Rane Madras Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>

1. Company Overview

Rane (Madras) Limited (RML) manufactures steering and suspension linkage products, steering gear products, specialized aluminum high pressure die-casting products, brake components and engine components catering to the Automotive Industry. The Company is a significant supplier of automotive components to major manufacturers of Passenger Vehicles (PV), Commercial Vehicles (CV), Farm Tractors (FT), Two Wheelers, Three Wheelers, Stationary Engines and Railways in India and globally. The Company operates in a single reportable business viz., components for the transportation industry.

 

2. Economic Review

2.1. Global Economy

During FY 2025-26, the global economy operated against a backdrop of significant trade realignment, as the United States imposed reciprocal tariffs on imports from multiple trading partners. These measures combined with country-specific duties and Section 232 actions on steel, aluminium and select automotive components elevated policy uncertainty, unsettled business sentiment and prompted companies to reassess sourcing strategies and capital allocation decisions. Despite this heightened trade- policy uncertainty, global activity remained resilient for much of 2025, supported by easing financial conditions, robust services demand, continued investment in digitalisation and artificial intelligence, and front-loaded orders ahead of tariff changes. The International Monetary Fund (IMF) estimates that the global economy expanded by 3.4% in 2025.

The operating environment deteriorated materially with the outbreak of war in the Middle East in late February 2026, which led to a large-scale disruption of shipping flows through the Strait of Hormuz. Brent crude prices surged above US$100 per barrel, LNG availability tightened, and flows of other industrial commodities were curtailed. In parallel, longer shipping transit times, higher freight and insurance costs, and sharp currency movements cascaded into elevated input costs across manufacturing, logistics and energy-intensive sectors, forcing companies to recalibrate sourcing, inventory and pricing strategies.

The IMF projects global growth at 3.1% in 2026 and 3.2% in 2027, down from 3.4% in 2025 and well below the pre-pandemic (2000-19) average of 3.7%. The downward revision for 2026 largely reflects the disruptions from the Middle East conflict, partly offset by the carryover from strong 2025 activity and reduced effective tariff rates following recent US bilateral trade agreements. The reduction in the growth rates is notably more pronounced for commodity-importing emerging market and developing economies, and global headline inflation is expected to tick up in 2026.

The global outlook remains cautious, with downside risks dominating. A longer or broader conflict, renewed trade tensions, or worsening geopolitical fragmentation could significantly weaken growth and destabilise financial markets. Navigating this environment will require policy agility, continued investment in productivity-enhancing technologies, and a sustained focus on supply-chain resilience and energy security.

 

2.2. Indian Economy

Against a challenging external backdrop, India continued to outperform its peers and remained the fastest-growing major economy during FY 2025-26 with a 7.6% year-on-year. Growth was underpinned by robust domestic consumption, sustained public capital expenditure, easing monetary conditions and broad- based expansion across manufacturing and services.

FY 2025-26 marked a notable shift in Indias consumption landscape, supported by the rationalisation of the GST framework. The revised structure with simplified tax slabs had reduced the overall tax incidence on mass-market categories, including reduction in GST on small passenger vehicles and two-wheelers (up to 350cc) from 28% to 18%, while auto component rates were aligned at 18%. The changes also extended to consumption-linked sectors such as consumer durables, cement and construction materials, improving affordability across a broad base of products.

Reinforced by multiple repo rate cuts by the Reserve Bank of India, the personal income tax relief announced in Union Budget 2025, a favourable monsoon, and buoyant rural demand, these measures delivered a substantial fillip to household spending, vehicle sales, housing and discretionary consumption.

Indias economy also proved remarkably resilient to trade headwinds. US tariffs on Indian goods, which escalated from 25% in early August 2025 to 50% later that month (including a 25% penalty linked to Russian oil imports), were substantially unwound following the US-India trade framework announced under which the additional 25% penalty was removed and the reciprocal rate was temporarily set at 10% with effect from February 24, 2026. While specific tariffs on steel, aluminium and select automotive components remain in place, the broader de-escalation has restored export competitiveness for Indian industry.

Looking into FY 2026-27, the outlook is balanced. On the positive side, the carryover from strong FY 2025-26 activity, the lower effective US tariff rate, benign domestic inflation through most of FY 202526, a steady investment cycle, and continuing reform momentum provide a firm foundation. However, the war in the Middle East poses clear near-term pressures. As a net energy importer that sources a significant share of crude oil and LNG through the Strait of Hormuz, India is exposed to higher and more volatile oil and gas prices, imported inflation, currency weakness, rising freight and insurance costs, and potential demand moderation in key export markets. The RBI expects domestic inflation to edge higher in the coming quarters as crude price pass-through accumulates, and the pace of further monetary easing is likely to moderate. Even so, Indias diversified growth drivers, strong domestic demand base, healthy corporate and bank balance sheets, and policy buffers position to absorb these shocks better than most peers and to continue delivering solid growth in FY 2026-27. IMF projects India to remain the worlds fastest-growing major economy, with real GDP growth forecasted at 6.5% for 2026.

 

3. Industry Review

3.1. Global Automobile Industry

FY26 witnessed steady but uneven performance for the global automobile industry. Global new vehicle sales rose approximately 3.4%, with production improving as semiconductor constraints eased and OEMs brought supply closer into balance with demand. Emerging markets continued to provide incremental growth, while replacement demand and improved vehicle availability supported developed markets. The industry also witnessed sustained momentum in electrification and technology investments, reflecting a clear, if uneven, shift towards future mobility.

In US, light vehicle sales grew by 2.3% YoY, aided by better inventory and strong demand for hybrids. However, the expiration of federal EV tax credits triggered a sharp moderation in battery electric vehicle demand in the fourth quarter, with consumers gravitating to hybrids as a lower-cost electrification option amid high interest rates and elevated vehicle prices. In Europe, recovery continued at a modest pace, constrained by elevated energy costs, regulatory transitions and subdued demand in core economies. European automakers also face growing competitive pressure from Chinese manufacturers, with China- made vehicles accounting approximately 7% of EU car sales in 2025 and that share continuing to rise as Chinese OEMs expand localised production in Europe. In China, volumes reached multi-year highs in 2025, though the halving of New Energy Vechicle (NEV) tax exemptions from January 01, 2026 and the winding down of trade-in subsidies are expected to moderate growth in the current year.

The 2026 operating environment is more challenging. Global light vehicle sales forecast to remain broadly flat with global production expected to edge down by about 0.4%. The combination of trade realignment, the Middle East conflict, sharply higher energy prices, elevated commodity and freight costs, and currency volatility is exerting further upward pressure on vehicle prices and testing just-in-time production models. In response, OEMs are accelerating the regionalisation of supply chains, prioritising cost optimisation, and adopting flexible powertrain strategies in which hybrids play an important transitional role.

Overall, the global automobile industry in 2026 is characterised by stable but uneven demand, slowing electrification momentum in some mature markets, and heightened strategic complexity. Software capabilities, cost discipline and supply-chain resilience are emerging as the key competitive differentiators. While the long-term transition to be electrified, software- defined and autonomous vehicles remains intact, nearterm growth is expected to be measured as the industry adapts to a more fragmented and risk-conscious global environment.

 

3.2. Indian Automobile Industry

Indias automobile industry witnessed strong demand during FY26, supported by improved affordability and policy support (GST rate reductions). The automotive production across major vehicle segments benefited by steady domestic demand and Indias growing importance as an automotive manufacturing and export hub.

Passenger Vehicles (PV) recorded their highest-ever production in FY26, growing 9% YoY. The growth was largely driven by utility vehicles, which continued to gain share, while passenger cars saw 4% growth. The segment also saw strong export momentum, with overseas shipments rising to 17.5%. Electric passenger vehicle adoption also accelerated sharply, with registrations rising more than 80% during the year, contributing to overall growth.

After two sluggish years, the Commercial Vechicle (CV) sector staged a broad-based recovery in FY26, driven by policy support and improving demand fundamentals. The Medium and Heavy Commercial Vehicles (M&HCV) segment recorded a robust 16% growth supported by infrastructure-linked goods movement and school bus demand. The Light Commercial Vehicles (LCV) segment grew by 11% driven by demand from last mile delivery uses.

Indias tractor industry posted a record-breaking performance in FY26, with 24% YoY growth, driven by sustained rural demand, a reduction in GST rates, and robust agricultural output. Two-Wheelers reclaimed their pre-COVID peak, with a growth of 12%, driven by the combination of GST-led affordability, improved rural cash flows, and a broadening product portfolio that catered to EV segment.

Overall, the Indian automobile industry in FY26 demonstrated resilience amid transition. While growth was supported by domestic consumption, rural recovery and policy tailwinds, the year also highlighted the increasing complexity of operating in a regulatory intensive and capital heavy environment. The sectors long term trajectory remains positive, anchored by infrastructure development, manufacturing localisation, electrification and sustained domestic demand, albeit with near term performance remaining nuanced and segment specific.

Industry Businesses (Production figures)	Growth in % (YoY change)
	FY26	FY25
Passenger Cars (PC)	4	(12)
Utility Vehicles (UV)	12	14
Multi-Purpose Vans (MPV)	10	8
Passenger Vehicles (PV)	9	3
Light Commercial Vehicles (LCV)	11	(5)
Medium & Heavy Commercial Vehicles (M&HCV)	16	(3)
Commercial Vehicles (CV)	13	(4)
Farm Tractors (FT)	24	6
Two Wheelers (2W)	12	11

 

Source: Society of Indian Automobile Manufacturers (SIAM)

 

3.3. Indian Auto Component industry

The Indian Auto Component industry continued its strong performance in FY 2025-26. According to the Automotive Component Manufacturers Association of India (ACMA), the industry turnover in the first half of FY26 grew 6.8% year-on-year supported by stable domestic demand, a resilient aftermarket, and sustained investments in capacity expansion, localisation and technology upgrades. Supplies to Original Equipment Manufacturers (OEMs) rose 7.3%, led primarily by the PV and LCV segments. Notably, auto component exports grew 9.3% despite tariff-related headwinds, elevated raw material costs and moderating demand in several developed markets, with the United States and Germany remaining among the largest destinations. With the benefit of the GST rate reduction translating into stronger vehicle demand in H2 FY 2025-26, full- year performance is expected to build further on this momentum.

Over the medium term, the industry is undergoing a structural transformation. Growth is being driven by rising vehicle penetration, higher technology content per vehicle, accelerating EV adoption, tightening emission norms, and the gradual mainstreaming of Advanced Driver Assitance Systems (ADAS). These trends are creating meaningful incremental demand for power electronics, sensors, control units, precision-engineered components and software- enabled systems. The Production Linked Incentive (PLI) schemes for automobiles and auto components, coupled with duty exemptions on lithium-ion battery scrap and expanded capital goods exemptions for EV production announced in Union Budget 202526, are accelerating localisation and are estimated to attract fresh investments of 25,000-30,000 crores in FY 2025-26 alone. Despite near-term headwinds from input cost volatility, currency movements and Middle East-related logistics pressures, the Indian auto component industry is well positioned to benefit from domestic volume growth, rising technology intensity, and its expanding role in global automotive supply chains.

 

3.4. Indian Automotive Aftermarket Industry

The Indian automotive aftermarket sustained a strong momentum during FY 2025-26, benefiting from a large and rapidly expanding vehicle parc, improving formalisation, and the largely non-discretionary nature of vehicle maintenance and replacement spend. As per ACMA, the aftermarket segment grew approximately 9% year-on-year in H1 FY 2025-26, outpacing overall industry growth and underlining its resilience even in a challenging global environment. India is expected to be the fastest-growing aftermarket in the region over the coming years, supported by favourable domestic demand trends and a rising vehicle parc.

The aftermarket is increasingly evolving towards more organised and technology-enabled operating models. Digital platforms, multi-brand service networks, e-commerce-led distribution and organised retail chains are enhancing product availability, pricing transparency and customer access across the value chain. At the same time, rising vehicle complexity, higher electronics content and the gradual spread of EVs are driving demand for advanced components, diagnostic capabilities and skilled workshop talent. The combination of steady underlying demand, improving industry structure and favourable long-term fundamentals positions the Indian aftermarket as an increasingly important growth engine for the broader component ecosystem.

 

3.5. Opportunity and Threats

Indias automotive sector stands at a pivotal juncture, offering multiple growth opportunities alongside a more complex risk environment. India has firmly established itself as the worlds third-largest automobile market, supported by a deep domestic consumption base, policy initiatives such as the PLI schemes, duty concessions on EV components, and its growing reputation as a manufacturing and export hub. The GST 2.0 reform has meaningfully improved affordability across mass-market segments and is expected to sustain consumption-led growth into FY 2026-27. The auto component industry is poised for significant expansion with potential to nearly double by 2030, supported by rising localisation, technology intensity and exports. The aftermarket is also evolving rapidly as the vehicle parc expands and consumers increasingly embrace organised and digitally-enabled service channels.

Indias strategic position in global supply chains offers a distinct opportunity. As global OEMs diversify sourcing away from traditional markets, Indias cost competitiveness, deep engineering talent pool, improving logistics infrastructure and large skilled workforce position it as a preferred "China plus one" partner. Ongoing trade realignments and supply-chain diversification by multinational OEMs are opening up further space for Indian manufacturers to integrate into international networks and capture incremental market share.

The industry, however, is exposed to several headwinds. The war in the Middle East has introduced elevated geopolitical risk, with direct implications for energy prices, freight and insurance costs, currency stability, and supply-chain reliability, especially given in the exposure of key shipping routes passing through the Strait of Hormuz. Input cost volatility in steel, aluminium, precious and rare-earth metals, and semiconductors remains a concern. Trade protectionism, evolving tariff regimes, and policy uncertainty in key export markets could affect investment flows and export momentum. Domestically, pockets of affordability pressure in the mass vehicle segment, uneven rural income recovery, and the capital-heavy nature of the electrification and ADAS transitions could affect demand patterns and return profiles. Proactive risk management, supply-chain diversification, localisation of critical components, and continued investments in engineering and digital capabilities will be essential to navigate this environment.

 

3.6. Outlook

The long-term outlook for the Indian automotive and auto component industry remains decisively positive, anchored by a durable set of structural drivers: rising per capita incomes and urbanisation, sustained infrastructure build-out, deepening manufacturing localisation, accelerating transition to electrified and software-defined vehicles, and Indias expanding integration into global automotive supply chains. PV demand is expected to remain supported by continued preference for utility vehicles and a gradual rise in alternative powertrains such as CNG, hybrid, and electric vehicles. In the two-wheeler segment, growth is likely to be driven by improving rural demand and financing availability, while premiumisation trends are expected to sustain demand in higher-value categories. CV demand is expected to remain linked to economic activity and replacement requirements, with buses expected to outperform within the segment.

In the near term, however, the industry must navigate several headwinds. While domestic demand remains stable, the industry continues to monitor external risks that could influence the operating environment. Factors such as geopolitical developments, volatility in crude oil and commodity prices, exchange-rate movements, and potential supply-chain disruptions could affect production costs, demand sentiment, and exports. At the same time, ongoing adoption of cleaner technologies, evolving regulatory norms, and increasing focus on safety and technology content per vehicle are expected to influence product mix and investment priorities. Overall, the outlook points to stable volume growth are accompanied by structural shifts in technology and demand composition, positioning the industry for sustained development over the medium term.

 

4. Financial Review

4.1. Standalone Financial Highlights

• Revenue from sale of products increased to 3,817.13 crores in FY26 from 3,364.45 crores in FY25.

• EBITDA increased to 355.80 crores in FY26 from 304.69 crores in FY25.

• Net Profit of 1 1 1 .44 crores in FY26 as against a Net Profit of 49.61 crores in FY25.

 

4.2. Consolidated Financial Highlights

• Revenue from sale of products increased to 3,816.63 crores in FY26 from 3,364.28 crores in FY25.

• EBITDA increased to 355.56 crores in FY 2025-26 from 297.75 crores in FY 25.

• Net profit of 1 07.48 crores in FY26 as against a Net profit 37.65 crores in FY25.

 

Standalone

Key Ratios	FY26	FY25	Reason for change in FY 26
			Higher profits from
Interest coverage ratio (turns)	3.65	2.43	improved performance and lower interest costs resulting from debt reduction via advance land sale proceeds.
Debt equity Ratio	0.82	1.10	Debt reduction from advance land sale proceeds and increased profit from improved operational performance.
Net profit margin %	2.88%	1.46%	Better fixed cost absorption from higher sales volume and reduced interest costs.
Return on Net worth	15.25%	7.34%	Enhanced operational performance resulting in a higher PAT.
Net capital turnover ratio (turns)	(28.20)	(159.03)	Due to the recognition of land sale advance receipts under current financial liabilities.
Return on capital employed	15.00%	12.05%	Improved operational performance, resulting in higher EBIT and optimized capital employed.

 

The other ratios as required under Schedule III are disclosed in note no. 38 (xiii) to the Standalone Financial Statements.

 

Consolidated

Key Ratios	FY26	FY25	Reason for change in FY 26
Interest coverage ratio (turns)	3.52	2.22	Higher profits from improved performance and lower interest costs resulting from debt reduction via advance land sale proceeds.
Debt equity Ratio	0.84	1.13	Debt reduction from advance land sale proceeds and increased profit from improved operational performance.
Net profit margin %	2.80%	1.11%	Better fixed cost absorption from higher sales volume and reduced interest costs.
Return on Net worth	15.12%	5.67%	Enhanced operational performance resulting in a higher PAT
Net capital turnover ratio (turns)	(28.83)	(168.81)	Due to the recognition of land sale advance receipts under current financial liabilities.
Return on capital employed	15.06%	12.05%	Improved operational performance, resulting in higher EBIT and optimized capital employed.

 

5. Business Review

5.1. Steering & Linkages

The breakup of the overall sales by Steering & Linkages business is given below:

Sales	2025-26	2024-25	Growth in %
Domestic	1,186.58	1,062.63	11.7
Exports	673.02	527.22	27.7
Total	1,859.60	1,589.85	17.0

 

Steering & Linkage business recorded its highest-ever sales in FY26, supported by strong performance across domestic and export markets. Post Q2, the domestic market experienced a sharp upswing following the revised GST framework, with significant growth in the Passenger Vehicle (PV) and Farm Tractor (FT) segments. The Commercial Vehicle (CV) segment also gained strong momentum from Q3 onwards, collectively enabling the business to achieve record performance. Exports were further bolstered by favourable traction from key customers and the ramp-up of new business programs. New business wins remained robust at over 500 crores, led predominantly by rack and pinion systems.

 

5.2. Light Metal Castings

The breakup of the overall sales by Light Metal Castings business is given below:

Sales	2025-26	2024-25	Growth in %
Domestic	152.04	147.66	3.0
Exports	115.49	114.40	0.9
Total	267.53	262.07	2.1

 

includes inter-division sales

Domestic sales of the Light Metal Castings Business registered a growth of 3% over the previous year. This was primarily driven by the ramp-up of a new engine cover project and increased demand in the PV segment for the model supplied by the business. Growth in the farm tractor segment was also supported by changes in GST norms.

Export sales of the Light Metal Castings Business registered a growth of 1% over the previous year. While demand from the North American programme remained subdued, this was offset by ramp-up in demand for supplies to Europe

Light Metal Castings Business expects strong export demand in FY 26-27, supported by ramp-up from new programme launches. The domestic market is also expected to remain stable.

 

5.3. Engine Components

The breakup of the overall sales by engine components business is given below:

Sales	2025-26	2024-25	Growth in %
Domestic	358.96	339.41	5.8
Exports	171.06	168.24	1.7
Total	530.02	507.65	4.4

 

The Engine Component business registered a 5.8% increase in the domestic market. The domestic market witnessed buoyancy across all segments in the Original Equipment Manufacturer (OEM) sales, registering a growth of 8% over the previous year. Export sales increased by 1.7% due to increase in off take by the customers. The Business development efforts of the Company in last couple of years and better performance of the plants helped achieve this.

 

5.4. Brake Components

The breakup of the overall sales by brake components business is given below:

Sales	2025-26	2024-25	Growth in %
Domestic	491.27	440.49	11.5
Exports	55.13	48.37	14.0
Total	546.40	488.86	11.8

 

The Brake Lining business reported a 11.8% sales growth driven by increase in volumes across all major businesses and entry into new models in Multi - Purpose Vehicle , Two wheeler and Railway brake block businesses and strong demand from exports. The export for FY26 was 55.1 Crores, an increase of 14.0% compared to FY25. During the year, continuous engagement with the US customers and launch of new products for CV businesses yielded breakthrough results. The Company continues the initiatives taken to sustain the organic sales and to enhance the export turnover through the overseas distribution network by entering into new geographies in US, Africa and Middle East countries. The enhancement of the product range, development of new grades and the product certifications as stipulated by the respective regulatory bodies will sustain the growth momentum in the export market.

 

5.5. Aftermarket Products

The breakup of the overall sales by aftermarket products business is given below:

Sales	2025-26	2024-25	Growth in %
Domestic	628.44	535.03	17.5
Exports	10.40	9.69	7.2
Total	638.84	544.72	17.3

 

Aftermarket Product business was restructured and embarked on a new way of working in FY26. This brought in synergy across product lines, focused on driving demand at retailer level, increased promotion to improve market visibility, introduced new products and built digital tools to drive efficiency.

This helped in capitalising the growth in vehicle parc and enhance market penetration for the products.

 

6. Risk Management

The Company has laid down well-structured procedures for monitoring the risk management plan and implementing risk mitigation measures. The risks are broadly classified into strategic risks, operational risks, financial risks and statutory compliance risks. These risks are rated based on factors such as past year experience, probability of occurrence, probability of non-detection and their impact on the business. The risk management committee reviews the strategic risks, and the risks with high probability and high impact along with a risk mitigation plan and it is also presented to the Board of Directors on a half-yearly basis. The strategic risks are taken into consideration in the annual planning process with their mitigation plan. Other risks are covered as part of the internal audit process and presented to the Audit Committee. The business process risks, and the related controls are subjected to internal audit and reviewed on a quarterly basis. The risk ratings are revalidated with the top management as part of the internal audit process every quarter. The overall re-assessment of risks at the Company level is carried out and presented to the Risk Management Committee and the Board of Directors once in two years for their review.

Risk	Nature of Risk	Risk Mitigation Strategies
Strategic	Industry / Market risk	Major portion of revenue is derived from the Indian Automotive sector. Hence, any drop in vehicle production will have a significant impact to Companys business. New Products secured by the Company are at significant lower sale prices, and post a significant risk in terms of profitability	The Company constantly strives to:
			(a) Increase revenue from International markets (outside of India).
			(b) Add new products to increase organic revenue and diversify customers across vehicle businesses.
			(c) The Company is pursuing opportunities to dialogue with Customer to get price up on back drop of global environment / increasing cost pressures, etc.
	Technology Obsolescence Risk	Auto Industry and customer preference undergoes changes resulting in technology obsolescence.	The Company has consistently delivered cutting edge technology products with:
			(a) Enhanced R&D capabilities, localization of testing and validation capabilities.
			(b) Diversity of product portfolio across steering, engine, braking, transmission components helps to mitigate the technology obsolescence.
			(c) Products serve variety of vehicle businesses experiencing different levels of adoption of technology.
	Competition	Maintaining market share in Competitive markets and availability of unorganized players further pose challenge.	The Companys long standing relationship with OEMs, state-of-the-art facilities and best-in-class processes help deliver superior value to the customers. We periodically conduct customer survey to understand customer feedback and work in furthering our relationship.
Operational	Quality / Processes	Quality and Delivery are sacrosanct for safety of critical products supplied by the Group.	Skilled workforce, imparting job skill enhancement training, enhancing supplier capabilities and robust manufacturing processes help us to mitigate quality and delivery risk. Implementation of Quality DOJO across the plants in progress to improve the skills of the workforce.
	People Risk	Attrition of key personnel could impact business operations and growth.	The Companys HR processes are constantly upgraded to attract, retain and develop talent. The policies are people-centric and industry accolades on HR practices help attract talent. The dedicated training center supports to build functional capabilities and develop a strong leadership pipeline. The performance management system and other employee engagement initiatives help to develop and retain talent.
	Raw Material (Input) Price Risk	Material cost is a significant part of the cost and volatility in the price of raw material costs will erode margin.	The Company constantly strives to mitigate the input cost increase by:
			(a) Cost reduction initiatives through alternate sourcing, localization, etc.
			(b) Negotiate and pass through input cost increases suitably to the customers.
			(c) Continued focus on process improvements, yield improvements, etc.
Financial	Currency Risk	Exposed to foreign currency exchange risk as we export our products to various countries and import raw materials.	The Company uses a multi-pronged approach as suitable to the scenarios. This approach includes:
			a) Optimally balancing the import and export to create natural hedge.
			b) Working with customer to index prices to mitigate currency fluctuations.
			c) Taking forwards on a rolling basis to protect its export realization
	Interest Rate Risk	Use of borrowings to fund expansion exposes to interest rate risk.	The Company manages interest rate risk on the following basis:
			(a) Maintaining optimal debt-equity levels.
			(b) Capex primarily through internal accruals constantly optimize working capital to reduce interest costs.
			(c) Leveraging the relationship with Banking and Financial institutions.

 

6. Human Resource Development and Industrial Relations

At the heart of the Rane Groups enduring success is a profound gratitude for its people, who are embraced not merely as resources, but as critical partners in growth and excellence, driving initiatives across talent development, digital transformation, wellness, and diversity.

 

6.1. Talent Development Initiatives

In FY26, the Company focused heavily on building leadership capacity and enhancing manufacturing capabilities through the following programs:

 

Leadership Development

6.1.1 Leadership Boot Camp (LBC) & Ranvocation

To seamlessly transition entry-level graduates from academia to the corporate environment, Rane Group implemented an intensive LBC featuring plant visits, cross-functional collaboration, and mentorship by senior leaders. This year, 47 high-potential individuals were selected to embark on this journey, which notably included an outbound collaboration and communication workshop. Over 15 Graduate Engineer Trainees and Management Trainees completed their year-long development journey, celebrated at the annual Ranvocation event.

 

6.1.2 Young Leadership Development (YLD)

This flagship program enables individual contributors to successfully transition into first-time managers. The 9^th batch commenced with 25 participants in partnership with KREA University, featuring gamified learning tools, interactive webinars, and outbound experiential learning at the Pegasus Institute in Pondicherry. Furthermore, 17 participants from earlier batches underwent a specialized workshop to enhance business acumen, culminating in case study presentations to business leaders.

 

6.1.3 High Potential Leadership Development (HPLD)

Aimed at building leadership competencies for department heads transitioning to broader functional and operational roles, the 10^th batch of HPLD was launched for 12 participants. The cohort utilized interactive development centers, case studies, and business simulations, and successfully completed the TOP GEAR residential program at the Great Lakes Institute of Management to enhance strategic thinking and execution excellence.

 

6.1.4 Supervisory Development Program (SDP)

Designed to enhance shop floor efficiency, SDP equipped participants with essential supervisory skills such as team motivation, performance management, and safety protocols. The program covered multiple batches across Chennai, Trichy, and Hyderabad.

 

6.1.5 Rane Manufacturing Systems Professionals (RMSP)

Focused on enhancing plant performance and technical expertise, the refreshed RMSP 4.0 framework facilitated 102 successful Productivity, Quality, Cost, Delivery and Safety (PQCDS) improvement projects this year. To deepen specialized technical proficiency, Rane partnered with premier institutions to launch programs in Vehicle Dynamics (SASTRA University) and Tribology (PSG College of Technology). The annual RMSP Technology Day was also hosted at ZF Rane Automotive India to showcase the latest manufacturing advancements and foster cross-functional knowledge sharing.

 

6.2 Cultivating Excellence

6.2.1 High-Performance Culture (ACE Awards)

Ranes organizational resilience is rooted in the cultural philosophy of Maithri (goodwill, friendship, and bonding). To translate these values into tangible performance, the Achieving and Celebrating Excellence (ACE) Awards drive annual business goals by evaluating units across four strategic pillars: Plant Operations (benchmarked on QCDPSM parameters), High-Impact Initiatives, HR Practices, and overall Business Performance. Through ACE, the organization fosters a high-performance culture that aligns the spirit of Maithri with sustainable stakeholder value.

 

6.2.2 Plant, Functional Heads Meeting

The Rane Group Senior Management Meet has brought together Plant and Function Heads to align business objectives with stakeholders demands, focusing on sustainable growth and operational efficiency. Leaders reviewed cost-transformation projects to embed a lasting mindset of cost excellence and cross-functional collaboration. Additionally, industry experts highlighted how to navigate global supply chain shifts and build a competitive "Right to Win" through technological differentiation and operational excellence. The event included strategic briefings on new labour codes to ensure proactive workforce management.

 

6.3. HR Tech Transformation & Digital Learning Journey

Recognizing that organizational expansion adds complexity, Rane evolved its digital HR ecosystem to build a connected, future-ready workforce.

 

6.3.1 HR Hub Unified Platform

The Group transitioned to a cloud-based HR system powered by People Strong, consolidating fragmented and distributed systems to manage the entire employee lifecycle - from recruitment and onboarding to learning and payroll into a seamless, mobile-first experience. This transformation empowers employees with independent access to HR services, minimizes administrative bottlenecks, and provides managers with real-time workforce visibility.

 

6.3.2 Digital Human Resource Management (DHRM)

The company rolled out a comprehensive DHRM application to modernize workforce management and ensure a seamless transition from legacy system. Specifically tailored for Trainees and Contract Labor, DHRM standardizes HR processes across the Group through end-to-end lifecycle management, featuring 100% digital onboarding, biometric- integrated attendance, and statutory-compliant payroll processing. The system further enhances shop floor capabilities by integrating with the Bodhi training platform for real-time skill mapping and evaluations, while simultaneously strengthening governance through automated manpower planning, standardized shift configurations, and systemic safeguards - such as mandatory rest periods to ensure regulatory compliance and operational transparency.

 

6.3.3 Digital Learning Hub

Rane successfully migrated its learning platform, delivering weekly microlearning content on leadership, functional competencies, and wellness. Learner engagement was significantly boosted through gamification elements like weekly quizzes, cohort challenges, and an L&D leaderboard, while partnerships with NPTEL and The Hindu Group expanded access to short-term certifications and language skills development.

 

6.4. Employee Experience & Work Culture (The Rane Pulse)

To measure employee experience and drive actionable workplace improvements, the company utilizes The Rane Pulse framework in partnership with W.E. Matters. This comprehensive model evaluates the organization to build a stronger workplace across the following pillars:

• Guiding Success (Leadership & Management): Focuses on building trust through leadership and business confidence, enhancing manager effectiveness via goal-setting and coaching, and fostering a culture of belonging, diversity of thought, and teamwork.

• Supporting Growth (Organization & Well-being): Tracks organizational performance (such as career opportunities and pay-performance linkage), monitors employee care, work-life harmony, and workplace safety, and evaluates the effectiveness of HR practices and benefits.

 

6.5. Wellness at Rane

Holistic employee well-being remains a top priority, supported by robust Health, Safety, and Environment (HSE) practices and thorough ergonomic workplace assessments. The Group promoted healthy habits through the Wellness Corner app, mental health support, and financial wellness programs. Fostering camaraderie and active living, the Rane Premier League inter-group cricket tournament brought together top talent across entities, while employees showed massive enthusiasm for community fitness, with over 190 employees participating in the Freshworks Chennai

Marathon 2026. Showcasing strong team spirit and endurance, employees successfully completed various distances, including the 10 km, Half Marathon, 20 Miler, and Full Marathon.

 

6.6. DEI at Rane

Rane Group strengthened its commitment to diversity through the Women at Work (W@W) initiative, which aims to cultivate an "Engaged, Enthused, and Empowered" community. By offering dedicated mentorship with executive coaches and collaborative group sessions, the program provides female employees with the crucial networking platforms and resources required to support their career ambitions and professional advancement.

Further, to further foster a high-performance and equitable culture, an "Inclusive Leadership in Action" workshop was organized for 63 senior leaders, focusing on addressing biases and building diverse workplaces.

 

6.7. Industrial Relations

Industrial Relations remained highly cordial across all group plants. The Group-level Industrial Relations Council continues to promote harmony and a healthy working environment by focusing on the seamless implementation of labour legislation, sharing best practices, and executing workforce mix planning for optimal deployment. Furthermore, Ranes digital-first approach to the new Labour Codes ensures modernized compliance and trust across the workforce.

 

7. Corporate Social Responsibility

Rane Foundation, a public charitable trust founded in the year 1967, is the leading partner for implementing Rane Groups CSR initiatives. The Companys CSR vision is to be a socially and environmentally responsible corporate citizen. The Company continues to focus on four thrust areas for its CSR activities - Education, Healthcare, Environment and Community Development and has contributed towards implementation of several projects in the field of Education, Healthcare and Community Development.

 

7.1 Education

The Rane Vidyalaya, established at Trichy in the year 2018 under the aegis of Rane Foundation has stepped into its eighth academic year. Rane Vidyalaya was recognized by Directorate of School Education, Tamil Nadu in 2018 and is affiliated to the Central Board of Secondary Education, New Delhi. In the academic year 2025-26, it reached a student strength of 1048 in its eighth year of operations, operating from LKG to XI. The school has achieved 100% pass percentage in the X standard board examination in the academic year 2025-26. The first batch of XII students will write the public exam in the academic year 2026-27.

The Rane Polytechnic, established at Trichy in the year 2011, under the aegis of Rane Foundation has stepped into completed its fifteenth academic year. The institution is accredited by the National Board of Accreditation (NBA) for its Diploma in Mechanical

Engineering program. So far 2120 students have completed their diploma program. as on May 2025. 88 students will complete by June 30, 2026 of which 25 students opted for campus placements, 40 will be absorbed after internship and 23 are considering for higher studies.

Considering the declining demand and enrolment for the polytechnic courses at the national and state level, it has been decided by the management Rane Foundation to progressively close the polytechnic institution by the end of academic year 2025-26. The application for Progressive closure has recently been approved by AICTE and closure formalities will be initiated with DoTE after completion of the internship by the students.

Rane Foundation also embarked on its next major project in 2025 to establish one more CBSE school in the name "Rane Vidyalaya - Sethurapatti". This school aims to provide quality education to rural children in and around Sethurapatti village. The school started its operations for the primary classes from the academic session 2025-26, and approval has been received from the Tamil Nadu Government. The CBSE application process is in progress and will be completed in 2026-27.

Rane Foundation carried out the following CSR initiatives:

• Extended support to the Gopalapuram Educational Society towards maintenance and operations of Boys & Girls Schools.

• Supported 20 Single Teacher Schools in association with Swami Vivekananda Development Society.

• Provided computer monitors towards upgradation of computer to Ramakrishna Mission Students Home.

The Company has also carried out the following CSR initiatives:

• The Government High School,

Madagadipetpalayam, Pondy has been supported through infrastructure development initiatives aimed at enhancing the learning environment for students. Key contributions include the installation of 8 CCTV cameras to improve safety and monitoring, provision of a computer system with printer to support digital learning, installation of name boards for better identification, and an interactive panel board to enable modern teaching methods. Additionally, the school playground has been levelled to create a safer and more usable space for physical activities. These initiatives have collectively benefited around 400 students by providing a safer, more engaging, and technology-enabled educational environment.

• Distribution of track suits to all students at the Government Primary School, Hirehalli, Tumkur, Karnataka.

• Education support to 5 children at SOS Childrens Village of India, Chennai.

• Contribution to a Registered Trust which adopted 23 Government Middle Schools for infrastructure development and education of students.

• Provision of wooden desks, dining tables and lockers to Government primary schools at Datarpally and Pregnapur in Telangana.

• Provision of lunch boxes to children of Government Middle School, Mogappair, Chennai.

• Provided two sets of uniform to 120 students of Sanaysikuppam Primary school and Thirubhuvanai Middle school, Puducherry.

• Provision of heavy duty batteries for system backup at Government Primary and Middle schools, Sanyasikuppam Village and Thirubhuvanai, Puducherry.

• Infrastructure development of computer lab with computers, wi-fi modem, tables chairs and electrical fittings in Government primary schools at Sethurapatti and Yagapudaiyanpatti.

 

7.2. Healthcare

Rane Foundation through strategic partnerships with established organisations contributed medical equipment to not for profit hospitals of repute, making a significant impact on society across various specialties such as Ophthalmology, Dialysis, and Public Health Care at an affordable cost, as outlined below.

• Procured Myopia master to Sankara Nethralaya to enhance the ophthalmic care.

• Contributed IT servers to the Child Trust Hospital.

• Supported Voluntary Health Services, a multi-speciality hospital with a modern high end upgradeable ventilator.

• Supported Sringeri Sharada Dhanvantari Charitable Hospital with hemodialysis machine.

• Supported Apollo Hospitals Enterprise Limited in conducting Tele-Ophthalmology Camp at Trichy including delivery of spectacles.

• Supported Tamilnadu Kidney Research Foundation (TANKER Foundation), a non-profit charitable trust with Hemodialyisis machine with blood pressure monitor.

Special focus for supporting NGOs at different locations i.e. Puducherry and Trichy like,

• Continued focus on providing Safe Drinking Water facility including Overhead tank under Sethurapatti Village panchayat, Trichy.

• Provision of water purifier with 100 litres capacity to Government middle school, Sanyasikuppam, Trichy.

• Awareness programmes on health and sanitation were carried out for the local government primary schools situated across our manufacturing facilities.

• Special focus for supporting NGOs at different locations like Construction of rest rooms at Government High School, Padi, Chennai.

 

7.3 Community Development

During FY26, the Company also pursued community development initiatives at its various locations as detailed hereunder:

• The installation of RO (Reverse Osmosis) water plants in Ambakkam has been a significant step toward improving community health and basic living standards. Prior to this initiative, residents largely depended on untreated or inconsistent water sources, which posed potential health risks and challenges in accessing safe drinking water.

With the commissioning of these RO water plants, the village now has a reliable source of purified and safe drinking water. The systems are designed to remove impurities, contaminants and harmful substances, ensuring that the water meets quality standards suitable for daily consumption. This initiative has directly benefited around 600 people.

• Provision of three tier SS chairs to an NGO trust at Alathur village, Chennai.

• Contributed to Flag day fund at Trichy and Chennai.

• Provision of laptop and printer to Trichy District Fire station.

• Contribution towards purchase of Electrolyte Analyzer Machine to Fathima Health Care centre, Fathima nagar, Trichy.

 

7.4 Environment

• Continued contribution to maintenance of Puducherry Keni (lake) to protect the water resource for people, birds and animals.

 

8. Health, Safety & Environment (HSE)

The company strongly believes that HSE is not merely a requirement but a fundamental responsibility. Over the years RML has implemented numerous initiatives to ensure a safe and healthy workplace for its employees, aligning with Rane Groups HSE & Sustainability framework. RML has established a robust HSE governance framework that enables the identification and mitigation of risks through structured processes, supported by sub-committees that enforce well-defined policies, standards, and procedures.

Ranes HSE principles emphasize that safety is a shared responsibility and all injuries are preventable, embedding a proactive mindset across the organization through comprehensive risk assessments, continuous safety training, and effective hazard controls to prioritize workforce well-being and foster a culture of prevention.

In pursuit of environmental sustainability, RML has focused on emission reduction initiatives, adoption of renewable energy, and other energy conservation strategies. Water conservation efforts and the commitment to achieving zero waste to landfill are also key focus areas.

These efforts are reflected in the Greenco Gold rating achieved in few of our plants and the Green-Pro certification earned by few of our products, underscoring our dedication to sustainable practices.

 

9. Internal Control Systems

The Company has put in place a robust internal control system to prevent operational risks through a framework of internal controls and processes. These controls ensure that the business transactions are recorded in a timely and complete manner in the financial records, resources are utilised effectively and the assets are safeguarded.

The internal audit function is outsourced to a professional firm of independent assurance service providers. The Audit Committee and the Board in consultation with the internal auditors, statutory auditors and operating management approve the annual internal audit plan. The scope also covers the internal financial controls and internal controls over financial reporting. The internal audit findings are placed before the Audit Committee at each of its quarterly meetings for review. The managements responses and counter measures are discussed in the Audit Committee meetings. This process ensures robustness of the internal control system and compliance with laws and regulations including resource utilization and system efficacy.

 

10. Cautionary Statement

The information and opinion expressed in this report may contain certain forward-looking statements, which the management believes are true to the best of its knowledge at the time of its preparation. Actual results may differ materially from those either expressed or implied in this report.