Rico Auto Industries Ltd Management Discussions

1. ECONOMIC OVERVIEW

1.1 Global Economic Overview

The global economy has remained resilient in CY 2025, though the pace of growth has moderated to around 3%. Ongoing geopolitical developments, wars and price volatility of essential resources have kept cost structures unpredictable, while tighter monetary conditions in developed markets have adversely affected the investment sentiment. Despite this, long-term shifts such as supply chain diversification, electrification, and digital adoption continue to shape the next phase of industrial growth. Throughout 2025, evolving tariff policies emerged as a key macroeconomic factor, driving disruptions in global commerce and operational planning.

Advanced economies continue to demonstrate resilience domestically but, the emerging and developing economies remain vulnerable to spillovers from reduced external demand, global disinflation efforts, and tighter financial conditions.

The global headline inflation moderated to 4.3% in 2025 and is expected to further ease to 3.6% in 2026 reflecting continued inflationary pressures arising from geopolitical developments, energy market volatility, and regional economic disparities. Inflation in advanced economies is expected to ease to 2.2% by 2026, while emerging and developing economies are projected to see inflation moderate to 4.6% by 2026.

Indian Economic Scenario

The Indian economy continued to demonstrate robust growth and resilience during the FY 2025-26, despite global economic uncertainties, geopolitical tensions, and evolving trade dynamics. India remained one of the fastest-growing major economies globally, supported by strong domestic fundamentals, prudent policy measures, and sustained structural reforms.

India recorded a strong growth trajectory with real GDP growth estimated at 7.7% reflecting a broad-based expansion across key sectors of the economy. Growth was driven by robust private consumption, government capital expenditure, and improved investment activity. The economy benefited from strong domestic demand, which continued to offset global volatility.

India maintained its position as a leading contributor to global economic growth with GDP growth exceeding 7%, supported by manufacturing and services sector expansion.

Inflationary pressure moderated during FY 2025-26 and remained broadly within the RBIs target range, supported by easing food prices, stable supply conditions, and proactive monetary measures. The Reserve Bank of India (RBI) maintained a balanced monetary policy stance, ensuring adequate liquidity while supporting growth. Policy measures such as interest rate adjustments and GST rationalisation contributed to improved affordability and consumption. Overall, the inflation environment remained under control and supportive of economic growth.

Gross capital formation remained a key growth driver, reflecting enhanced investor confidence and long-term economic potential. India continued to strengthen its position in global value chains, supported by increasing manufacturing competitiveness, policy initiatives and expanding trade partnerships.

Outlook

The Indian economy is expected to maintain its position as one of the fastest growing major economies globally during FY 2026-27, albeit with a moderation in growth momentum compared to the previous fiscal year. Various authoritative estimates, including those from the Economic Survey, RBI, IMF, and World Bank, project real GDP growth in the range of 6.3% to 7.2% for FY 2026-27, reflecting underlying macroeconomic resilience amid global uncertainties. The growth outlook is underpinned by strong domestic demand, sustained government capital expenditure, improving private investment, and a robust services sector. Private consumption continues to be supported by rising disposable incomes and structural reforms such as tax rationalization and GST simplification. Meanwhile, investment activity is expected to gain traction due to infrastructure spending, Production Linked Incentive (PLI) schemes, and a stable financial system with healthy banking sector balance sheets.

However, the near-term outlook reflects some moderation due to adverse global developments, including geopolitical tensions, elevated crude oil prices, and slowing global trade. The Reserve Bank of India (RBI) has accordingly projected GDP growth for FY 2026-27 at around 6.6%-6.9% highlighting risks arising from external demand weakness and cost pressures faced by domestic industries.

2. INDUSTRY STRUCTURE AND DEVELOPMENT

2.1 Global Automobile Industry

The Global Automobile Industry during FY 2025-26 continued its gradual recovery while entering a phase of structural transformation driven by electrification, digitalization, and evolving consumer preferences. Global vehicle sales demonstrated modest growth, during FY 2025-26, reaching approximately 90-92 million units, reflecting stabilization after pandemic-related disruptions, though growth remained uneven across regions due to macroeconomic challenges such as inflation, high interest rates, and geopolitical uncertainties.

The industry experienced mixed regional performance, with emerging markets such as China and India acting as key growth engines, while mature markets in North America and Europe witnessed slower expansion due to affordability constraints and policy shifts. Global car registrations increased by around 3-3.5% in 2025, supported primarily by strong demand in Asia, while developed markets showed only marginal growth.

Global Electric Vehicle (EV) sales exceeded 20 million units in 2025, accounting for nearly 25% of total car sales, At the same time, hybrid vehicles gained significant traction, emerging as a practical transition technology due to affordability considerations and infrastructure limitations.

Technological transformation remained central to the industry, with increasing adoption of Software-Defined Vehicles and Advanced Driver Assistance Systems (ADAS), although commercialization timelines remain gradual.

The sectors medium-term outlook remains driven by innovation, sustainability imperatives, and evolving mobility ecosystems, albeit influenced by macroeconomic and geopolitical headwinds.

2.2 Indian Automobile Industry

The Indian Industry recorded an overall growth of approximately 12% year-on-year, reflecting expansion across key segments including exports taking total production figure from 31 million units to 35 million units in FY 2025-26. Export volumes grew by 24% signaling towards India transforming into global hub for automotive manufacturing. Growing domestic sales is experiencing shift in customer preference towards hybrid and more sustainable tech embedded vehicles.

All segments of the auto industry are expected to maintain their growth momentum in FY 2026-27, supported by stable macroeconomic fundamentals, proactive policy interventions, and continued infrastructure development. Export demand is expected to remain strong, with Made in India vehicles gaining increasing traction in global markets.

The Automotive Industry is witnessing a rapid increase in semiconductor content driven by the growing adoption of Electric Vehicles (EVs). Recognizing the strategic importance of semiconductors, the Government of India has undertaken several initiatives to strengthen the domestic semiconductor and electronics manufacturing ecosystem, including India Semiconductor Mission (ISM), capital support for semiconductor fabrication and ATMP/OSAT facilities, the Electronics Components Manufacturing Scheme (ECMS), liberal 100% Foreign Direct Investment (FDI) policy under the automatic route for electronics manufacturing.

With inflation within the RBIs target band, monetary policy is expected to gradually turn accommodative. The ongoing structural reforms, including improved subsidy targeting and rationalization of tax expenditures, are set to enhance the efficiency of public spending. Progress in logistics, digital infrastructure, and tax administration is expected to facilitate greater private sector investment.

India continues to hold its position as the fastest-growing major economy, though this growth remains supported by robust government capital expenditure.

Automobile Sales

The Indian automobile industry sustained its growth momentum supported by strong domestic demand, policy stability, infrastructure push, and a growing shift towards sustainable mobility.

Automobile Domestic Sales Trends

Category	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26
Passenger Vehicles	27,11,457	30,69,523	38,90,114	42,18,750	43,01,848	46,43,439
Commercial Vehicles	5,68,559	7,16,566	9,62,468	9,68,770	9,58,679	10,79,871
Three Wheelers	2,19,446	2,61,385	4,88,768	6,94,801	7,41,420	8,36,231
Two Wheelers	1,51,20,783	1,35,70,008	1,58,62,771	1,79,74,365	1,96,07,332	2,17,05,974
Quadricycles	(12)	124	725	725	120	4
Grand Total	1,86,20,233	1,76,17,606	2,12,04,846	2,38,57,411	2,56,09,399	2,82,65,519

(Source: SIAM)

Exports showed encouraging trends across segments, particularly in Passenger Vehicles and Two-wheelers, reflecting rising global demand and Indias manufacturing competitiveness.

Category	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26
Passenger Vehicles	4,04,397	5,77,875	6,62,891	6,72,105	7,70,364	9,05,200
Commercial Vehicles	50,334	92,297	78,645	65,818	80,751	94,793
Three Wheelers	3,93,001	4,99,730	3,65,549	2,99,977	3,06,914	4,60,567
Two Wheelers	32,82,786	44,43,131	36,52,122	34,58,416	41,98,403	51,80,429
Quadricycles	3,529	4,326	2,280	4,178	6,422	6,696
Grand Total	41,34,047	56,17,359	47,61,487	45,00,494	53,62,884	66,47,685

(Source: SIAM)

Sales Performance of Passenger Vehicles

The Passenger Vehicle (PV) segment of the Indian automobile industry continued its strong growth trajectory during FY 2025-26, supported by favourable macroeconomic conditions, improved consumer sentiment, and policy-driven cost benefits.

During the year, domestic passenger vehicle sales reached approximately 4.64 million units, registering a growth of about 7.9% over FY 2024-25. This represents the highest-ever annual sales achieved by the segment, reflecting sustained demand momentum across both urban and semi-urban markets.

The growth in Passenger Vehicle segment during the year was primarily driven by improved affordability due to reduction in financing costs and policy support such as GST rationalisation. Strong demand for Utility Vehicles (UVs) continued to dominate the segment, accounting for a major share of total PV sales supported by new product launches with advanced features, technology integration and enhanced safety standards.

Export Performance

Exports of PV also witnessed healthy growth, reaching approx. 0.90 million units, reflecting a growth of approximately 17.5% over the previous year.

Growth in exports was driven by strong demand in emerging markets such as Latin America, Africa and the Middle East, increasing acceptance of India as a global manufacturing hub and expansion into developed markets by select OEMs.

Global Passenger Vehicle sales remained resilient during 2025, with worldwide registrations increasing by approximately 3.5% over the previous year to 77.6 million units supported by continued growth in major markets particularly China, United States, India, Japan, and Germany collectively accounting for about 67% of total motor vehicle sales.

India retained its position as the worlds third-largest automotive market by vehicle sales, underscoring the countrys growing importance in the global automotive industry.

Sales Performance of Two Wheelers

The Two-Wheeler (2W) segment, which constitutes the largest share of the Indian automobile market, demonstrated a strong recovery and sustained growth during the FY 2025-26, supported by improving rural demand, enhanced mobility requirements, and favourable macroeconomic conditions.

During the year, domestic two-wheeler sales reached approximately 21.7 million units, registering a robust growth of around 10.7% over FY 2024-25. This represents the highest-ever annual domestic sales volume for the segment, surpassing the pre-pandemic peak and reflecting broad-based recovery in consumer demand across urban and rural markets.

The growth of the two-wheeler segment during FY 2025-26 was driven by revival in rural demand, supported by improved agricultural income, enhanced affordability, aided by easing inflation, lower financing costs, increased mobility demand, particularly in semi-urban and rural areas.

Emerging Electric Vehicle (EV) Trends

The FY 2025-26 marked a defining phase in Indias transition towards electric mobility, with the Electric Vehicle (EV) ecosystem witnessing accelerated growth, increasing market penetration, and broad-based adoption across segments. The EV industry continued to evolve from a niche segment to a mainstream mobility solution, driven by policy support, rising fuel costs, improving technology, and growing environmental awareness.

Indias EV market recorded a strong growth trajectory during FY 2025-26, with total EV sales crossing 24 lakh units, reflecting a year-on-year growth of approximately 25%. EV penetration increased to around 8.5% of total vehicle sales, up from approximately 7.7% in FY 2024-25. The growth indicates a steady transition towards electrification, although penetration levels remain below long-term policy targets.

This trend reflects a structural shift in the mobility landscape, with EV adoption becoming a key driver of transformation in the automotive industry.

FINANCIAL PERFORMANCE

1. Revenue

Total revenue of ? 1855.04 crore was recorded in FY26 as against revenue of ? 1641.49 crore registering a growth of 13% over the previous year. The total revenue for FY26 includes export revenue of ? 337.08 crore as against ? 326.86 crore in the previous year.

2. Profits

The Company has earned Profit before Interest, Depreciation and Tax (PBIDT before exceptional item) of ? 173.69 crore during FY26 over the previous years PBIDT of ? 164.94 crore. The Profit before Tax of ? 36.17 crore, and Profit after Tax of ? 27.32 crore, were recorded in FY26 registering a growth of 19% over the previous year. The Company remains focused on driving sustainable growth through disciplined cost optimization initiatives and the optimal utilization of its installed capacities, with the objective of enhancing operational efficiency and improving profitability.

3. Earnings Per Share (EPS)

The Basic and Diluted EPS of ? 1/- paid-up share is ? 2.02 for FY26 as against ? 1.69 in the previous year.

4. Dividend

The Companys Directors have recommended a Dividend @55 percent i.e. ? 0.55 per Equity Share of ? 1/- each for FY26 amounting to ? 7.44 crore on the equity share capital of ? 13.53 crore as against a dividend of 50 percent i.e. ? 0.50 per Equity Share of ? 1/- each amounting to ? 6.76 crore in the previous year on the same equity share capital.

5. Reserves & Surplus

The reserves and surplus of the Company stood at ? 675.16 crore as against ? 654.37 crore in the previous year.

6. Loan Funds

Total debt outstanding as on 31st March, 2026 stands at Term Loan & Buyers Credit of ? 473.16 crore and Working Capital Loan of ? 139.75 crore, aggregating to ? 612.91 crore as against Term Loan & Buyers Credit of ? 375.15 crore and Working Capital Loan of ? 178.30 crore, aggregating to ? 553.45 crore in the previous year.

7. Key Financial Ratios

Key Financial Ratios are as mentioned below:

Ratio	Measurement unit	As at 31st March, 2026 Ratio	As at 31st March, 2025 Ratio	Change	Remarks
Current ratio	Times	0.76	0.84	-9%	Not required
Debt-equity ratio	Times	0.90	0.84	7%	Not required
Debt service coverage ratio	Times	0.71	0.91	-22%	Not required
Return on equity ratio	Percentage	4.03%	3.46%	16%	Not required
Inventory turnover ratio	Times	4.71	3.97	19%	Not required
Trade receivables turnover ratio	Times	6.54	5.89	11%	Not required
Trade payables turnover ratio	Times	2.81	2.69	4%	Not required
Net capital turnover ratio	Times	-10.54	-14.58	-28%	Decrease in ratio is on account of increase in revenue from operations.
Net profit ratio	Percentage	1.49%	1.43%	4%	Not required
Return on capital employed	Percentage	5.99%	5.93%	1%	Not required
Return on investment	Percentage	20.10%	39.42%	-49%	Decrease in Return on investment ratio is on account of decrease in dividend income in current year.

INDIAN ACCOUNTING STANDARDS (Ind AS)

The Company, its Subsidiaries and Joint Venture are complying with the applicable Ind AS issued by the Ministry of Corporate Affairs (MCA) from time to time.

RICO EXECUTIVE COMMITTEE (REC)

The Company has an Executive Committee (REC) to provide strategic oversight and drive effective management of its day-to-day operations under the overall supervision of the Managing Director and the Board of Directors. The REC is responsible for translating the Companys strategic priorities into actionable plans, defining long-term business objectives, establishing key performance milestones, and ensuring disciplined execution across the organization.

The REC provides strategic direction, guidance, and the necessary resources to the RICO Leadership Team (RLT) to facilitate the effective implementation of short, medium and long-term business plans. Working in close coordination, the REC and RLT foster a culture of operational excellence, accountability, innovation and cross-functional collaboration, enabling the Company to respond proactively to evolving market dynamics and customer requirements.

The leadership team also plays a critical role in strengthening stakeholder engagement through transparent communication, sound governance practices and consistent execution of the Companys strategic priorities. By maintaining a strong focus on customer centricity, sustainability, risk management and operational discipline, the leadership remains committed to creating long-term value for shareholders while upholding the highest standards of corporate governance and ethical business conduct.

RISKS & CONCERNS

The Company operates in a dynamic and increasingly complex business environment characterised by evolving market conditions, global supply chain interdependencies, changing customer expectations, stringent regulatory requirements and operational risks across its manufacturing and distribution network. Macroeconomic developments, geopolitical events, technological advancements and industry-specific trends continue to influence the operating environment and have a bearing on the Companys business performance.

To effectively manage these uncertainties, the Company has established a robust Enterprise Risk Management (ERM) framework that is integrated with its strategic planning and business decision-making processes. The framework enables systematic identification, assessment, evaluation, prioritisation, mitigation and continuous monitoring of risks that could impact the achievement of the Companys strategic and operational objectives. Appropriate risk mitigation plans, internal controls and governance mechanisms are periodically reviewed to enhance organisational resilience and support sustainable business growth.

The Risk Management Committee, under the oversight of the Board of Directors, periodically reviews the Companys risk profile, evaluates emerging and existing material risks and monitors the effectiveness of mitigation measures. The Committee ensures that appropriate risk management strategies are implemented and remain aligned with the Companys risk appetite, business priorities and evolving external environment.

The Company also leverages Key Risk Indicators (KRIs) as an integral component of its risk monitoring framework. These indicators provide early warning signals and facilitate proactive management of risks across key areas, including market dynamics, supply chain resilience, operational excellence, quality, regulatory compliance, cybersecurity, information security, financial controls, and business continuity. Regular monitoring of KRIs enables timely management intervention, strengthens organisational preparedness, and supports informed decision-making, thereby reinforcing the Companys commitment to long-term value creation and sustainable growth.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains a robust internal control framework over financial reporting, supported by well-defined processes, policies and procedures to ensure the accuracy, reliability and integrity of its financial statements. The framework is designed to ensure compliance with applicable laws and regulations, adherence to established processes, safeguarding of assets and prevention and detection of fraud.

The Audit Committee periodically reviews the reports of the Internal Auditors, evaluates the adequacy and effectiveness of the internal control framework and monitors the implementation of recommendations and corrective actions. The Committee also interacts regularly with the Statutory and Internal Auditors to obtain their assessment of the Companys internal control systems and keeps the Board of Directors informed of significant observations, where appropriate.

HUMAN RESOURCES

At RICO, we firmly believe that our people are our greatest strength and the foundation of our long-term success. As the business landscape continues to evolve, we remain committed to creating a future-ready organization by investing in our workforce, strengthening capabilities, and fostering a culture that promotes innovation, inclusion, and excellence. During the year, we continued to enhance our learning and development ecosystem while accelerating the adoption of digital technologies and Artificial Intelligence across key people processes, security systems, and EHS functions. These initiatives are enabling greater efficiency, strengthening decision-making, and supporting employees in building the skills required for the future workplace.

Our commitment to Diversity, Equity and Inclusion remains integral to our people strategy. We strive to provide an environment where every employee feels respected, empowered, and valued. By focusing on the entire employee lifecycle, from onboarding and capability building to career progression, wellbeing, and rewards, we continue to strengthen employee engagement and organizational effectiveness.

A key milestone during the year was the advancement of our transformation agenda through strategic collaborations with EY, Mazars, Mynd and ICAM, which enhanced our capabilities in governance, talent management, digital learning, and workforce planning. The implementation of SAP S/4HANA under our flagship Shifting Gears initiative marks a significant step in our digital transformation journey, strengthening HR processes, compliance management, ESG integration, and data-driven decision-making across the organization.

Leadership development continues to remain a strategic priority. Through focused leadership interventions and enterprise-wide engagement platforms, including the India Townhall, we reinforced our renewed vision of becoming the Trusted Engineering and Manufacturing Solutions Partner Creating Value for the Stakeholders while aligning our teams with the aspirations of our 3X Mission 2030.

Succession planning continues to be one of our most critical talent management processes. We strongly believe in developing and nurturing homegrown leadership talent while selectively bringing in external expertise to support new capabilities and business expansion opportunities. This balanced approach enables us to maintain organizational continuity while enriching our talent pool with diverse experiences and perspectives.

In line with our growth strategy, we have continued to strengthen our talent pipeline by recruiting young engineering professionals from reputed institutions and expanding opportunities for diploma and technical graduates across our manufacturing operations. These initiatives are helping us build a skilled workforce equipped to deliver higher productivity, operational excellence, and superior quality standards. We are also leveraging emerging workforce models, including Fixed Term Employment, to enhance organizational agility and meet evolving business requirements.

Creating a culture of engagement, innovation, and sustainability remains central to our employee value proposition. Alongside our people initiatives, we continue to support environmental stewardship through programs such as reforestation and other sustainability-focused interventions, reflecting our commitment to responsible and sustainable growth.

Our social responsibility efforts continue to create meaningful impact in the communities we serve. Through the RICO Medicare Centre at Pathredi, we provide accessible healthcare services to thousands of beneficiaries annually through OPD consultations, mobile healthcare services, and specialized medical camps. Our community initiatives also support education, skill development, and the empowerment of women and youth, enabling broader socio-economic development.

We uphold the highest standards of ethics, integrity, and respect for human rights across all our operations. Our robust governance framework, supported by transparent policies and effective grievance redressal mechanisms, strengthens employee trust and reinforces our commitment to a safe, fair, and responsible workplace. We remain fully compliant with applicable Labour laws and continue to maintain constructive engagement with employee and worker representatives.

Our people-centric practices and operational excellence have been recognized through several prestigious industry awards and customer recognitions during the year. These accolades reflect the dedication, capability, and commitment of our employees, who continue to drive RICOs success and reputation in the marketplace.

As we move forward, we remain confident in our transformation journey. Guided by our people-first philosophy, strengthened by technology, and driven by a culture of continuous improvement, we are well-positioned to create sustainable value for all stakeholders while building a resilient, agile, and future-ready organization.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

Safety, Health, and Environmental responsibility form the foundation of our business excellence journey, enabling us to protect our people, preserve the environment, enhance operational performance, and create sustainable value for all stakeholders. EHS principles embedded into every aspect of our operations, safeguard our people, minimize environmental impact, strengthen operational resilience.

RICO is committed to maintaining a safe, healthy, and environmentally responsible workplace along with conserving energy, reducing waste, minimizing emissions, and promoting sustainable practices. All manufacturing facilities within the RICO Group are certified under ISO 14001 Environmental Management System and ISO 45001 Occupational Health & Safety Management System, reflecting our commitment to globally recognized EHS practices.

Safety remains a core organizational value and an integral component of our operational excellence framework. We are committed to providing a safe and healthy workplace through effective risk management, robust safety systems, and a culture of continuous improvement. This commitment is driven through active leadership involvement supported by established safety protocols, including permit-to-work systems, Lockout/Tagout (LOTO) procedures, fire and emergency preparedness programs, visitor safety management, regular safety inspections, audits, training initiatives, and mock emergency response drills.

Employees and workforce are encouraged to proactively identify, report, and address unsafe conditions, near-miss incidents, and potential hazards. This preventive and participative approach enables us to strengthen risk management practices and promote a safe working environment for all stakeholders. Environmental Health and Safety Committees are constituted at each manufacturing location with equal representation from management and the workforce. These committees play a vital role in reviewing safety performance, identifying emerging risks, driving corrective actions, and fostering employee participation in the continuous improvement of workplace health and safety standards.

Employee well-being encompasses both physical and mental health. Regular health check-ups, ergonomics awareness, stress management initiatives, and work-life balance programs contribute to a healthier and more engaged workplace with clear mission & vision. Our focus remains on preventing incidents, protecting the environment, and promoting the well-being of all employees, contractors, and stakeholders. Employees are also encouraged to participate in sports and recreational activities through the Companys well-equipped sporting facilities, supporting physical fitness and overall wellbeing.

Safety is at the core of our operations and decision-making processes. Through sustained leadership commitment, active employee participation, and the continuous strengthening of our EHS systems and processes, the Company continued to conduct focused awareness and engagement campaigns on critical topics such as fire safety, road safety, emergency preparedness, workplace ergonomics, and safe behavioral practices. We continuously invest in safety management systems, employee awareness, and risk mitigation measures to protect our workforce, ensure operational resilience, and support sustainable business growth.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

Environmental, Social and Governance (ESG) principles are at the core of RICOs vision for sustainable and responsible growth. They provide the foundation for integrating sustainability into business strategy, enabling the Company to evaluate its environmental and social impacts, uphold strong governance practices, and identify emerging risks and opportunities that drive long-term value creation.

RICO is committed to continuously strengthening its ESG performance and embedding sustainability across its operations and value chain. Through responsible governance, strategic climate action and collaborative stakeholder engagement, the Company aims to create lasting value for its stakeholders while contributing to a more sustainable, resilient and responsible future.

Environmental

RICO is committed to embedding environmental sustainability into its business operations through a focused approach to climate action, resource efficiency and responsible environmental stewardship. As part of this commitment, the Company has undertaken a comprehensive assessment of its Scope 1, Scope 2 and Scope 3 Greenhouse Gas (GHG) emissions to identify emission hotspots, prioritize reduction opportunities and establish a structured decarbonization roadmap which provides a science-informed framework to accelerate emissions reduction across RICOs operations and value chain.

For Scope 1 emissions, RICO is driving the transition to lower-carbon operations by phasing out high-carbon fuels through the elimination of Furnace Oil (FO), replacing Light Sulphur Heavy Stock (LSHS) with biodiesel, converting PNG-based furnaces to Electric Arc Furnaces (EAF), replacing R-22 refrigerants with R-32 systems, introducing Compressed Biogas (CBG) blending in PNG, increasing biodiesel blending in High-Speed Diesel (HSD), and progressively electrifying its corporate fleet. To address Scope 2 emissions, the Company has strengthened its renewable energy portfolio through multiple Power Purchase Agreements (PPAs) and on-site solar installations, while planning to further expand renewable electricity procurement in line with the ongoing decarbonization of Indias electricity grid.

Recognizing that the majority of climate impacts extend beyond its direct operations, RICO also completed its Scope 3 emissions assessment, identifying Purchased Goods and Services (Category 1) and Fuel- and Energy-related Activities (Category 3) as the most significant contributors to value chain emissions. These insights provide a clear strategic direction for enhancing sustainable sourcing practices, strengthening supplier engagement and fostering collaborative decarbonization across the value chain.

Complementing its climate initiatives, RICO continues to improve operational efficiency through energy conservation measures such as the adoption of energy-efficient lighting, minimization of compressed air losses, modernization of equipment and continuous optimization of energy consumption. The Company also remains focused on responsible water stewardship by treating and reusing wastewater through in-house Effluent Treatment Plants (ETPs) and Sewage Treatment Plants (STPs), with recycled water utilized for non-potable applications including gardening and facility cleaning. These initiatives, result in an improvement in water-use efficiency, with water intensity decreasing from 1.00 KL per INR lakh of turnover in the previous year to 0.98 KL per INR lakh of turnover during the current year.

RICO further advances its environmental performance by embedding the principles of reduce, reuse and recycle into its waste management practices, ensuring 100% disposal of hazardous waste through authorized vendors and driving process improvements to minimize waste generation at source. Supported by continuous environmental monitoring, efficient resource utilization, employee engagement and regular environmental audits, RICO reinforce commitment to responsible resource management, regulatory compliance and long-term environmental resilience.

Social

People are at the heart of RICOs long-term success, and the Company remains committed to fostering a safe, inclusive and empowering workplace where every employee can thrive. The Company actively promotes diversity, equity and inclusion across all levels of the organization, including enhanced representation at the Board level, while continuing to strengthen workforce diversity across its operations. Through comprehensive and continuous learning initiatives, RICO equips its employees with the technical expertise, leadership capabilities and future-ready skills required to succeed in an evolving business landscape.

RICO also remains committed to providing fair compensation, equal employment opportunities and a comprehensive range of employee welfare benefits that support the holistic wellbeing of its workforce.

Governance

Strong governance forms the foundation of RICOs sustainable growth strategy, enabling the Company to create long-term value while maintaining the highest standards of integrity, transparency and accountability. Reaffirming its commitment to responsible business conduct, RICO continues to strengthen its governance framework by enhancing corporate governance practices, reinforcing enterprise risk management and fostering a culture of ethical decision-making across the organization.

The Company places particular emphasis on proactively identifying and mitigating business risks, managing potential conflicts of interest and ensuring robust compliance with applicable laws, regulations and internal policies. RICO also remains committed to promoting Board diversity, maintaining transparent and performance-linked executive remuneration, and strengthening oversight through effective governance mechanisms.

RESEARCH AND DEVELOPMENT (R&D)

The Companys level of adaptability is actively driven by a remarkable R&D infrastructure. We focus intensely on in-house product development and localisation, ensuring innovations meet OEMs requirement. R&D team provides technical solutions with a focus on offering the quality products. Our in-house R&D capability for Die design, Die manufacturing, Special Purpose Machine (CNC) building and Automation enhanced customer confidence and makes RICO a Supplier of Choice.

Our R&D team continuously works and provides innovative/ VA/VE Solutions keeping cost in focus without compromising the product performance.

We have successfully developed various components for Hybrid and Electric Vehicles, such as housings and covers for transmission, E-axles, Electric motor and differential cases. For IC engines team has developed components such as Cylinder lock, Cover Valves, Timing cases, Oil Pans, Fly Wheels etc. For 2-wheelers, team has successfully designed and developed many clutches, got approvals from customers, and started production.

AUTOMATION AND DIGITAL TRANSFORMATION

RICO continues to advance its automation and digital transformation agenda through the progressive adoption of automation, digital technologies, Industrial Internet of Things (IIoT) and AI-enabled solutions (Artificial Intelligence) across its operations and business processes. These initiatives encompass robotics, automated process controls, connected equipment, digital monitoring systems and product traceability solutions, with the objective of enhancing operational efficiency, product quality, asset reliability, workplace safety, and informed decision-making.

RICO is also leveraging digital solutions across key business functions to improve process effectiveness, customer responsiveness and organisational agility, while continuing to reinforce its cybersecurity, information security and EHS frameworks.

Above initiatives are being implemented in a phased and disciplined manner, guided by business priorities, operational requirements, technology readiness, customer expectations and long-term strategic objectives.

DATA INTEGRITY AND SECURITY

Cyber Security Compliance Management is governed by a robust Information Security Management System (ISMS) comprising specialized policies, including data privacy and risk management, aiming to protect against AI-enabled threats. RICO has a comprehensive Information Security Policy that emphasizes continuous improvement, maintaining data integrity, proactive threat monitoring, and establishing responsibilities across the workforce.

The information security management programme includes business continuity planning, vulnerability analysis, internal audits, and an annual external audit aligned with ISO 27001:2022 certified, TISAX certified. Measures also include structured incident reporting, escalation protocols, employee awareness training, and strong controls to protect third-party data from unauthorised access.

To ensure robust data security and protect your privacy, we have adopted advanced features like Multi-Factor Authentication (MFA), Data Loss Prevention (DLP), and Advanced Threat Protection (ATP).

RICO remains committed to evaluating emerging digital technologies that strengthen operational excellence, governance, cybersecurity, innovation and sustainable long-term value creation while delivering enhanced value to customers and other stakeholders.

CAUTIONARY NOTE

This report contains certain forward-looking statements. All such statements are subject to risks and uncertainties. Actual results could differ materially from those expressed or implied.