Rico Auto Industries Ltd Management Discussions

1. ECONOMIC OVERVIEW

1.1 Global Economic Overview

The year 2024 underscored the cyclical nature of global economic recovery, which was marked by gradual stabilization amidst continuous external challenges. The global economy expanded by 3.3% in 2024, which was slightly lower than the 3.5% growth recorded in 2023. Global inflation showed signs of moderation, averaging 5.7% in 2024, which was down from the peak of 8.6% in 2022. Thus, indicating a gradual return towards the central bank targets. This stabilization came in after a period of exceptional global disruptions. However, despite the easing inflationary pressures, structural shifts in global trade and evolving policy landscapes have reintroduced economic

uncertainties, causing a possible challenge to the recovery momentum.

Looking ahead, global growth is forecasted to decelerate to 2.8% in 2025 before improving marginally by 0.2% to reach 3.0% in 2026. These projections show a downward revision of 0.5% for 2025 and 0.3% for 2026, largely reflecting the adverse impacts of new trade measures. These revisions are broad-based across economies, which are driven by both the direct implications of changes in the policies and the indirect impacts through weakened trade linkages, subdued business sentiment and rising uncertainty.

Advanced economies continue to demonstrate resilience domestically but are facing increasing external pressures from trade disputes and shifting policies. Meanwhile, the emerging and developing economies remain vulnerable to spillovers from reduced external demand, global disinflation efforts, and tighter financial conditions.

Source: International Monetary Fund (IMF), World Economic Outlook, April 2025

Outlook

The global economy is projected to expand at an average rate of 3.2% over the next 5 years, remaining below the pre-pandemic historical average of 3.7% (2000-2019). This reflects a weaker structural momentum and continued external headwinds, with growth projections downgraded across several advanced and emerging economies compared to 2020 forecasts.

Global trade growth is expected to be around 1.7% in 2025, revised down by 1.5% compared to the World Economic Outlooks previous forecast. This revised estimate primarily reflects the impact of rising tariff barriers and the gradual dissipation of earlier cyclical gains in goods trade. Elevated trade policy uncertainty has reinforced the need for renewed efforts toward regional and multilateral trade frameworks. Agreements encompassing areas such as digital trade, services, and investment are expected to support greater predictability, productivity, and resilience.

The global headline inflation is projected to decline to 4.3% in 2025 and further to 3.6% in 2026. 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.

1.2 Indian Economic Scenario

In fiscal year 2026, the global economy faces great uncertainty driven by trade policy shifts in terms of higher tariffs being imposed by USA across the globe and a potential slowdown in growth. Despite these external challenges, India remains one of the most resilient economies because of its huge domestic market, an emerging middle class thats getting larger and favourable macro economic factors. IMF forecasts Indias real GDP growth to be at 6.2% in 2025, slightly lower than its earlier estimate, due to global headwinds. Strong macroeconomic fundamentals,

ongoing policy support and steady rural consumption are expected to sustain the growth momentum. Strategic reforms in infrastructure, digitisation and financial inclusion continue to enhance Indias growth potential and reinforce its role in the global economy.

The Indian government has increased capital expenditure to INR 11.21 lakh crore (3.1% of GDP) in FY2026, which includes INR 1.5 lakh crore in interest-free loans to states. This underscores the emphasis of the government on infrastructure-led growth and strengthening state-level capacities.

Indias fiscal approach remains focused on reform, resilience, and inclusive development. In a volatile global setting, these priorities support macroeconomic stability and long-term growth.

The FDI inflows in FY 2024-25 reached USD 81.04 billion (provisional), 14% growth compared to the previous year.

Indias cumulative FDI between FY 2014-25 stood at USD 748.78 billion, hence accounting for ~70% of total inflows over the last 25 years. This reflects the sustained investor confidence in the Indian economy.

Outlook

The Union Budget for FY 2025-26 underscores a measured path to fiscal consolidation, aiming to reduce the fiscal deficit from 4.8% to 4.4% of GDP. 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 largely supported by robust government capital expenditure. Reflecting easing price pressures and the expectation of a favourable monsoon, the RBI has revised its inflation outlook for FY 2026 to 3.7%, from 4% earlier.

2. INDUSTRY STRUCTURE AND DEVELOPMENT

2.1 Global Automobile Industry

In 2024, the global sales of passenger and commercial vehicles reached 95.3 million units, registering a growth of 2.7% over 2023 (92.9 million units) and marking the highest volume recorded since the pre-pandemic peak in 2019. Over the five years from 2019 to 2024, the industry reported a cumulative growth of 3.5%.

Passenger vehicle sales stood at 67.5 million units, up 3.3% year-on-year, while commercial vehicle sales increased by 1.2% to 27.8 million units. India ranked third globally in passenger vehicle sales with a volume of 4.27 million units, following China and the United States. In overall vehicle sales (passenger and commercial combined), India held the third position with total volumes reaching 5.2 million units.

(Source: OICA - Organisation Internationale des Constructeurs d Automobiles)

2.2 Indian Automobile Industry

The Indian automotive industry is projected to reach a market size of USD 300 billion by 2026, driven by growing domestic demand, export opportunities, and a supportive policy environment. India has emerged as the worlds one of the largest manufacturer of electric two-wheelers and three- wheelers, reinforcing its position as a key player in the global automotive landscape.

India continues to exhibit significant headroom for growth in the passenger vehicle segment. With a car penetration rate of just 24 per 1,000 people-among the lowest across the top 13 global markets and well below the world average of 314 per 1,000 people-the long-term potential remains robust.

Government initiatives, notably the Production-Linked Incentive (PLI) Scheme and the FAME India programme, have played a pivotal role in promoting local manufacturing and attracting foreign direct investment. The PLI scheme for the automotive and auto components sector received an allocation of INR 2,818.9 crore (USD 325.6 million) for FY 2025-26, and its tenure was extended by one year, now applicable until March 31,2028.

The Industry continues to benefit from steady domestic demand, underpinned by sustained government capital expenditure and infrastructure investments. Indias position as a global sourcing hub has also supported robust export growth, particularly to markets in Africa and neighbouring countries.

All segments of the auto industry are expected to maintain their growth momentum in FY 2025-26, 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.

Automobile Sales and Production Trends

The Indian automobile industry sustained its growth momentum in FY 2024-25, supported by strong domestic demand, policy stability, infrastructure push, and a growing shift towards sustainable mobility.

Passenger Vehicle sales reached an all-time high of 4.3 million units, growing 2% YoY, while Three-wheeler volumes rose 6.7% YoY to 7.4 lakh units-also the highest ever. Two-wheelers recorded a robust 9.1% YoY growth with sales of 19.6 million units, driven by improved rural sentiment and favourable consumption trends. Commercial Vehicles witnessed a marginal decline of 1.2% YoY to 9.6 lakh units; however, the MHCV subsegment remained resilient, registering 1% growth. The Tractor segment posted a strong recovery, with retail sales rising 7% and offtake volumes up 8% YoY, supported by a healthy rabi harvest and improved farm sentiment.

Exports showed encouraging recovery across segments, particularly in Passenger Vehicles and Two-wheelers, reflecting rising global demand and Indias manufacturing competitiveness. Government initiatives like the PM E-Drive and PM e-Sewa schemes reinforced the long-term vision for clean and inclusive mobility. Alongside structural policy support, measures such as income tax reforms and RBIs accommodative stance are expected to further enhance consumer confidence and sustain industry growth.

Automobile Production Trends (In Numbers)

Category	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
Passenger Vehicles	40,28,471	34,24,564	30,62,280	36,50,698	45,77,487	49,01,840	50,61,164
Commercial Vehicles	11,12,405	7,56,725	6,24,939	8,05,527	10,35,626	10,67,504	10,32,645
Three Wheelers	12,68,833	11,32,982	6,14,613	7,58,669	8,55,696	9,96,159	10,50,020
Two Wheelers	2,44,99,777	2,10,32,927	1,83,49,941	1,78,21,111	1,94,59,009	2,14,68,527	2,38,83,857
Quadricycles	5,388	6,095	3,836	4,061	2,897	5,006	6,488
Grand Total	3,09,14,874	2,63,53,293	2,26,55,609	2,30,40,066	2,59,30,715	2,84,39,036	3,10,34,174

(Source: SIAM)

Domestic Sales Trends (In Numbers)

Category	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
Passenger Vehicles	33,77,389	27,73,519	27,11,457	30,69,523	38,90,114	42,18,746	43,01,848
Commercial Vehicles	10,07,311	7,17,593	5,68,559	7,16,566	9,62,468	9,67,878	9,56,671
Three Wheelers	7,01,005	6,37,065	2,19,446	2,61,385	4,88,768	6,91,749	7,41,420
Two Wheelers	2,11,79,847	1,74,16,432	1,51,20,783	1,35,70,008	1,58,57,012	1,79,74,365	1,96,07,332
Quadricycles	627	942	(12)	124	725	725	120
Grand Total	2,62,66,179	2,15,45,551	1,86,20,233	1,76,17,606	2,11,99,087	2,38,53,463	2,56,07,391

(Source: SIAM)

Emerging Electric Vehicles Trends

The global Electric Vehicle (EV) market, valued at approximately USD 250 billion in 2021, is projected to expand nearly five fold to USD 1,318 billion by 2028, reflecting strong structural growth drivers. In line with this global transition, the Government of India launched the PM E-DRIVE scheme, with an outlay of USD 1.3 billion (INR 10,900 crore), effective till March 31,2026. The scheme aims to accelerate EV adoption, expand charging infrastructure, and strengthen domestic manufacturing capabilities. These initiatives are expected to reduce crude oil dependence, improve the trade balance, and contribute to environmental sustainability.

In FY 2024-25, total EV registrations in India rose by 16.9% YoY to 1.97 million units. Electric Two-Wheelers led the segment with 11.5 lakh units, registering a 21.2% YoY growth, while Electric Three- Wheelers saw a 10.5% YoY rise with registrations nearing 7 lakh units. Electric Passenger Vehicle registrations crossed 1 lakh units, growing by 18.2% over the previous year. Complementing these efforts, the Voluntary Vehicle Modernization Program continues to support the phased transition away from older, polluting vehicles, enhancing both environmental outcomes and road safety. Automobile Exports Trends

India continues to offer a compelling cost advantage in automotive manufacturing, with operational savings of

10-25% compared to Europe and Latin America. Backed by strong engineering capabilities, scalable production, and improving quality standards, India is emerging as a preferred global manufacturing hub. The country is also on track to be amongst the largest Electric Vehicle market by 2030, with an estimated investment opportunity exceeding USD 200 billion over the next 8-10 years.

During FY 2024-25, total automobile exports grew by 19.2% YoY, reflecting robust global demand and rising acceptance of India-manufactured vehicles in international markets. Passenger Vehicle exports reached an all-time high of

0.77 million units, registering a growth of 14.6% YoY, led by increased traction in Latin America, Africa, and select developed markets. Two-Wheeler exports rose by 21.4% to

4.2 million units, supported by new model launches and stable demand across key geographies. Three-Wheeler exports grew by 2.3% to 3.1 lakh units, driven by replacement demand and improved financing availability. Commercial Vehicle exports recorded strong growth of 23% to 0.81 lakh units - the highest ever, supported by global freight requirements and enhanced connectivity. Notably, the segment benefited from increased exports of globally benchmarked models manufactured in India, with select OEMs entering developed markets.

Automobile Exports Trends (In Numbers)

Category	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
Passenger Vehicles	6,76,192	6,62,118	4,04,397	5,77,875	6,62,891	6,72,105	7,70,364
Commercial Vehicles	99,933	60,379	50,334	92,297	78,645	65,816	80,986
Three Wheelers	5,67,683	5,01,651	3,93,001	4,99,730	3,65,549	2,99,977	3,06,914
Two Wheelers	32,80,841	35,19,405	32,82,786	44,43,131	36,52,122	34,58,416	41,98,403
Quadricycles	4,400	5,185	3,529	4,326	2,280	4,178	6,422
Grand Total	46,29,049	47,48,738	41,34,047	56,17,359	47,61,487	45,00,492	53,63,089

(Source: SIAM)

2.3 Indian Auto Component Industry

Indias auto components sector is projected to grow by 7-9% in FY 2024-25, maintaining momentum from the previous year. The growth will be primarily driven by sustained demand from two-wheelers and passenger vehicles, especially utility vehicles, which together account for nearly 50% of the sectors revenue. Modest contributions from the commercial vehicle and tractor segments (around 17%) and a stable aftermarket (15% share, growing at 5-7%) are expected to provide additional support.

Export performance, however, may remain subdued due to softer demand in key markets such as the US and Europe, which collectively contribute 60% of Indias auto component exports. The sectors operating margins are expected to remain stable at 12-12.5%, supported by a rising share of high- margin, technology-intensive products-such as ADAS modules, infotainment systems, and advanced braking systems-which now contribute approximately 27% of revenue.

Easing raw material costs, particularly for steel, aluminium, and plastics, are also expected to support profitability. However, potential tariff increases by the US could pose risks to margin stability, with firms highly exposed to that market likely to face a margin impact of 125-150 basis points.

The capital expenditure in the Indian auto components sector remains strong, with industry investments of INR 22,000 crore focused on EV technologies and precision engineering.

FINANCIAL PERFORMANCE

1. Revenue

Total revenue of Rs1641.49 crore was recorded in FY25 as against revenue of ^1682.39 crore in the previous year. The total revenue for FY25 includes export revenue of ^326.86 crore as against Rs426.23 crore in the previous year, a reduction of 23 percent in exports.

2. Profits

The Company has earned Profit before Interest, Depreciation and Tax (PBIDT) of Rs164.94 crore during FY25 over the previous years PBIDT of ^192.38 crore. The Profit before Tax of Rs34.48 crore, and Profit after Tax of Rs22.91 crore, were recorded in FY25. The Company is focused to take cost reduction initiatives, optimum ulilisation of its installed capacities to improve the profitability for sustained growth.

Key Financial Ratios

Key Financial Ratios are given below:

3. Earnings Per Share (EPS)

The Basic and Diluted EPS of Rs1/- paid-up share is ^1.69 for FY25. The previous years Basic and Diluted EPS was Rs2.28 on Re.1/- paid-up share.

4. Dividend

The Companys Directors have recommended a Dividend @50 percent i.e. TO.50 per Equity Share of Rs1/- each for FY25 amounting to Rs6.76 crore on the equity share capital of ^13.53 crore as against a dividend of 60 percent i.e. TO.60 per Equity Share of Rs1/- each amounting to Rs8.12 crore in the previous year on the same Equity Share Capital.

5. Reserves & Surplus

The reserves and surplus of the Company stood at Rs654.37 crore as against Rs643.71 crore in the previous year.

6. Loan Funds

Total debt outstanding as on 31 st March, 2025 stands at Term Loan & Buyers Credit of Rs375.15 crore and Working Capital Loan of ^178.30 crore, aggregating to ^553.45 crore as against Term Loan & Buyers Credit of Rs341.20 crore and Working Capital Loan of Rs202.33 crore, aggregating to ^543.53 crore in the previous year.

Ratio	Measurement unit	As at 31 s1 March, 2025	As at 31 s1 March, 2024	Change	Remarks
		Ratio	Ratio
Current ratio	Times	0.84	0.85	-1%	NA
Debt-equity ratio	Times	0.84	0.83	2%	NA
Debt service coverage ratio	Times	0.91	1.16	-21%	NA
Return on equity ratio	Percentage	3.46%	4.78%	-28%	Decrease in return on equity ratio is on account of decrease in net profit after tax in current year.
Inventory turnover ratio	Times	3.97	4.11	-4%	NA
Trade receivables turnover ratio	Times	5.89	5.18	14%	NA
Trade payables turnover ratio	Times	2.69	2.58	4%	NA
Net capital turnover ratio	Times	-14.58	-16.21	-10%	NA
Net profit ratio	Percentage	1.43%	1.87%	-24%	N/A
Return on capital employed	Percentage	5.93%	7.08%	-16%	N/A
Return on investment	Percentage	39.42%	25.36%	55%	Increase in Return-on investment ratio is on account of increase in interest and 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 drive day to day affairs accountable to the Managing Director and Board of Directors for business performance. REC is responsible

for defining long-term business goals, major milestones, and developing plans for seamless execution. Provide necessary support and resources to Rico Leadership Team (RLT) in effectively executing the short/mid-term operational plans. While RLT is responsible for ensuring compliance and adherence to internal controls, REC holds the ultimate responsibility of monitoring and guaranteeing business performance with high level of ethics, sustainability and creating value for each stakeholder.

RISKS & CONCERNS

The operations of the Company are largely dependent on the volatility and cyclical nature of the Industry, geopolitical equilibrium are major factors affecting the growth of the Company. General economic conditions impact the industry at large and in turn our operations as well. The Risk Management Committee of the Company on frequent intervals assess all identified material subjects that are directly connected to the risks, formulated comprehensive mitigation strategies to effectively address these risks. Our Key Risk Indicators (KRIs) are vital metrics used to monitor potential risks that may affect our business objectives including market dynamics, operational efficiency, compliance, cybersecurity and business continuity. They serve as early warning signals, allowing for proactive risk identification and mitigation. By continuously tracking these indicators, we ensure timely intervention and effective risk mitigation.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Our Company has robust internal controls over financial reporting encompassing its processes, policies, and procedures to ensure the accuracy, reliability, and integrity of its financial statements. These controls are designed to ensure compliance with applicable laws and regulations, process adherence, safeguard assets and prevent fraud. The Companys Audit Committee is responsible for reviewing the Report submitted by the Internal Auditors. Suggestions for improvements are considered, and the Audit Committee follows up on the implementation of corrective actions. The Audit Committee also invites the Statutory and Internal Auditors for regular meetings to ascertain their views on the adequacy of internal control systems and keeps the Board of Directors informed of its observations from time to time.

HUMAN RESOURCES

RICO believes at its core that the Human Resource are its invaluable asset, we are committed to continuously enhance learning and development opportunities to support our employees growth plans and career aspirations.

Rico is fostering the culture of diversity, equity and inclusion where everyone feels empowered and everyones work is valued. We continue to focus on enhancing employees experience from onboarding to benefits and wellness programmes. Our focus is to build expertise and talent pool to drive our business forward and be future-ready organisation. RICO has laid a strategic foundation to drive transformational changes year on year by collaborating with reputed partners such as EY, Mazars, and valued customer MSIL for upgrading our online learning platform and advance manpower planning. This partnership enables the Company to effectively leverage external expertise across key dimensions of the business.

The S4 Hana project under the umbrella of "Shifting Gears" initiative has been a comprehensive response to the evolving business landscape, embracing emerging technologies and best practices. RICO has a strong emphasis on organizational excellence, HR automation and digitalization, ESG integration, and compliance automation. RICO is well -positioned to remain competitive and sustainable in an increasingly dynamic global environment.

Furthermore, recognizing employees ideas reinforces a culture of engagement and innovation. Continued reforestation efforts is our strong commitment for sustainability. Internal & external initiatives ensure that every team member and community is valued, and RICO believes in inclusive growth.

We set consistent standards across business practices to prevent and zero tolerance to any form of human rights violations or abuses. This commitment is reflected in the Rico Groups policies and day-to-day actions across its workforce,

business partners, communities, and the regions where it operates.

We have internal mechanism to redress grievances on human rights. A robust grievance mechanism helps in having a stronger and stable workforce. It helps resolve all concerns and facilitate in communicating people suggestions to the management.

We are confident, we are on the right path of transformation.

ENVIRONMENT, HEALTH AND SAFETY (EHS)

Environment, Health and Safety (EHS) is the set that studies and implements the practical aspects of maintaining Environment, Employees Health and Safety at workplace.

The Company is committed to the highest standards and continual improvement in the Environment, Occupational health and Safety with all applicable laws and customer requirements. All units and locations of the Rico Group are certified under the ISO 45001 OHS Management System. Safety is one of the Rico Groups top priorities, and we are deeply committed to establishing a culture that promotes safety and personal accountability at all levels. Emphasis is placed on individual responsibility, supported by well-established systems and protocols such as work permit procedures, employee training, Lockout/Tagout (LOTO) processes, safety inspections, audits, and periodic assessments. All employees direct of indirect are encouraged and expected to report not only accidents but also near-miss incidents and potential hazards.

OHS Committees are constituted at each plant. These committees maintain equal representation from the workforce, ensuring a balanced and inclusive approach to safety governance. The OHS Committees play a critical role in the development and implementation of safety best practices, identifying and minimizing risks, and providing a structured platform for employees to voice concerns and propose solutions related to OHS.

RICO focuses on Employees wellness. Medical checkup camps are organised for employees every year. Health talks are arranged for increasing awareness amongst people about good health, nutrition and exercise. We also encourage employees to engage in various sports activities like cricket, badminton, table tennis as we have well equipped sports complex in our corporate campus. Employee engagement campaigns conducted on key health and safety topics such as fire safety, road safety, emergency evacuation, and workplace ergonomics.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

ESG principles form a core part of RICOs long-term vision for sustainable and responsible growth. ESG serves as a robust framework for evaluating the Companys practices, performance, and impact across critical dimensions of sustainability, ethics, and stakeholder well-being. It also provides an important lens through which to assess emerging business risks and opportunities.

As part of its sustainability roadmap, the Company carried out an ESG due diligence and evaluated its GHG emissions profile to identify key impact areas and opportunities for improvement. With a long-term goal of achieving carbon neutrality by 2050, the Company has begun realigning several of its key initiatives to ESG-specific guidelines. Strategic efforts are underway to enhance energy efficiency, transition to cleaner technologies, and increase the share of renewable energy in its operations. In the coming years, the Company will continue to strengthen its ESG performance through focused actions in areas such as product innovation, responsible water and waste management, optimized supply chains, occupational health and safety, and community engagement.

Rico Auto also places a strong emphasis on social impact, with active efforts to promote employee well-being, diversity and inclusion, and equitable growth. Governance continues to remain a key enabler, with the Company reinforcing transparency, ethical conduct, and board-level diversity to build trust and resilience.

Key ESG priorities have been identified under the three core pillars: Environmental, Social, and Governance, and the Company has initiated several projects aligned to these pillars. As RICO evolves with the changing global sustainability landscape, it remains deeply committed to advancing its ESG journey and delivering long-term value to all stakeholders.

Environmental

RICO remains committed to advancing its environmental sustainability goals through targeted actions across key material areas. The Company has conducted a comprehensive assessment of its Scope 1 and Scope 2 greenhouse gas (GHG) emissions to identify major sources and opportunities for reduction. As part of its decarbonization strategy, it has installed solar panels at multiple facilities, significantly lowering its carbon footprint. To improve energy efficiency, the Company has undertaken initiatives such as upgrading to energy-efficient lighting, minimizing compressed air losses, and modernizing equipment to reduce energy intensity. In water management, RICO conserves freshwater by treating and reusing wastewater through in-house Effluent and Sewage Treatment Plants, using the recycled water for non-potable applications like gardening and cleaning. The Company has also advanced in waste management by adopting reduce, reuse, and recycle principles, ensuring 100% disposal of hazardous waste through authorized vendors and implementing process improvements to minimize waste generation at source. Additionally, resource efficiency efforts have been directed at optimizing raw material and energy usage across operations. These initiatives are supported by continuous monitoring, employee engagement, and regular audits, reflecting the Companys ongoing commitment to environmental responsibility, regulatory compliance, and alignment with global sustainability standards.

Social

RICO places strong emphasis on social responsibility, with a focus on workplace health and safety, inclusive growth, and ethical supply chain practices. The Company actively promotes diversity and inclusion at all levels, including enhanced representation at the Board level, and is steadily increasing workforce diversity across its operations. To support employee development, RICO has institutionalized comprehensive and continuous training programs aimed at upgrading skills, promoting leadership, and preparing its workforce for future challenges. The Company is equally committed to providing fair compensation, equal employment opportunities, and a broad range of employee welfare benefits. Over the past year, RICO has significantly expanded employment opportunities promoting inclusive, equitable, and sustainable growth through people-centric practices.

Governance

In line with its commitment to responsible business conduct, RICO continues to strengthen its governance framework by elevating corporate governance standards and embedding a culture of integrity, transparency, and accountability. The Company is focused on enhancing enterprise risk management practices, upholding the highest standards of ethical conduct, and proactively identifying and mitigating conflicts of interest. Emphasis is placed on promoting board diversity, ensuring responsible and performance-linked executive compensation,

and maintaining strict adherence to corporate policies and regulatory requirements. Through these measures, RICO aims to build long-term stakeholder trust and ensure robust, ethical, and future-ready governance.

RESEARCH AND DEVELOPMENT(R&D)

The Companys Research and Development (R&D) team continuously working on design innovations for the sustenance of business growth by providing solutions to real world challenges. Team has successfully developed many e-mobility & import substitution parts, for long term business requirements.

R&D team is providing solutions to customers, with focus to offer first time right products. Our team works concurrently with OEMs development team to provide best technical solutions, in line with their expectations. 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 working and providing innovative/VA/VE Solutions for Design of Engine clutch Assy & CVT (Continuous variable Transmission) of various models of 2W-OEM and Developing new Model from concept to realization keeping cost in focus without compromising the Performance and Durability.

Our R&D team have successfully developed Paper-based Friction material for clutch Application, we are first in India to develop this Paper-based Friction material. It is being procured from overseas by competitors to make clutch friction Disc used in Clutch assy. Our paper-based friction material is approved by Global OEM and is currently in production.

We have successfully developed various components for Hybrid and Electric vehicles, such as transmission housings, cases and covers, Electric motor housing and differential cases. For IC engines team has developed components such as Cover Valves, Timing cases, Oil pans, Fly wheels etc. For 2-wheeler, team has successfully designed and developed many clutches, got approvals from customer and started production.

INFORMATION TECHNOLOGY

We implemented S4 HANA in April 2025 as a greenfield project. We are dedicated to continually acquiring state-of- the-art technology and information resources, with a focus on enhancing the availability and security of our information. Several initiatives have been implemented to improve automation, process performance, and controls. Technologies such as Disaster Recovery Sites, Private Cloud and Cloud Storage play a crucial role in safeguarding our vital information in the event of a disaster. 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).

Our Information Security Management System is compliant with the requirements of ISO/IEC 27001:2013, certified by KVQA. We are currently in the process of updating our compliance to ISO/IEC 27001:2022.

The Company received the TISAX Certificate in July 2024.

The Company is maximizing its IT Infrastructure to generate business intelligence reports and enhance productivity with collaboration technology. It is also adopting Industry 4.0 and integrating IoT with SAP HANA to improve operational efficiencies and optimize resources.

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.