Sansera Engineering Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

In CY 2024, the world economy grew at a moderate rate of 3.3%, signifying a phase of relative stability, but growth was still restrained. As we progress through CY 2025, the global environment is seeing a substantial transformation, prompted by nations realigning their policy priorities in reaction to escalating geopolitical tensions and increasing economic difficulties. While developed economies experienced muted construction activity, emerging markets exhibited encouraging growth trends. However, rising energy costs and tightening environmental regulations continued to weigh on operational margins worldwide.

The United States has implemented a series of additional tariff measures, eliciting immediate and vigorous responses from key trading partners. This resulted in the enactment of nearly universal tariffs. Consequently, effective tariff rates have escalated to unprecedented heights, inflicting a severe and detrimental impact on global GDP

The issue has been exacerbated by the rapid and erratic nature of these policy shifts, which have markedly intensified economic uncertainty and rendered the short-term outlook highly unstable. This escalating volatility has compromised the trustworthiness of conventional forecasting models, rendering it challenging to build estimates on previously reliable assumptions.

In light of this uncertainty, worldwide headline inflation is projected to decrease at a slower rate than previously planned. The projection indicates a decline to 4.3% in CY 2025 and thereafter to 3.6% in CY 2026. The revision indicates elevated inflation projections for industrialized nations, somewhat counterbalanced by slight downward modifications in emerging markets and developing economies.

Growth in advanced economies is expected to remain subdued, with global projections indicating a modest expansion of 1.4% in 2025. The United States is likely to grow at 1.8%, while the Furo Area is expected to lag behind with a growth rate of just 0.8%. In contrast, emerging markets and developing economies (FMDFs) are projected to slow to 3.7% in 2025, followed by a slight rebound to 3.9% in 2026. Among these, countries most impacted by recent trade measures, particularly China, are witnessing notable downward revisions to their growth forecasts.

However, several emerging markets such as India, Southeast Asia, and parts of Africa and Latin America are poised to outperform the global average. Their growth is being driven by robust domestic demand, increased infrastructure investment, and favourable demographic trends. Additionally, rising investments in renewable energy, electric vehicles, green buildings, and carbon capture technologies are expected to gather momentum, unlocking new opportunities and reshaping global supply chains.

OUTLOOK

Despite the challenges facing the global economy, this period offers a unique opportunity to strengthen resilience and chart a more sustainable path forward. The adaptability shown by many economies under pressure signals that recovery is possible with the right mix of coordinated policies and proactive reform.

By working together to establish a stable and transparent trade environment, advancing timely debt resolution, and addressing structural imbalances, countries can support a more balanced and inclusive global recovery. Maintaining clear monetary policy direction, using macroprudential tools as needed, and implementing credible fiscal plans will help restore financial stability and protect long-term growth.

International cooperation will be essential in navigating the road ahead. With aligned strategies, strong leadership, and a commitment to shared progress, the global economy can regain momentum, rebuild buffers, and open up new opportunities for prosperity across regions.

INDIAN ECONOMIC OVERVIEW

Indias economic performance in 2024-25 highlights its resilience amid global challenges, with the Gross Domestic Product (GDP) growing by 6.5%, maintaining its position as the fastest-growing major economy. This growth is driven by strong government infrastructure investments, a recovery in rural spending, and continued expansion in key sectors such as finance, real estate, and construction. As of June 2025, the Reserve Bank of India has adopted a more accommodative monetary policy stance, reducing the repo rate by a cumulative 50 basis points over the year to 5.50%. These calibrated rate cuts are intended to strike a balance between managing inflation and fostering credit growth and capital formation. The move underscores the central banks commitment to sustaining domestic demand and supporting economic recovery amid persistent global uncertainties and external headwinds.

Sector-wise Performance in 2024-25 Agriculture and Allied Sectors: The agricultural sector is set for a rebound with an estimated 3.8% growth in 202425, supported by food grain production rising 4.8% to 330.9 million tonnes according to the second advanced estimates. This increase is driven by a 6.8% rise in Kharif and a 2.8% gain in Rabi crops, aided by a favorable monsoon that boosted rural incomes and demand. Government initiatives like higher MSPs, expanded crop insurance, better irrigation, and greater agri-tech adoption further strengthened the sectors resilience and growth prospects.

Industrial Sector: The industrial sector is estimated to grow by 6.2% in 2024-25, reflecting the broad-based momentum across manufacturing, construction, mining, and utilities. This robust trajectory was driven by buoyant construction activities, higher manufacturing output across industries, like automobiles, electronics and pharmaceuticals, and sound performance in mining and quarrying. Key utilities such as electricity, gas, and water supply witnessed steady expansion, supported by increased infrastructure investments. The manufacturing sub-sector, in particular, demonstrated resilience, with enhanced production levels bolstering overall industrial performance.

Services Sector: The services sector continues to anchor Indias economic growth, contributing the largest share to GDP Financial, real estate, and professional services are projected to grow by 7.3% in 2024-25, while trade, transport, and communication services are expected to expand by 5.8%, buoyed by heightened consumer demand and surging economic activity.

Construction Sector: The construction sector is projected to expand by 8.6% in 2024-25, driven by robust infrastructure development and higher investments. Government spending on key projects has played a significant role in this growth, creating jobs and supporting progress in related industries.

Other Key Sectors: Indias growth momentum in 2024-25 was significantly supported by emerging high-technology manufacturing sectors, particularly aerospace and semiconductor components. The aerospace and defence industry contributed approximately 1.27 lakh crore to the economy, accounting for nearly 0.7% of Indias GDP driven by expanding domestic air travel, increasing fleet demand, and the governments focus on indigenization under initiatives like Make in India. Meanwhile, semiconductor manufacturing is rapidly scaling up, catalysed by over 1.26 trillion in approved investments under the India Semiconductor Mission. With the electronics and semiconductor ecosystem estimated to contribute between 3 to 5 lakh crore, this sector represents 1.6% to 2.7% of Indias GDP as on 2024-25. Together, these sectors reflect Indias strategic pivot toward high-value, innovation-led manufacturing, enhancing economic resilience and future readiness.

The Union Budget for 2025-26 underscores the governments focus on growth, with capital expenditure set at a record INR 11.21 Lac Cr. (around 3.1% of GDP). The targeted fiscal deficit of 4.9% reflects a balanced approach to fiscal management while continuing to support economic expansion.

Increased funding for key rural programs, expanded Direct Benefit Transfers (DBTs), and tax relief under the new income tax regime are expected to boost consumption, especially in rural and middle-income households. Indias retail inflation eased to a 75-month low of 2.82% in May, down from 3.2% in April, driven by a sharp decline in food inflation, which fell below 1% for the first time in nearly four years, according to government data released on June 12. This marks the fourth straight month that headline inflation has remained below the Reserve Bank of Indias (RBI) 4% target midpoint. Notably, food inflation, a major component of the Consumer Price Index has stayed under 3% for three consecutive months.

OUTLOOK

Looking ahead to 2025-26, Indias GDP is expected to grow between 6.3% and 6.8%, driven by strong domestic fundamentals and strategic policy measures. The ongoing recovery in private capital expenditure and consumption is likely to sustain growth, while initiatives like the Make in India programme, investments in digital public infrastructure, and the Production-Linked Incentive (PLI) schemes will strengthen the manufacturing sector. A strong rural recovery, supported by targeted financial inclusion efforts, will further boost demand across various sectors. With inflation easing and the Reserve Bank of India maintaining a supportive monetary policy, macroeconomic stability is anticipated to continue. Moreover, large-scale infrastructure development, favorable demographic trends, and rising investor confidence will provide solid support for Indias long-term growth, even as the global environment becomes more complex and uncertain.

GLOBAL AUTOMOTIVE INDUSTRY OVERVIEW

The global automotive industry is expected to reach 94.7 million vehicle sales in 2024, marking a 3.3% increase fromthe previous year. This growth, however, is slower compared to the 11.7% surge seen in 2023, indicating a market stabilisation. While demand remains robust, factors like market saturation and increasing competition, particularly in the electric vehicle (EV) segment, have slowed the pace of expansion. Despite these challenges, EVs continue to grow faster than internal combustion engine (ICE) vehicles, fuelled by regulatory policies and changing consumer preferences.

Regionally, the Asia-Pacific market continues to lead, with China producing 31.4 million light-duty vehicles, reflecting a 4.5% year-on-year growth. This growth is largely driven by urbanisation, rising disposable incomes, and government initiatives to boost domestic manufacturing. In contrast, the European market has seen little growth, with some countries facing declines due to the phase-out of EV incentives and an aging vehicle fleet. In North America, vehicle sales have risen by 2.2%, supported by improved economic conditions and increased consumer spending on automobiles. Inflationary pressures and macroeconomic factors continue to shape global vehicle sales, with higher disposable incomes in key regions helping to maintain demand.

Key Industry Metrics 2024

Metrics	Value
Global Vehicle Sales	94.7 mn units
EV Sales Growth	Estimated at 17%
China Light Vehicle Sales	31.4 mn units
EU Market Growth	0.8%
North America Sales Growth	+2.2%

OUTLOOK

Global vehicle sales are expected to grow by 2.7%, reaching 98.7 million units in 2025. However, demand for high-cost items like automobiles is likely to remain under pressure due to economic challenges, such as high vehicle prices, rising consumer debt, and potential policy changes. Key risks to the outlook include the possibility of tariffs between major markets, particularly between the US, China, and the EU, as well as trade disruptions related to elections, both of which could raise costs and reduce demand.

Looking ahead, the industrys shift toward electrification and technological innovation will shape its long-term path. By 2030, all new vehicle sales are projected to be driven by stricter emission regulations and growing global demand for sustainable mobility. Simultaneously, automakers are increasing investments in software development, digital integration, and autonomous driving technologies to enhance the user experience and meet evolving regulatory requirements.

GLOBAL ELECTRIC & HYBRID VEHICLE MARKET

In 2024, the global electric vehicle (EV) market saw impressive growth, with sales rising by 25% to reach 17.1 million units. A significant driver of this increase was China, where EV sales jumped by 40%, reaching 11 million units. Government incentives, including the extension of auto trade-in subsidies in China, were key factors in boosting adoption.

The Hybrid Vehicle Market was valued at USD 291.42 bn in 2024 and is projected to grow between 7% and 24% by 2032. This growth is being fuelled by favourable government policies supporting hybrid technologies, increased demand for fuel-efficient transportation, and the rising cost of gasoline.

Technological advancements are continuing to reshape the electric vehicle (EV) landscape. Innovations like solid-state batteries and improved thermal management systems

have significantly increased EV driving ranges to about 600 km per charge, while also reducing charging times and production costs. Hybrid vehicles are also benefiting from efficiency improvements, with regenerative braking systems boosting fuel economy by 20-30%, making them more competitive with traditional internal combustion engine vehicles.

China remains the leader in the global EV market, representing 62% of sales in 2024. This dominance is supported by substantial government incentives and policies that favor plug-in hybrid electric vehicles (PHEVs), which saw a remarkable 81% year-on-year sales growth. Meanwhile, Western markets are facing challenges, with regulatory changes in the U.S. and new EU tariffs on Chinese EVs potentially disrupting supply chains and slowing growth.

Despite strong growth, the industry faces challenges, particularly supply chain constraints for critical minerals needed for battery production. However, expanding charging infrastructure, such as Indias addition of 7,432 new stations under the FAME II initiative, and the introduction of a broader range of EV models, including luxury SUVs from brands like BMW and Audi, are expected to support continued market demand. Furthermore, hybrids are becoming more popular in commercial fleets, driven by potential fuel savings and an increasing focus on corporate sustainability goals.

4.significance%20in%20the%20automotive%20industry.)

Segment	2024 Market Size	CAGR (2024-2032p)	2032 Projection	Key Drivers	Source
Electric Vehicles	USD 671.47 bn	13.8%	USD 1,891.08 bn	Battery innovation, subsidies, emission regulations	Reuters
Hybrid Vehicles	USD 291.42 bn	7.1-24%	USD 504.18 bn- USD 3.33 tn	Fuel efficiency, policy incentives, charging infrastructure	EIA

OUTLOOK

The electric and hybrid vehicle markets are set for strong growth in 2025 and beyond. Global sales of electric vehicles (EVs) are expected to exceed 20 million units in 2025, marking a significant rise from the previous year. China remains the driving force behind this growth, supported by extended auto trade-in subsidies and a strategic push into international markets. Hybrid vehicles are also gaining

traction as an appealing option for consumers focussed on reducing emissions, offering greater efficiency without full reliance on charging infrastructure.

While challenges such as regional policy changes and infrastructure limitations, particularly in Western markets, could create hurdles, ongoing innovation and sustained government incentives will be crucial in shaping the industrys trajectory. The expanding range of vehicle models, increased commercial adoption, and rapid technological advancements all point to continued and transformative growth for both the electric and hybrid vehicle sectors in the coming decade.

GLOBAL SECTORAL TRENDS

Surge in Electrification

Electric vehicles (EVs) saw continued growth, with global sales expected to surpass 20 million units in 2025. China led the charge, boosting sales through expanded auto trade-in subsidies and strong international expansion. In contrast, the United States faced challenges with regulatory uncertainty and supply chain dependencies, which impacted the steady growth of the EV market.

Technological Breakthroughs

Innovation continued to transform the automotive industry. Progress in solid-state battery technology offered the potential for higher energy density, quicker charging times, and longer vehicle ranges. Several companies are gearing up to launch pilot production lines in 2025, a key milestone toward the next generation of electric vehicles. At the same time, advancements in regenerative braking and thermal management systems are improving vehicle efficiency and performance.

Shifting Consumer Behaviour

In response to economic pressures, consumers have become more focused on affordability. This shift is clearly visible in sectors like car tyres and engine oils, where budget brands gained significant market share. From 2023 to 2024, smaller tyre brands saw their global market share grow from 29% to 33%, reflecting a wider trend of consumers opting for more cost-effective choices. This change highlights how purchasing behavior is evolving, with value becoming a top priority for many buyers.

Cautious Production Outlook

Global car sales saw a 2.5% year-on-year growth, reaching 74.6 million units, but challenges like supply chain disruptions and high interest rates continue to impact the industry. While growth is expected to persist into 2025, the overall outlook remains cautious, with manufacturers staying vigilant to economic and policy shifts that could influence the market.

INDIAN AUTOMOTIVE INDUSTRY REVIEW

In 2024, the Indian automotive market was valued at USD 121.5 billion and is expected to grow to USD 247.4 billion by 2033, with a compound annual growth rate (CAGR) of 8.2% during this period. As one of the largest and fastest-growing automotive markets in the world, Indias automotive sector accounts for about 45% of the countrys manufacturing GDP and contributes over 7.1% to the overall GDP Additionally, the industry plays a crucial role in employment, directly and indirectly supporting nearly 32 million jobs.

Recognising the crucial role of Indias automotive sector, the Government of India aims to increase its contribution to 12% of GDP by 2026, creating 65 million jobs and tripling the industrys turnover. With its strong connections across both supply and demand chains, the automotive sector remains a cornerstone of Indias economic growth. Despite facing challenges such as global disruptions and supply chain issues, the industry is now on a path to renewed growth and transformation. Technology adoption has been key in this recovery, driving innovation and improving efficiency across the entire value chain. The sectors growth is further supported by factors like a growing population, rising disposable incomes, easier access to credit, and favourable government policies. These combined forces are positioning Indias automotive industry for sustained growth and global competitiveness in the years ahead.

• Ranked as one the Top 2 manufacturers of two- wheelers in the world

• Largest manufacturer of three-wheelers

• Ranked in the Top 4 manufacturers of passenger vehicles

• Positioned within the Top 5 manufacturers of commercial vehicles in the world

Segment-wise Performance

Two-Wheeler (2W): The Two-Wheeler (2W) segment saw solid growth of 9.1%, with sales reaching 19.6 million units. This recovery was driven by stronger rural demand and a resurgence in consumer confidence, especially in the scooter segment. Electric two-wheelers also gained traction, accounting for over 6% of total sales. Exports of two-wheelers grew by 21.4%, supported by new model launches and economic recovery in African and Latin American markets.

Three-Wheeler (3W): The Three-Wheeler segment had a standout year, with sales hitting an all-time high of 7.4 Lakh units, reflecting a 6.7% year-on-year growth. This was driven by strong demand for passenger variants and last- mile mobility solutions, including electric models. Easier financing options and increased replacement demand also played a role in supporting the segment. Exports saw modest growth of 2.3 Passenger Vehicle (PV): Passenger Vehicles (PVs) achieved record sales of 4.3 million units, growing 2% year- over-year, despite a high base effect. Utility Vehicles (UVs) continued to be the main growth driver, making up 65% of total PV sales. The launch of new, feature-rich models, along with appealing discounts and promotional offers, helped maintain strong consumer interest. Exports of passenger vehicles also reached a new high of 770,000 units, driven by robust demand from Latin America, Africa, and select developed markets.

Commercial Vehicle (CV): The Commercial Vehicle (CV) segment experienced a small decline of 1.2%, mainly due to a dip in truck sales. However, the shift towards higher Gross Vehicle Weight (GVW) vehicles and growing investments in highway infrastructure helped sustain freight movement. The bus segment saw growth, driven by increased intercity and intra-city mobility initiatives. On a positive note, CV exports showed strong performance, growing by 23% to reach 81,000 units.

OUTLOOK

Looking ahead, the industry is set to continue its growth in 2025-26, backed by stable macroeconomic conditions, reforms in personal income tax, RBI rate cuts, and ongoing government infrastructure spending. A normal monsoon is expected to further support rural demand. Export opportunities in Africa and neighboring regions are also promising, with Made in India vehicles gaining international recognition. While staying alert to global macroeconomic and geopolitical developments, the Indian automotive industry remains on a strong growth trajectory, driven by innovation, policy support, and shifting consumer needs.

INDIAN ELECTRIC & HYBRID VEHICLE MARKET

The Indian Electric and Hybrid Vehicle (EV and HEV) market has experienced significant growth in 2024-25, driven by rising consumer adoption and technological progress. Sales across both electric and hybrid segments have surged, alongside improvements in charging infrastructure and increased localisation of manufacturing. With continued innovation from manufacturers and the expansion of infrastructure, Indias shift towards cleaner mobility is picking up pace.

Indias EV market saw a significant surge in 2024, with total sales reaching 2,022,873 units, marking a 25.4% year-on- year growth over 2023. This growth led the EV segment to account for 7.7% of total automobile sales, reflecting a strong shift towards electric mobility. Indias electric vehicle (EV) market was valued at USD 8.49 billion in 2024 and is expected to grow at a robust CAGR of 40.7% between 2025 and 2030. This rapid expansion is driven by strong government support, including subsidies and infrastructure development aimed at accelerating EV adoption. Additionally, growing consumer awareness around environmental sustainability, coupled with the improving affordability and efficiency of EVs, is propelling demand. Together, these factors are positioning India as an emerging force in the global EV landscape. Electric two-wheelers led the Indian EV market in 2024, accounting for nearly 60% of total electric vehicle sales, equivalent to approximately 1.2 million units. This segment recorded a strong year-on-year (YoY) growth of around 30%, reflecting rising urban demand for cost-effective, eco-friendly mobility solutions such as e-scooters and e-bikes. Following closely, the electric three-wheeler segment emerged as the second-largest by volume, with 694,466 units sold in 2024, an 18% YoY increase. Notably, the electric three-wheeler cargo category saw the highest surge, registering nearly 45% YoY growth, fueled by the booming logistics and e-commerce sectors and favorable cost economics. Although smaller in scale, the electric passenger car segment showed steady traction, with 99,848 units sold, representing a 6.9% YoY increase and contributing roughly 5% to total EV sales in the country.

Electric buses also witnessed significant momentum, with sales growing by 39% to reach 3,834 units in 2024. This growth is expected to accelerate further, supported by the governments PM E-DRIVE scheme, which aims to promote e-bus adoption across major urban centers through targeted incentives and deployment targets.

Indias charging infrastructure has been growing quickly to support the expanding EV ecosystem. By the end of 2022, there were 10,900 public charging stations in operation, and this number is expected to rise to 15,000 by 2025, reflecting a 37% increase. The private sector has been a key driver of this growth, contributing significantly with investments in fast-charging solutions and expanding the network.

The hybrid vehicle market has experienced strong growth, with sales increasing by 27% in 2024, reaching 51,897 units between January and July. Hybrid Electric Vehicles (HEVs) continue to dominate, making up 99% of the hybrid market, driven by established infrastructure and consumer familiarity. The market is expected to grow from USD 525.55 million in 2025 to USD 1.28 billion by 2029, at a CAGR of 24.81%. Toyota leads the hybrid segment, holding a 78% market share, as strong hybrids gain popularity due to government incentives and lower ownership costs.

India Electric Vehicle Market projection

Year	USD billion	CAGR
2025	0.53	24.81%
2029	1.28

With strong policy backing, rising consumer demand, and ongoing technological advancements, the Indian EV and hybrid vehicle markets are set for significant growth. As manufacturers innovate and infrastructure continues to develop, the country is making swift progress towards a sustainable, electrified future.

INDIAN AUTOMOTIVE COMPONENT SECTOR

The auto component sector is a key pillar of Indias manufacturing industry, supplying essential parts and systems to domestic vehicle manufacturers while also serving major global markets. The industry encompasses a broad range of products, including engine parts, transmission systems, braking solutions, electrical and electronic components, body parts, and chassis systems. India has become a leading destination for auto component manufacturing due to its cost competitiveness, skilled workforce, and strong government support. The sector contributes 2.3% to Indias GDP and directly employs over 1.5 million people, playing a crucial role in driving economic growth.

In 2023-24, Indias auto components industry delivered strong results, growing by 10%, supported by a 9% increase in vehicle production and sales. The industry achieved a positive trade balance, with exports exceeding imports by USD 300 million, marking a substantial improvement from the USD 200 million deficit in 2022-23. The growing adoption of electric vehicles (EVs), which saw a 47% increase, has driven higher demand for EV-specific components such as batteries and powertrains. However, localisation in the EV supply chain remains relatively low, at just 30-40%, presenting opportunities for domestic manufacturers to improve their capabilities.

Looking ahead, revenue growth for the automotive component sector is expected to moderate to 7-9% in2024- 25, following a 14% growth in 2023-24. Operating margins are likely to stabilise around 11-12%, driven by trends towards value addition and premiumisation. For2025- 26, the sector is projected to grow at an annual rate of 8-10%, supported by greater localisation efforts, increased demand for premium and EV components, and a growing aftermarket due to an aging vehicle fleet and the rising trend of preventive maintenance.

Broadening Our Prominence

Sansera Engineering is strategically positioned to leverage the rapid growth in Indias auto component sector. With a varied portfolio that covers engine, transmission, suspension, chassis, driveline and EV components, the Company is well-aligned with the rising domestic demand, export potential, and the industrys shift towards localisation and cutting-edge technologies. The Companys strong relationships with OEMs, advanced engineering capabilities, and focus on innovation, automation, and lightweight solutions give us a significant competitive advantage. As the sector sets its sights on USD 30 bn in exports by 2026 and USD 100 bn by 2030, Sansera is fully equipped to drive growth, capture new opportunities, and shape the future of automotive excellence.

INDIAN AEROSPACE AND DEFENCE INDUSTRY

Indias Aerospace and Defence (A&D) market was valued at USD 27.1 bn in 2024 and is expected to nearly double to USD 54.4 billion by 2033, expanding at a CAGR of 6.99% during this period. The sector covers the production of aircraft, ships, spacecraft, weapon systems, and defence equipment, serving both government and private sector clients across a range of industries.

The Indian A&D sector is playing a key role in driving the countrys manufacturing growth, with state-of-the-art facilities and defence equipment that meet international quality standards. Indian companies have demonstrated their ability to produce world-class products with first-time- right quality, on par with global benchmarks.

A key driver of this growth has been the increasing involvement of the private sector, which contributed 15,233 Cr to defence exports in 2024-25, compared to 8,389 Cr from Defence Public Sector Undertakings (DPSUs). Indias defence exports now reach over 100 countries, strengthening diplomatic and trade ties with key partners such as the USA, France, and Armenia. This expanding global presence aligns with Indias strategic goal of becoming a leading defence exporter, with a target of 50,000 Cr in exports by 2028-29.

Driving this expansion is a record-high defence budget, which has grown from 2.53 Lakh Cr in 2013-14 to 6.81 Lakh Cr for 2025-26, reflecting the governments strong commitment to military modernisation and infrastructure development. This funding is essential for supporting advanced R&D, manufacturing next-generation military platforms, and boosting self-reliance in critical defence technologies. At the same time, the Indian A&D market, valued at USD 27.1 bn in 2024, is expected to clock in a CAGR of 6.99%, reaching USD 54.4 bn by 2033. This growth is driven by rising demand for advanced defence systems, increased private-sector involvement, and global partnerships focussed on technology transfer and joint production.

Indian Aerospace and Defence Market Projection

Year	USD bn	CAGR
2023	25.5	7.9%
2024	27.1
2033	54.4

With these factors in place, India is on its way to becoming a key player in the global defence sector. Strong policy support, a growing private sector, and targeted investments in innovation and exports are paving the way for the country to emerge as a major aerospace and defence hub in the next decade.

INDIAN SEMICONDUCTOR MANUFACTURING INDUSTRY

Indias semiconductor manufacturing industry made significant progress in 2024-25, supported by strong policy push and rising domestic demand. The governments 76,000 Cr Semicon India Mission accelerated approvals for multiple fabrication and assembly units, alongside nine projects under the SPECS scheme. The Union Budget 2024-25 further reinforced this momentum by increasing allocations for semiconductor and electronics manufacturing by 71% to 13,100 Cr. State-level initiatives in Gujarat, Uttar Pradesh, Maharashtra, and Assam complemented central efforts, offering policy and fiscal incentives to attract large-scale investments in fabrication (fabs), OSAT (Outsourced Semiconductor Assembly and Test), and equipment ecosystems.

In 2024-25, Indias semiconductor consumption market was valued at approximately USD 52 billion, with expectations to double and reach USD 103.4 bn by 2030, growing at a CAGR of ~13% (Business Standard). The foundry segment, critical to fabrication, stood at USD 7.8 bn and is projected to rise to USD 12.4 bn by 2033, at a CAGR of 4.7%. To address Indias high import dependency estimated between 85% to 95%, the government has also prioritized talent development, domestic IP creation, and R&D infrastructure. Institutions such as the upcoming Bharat Semiconductor Research Centre and modernization of existing facilities are central to Indias strategy to create a self-reliant end-to-end semiconductor manufacturing ecosystem.

Growing Our Prominence

Sansera Engineering is strategically strengthening its focus on the high-potential Aerospace, Defence, and Semiconductor (ADS) segment within its non-automotive portfolio. Backed by strong recovery in production from key aerospace customers and the addition of new clients, the Company is well-positioned to tap into rising demand across the ADS spectrum. A major milestone is its long-term contract with Airbus Defence and Space worth approximately 1,600 mn (USD 18.80 mn) for the manufacture, supply, and support of the Airborne Intensive Care Transport Module (ICTM) for light and medium transport aircraft. This marks the first time Airbus has selected an Indian supplier for this critical airborne medical evacuation system, highlighting Sanseras advanced capabilities in precision machining and structural assembly.

The Company has entered the mass production phase in its semiconductor equipment component manufacturing business, following an intensive qualification process. This marks a major technological leap for the Company, as semiconductor manufacturing demands an entirely different level of precision and process sophistication compared to its traditional engineering operations. To support this transition, Sansera has made significant strategic investments, setting up advanced machining facilities, a Level 1000 clean room, robust quality systems, and specialised processes tailored to the exacting requirements of semiconductor manufacturing. These upgrades position the Company to scale its semiconductor business rapidly, with the ADS (Aerospace, Defence, and Semiconductor) vertical expected to deliver at least double the revenue of the previous year.

FACTORS POWERING INDIAS MANUFACTURING ADVANCEMENTS

Indias manufacturing sector in 2024-25 is seeing strong growth, supported by strategic government initiatives, technological progress, rising investments, and a favourable position in the global market.

Government Policies and Initiatives

The Production-Linked Incentive (PLI) Scheme has played a crucial role in boosting domestic manufacturing across

14 key sectors. Recent reports show that the scheme has attracted investments of over 1.46 Lakh Cr, resulting in 12.5 Lakh Cr in production, 4 Lakh Cr in exports, and the creation of around 9.5 lakh jobs.

The Make in India and Atmanirbhar Bharat initiatives are designed to strengthen industrialisation and promote self-reliance, helping position India as a key global manufacturing hub. The development of industrial corridors further improves infrastructure, streamlining operations for manufacturers and enabling more efficient supply chains.

Technological Advancements

Indian companies are progressively adopting automation and digitisation to improve efficiency and reduce dependence on labor-intensive processes. The integration of Artificial Intelligence (AI) and Machine Learning (ML) is driving the rise of smart factories, with projections suggesting that digital technologies will make up 40% of total manufacturing spending by 2025, up from 20% in 2021.

Indias focus on advanced manufacturing in areas like electronics, semiconductors, pharmaceuticals, and clean energy components is strengthening its competitive position in global markets. A key step in this direction is the Indian cabinets approval of a 22,919 crore plan to support electronic components manufacturing, which is expected to create around 92,000 direct jobs.

Investment and Economic Growth

Relaxed Foreign Direct Investment (FDI) norms have encouraged global companies to invest in India as they look to diversify supply chains in response to ongoing global uncertainties. In 2023-24, total FDI inflows stood at USD 17.96 bn, with major contributions from countries including Mauritius, Singapore, USA, the Netherlands, and Japan.

The growing domestic market, supported by increasing demand for manufactured goods, continues to drive sector growth. According to the Economic Survey 202425, real GDP is projected to grow by 6.4%, with private final consumption expenditure expected to rise by 7.3%, underscoring strong domestic demand.

Sectoral Growth Trends

Key sectors driving growth include:

• Automotive: The industry continues to expand, contributing significantly to manufacturing output.

• Electronics and Electrical Equipment: Notable growth is evident, with electrical equipment production increasing by 21.7% in January 2025.

• Pharmaceuticals and Textiles: Ongoing innovation and strong export demand bolster these industries.

Indias strategic location gives manufacturers a gateway to Southeast Asian markets and positions it as a viable alternative to regions like China. As global supply chains continue to diversify, India has seen a rise in manufacturing and production activity, strengthening its position in the global manufacturing landscape.

However, challenges such as shifting trade dynamics, periods of slower growth, and infrastructure gaps still exist. Addressing these issues remains key to maintaining momentum and supporting long-term growth in the manufacturing sector.

GLOBAL PRECISION MACHINED COMPONENTS MARKET

The global precision engineering components market has experienced robust growth in recent years. It is projected to expand from USD 14.59 bn in 2024 to USD 15.67 bn in 2025, reflecting a compound annual growth rate (CAGR) of 7.4%. This growth has been driven by rising demand in consumer electronics, stricter quality management standards, increased globalisation and trade, standardisation initiatives, and applications in the automobile and defense industries.

I.)The precision engineering components market is expected to maintain strong momentum over the coming years, reaching USD 19.75 bn by 2029 with a CAGR of 6.0%. Growth drivers for the forecast period include the rise of smart factories, advancements in high-speed machining, sustainable manufacturing practices, and trends towards greater customisation and personalisation. Key developments influencing the market are miniaturisation and microfabrication, loT integration, robotics and collaborative automation, precision robotics, digital twin technologies, hybrid systems, and innovations in multi-axis machining.

BUSINESS OVERVIEW

Established in 1981, Sansera Engineering Limited (referred to as Sansera or the Company) has built a legacy of excellence in high-precision machined components. Recognised for its deep-rooted expertise in both automotive and non-automotive segments, the Company plays a vital role in enabling critical systems. These systems include Auto ICE as well as tech agnostic components which goes into engines, transmissions, chassis, suspensions, and brakes across a wide range of vehicles from two-wheelers and passenger cars to commercial and off-road vehicles. Our long-standing partnerships with nearly all leading Original Equipment Manufacturers (OEMs) underscore the trust and value we bring through innovation, reliability, and scalable engineering solutions.

Beyond the mobility sector, Sansera applies its engineering expertise to high-demand areas such as aerospace, agriculture, semiconductor and various industrial applications. In line with the evolving global and domestic manufacturing landscape, Sansera continues to expand its presence in the fast-growing semiconductor space. This diversification reflects the Companys consistent focus on quality, innovation, and advanced technology. Each component is built to meet the highest standards, ensuring reliable performance in complex systems worldwide.

In 2024-25, Sansera continued to treat precision not just as a standard, but as a way of thinking, driving progress, raising engineering benchmarks, and delivering long-term value across industries.

Sansera Group operates 17 integrated manufacturing facilities, 16 in India and one in Sweden, underpinned by a dynamic research and engineering team of over 575 specialists. With expertise spanning aerospace, machine building, and automation, and a strong legacy in internal combustion engine (ICE) technology, Sansera is uniquelypositioned to serve both traditional OEMs and new-age industry players.

The Company has cultivated enduring relationships with leading domestic and global OEMs by consistently meeting rigorous audit standards, approvals, and customer specifications. These trusted partnerships have helped Sansera expand its market presence significantly, achieving major breakthroughs with marquee international clients.

Guided by an eminent Board and a seasoned management team with over three decades of collective experience, Sansera remains committed to strategic excellence and relentless innovation. Currently, the Company is undergoing a strategic transformation, evolving from a traditional automotive component supplier to an engineering-led diversified provider of precision forged and machined components across multiple industries.

Poised for substantial growth beyond the automotive sector, Sansera is aggressively pursuing new opportunities in engine-agnostic components, including solutions for hybrid vehicles, reinforcing its adaptability to changing market dynamics. The booming electric vehicle (EV) market aligns seamlessly with Sanseras capabilities and its customers mass production schedules, demonstrating the Companys readiness to capitalise on emerging opportunities in electric mobility. The Companys increasing focus on hybrid technology further complements this pivot, leveraging Sanseras deep expertise and robust infrastructure to meet rising demand.

GROWTH STRATEGIES

• Fuelling Growth through Capacity Building

• Leveraging Opportunity in the Emerging Auto Technologies

• Amplifying Efficiency through Digitisation and Innovation

• Bolstering Prospect with Strategic Investment

• Future-proofing Business with Strategic Diversification

OPERATIONAL REVIEW AS OF 2024-25

Sanseras product sales are categorised into three key end markets/applications.

Auto-ICE: Sansera is a key manufacturer of critical components like connecting rods, crankshafts, rocker arms, and gear shifter forks for two-wheelers, along with connecting rods and rocker arms for passenger vehicles.

These high-precision parts are mainly delivered to OEMs in a fully finished, forged, and machined form, highlighting the Companys strong value contribution throughout the manufacturing process.

Product sales	Share of Total Product Sales	Year-on-Year Growth
20,771 Mn	74%	4%

Tech-Agnostic & xEV: This segment covers components beyond the engine and transmission, such as aluminium- forged parts used in suspension, driveline, braking, and chassis systems. These parts are built to work seamlessly with modern technologies, including Hybrid and Electric Vehicles (xEVs), and meet the rising demand for lightweight, high-aesthetic solutions. Sanseras strength in aluminium forging gives it a first-mover advantage in this fastchanging area of the automotive industry

Product sales	Share of Total	Year-on-Year
	Product Sales	Growth
4,163 Mn	15%	29%

Non-Auto: Sanseras non-auto segment highlights its precision engineering strengths across the aerospace, defence, semiconductor manufacturing and industrial engine sectors. This strategic diversification enables the Company to apply its manufacturing expertise beyond the automotive space, entering high-growth industries that require specialised and technically advanced components.

Product sales	Share of Total	Year-on-Year
	Product Sales	Growth
3,279 Mn	12%	1%

ORDER BOOK AS OF MARCH 31, 2025

As of March 31, 2025, Sanseras new business order book, at peak annual revenue potential, stood at 18,511 Mn. Notably, around 50% of this value is attributed to the non-auto and auto tech-agnostic/EV segments. The international order book witnessed strong growth, fuelled by a broad-based recovery and increased demand across global markets.

	March 2023	March 2024	March 2025
Order Book ( bn)	13.2	15.9	18.5
New Orders Received ( bn)	8.5	7.6	-
Moved to Production ( bn)	(6.0)	(5.0)	-

FINANCIAL REVIEW

Sansera delivered a strong financial performance in 2024-25, with consolidated revenue rising 7% year-on-year. EBITDA grew by 7% to 5,148 mn, while Profit After Tax (PAT) reached 2,169 mn, marking a 16% increase over the previous fiscal. Backed by a robust balance sheet post-QIP, the Company is operating with surplus cash and actively working towards reducing debt, an initiative expected to further strengthen financial stability and support gradual margin improvement in the coming years.

Particulars	2024-25	2023-24	Change Y-o-Y (%)
Revenue from Operations	30,168	28,114	7%
Total Expenses	27,458	25,581	7%
EBITDA	5,148	4,799	7%
Other Income	203	24	735%
Finance Charges	700	770	-9%
Depreciation & Amortisation	1,738	1,495	16%
Profit before Tax (PBT)	2,912	2,558	14%
Share of Profit from Associates	8	5	57%
Tax Expenses	751	687	9%
Profit after Tax (PAT)	2,169	1,875	16%
EPS (Basic)	37.41	34.83	7%

KEY FINANCIAL INDICATORS

Ratio	2024-25	2023-24	Change (%)	Reason for Deviation
EBITDA Margin	17.06%	17.07%	0.0%	Remained stable
PAT Margin	7.19%	6.67%	7.1%	Lower interest cost due to reduction in debt
Pre-Tax OCF/EBITDA	85.79%	91.63%	(5.8%)	Higher inventory due to reduction in exports schedules
Return on Capital Employed (ROCE)	15.24%	16.92%	(1.7% )	Higher Capex to support new orders execution and increased inventory
Current Ratio	2.55	1.02	149.4%	Repayment of working capital debt and higher cash and cash equivalent balances as a result of QIP proceeds
Debt-to-Equity Ratio	0.11	0.59	(81.6%)	Use of QIP proceeds for debt repayment
Debt Service Coverage Ratio	1.13	2.16	(47.5%)	Higher repayment of Debt during 2024-25 out of the QIP proceeds
Return on Equity	10.50%	14.74%	(4.2%)	Increase in shareholders equity balance post QIP

Notes

• EBITDA = Earnings Before Interest, Tax, Depreciation & Amortisation, and Other Income

• EBITDA Margin = EBITDA/Total Revenue

• PAT Margin = Net Profit after Taxes/Revenue from Operations

• Pre-tax OCF/EBITDA = Pre-Tax Operating Cash Flow/EBITDA

• Return on Capital Employed (ROCE) = EBIT/Capital Employed Capital Employed = Tangible Net Worth + Net Debt

Net Debt = Long-term Borrowings + Short-term Borrowings less Cash and Cash Equivalent and Bank Balance

• Current Ratio = Current Assets/Current Liabilities

• Debt-to-Equity Ratio = Long-term Borrowings + Short-term Borrowings/Shareholders Equity

• Debt Service Coverage Ratio = Earnings Available for Debt Servicing/Debt Servicing

• Return on Equity = Net Profit after Taxes/Average Shareholders Equity

RISK MANAGEMENT

Sansera takes a hands-on, strategic approach to managing risk, guided by a solid set of policies and clear processes. With the Boards oversight, the Risk Management Committee looks at potential risks from all angles, including assessing, addressing, and openly communicating them. This thoughtful approach helps the Company stay flexible and ready for the unexpected, keeping business on track no matter the challenge.

Key business risks identified and addressed by Sansera include:

Risk Type	Risk Factors	Mitigative Approach
	Periods of economic volatility driven by factors, including high inflation, geopolitical unrest, and escalating global trade tensions, pose potential risks to Sanseras operational continuity and financial performance. These risks are further heightened by ongoing tariff disputes between major economies.	• Evaluates its order book, execution schedules, and market dynamics continuously to proactively detect early warning signs and implement measures aimed at minimizing financial or operational disruptions.
Economic Risk		• Tailors its diversification approach across sectors and regions to proactively seize emerging opportunities and effectively navigate changing market dynamics.
Market Risk	Making market relevance and a competitive product portfolio may become increasingly complex as the company navigates shifting customer preferences, rapid technological advances, stricter regulatory landscapes, and volatile fuel costs.	• Expands its product portfolio to cater to technology- agnostic applications.
		• Monitors the progress of diversification initiatives and assesses the impact of new orders on the overall product mix
Talent Risk	Sanseras continued growth and innovation may be impacted by challenges in attracting, retaining, and developing talent, along with building strong succession plans for key roles.	• Evaluates the key skills needed regularly for current and future roles and supports employees through focused training, coaching, mentoring, and leadership development programmes.
		• Strengthens learning and growth opportunities for employees, while also actively bringing in external talent to fill new roles when suitable internal candidates are not available.
Counterparty Risk	Sanseras revenue streams and financial stability face risks related to the obligations of counterparties in financial instruments and customer contracts.	• Manages credit risk in its operations and financial activities by keeping a close watch on counterparty obligations in both financial instruments and customer agreements.
		• Takes a strategic approach to assessing and reducing financial liabilities from credit risk exposure; while ensuring it maintains sufficient provisions for any potential doubtful debts.
Competition Risk	The Companys strong market position and profitability could come under pressure due to rising competition in both domestic and international markets.	• Draws on its deep expertise and strong reputation to sustain a leading position in the market.
		• Focusses on building long-term customer relationships and consistently provides innovative, high-quality products and services to maintain its strong competitive edge.
Liquidity Risk	Insufficient liquidity could affect Sanseras ability to meet its financial commitments, putting both its reputation and overall financial stability at risk.	• Ensures it has liquidity to meet obligations under both normal and stressed conditions. As of March 31, 2025, the Companys cash and cash equivalents plus bank balance stood at 4,272 mn.
		• Additionally, Sansera has access to a strong credit line from banks to efficiently manage its working capital needs.
Risk Type	Risk Factors	Mitigative Approach
Procurement Risk	Sanseras supply chain and operations could face disruptions if market price fluctuations or financial instability affect its suppliers.	• Monitors market prices regularly and develops contingency plans to mitigate the impact of price fluctuations or financial instability among suppliers.
		• Expands the supplier base to reduce dependence on any single source and strengthen resilience against potential supply chain disruptions.
Cybersecurity Risk	A cyber intrusion could jeopardise the Companys data integrity and reputation, potentially resulting in the exposure or loss of critical assets and sensitive information.	• Assesses network vulnerabilities and upgrades tools to defend against both known and emerging cyber threats.
		• Implements a extensive cybersecurity risk management strategy to protect critical assets, safeguard sensitive information, and minimise reputational damage from cyber-attacks or breaches across the Companys IT infrastructure.

ESG COMMITMENTS

The leadership at Sansera, a group of industry veterans with diverse competencies, is deeply committed to integrating Environmental, Social, and Governance (ESG) principles into all facets of corporate strategy. Beyond driving operational excellence and innovation, they champion responsible growth. This principled approach enhances Sanseras stature as a dependable and progressive force in the global manufacturing industry.

The Company shows its commitment to sustainability through practical circular manufacturing methods that reduce waste, make smarter use of resources, and support environmental care across the value chain. This approach helps meet regulatory expectations, builds resilience, and earns the trust of stakeholders-strengthening long-term competitiveness.

Sanseras strong focus on quality and sustainability has earned recognition across the industry, helping to build its reputation as a company that delivers real innovation, operates with integrity, and creates lasting value both economically and socially.

HUMAN RESOURCES

Sansera regards its Human Resources function as a strategic pillar in cultivating a performance-driven, positive organisational culture. In alignment with corporate objectives, HR initiatives centre on employee development through a blend of targeted internal and external training programmes, while upholding rigorous standards in health and workplace safety.

The Company promotes a culture grounded in diversity, inclusion, and respect, with a strong emphasis on fostering engagement, personal advancement, and individual accountability. Through its firm zero-tolerance stance on discrimination and harassment, Sansera ensures a workplace that is both safe and empowering for all employees.

As of March 31, 2025, Sanseras workforce comprised 11,300 employees, underscoring its commitment to nurturing a high-performing talent ecosystem.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Sansera has established comprehensive internal control systems and audit mechanisms to protect its assets and maintain the accuracy of its financial and operational information. This framework ensures strict adherence to policies, procedures, and regulatory obligations through clearly defined authorisation protocols.

The Company undertakes thorough audits regularly across its functional and departmental spectrum to systematically evaluate compliance and identify areas requiring refinement. These audits serve as both a compliance safeguard and a catalyst for sustained improvements in operational performance.

CAUTIONARY STATEMENT

The statements in the Management Discussion and Analysis section describing the Companys objectives, projections, estimates, and predictions may be considered as forward-looking statements. All statements that address expectations or predictions, including, but not limited to, statements about the Companys strategy for growth, product development, market positioning, expenditures, and financial results, are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Companys actual results, performance, or achievement may, thus, differ materially from those projected in such forward-looking statements. The Company assumes no responsibility to publicly amend, modify, or revise any forward-looking statement based on any subsequent developments, information, or events. To avoid duplication and repetition, certain heads of information required to be disclosed in the Management Discussion and Analysis, have been included in the Boards Report.