Sar Auto Products Ltd Management Discussions

Pursuant to Regulation 34(2)(e) of SEBI LODR Regulations 2015,

a Management Discussion and Analysis report is given below: -

OVERALL REVIEW OF PERFORMANCE OF COMPANY:

The Company engage in manufacturing and selling of Auto components, especially Gears for Transmission, Differential & Engine. Our Company manufactures Auto components comprising of automobile gears like Spur Gear, Helical Gear, Straight Bevel Gear, Sprockets along with Transmission Spline Shafts, Couplings and Power Take-off clutches which are used for Transmission, Engine and Differential gear boxes. Our Company is one of the leading manufacturers of quality assured gears, gear boxes and other transmission components in Rajkot, Gujarat-India, since last 20+ years. All parts are manufactured and tested as per the German Specification (DIN standard) and majority of the parts are self-certified by our OEM customers and are directly used at their assembly line.

We are having certificate in compliance with the requirements of the Standard ISO 9001: 2015 audited by QRO (Quality Research Organization) for following scope of activities: Manufacturer & Supplier of Machined items like Synchronizer Parts (Rings, Cones, Sleeves, Hubs), Transmission gears and Housings for Automative, Agricultural and Engineering Applications. Company carries out statistical process control studies for better process capabilities and we emphasize more on the defect prevention, rather than defect detection. Our in-house standard room is fully equipped to calibrate the monitoring and measuring devices used in the manufacturing processes. We have our in-house chemical and metallurgical laboratory to cater to all our needs in the chemical & metallurgical analysis. Our range of testing machines include computerized Gear helix & Profile tester and Gear roll tester (Maag & Mahr) besides Helix measuring and hob testing machine, Material hardness testers (BHN & HRC) & other standard measuring instruments.

OUR PRODUCTS VARIOUS TYPES OF PARTS

During the year 2025-26, the Company has revenue from operation of Rs. 1434.95 Lacs in comparison to previous year of Rs. 1396.79 Lacs. The overall Review highlighted below:

Particulars	Year: 2025-2026	Year: 2024-2025
	(In Rs. In Lacs except EPS)	(In Rs. In Lacs except EPS)
Export Sales	-	-
Domestic Sales	1424.96	1389.49
Other Operating revenue	9.99	7.30
Total Sales	1434.95	1396.79
Other Income	112.21	108.05
Earnings Per Share	1.41	0.88

Due to external factors, war tensions amongst other countries of the world, in the year 2025-26, Company has Nil Exports sales, however Turnover of the Company increased in comparison to previous year. Management is hopeful to continue this profitable position and strives to achieve better performance in next period. Management efforts and hard work and continuous analyzing and searching and grabbing of opportunities, Company was able to maintain and increase the profitability of the Company. Of course, Government policies has also played a vital role in making the industry structure of the Company stronger and thereby Economic of whole Country.

INDUSTRY STRUCTURE, OUTLOOK AND DEVELOPMENTS:

Global Economic growth

In 2025, the global economy grew at an estimated rate of 3.4%.

Before inception of Middle East war, Global growth is projected at 3.3% in 2026, fully recovering from the April 2025 tariff-related downgrade and returning to its January 2025 level. Advanced economies (AEs) are expected to grow at 1.8%, driven largely by continued US resilience, while emerging market and developing economies (EMDEs) are projected to expand by 4.2%, slightly below initial expectations, reflecting lingering effects of tight financial conditions and trade uncertainty. Overall, growth stabilises but remains uneven and regionally divergent Global Economic growth is hampered in February 2026 due to outbreak of war in Middle east so forecast differs considering the duration, intensity and scope of war. Global growth is projected to be 3.1 percent in 2026 and 3.2 percent in 2027, slower than its recent pace of about 3.4 percent in 2024 25,

Source: Economic Survey 2024-25 IBEF.org and IMF

INDIAN ECONOMY

INDIAN ECONOMY OVERVIEW

Indias economic momentum remains strong, underpinned by resilient domestic demand and sustained macroeconomic stability. In FY 2025 26, Real GDP (GDP at Constant Prices) reflecting a robust growth of 7.6%. At current prices, Nominal GDP registering a growth of 8.6%. On the production side, Real Gross Value Added (GVA) is estimated growth of 7.7%, while Nominal GVA is expected to growth of 8.7%. Collectively, these trends highlight Indias position as one of the fastest-growing major economies, supported by broad-based expansion across sectors. Source:IBEF- Indian Econmic overview

AUTO COMPONENTS & AUTOMOBILE INDUSTRY IN INDIA IN THE YEAR 2025-26

Source: IBEF Industry Sector

AUTO COMPONENTS INDUSTRY: the auto component industry has become a vital segment of the economy, spanning large corporations to micro enterprises across manufacturing clusters nationwide. It accounted for 2.3% of Indias GDP in FY25 and provided direct employment to over 1.5 million people, a figure expected to rise as the sectors GDP contribution reaches 5-7% by 2026

MARKET SIZE OF AUTO COMPONENTS

Indias auto components industry has significantly expanded its market share, driven by rising automobile demand from the growing middle class and strong global exports. The sector has attracted both Indian and international players and is broadly classified into organised and unorganised segments. While the unorganised sector primarily caters to the aftermarket with low-value items, the organised sector focuses on supplying high-value precision instruments to Original Equipment Manufacturers (OEMs). In FY26 (April-September), domestic sales stood at 1,02,36,639 units for two-wheelers, 20,51,082 units for passenger vehicles, 4,63,502 units for commercial vehicles, and 3,94,450 units for three-wheelers. In FY26 (April-September), the total production of Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers and Quadricycle was 1,65,34,997 units. Indias Automotive Mission Plan 2047 aims to boost vehicle production to 50 million by 2030 and 200 million by 2047, positioning India among the top two global auto producers. It prioritizes sustainable vehicle production with hydrogen, electric, CNG, and biogas, while not curbing petrol or diesel vehicles immediately

FOLLOWING ARE THE ADVANTAGES OF AUTOCOMPONENTS INDUSTRY IN INDIA:

Robust Demand- Market Demand, Export Opportunities, Policy Support i.e. Government Policy Support and Competitive Advantage. India is emerging as a global auto component sourcing hub due to its proximity to key automotive markets such as ASEAN, Europe, Japan and Korea

AUTOMOBILE INDUSTRY:

The Indian automobile industry has long been a reliable barometer of economic performance, given its critical role in both macroeconomic expansion and technological advancement. Within the sector, the two-wheeler segment dominates in terms of volume, driven by a growing middle class, a predominantly young population, and rising demand from rural markets. Demand for commercial vehicles has also strengthened, supported by the expansion of logistics and passenger transportation services. Market growth is expected to be shaped by emerging trends such as vehicle electrification, particularly in three-wheelers and small passenger cars.

MARKET SIZE

India enjoys a strong position in the global heavy vehicles market as the largest tractor producer, second-largest bus manufacturer, and third-largest heavy truck manufacturer in the world. The total production of Passenger Vehicles, Three Wheelers, Two Wheelers, and Quadricycle in January 2026 was ~2.9 million units. Two-wheelers and passenger vehicles dominate the domestic Indian auto market. Two-wheelers and passenger cars accounted for 77.26% and 16.13% of market shares, respectively, In FY26 (April-December 2025) Passenger car sales are dominated by small and midsized cars.

FOLLOWING ARE THE ADVANTAGES OF AUTOMOBILE INDUSTRY IN INDIA

(1) Growing Demand i.e. Rising middle-class income and a huge youth population will result in strong demand (2) Opportunities, 3) Rising in Investment i.e. FDI in auto sector and (4) Government Policy Support.

COMPANYS OVERVIEW:

Company is focusing on the Industry structure prevalent in Indian Economy and Global Economy and Company is planning its road map of business activity accordingly.

Future Plan of Company : We are on the threshold of manufacturing the following products: -- Assembly of Gear boxes for automobiles and machine tools.

- With the best of technical expertise, financial acumen, marketing experience and managerial skills at hand, we actively seek new clients in India and abroad.

- We welcome foreign collaborations in technical knowhow, with buyback arrangements, for manufacture of Gear boxes, Geared motors, Ground Gears and other similar components.

SEGMENT/PRODUCT WISE PERFORMANCE:

The Company is working in single segment namely the manufacturing Segment includes manufacturing of gears, gear boxes and other transmission components. Further In this segment company has earned revenue of Rs. 1424.96 Lacs in comparison to previous year of Rs. 1389.49 Lacs and other operating revenue of Rs. 9.99 Lacs in comparison to previous year of Rs. 7.30 Lacs.

OPPORTUNITIES, THREATS, RISK AND CONCERN:

OPPORTUNITIES

The Company is carrying on the business of manufacturing of auto components such as automobile gears like Spur, Helical, Straight Bevel, Sprockets along with Transmission Spline Shaft, Couplings and Power Takeoff Clutches which are used for Transmission, Engine and Differential gear boxes. Our Company believes that Company have a greater advantage of being located in Rajkot (Gujarat) as it is a hub for engineering industries, enabling to offer the customers more range of products and services in a faster and at the most competent way. With, many OEM approved raw material suppliers and heat treatment service providers stationed here, we have a competitive advantage in providing the services, in the most efficient and effective way to delight our valued customers. As Rajkot being popular for its skilled labour availability & labour friendly environment, we hold the reputation of being the most reliable, at any point of time. Our gears are used in automobiles, machine tool industries and printing machineries. We are ready and equipped to manufacture any type of gear for anyone, anywhere in the world!

In todays parlance Auto component industry has growth potential as the population is increasing, demand of vehicle in all segment is increasing, in furtherance after the spread of Covid-19 pandemic and its post effect, people feel safe for using personal vehicles instead of public transport and this factor also boost up the demand and further, life style, needs of society also gives boost to the business opportunities. In aforesaid points given various advantages of auto parts components Industry and Automobile Industry which are opportunities for our Company. Further Government of India is also taking various initiative steps for the development of Auto Industry. The Theme of “ATMANIRBHAR” & “MAKE IN INDIA” of Indian Government will also be one of the path of Opportunity for the Company.

THREATS, RISK AND CONCERN

Your Company regularly monitors the various risks associated with its business. The Company is identifying, minimizing and mitigating the risks and the same are reviewed periodically. There are various Risk factors such as Changes in Government Policies and Regulations, Tense situations amongst the Country, Fluctuation in Foreign Exchange Rates, Prices of Raw materials, Competition, Volatile in Automobile Industry, Manpower. The Company is trying to overcome/minimize it by taking certain steps, which are in hand of Company.

The Companys risk management is done in close co-ordination with the board of directors and focuses on actively securing the Companys short, medium and long-term cash flows by minimizing the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns. The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options.

Besides this, Companies Internal Risk, Credit Risk, Liquidity Risk, Maturities of Financial Liabilities, Interest rate risk and the details of the same has been given in Notes Forming Part of Financial Statements.

Company is watching and analyzing the trend of market situation and accordingly will take various steps to mitigate the risks of the business.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company is committed to maintaining high standards of internal controls designed to provide accuracy of information, efficiency of operations, and security of assets. The Company has adequate internal controls commensurate with the size and nature of its operations to ensure orderly and efficient conduct of business.

These controls ensure the safeguarding of assets, prevention and detection of fraud and error, Irregularities. These controls ensure the accuracy and completeness of the accounting records, timely preparation of reliable financial information and adherence to Companies policies, procedures and legal obligations. The audit committee of the Board of Directors meets periodically to review the performance as reported by the auditors.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE :

The Company has the Net turnover of Rs. 1434.95 Lacs in the financial year 2025-26 in comparison to previous year of Rs. 1396.79 Lacs. In this year, Company has earned Profit before Tax of Rs. 73.85 Lacs in comparison to previous year of Rs. 72.89 lacs and has earned Profit after Tax of Rs. 66.62 Lacs as compared to last years profit after Tax of Rs. 41.77 lacs. Further, Company has earned total comprehensive income of Rs. 67.30 Lacs in comparison to previous year of Rs. 42.33 Lacs. There are various challenges in the year 2025-26 internal as well as external, though company has tried to maintain and increase the profitability situation in comparison to previous year. Details of the performance are disclosed in the financial statement.

HUMAN RESOURCE AND DEVELOPMENT:

There has been no material development on the Human Resource/ Industrial Relations Front during the year. The Company always has adopted positive approach towards human relation development. Industrial relations remained cordial throughout the year and there was no incidence of strike, lock-out, etc. There were no Complaints from any of the employees of the Company. The Company is taking all precautions measures that are required to be followed for prevention and safeguard of the Human Assets.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS:

Details of Changes in Key Financial Ratios along with reasons for variance is given as below :

Sr. No. Key ratio	Financial	March 2026	March 2025	Variance	Reason for variance
1 Debtor ratio	Turnover	7.76	9.44	18%	-
2 Inventory Ratio	Turnover	5.41	-	28%	7.49
On Account of Higher inventory at year end FY 26
3 Debt	Service	21.92	4.21	-67%	On Account of Higher
Coverage Ratio				Earning coupled with Lower	Debt Service
4 Current Ratio		1.07	1.13	-5%	--
5 Debt Equity Ratio		1.44	1.05	37%	On account of Increase in Short Term Borrowing
6 Operating Margin(%)	Profit	5.97%	6.18%	-3.39%	--
7 Net Profit (%)	Margin	4.64%	5.00%	-7%	--

Further more details on financial ratio is given in the Annexure E forming part of Notes to Financial Statements and the same is forming part of this Annual Report.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

The Networth of the Company as on 31^st March, 2026 is Rs.17,98,22,000 in comparison to previous year of Rs. 17,30,92,000 Change in net worth is due to increase in retained earnings.

DISCLOSURE OF ACCOUNTING TREATMENT

The Companys financial statements comply in all material aspects with Indian Accounting Standard (IND AS) notified under section 133 of the Companies Act, 2013, Companies (Indian Accounting Standard) Rules, 2015 as amended by Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and other relevant provisions of the Act as applicable. Company has not followed different treatment than prescribed in the accounting standard and as such no explanation is required to be given.

CAUTIONARY STATEMENT:

Management Discussion and Analysis Report are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company. Actual results could differ materially from those expressed or implied. The Company assumes no responsibility to publicly to amend, modify or revise any of these statements on the basis of any subsequent developments, information or events.

Place: Rajkot	For and on Behalf of
Date: 03rd August, 2026	Sar Auto Products Limited
	Rameshkumar D. Virani
	Chairman and Managing Director
	DIN: 00313236

ANNEXURE -03

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto.

1. Details of contracts or arrangements or transactions not at arms length basis: NIL

2. Details of material contracts or arrangement or transactions at arms length basis:

Name(s) of the related party and nature of relationship:	Nature of contracts/ arrangements/t ransactions	Duration of the contracts / arrangements/ transactions	Salient terms of the contracts or arrangements or transactions including the value, if any (Amt in Rs. In Lacs)	Date(s) of approval by the Board	Amount paid as advances, if any
Virani Estate Corporation Enterprise in which	Commission On Sales	Approved yearly Omnibus along with Members approval	6.15	12-05-2025	NIL
MD/WTD are able to exercise siqnificant Influence
	Sales Of Automobiles Parts	Approved yearly Omnibus along with Members approval	376.94	12-05-2025	NIL
	Purchase of Goods	Approved yearly Omnibus along with Members approval	253.89	12-05-2025	NIL
	Rent Income	Approved yearly Omnibus along with Members approval	0.30	12-05-2025	NIL
Note: for material transactions done in 2025-26, approval of Member is taken at the 38th Annual General Meeting held on 30th September, 2025.
Sanchit S. Virani Relatives of Director	Salary	Approved yearly	7.39	12-05-2025	NIL

 

Place: Rajkot	For and on Behalf of
Date: 03rd August, 2026	Sar Auto Products Limited
	Rameshkumar D. Virani
	Chairman and Managing Director
	DIN: 00313236