Sellowrap Industries Ltd Management Discussions

Management Discussion and Analysis Report

GLOBAL AUTOMOTIVE INDUSTRY OUTLOOK

The global automotive components market is projected to grow at approximately 3.5% annually between 2025 and 2035. While overall industry growth is expected to remain moderate, value creation is increasingly shifting toward software-defined vehicles, advanced electrical and electronic architectures, Advanced Driver Assistance Systems (ADAS), and EV powertrain components, with several of these segments expected to expand at double-digit rates. Although ICE powertrain components are witnessing a gradual structural decline, traditional categories such as interior, body, exterior, and chassis components continue to track global vehicle production, delivering stable low singledigit growth and remaining a significant part of the automotive supplier ecosystem.

These structural shifts are also widening the performance gap between supplier categories. While companies exposed to semiconductors, batteries and next generation mobility technologies have delivered stronger growth, suppliers of classic components-interior, body, exterior, chassis and sealing systems- continue to form the economic backbone of the global automotive supply chain. For these manufacturers, scale, operational efficiency, manufacturing excellence and deep OEM relationships remain the critical differentiators that sustain profitable growth even as value creation gradually shifts toward technology intensive segments. Importantly, as OEMs differentiate increasingly on safety, comfort and user experience, the content value of classic components per vehicle continues to rise, providing a natural demand tailwind that partially offsets the volume headwinds from EV transition.

INDIAN AUTOMOTIVE INDUSTRY OUTLOOK

Indias automobile industry delivered a landmark performance in FY 2025-26, recording its highest ever annual sales across all vehicle categories for the first time in seven years. Total domestic vehicle wholesales reached 2.83 crore units, growing 10.4% year on year, with passenger vehicles rising 8% to 0.464 crore units, two wheelers expanding 10.7% to 2.171 crore units and commercial vehicles growing 12.6% to 0.108 crore units. The year was shaped by a sharp recovery in H2, with Q4 recording a 23.6% surge in total domestic sales year on year, led by GST reforms, successive repo rate cuts and improved consumer affordability. On the component side, the industry grew 6.8% to Rs. 3.56 lakh crore in H1 FY26, with OEM supplies rising 7.3% and exports growing 9.3% to USD 12.1 billion despite global headwinds.

Electric vehicle adoption accelerated meaningfully during the year, with electric passenger vehicle registrations rising over 80% and electric two wheeler demand climbing sharply, reinforcing the steady but broadening shift towards new age mobility. For component manufacturers, this transition presents an opportunity rather than a threat, products serving vehicle comfort, safety, sealing, insulation and noise reduction are required across both ICE and electric platforms, ensuring that the EV shift expands the addressable market rather than contracting it.

Looking ahead, the long term structural opportunity for Indias auto component industry remains among the most compelling in the manufacturing sector. A McKinsey report projects the industry to reach USD 200 billion by 2030, growing at a 16% CAGR, with exports expected to grow fivefold to USD 100 billion and domestic OEM sales reaching USD 89 billion. Indias Automotive Mission Plan 2047 further aims to boost vehicle production to 5 crore units by 2030, positioning India among the top two global auto producers.

Unlike global markets where component value pools are shifting away from classic segments, Indias growth story is driven by volume expansion across all vehicle categories and rising content per vehicle-a combination that benefits conventional component manufacturers directly.

MANAGEMENT DISCUSSION AND ANALYSIS

Sellowrap Industries has built its presence in the automotive component industry through a combination of engineering expertise, manufacturing excellence, and enduring customer relationships. Over the course of more than four decades, the company has evolved from a singleproduct manufacturer into a diversified automotive component solutions provider, catering to the requirements of leading OEMs and Tier-1 suppliers across multiple product categories and applications.

The automotive industry is experiencing a period of significant transformation. Evolving consumer expectations, advancements in vehicle technology, increasing focus on safety, growing adoption of lightweight materials, and the transition towards sustainable mobility are reshaping manufacturing priorities across the value chain. These developments are creating opportunities for suppliers capable of delivering innovative, reliable, and application-specific solutions while maintaining the highest standards of quality and operational performance.

Against this backdrop, Sellowrap continues to strengthen its position through specialised capabilities in plastic injection molding, polyurethane foam molding, screen sealing solutions, and expanded polypropylene (EPP) products. The Companys diversified portfolio enables it to participate across a wide range of automotive applications relating to comfort, safety, insulation, protection, and vehicle efficiency. Its manufacturing facilities, strategically located across key automotive clusters in India, support customer proximity, supply chain responsiveness, and operational flexibility.

At Sellowrap, innovation is reflected not only in product development but also in manufacturing processes, material applications, and customer engagement. Integrity remains central to the Companys approach towards quality, governance, and stakeholder relationships, while a relentless focus on excellence drives continuous improvement across operations. These principles have helped the company establish long-standing partnerships with customers and build capabilities aligned with the evolving needs of the automotive industry.

As the industry advances towards greater localisation, premiumisation and technology adoption, the Company remains focused on enhancing its engineering capabilities, expanding customer engagement, and creating sustainable value for all stakeholders. The following discussion provides an overview of the economic environment, industry developments, opportunities, risks, and strategic factors influencing the Companys business and future growth prospects.

ECONOMIC ENVIRONMENT

Global Economic Overview

The global economy navigated a year of considerable complexity in FY 2025-26, shaped by the convergence of shifting trade architectures, persistent geopolitical tensions, and a monetary policy transition that moved from restriction to accommodation across most major economies. Global growth is projected to slow to 3.1% for 2026 and 3.2% for 2027, revised downward from the January 2026 World Economic Outlook update, reflecting the economic impact of the Middle East conflict on energy prices, supply chains, and global trade , with technology investment, fiscal and monetary support, accommodative financial conditions, and private sector adaptability offsetting the drag from trade policy shifts. This relatively steady growth trajectory, however, masks significant divergence in underlying conditions across regions and economies.

(Source: Trendlyne)

The United States economy demonstrated resilience through much of the period, though its policy environment introduced new uncertainties for global trade. The decision to impose additional tariffs on a broad range of imports, including automotive goods, created significant disruption to global supply chains and triggered a wave of front loading by manufacturers and retailers seeking to build inventory ahead of higher costs. US real GDP grew at an annualised rate of 2.1% in Q1 2026 (January-March), recovering from 0.5% growth in Q4 2025, supported by increases in investment, exports, government spending and consumer spending, though the economy continues to navigate elevated energy prices and supply chain pressures stemming from the Middle East conflict. Patterns consistent with aggressive front loading ahead of expected higher prices induced by tariffs. For the automotive supply chain specifically, US tariff policy on auto imports created elevated uncertainty for exporters globally, while simultaneously accelerating conversations about supply chain diversification and manufacturing localisation within or closer to the US market.

(Source: US Bureau of Economic Analysis, GDP Third Estimate, Q1 2026, released June 25, 2026)

Europe continued to navigate a difficult environment characterised by weak domestic demand in its two largest economies, Germany and France; elevated energy costs relative to the United States; and growing competitive pressure from Chinese manufacturers in segments ranging from consumer goods to electric vehicles. The European Central Banks rate-cutting cycle provided some monetary support, but structural challenges, including ageing demographics fiscal consolidation pressures, and the complexity of managing the energy transition, created headwinds that monetary policy alone could not resolve. The automotive sector in Europe faced particular pressure, with OEMs balancing the against near-term volume softness in their home markets.

For advanced economies, GDP growth is projected at 1.8% in 2026 and 1.7% in 2027, as monetary easing continues to support gradual recovery across developed markets, reflecting the subdued pace of expansion in most developed markets. In contrast, emerging and developing economies, particularly in Asia, continued to deliver significantly stronger growth, underpinned by demographic tailwinds, rising middle-class consumption, and ongoing industrialisation. This divergence between the advanced and emerging worlds has important strategic implications for Indian auto component manufacturers, whose primary export markets in Europe and the US are growing slowly even as the domestic demand backdrop in India remains substantially more favorable.

(Source: business-standard)

The geopolitical environment added further complexity to the global economic picture. Tensions in the Middle East and Eastern Europe continued to exert upward pressure on energy prices and freight costs. The US-China strategic competition deepened, with both sides deploying industrial policy tools, export controls, and tariff measures to secure supply chain advantages in critical technologies.

For global companies, this environment reinforced the imperative of supply chain diversification and the China Plus One strategy, creating a structural and durable opportunity for Indian manufacturers

Global Economic Outlook

Global growth is projected to slow to 3.1% in 2026 and 3.2% in 2027, with global headline inflation expected to rise modestly in 2026 before resuming its decline in 2027, driven primarily by the energy price shock stemming from the Middle East conflict. Downside risks remain dominant, including potential escalation of geopolitical tensions, renewed trade disruptions and fiscal pressures in major economies.

Though downside risks from geopolitical escalation, technology valuation corrections, and fiscal pressures in major economies remain relevant concerns.

(Source: IMF World Economic Outlook, April 2026 e)

The ongoing expansion of manufacturing in India and Southeast Asia as a consequence of supply chain diversification is expected to be a durable structural tailwind for the region through the balance of the decade. India specifically benefits from a combination of factors that no other large economy can replicate in the near term—a large and growing domestic market, a deep engineering talent base, improving infrastructure, cost competitiveness, and increasingly credible quality and delivery systems across its manufacturing sector. For Sellowrap, this macro backdrop creates a favourable operating environment both for domestic volume growth and for progressive expansion of its export business. (Source: IMF World Economic Outlook Update, January 2026 - https://www.imf.org/en/publications/weo issues/2026/01/19/ world-economic-outlook-update-january-2026)

Indian Economic Overview

India delivered a standout economic performance in FY 2025-26, emerging as one of the worlds fastest- growing large economies against a backdrop of global uncertainty and trade disruption. Real GDP grew 7.7% in FY 2025-26, up from 7.1% in FY25, with Q4 expansion of 7.8%, outperforming the second advance estimate of 7.6% due to higher manufacturing output, construction activity, and steady domestic consumption. This result exceeded the expectations of most forecasters and confirmed Indias position as one of the most resilient and dynamically expanding major economies in the world.MoSPI Provisional Estimates of National Income, June 5, 2026 (Source: https://www.mospi. gov.in)"

The manufacturing sector expanded by 10.7% in FY26, compared to 9.3% in FY25, emerging as a key contributor alongside the services sector, which recorded 11% growth in trade, transport, hotels and communication." , compared to 9.3% in FY25, while the services sector, comprising trade, repair, hotels, transport, and communication, quickened to 11% growth from 6.6% in the previous fiscal. Private Final Consumption Expenditure quickened significantly to 7.7% in FY26 from 5.8% in FY25, reflecting a strong recovery in both urban and rural demand. For an auto ancillary manufacturer like Sellowrap, this consumer demand recovery is directly relevant—it translates into stronger OEM production schedules, higher vehicle off-take, and improved component order visibility across the supply chain.

(Source: MoSPI Provisional Estimates of GDP for FY 2025-26, June 2026)

Gross Fixed Capital Formation grew 8.2% annually, with Q4 GFCF at 10.8%, a 13-quarter high, signaling a meaningful acceleration in investment activity that augurs well for industrial demand and manufacturing capacity expansion through the current fiscal year. The governments sustained push on infrastructure spending and the RBIs shift to an accommodative monetary stance, with successive repo rate cuts bringing the policy rate lower, provided complementary support to both consumption and investment through the year.

(Source: Craftsmanautomatiori)

Inflation remained well contained, with headline CPI easing significantly through the year and staying comfortably within the RBIs target band. This created space for monetary easing without the risk of reigniting price pressures, a combination that is particularly supportive of consumer credit growth and vehicle financing affordability. The income tax relief announced in the Union Budget FY 2025-26 for salaried individuals provided an additional demand stimulus, with discretionary spending expected to benefit across categories including personal mobility, a segment directly served by Sellowraps manufacturing platform.

(Source: MoSPI Provisional Estimates of National Income, June 2026 — https://iaspoint.com/india-gdp-growth-fy-2025-26/; PIB Press Release on GDP, 2025)

Indian Economic Outlook

The RBI has projected GDP growth to moderate to 6.6% in FY 2026-27 due to downside risks arising from the geopolitical crisis in West Asia and expectations of a lower than normal monsoon. While this represents a moderation from the strong FY26 outturn, 6.6% growth would still rank India among the fastest-growing major economies in the world and provides a solid demand foundation for industrial and consumer-facing sectors.

(Source: MoSPI Provisional Estimates of National Income, June 5, 2026; RBI Bi-monthly Monetary Policy Statement, June 5, 2026)

The manufacturing sector, which delivered doubledigit growth in FY26, is expected to sustain strong momentum through FY27, driven by the continued execution of PLI scheme investments, expanding private sector capex, and the gradual pickup in export competitiveness as global supply chains continue to adjust away from China-centric models. The RBIs accommodative monetary stance, now firmly established, is expected to support lower borrowing costs for both consumers and manufacturers, sustaining vehicle affordability and enabling component manufacturers to invest in capacity expansion on favourable terms.

Accelerating urbanisation, rising rural incomes driven by improved agricultural support pricing, and increasing penetration of financial services in semi-urban and rural markets are expected to drive structural expansion in two-wheeler and entry-level passenger vehicle demand over the medium term. These trends directly underpin demand for the foam, sealing, and injection-molded components that form the core of Sellowraps product portfolio, providing durable demand visibility beyond the current fiscal year.

(Source: MoSPI Provisional Estimates of National Income, June 2026; RBI Monetary Policy Report)

Global Automotive Industry: Current Overview

The global automotive industry experienced a period of stabilization during the financial year. The global automotive industry experienced a period of stabilization during the financial year, navigating shifts in regional manufacturing and changing powertrain preferences. According to data tracked in the S&P Global Automotive Outlook, new light vehicle sales reached approximately 91.7 crore to 91.8 crore units globally. Production levels balanced out after a phase of rapid post-pandemic restocking, though regional performances varied. Mainland China sustained its high volume output by accelerating its global vehicle exports, while mature markets in North America and Western Europe faced flat registration growth due to persistent inflationary pressures and high initial financing costs for consumers.

From an operational standpoint, Original Equipment Manufacturers (OEMs) prioritized margin protection over aggressive factory expansions. The global industry managed high ocean freight spikes caused by continued maritime transit disruptions alongside shifting raw material prices. To mitigate these pressures, carmakers optimized their production schedules toward high-margin, multi-utility platforms like Sport Utility Vehicles (SUVs) and Crossovers. Concurrently, manufacturing lines adapted to a multi-

Global Automotive Industry: Future Outlook

The near-term outlook for the global vehicle market indicates a focus on supply chain restructuring and localized risk management rather than high capacity growth. Economic forecasting models from S&P Global Market Intelligence indicate that global light vehicle sales will remain steady near 91.8 crore units, supported by a modest global GDP growth projection of 2.7%. Production footprints are expected to undergo regional shifts as global brands implement localized supply clusters to shelter their networks from sudden trade tariff adjustments, localized emission mandates, and sudden supply shocks.

(Sources: S&P Global Automotive Insights & PwC Industrial Products Library)

GLOBAL AUTOMOTIVE OUTLOOK SHAPING FORCES

GLOBAL REGIONAL CORES:

Production localized to build buffers against international tariff & trade risk.

The medium-term cost structures of international auto assemblies are projected to reward suppliers with flexible manufacturing processes. As global OEMs work to decrease retail pricing pressures on end consumers, they are standardizing vehicle components across electric, hybrid, and traditional Internal Combustion Engine (ICE) architectures. This consolidation presents a clear growth opportunity for tier-1 and component suppliers that offer scalable acoustic, sealing, and performance parts, enabling them to secure high-volume global platform supply agreements.

Indian Automotive Industry: Current Overview

The Indian automobile industry completed a notable financial year, reinforcing its position as a key driver of domestic manufacturing. Official updates from the Ministry of Heavy Industries show that the automotive sector contributes roughly 6% to the national Gross Domestic Product (GDP) and commands an overwhelming 35% share of Indias manufacturing GDP. This output is supported by strong structural tailwinds, including extensive state-funded road infrastructure investments, rising disposable urban incomes, and tax modifications that improved overall vehicle affordability.

Domestic manufacturing volumes hit multiple records according to the SIAM Industry Performance Review. Total automobile wholesales across all domestic categories reached 2.83 crore units, supported by consecutive interest rate reductions from the Reserve Bank of India (RBI). The domestic passenger vehicle market posted its highest-ever sales of 46.43 lakh units, reflecting a 7.9% growth year-on-year. While the first half of the fiscal year started slowly with a minor contraction, a strong 16.7% demand surge in the second half— complemented by a 17.5% jump in car exports to an all-time high of 9.05 lakh units as detailed by Auto Punditz Export Analytics—underlined a robust closing performance.

The component sectors manufacturing capabilities are highly diversified across multiple design categories:

• Engine & Powertrain Components: 25% allocation

• Suspension and Braking Architectures: 15% allocation

• Drive Transmission Systems: 14% allocation

• Electricals and Electronics Assemblies: 14% allocation

• Body, Chassis, and Trim/lnterior Systems: ~21% combined allocation

Mid-year updates published in the ACMA Mid-Year Performance Review showed that the component sector grew by 6.8% to reach Rs.3.56 lakh crore (USD 41.2 billion) during the first half of the fiscal period. Supplies to domestic vehicle manufacturers rose 7.3% to Rs.3.04 lakh crore, led primarily by high passenger vehicle dispatches. Concurrently, the domestic aftermarket grew by 9% to Rs.53,160 crore, supported by an expanding overall vehicle population, increased formalization of workshop networks, and broader deployment of organized logistics channels.

(Sources: SIAM Press Releases & IBEF Automobile Industry Report)

Indian Auto Component Industry: Future Outlook

The long-term growth roadmap for the auto component sector is guided by the strategic targets detailed in the IBEF Auto Components Strategic Outlook. The industrys Vision 2030 Roadmap aims to increase total localized production to USD 145 billion and scale component export value to USD 60 billion. Achieving these targets is intended to lift Indias share of the globally traded auto component market from 3% to 8%, driven by deeper inclusion in global vendor programs and ongoing localization efforts.

Near-term revenue growth for component manufacturers is projected to remain steady within a 7% to 9% expansion corridor. To address global maritime shipping variations and international trade disruptions, component suppliers are investing between Rs.20,000 crore and Rs.35,000 crore in capital expenditures. These investments focus on capacity duplication, advanced electronic localization, and specialized sealing, acoustic foam, and NVH (Noise, Vibration, and Harshness) reduction solutions to satisfy the technical needs of premium cabins, high- efficiency hybrid structures, and electric vehicle platforms.

(Sources: ACMA Industry Performance Update & IBEF Auto Components Strategic Outlook)

INDUSTRY TRENDS SHAPING DEMAND

LIGHTWEIGHTING AND ADVANCED MATERIALS: RESHAPING THE AUTOMOTIVE VALUE CHAIN

The automotive industry is undergoing a fundamental transformation in material usage as manufacturers seek to balance performance, safety, fuel efficiency, and sustainability objectives. Vehicle weight reduction has emerged as a key engineering priority across both internal combustion engine vehicles and electric vehicles, driving increased adoption of advanced materials capable of delivering superior functionality without compromising structural integrity.

Historically, metals accounted for a significant proportion of vehicle components across structural and non-structural applications. However, advancements in material science have enabled automotive manufacturers to increasingly substitute conventional materials with engineered plastics, polyurethane foams and lightweight polymer solutions. These materials provide multiple advantages, including lower weight, corrosion resistance, design flexibility, dimensional stability and cost efficiency throughout the product lifecycle.

The shift towards lightweight materials has gained further momentum with the rapid growth of electric mobility. Battery systems constitute a substantial portion of an electric vehicles overall weight, prompting manufacturers to optimise every component to improve energy efficiency and driving range. Lightweight materials play a critical role in achieving these objectives while also enhancing vehicle dynamics and reducing lifecycle emissions.

In parallel, consumers are demanding vehicles that offer improved comfort, enhanced safety features delivering customised and technically advanced material solutions are becoming increasingly important participants within the value chain.

Indias emergence as a global automotive manufacturing destination is also supporting greater adoption of advanced materials. Automotive OEMs and Tier-1 suppliers are increasingly focusing on localisation, quality enhancement and product innovation, creating opportunities for specialised component manufacturers with diversified process capabilities and established customer relationships.

Sellowrap Industries operates at the intersection of these industry developments through its capabilities across plastic injection moulding, polyurethane foam moulding, screen sealing solutions and expanded polypropylene products. The Companys diversified product portfolio aligns with key industry trends centred around lightweighting, safety, comfort and performance enhancement, positioning it to participate in the ongoing evolution of automotive manufacturing.

(Sources: International Energy Agency (IEA): https://www.iea.org Automotive Component Manufacturers Association (ACMA):

https://www.acma.in

Society of Indian Automobile Manufacturers (SIAM): https://www. siam. in)

GROWING EMPHASIS ON COMFORT, SAFETY AND NVH PERFORMANCE

Consumer expectations from automobiles have evolved significantly over the past decade. Vehicle purchase decisions are increasingly influenced not only by performance and fuel efficiency but also by factors such as cabin comfort, refinement, safety and overall driving experience. This shift has accelerated the adoption of specialised materials and components designed to improve Noise, Vibration and Harshness (NVH) performance across vehicle platforms.

NVH management has become a critical aspect of automotive engineering, particularly as manufacturers seek to create quieter, safer and more comfortable passenger environments. Advanced insulation materials, acoustic foams and sealing systems are now integrated across various vehicle components to minimise the transmission of unwanted sound and vibration. These solutions contribute to improved passenger comfort while also supporting thermal management and overall vehicle efficiency.

The transition towards electric vehicles is further strengthening demand for NVH solutions. Unlike conventional vehicles, electric vehicles generate significantly lower powertrain noise, making road noise, wind noise and structural vibrations more perceptible to occupants. As a result, OEMs are placing increased emphasis on acoustic engineering and insulation systems to maintain high levels of cabin refinement.

Alongside comfort considerations, automotive safety standards continue to become more stringent across global markets. Manufacturers are increasingly incorporating materials capable of absorbing impact energy, enhancing structural protection and improving occupant safety. This trend has expanded the role of specialised polymer and foam-based components within vehicle architectures.

Sellowraps product portfolio includes polyurethane foam moulded products, insulation components and sealing solutions that address many of theseevolving requirements. By supplying customised products designed for comfort, protection and performance applications, the Company participates in a segment of the automotive component industry that is expected to witness sustained demand growth over the long term.

EXPANDED POLYPROPYLENE (EPP): ENABLING LIGHTWEIGHT AND SAFER MOBILITY

The automotive industrys pursuit of lighter, safer and more sustainable vehicles has significantly increased the relevance of expanded polypropylene (EPP) materials. EPP combines lightweight characteristics with exceptional energy absorption capabilities, making it one of the most versatile materials used across modern automotive applications.

EPP is widely utilised in safety-critical and performance-oriented applications, including bumper cores, side-impact protection systems, headrests, tool kits and specialised packaging solutions. The materials ability to withstand repeated impacts while maintaining structural integrity makes it particularly suitable for applications requiring durability and occupant protection.

In addition to safety benefits, EPP contributes to vehicle lightweighting objectives. The material offers high strength-to-weight characteristics, enabling manufacturers to reduce component weight without sacrificing functionality. This advantage has become increasingly important as OEMs strive to improve fuel economy and optimise electric vehicle performance.

Environmental considerations are also influencing material selection decisions across the automotive sector. EPP is recyclable and supports broader sustainability objectives within automotive manufacturing. As global OEMs continue integrating circular economy principles into product development and procurement strategies, demand for recyclable and resource-efficient materials is expected to increase.

The growing adoption of electric vehicles presents additional opportunities for EPP-based applications. Vehicle manufacturers are increasingly exploring lightweight materials capable of offsetting battery weight while improving energy efficiency and driving range. EPPs unique combination of performance, durability and sustainability positions it favourably within this evolving market environment.

Through Sellowrap EPP India Private Limited, the Company participates in this specialised segment and benefits from technical expertise associated with advanced EPP manufacturing processes. The business provides exposure to a niche market supported by favourable long-term industry trends, including lightweighting, safety enhancement and sustainable mobility.

STRATEGIC

MANUFACTURING NETWORK AND CUSTOMER PROXIMITY

The automotive component industry operates within highly integrated supply chains where reliability, consistency and responsiveness are essential to maintaining customer relationships. OEMs and Tier- 1 suppliers increasingly prefer vendors capable of supporting production schedules through geographically aligned manufacturing operations and efficient logistics capabilities.

Indias automotive ecosystem is concentrated around several key manufacturing clusters, including the National Capital Region, Maharashtra and Tamil Nadu. These regions host production facilities of leading passenger vehicle, commercial vehicle and component manufacturers, creating significant opportunities for suppliers with established regional presence.

Recognising the importance of customer proximity, Sellowrap has developed a manufacturing network strategically located across major automotive hubs. Its facilities in Gurgaon, Ranipet and Pune provide access to important automotive production centres and enable the Company to serve customers efficiently across different regions.

The geographic distribution of manufacturing facilities supports operational flexibility, improved logistics efficiency and reduced lead times. It also facilitates closer collaboration with customers during product development, validation and commercial production phases. Such proximity enables faster response to changing customer requirements while strengthening supply chain resilience.

The Companys manufacturing infrastructure is supported by quality systems, engineering capabilities and process controls designed to ensure consistency across product categories. By combining manufacturing excellence with strategic location advantages, Sellowrap seeks to enhance customer service levels and maintain its position within a competitive automotive supply chain environment.

OPPORTUNITIES

The automotive industry continues to present significant growth opportunities supported by rising vehicle demand, localisation initiatives and increasing adoption of advanced materials.

KEY OPPORTUNITIES

Lightweighting Trends

Growing use of engineered plastics, polyurethane foams and EPP products across vehicle platforms.

Premiumisation

Increasing demand for comfort, safety and NVH- related components.

Localisation

Expansion of domestic sourcing by OEMs and Tier-1 suppliers.

Electric Mobility

Growing requirement for lightweight and energyabsorbing materials.

Customer Expansion

Opportunities to deepen engagement with existing customers and participate in new vehicle

INDUSTRY STRUCTURE AND KEY DEVELOPMENTS

The automotive industry is witnessing a period of transformation driven by technological innovation, changing consumer preferences, evolving regulatory frameworks and increasing emphasis on sustainability. Vehicle manufacturers are no longer focused solely on performance and cost efficiency; the industry is increasingly prioritising safety, passenger comfort, lightweighting, connectivity and environmental responsibility. These developments are influencing material selection, product design and supply chain strategies across the automotive value chain.

One of the most significant trends shaping the industry is the increasing content per vehicle. Modern vehicles incorporate a greater number of components aimed at enhancing safety, comfort and driving experience. Features such as improved cabin insulation, vibration control systems, impact protection structures and advanced interior materials have become integral to vehicle design. As a result, automotive component suppliers are expected to provide more sophisticated and customised solutions that meet stringent quality and performance requirements.

Another notable trend is the growing preference for lightweight materials across automotive platforms. Manufacturers are actively reducing vehicle weight to improve fuel efficiency, lower emissions and enhance vehicle performance. This trend has accelerated the adoption of engineered plastics, polyurethane foams and expanded polypropylene materials across a wide range of applications. These materials offer an optimal balance between strength, durability and weight reduction, making them increasingly important in modern vehicle manufacturing.

The industry is also witnessing greater localisation of manufacturing and sourcing activities. Global OEMs and Tier-1 suppliers are increasingly expanding local procurement networks to enhance supply chain resilience, improve cost competitiveness and reduce dependency on external markets. Indias growing manufacturing capabilities, supportive policy environment and large domestic market have positioned the country as an attractive destination for automotive production and component manufacturing.

Sustainability considerations are becoming increasingly important across the automotive ecosystem. Manufacturers are incorporating recyclable materials, optimising resource consumption and adopting environmentally responsible production practices. Suppliers capable of supporting these objectives through innovative products and efficient manufacturing processes are likely to benefit from evolving customer requirements and regulatory expectations.

Against this backdrop, companies with diversified product portfolios, strong engineering capabilities and established customer relationships are well positioned to participate in the next phase of industry growth. The ability to combine innovation, quality and operational excellence is becoming an increasingly important differentiator in an industry characterised by rapid technological advancement and rising customer expectations.

Suggested Visual:

"Key Trends Shaping the Automotive Components Industry"

SWOT ANALYSIS

STRENGTHS

Four Decades of Industry Experience

Sellowraps operating history stretching backto1983 gives it an institutional depth that newer entrants cannot replicate. Through multiple automotive cycles, technology transitions and economic downturns, the Company has consistently retained and grown its OEM relationships, demonstrating the kind of reliability and consistency that tier one customers demand from their supply base. This heritage translates into embedded process knowledge, qualification history across dozens of OEM programs and a reputation built on decades of delivery.

Diversified Product Portfolio

Unlike suppliers dependent on a single product category, Sellowrap manufactures across five distinct product lines — plastic injection moulded components, polyurethane foam products, screen sealing solutions, foam labels and stickers, and expanded polypropylene products. This breadth allows the Company to serve a wide range of vehicle applications spanning comfort, safety, insulation and protection, reducing revenue concentration in any single category and enabling cross selling opportunities within existing customer accounts.

Presence Across Major Automotive Hubs

With manufacturing facilities in Gurgaon serving the NCR cluster, Ranipet serving South India and Pune serving the western automotive corridor, Sellowrap is positioned within proximity of Indias three most significant automotive manufacturing geographies. This footprint enables just in time supply to OEM assembly lines, reduces logistics costs and strengthens the Companys ability to support customer production schedules with the responsiveness that modern automotive supply chains demand.

Established OEM Customer Relationships

Sellowraps customer base includes some of Indias most demanding automotive manufacturers — Maruti Suzuki, Hyundai, Tata Motors, Mahindra & Mahindra, Renault, Nissan, Isuzu, Jaguar Land Rover and Ashok Leyland among others. Development cycles of 18 to 24 months and the high cost of supplier switching create strong retention dynamics. Multiple OEM awards received in FY26 including recognition from Isuzu, Hyundai, Suzuki Motor Gujarat and Mahle are external validations of the relationship quality the Company has built.

Multi Process Manufacturing Capability

The combination of injection moulding, PU foam moulding, EPP processing, screen sealing fabrication and film based solutions under one manufacturing platform gives Sellowrap a breadth of process capability that few comparable sized manufacturers can match. This allows the Company to offer integrated component solutions to OEMs rather than standalone parts, increasing program value per customer and strengthening its position as a development partner rather than a commodity supplier.

WEAKNESSES

Dependence on Automotive Industry

Sellowrap derives substantially all of its revenue from the automotive sector, with white goods contributing only a small share. Any significant downturn in domestic vehicle production, whether caused by economic slowdown, OEM production cuts, fuel price spikes or regulatory changes, would directly impact the Companys order volumes and capacity utilisation. The Company currently has limited ability to rapidly pivot its manufacturing assets to non automotive end markets in the short term.

Exposure to Raw Material Price Volatility

With polymers accounting for approximately 62% of cost of goods sold, the Companys margins are directly exposed to fluctuations in petrochemical prices, which are in turn linked to crude oil cycles and currency movements. While the Company manages this through price pass through negotiations with OEMs, the typical lag of three to six months between input cost increases and contractual price recovery means that margin compression is a near term risk during periods of sharp raw material cost escalation or significant rupee depreciation.

Customer Concentration

The top ten customers account for approximately 50 to 55% of revenue, creating a degree of concentration that introduces revenue risk if any key account reduces volumes, transitions to an alternate supplier or discontinues a model program. While long development cycles and switching costs reduce the probability of sudden customer loss, the Company is actively working to diversify its customer base through new OEM additions including VinFast, JSW, Toyota and Honda to progressively reduce this concentration over time.

OPPORTUNITIES

Record Vehicle Sales and Growing Domestic Demand

India delivered its highest ever vehicle sales in FY26 across all categories, with total domestic wholesales reaching 2.83 crore units growing 10.4% year on year. With vehicle penetration at only 38 per 1,000 people and structural demand drivers including rising incomes, urbanisation, lower interest rates and income tax relief firmly in place, the long term demand runway for automotive components in India remains deep and durable.

Increasing OEM Localisation and China Plus One Strategy

Global OEMs and Tier 1 suppliers are accelerating domestic sourcing in India to reduce import dependency, improve supply chain resilience and respond to the China Plus One diversification imperative. Indias auto component industry targets USD 100 billion in exports by 2030, up from approximately USD 24 billion today. For established Indian manufacturers with proven OEM credentials and multi plant supply capability, this represents a structural and growing opportunity to expand both domestic and export revenue.

Expansion of Lightweight Material and NVH Applications

The automotive industrys accelerating shift toward lightweight materials, enhanced cabin comfort and superior NVH performance is driving sustained demand growth for engineered foam, sealing and polymer based components. As vehicle platforms become more sophisticated and consumer expectations rise, content per vehicle in the categories Sellowrap serves is expected to grow, providing a natural revenue tailwind independent of overall vehicle volume growth.

Electric Vehicle Adoption

Indias electric vehicle registrations grew over 80% in FY26 and the transition to new age mobility is accelerating across all vehicle categories. Sellowraps product portfolio of foam components, water deflector films, sealing systems and injection moulded parts serves both ICE and EV platforms equally, positioning the Company to benefit from EV volume growth without any product or process transformation. The Companys early investment in clean room infrastructure for battery related parts manufacturing also positions it to address emerging EV specific component opportunities over the medium term.

THREATS

Intense Competitive Pressure

The Indian auto ancillary sector is highly competitive, with both large organised players and smaller regional manufacturers competing for OEM programs on the basis of price, quality and delivery. OEMs continuously seek cost reduction from their supply base, creating margin pressure that requires constant investment in efficiency, automation and process improvement to offset. New entrants with lower cost structures or technology advantages in specific product categories represent a persistent competitive risk.

Technological Disruption

The rapid evolution of vehicle architectures toward software defined vehicles, advanced electronics and new mobility platforms could reduce demand for certain conventional component categories over time. While Sellowraps vehicle agnostic portfolio provides near term insulation from EV transition risk, the longer term shift toward autonomous vehicles, connected platforms and new interior architectures could reshape component demand in ways that are difficult to predict. Continuous investment in R&D and product development capability is essential to stay ahead of these shifts.

Intense Competitive Pressure

The Indian auto ancillary sector is highly competitive, with both large organised players and smaller regional manufacturers competing for OEM programs on the basis of price, quality and delivery. OEMs continuously seek cost reduction from their supply base, creating margin pressure that requires constant investment in efficiency, automation and process improvement to offset. New entrants with lower cost structures or technology advantages in specific product categories represent a persistent competitive risk.

Economic Slowdowns

A significant deceleration in Indias economic growth or a global recession affecting export markets could result in meaningful volume reductions across OEM production schedules, directly impacting Sellowraps capacity utilisation and fixed cost absorption. While Indias structural growth story remains intact, short term cyclical risks from monsoon failures, global trade disruptions or domestic policy changes represent threats to near term demand visibility that the Company monitors closely.

OPERATIONAL REVIEW

Manufacturing Infrastructure

Sellowrap Industries Limited operates three manufacturing facilities strategically located across Indias key automotive manufacturing clusters, with a combined built up area of approximately 1,44,776 square feet spread across plot areas totalling over 2,12,000 square feet. The Ranipet facility in Tamil Nadu is the Companys largest plant, with a built up area of 55,164 square feet across ground, first and second floors within a plot area of 87,274 square feet, anchoring the Companys South India manufacturing presence and contributing approximately 50% of total revenue. The Pune facility at Chakan is the second largest, with a built up area of 65,249 square feet including ground floor shed, mezzanine and utility areas within a 1,03,292 square feet plot, serving the western automotive cluster comprising major OEMs in the Maharashtra region.

The Gurgaon facilities, comprising two plants at GP-54 and GP-51 within the Maruti Industrial Estate, together provide a built up area of approximately 24,363 square feet and serve the NCR automotive cluster, the original home of Sellowraps manufacturing operations since 1985. Each facility is equipped with injection moulding machines, foam processing equipment and film fabrication lines, supported by centralized R&D centres, in-house tool rooms and dedicated warehousing infrastructure. The multi-plant architecture allows the Company to offer OEMs geographically proximate supply, a critical requirement for just-in-time manufacturing programs, while providing operational resilience through the ability to transfer production across locations in the event of disruption.

Capacity Utilisation

In FY 2025-26, Sellowrap achieved an overall capacity utilisation of 85% across all three plants and all product categories combined, producing 11.865 crore units against an installed capacity of 13.993 crore units. This level of utilisation reflects both the strength of customer demand through the year and the disciplined capacity management practices adopted across the Companys manufacturing network.

Gurgaon Plant I & II

	2025-26
Product Name	Installed (Units)	Actual (Units)	%
FILM	15,070,286	10,008,049	66
FOAM	34,638,820	31,257,418	90
PLASTIC INJECTION MOULDING	14,051,928	13,245,594	94
Total	63,761,034	54,511,061	85

Pune Plant

	2025-26
Product Name	Installed (Units)	Actual (Units)	%
FILM	2292716.4	1910597	83
FOAM	7175793.8	5125567	71
PLASTIC INJECTION MOULDING	8695631.1	6688947	77
Total	18164141.3	13725111	76

Ranipet Plant

	2025-26
Product Name	Installed (Units)	Actual (Units)	%
FILM	20000000	16550418	83
FOAM	8000000	5886860	74
PLASTIC INJECTION MOULDING	30000000	27975756	93
Total	58000000	50413034	87

Total

	2025-26
Product Name	Installed (Units)	Actual (Units)	%
FILM	37,363,003	28,469,064	76
FOAM	49,814,614	42,269,845	85
PLASTIC INJECTION MOULDING	52,747,559	47,910,297	91
Total	139925175.3	118649206	85

Sellowrap enters FY 2026-27 from a position of operational strength, financial momentum and strategic clarity. With a confirmed order book of Rs. 275 crore and an execution timeline of approximately 24 months, the Company has exceptional near term revenue visibility. Prototype approvals already secured for FY27 to FY28 are expected to generate incremental revenue of Rs. 50 to 60 crore from export programs alone, extending the pipeline visibility well into the next financial year.

The addition of 4 to 5 injection moulding machines in FY27 will expand the Companys production capacity meaningfully, creating headroom for the ramp up of new OEM programs without disrupting existing customer delivery obligations. New OEM targets including VinFast, JSW, Toyota and Honda represent a step up in customer profile and program complexity, and successful qualification with even one of these accounts would materially expand the Companys addressable revenue base over the following two to three years.

On the export front, the Companys concentration in Europe and Asia, with minimal direct US tariff exposure, provides a structural advantage in the current global trade environment. With export revenue contributing 23% of total revenue and growing, the Companys strategy of building prototype approval pipelines well ahead of commercial program starts ensures that export growth is visible, contracted and funded before it flows through the income statement.

Domestically, Indias record vehicle sales in FY26 and the structural demand tailwinds from repo rate cuts, income tax relief and rural income growth provide a strong operating environment for the coming year. The Companys EV and ICE agnostic product portfolio ensures that the accelerating electric vehicle adoption in India strengthens rather than threatens its demand outlook, as foam, sealing, film and injection moulded components are required across both powertrain types.

The fourfold increase in R&D investment from Rs. 0.28 crore in FY25 to Rs. 1.1 crore in FY26 is expected to begin yielding commercial returns through FY27 and FY28 as prototype programs convert to production contracts and new product categories including kinematic parts, ambient lighting components and NVH solutions move closer to OEM qualification. The Companys planned investments in in-house CAE, mold flow analysis and CMM scanning capability will further reduce development cycle times and external validation costs, improving both the speed and economics of new program launches.

Management remains focused on protecting and improving margins through price pass through recovery on raw material cost increases, automation led efficiency gains of two to three percent annually, and the progressive improvement in product mix as higher complexity and higher margin programs grow as a share of total revenue. The combination of a strong order book, an expanding customer base, rising R&D capability and a disciplined operational framework positions Sellowrap well for sustained and profitable growth through FY27 and beyond.

Cautionary Statement

Certain statements in this Annual Report relating to the Companys outlook, objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied, depending on the evolution of economic conditions, government policies, demand and supply conditions in the automotive sector, input cost fluctuations, currency movements, geopolitical developments and other incidental factors over which the Company may have limited or no control. The Company does not undertake any obligation to publicly update or revise any such forward looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward looking statements, which speak only as of their respective dates.