Shivam Autotech Ltd Management Discussions

ANNEXURE ‘B TO BOARDS REPORT

1. BUSINESS OVERVIEW

FY 2025-26 was a challenging year for Shivam Autotech Limited. The Companys performance was impacted by working capital and liquidity constraints, which restricted production capacity and limited its ability to fully participate in available business opportunities during parts of the year.

At the same time, the underlying Indian automotive industry remained resilient, with major vehicle categories recording strong domestic sales during the year. Against this backdrop, managements focus during FY 2025-26 was on maintaining operational continuity, servicing customers, protecting established customer relationships and continuing investments in product development and organisational capabilities. The Company reported revenue from operations of

_ 409.58 crore during FY 2025-26 compared with _ 453.98 crore in FY 2024-25. EBITDA stood at _ 31.80 crore compared with _ 44.41 crore in the previous year, while EBITDA margin moderated to 7.76% from 9.78%. The Company reported a loss after tax of _ 81.33 crore compared with a loss of _ 48.04 crore in FY 2024-25.

The decline in operating performance was primarily attributable to lower business volumes arising from liquidity constraints, resulting in lower capacity utilisation and reduced operating leverage. Higher finance costs further affected the Companys profitability.

During the year, management remained focused on strengthening the Companys operating and financial foundation. Funding support received during December 2025 provided greater financial flexibility and enabled the Company to address a significant portion of the immediate working capital constraints.

Looking ahead, the Companys priorities are centred on restoring operating scale and capacity utilisation, improving manufacturing productivity, increasing customer and product participation, and selectively expanding its presence across automotive and non-automotive applications.

2. ECONOMIC ENVIRONMENT AND INDUSTRY OUTLOOK

Global Economic Environment

FY 2025-26 was characterised by an evolving global economic and geopolitical environment. While inflationary pressures moderated across several major economies, geopolitical developments, changing trade policies, supply-chain realignments and commodity-price volatility continued to influence manufacturing and investment decisions.

Manufacturing and industrial sectors experienced varying levels of recovery across geographies, while businesses continued to focus on operational efficiency, technology adoption and supply-chain resilience.

Fortheglobalautomotiveindustry,thesedevelopments reinforced the importance of cost competitiveness, localisation and resilient sourcing networks. Automotive manufacturers and suppliers continued to balance investments across internal combustion engine, hybrid and electric vehicle platforms in response to changing regulatory requirements, technology developments and consumer preferences.

Automobile Domestic Sales Trends_ (In Numbers)

Category	2021-22	2022-23	2023-24	2024-25	2025-26
Passenger Vehicles	30,69,523	38,90,114	42,18,746	43,01,848	46,43,439
Commercial Vehicles	7,16,566	9,62,468	9,67,878	9,56,671	10,79,871
Three Wheelers	2,61,385	4,88,768	6,91,749	7,41,420	8,36,231
Two Wheelers	1,35,70,008	1,58,62,087	1,79,74,365	1,96,07,332	2,17,05,974
Grand Total	1,76,17,482	2,12,03,437	2,38,52,738	2,56,07,271	2,82,65,515

Indian Economic Environment

India continued to demonstrate resilient economic fundamentals during FY 2025-26, supported by domestic consumption, infrastructure investment, manufacturing activity and continued policy support. The manufacturing sector continued to benefit from increasing localisation, supply-chain diversification and adoption of automation and digital technologies. These structural trends remain favourable for Indian engineering and automotive component manufacturers with established manufacturing capabilities, customer relationships and the ability to meet evolving quality, cost and technology requirements.

Automotive Industry

The Indian automotive industry remained resilient during FY 2025-26, supported by domestic demand, infrastructure activity, improving consumer sentiment and increasing vehicle penetration.

According to the Society of Indian Automobile Manufacturers (SIAM), domestic passenger vehicle sales reached approximately 46.43 lakh units during FY 2025-26, while commercial vehicle sales stood at approximately 10.80 lakh units. Three-wheeler sales reached approximately 8.36 lakh units and two-wheeler sales approximately 2.17 crore units.

The industrys growth was accompanied by structural changes including premiumisation, increasing localisation, greater adoption of technology, evolving customer expectations and the gradual transition towards electric mobility.

For automotive component manufacturers, these trends create opportunities to participate in higher-value vehicle platforms, deepen customer relationships, develop new applications and increase localisation.

Electrification and Technology Transition

Electric mobility continued to gain momentum in India during FY 2025-26, although conventional powertrain technologies continued to account for a substantial proportion of overall vehicle volumes.

The transition towards electrification is changing the composition of component demand and creating opportunities for manufacturers capable of adapting their product portfolios and engineering capabilities to emerging vehicle architectures.

For Shivam Autotech, the transition reinforces the importance of maintaining a balanced product portfolio while selectively developing products relevant to emerging mobility applications. The Company continues to evaluate and develop EV-compatible products and components, leveraging its existing engineering and manufacturing capabilities.

The Companys strategy is not dependent on a single propulsion technology. Instead, it is focused on maintaining relevance across current vehicle platforms while building capabilities in areas where future mobility trends create commercially attractive opportunities.

Supply-Chain Realignment and Localisation

Global automotive supply chains continued to diversify as OEMs and Tier-1 suppliers sought to improve resilience and reduce concentration risks.

Indias established automotive ecosystem, manufacturing capabilities, engineering talent and competitive cost structure position the country to benefit from this shift.

Increasing localisation by OEMs and Tier-1 suppliers and the continued diversification of global sourcing provide opportunities for Indian component manufacturers to increase domestic value addition and participate in international sourcing programmes. For Shivam Autotech, these developments create opportunities to strengthen its participation across existing customer accounts, pursue new customers and applications and selectively expand its international presence.

3. BUSINESS PROFILE AND POSITIONING

Shivam Autotech Limited is primarily an automotive component manufacturer with capabilities spanning precision engineering utilising near net shape forging technology across all three temperature regimes – cold, warm & hot, machining, gear manufacturing, heat treatment and related manufacturing processes. During FY 2025-26, approximately 97% of the Companys revenue was derived from the automotive business, with approximately 3% contributed by non-automotive applications.

The Companys automotive product portfolio includes transmission gears and shafts, steering components and other precision-engineered components supplied to leading Tier-1 suppliers and OEMs across domestic and international markets.

Non-Automotive Business

While automotive components remain the Companys core business, Shivam Autotech already supplies products across a range of non-automotive applications, including industrial components, renewable energy equipment, power-sector components and construction tools.

The Company is focused on strengthening its presence in these segments by leveraging its existing manufacturing capabilities, engineering expertise and process know-how.

The objective is to build these businesses as complementary growth avenues while continuing to focus on the Companys core automotive operations.

Revenue Mix

4. COMPANY PERFORMANCE

Financial and Business Performance

FY 2025-26 was a challenging year for the Company, primarily due to working capital and liquidity constraints that affected production capacity and business volumes during parts of the year.

The funding support secured during December 2025 provided greater financial flexibility and enabled management to address a significant portion of the immediate working capital constraints. Management remained focused throughout the year on maintaining customer relationships, operational continuity and the capabilities required to support future growth.

Financial Snapshot

Particulars	FY	FY	Change
	2024-25	2025-26
Revenue from Operations (_ crore)	453.98	409.58	-9.8%
EBITDA (_ crore)	44.41	31.80	-28.4%
EBITDA Margin	9.78%	7.76%	-202 bps
Loss After Tax	48.04	81.33	69.29%
(_ crore)

5. OPERATIONAL PERFORMANCE

Capacity Utilisation and Manufacturing Performance

Lower business volumes during FY 2025-26 resulted in reduced utilisation of the Companys manufacturing capacity and adversely affected fixed-cost absorption. Improving capacity utilisation is therefore an important component of the Companys profitability improvement agenda. Management is focused on rebuilding business volumes, improving productivity, strengthening manufacturing efficiency and increasing operating leverage as financial flexibility improves.

Customer Relationships and Business Continuity

Maintaining customer relationships and continuity of supply remained an important priority during the year. Despite the operating constraints experienced during FY 2025-26, the Company continued to focus on meeting customer requirements and protecting its established customer relationships.

The Companys existing relationships with domestic and international customers provide a foundation for increasing wallet share and pursuing additional business opportunities.

6. PRODUCT PORTFOLIO AND PRODUCT DEVELOPMENT

The Company continued to focus on strengthening its product portfolio and developing technically advanced and value-added products aligned with evolving customer requirements.

Management believes that maintaining product-development capabilities through a period of operating and financial constraints is important to protect the Companys future competitive position. Accordingly, available resources were deployed judiciously between supporting existing business requirements and progressing selected new-product opportunities.

The Companys product-development strategy is focused on leveraging its existing capabilities in precision manufacturing, forging, machining, gear manufacturing and related processes to participate in new applications and increase value addition.

7. NON-AUTOMOTIVE BUSINESS AND DIVERSIFICATION

Shivam Autotechs non-automotive business already spans industrial components, renewable energy equipment, power-sector components and construction tools.

The Company is focused on strengthening its presence in these segments by leveraging existing manufacturing infrastructure, engineering capabilities and process expertise.

The strategy is to build these businesses as complementary growth avenues, increase utilisation of existing capabilities and broaden the Companys customer and end-market base.

Diversification is therefore being pursued selectively, with emphasis on segments where the Company can establish a sustainable competitive position and generate attractive returns on deployed capabilities.

8. INTERNATIONAL MARKETS AND EXPORT OPPORTUNITIES

Indias growing importance as a global manufacturing and sourcing destination continues to create opportunities for Indian automotive component manufacturers.

Shivam Autotech intends to leverage its manufacturing capabilities and customer relationships to selectively pursue international opportunities and expand its presence across global markets.

Increasing export participation can support customer and geographic diversification while providing access to additional growth opportunities beyond the domestic market.

9. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL ALLOCATION

Strengthening the Companys financial position remains a key management priority. The Company is planning to pursue a Rights Issue during FY 2026-27, subject to requisite approvals and applicable regulatory and market conditions. The proposed capital raise is intended to strengthen the Companys financial position, support working capital requirements and provide the financial flexibility required to pursue identified business opportunities.

The Company remains focused on disciplined capital allocation, with priority given to maintaining operational continuity, supporting customer requirements, improving manufacturing efficiency and investing selectively in commercially attractive growth opportunities.

10. TECHNOLOGY, DIGITALISATION AND OPERATIONAL IMPROVEMENT

Digitalisation is an important component of the Companys efforts to strengthen operational discipline, process visibility and decision-making.

During FY 2025-26, the Company continued to focus on digitalisation initiatives aimed at strengthening process standardisation, data integrity, reporting visibility and control effectiveness across the organisation.

These initiatives are intended to improve the quality and timeliness of management information, strengthen process controls and support more data-driven decision-making across functions.

The Companys digitalisation agenda is being pursued alongside manufacturing and process-improvement initiatives, with the objective of creating a more efficient, transparent and scalable operating platform.

11. INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

Shivam Autotech maintains an internal control framework designed to support operational efficiency, reliable financial reporting, safeguarding of assets and compliance with applicable laws and regulations.

The Internal Audit function reports to the Audit Committee and covers key operational and financial processes, including inventory controls, scrap reconciliation, bill-of-material verification and spares management.

Internal audit observations and recommendations are reviewed periodically by the Audit Committee, with corrective actions monitored for implementation.

The Company is also strengthening its digital processes with a focus on process standardisation, data integrity, reporting visibility and control effectiveness across the organisation.

Management believes that the internal control systems are adequate and commensurate with the size and complexity of the Companys operations.

12. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Human capital remains an important enabler of the Companys operational and strategic priorities.

The Company employs personnel across manufacturing, engineering, quality, commercial and corporate functions, comprising skilled, semi-skilled and support personnel.

During FY 2025-26, management continued to focus on workforce capability, training, skill development, performance management and employee engagement.

As the Company strengthens its focus on productivity, digitalisation, automation and product development, capability building will remain important to ensuring that the organisation has the technical and managerial skills required to support its future growth.

Industrial relations remained cordial during the year.

13. SUSTAINABILITY AND RESPONSIBLE MANUFACTURING

Sustainability considerations continue to be integrated into the Companys manufacturing and operational practices, with a focus on energy efficiency, responsible resource utilisation, waste reduction and increased adoption of cleaner energy sources.

The Company continues to monitor its greenhouse gas emissions and pursue initiatives aimed at improving energy efficiency and increasing the use of renewable energy.

Sustainability is also becoming increasingly relevant to customer requirements and international supply chains. The Company therefore continues to strengthen its preparedness to meet evolving customer and regulatory requirements relating to sustainability and emissions data.

14. OPPORTUNITIES AND CHALLENGES Opportunities Indias Automotive Growth

The continued expansion of Indias automotive market provides a favourable structural backdrop for domestic component manufacturers. Growth across passenger vehicles, commercial vehicles, two-wheelers and other applications supports long-term demand for precision-engineered components.

Localisation

Increasing localisation by OEMs and Tier-1 suppliers presents opportunities for domestic component manufacturers with competitive quality, cost, delivery and engineering capabilities.

Global Sourcing and Supply-Chain Diversification

The diversification of global automotive supply chains create opportunities for Indian manufacturers to increase their participation in international sourcing programmes.

Premiumisation

The increasing share of utility vehicles and premium vehicle platforms can result in higher component content per vehicle and create opportunities for value-added products.

Electric Mobility

The gradual transition towards electric mobility creates opportunities for manufacturers capable of adapting their products and engineering capabilities to changing vehicle architectures.

Non-Automotive Applications

The Companys established presence in industrial components, renewable energy equipment, power-sector components and construction tools provides a platform to strengthen non-automotive revenues and broaden its end-market exposure.

Customer and Product Diversification

Increasing wallet share with existing customers, adding new customers and developing new products provide multiple avenues for future growth.

Challenges

Working Capital and Liquidity

Maintainingadequateliquidityanddisciplinedworking capital management remains important to ensuring uninterrupted operations and enabling the Company to participate fully in available business opportunities. The Current fund raising activity through Right Issue is an important step in this direction.

Commodity and Energy Costs

Volatility in commodity pricing, energy and other input costs can affect manufacturing costs and profitability.

Customer Pricing Pressure

Competitive conditions and continuing cost optimisation by OEMs and Tier-1 suppliers can place pressure on component pricing and margins.

Technology Transition

Changes in vehicle architecture, electrification, safety requirements and manufacturing technologies require continuous investment in engineering and manufacturing capabilities.

Execution Risk

The Companys ability to convert its growth initiatives into financial performance will depend on successful execution across customer acquisition, product development, capacity utilisation, working capital management and manufacturing productivity.

15. STRATEGIC PRIORITIES AND FUTURE OUTLOOK Market Outlook

The long-term outlook for the Indian automotive industry remains constructive, supported by economic growth, increasing vehicle penetration, infrastructure development, localisation and Indias growing role as a global manufacturing and sourcing destination.

The Company also sees opportunities to strengthen its presence in non-automotive applications and international markets.

For Shivam Autotech, the immediate objective is to translate improved financial flexibility and the Companys existing manufacturing and customer capabilities into improved operating performance.

Strategic Priorities

(i) Restore Operating Scale and Capacity Utilisation

The Company will focus on rebuilding business volumes and improving utilisation of its manufacturing capacity. Higher utilisation, together with productivity improvements and cost discipline, is expected to support better operating leverage.

(ii) Deepen Customer Relationships

The Company intends to increase wallet share with existing customers while selectively pursuing new customer relationships across vehicle segments, applications and geographies.

(iii) Expand Product Participation

The Company will continue to develop new products and applications that leverage its existing engineering and manufacturing capabilities and respond to evolving customer requirements.

(iv) Strengthen Non-Automotive Presence

The Company intends to strengthen its presence in industrial components, renewable energy equipment, power-sector components and construction tools, building on its existing participation in these segments.

(v) Build Future-Ready Capabilities

The Company will continue to selectively develop capabilities relevant to electric mobility and evolving automotive technologies while maintaining a diversified product portfolio.

Management Outlook

The Company recognises that restoring sustainable growth and profitability will require execution of available orders.

The objective is not merely to restore historical revenue levels, but to build a more resilient business characterised by stronger customer participation, improved capacity utilisation and greater operational efficiency.

The Company enters FY 2026-27 with a clear focus on operational recovery and selective growth. Management believes that the combination of Indias favourable automotive fundamentals, the Companys established manufacturing capabilities and customer relationships, its existing presence in non-automotive applications, ongoing product-development initiatives and planned measures to strengthen its financial position provides a foundation for improving business performance over the medium term.

16. KEY FINANCIAL RATIOS

In accordance with the applicable requirements of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company provides details of significant changes in key financial ratios, i.e., changes of 25% or more compared with the immediately preceding financial year, together with explanations for such changes. Changes in Return on Net Worth are also disclosed with explanations.

SL No. Particulars	Formula	FY 2025-26	FY 2024-25	In % Reasons if any
1 Net Profit Margin	Net Profit after Tax/ Revenue from Operation	-0.20	-0.11	87.65 #
2 Debt Service Coverage Ratio	(Profit Before Tax + Finance Cost + Depreciation)/ (Finance Cost for the Period or Year + Principal Repayment made during the period or year + Interest Capitalised)	0.19	0.47	-59.95 ##
3 Trade Receivable Turnover Ratio	Revenue from Operation /Average Accounts Receivable	7.38	6.19	19.25
SL Particulars	Formula	FY	FY	In %	Reasons if any
No.		2025-26	2024-25
4 Inventory Turnover Ratio	Revenue from Operation /Average Inventory	4.96	5.62	-11.76
5 Debt- Equity Ratio	(Long Term Debt + Short Term Debt/ Equity	-9.80	10.59	-192.58	Due to total equity turning negative from accumulated operational losses while total borrowings continued to increase.
6 Current Ratio	Current Asset/ Current Liability	0.76	0.46	66.94	Ratio improved due to a substantial reduction in current liabilities that outpaced the minor changes in current assets.
7 Return on Equity Ratio	Net profit after tax / Average Equity	-17.68	-1.10	1,502.19	###
8 Return on Capital Employed	"Earning before interest and taxes / Capital Employed"	-0.02	0.05	-129.47	Due to operating profitability decreases from a positive position into an operating loss.
9 Return on Investment	Net profit after tax / Total Asset	-0.17	-0.09	84.45	Due to increasing net losses while the total asset base contracted only slightly.
10 Trade payable Turnover Ratio	Net Credit Purchase /Average Trade payable	2.85	2.82	0.97
11 Capital turnover Ratio	Net Sales /Capital Employed	1.56	2.18	-28.35	Due to decrease in revenue from operations occurring simultaneously with an expansion in total capital employed.

# Ratio deteriorate due to increase in operational expenses mainly on account of finance cost.

## Ratio deteriorated due to a drop in operating profits combined with increase in total debt servicing requirements, driven heavily by increased principal repayments.

### Ratio deteriorated due to sharply increasing net losses alongside a severe erosion of the average equity base.

17. CAUTIONARY STATEMENT

Certain statements in this Annual Report and the Management Discussion & Analysis describing the Companys objectives, expectations, estimates, outlook, projections or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations.

These statements are based on managements current expectations and assumptions and are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied.

Factors that may affect the Companys actual results include changes in economic conditions, automotive industry demand, customer requirements, commodity and energy prices, interest rates, foreign exchange movements, supply-chain conditions, technology changes, regulatory developments, competitive conditions, availability of financing and other factors beyond the Companys control.

The Company does not undertake any obligation to publicly update or revise any forward-looking statements, except as may be required under applicable laws and regulations.

	For and on behalf of the Board	For and on behalf of the Board
	Neeraj Munjal	Charu Munjal
Place: Gurugram	Managing Director	Whole Time Director
Date: August 13, 2026	DIN: 00037792	DIN: 03094545