SNL Bearings Ltd Management Discussions

ANNEXURE I

Industry Structure and Developments

SNL Bearings Limited operates in the anti-friction bearing industry catering primarily to Automotive OEMs, Replacement Market and Export customers. The Companys product portfolio comprises needle roller bearings and bearing components used in automotive and engineering applications.

The Indian bearing industry continues to benefit from growth in automotive infrastructure development and increasing localization initiatives. Government programs such as Make in India, Production Linked Incentive (PLI) Schemes and investments in infrastructure and manufacturing continue to support long-term growth.

The Companys business continues to be predominantly driven by Original Equipment Manufacturers (OEMs), with the balance contributed by replacement market and export sales. During FY 2025-26, the overall business mix remained largely stable. The composition of export sales witnessed a positive shift during the year with increasing contribution from industrial applications through supplies to group entities, representing an important diversification beyond the Companys

India remains one of the fastest-growing automotive markets globally and is currently the worlds third-largest vehicle market after China and the United States. The Indian automotive industry continues to attract investments from major global vehicle manufacturers, many of whom have established or are expanding manufacturing facilities in the country to serve both domestic and export markets. The automotive sector remains one of the key pillars of the Indian economy and is among the largest contributors to the countrys manufacturing output. Long-term growth prospects in personal mobility remain strong, supported by Indias large geographical spread, growing population and relatively low vehicle penetration levels. Growth in goods mobility is being driven by the increasing need for efficientsupply chains connecting producers and markets, supported by continuous improvements in road and logistics infrastructure. India also continues to strengthen its position as a global manufacturing and export hub, supported by increasing localization, supply chain diversification initiatives and policy support for exports.

Economic Environment and Outlook

The global economy during FY 2025-26 continued to face challenges arising from geopolitical uncertainties, evolving trade policies and supply chain disruptions. The ongoing Russia-Ukraine conflict, tensions in the Middle East, including the Israel-Iran conflict, and disruptions to international shipping routes contributed to volatility in energy prices, freight costs and commodity markets, particularly steel, oil and other industrial inputs. In addition, tariff-related measures by major economies and currency fluctuations continued to create uncertainty in global trade and manufacturing supply chains.

Despite these challenges, the Indian economy continued to demonstrate resilience and remained one of the fastest-growing major economies globally. As per the RBI Monetary Policy Update dated 5 June 2026, the Reserve Bank of India maintained the policy repo rate at 5.25% while highlighting concerns relating to inflationary pressures, geopolitical uncertainties and their potential impact on economic growth. The RBI has revised its FY 2026-27 inflation forecast upwards to 5.1% and moderated its GDP growth projection to 6.6%. While inflationary pressures have increased due to geopolitical tensions, elevated energy prices and supply chain disruptions, Indias macroeconomic fundamentals remain strong. Rising capacity utilisation in the manufacturing sector, healthy credit growth, continued infrastructure development, GST rationalisation and resilient domestic demand are expected to support industrial production and growth across the automotive, engineering and industrial sectors. Continued policy support, infrastructure investments and private sector participation are expected to sustain growth momentum over the medium term.

The Government of India continues to promote manufacturing competitiveness through initiatives such as Make in India, Production Linked Incentive (PLI) Schemes, Automotive Mission Plan 2026, Vehicle Scrappage

Policy, EV-focused incentives and investments in infrastructure, digitalization, technology and Artificial

Intelligence. These initiatives are expected to strengthen domestic manufacturing capabilities and enhance Indias position in global supply chains. The automotive and industrial manufacturing sectors, which constitute key demand drivers for the bearing industry, are expected to benefit from ongoing industrial development and infrastructure spending.

The automotive sector continued to perform steadily across passenger vehicles, commercial vehicles, farm equipment and two-wheeler segments, while the industrial sector benefited power, construction equipment and engineering industries. The long-term outlook for the Indian automotive and engineering sectors remains positive, supported by favourable demographics, infrastructure development and continued policy support for manufacturing.

Opportunities and Threats Opportunities

• Growth in Indian automotive and industrial production.

• Increasing localization initiatives by OEM customers.

Export opportunities arising from global supply chain diversification and China+1 strategies.

• Growing demand from hybrid and electric vehicle platforms.

• Expansion of infrastructure, railways and manufacturing sectors.

• Increasing automation, industrialization and engineering applications

Diversification into industrial export markets.

Threats

• Intense competition from low-cost imports.

• Volatility in steel and other raw material prices.

Foreign exchange fluctuations.

• Geopolitical uncertainties impacting global demand and supply chains.

• Continuous need for investments in technology and product development.

• Elevated energy and commodity prices caused by higher oil prices and supply chain disruptions leading to higher logistics and shipping costs.

Financial Performance

Revenue from operations increased by 10.6% to Rs. 5,662 lakhs during FY 2025-26 from Rs. 5,119 lakhs in the previous year.

Profit before tax (PBT) stood at Rs. 1,458 lakhs compared to Rs. 1,414 lakhs in FY 2024-25. The Companys operating performance remained healthy, supported by revenue growth, improved capacity utilization and continued focus on operational efficiencies. However, growth in profitability was moderated by lower other income during the year due to lower investment income and fair valuation gains arising from volatility in financial markets.

Profit after tax (PAT) remained stable at Rs. 1,085 lakhs during FY 2025-26.

The Company maintained a strong financial position during the year. Total assets increased to Rs. 8,422 lakhs from Rs. 7,503 lakhs in the previous year, while net worth increased to Rs. 7,503 lakhs from Rs. 6,784 lakhs. The Company continued to remain debt-free and maintained healthy liquidity through cash, bank balances and investments.

In line with its long-term growth strategy and anticipated increase in customer demand, the Board of Directors has approved a capital expenditure plan of approximately Rs. 8 Crore towards capacity expansion and modernization initiatives. The proposed investment is expected to strengthen manufacturing capabilities, improve operational efficiencies and support future business growth.

The Board of Directors has recommended a dividend of Rs. 15 per equity share (150% of face value of 10 per share) for FY 2025-26, reflecting the Companys commitment to delivering sustainable value to shareholders.

Risks and Risk Mitigation

The Company is exposed to external business risks, operational risks and financial risks.

External risks arise from market competition, fluctuationsin raw material prices, changing customer demand and global economic developments. Operationalrisksrelatetomanufacturingefficiency, quality performance and supply chain reliability. Financial risks primarily include foreign exchange fluctuations, volatility in investment income and changes in financial market conditions.

Recent geopolitical developments in West Asia, volatility in energy and commodity prices, higher oil prices, fluctuations in foreign exchange markets and disruptions in global shipping routes may continue to influence input costs, export demand, supply chain efficiency, logistics and shipping costs and overall across industries.The Company has established a structured risk management framework under the oversight of the Board of Directors and Audit Committee. Risks are periodicallyidentified,assessed and prioritized based on probability and impact, and suitable mitigation measures are implemented. and continuously monitorsTheCompanymaintainsmarket diversified developments. may impact treasury income in the short Volatilityinfinancial term; however, strong operating cashflows, financialmanagement debt-freebalancesheetandprudent help mitigate such risks.

Internal Control Systems and Adequacy

The Company has adequate internal control systems commensurate with the size and nature of its operations.

These systems ensure reliability of financialreporting, safeguarding of assets, compliance with applicable laws and regulations and efficient utilization of resources.

Independentinternalaudits financialareas . conductedperiodicallycoveringsignificantoperationaland

Audit findings are reviewed by management and the Audit Committee, and necessary corrective actions are implemented to strengthen business processes and controls.

Segment-wise Performance

The Company continues to operate primarily in the bearings segment. Automotive OEMs remained the principal source of revenue during FY 2025-26. Export sales continued to contribute to the business mix, with increasing participation in industrial applications supporting diversificationof the Companys end-use markets and customer base.

Industrial Relations and Human Resource Management

Industrial relations remained cordial throughout the year.

The Company continues to invest in employee development through training, skill enhancement and employee engagement initiatives. Focus remains on improving productivity, quality, safety and operational excellence. The Company also continues to implement automation and process improvement initiatives aimed at enhancing competitiveness and customer satisfaction.

Details of Significant Changes in Key Financial Ratios

Ratio	2025-26	2024-25	Change (%)	Explanation where change is more than 25%
Current Ratio	10.80	10.68	1%	-
Debt Equity Ratio	Nil	Nil	-	-
Return on Equity Ratio	15%	17%	(11%)	-
Inventory Turnover Ratio	1.61	1.52	6%	-
Trade Receivables Turnover	5.97	6.43	(7%)	-
Ratio
Trade Payables Turnover	5.84	7.65	(24%)	-
Ratio
Net Capital Turnover Ratio	0.90	0.96	(6%)	-
Net Profit Ratio	19%	21%	(10%)	-
Return on Capital Employed	19%	20%	(8%)	-
Return on Investment	5%	8%	(35%)	Lower investment income and fair valuation gains due to market volatility during the latter part of the financial year.

Outlook

The long-term outlook for the Indian automotive and engineering sectors remains positive. Rising capacity utilisation in the manufacturing sector, healthy credit growth, continued infrastructure development and resilient domestic demand are expected to support growth across the automotive and industrial manufacturing sectors, which remain key demand drivers for the bearing industry. To capitalize on future opportunities, the Board has approved a capital expenditure program of approximately Rs. 8 crore for capacity expansion and modernization. This investment is expected to enhance production capabilities, improve competitiveness and support the Companys long-term growth objectives.

The Company remains focused on operational excellence, cost optimisation, product quality enhancement, technological advancement and customer diversification to effectively address emerging challenges and capitalize on growth opportunities in the domestic and international markets. The management continues to closely monitor macroeconomic developments and implement appropriate strategies to strengthen the Companys competitive position and long-term sustainable growth.

The Company will continue to focus on strengthening customer relationships, expanding opportunities in domestic and export markets, improvingoperationalefficiencies, developing new products and enhancing shareholder value. With its strong balance sheet, debt-free status, approved growth investments and established customer base, the Company remains well positioned to capitalize on future growth opportunities.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable laws and regulations.Actualresultsmaydiffermaterially from those expressed or implied due to various factors including economic conditions, market developments, competitive pressures, regulatory changes and other risks beyond the Companys control.

The Company assumes no obligation to publicly amend, modify or revise any forward-looking statements based on subsequent developments, information or events.

	FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
	FOR SNL BEARINGS LIMITED
	HARSHBEENA ZAVERI
PLACE: MUMBAI	CHAIRPERSON
DATE: MAY 04, 2026.	DIN: 00003948