Sterling Tools Ltd Management Discussions

ECONOMIC OVERVIEW

GLOBAL ECONOMY¹

OVERVIEW

In CY 2025, the global economy continued to demonstrate resilience despite moderating inflation, restrictive financial conditions and ongoing geopolitical uncertainties. Global GDP growth stood at 3.5%, supported by resilient services demand, stable labour market conditions across major economies and gradual monetary policy normalisation. Growth trends, however, remained uneven across regions. Emerging Market and Developing Economies recorded a stronger expansion of around 4.4%, while Advanced Economies grew at a comparatively moderate pace of 1.9%.

Global headline inflation moderated to an estimated 4.1% for CY 2025², supported by easing supply chain constraints and stabilising commodity prices. Global trade volumes also witnessed a modest recovery, though they remained below long-term averages due to geopolitical fragmentation and structural realignment of global supply chains.

Overall, the global economy remained stable during the year, although divergent regional growth patterns and evolving macroeconomic conditions continued to necessitate a cautious and adaptive business approach across globally integrated industries.

OUTLOOK

The global economic outlook remains cautiously optimistic, with growth projected to moderate over the near term. Global GDP is projected to grow by 3.1% in CY 2026 and 3.2% in CY 2027, with emerging markets remaining the primary drivers of expansion. However, elevated energy prices and supply-side disruptions may continue to exert inflationary pressures, with global headline inflation projected at around 4.4% in 2026.

The Euro area outlook is expected to improve gradually, supported by recovery in manufacturing activity and global trade linkages. Further, the proposed EU-India Free Trade Agreement (FTA) is expected to strengthen bilateral trade by reducing tariff and non-tariff barriers, improving market access and enhancing value-chain integration across key sectors.

The global outlook nevertheless remains exposed to risks arising from geopolitical fragmentation, trade policy uncertainties and commodity price volatility. At the same time, accelerated investments in electric vehicles, clean energy and advanced manufacturing technologies could support productivity-led growth across industrial sectors. Persistent inflation volatility and uncertainty around the timing of monetary easing may continue to influence investment sentiment and global trade flows. Consequently, businesses are expected to maintain a cautious approach while navigating evolving macroeconomic and geopolitical conditions.

OVERVIEW

India continued to remain one of the fastest-growing major economies globally during FY 2025-26, demonstrating strong macroeconomic resilience amid evolving global conditions. Real GDP growth stood at 7.7%,³ driven by robust domestic demand, policy support and sustained public investments. Inflation remained largely contained and remained within the Central Banks target range during the year, aided by stable commodity trends, although intermittent volatility persists due to global factors.

Government-led capital expenditure continued to act as a key growth driver, with public capex increasing significantly to 11.2 trillioninFY2025-26⁴,reflectingasustainedfocusoninfrastructure development, manufacturing and crowding in private investment. The automotive sector witnessed strong tailwinds, with overall vehicle sales reaching record highs in FY 2025-26, growing by approximately 13.30% year-on-year⁵, driven by rising demand across segments and improving consumer sentiment.

1https://www.imf.org/en/publications/weo/issues/2026/04/14/world-economic-outlook-april-2026 ²https://www.imf.org/-/media/files/publications/weo/2026/april/english/foreword.pdf

3https://www.mospi.gov.in/uploads/latestReleases/latest_release_1780655857536_5ac01869-ca4a-422d-b7a7-57b81da60932_Press_Note_on_GDP_Estimates_ for_Q4_2025-26_and_PE_FY_2025-26_F.pdf ⁴https://www.pib.gov.in/PressReleasePage.aspxRsPRID=2222521&reg=3&lang=1 ⁵https://fada.in/images/press-release/169d329fc83770FADA%20releases%20FY%202026%20and%20March%202026%20Vehicle%20Retail%20Data.pdf

The domestic manufacturing sector continued its steady expansion during FY 2025-26, supported by policies such as Make in India, Production Linked Incentive (PLI) schemes and increasing localisation efforts across industries. Manufacturing Gross Value Added (GVA) grew by 6.6% in FY 2025-26, reflecting improving industrial activity and higher value-added production. Industrial momentum remained robust, with the Index of Industrial Production (IIP) recording 8.1% growth in December 2025, led by strong growth in sectors such as motor vehicles, electronics and transport equipment.

Forward-looking indicators also remained encouraging, with the manufacturing Purchasing Managers Index (PMI) staying consistently above the expansion threshold during the year and standing at 55.4 in January 2026, indicating sustained improvement in business conditions and demand environment.⁶ These trends, coupled with infrastructure spending, supply chain diversification and supportive government policies, continued to strengthen Indias position as an emerging global manufacturing hub.

Indias transition towards electric mobility continued to gain traction during the reporting year, supported by strong policy impetus and improving ecosystem readiness. Government of India initiatives, such as the PM E-DRIVE scheme and the Production Linked Incentive (PLI) Scheme for Advanced Chemistry Cell (ACC) Battery Storage, have played an instrumental role in accelerating EV adoption, domestic manufacturing and charging infrastructure development.

India has installed 29,151 public EV charging stations as of 2026, with continued investment of 9.1 billion under the PM E-DRIVE scheme to strengthen the nationwide charging infrastructure.⁷

Indias growth story is underpinned by strong fundamentals, such as continued expansion of the manufacturing and services sectors, government reforms to sustain economic growth and emphasis on infrastructure creation. Another important feature is the revival of Indias private capital expenditure (capex), which augurs well for the economy, going forward.

OUTLOOK

Indias economic outlook remains strong, aided by robust domestic fundamentals and continued policy support. Real GDP growth is projected at 6.6% for FY 2026-27.⁸

Growth is expected to be primarily driven by domestic demand. Private consumption is likely to remain healthy, aided by stable inflation, improving household income levels and gradual recovery in rural demand alongside steady urban consumption. Investment activity is also expected to sustain momentum, supported by continued government capital expenditure of 12.2 trillion in FY

2026-27 and sustained infrastructure development initiatives.⁹

Export growth is expected to remain favourable, with the proposed India-European Union Free Trade Agreement (FTA) likely to provide medium-term support to trade and manufacturing activity, subject to its conclusion and implementation. However, ongoing global uncertainties, geopolitical developments and potential supply chain disruptions may continue to create volatility across trade and financial markets, necessitating a cautious approach.

INDUSTRY OVERVIEW

INDIAN AUTOMOBILE INDUSTRY¹⁰

India continues to strengthen its global automotive footprint, ranking among the top three in passenger vehicle sales, while also serving as a key manufacturing hub.

Overall vehicle production across passenger vehicles, commercial vehicles and two and three wheelers stood at 34.7 million units during April 2025 to March 2026, reflecting sustained demand momentum and improving manufacturing activity across segments.

The passenger vehicle segment recorded its highest-ever sales of 4.6 million units in FY 2025-26, registering a growth of 7.9% over the previous year. Growth moderated due to the elevated base of the previous year, with demand heavily concentrated in the utility vehicle segment. Passenger vehicle exports also reached an all-time high, reflecting a growth of 17.5% over FY 2024-25. Export demand remained resilient across major markets such as the Middle East, Africa and Latin America.

The two-wheeler segment achieved record sales of 21.7 million units during FY 2025-26, reflecting growth of 10.7%. The segment benefited from improving rural demand, new product launches and favourable consumer sentiment. Exports also witnessed a strong recovery, reaching 5.18 million units and growing by 23.4% over the previous year, aided by improving overseas demand and favourable currency movements.

The commercial vehicle segment delivered a growth of 12.9% over FY 2024-25, marking its best annual performance. Exports also expanded by 17.4%, with neighbouring markets and the Middle East remaining key export destinations.

During FY 2025-26, the Indian farm vehicle segment recorded production of 12,42,032 units, reflecting stable manufacturing activity and continued demand from the agricultural sector. Domestic sales stood at 11,60,231 units, driven by increasing mechanization and sustained rural demand. Export sales reached 1,05,593 units, demonstrating the growing acceptance of Indian farm vehicles in international markets and strengthening the segments global presence.

The industrys growth trajectory remains positive, driven by favourable demographics, rising disposable incomes, expanding infrastructure investment and an accelerated shift towards sustainable mobility solutions.

OUTLOOK

The Indian automotive industry remains positive, supported by strong demand momentum and a favourable policy environment. FY 2025-26 data indicates growth across passenger vehicle, two-wheeler and three-wheeler segments, driven by sustained consumer demand and strengthened market sentiment.

The industry is also expected to benefit from increasing localisation, supply-chain diversification and growing export opportunities. Adoption of electric mobility, particularly across two- and three-wheelers, is likely to accelerate further, supported by policy initiatives, charging infrastructure expansion and improving ecosystem readiness. Overall, the sector remains well-positioned to sustain medium-term growth, supported by structural demand drivers and continued transition towards advanced and sustainable mobility solutions.

Electric Vehicle (EV) Industry

Overview

Indias electric mobility ecosystem continued to witness strong momentum in FY 2025-26, supported by favourable policy interventions, improving consumer acceptance and expanding charging infrastructure. EV adoption in the country has scaled significantly over the past few years, with total registrations crossing 2.45 million units in FY 2025-26.¹¹

Electric two-wheelers continued to account for the largest share of EV volumes, the highest growth rates were however seen in the passenger three-wheelers, passenger vehicles, light commercial vehicles and busses in that order. Growing adoption across these segments continued to support the broader transition towards sustainable transportation.

Government initiatives remained a key enabler for industry expansion. Under schemes such as PM e-DRIVE, over 22 lakh EVs had been supported as of January 2026, with a strong focus on two- and three-wheelers.¹² Additionally, the Govt pushed for additional adoption of electric busses with Convergence Energy Services limited (CESL) concluding tenders for 10,900 Ebuses and having additional tenders 6,230 buses in the pipeline. Further, policy initiatives such as the Scheme for Promotion of Manufacturing of Electric Passenger Cars (SPMEPCI) aim to strengthen domestic manufacturing capabilities through defined localisation and investment thresholds, thereby supporting the development of a self-reliant EV ecosystem.

Infrastructure development also continued to gain momentum during the year. As of early 2026, India had installed over 29,000 public EV charging stations, supported by initiatives such as FAME-II and PM e-DRIVE, alongside increasing private sector participation. Continued expansion of the charging network is expected to reduce range anxiety and support wider EV adoption across regions.¹³

From a structural standpoint, the EV industry continues to benefit from rising fuel costs, improving total cost of ownership, urbanisation-led mobility demand and increasing environmental awareness. The transition is further reinforced by production-linked incentive (PLI) schemes aimed at accelerating advanced battery manufacturing and localisation of EV supply chains.

Overall, Indias EV industry remains well-positioned for long-term growth, supported by favourable regulations, rising investments in localisation and infrastructure development and increasing consumer acceptance. However, challenges such as high upfront costs, supply chain dependencies and uneven charging infrastructure continue to persist. As the ecosystem matures, the sector is expected to create significant opportunities for automotive and auto component manufacturers, particularly across EV-specific components, power electronics and battery system.

EV Registration Trend

Number of Registered Electric Vehicles (EVs) (Nos. in lakh)

OUTLOOK

The outlook for Indias EV industry remains positive, supported by favourablegovernmentpolicies,expandingcharginginfrastructure and rising consumer adoption across segments. Electric two- and three-wheelers are expected to remain key growth drivers, while increasing investments in localisation, battery manufacturing and power electronics are likely to strengthen the domestic EV ecosystem. Despite challenges such as high upfront costs and uneven charging infrastructure, the industry remains well-positioned for long-term growth, supported by policy support and Indias transition towards sustainable mobility.

	GROWTH DRIVERS
Growth Drivers	Description
Government Incentives &	Policy initiatives such as PM e-DRIVE, FAME-II and PLI schemes are accelerating EV adoption,
Localisation Push	domestic manufacturing and localisation of EV components.
Rising EV Penetration	Increasing adoption of electric two- and three-wheeler, E-buses is driving demand for EV-specific
Across Segments	components, electronics and precision engineering products.
Expansion of EV Charging	Growth in public charging infrastructure is improving EV accessibility and supporting long-term
Infrastructure	ecosystem development.
Supply Chain	Increasing investments in advanced manufacturing, battery systems and power electronics are
Diversification & Advanced Manufacturing	creating opportunities for domestic auto-component manufacturers.

INDIAN AUTO-COMPONENT INDUSTRY¹²

OVERVIEW

Driven by resilient domestic demand and deeper integration into global supply chains, the Indian auto-component industry remains a critical pillar of Indias manufacturing ecosystem. The sector continues to strengthen its role in global automotive supply chains, supported by improving quality standards, cost competitiveness and increasing localisation.

The industry reported an estimated turnover of 6.73 lakh crore in FY25, reflecting year-on-year growth of 9.6%. Over the past five years, the sector has expanded at a CAGR of 14%, reflecting its resilience and long-term growth potential.¹³ Growth during the year was supported by sustained demand across passenger vehicles and two-wheelers, along with stable performance in the aftermarket segment.

Exports continued to remain a major contributor to industry growth, increasing by 8% to 1,95,726 crore in FY25, with North

America and Europe remaining key markets. Indias emergence as a preferred global sourcing hub is further reinforced by supply-chain diversification strategies, with global OEMs and Tier-1 suppliers increasingly looking towards India for sourcing and manufacturing partnerships.

The industry is also undergoing a gradual transformation driven by electrification, increasing digitalisation and rising electronics content in vehicles. While EV adoption is accelerating, continued demand for internal combustion engine (ICE) vehicles necessitates parallel investments across both conventional and emerging automotive technologies.

OUTLOOK

Looking ahead, the industry is well-positioned for sustained growth, supported by strong domestic demand, export opportunities and policy support. Indias vehicle production is projected to increase from 30-35 million units currently to 50-55 million units by 2030, which is expected to significantly expand component demand. The sector is also targeting a scale of USD 200 billion by 2030.¹⁴ However, increasing product complexity, rising technology intensity and evolving global dynamics will require continued investments in advanced manufacturing, automation and capability building.

	GROWTH DRIVERS
Growth Drivers	Description
Export Growth & Global OEM Integration	Increasing global OEM sourcing from India, supported by supply-chain diversification, quality improvement and cost competitiveness, is strengthening export opportunities for Indian auto-component manufacturers.
Smart Manufacturing & Automation	Adoption of smart factories, automation, AI-driven analytics and digital manufacturing is improving productivity, quality, traceability and operational efficiency across the industry.
EV Transition & Rising Electronics Content	Increasing electrification and higher electronics integration in vehicles are driving demand for EV- specific components, power electronics and advanced engineering solutions.
Domestic Vehicle Demand	Strong growth across passenger vehicles and two-wheelers, coupled with localisation and import
& Localisation	substitution initiatives, continues to support domestic component manufacturing.

COMPANY OVERVIEW

Sterling Tools Limited is an established automotive components manufacturer with a strong presence in high-tensile cold-forged fasteners, catering to leading Original Equipment Manufacturers (OEMs) across passenger vehicles, commercial vehicles and two-wheelers. Built on consistent quality and deep engineering expertise, the Companys long-term customer relationships sustain its stable standing within the domestic automotive supply chain.

In recent years, the Company has undertaken a strategic transformation to expand beyond its core fasteners business and align with the evolving mobility landscape. Through its subsidiary, Sterling E-Mobility Solutions Limited (Formerly known as Sterling Gtake E-Mobility Limited), the Company has established a presence in the electric mobility segment, offering Motor Control Units (MCUs) and progressively expanding into integrated powertrain and power electronics solutions. The business is actively engaged across multiple vehicle segments, including two-wheelers, three-wheelers and commercial vehicles and is working on a broad portfolio of programmes with OEMs. The product roadmap includes advanced solutions, such as integrated motor-controller systems, rare-earth magnet-free motors, onboard and off-board chargers and DC/DC converters, supported by strategic technology partnerships with global players.

Through strategic global partnerships, the company is bolstering its tech capabilities for advanced mobility expansion. During the year, it entered into a partnership with Nanjing Haohang Technology Co., Ltd. to localise Advanced Rider Assistance Systems (ARAS) for the Indian two-wheeler market, marking its entry into intelligent vehicle safety systems. These partnerships, along with existing alliances in the EV ecosystem, are aimed at accelerating product development, enabling localisation and enhancing the Companys presence in high-value, technology-driven segments.

Further strengthening its position in the EV ecosystem, the Company is developing capabilities in high-voltage components through its subsidiary, Sterling Tech-Mobility Limited. This includes the localisation of critical products such as high-voltage DC contactors and relays, which are currently largely import-dependent. These initiatives are aligned with the Government of Indias focus on increasing domestic manufacturing, localisation and building supply chain resilience under programmes such as Make in India and Aatmanirbhar Bharat. The Company is also pursuing opportunities in adjacent EV-linked product categories, with a focus on import substitution and building indigenous capabilities.

The Companys growth strategy is centred on the Autonomous, Connected and Electric (ACE) mobility ecosystem, with a calibrated shift towards technology-led and high-value-added products. Its approach combines first-mover advantage in emerging segments, partnerships with global technology providers and investments in advanced manufacturing and engineering capabilities. The Company is building a diversified, future-ready portfolio to capitalise on the automotive industrys ongoing transformation. While the transition into new business verticals will scale progressively over the medium term, this strategic focus ensures the organisation is well-positioned to capture emerging growth opportunities as the sector evolves.

OPPORTUNITIES AND CHALLENGES

OPPORTUNITIES

Expansion in EV Powertrain and Power Electronics Portfolio

The Company is actively scaling its presence in the EV ecosystem through its expanding portfolio of powertrain and power electronics products, including MCUs, integrated motor-controller systems, DC/DC converters and onboard/ off-board chargers. With multiple ongoing customer programmes across vehicle segments and initial nominations secured for new product lines, these businesses are expected to drive incremental growth over the medium term.

Import Substitution and Localisation Opportunities

A significant portion of advanced EV components and high-voltage systems continues to be imported into India. The Company is strategically focusing on localising such products, including high-voltage DC contactors and advanced power electronics, supported by technology partnerships and greenfield manufacturing initiatives. This enables the company to capitalise on localisation and supply chain diversification trends.

First-Mover Advantage in Emerging Technologies

The Company is building capabilities in relatively underpenetrated segments such as rare earth magnet-free motors and integrated EV systems. Early investments in these areas, supported by global technology collaborations, provide a first-mover advantage and enable the Company to address evolving OEM requirements across multiple mobility segments.

Strong Customer Engagement and Programme Pipeline

With engagement across multiple OEM programmes in the EV segment and continued onboarding of new customers in the core fasteners business, the Company is strengthening its market position. Increasing participation across diverse vehicle categories enhances visibility for future growth and supports long-term business scalability.

CHALLENGES

Near-Term Revenue Volatility and Transition Phase

The Company is currently navigating a transition phase, with near-term performance impacted by factors such as product in-sourcing by strategic customers.

Long Gestation and Validation Cycles

New EV products involve longer lead times before commercialisation due to extensive testing and validation requirements by OEMs. This can delay revenue ramp-up despite ongoing development and customer interest.

Supply Chain Dependencies and Raw Material Risks

The automotive and EV sectors remain exposed to supply chain risks, including constraints in critical materials such as rare earth elements. Any disruption in availability or pricing volatility may impact production planning and cost structures.

KEY FINANCIALS

	Consolidated		Standalone
Particulars	FY 2025-26	FY 2024-25	FY 2025-26	FY 2024-25
Revenue from Operations	827.8	1,026.3	716.7	644.8
EBITDA	87.9	121.2	111.0	94.8
EBIT	48.0	86.4	79.2	63.9
PAT	29.3	58.3	64.2	42.9
Interest Expenses	9.8	9.8	5.2	5.9
Net Worth	526.3	499.7	528.5	467.0

KEY RATIOS

	Consolidated		Standalone
Particulars	FY 2025-26	FY 2024-25	FY 2025-26	FY 2024-25
Operating Profit Margin (%)	10.6%	11.8%	15.5%	14.7%
Net Profit Margin (%)	3.5%	5.7%	9.0%	6.6%
Debtor Turnover (Days)	43.85	23.28	36.54	32.68
Inventory Turnover Ratio (times)	2.02	2.94	2.39	2.08
Interest Coverage Ratio (times)	4.88	8.84	15.38	10.92
Debt to Equity (times)	0.28	0.26	0.20	0.23
Current Ratio (times)	2.14	2.04	2.46	2.24
Return on Net Worth / Equity (%)	5.7%	12.3%	12.9%	9.6%

AWARDS

The Company continues to strengthen its position through its unwavering commitment to quality, innovation, operational excellence, and customer satisfaction. During the recent years, the Company has been honoured with several prestigious recognitions from its stakeholders and business partners, reflecting its dedication to maintaining high standards across all areas of operations.

In recognition of its exceptional performance and significant contributions, the Company was conferred with the Outstanding Contribution Award in 2024. This award acknowledges the Companys Supply Chain Management Award for Outstanding Contribution in Hardware and Consumables.

Further demonstrating its commitment to excellence in manufacturing and quality management systems, the Company received the Best Quality Award in 2025. This recognition highlights the Companys focus on continuous improvement, stringent quality control measures, and its ability to consistently meet and exceed customer expectations through superior product quality and reliability.

The Companys emphasis on innovation and technological advancement was recognized through the Best New Model Development Award in 2026. The award underscores the Companys capabilities in product development, engineering excellence, and successful execution of new projects that contribute to enhanced customer value and business growth.

In addition, the Company was presented with a Certificate of Appreciation in 2026 in recognition of its continued support, commitment, and contribution towards achieving shared business objectives with Maruti Suzuki (MSIL). This appreciation reflects the trust and confidence placed in the Company by its stakeholders and reinforces its reputation as a reliable and valued business partner.

These accolades serve as a testament to the dedication, expertise, and collective efforts of the Companys employees and management team. The Company remains committed to pursuing excellence, fostering innovation, and delivering sustainable value to all its stakeholders

RISK MANAGEMENT

The Company has established a comprehensive risk management framework designed to identify, assess and mitigate potential risks across its operations. This framework is supported by structured processes, periodic risk assessments and timely implementation of mitigation strategies, under the oversight of the Risk Management Committee. The approach enables proactive risk identification and ensures that appropriate controls are in place to safeguard business continuity and long-term value creation. The Company continuously monitors internal and external risk factors, including technological changes, regulatory developments, supply chain dependencies and market dynamics.

Particulars	Risk Description	Mitigation Strategy
Market	Expansion into EV powertrain and power electronics segments, which are characterised by evolving technologies and extended product	Diversifying the Companys product portfolio across multiple EV segments and OEM programmes
Transition and Technology Risk	validation cycles. Delays in customer approvals or slower-than-expected adoption may impact revenue realisation.	to reduce dependency on any single product or customer. It is also strengthening in-house engineering capabilities and leveraging global technology partnerships to accelerate development and validation processes.

 

Particulars	Risk Description	Mitigation Strategy
Environmental and Regulatory Compliance Risk	Manufacturing operations are subject to environmental laws and regulations relating to emissions, waste management, energy consumptionandworkplacesafety.Anytightening of regulatory standards or non-compliance may lead to increased compliance costs, operational disruptions or reputational impact.	The Company continues to strengthen its environmental, health and safety practices through compliance monitoring, resource optimisation and adoption of sustainable manufacturing processes. It also undertakes periodic audits and invests in energy-efficient technologies and responsible waste management practices to ensure regulatory adherence and operational sustainability.
Supply Chain and Raw Material Risk	Dependence on critical components and materials, including electronic components and rare earth elements, may lead to supply disruptions or cost volatility.	Prioritising localisation and import substitution, along with strategic sourcing initiatives and vendor diversification. It also undertakes inventory planning and supply chain optimisation to mitigate potential disruptions.
Competitive Intensity	Increasing competition from domestic and global players in both fasteners and EV components may exert pricing pressure and impact margins.	The Company focuses on product differentiation, quality, cost competitiveness and strengthening customer relationships. Early entry into emerging segments and continuous innovation support its competitive positioning.
Cyber Security and Data Privacy Risk	Increasing reliance on digital systems and automation exposes the Company to potential cyber threats and data breaches.	The Company has implemented robust IT security measures, including secure network infrastructure, access controls, regular data backups and system monitoring to ensure data integrity and business continuity.
Human Resource Risk	The availability and retention of skilled talent, particularly in specialised areas such as power electronics and advanced manufacturing, remain critical to business growth.	The Company focuses on talent development, capability building and employee engagement initiatives. It also strengthens leadership and technical teams to support expansion into new technology domains.

COMPANY OUTLOOK

The Companys strategic investments in the EV ecosystem are expected to progressively strengthen its growth profile. Driven by an expanding powertrain and power electronics portfolio and a strong customer pipeline, these business units are set to scale over the medium term. Strategic partnerships and recent collaborations in advanced mobility further enhance the Companys ability to localise high-value products and meet evolving industry demands. The broader policy environment remains supportive of localisation and technology development in the automotive and EV sectors. Initiatives such as the recently notified scheme to promote domestic manufacturing of rare-earth permanent magnets are expected to strengthen the supply chain ecosystem and reduce import dependence over time. This context enables the Company to capitalise on the emerging mobility landscape, driving enduring and sustainable growth over the long term.

HUMAN RESOURCES

The Company has a competent and well-trained workforce across its manufacturing and technology centres, with an emphasis on strengthening teams within its technology function. The Company undertook focused initiatives to enhance capabilities in emerging areas, particularly electric vehicle components and power electronics. Employee engagement, along with health, safety and overall well-being, continued to remain a key priority during the year. To promote skill development, the Company rolled out structured training programmes encompassing advanced manufacturing techniques, SAP systems and quality management practices. These initiatives support a culture of ownership, innovation and continuous improvement across the organisation.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

Sterling Tools Limited has established a robust internal control system that plays a critical role in ensuring operational excellence and regulatory compliance. This system provides a reliable framework for monitoring various business segments and sales operations, safeguarding assets and maintaining effective internal audit controls.

A dedicated team of experts identifies key operational areas for periodic internal audits, which are thoroughly reviewed by internal auditors in collaboration with the Audit Committee and the Board. These reviews offer valuable insights and recommendations to further strengthen the Companys internal control environment.

The Companys commitment to system-driven operations is reflected in its adoption of advanced IT-enabled controls, shop floor automation and stringent quality control measures. Significant investments in machinery upgrades are supported by an internal management information system, enhancing operational efficiency and data accuracy.

The presence of both internal and external auditors, proportionate to the scale of operations, further reinforces Sterling Tools Limiteds dedication to sound governance and transparency.

CAUTIONARY STATEMENT

Certain statements in the Management Discussion & Analysis section concerning future prospects may be forward-looking statements, which involve a number of underlying identified/ unidentified risks and uncertainties that could cause actual results to differ materially. In addition to the foregoing changes in the macroenvironment, a global pandemic like Covid-19 may pose an unforeseen, unprecedented, unascertainable and constantly evolving risk(s), inter alia, to the Company and the environment in which it operates. The results of these assumptions, made by relying on available internal and external information, are the basis for determining certain facts and figures stated in the report. Since the factors underlying these assumptions are subject to change over time, the estimates on which they are based are also subject to change accordingly. These forward-looking statements represent only the Companys current intentions, beliefs or expectations and any forward-looking statement speaks only as of the date on which it was made. The Company assumes no obligation to revise or update any forward-looking statements, whether as a result of new information, future events or otherwise.