ECONOMIC OVERVIEW
GLOBAL ECONOMY
In CY24, global economies contended with a challenging backdrop marked by geopolitical tensions, trade-related uncertainties and extended periods of tight monetary policy. Despite these hurdles, worldwide economic growth remained steady at 3.3%, driven largely by emerging markets, while advanced economies struggled against persistent obstacles.1 Europe showed clear signs of stagnation, with major economies experiencing economic strain. In contrast, the US economy demonstrated resilience, maintaining consistent growth supported by robust consumer spending and strong corporate earnings. Chinas economy recorded subdued growth as issues in its property market persisted.
Inflationary pressures moderated during the year, with global inflation estimated to decline to 5.7% in CY24.2 As inflation began to ease, central banks worldwide shifted toward expansionary monetary measures, which helped bolster business confidence and spur consumer demand. Nonetheless, the recent introduction of new US tariff regulations continues to threaten the stability of global trade flows.
Looking ahead, the global economic outlook for CY25 and beyond appears stable. Growth is forecast at 2.8% for CY25 and 3.0% for CY26, underpinned by a more predictable macroeconomic environment. Inflation is projected to fall further, reaching 4.3% in CY25 and 3.6% in CY26. Investment activity, which showed promising improvements in CY24, is expected to accelerate, supported by declining inflation, enhanced liquidity and a more favourable investment climate.
INDIAN ECONOMY
During the year under review, India emerged as the worlds fourth-largest economy, with its GDP surpassing the $4 trillion milestone and overtaking Japan.3 The economy grew at a rate of 6.5% in FY 2024–25, reinforcing its position among the fastest-growing major economies globally. This strong performance was driven by sustained domestic consumption, steady expansion in manufacturing activities, structural reforms and the rapid evolution of the digital ecosystem. Government-led infrastructure development and supportive policy interventions contributed significantly to growth across services and industry sectors.
Inflation moderated from 5.4% in the previous fiscal to 4.6%, thereby improving consumer confidence and driving retail demand across rural and urban markets.4 The Reserve Bank of
India infused 1.5 trillion into the banking system to maintain adequate liquidity and stimulate economic activity.5 Rural consumption remained resilient, supported by stable agricultural output and welfare initiatives, while rising urban incomes and evolving consumer preferences further bolstered expenditure.
1
https://www.imf.org/en/Publications/WEO/Issues/2025/04/22/world-economic-outlook-april-2025 2https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD 3https://www.newsonair.gov.in/india-becomes-worlds-4th-largest-economy-surpasses-japan-niti-aayog/ 4https://www.pib.gov.in/PressReleasePage.aspx?PRID=21221485
https://www.livemint.com/economy/rbi-1-5-trillion-liquidity-boost-how-will-it-help-dollar-rupee-rate-cut-mint-primer-11738086455919.htmlThe outlook for FY 2025–26 remains constructive, with GDP growth projected at 6.5%. Continued policy support, including tax reforms and the extension of income tax exemptions, is expected to enhance disposable income levels and spur consumption. In addition, the Reserve Bank of Indias reduction in the repo rate is by 50 basis points to 5.50%, with a view of increasing liquidity in the economy encourage credit growth and improve overall market sentiment.6 Sustained investments across manufacturing, trade and financial services are expected to reinforce Indias growth trajectory, positioning the economy to navigate global challenges while maintaining its momentum.
INDUSTRY OVERVIEW
INDIAN AUTOMOBILE INDUSTRY7
Indias automotive sector continued its growth momentum, recording a 7.3% increase in domestic sales and a 19.2% hike in exports. This growth was driven by robust customer demand, substantial infrastructure investment and government policies advocating sustainable mobility. Passenger Vehicles (PVs) hit a record of 4.3 million units in sales, with Utility Vehicles (UVs) being the primary growth drivers. The two-wheeler segment expanded by 9.1%, supported by rising rural demand and improved consumer confidence. Three-wheelers also achieved their highest ever sales of 7.4 lakh units, led by urban mobility requirement and easier access to financing.
While commercial vehicle sales saw a modest decline of 1.2%, the segment benefitted from widening road networks and rising demand for mass mobility solutions. Exports performed notably across all segments, particularly for PVs and two-wheelers, reflecting Indias growing competitiveness in overseas markets. Electric Vehicle (EV) adoption accelerated as well, with registrations rising by 16.9% year-on-year, supported by new government initiatives.
Looking ahead, the Indian automotive industry is well-positioned to sustain its growth trajectory in FY 2025-2026. Stable macroeconomic conditions, ongoing infrastructure development and proactive government measures including income tax reforms are expected to enhance consumer confidence and improve access to vehicle financing. A forecasted normal monsoon may further stimulate rural demand, especially for two-wheelers and entry-level vehicles. Additionally, continued focus on exports and the Government of Indias commitment to promoting sustainable mobility through enhanced EV policies and incentives will further support industry expansion.
Production Sales Trend Category |
2020-2021 | 2021-22 | 2022-23 | 2023-24 | (in Numbers) 2024-25 |
| Passenger vehicles | 30,62,280 | 36,50,698 | 45,87,116 | 49,01,840 | 50,61,164 |
| Commercial Vehicles | 6,24,939 | 8,05,527 | 10,35,626 | 10.67,504 | 10,32,645 |
| Three Wheelers | 6,14,613 | 7,58,669 | 8,55,696 | 9,96,159 | 10,50,020 |
| Two Wheelers | 1,83,49,941 | 1,78,21,111 | 1,94,59,009 | 2,14,68,527 | 2,38,83,857 |
| Quadricycles | 3,836 | 4,061 | 2,897 | 5,006 | 6,488 |
Grand Total |
2,26,55,609 | 2,30,40,066 | 2,59,40,344 | 2,84,39,036 | 3,10,34,174 |
Source: SIAM
ELECTRIC VEHICLES (EV) INDUSTRY8
The Indian Electric Vehicles industry achieved strong growth in FY 2024-2025, crossing the milestone of 2 million units sold, representing a 15.68% year-on-year increase over the previous fiscal Year. The two-wheeler segment continued to dominate, accounting for over 59.4% of the total EV sales, while electric three-wheelers and four wheelers saw a substantial 6.6% jump, emphasizing the growing demand for clean last-mile connectivity.
This momentum is supported by a suite of government policies the FAME-II subsidy, the Production Linked Incentive (PLI) scheme for advanced automotive technology and battery manufacturing and reduced customs duties on imported Completely Knocked Down (CKD) EV kits. These policies have collectively narrowed the price gap between EVs and traditional petrol vehicles. Additional measures, such as GST reductions and state-level incentives including road tax waivers, are further improving EV affordability and accessibility.
6
https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=154573&ModuleId=3 7https://www.siam.in/pressrelease-details.aspx?mpgid=48&pgidtrail=50&pid=5798
https://evreporter.com/wp-content/uploads/2025/05/EVreporter-India-EV-Report-FY24-25.pdfINDIAN AUTO COMPONENT INDUSTRY
The Indian automotive components sector is a key pillar of the nations manufacturing base, catering to both domestic vehicle market and international supply chains. The sector produces a wide array of products such as engine components, transmission units, electronics and more catering to Original Equipment Manufacturers (OEMs) and the aftermarket segment. Its growth is intrinsically tied to the broader expansion of the motor vehicle industry, supported by expanding consumer demand, mounting vehicle exports and rapid technological advancements.
The sector has demonstrated notable resilience in the face of setbacks such as global supply chain disruptions, regulatory shifts and evolving market dynamics. Indias auto component makers are emphasising on innovation, quality enhancement and cost competitiveness to cater to the changing demands of domestic as well as overseas customers. The industry has also invested significantly in research and development, especially in areas such as electric mobility and smart automotive technologies.
As the worlds fourth-largest automobile manufacturer, Indias auto industry is strongly linked with multiple key sectors, from steel and electronics to IT and logistics and sustains millions of jobs throughout the country. Despite its strong manufacturing base, Indias contribution to the worlds auto component trade, particularly in high-value domains, remains modest, reflecting immense untapped potential. The Government of India has initiated a number of strategic programmes-like Make in India, Atmanirbhar Bharat, the FAME India Scheme and Production Linked Incentive (PLI) schemes-to encourage indigenous manufacturing, stimulate innovation and accelerate the transition toward electric and sustainable mobility solutions.
Indias automotive components industry is projected to register a revenue growth of 7-9% in the current fiscal, in line with the growth achieved last year. This will be primarily driven by continued strong demand from the two-wheeler (2W) and passenger vehicle (PV) segments—particularly utility vehicles—which together contribute nearly 50% of the sectors revenue. A modest improvement in sales of commercial vehicles and tractors (which together make up around 17% of the revenue mix) will add further momentum. Meanwhile, the aftermarket segment, accounting for about 15% of which total revenue, is expected to grow steadily by 5-7%.
Operating margins for auto component manufacturers are likely to remain stable at 12–12.5%. This resilience will be supported by a rising contribution from high-value, technology-driven parts such as Advanced Driver Assistance Systems (ADAS), infotainment units, and advanced braking technologies. Easing input costs—especially for steel (which makes up 45–50% of total material cost), aluminium (15–20%), and plastics (10–12%)—used for structural components, lightweighting, and interiors, will further aid margins. However, fresh tariff-related pressures, particularly affecting exporters to the US, could pose some downside risks to profitability.9
COMPANY OVERVIEW
Sterling Tools Limited (STL) stands as one of Indias leading manufacturers of automotive fasteners, supplying high-tensile cold-forged fasteners to major OEMs across the passenger, commercial, two-wheeler, and specialty vehicle segments. The Companys manufacturing footprint comprises four state-of-the-art fastener plants, a dedicated Motor Control Unit (MCU) facility, and two advanced technology centres that foster innovation and R&D.
Sterling has a strong belief that the Autonomous, Connected & Electric (ACE) movement will define the future of mobility and there is channelling its resources to addressing these needs of the Auto industry.
Sterling Gtake E-Mobility Limited (SGEM), a subsidiary of Sterling Tools Limited (STL), has established itself as a leading supplier of Motor Control Units (MCUs) for electric two-wheelers, three-wheelers, and light and heavy commercial vehicles in India. In line with the growing momentum of the EV sector, SGEM recorded its highest-ever sales this year and upgraded its manufacturing facility into a comprehensive EV compound to support expanded operations.
To drive future growth, SGEM is diversifying its product portfolio to include Rare Earth Magnet Free Motors, On-board and Off-Board Chargers, DC/DC Converters, aimed at reducing reliance on imported components and enhancing sustainability. These initiatives, backed by strategic global technology partnerships, will position Sterling Gtake as a solution provider to EV OEMs and should therefore boost competitiveness and profitability in the coming years.
In addition, STLs subsidiary, Sterling Tech-Mobility Limited (STML), is nearing completion of a cutting-edge manufacturing facility in Bengaluru dedicated to producing high-voltage direct current (HVDC) contactors and relays. In partnership with GLVAC YT, STML aims to manufacture advanced HVDC components for the electric and hybrid electric vehicle industry. This initiative is poised to strengthen Indias EV supply chain by promoting domestic manufacturing and leveraging advanced technologies.
STL is driven by a strong commitment to sustainability, import substitution, and operational excellence, aligning closely with national initiatives such as Atmanirbhar Bharat. The Company aims to become the most trusted brand for its customers while consistently enhancing shareholder value. With a well-diversified revenue mix, strong OEM partnerships, and a first-mover advantage aligning our efforts across the STL Group to expand in the Autonomous, Connected and Electric (ACE) mobility space., STL is well-positioned for sustained growth and to play a pivotal role in the transformation of Indias automotive landscape.
OPPORTUNITIES AND CHALLENGES |
|
Opportunities |
Details |
Expansion into |
Through its subsidiary partnership with UK-based Advanced Electric Machines (AEM), the Company is leading the way in manufacturing rare-earth magnet-free traction motors in India. |
Magnet-Free Traction Motors |
This partnership provides options for toward sustainable and high-performance electric vehicle (EV) technology, while strategically reducing reliance on rare-earth elements—critical raw materials that are often environmentally taxing and geopolitically sensitive. |
Strong Positioning in a Growing EV Market |
Sterlings broad EV portfolio and Solutions approach positions it to benefit from long-term structural shift towards vehicle electrification The growing adoption of electric vehicles in India— particularly in the two-wheeler, three-wheeler, and light commercial vehicle segments offers numerous opportunities for Sterlings EV Powertrain and Power Electronics products. |
Strong Financial Position |
With a net debt-free balance sheet and a substantial cash surplus, the Company is well-positioned to fund capital expenditures and invest in research and development independently, without the need for external financing. |
Import Substitution & Atmanirbhar Bharat |
The Company supports the Make in India initiative by localizing EV component manufacturing, replacing imported power electronics and magnetics with domestic produced alternatives to strengthen supply chain resilience. |
Challenges |
Details |
Market Transition Timing |
Extended validation cycles for new EV components may delay revenue accrual. Additionally, the scale-up of innovative products like magnet-free motors and DC/DC converter is expected to be gradual, even though capital investments will have to be made earlier |
Dependence on Industry Growth and Policy Support |
Industry growth remains closely linked to sustained automotive demand and favorable government policies promoting vehicle electrification, making it vulnerable to cyclical demand shifts and changes in regulatory frameworks |
Competitive Intensity |
The increasing presence of both domestic and international players in the EV components and fasteners segment may intensify pricing competition, potentially leading to margin pressures. |
KEY FINANCIAL
| Consolidated | Standalone | |||
Particulars |
FY 2024-25 | FY 2023-24 | FY 2024-25 | FY 2023-24 |
| Revenue from the operation | 1.026.3 | 932.0 | 644.8 | 608.1 |
| EBITDA | 121.2 | 114.31 | 94.8 | 90.5 |
| EBIT | 86.4 | 81.3 | 63.9 | 59.2 |
| PAT | 58.3 | 55.4 | 42.9 | 38.8 |
| Interest Expenses | 9.8 | 9.5 | 5.9 | 7.5 |
| Net Worth | 499.7 | 447.1 | 467.0 | 429.6 |
KEY RATIOS
| Consolidated | Standalone | |||
Particulars |
FY 2024-25 | FY 2023-24 | FY 2024-25 | FY 2023-24 |
| Operating profit Margin | 11.8% | 12.3% | 14.7% | 14.9% |
| Net Profit Margin | 5.7% | 5.9% | 6.6% | 6.4% |
| Debtor Turnover (no. of days)? | 23 | 35 | 33 | 38 |
| Inventory Turnover Ratio | 2.90 | 2.88 | 2.08 | 1.95 |
| Interest Coverage Ratio? | 8.84 | 8.59 | 10.92 | 7.91 |
| Debt to Equity (times) | 0.23 | 0.20 | 0.19 | 0.21 |
| Current ratio (times) | 2.14 | 2.04 | 2.46 | 2.24 |
| Return on Net Worth/Equity | 12.3% | 13.1% | 9.6% | 9.3% |
1
In Consolidated, Debtor Turnover Ratio improved due to better receivables days.2
In Standalone, Interest Coverage Ratio improved due to better operating profit and lower interest cost.AWARDS
The Company was honoured with multiple prestigious awards in recognition of its outstanding performance, superior quality standards, and reliable supply chain management. The Company received the ‘Outstanding Contribution in Hardware and Consumables award from EICHER, acknowledging its excellence in supply chain operations. Additionally, Suzuki Motorcycle India Private Limited recognised the Company with the ‘Best Quality award, reaffirming STLs unwavering commitment to delivering high-quality products and maintaining rigorous quality benchmarks.
Risk and Management
The Company has implemented a comprehensive risk management framework that enables the identification, assessment, and mitigation of potential risks. This structured approach includes regular reviews and timely execution of mitigation strategies, all under the supervision of the Risk Management Committee, ensuring proactive and effective risk oversight.
Risk |
Description |
Mitigation Strategy |
Environmental Risk |
The automotive sector remains susceptible to demand fluctuations driven by economic cycles, evolving regulatory framework and volatility in commodity prices. In line with the | The Company is actively investing in solar energy solutions to reduce its reliance on conventional energy sources. In addition, it is committed to adopting advanced, energy-efficient technologies |
| Government of Indias Zero Carbon initiative, the industry must accelerate its shift towards green and clean energy solutions. Dependence on critical raw materials and | that help lower overall energy consumption and minimize its carbon footprint, reinforcing its dedication to sustainable operations. Better Inventory Management | |
Supply Chain Disruptions |
imports such as specialty steels, electronic components may lead to production delays or cost escalations. | Product Planning and Multiple both domestic and imports |
Risk |
Description Cyber-attacks and privacy breaches present major risks to information security and can |
Mitigation Strategy The Company has established robust cybersecurity measures, including firewall-protected routers, |
Cyber Security and Data Privacy Risk |
disrupt business activities. | advanced antivirus systems, and daily backups of critical data across multiple locations. These safeguards ensure the integrity, confidentiality, and availability of essential information, supporting secure and resilient operations. |
Human Resource Risk |
A skilled workforce is critical to maintaining smooth operations over the long term. Shortages of talent, elevated attrition rates, or gaps between required and available skills can hamper productivity, disrupt business continuity, hinder growth plans. | The Company undertakes strategic initiatives to attract and retain top talent, focusing on enhancing employee engagement and ensuring a skilled workforce. These efforts include capability development and capacity-building programs aimed at fostering growth, improving competencies, and supporting long-term organizational success. |
HUMAN RESOURCES
The Company maintains a strong and skilled workforce across its manufacturing and technology facilities, with a strategic focus on expanding its technology centre teams. Targeted initiatives all were undertaken to build capabilities in emerging domains, particularly in electric vehicle components and power electronics. Employee engagement, safety, and well-being remains top priorities throughout the year.
To support continuous development, the Company implemented comprehensive training programs covering advanced manufacturing practices, SAP implementation, and quality systems. These efforts foster a culture of accountability, innovation, and continuous improvement across the organization.
INTERNAL CONTROL SYSTEM AND THEIR 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 a robust 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, 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.
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