Studds Accessories Ltd Management Discussions

Industry Structure and Developments

Economic Overview

Global Economy Review

The global economy remained steady in 2025, despite trade-policy shifts, geopolitical disruptions and tighter financing conditions across several markets. Global output grew by 3.4% in 2025, supported primarily by emerging market and developing economies, which expanded by 4.4%. Advanced economies grew by 1.9%, reflecting slower but stable demand conditions. Global growth is projected to moderate to 3.1% in 2026 before improving marginally to 3.2% in 2027.

Inflation continued to ease across major economies, with global inflation estimated at 4.1% in 2025 and projected to decline further to 3.8% in 2026 and 3.4% in 2027. This moderation supported a more predictable cost environment for global businesses. However, policy uncertainty, tariff adjustments and uneven monetary easing continued to influence capital allocation, trade flows and operating costs.

Geopolitical risk remained a key pressure point for the global economy. While the Russia-Ukraine conflict continued to affect commodity markets and logistics, West Asia emerged as a sharper source of disruption during the year. Tensions in the region affected shipping routes, energy logistics and commodity markets, contributing to freight volatility, input-cost pressure and uncertainty in the availability of critical materials and services.

Source: IMF World Economic Outlook, April 2026,

IMF World Economic Outlook Update

Regional Economic Review

United States

The United States grew by 2.1% in 2025 and is projected to grow by 2.3% in 2026 and 2.1% in 2027. Growth is expected to remain supported by consumer spending, real wage gains and continued investment activity, although policy uncertainty, elevated financing costs and trade-related risks may keep the outlook measured.

Japan

Japans economy grew by 1.2% in 2025 and is projected to grow by 0.7% in 2026 and 0.6% in 2027. The recovery remains moderate, shaped by wage growth, inflation management and the direction of fiscal and monetary policy.

Europe

The Euro Area continued to recover from earlier energy and inflation shocks. GDP growth improved from 0.9% in 2024 to 1.4% in 2025 and is projected at 1.1% in 2026 and 1.2% in 2027. Growth is expected to be supported by gradual improvement in consumption and easing price pressures, although the recovery remains modest.

Asia

Asia remained the strongest growth region, led by India and supported by steady demand across emerging markets. Chinas economy grew by 5.0% in 2025 and is projected to moderate to 4.4% in 2026 and 4.0% in 2027. The region is expected to continue contributing significantly to global growth, although trade-policy changes and softer external demand may affect export momentum.

Latin America

Latin America recorded GDP growth of 2.4% in 2025, with growth projected at 2.3% in 2026 and 2.7% in 2027. The region benefited from easing inflation and gradual recovery in domestic demand, although growth remained uneven across major economies such as Brazil and Mexico.

Middle East and West Asia

Growth in the Middle East improved to 3.6% in 2025 and is projected at 1.9% in 2026 and 4.6% in 2027, supported by oil output and diversification efforts in economies such as Saudi Arabia. However, geopolitical tensions across West Asia continue to affect shipping routes, energy logistics and commodity markets, creating downside risks for trade, inflation and financial stability.

Source: Europe, Europe2, Asia, LatinAmerica, IMF World Economic Outlook, April 2026

Overall, the global outlook remains stable but uneven. Emerging markets are expected to continue growing faster than advanced economies, while inflation is projected to soften further. At the same time, tariff adjustments, regional conflicts and supply-chain disruptions remain important watchpoints for businesses with exposure to global raw material, logistics and export markets.

Source: IMF World Economic Outlook, April 2026

Indian Economy

India continues to remain one of the worlds fastest-growing major economies and the sixth largest economy in the world, supported by resilient domestic demand, strong investment activity, and ongoing structural reforms. In FY 2025-26, Indian economy demonstrated resilience amid global geopolitical tensions, trade uncertainties, and financial volatility. The GDP growth for FY 2025-26 is estimated at 7.4% compared to 7.1% in FY 2024-25, validating the durability of our domestic demand-led growth model. Robust agricultural output supported rural incomes, while urban consumption improved on the back of stable employment, supportive tax measures, and easing inflation.

Private consumption continues to anchor growth, aided by lower inflation and higher real incomes. Investment activity accelerated, led by public capital expenditure of Rs.12.2 lakh crore, driving growth across manufacturing, construction, logistics, and energy sectors. Initiatives like Viksit Bharat 2047 and Kartavya Kaal promote self-reliance, capacity building, and duty-focused development amid external pressures.

Inflation dropped to a historic low of 1.7% during the first nine months of FY 2025-26, marking the lowest level since the current CPI series was introduced. This price stability acted as a key driver in strengthening domestic purchasing power. Moving forward, inflation expectations remain well-anchored, with the RBI projecting a rate of 2.0% for the full year. This stability is supported by disciplined government spending, record tax collections, and steady growth in bank credit. The banking sector remains strong with low non-performing assets and strong capital reserves.

This, combined with foreign exchange reserves exceeding $700 billion provides an added cushion against global challenges.

The Union Budget for 2026-27 reinforces the Governments focus on driving economic growth while managing the nations finances responsibly. By continuing to prioritise long-term investments in infrastructure and manufacturing, the budget supports the broader vision of a developed India. Significant emphasis has been placed on energy transition, digital innovation, and support for small and medium-sized enterprises (MSMEs). Additionally, new measures to simplify business operations and improve access to credit are expected to boost consumer demand and industrial production. These initiatives collectively create a strong environment for increased investment and energy consumption, laying a solid foundation for sustainable future growth.

Outlook

The outlook for the Indian economy remains positive and stable. For FY 2026-27, real GDP is expected to grow between 6.8% and 7.2%, demonstrating Indias ability to maintain strong momentum even during uncertain times globally. This growth will likely be fueled by ongoing government spending on infrastructure, a steady increase in private sector investment, and a strengthening manufacturing base. Additionally, the services sector is expected to continue its consistent expansion. Backed by a stable economy and steady government policies, India is well-prepared to manage global challenges while ensuring that economic progress remains inclusive and sustainable over the long term.

Source: PIB, AngelOne, MoSPI

Industry Overview

Indias Two-Wheeler Industry

The Indian two-wheeler industry staged a strong recovery in FY2025-26, with retail sales growing 10.70% year-on-year to 2.17 crore units, up from 1.96 crore units in FY2024-25. This resurgence was driven by a convergence of policy tailwinds, improving consumer sentiment, and structural demand across urban and rural markets.

Wholesale volumes stood at 23.81 million units, marginally below the FY2018-19 peak, reflecting steady but not yet complete recovery. Entry-level motorcycles have shown consistent improvement since FY2022-23, while a clear shift in consumer preference towards scooters and executive motorcycles signals deepening premiumization. The electric two-wheeler (e2W) segment was a standout performer, with sales growing 21.81% year-on-year to 14,01,818 units.

Source: SIAM, SIAMFY25, ETAuto, FADA

Policy Support

The policy environment in FY2025-26 was meaningfully supportive of demand. The most significant measure was the GST rationalisation under GST 2.0, which moved motorcycles up to 350cc from the 28% slab to 18%, directly reducing upfront costs for lower-middle-income households, young professionals, farmers, small traders, daily wage earners and gig workers.

Key policy measures during the year:

• GST reduction: 28% to 18% for motorcycles up to 350cc

• Income tax relief: no tax payable up to Rs.12 lakh; effective limit of Rs.12.75 lakh for salaried taxpayers after standard deduction

• Monetary easing: multiple repo-rate reductions to support financing affordability

• PM E-DRIVE: demand incentives targeting approximately 24.79 lakh electric two-wheelers

• PLI-Auto scheme: Rs.25,938 crore budgetary outlay to strengthen domestic automotive manufacturing

Together, these measures improved affordability, boosted household spending capacity, and supported conversion at the showroom level, particularly in the second half of the fiscal year.

Source: GST Council; Union Budget 2025-26; PM E-DRIVE scheme; PLI-Auto scheme

Electric Two-Wheelers

Electric two-wheelers remained a structural growth area within Indias broader mobility transition. The PM E-DRIVE scheme was the primary government mechanism for demand support, providing incentives that reduce upfront EV costs and strengthen the broader ecosystem.

Key features of the PM E-DRIVE scheme:

• Targets incentivisation of approximately 24.79 lakh electric two-wheelers

• Eligibility restricted to advanced battery vehicles

• Scope includes demand incentives, electric bus support, charging infrastructure and testing facilities

• Framework extended to 31 March 2028 for select components

• Incentive terminal date for registered e-2Ws: 31 July, 2026

The PLI-Auto scheme, with a budgetary outlay of Rs.25,938 crore, is supporting OEM investment in electric platforms, battery systems and power electronics, building domestic manufacturing capability for next-generation automotive technology.

Source: PM E-DRIVE scheme, PLI-Auto scheme

Helmet Industry Overview

The Indian two-wheeler helmet market is projected to grow from 26 million units in CY2024 to 35 million units by CY2029, at a CAGR of 6.1%. Growth is supported by tightening safety regulations, rising two-wheeler penetration and growing rider safety awareness.

The regulatory push towards ISI-certified helmets is a key structural driver, supporting a shift away from non-compliant products towards quality-assured alternatives. The market is also seeing product evolution, with smart helmets incorporating bluetooth connectivity, communication systems and advanced safety features gaining traction among urban riders. The rise of EVs is creating a new consumer segment with distinct preferences for lightweight, aerodynamic and technologically integrated designs.

Source: STUDDS RHP / CARE Report

Motorbike Protective Gear

Premium protective gear is gaining traction in India, driven by the growing adventure biking community and a broader shift in rider attitudes towards safety. Demand is increasingly oriented towards products that combine protection with comfort and style, with lightweight construction and ergonomic design becoming key purchase criteria.

For established helmet manufacturers, protective gear represents a natural adjacency, with existing brand equity, distribution reach and retail relationships providing a low-friction path to category expansion.

Source: BIS / PIB helmet safety release; Motor Vehicles Act, Section 129

Company Overview

Studds Accessories Limited started manufacturing helmets in 1972 and was incorporated in 1983. Over the past five decades, the Company has established itself as one of the worlds largest two-wheeler helmet manufacturers by volume in Calendar Year 2024. The Company commands a market share of 27.3% by volume and 25.5% by value in the domestic market as of Fiscal 2024, while maintaining an export presence across more than 70 countries.

Source: STUDDS RHP / CARE Report

The Company designs, manufactures, markets and sells helmets and riding accessories under the brand name STUDDS and SMK. STUDDS serves the mass and mid-market segments through accessible, certified and dependable products, while SMK addresses premium Indian and international riders through design-led, feature-rich and higher-value offerings.

STUDDS operates four active manufacturing facilities at Faridabad, Haryana, with a fifth facility under construction. Its manufacturing platform is vertically integrated across critical processes including EPS liner production, in-house mould-making, shell fabrication, painting, hard coating, metallising, water decal application, fabric stitching, assembly, testing and dispatch. This integration supports quality control, cost efficiency, product consistency and faster execution.

During FY2025-26, the Company produced 8.27 million helmets and boxes and sold 8.13 million helmets and boxes. Capacity utilisation for helmets and boxes stood at 89%, with EPS utilisation at 88% and water decals at 57%. Facility V is expected to expand installed capacity from approximately 9.5 million units to 12.5 million units through two phases. The expansion is designed with flexibility, allowing allocation between STUDDS and SMK based on market demand.

The Companys manufacturing flexibility remains an important operating advantage. Production can be calibrated across STUDDS, SMK and private label requirements depending on demand visibility, product mix and customer requirements. This supports better utilisation, faster response to market shifts and disciplined capacity deployment.

Facility V is expected to expand installed capacity from approximately 9.5 million units to 12.5 million units through two phases. The commencement of commercial production is now expected before the end of Q2 of FY 2027 for Facility V.

Source: STUDDS RHP

Opportunities and Threats

Opportunities

The business of Studds Accessories Limited is well-positioned to capitalize on several favorable trends:

Regulatory strengthening and formalisation:

The regulatory framework remains a key structural driver for the organised helmet industry. Stricter enforcement of BIS and ISI certification requirements is expected to accelerate the shift from non-compliant products to certified helmets. The proposed requirement of two BIS-certified helmets at the time of two-wheeler purchase can further expand the addressable market for organised manufacturers with certified products, testing capabilities, manufacturing scale and distribution reach.

Growing safety awareness: Increasing awareness around rider safety is supporting both regulatory enforcement and voluntary adoption across urban, semi-urban and rural markets.

Two-wheeler penetration: Continued growth in two-wheeler ownership, particularly in tier-2 and tier-3 cities, is expected to expand the demand base for both first-time and replacement helmets.

Premiumisation: Rising consumer preference for better design, comfort, graphics, ventilation, lighter weight and enhanced features is supporting value growth across the category. This trend is particularly relevant for SMK, which serves premium Indian and international riders.

Electric two-wheeler growth: Rising electric two-wheeler adoption is creating a new consumer segment with preference for lightweight, modern and design-oriented helmets.

Exports and global market-building: The

Companys manufacturing scale, certifications and presence across more than 70 countries position it well to participate in international markets with rising safety awareness and helmet compliance requirements.

Threats

Despite favorable industry tailwinds, the Company faces certain challenges:

Intense Competition: The presence of both organised competitors and a large unorganised sector creates pricing pressures and market share challenges.

Raw Material Price Volatility: Fluctuations in prices of key raw materials, particularly petroleum-based products like ABS plastic and polycarbonate, can impact margins.

Evolving Regulatory Requirements: Changes in safety standards and certification requirements across different geographies necessitate ongoing investments in testing and compliance.

Macroeconomic Sensitivity: Changes in consumer demand patterns driven by fashion, inflation, interest rates, and income levels can affect discretionary purchases.

The Company continues to address these threats through its focus on quality, cost optimization, continuous innovation, and strengthening its market presence and brand equity.

Segment-wise or product-wise performance

The Company operates in a single reportable business segment, i.e., manufacture and sale of helmets and accessories, in accordance with Ind AS 108, Operating Segments. Accordingly, no separate segment-wise information is required to be presented.

Consolidated revenue from operations for FY2025-26 stood at Rs.6,342.33 million, reflecting growth of 8.61% over Rs.5,839.51 million in FY2024-25. The revenue mix comprised STUDDS helmets at 74.1%, SMK helmets at 15.7%, private labels at 3.1% and other accessories at 7.1%.

STUDDS continued to grow on a large base, supported by brand recall, wide price architecture and distribution depth. STUDDS helmet sales volume stood at 7.74 million units in FY2025-26. SMK remained a key growth driver, with volumes growing at an approximate three-year CAGR of 52%. This reflects the rising acceptance of the Companys premium helmet portfolio and growing consumer preference for design-led, feature-rich products.

SMK also strengthened the Companys value profile. SMK ASP stood at approximately Rs.2,550 in FY2025-26, while SMK export ASP stood at approximately Rs.2,600. Its EBITDA margin runs approximately 10 percentage points above STUDDS, making the brand an important lever for premiumisation and margin improvement.

Private label revenues contributed 3.1% of the revenue mix during the year. The Companys private label business is supported by manufacturing flexibility, quality consistency and the ability to meet demanding requirements of international customers.

Domestic sales accounted for approximately 80% of revenues, while exports contributed ~20%, compared with 16.75% in FY2024-25. The channel mix was led by the distributor network and EBOs at 55.2%, followed by exports at 20%, OEMs at 13.7% and other channels at 11.1%.

BUSINESS/FINANCIAL PERFORMANCE

Material Development

During the year under review, Studds Accessories Limited undertook and completed its Initial Public Offering (IPO). The offering was structured as an Offer for Sale by certain existing shareholders, and accordingly, the Company did not receive any proceeds from the issue.

The equity shares of the Company are now listed on BSE Limited and National Stock Exchange of India Limited, effective from November 7, 2025. The listing marks a significant milestone for the Company, enhancing its visibility, strengthening governance and disclosure standards, and enabling broader investor participation. The Company remains focused on its long-term growth strategy, operational excellence, and value creation for all stakeholders.

During the year, the Company incurred capex of Rs.480 million. The upcoming Facility V expansion, with planned capex of approximately Rs.1,600 million, is expected to increase capacity from approximately 9.5 million units to 12.5 million units through two phases and support future growth across brands, markets and product categories.

Financial Highlights

Figures in Rs. Millions	FY 2026	FY 2025	FY 2024
Revenue from Operations	6,342.33	5,839.51	5,290.23
Operating EBITDA	1,221.91	1,049.67	901.93
PBT	1,116.19	950.30	763.75
PAT	826.53	696.43	572.27
Net Worth	5,229.68	4,494.77	3,874.04

Performance Analysis

Revenue Growth

The Companys revenue trajectory demonstrates sustained growth momentum. Comparing year-on-year performance, Revenue from Operations increased from Rs.5,839.51 million in FY25 to Rs.6,342.33 million in FY26, reflecting growth of 8.61%. The growth was driven by both domestic market expansion and significant export market penetration.

Export Performance

A particularly noteworthy aspect of the Companys performance has been the substantial growth in export revenues. Export revenues surged to Rs.1,286.26 million in FY26, representing a growth of 32.30% over FY25 (Rs.972.19 million). This increase was complemented by an approximately 16.93% rise in the quantity of helmets exported, growing from 580,984 units in FY25.

The synergy between value and volume growth in exports has been instrumental in improving overall profitability metrics. The Companys ability to penetrate international markets while maintaining quality standards and competitive pricing demonstrates the strength of its manufacturing capabilities and product portfolio.

Cost Management Initiatives

Over the last five years, the Company has maintained a sustained focus on cost optimisation across procurement, manufacturing processes, operating efficiency and product mix. These initiatives have supported improvement across gross profit, EBITDA and PAT, while allowing the Company to continue investing in capacity, design, product development and exports.

Material Cost Optimization: The cost of materials consumed as a percentage of revenue from operations improved from approximately 44.9% in FY25 to approximately 43.8% in FY26. This reduction of percentage points indicates a stronger procurement process, better negotiation with suppliers, and the adoption of more cost-effective materials and manufacturing methods. These efficiency gains have directly contributed to improved gross margins.

Employee Cost Management: The Company effectively managed employee costs, maintaining them at approximately 10.3% of revenue from operations in FY26 (FY25: 10.7%), demonstrating effective workforce cost management while continuing to invest in talent development and workforce quality.

The combination of disciplined cost management and growth in exports contributed to an improvement in Operating EBITDA margins from approximately 18.0% in FY25 to 19.3% in FY26, allowing for enhanced profitability alongside revenue growth. FY 2025-26 demonstrates the Companys ability to scale earlier efficiency gains into ongoing growth and value creation.

Profitability Metrics

The Companys profitability showed consistent improvement across all key metrics:

• Operating EBITDA increased from Rs.1,049.67 million in FY25 to Rs.1,221.91 million in FY26, representing a growth of 16.41%, with an EBITDA margin of 19.3% of Revenue from Operations

• Profit Before Tax (PBT) grew from Rs.950.30 million in FY25 to Rs.1,116.19 million in FY26, an increase of 17.46%

• Profit After Tax (PAT) increased from Rs.696.43 million in FY25 to Rs.826.53 million in FY26, growth of 18.68%

• Net Worth strengthened from Rs.4,494.77 million in FY25 to Rs.5,229.68 million in FY26, reflecting 16.35% growth

KEY RATIOS

Figures in Rs. Millions	FY 2026	FY 2025	Change %	Details of significant changes (if change 25% or more as compared to FY25)
Debtors Turnover Ratio (Net Sales/ Average Trade Receivable)	14.95	16.38	(8.73)	NA
Inventory Turnover(Cost of Material Consumed /Average Inventories)	3.89	5.30	(26.60)	The storage capacities have increased to meet the demand and this has resulted in an increase in inventory.
Interest Coverage Ratio	124.20	79.09	57.04	Increase in earnings before interest and taxes and decrease in finance cost
Current Ratio (in times)	2.70	2.55	5.88	NA
Operating Profit Margin (in %)	15.93	14.44	10.32	NA
Debt Equity Ratio	0.02	0.02	-	NA
Net Profit Margin (in %)	13.03	11.93	9.22	NA
Return on Capital Employed (in %)	20.42	20.17	1.24	NA
Return on Net Worth (PAT/Total Equity) (in %)	15.80	15.49	2.00	*Increase in Profit After Tax

* Rationale is given for any change.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS

Studds Accessories Limited recognises that its people are its most valuable asset. The Company employs over 3,000 professionals across its operations, representing a diverse and skilled workforce committed to excellence in manufacturing, innovation, and customer service.

Talent Development and Learning

During FY 2025-26, the Company made significant investments in leadership development, internal mobility programs, and digital learning initiatives. The focus remained on fostering a culture built on integrity, diversity, and high performance. The Company is committed to creating a dynamic, diversified, and engaged workforce by onboarding talent from varied experiences and backgrounds.

The cornerstone of employee career growth at STUDDS comprises comprehensive learning and development programs complemented by opportunities such as internal job rotations and

Management Outlook

Strategic Priorities

Studds Accessories Limiteds strategic priorities for the medium term are centered on expanding market presence, both domestically and internationally, leveraging the growth in electric vehicles, and investing substantially in product innovation and research & development capabilities.

structured mentorship initiatives. An open culture of feedback mechanisms further reinforces the Companys commitment to fostering a supportive and collaborative work environment.

Leadership Development

Recognizing the importance of building a strong leadership pipeline, the Company has introduced various leadership development programs designed to groom future leaders who will drive the organizations next phase of exponential growth. These programs focus on developing strategic thinking, decision-making capabilities, and change management skills.

Performance Culture

These focused initiatives have created the right impetus for employees and cultivated a high-performing, future-ready workforce across all levels. This workforce is capable of driving sustainable growth and innovation across the Companys business verticals, ensuring that human capital remains a key competitive advantage.

The Company will continue to focus on strengthening STUDDS, scaling SMK, expanding private label opportunities and improving value realisation through product mix, design and features. SMK will remain an important growth engine, supported by its premium positioning, higher ASP, stronger margin profile and improving visibility in India and overseas markets.

Product development remains a key priority. The Company has a 70+ member in-house design and development team, supported by an in-house mould-making shop, design centre, 3D printing capability, electronics lab and VCA-certified element testing laboratory. STUDDS product development typically takes around 9 months from ideation to production, while SMK platforms take around 14 months due to higher complexity and certification requirements. The Company typically launches 5-7 new models annually and currently offers more than 240+ helmet styles and over 19,000 SKUs.

On-ground product reviews and market feedback help the Company understand consumer preferences, design acceptance and demand patterns. These inputs support production planning, launch readiness and sharper alignment between manufacturing schedules and market demand.

The Company is also widening its rider safety platform through adjacent categories such as riding gear, protective gloves, bluetooth communication systems, bicycle helmets and smart safety platforms. These categories align with the Companys core purpose of rider protection and create additional opportunities for consumer engagement.

SMKs participation in the FIM Road to MotoGP ecosystem through the Moto4 Latin America Cup has strengthened premium brand visibility and built credibility among performance-oriented and safety-conscious riders. Such engagement platforms support SMKs international positioning and deepen connect with rider communities.

The Company is witnessing an increase in certain raw material prices. While sourcing remains stable and material availability is not a concern, the Company is evaluating suitable measures to manage cost impact through procurement efficiency, operating improvements, product mix management, calibrated pricing actions and continued cost optimisation.

Market Growth Projections

The Companys growth projections for the coming years remain promising, supported by favorable industry dynamics. The Indian two-wheeler market is expected to experience continued growth from FY26 to FY29, with a CAGR estimated at 4-6%. This growth is fueled by multiple positive factors:

• New model launches across motorcycle and scooter segments attracting consumer interest

• Festive season demand patterns and seasonal buying cycles

• Rise in the number of weddings and associated two-wheeler purchases

• Easing in the supply of critical components like chips and semiconductors

• Improved affordability following GST rationalization

The domestic market, which continues to constitute the industrys largest segment, is expected to remain resilient, supported by improved affordability following the rationalization of lowered Goods and Services Tax (GST) rates.

Source: CARE Report

Annexure

Overall two-wheeler volumes and growth trend

According to the CARE Report, the mandatory requirement for all motorcycle helmets to carry Indian Standards certification from the Bureau of Indian Standards is expected to drive further consolidation of the helmet market towards the organised segment. This shift is anticipated to boost the demand for ISI-certified helmets and contribute to the growth of market share for organised helmet manufacturers. This growth expansion will be supported by improved rural and urban demand, an increase in electric two-wheeler adoption, and continued momentum in the premium and scooter segments. However, high inflation, rising costs due to regulatory changes, and uneven monsoons could dampen rural sentiment.

Global Market Opportunity

Beyond the domestic market, the Company is focused on capturing the significant opportunity in the global two-wheeler helmet market, which is estimated to grow at a CAGR of 5.1% in value terms between Calendar Year 2024 and Calendar Year 2029. This growth is primarily fueled by:

A consistently high-interest rate environment also remains a key factor that may impact consumer spending. The ongoing shift from internal combustion engine (ICE) two-wheelers to electric vehicles is expected to partially offset the slowdown in traditional segments. We believe that we are well placed to benefit from the growth in the two-wheeler helmet industry by leveraging our existing market position in India, particularly the recognition of our brands, STUDDS and SMK, our quality standards and certifications and geographical spread of our distributor network.

• Increasing urbanization in emerging markets

• Rising disposable incomes in developing economies

• Heightened safety awareness among two-wheeler users globally

• Government regulations mandating helmet use in more jurisdictions

Domestic Market Dynamics

According to industry research, the mandatory requirement for all motorcycle helmets to carry Indian Standards (ISI) certification from the Bureau of Indian Standards is expected to drive further consolidation of the helmet market towards the organised segment.

This regulatory shift is anticipated to boost demand for ISI-certified helmets and contribute to market share gains for organised helmet manufacturers like STUDDS. Growth expansion will be supported by improved rural and urban demand, an increase in electric two-wheeler adoption, and continued momentum in the premium and scooter segments.

Risk Factors and Mitigation

While the outlook remains positive, the management recognises potential headwinds including high inflation, rising costs due to regulatory changes, and the possibility of uneven monsoons that could dampen rural sentiment. A consistently high interest rate environment also remains a key factor that may impact consumer spending on discretionary items.

The ongoing transition from internal combustion engine (ICE) two-wheelers to electric vehicles is expected to partially offset any slowdown in traditional segments, presenting new opportunities for helmet manufacturers who can cater to the evolving needs of EV riders.

Competitive Positioning

The Company believes it is well-positioned to benefit from the projected growth in the two-wheeler helmet industry by leveraging several key competitive advantages:

• Strong existing market position in India with leadership in both volume and value terms

• Recognition and trust associated with the STUDDS and SMK brands

• Comprehensive quality standards and multiple international certifications

• Extensive geographical spread of the distributor network across India

• Manufacturing capabilities to serve diverse market segments and price points

Risk Management

The Company has established a comprehensive risk management framework to identify, assess, and mitigate risks that could impact its business operations and strategic objectives. The management regularly evaluates key risks and has implemented appropriate mitigation strategies:

Risk Category	Impact on Organization	^Mitigation Strategies
Regulatory Risk	The Company operates in a highly regulated industry subject to stringent safety standards and certifications. Non-compliance could lead to penalties, product recalls, operational halts, and reputational damage. Post-listing, the Company must comply with securities laws, listing regulations, and enhanced disclosure requirements.	The Company consistently invests in expanding and upgrading testing facilities and technologies to ensure all products meet or exceed safety standards. Rigorous quality control processes are maintained throughout the production cycle. The Company has strengthened its compliance and governance framework through internal controls, periodic compliance reviews, and engagement of professional advisors to ensure adherence to laws and listing regulations.
Competition Risk	The presence of a large unorganised segment and competition from established brands creates pricing pressure, limits market share expansion opportunities, and poses scalability challenges for the Company.	The Company is advancing manufacturing technology to enhance product quality while reducing costs. Implementation of backward integration strategies provides better control over critical component supply. Automation of key manufacturing processes, including material handling, increases efficiency and operational flexibility. These initiatives help manage pricing pressures and scalability challenges.
Market Risk	Failure to understand and respond to evolving customer preferences regarding style, design, safety features, and product innovation could lead to declining demand for the Companys products and erosion of market share.	The Company prioritizes continuous staff training and awareness programs to stay aligned with evolving market trends and customer preferences. Regular market research and customer feedback mechanisms are employed. Investment in design and R&D capabilities ensures the product portfolio remains contemporary and aligned with consumer expectations.
Supply Chain Risk	Over-dependence on a limited supplier base and vulnerabilities in the supply chain could lead to production delays, increased costs, and inability to meet customer demand during peak seasons or market opportunities.	The Company is actively diversifying its supplier base and strengthening local sourcing to reduce dependence on limited vendors. Backward integration in EPS and in-house capabilities across mould-making, decals, painting, testing and assembly provide better control over critical inputs, quality and production timelines. Strategic inventory planning and supplier relationship programmes help minimise production disruptions. While sourcing remains stable and material availability is not a concern, the Company continues to monitor input markets closely.
Financial Risk	Significant fluctuations in raw material prices, particularly petroleum-based plastics and other key inputs, could adversely impact profitability margins and overall financial performance of the Company.	The Company remains exposed to fluctuations in key raw material prices, particularly petroleum-based inputs such as ABS plastic and polycarbonate. During the year, the Company witnessed an increase in certain raw material prices and is evaluating suitable measures to manage the impact. These measures include procurement efficiency, operating improvements, cost optimisation, product mix management and calibrated pricing actions where required. The Companys continued focus on manufacturing efficiency, premiumisation and backward integration provides an additional buffer against margin pressure.

Internal Control Systems and Their Adequacy

Internal Financial Controls Framework

Studds Accessories Limited has established a robust Internal Financial Control (IFC) system that ensures transactions are properly authorized, recorded, and reported in accordance with applicable accounting standards. The Companys IFC system has been designed to provide reasonable assurance regarding:

• Effectiveness and efficiency of operations

• Adequacy of safeguards for assets

• Prevention and detection of frauds and errors

• Accuracy and completeness of accounting records in accordance with Indian Accounting Standards (Ind AS)

• Timely preparation of reliable financial statements

Control Environment

The controlled environment comprises a balanced mix of preventive and detective controls which are manual, semi-automated, and automated in nature. The Company has followed established principles such as segregation of duties, proper authorization, regular reconciliation, physical inventory verification, and periodic review while designing the internal control framework.

The Company has also implemented an effective internal control and risk mitigation system, which are constantly assessed and strengthened with new or revised standard operating procedures on a need basis. The Companys internal control system is commensurate with its size, scale, and complexity of operations.

Internal Audit Function

The objective of the internal audit function is to provide senior management and the Audit Committee with independent and reasonable assurance on the adequacy and effectiveness of the Companys risk management, control, and governance processes. This is achieved through an outsourced internal audit model wherein audit reviews are performed by Deloitte, an independent audit firm.

The main thrust of internal audit is to test and review controls, appraise risks and business processes, and benchmark controls with best practices in the industry. An audit scope is decided and rolled out with the approval of the Companys Audit Committee and Board of Directors. The scope is aimed at evaluating the efficacy and adequacy of internal control systems and compliance thereof, robustness of internal processes, policies and accounting procedures, and overall compliance with applicable regulations.

Oversight and Governance

The Audit Committee reviews the annual internal audit report and ensures adherence to the audit plan and recommendations. This helps facilitate timely detection of any irregularities and enables early remediation. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen them further.

The Company has implemented a robust Management Information System which is an integral part of the control mechanism, providing timely and accurate information to support decision-making at all levels of management.

Based on the reports of internal audit, process owners undertake corrective action in their respective areas. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. During the year, the Audit Committee was regularly apprised of internal audit findings and the corrective actions implemented.

Cautionary Statement

Certain statements in this Management Discussion and Analysis section concerning future prospects may be forward-looking statements which involve a number of underlying identified and unidentified risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements.

These forward-looking statements include, but are not limited to, statements regarding the Companys growth prospects, business strategies, future operations, financial position, projected costs, and prospects. The Companys actual results, performance, or achievements could differ materially from those expressed or implied in such forward-looking statements.

Key factors that could cause actual results to differ materially from the Companys expectations include changes in the regulatory environment, economic conditions in India and globally, competitive pressures, technological changes, raw material price volatility, changes in consumer preferences, and other factors beyond the Companys control.

In addition to the foregoing changes in the macro-environment, unforeseen adverse events such as pandemics, natural disasters, or geopolitical events may pose unprecedented and unascertainable risks to the Company and the environment in which it operates.

The results of the assumptions made, relying on available internal and external information, are the basis for determining certain facts and figures stated in this 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. The Company acknowledges that projections, estimates, and forward-looking statements are based on assumptions derived from these sources, combined with managements assessment and analysis. Readers are advised to exercise their own judgment and consult professional advisors before making any decisions based on this information.