Taaza International Ltd Management Discussions

INDUSTRY

Designing, developing, manufacturing, producing, assembling, selling, buying, distributing, exporting, importing of automotive vehicles including but not limited to electric vehicles including autos, buses omni buses, trucks, lorries, motor cars, scooters, motor-scooters, engines, locomotives of every description. The EV industry in India is experiencing explosive growth, driven by government support and increasing consumer demand.

STRUCTURE AND DEVELOPMENTS:

?‚? Industry Structure: The market is highly segmented. Electric Two-Wheelers (E-2W) and Electric Three-Wheelers (E-3W) dominate the overall sales volume due to high affordability and use in last-mile mobility. Meanwhile, Electric Four-Wheelers (E-4W), led by SUVs, are seeing high growth in the passenger segment, and Electric Buses (E-Buses) are the primary focus for large-scale government procurement in the Heavy Commercial Vehicle space, driven by schemes like PM e-Bus Seva.

?‚? Key Developments:

?‚? Policy Support: Schemes like the PM E-DRIVE Scheme 2024 continue to incentivize adoption, especially for Electric Buses, 2W and 3W. A new EV Policy aims to attract major global players by offering reduced import duties for companies committing to local investment and manufacturing.

?‚? Infrastructure: Public charging stations are expanding, though EV adoption is accelerating faster, leading to a rising EV-to-charger ratio (e.g., from 12:1 to 20:1).

OPPORTUNITIES AND THREATS:

?‚? Opportunity:

?‚? Commercial Fleet Electrification: Strong adoption in 3W, 2W for last-mile delivery, and E-Buses for city transport, all driven by a lower Total Cost of Ownership (TCO) over the long run (5-10% lower than diesel buses over their lifecycle).

?‚? Government Target & Schemes: Schemes like the PM e-Bus Sewa Yojna aim to deploy tens of thousands of E-Buses, creating massive bulk procurement and manufacturing demand.

?‚? Localization & Supply Chain: Government push for PLI schemes and localization encourages the development of domestic E-Bus manufacturing and battery component supply chains.

?‚? Innovative Business Models: Growth of Gross Cost Contract (GCC) and Pay-Per- Kilometer models to bypass the high upfront cost, enabling deployment of E-Buses without large capital expenditure by STUs.

?‚? Retrofitting: Opportunity to convert older diesel buses into electric buses by retrofitting the powertrain, extending the life of the asset and accelerating fleet conversion.

?‚? Threat / Challenge:

?‚? Charging Infrastructure Gap: Adoption is outpacing public charger deployment. For E-Buses, the major challenge is depot readiness and the availability of high-power DC fast-chargers suitable for heavy vehicles.

?‚? High Upfront Capital Cost: E-Buses cost 2-3 times more than comparable diesel buses, creating severe financing constraints for State Transport Undertakings (STUs) and private operators.

?‚? Payment/Contractual Risk: Private operators face risk due to delayed payments from financially stressed municipalities and STUs. The effectiveness of the new Payment Security Mechanism (PSM) is yet to be fully established.

?‚? Talent/Workforce Disruption: The transition requires retraining or re-deployment of thousands of existing diesel bus drivers and maintenance staff, leading to workforce redundancy concerns (as seen in some DTC operations).

?‚? Bureaucratic & Implementation Delays: Projects often stall due to depot land acquisition issues, repeated tender failures, and slow work-order issuance from civic bodies, delaying deployment for years.

SEGMENT WISE OR PRDOUCT WISE PERFORMANCE:

The market is heavily dominated by the lower-cost segments, but the higher-value segments are growing fast.

Segment	Sales Dominance (Volume)	Key Trends & Penetration
Electric 2- Wheelers (E- 2W)	Dominant (Approx. 58- 60% of total EV sales)	Highest volume, driving overall EV sales. Penetration is around 6% of total 2W sales.
Electric 3- Wheelers (E- 3W)	Strong (Approx. 34% of total EV sales)	High penetration in the commercial space (22.8% in passenger L5). Strong Total Cost of Ownership (TCO) benefits for e- rickshaws and cargo carriers.
Electric 4- Wheelers (E- 4W)	Niche but Growing (Approx. 7% of total EV sales)	Growth driven by SUVs (approx. 73% of E-4W sales). Penetration is around 2.7% of total 4W sales.
Electric Buses (E-Buses)	Low Volume (Approx. 4% of annual bus registrations, but growing 80%+ YoY)	Policy-driven segment (PM e-Bus Sewa Yojna). Penetration is high in the Heavy Passenger Vehicle (HPV) category (approx. 12.5%). TCO is 15-20% lower than diesel buses over their lifecycle.

OUTLOOK:

The overall outlook for the Indian EV industry remains robust and highly positive, driven by strong policy commitment and commercial TCO advantages, with different segments contributing distinctively to growth.

?‚? Overall Market Growth: The market size is forecast to reach over $117 billion by 2032. Indias ambitious target remains 30% EV sales penetration by 2030 (80% for 2W/3W, 70% for commercial vehicles, and 30% for private cars).

?‚? Electric Two-Wheelers (E-2W) & Three-Wheelers (E-3W): These segments will continue to drive volume, achieving near-saturation in key commercial applications (last- mile delivery, e-rickshaws) as they achieve Total Cost of Ownership (TCO) parity with ICE vehicles first.

?‚? Electric Four-Wheelers (E-4W): This segment will see growth sustained by new model launches (especially in SUVs and premium segments), increased focus on longer range and technology by domestic and international players, and increasing demand from corporate fleets.

?‚? Electric Buses (E-Buses): This segment is poised for explosive, policy-led growth with a projected CAGR of $\sim 86\%$ until 2030. This growth is guaranteed by large government initiatives like the PM e-Bus Sewa Yojna (aiming to deploy thousands of buses) and the continued shift to Gross Cost Contract (GCC) models, which mitigate the upfront financial risk for transport authorities. The focus will be on electrifying city transport across Tier 1 and Tier 2 cities.

RISK & CONCERNS:

Risk/Conce rn	Description	Impact on E-Bus Segment
Charging Infrastructure Lag	EV adoption (especially E-4W) is accelerating faster than public charger deployment, increasing the EV-to-charger ratio (e.g., from 12:1 to 20:1 recently). Faulty chargers are a major user concern.	E-Buses require specialized, high- power DC fast-charging depots on significant land parcels. Lack of depot readiness, grid infrastructure capacity, and slow execution of charging contracts are the primary bottlenecks delaying E- Bus deployment.
High Upfront Capital Cost	High cost of the battery (30-40% of vehicle cost) keeps EV prices higher than ICE, hindering mass- market adoption.	E-Buses cost 2-3 times more than diesel buses. This places severe financing strain on State Transport Undertakings (STUs), leading to delays, tender failures, and reliance on complex subsidy/GCC models.
Policy/Subsidy Uncertainty	Frequent changes or withdrawals of subsidy schemes (e.g., FAME- II replacement with EMPS 2024, reduction of E-2W subsidies) create investment uncertainty.	E-Bus viability is almost entirely dependent on sustained, long-term government subsidies (like the PM e- Bus Sewa) and the reliability of the Payment Security Mechanism (PSM) to guarantee operator revenue

		from fiscally weak STUs.
Safety and Quality	Concerns over battery fire incidents in the past have led to consumer hesitancy and stricter BIS standards .	E-Buses carry large, high-capacity battery packs, making fire safety protocols, robust Battery Thermal Management Systems (BTMS), and emergency response training a mission-critical risk factor for public transport.
Supply Chain Dependence	Heavy reliance on imports for Lithium, Cobalt, and Nickel and high-purity battery cells exposes the industry to global price volatility and geopolitical supply chain risks.	This risk directly impacts the TCO and the localization targets of domestic E-Bus manufacturers, making their long-term cost projections uncertain.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The adequacy of Internal Control Systems (ICS) in the Indian EV sector is being reshaped by regulatory mandates focusing on product safety and financial compliance, particularly given the rapid growth and reliance on subsidies.

?‚? Product Safety & Quality Controls: The most material development impacting ICS is the shift in manufacturing and compliance. Adequacy is primarily driven by adherence to Bureau of Indian Standards (BIS) norms, particularly for battery safety, charging technology, and component localization. The ICS must ensure rigorous testing, traceability of parts (crucial for quality management and recall procedures), and compliance with the evolving Automotive Industry Standards (AIS), which address thermal propagation and fire safety.

?‚? Financial Control Adequacy: ICS are crucial for managing financial risks related to government incentives. The system must ensure accurate documentation and reporting to comply with subsidy disbursement schemes (like EMPS 2024 or PM e-Bus Sewa Yojna) and localization mandates. Mismanagement or misrepresentation of data can lead to penalties and subsidy callbacks, a major financial risk factor experienced by some OEMs.

?‚? Supply Chain Control: Controls are required to manage the volatile costs of imported critical minerals and battery cells. This involves establishing clear risk mitigation strategies, inventory management for high-cost components, and cybersecurity controls for connected vehicles and smart charging networks.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Financial performance in the Indian EV sector is defined by high growth in operational

volumes but often strained by front-loaded capital expenditure and dependency on external factors.

Performance Area	Operational Performance (Volume & Efficiency)	Financial Performance (Revenue & Profitability)
Revenue Growth	High operational scale: EV sales volume growth is consistently high with E-2W and E-3W driving units. E-Bus segment is witnessing exponential volume growth from government orders.	High revenue growth: Top players see revenue increases commensurate with volume growth.
Profitability & Costs	Operational Efficiency: Superior to ICE due to lower running and maintenance costs (lower TCO). This makes fleet/commercial operations (E-3W, E-Buses) highly efficient.	Strained Margins: Profitability is often challenged by the high cost of imported battery cells and high CapEx in setting up battery and component manufacturing plants (PLI investments).
Financial Milestone	Achieving Operational Breakeven: Leading players in E- 4W (e.g., Tata Motors EV division) are moving toward achieving EBITDA profitability through volume scale and higher localization.	Subsidy Dependency: Earnings can be volatile, directly impacted by the timely release or reduction of government subsidies. Working capital is strained due to high GST on raw materials vs. low GST on the final product (Taxation Inversion).
Capital Investment	Vertical Integration: Strong operational focus on building domestic capacity (Giga factories, component manufacturing) under the PLI schemes.	Heavy Investment: Requires massive capital infusion (Equity/Debt) for R&D, manufacturing, and building a nationwide charging network.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

The EV industrys biggest development in HR is a fundamental skill transformation

driven by rapid technological change.

?‚? Employment Growth: The sector is projected to be a massive employment generator, expected to create 10 million direct and 50 million indirect jobs by 2030. New factories (including those established under the new EV Policy) are poised to significantly increase the number of people employed.

?‚? The Critical Skill Gap (Talent Shortage): The shift from Mechanical Engineering (ICE) to Electrical and Software Engineering (EV) has created a severe skill gap. High-demand roles include:

?‚? Battery Management System (BMS) Engineers

?‚? Power Electronics/Inverter Specialists

?‚? Data Scientists for telematics and charging optimization.

?‚? HR Strategy: Companies are addressing the gap through:

?‚? Reskilling/Upskilling: Implementing extensive programs to retrain the existing ICE workforce for new EV technologies.

?‚? Educational Partnerships: Collaborating with ITIs and engineering colleges to tailor curricula to EV-specific requirements (e.g., battery chemistry, connected systems).

?‚? Attraction: Emphasizing the sustainability mission and high-tech nature of the work to attract millennial and Gen Z talent.

?‚? Industrial Relations: Generally stable, though the need to adapt a primarily mechanical/assembly-line workforce to high-tech, digital roles requires careful change management and training investment to maintain industrial harmony.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS

THEREFOR, INCLUDING: Not Applicable as the Company was in IBC in FY 2024-25.

DISCLOSURE OF ACCOUNTING TREATMENT:

During the preparation of Financial Statements for the financial year 2024-25, the treatment as prescribed in the Note No. 2 to the Financial Statements regarding the Accounting Standards, has been followed by the Company. There are no significant changes in the treatment of Accounting Standards followed by the Company in the said financial year as compared to the previous financial year.

CAUTIONARY STATEMENTS:

Although we believe, we have been prudent in our projections, estimates, assumptions, expectations or predictions while making certain statements, realization is dependent on various factors. Should any known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated or projected. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information.

For and on behalf of the Board Taaza International Limited

Place: Hyderabad	Jhansi Sanivarapu	Venkatesh Challa
Date: 28.11.2025	Whole time Director (DIN: 03271569)	Director DIN: 08891249