The Hi-Tech Gears Ltd Management Discussions

GLOBAL ECONOMIC REVIEW

The global economy continued to navigate a complex and evolving environment during FY 2025-26, characterized by geopolitical uncertainties, changing trade relationships, technological disruption, and shifting investment patterns. Despite these challenges, economic activity across major regions remained relatively stable, demonstrating the adaptability of businesses, governments, and consumers in the face of persistent global headwinds. The evolving conflict in the Middle East is having significant humanitarian costs and testing the resilience of the global economy.

While growth remained uneven across geographies, the overall global economy benefited from improving financial conditions and continued investment in productivity-enhancing technologies.

The global business landscape is also witnessing a structural transformation driven by technological innovation. Investments in Artificial Intelligence (AI), automation, cloud computing, digital infrastructure, and advanced manufacturing technologies accelerated across industries. Organizations increasingly focused on enhancing operational efficiency, improving supply chain visibility, and building more agile business models capable of responding to rapidly changing market conditions. These developments are reshaping traditional industrial structures and creating new opportunities for productivity gains across both manufacturing and service sectors.

At the same time, geopolitical developments continued to influence economic activity and trade flows. Ongoing conflicts in Eastern Europe and West Asia, coupled with growing economic nationalism and changing tariff regimes, prompted businesses to reassess supply chain strategies and sourcing arrangements. Many countries intensified efforts to strengthen domestic manufacturing capabilities and reduce dependency on concentrated supply networks. This shift has resulted in increasing regionalization of supply chains and greater emphasis on supply chain resilience, localization, and strategic partnerships.

According to the International Monetary Fund (IMF), projected global economic growth holding steady at 3.3% for CY25 marking a 0.2% upward revision from October forecasts, driven primarily by stronger-than-expected performance in the US and China. This momentum is projected to carry forward, with healthy growth targets of 3.3% in CY26 and 3.2% in CY27. On the inflation front, global headline rates are on a clear downward trajectory, expected to ease from 4.1% in CY25 to 3.8% in CY26, and further moderate to 3.4% by CY27. The IMF credits this macroeconomic resilience to a combination of stabilizing factors: a gradual cooling of trade tensions, the quick operational pivots made by private sector businesses to bypass supply chain bottlenecks, and a sustained capital push into technology, particularly artificial intelligence (AI).

The global economy is facing this next test of resilience as signs of unevenness lie beneath the surface. Activity in the two largest economies, China and the United States, has been stronger than was expected in the October 2025 WEO. But this strength has been uneven. In the case of China, domestic activity especially in the housing sector lags behind exports. In the case of the United States, strong activity has been accompanied by low employment growth, amid declining labour force growth.

Another notable trend was the growing global focus on sustainability and energy transition. Governments and businesses continued to accelerate investments in renewable energy, energy efficiency, clean mobility solutions, and environmentally responsible manufacturing practices. Sustainability considerations are increasingly influencing capital allocation decisions, product development strategies, and regulatory frameworks across industries.

Looking ahead, the global economy is expected to maintain moderate growth momentum, supported by easing inflation, technological innovation, and infrastructure investments. However, risks associated with geopolitical tensions, trade policy uncertainty, energy market volatility, climate-related disruptions, and financial market fluctuations continue to warrant caution. The ability of economies and businesses to adapt to these evolving dynamics, while embracing technological and sustainability-led transformation, will play a critical role in shaping long-term growth prospects.

INDIAN ECONOMIC REVIEW

India continued to strengthen its position as one of the world s most dynamic and resilient economies during FY 2025-26. At a time when several advanced economies faced subdued growth, trade-related uncertainties, and investment moderation, India remained supported by strong domestic demand, robust public investment, a rapidly expanding digital ecosystem, and an increasingly competitive manufacturing base. These factors enabled the country to sustain a healthy growth trajectory and further enhance its role in the global economic landscape.

During the year, India achieved a significant milestone by surpassing Japan to become the world s fourth-largest economy in nominal GDP terms. This achievement reflects not only the scale of economic expansion witnessed over the past decade but also the success of structural reforms, infrastructure development initiatives, digital transformation, and efforts aimed at enhancing manufacturing competitiveness. According to official estimates, India has witnessed the growth rate of 7.7% in FY 2025-26. The projected real GDP for FY 2026-27 is estimated at 6.8%. with the country remaining the world s fastest-growing major economy.

A key contributor to this performance has been the Government s continued focus on capital expenditure and infrastructure creation. Investments in highways, railways, logistics networks, airports, renewable energy, urban development, and digital connectivity have created a strong multiplier effect across sectors. Such investments have not only stimulated economic activity in the short term but have also strengthened the foundation for long-term productivity improvements and industrial growth.

Despite India s strong domestic performance, geopolitical development remain an important external risk.

The geopolitical conflict involving the United States, Israel and Iran has emerged as a significant source of uncertainty for the global economy. Despite India s strong domestic performance geopolitical development remain an important external risk. The situation has contributed to volatility in crude oil prices, potential disruptions in LNG supplies and increased logistics, freight and insurance costs. As India remains dependent on imported energy resources, prolonged disruptions may increase the country s import bill and create inflationary pressures, while also impacting supply chains across certain sectors. Nevertheless, India s diversified growth drivers, strong domestic consumption, infrastructure investments and continued policy reforms are expected to enhance economic resilience and support sustained growth despite external challenges.

The manufacturing sector continued to play an increasingly important role in India s growth story. Policy initiatives such as the Production Linked Incentive (PLI) schemes, ease-of-doing-business reforms, and efforts to strengthen domestic supply chains have encouraged fresh investments across several industries. Additionally, the global shift toward supply chain diversification and the adoption of the China+1 strategy have enhanced India s attractiveness as a manufacturing destination. This trend has created opportunities across sectors including automotive, engineering, electronics, renewable energy, and industrial equipment.

During FY 2025 26, the Government continued to strengthen the India Semiconductor Mission by approving additional semiconductor manufacturing projects, including India s first commercial Mini/Micro-LED display facility and a semiconductor packaging unit. These approvals further expanded the domestic semiconductor ecosystem and reinforced India s objective of becoming a global hub for semiconductor manufacturing.

In a major boost to India s high-tech manufacturing landscape, the Union Cabinet approved the Semicon 2.0 initiative with a substantial budgetary outlay of 1,27,500 crore. Building on the initial momentum of its predecessor, this long-term policy framework focuses on holistically developing the domestic semiconductor landscape across six foundational pillars: chip design, advanced machines and raw materials, fabrication facility expansion, ATMP/OSAT packaging, collaborative R&D, and deep talent development. The structural shift aims to strengthen national security, secure critical supply chain resilience, and position India as a global technological leader in strategic and commercial chip manufacturing.

India s services sector also remained a key pillar of economic growth, supported by strong performance in information technology, financial services, telecommunications, e-commerce, and professional services. The rapid adoption of digital technologies, growing fintech penetration, and expansion of Global Capability Centres (GCCs) further strengthened the country s competitive advantage in knowledge-based industries.

Inflation moderated considerably during the year, supported by prudent monetary management, stable commodity prices, and favorable agricultural output. This provided the Reserve Bank of India with greater flexibility to support growth through calibrated policy measures. Strong foreign exchange reserves, a resilient banking system, improving corporate balance sheets, and increasing investor confidence further strengthened the macroeconomic environment.

Looking ahead, India remains well-positioned to sustain its growth momentum. Rising urbanization, favourable demographics, expanding manufacturing capabilities, digital transformation, infrastructure investments, and increasing integration with global supply chains are expected to drive future growth. While geopolitical developments and global economic uncertainties remain areas of concern, India s strong economic fundamentals, reform-oriented policy framework, and growing domestic market provide confidence in its long-term growth prospects.

INDIAN AUTO SECTOR AND PRODUCTION TREND

India s automobile industry continued its strong growth momentum during FY 2025-26 and remained one of the key pillars of the country s manufacturing sector. The industry benefited from robust domestic demand, rising disposable incomes, improving rural sentiment, infrastructure development, favourable government policies and increasing adoption of advanced mobility solutions.

The Government s continued focus on manufacturing-led growth through initiatives such as Make in India , Production Linked Incentive (PLI) Schemes, PM E-Drive, National Logistics Policy, Vehicle Scrappage Policy and investments in infrastructure development further strengthened the long-term prospects of the automobile and auto-component sectors. These initiatives continue to encourage domestic manufacturing, attract investments and improve India s competitiveness in global supply chains.

As per data released by the Society of Indian Automobile Manufacturers (SIAM), the Indian automotive industry recorded another year of healthy growth during FY 2025-26. Total vehicle production increased to 34.70 million units as compared to 31.03 million units during FY 2024-25, reflecting growth of approximately 11.8%. The increase was broad-based across all major vehicle segments and was supported by strong consumer demand and improving supply chain conditions.

The overall Passenger Vehicle production increased from 5.06 million units in FY 2024-25 to 5.54 million units in FY 2025-26, while domestic sales reached an all-time high from 4.30 million in FY 2024-25 to 4.64 million units in FY 2025-26, registering growth of approximately 8% over the previous year. The segment continued to benefit from strong urban demand, premiumization trends, increasing preference for SUVs and sustained replacement demand.

The Commercial Vehicle segment recorded a healthy recovery during the year. Domestic sales increased from 0.96 million units in FY 2024-25 to 1.08 million units in FY 2025-26, reflecting growth of approximately 13%. Increased infrastructure spending, logistics activity, construction projects and government capital expenditure supported demand across medium and heavy commercial vehicle categories.

The Three-Wheeler segment continued its strong recovery trajectory with domestic sales increasing from 0.74 million units in FY 2024-25 to 0.83 million units during FY 2025-26. The segment benefited from improving urban mobility demand, growth in e-commerce logistics and increasing adoption of electric three-wheelers for passenger and cargo transportation.

The Two-Wheeler segment remained the largest contributor to overall industry volumes. Domestic sales increased from 19.61 million units in FY 2024-25 to 21.71 million units in FY 2025-26, registering growth of approximately 10.6%, while overall production reached to 26.69 million units in FY 2025-26 as compared to 23.88 million in previous FY 2024-25. Alongside growth constraints vehicle segment India s electronic mobility ecosystem also expanded rapidly during the year. Improved rural demand, better monsoon conditions, rising agricultural income and increasing financing availability contributed significantly to the segment s growth.

Alongside growth Conventional vehicle segment, India s electronic mobility ecosystem also expanded rapidly during the year.

The electric mobility ecosystem continued to expand rapidly during the year. Government support through PM E-Drive, battery manufacturing incentives, localization initiatives and charging infrastructure development accelerated EV adoption across vehicle categories. Electric two-wheelers and three-wheelers continued to account for a significant share of overall EV sales, creating substantial opportunities for auto-component manufacturers supplying advanced mobility solutions.

The China+1 strategy continued to provide significant opportunities for India. Global OEMs and component manufacturers increasingly diversified their supply chains and expanded sourcing from India. Supported by a competitive manufacturing ecosystem, skilled workforce, improving infrastructure and favourable policy framework, India continued to strengthen its position as a preferred global manufacturing and sourcing hub.

The sustained growth in vehicle production, increasing localization levels, rising exports and accelerating EV penetration continue to create significant opportunities for Indian auto-component manufacturers. Higher value addition, increased content per vehicle and growing participation in global supply chains are expected to support long-term growth prospects for the industry.

Tab I: Automobile production trends

Category	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26
Passenger Vehicles	30,62,280	36,50,698	45,87,116	49,01,840	50,61,164	55,39,115
Commercial Vehicles	6,24,939	8,05,527	10,35,626	10,67,504	10,34,947	11,70,150
Three Wheelers	6,14,613	7,58,669	8,55,696	9,96,159	10,50,020	13,00,805
Two Wheelers	1,83,49,941	1,78,21,111	1,94,59,009	2,14,68,527	2,38,83,857	2,66,91,916
Grand Total	2,26,51,773	2,30,36,005	2,59,37,447	2,84,34,080	3,10,29,988	3,47,01,986

[Source: Society of Indian Automobile Manufacturers (SIAM)]

Tab II: Automobile domestic sales trends

Category	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26
Passenger Vehicles	27,11,457	30,69,523	38,90,114	42,18,750	43,01,848	46,43,439
Commercial Vehicles	5,68,559	7,16,566	9,62,468	9,68,770	9,58,679	10,79,871
Three Wheelers	2,19,446	2,61,385	4,88,768	6,94,801	7,41,420	8,36,231
Two Wheelers	1,51,20,783	1,35,70,008	1,58,62,771	1,79,74,365	1,96,07,332	2,17,05,974
Grand Total	1,86,20,245	1,76,17,482	2,12,04,121	2,38,56,686	2,56,09,279	2,82,65,515

[Source: Society of Indian Automobile Manufacturers (SIAM)]

OUTLOOK

The outlook for India s automobile and auto-component industry remains positive. Strong domestic demand, rising vehicle ownership, infrastructure development, supportive government policies and increasing global sourcing opportunities are expected to drive sustainable growth in the medium and long term.

The strong performance of the automobile industry during FY 2025-26 provides a favorable foundation for future growth. Passenger vehicles recorded their highest-ever domestic sales while two-wheelers demonstrated robust recovery driven by rural demand. Commercial vehicles benefited from continued infrastructure investments and logistics expansion, whereas three-wheelers continued to gain momentum due to increasing urban mobility requirements. Going forward, sustained infrastructure spending, favorable demographics, increasing vehicle penetration and growing consumer aspirations are expected to support healthy demand across all vehicle segments.

The electric vehicle ecosystem is expected to witness accelerated growth supported by policy incentives, localization initiatives, battery manufacturing investments and expanding charging infrastructure. Manufacturers are increasingly focusing on advanced technologies, connected mobility solutions and sustainable manufacturing practices to enhance competitiveness.

However, the industry continues to face challenges arising from geopolitical uncertainties, fluctuations in commodity prices, supply chain disruptions, technological transitions and evolving regulatory requirements. The increasing adoption of electric mobility, autonomous technologies and digital manufacturing will require sustained investments in research, development and innovation.

The Company remains well-positioned to capitalize on emerging opportunities through its strong customer relationships, engineering capabilities, diversified product portfolio and focus on operational excellence. Continued emphasis on new product development, cost optimization, quality enhancement and capacity utilization will support sustainable growth and long-term value creation.

RISKS AND CONCERNS IN AUTOMOBILE AND AUTO COMPONENT SEGMENT

The automotive industry continues to operate in an increasingly dynamic and competitive environment influenced by economic, geopolitical, technological and regulatory developments. While the long-term growth outlook for the automobile and auto-component industry remains positive, manufacturers continue to face several challenges that could impact business performance and profitability.

The global automotive sector remains exposed to geopolitical uncertainties arising from ongoing regional conflicts, changing trade policies and increasing protectionist measures by various countries. Such developments have the potential to disrupt global supply chains, increase logistics costs and impact the availability of critical raw materials and components. The continuing geopolitical tensions across Europe, the Middle East and parts of Asia such as Russia Ukraine war, America and Iran war, America s trade tariffs, etc. continue to create uncertainty in commodity markets and international trade flows.

Volatility in commodity prices remains a key concern for the automotive and auto-component industry. Raw materials such as steel, alloy steel, aluminium, copper and other specialty metals constitute a significant portion of manufacturing costs. Fluctuations in global commodity prices, driven by geopolitical developments, inflationary pressures, supply-demand imbalances and trade restrictions, can adversely impact operating margins, particularly where cost increases cannot be immediately passed on to customers. Additionally, volatility in energy prices and transportation costs continues to influence manufacturing and logistics expenses.

The industry also remains exposed to the risk of shortages or delayed availability of critical components such as semiconductors, electronic chips, sensors and other specialized electronic parts, which have become increasingly important with the growing adoption of advanced electronics, connected vehicles and electric mobility solutions. Any disruption in the supply of these components may lead to production delays, increased procurement costs and disruption in customer deliveries.

The industry is witnessing a rapid technological transformation driven by electrification, connected mobility, autonomous technologies and digitalization. While these developments create significant opportunities, they also require substantial investments in research and development, engineering capabilities, manufacturing technologies and workforce upskilling. Companies that fail to adapt quickly to changing technological requirements may face challenges in maintaining their competitive position.

One of the most significant technological transformation and transition towards electric mobility is creating both opportunities and uncertainties for the automotive ecosystem. Although EV adoption is increasing steadily, the pace of transition remains dependent upon charging infrastructure development, battery costs, government incentives and consumer acceptance. Manufacturers must continue to invest in new technologies while simultaneously supporting traditional internal combustion engine platforms.

Supply chain resilience continues to be a major focus area across the industry. The lessons learned from recent disruptions have highlighted the importance of supplier diversification, localization and strategic inventory management. Any disruption in the availability of critical components, semiconductors or specialty materials may impact production schedules and customer deliveries.

Stringent regulatory requirements relating to safety, emissions and sustainability continue to increase compliance obligations for automotive manufacturers. Future regulatory changes may require additional investments in product development, testing, certification and manufacturing processes. Companies must continuously monitor evolving regulations and ensure timely compliance to avoid operational disruptions.

Despite these challenges, the industry continues to demonstrate resilience through innovation, localization initiatives, supply chain optimization and strategic investments in advanced technologies. Companies that successfully manage these risks while maintaining operational flexibility are expected to benefit from the long-term growth potential of the automotive sector.

OPPORTUNITIES, THREATS AND MITIGATION STRATEGIES

OPPORTUNITIES

India s automotive and manufacturing sectors continue to present significant growth opportunities driven by favourable demographics, rising income levels, increasing urbanization and strong policy support from the Government. The country remains one of the largest and fastest-growing automobile markets globally, creating substantial opportunities for vehicle manufacturers and component suppliers.

The continued implementation of the Make in India initiative, Production Linked Incentive (PLI) schemes, PM Gati Shakti, National Logistics Policy and various state-level industrial promotion programs are strengthening India s manufacturing competitiveness. These initiatives are encouraging investments, improving infrastructure and enhancing India s position in global supply chains.

The ongoing diversification of global supply chains continues to create opportunities for Indian manufacturers. As global companies seek to reduce concentration risks and build resilient sourcing networks, India is increasingly emerging as a preferred manufacturing and engineering hub, supported by its strong domestic market, skilled workforce, policy support, and improving infrastructure

The rapid growth of electric mobility presents substantial opportunities for component manufacturers. Increasing EV adoption is driving demand for advanced transmission systems, precision-engineered components, lightweight materials, electric drivetrain solutions and various specialized automotive products. The Company s continued focus on innovation and engineering excellence positions it favourably to capitalize on these opportunities.

Export opportunities continue to expand as global OEMs increasingly source components from India. The country s cost competitiveness, engineering capabilities and quality standards are enabling Indian suppliers to strengthen their participation in global value chains. Continued localization efforts by OEMs and increasing preference for reliable suppliers are expected to support long-term export growth.

Advancements in manufacturing technologies, automation, Industry 4.0 and digital transformation are enabling companies to improve productivity, quality and operational efficiency. Organizations that effectively adopt these technologies can achieve sustainable competitive advantages.

THREATS AND MITIGATION STRATEGIES

Technological Disruption

The automotive industry is undergoing a rapid transformation driven by electrification, vehicle connectivity, autonomous technologies, lightweight materials, digital manufacturing and increasing adoption of artificial intelligence across the value chain. These developments are changing customer requirements, product specifications and manufacturing processes. Companies that are unable to keep pace with technological advancements may face the risk of product obsolescence, reduced competitiveness and loss of market share.

The Company continues to invest in engineering excellence, product development and process innovation to align its product portfolio with evolving industry requirements. It actively collaborates with customers during the product development stage, enhances its research and development capabilities and focuses on developing technologically advanced products for both conventional and emerging mobility platforms. Continuous investment in automation, digital manufacturing and employee skill enhancement further strengthens the Company s ability to respond to changing market dynamics.

Raw Material Cost Volatility

Steel, alloy steel and other metal-based raw materials constitute a significant portion of the Company s production cost. Fluctuations in commodity prices due to global demand-supply imbalances, geopolitical developments, inflationary pressures, energy costs and trade restrictions may adversely affect operating margins, particularly where cost increases cannot be immediately passed on to customers.

The Company mitigates this risk through strategic sourcing initiatives, long-term supplier partnerships, vendor diversification and continuous supplier development programmes. It focuses on value engineering, material optimization, productivity improvements and cost reduction initiatives to improve operational efficiency. Where commercially feasible, the Company also works closely with customers for timely price revisions and maintains disciplined procurement practices to minimize the impact of raw material price volatility.

Supply Chain Disruptions

Global supply chains continue to remain vulnerable to geopolitical conflicts, transportation bottlenecks, natural disasters, shortages of critical materials, logistics constraints and trade policy changes. Such disruptions may result in delays in procurement of raw materials and components, increase logistics costs and adversely impact production schedules, customer deliveries and overall operational efficiency.

The Company has adopted a diversified sourcing strategy by expanding its supplier base and reducing dependence on single-source suppliers. It continues to strengthen localization initiatives, maintain optimum inventory levels for critical materials and improve supply chain visibility through better planning and digital monitoring systems. Regular supplier engagement, risk assessment and business continuity planning enable the Company to respond effectively to unforeseen disruptions and maintain uninterrupted customer supplies.

Regulatory and Compliance Risks

The automotive industry operates in an increasingly regulated environment with evolving requirements relating to emission standards, vehicle safety norms, environmental protection, ESG reporting, labour regulations, product quality and corporate governance. Any failure to comply with applicable laws and regulations could result in financial penalties, operational disruptions and reputational damage.

The Company has established robust compliance and governance frameworks supported by well-defined internal policies, standard operating procedures and periodic compliance reviews. It continuously monitors regulatory developments at both domestic and international levels and undertakes timely implementation of necessary changes. Regular employee awareness programmes, internal audits and cross-functional coordination help ensure compliance with applicable statutory and regulatory requirements.

Foreign Exchange Risks

The Company is exposed to foreign exchange risks arising from exports, imports of raw materials, capital goods and other foreign currency transactions. During FY 2025-26, the Indian Rupee remained under pressure against the US Dollar due to global trade uncertainties, geopolitical developments, foreign portfolio investment outflows and higher demand for the US Dollar in international markets. The appreciation of the US Dollar and increased volatility in currency markets resulted in fluctuations in import costs, export realizations and overall profitability. Continued volatility in exchange rates may also impact cash flows, working capital requirements and financial performance.

The Company follows a prudent foreign exchange risk management framework by continuously monitoring currency exposures and adopting appropriate hedging strategies in accordance with its risk management policy. It also seeks to achieve a natural hedge by balancing foreign currency receivables and payables, wherever feasible, thereby minimizing the impact of exchange rate fluctuations. The Company regularly reviews market developments, optimizes treasury operations and maintains disciplined financial risk management practices to safeguard profitability and liquidity against adverse currency movements.

Talent and Skill Availability

The automotive and manufacturing sectors are witnessing increasing demand for highly skilled professionals in areas such as precision engineering, automation, digital manufacturing, robotics, artificial intelligence, electric vehicle technologies and data analytics. Intense competition for qualified talent may affect business continuity, innovation and future growth.

The Company continues to invest in employee learning and capability development through structured technical training programmes, leadership development initiatives and continuous skill enhancement. It focuses on employee engagement, performance-driven culture, succession planning and career development opportunities to attract, retain and nurture high-quality talent. The Company also promotes a safe, inclusive and collaborative work environment to strengthen employee satisfaction and long-term retention.

Labour Availability and Workforce Challenges

The manufacturing sector continues to face challenges in the availability and retention of skilled and semi-skilled shop-floor workforce due to increasing competition for labour, demographic shifts, migration patterns, rising wage expectations and changing workforce preferences. Shortages of trained operators and technicians may impact production schedules, operational efficiency, product quality and timely execution of customer orders. In addition, changes in labour laws and increasing compliance requirements may lead to higher manpower costs and operational complexities.

The Company focuses on building a stable and skilled workforce through continuous skill development programmes, structured induction and on-the-job training, multi-skilling initiatives and employee engagement activities. The Company also maintains long-term relationships with manpower agencies, strengthens workforce planning, promotes automation wherever commercially feasible and provides a safe, healthy and inclusive workplace to improve employee retention and productivity. Continuous monitoring of manpower requirements and succession planning further support uninterrupted manufacturing operations.

Geopolitical Uncertainties

The Company s business is closely linked to the global automotive industry and export markets, including North America, Europe, India and Asia. With operations and supply chains extending across multiple geographies, the Company remains exposed to geopolitical developments, trade disputes, changes in tariff policies, economic sanctions and evolving international trade regulations. During FY 2025-26, global trade was impacted by heightened geopolitical tensions, including conflicts in Eastern Europe and the Middle East, evolving tariff measures by major economies and disruptions in key global shipping routes. Such developments have the potential to increase raw material and logistics costs, disrupt global supply chains, extend lead times and affect customer demand across international markets. Continued uncertainty may also result in currency volatility, inflationary pressures and delays in investment decisions by customers, thereby impacting business performance and profitability.

The Company continues to strengthen its business resilience through a diversified customer base, balanced geographical presence and a multi-location sourcing strategy. It focuses on supplier diversification, localization of procurement, continuous monitoring of geopolitical developments and proactive supply chain risk management to minimize disruptions. The Company also maintains close engagement with customers and suppliers, enhances inventory planning for critical materials and components and regularly reviews its export strategy to respond effectively to changing global trade dynamics. These measures enable the Company to improve operational flexibility, ensure business continuity and mitigate the impact of geopolitical uncertainties.

BRIEF OF FINANCIAL RESULTS

During the Financial Year 2025-26, the Company continued to demonstrate operational resilience amidst a challenging global business environment characterized by economic uncertainties, evolving customer requirements and increasing competitive pressures.

On a standalone basis, Revenue from Operations for the FY 2025-26 stood at 6,486.50 million as compared to 6,389.93 million during the previous financial year i.e 2024-25, reflecting steady business performance and continued customer demand across key markets. Total Income increased to 6,806.12 million from 6,696.12 million in the previous year.

Profit Before Tax (PBT) for the FY 2025-26 stood at 445.95 million as compared to 635.69 million during the previous FY 2024-25. Profit After Tax (PAT) stood at 330.54 million as against 473.78 million reported during FY 2024-25. Basic Earnings Per Share (EPS) for the year stood at 17.59 as compared to 25.23 during the previous financial year.

Despite pressures arising from increased employee costs, commodity price fluctuations and investments in future growth initiatives, the Company maintained a strong financial position supported by prudent financial management and disciplined capital allocation.

In response to these challenges the Company continued to focus on operational efficiency, cost optimization, productivity enhancement and customer service excellence. During the year, strategic initiatives aimed at improving manufacturing efficiency, reducing operational costs and enhancing value-added offerings contributed positively to business performance.

The Company s continued emphasis on quality, technology, innovation and customer satisfaction enabled it to strengthen its market position and maintain long-term relationships with leading OEM customers across domestic and international markets.

These results underscore the Company s ability to adapt to changing market conditions while continuing to invest in future growth opportunities and sustainable value creation for stakeholders.

KEY FINANCIAL RATIOS ARE GIVEN BELOW

Particulars	Unit	2025-26	2024-25	Change over previous year	Reason for material change
Debtors Turnover	Times	5.29	5.09	3.91%	Average Trade receivable has decreased and revenue has increased, resulting in increase in debtor turnover ratio.
Inventory Turnover	Times	3.60	3.82	-5.85%	Inventory turnover ratio decreased due to increase in inventory for mitigating future sales plan as well as change in customer EDI.
Current Ratio	Times	2.03	1.89	7.48%	Current ratio improved, mainly due to increase in Current assets and re- payments of debts.
Debt Equity Ratio	Times	0.20	0.24	-16.52%	Debt Equity ratio is improved due to increase in Net worth and reduction in Debt.
Particulars	Unit	2025-26	2024-25	Change over previous year	Reason for material change
Interest Coverage Ratio	Times	4.20	1.27	230.79%	Increased due to lower interest cost and lower re-payment of long-term debts, despite lower Profit after tax before interest and depreciation.
Operating Profit (EBIDTA) Margin	%	12.90	16.16	-3.26%	Decreased largely due to increase in consumable & manpower cost.
Net Profit Margin	%	4.96	7.20	-2.25%	Net profit margin reduced due to reduction in EBITDA margin.
Return on Net Worth	%	6.66	10.37	-3.71%	Decrease due to decrease in Net Profit.

EXCELLENCE, AWARDS AND RECOGNITIONS

The Company remains committed to achieving manufacturing excellence, technological leadership and sustainable business growth. Continuous improvement, innovation and customer-centricity remain integral to the Company s operational philosophy.

During the year, the Company continued to strengthen its position in the electric mobility ecosystem by actively participating in new product development initiatives and engaging with customers across emerging EV platforms. Several new product development programs progressed successfully during the year, reinforcing the Company s capabilities in advanced transmission and drivetrain solutions.

The Company continued to invest in engineering excellence, process innovation and manufacturing modernization. Various initiatives focused on productivity improvement, quality enhancement, automation and digital transformation were implemented across manufacturing facilities to improve operational performance and customer satisfaction.

The Company s Manesar manufacturing facility continued to uphold high standards of environmental stewardship and sustainable manufacturing practices. The Company s commitment towards responsible manufacturing, energy conservation, waste reduction and resource optimization remains aligned with global sustainability objectives.

Customer recognition continues to be a reflection of the Company s commitment to quality, delivery performance, innovation and business excellence. Long-standing relationships with leading domestic and international customers continue to strengthen the Company s reputation as a reliable and preferred supplier.

The Company remains focused on building future-ready capabilities while pursuing excellence in every aspect of its operations.

SEGMENT REPORTING

The Company is primarily engaged in the manufacture of gears and transmission components, which constitute a single business segment owing to the similarity in the nature of products, production processes, customer base, and associated risks and returns. Accordingly, the Company s operating performance is evaluated and reported as a single business segment.

To provide stakeholders with a broader perspective of its business operations, the Company presents geographical information in its financial statements, categorised into three principal regions. These disclosures reflect the Company s domestic and international presence and provide insights into its revenue distribution across different geographical markets.

The geographical segment information enhances transparency and enables investors and other stakeholders to better assess the Company s regional business performance while maintaining consistency with its single business segment reporting. This approach ensures compliance with the applicable accounting requirements and facilitates a comprehensive understanding of the Company s overall operations.

INTERNAL CONTROLS AND THEIR ADEQUACY

The Company has established a comprehensive system of internal controls designed to provide reasonable assurance regarding the effectiveness and efficiency of operations, reliability of financial reporting, safeguarding of assets and compliance with applicable laws and regulations.

The internal control framework is supported by clearly defined organizational structures, documented policies and procedures, delegation of authority matrices and robust monitoring mechanisms. These controls are regularly reviewed and updated to align with changing business requirements and regulatory expectations.

The Company maintains an independent internal audit function that evaluates the adequacy and effectiveness of internal controls, risk management practices and governance processes. Internal audit reviews are conducted based on a risk-based audit plan approved by the Audit Committee.

The findings and recommendations arising from internal audits are periodically reviewed by management and the Audit Committee. Corrective actions are monitored to ensure timely implementation and continuous improvement in control processes.

The Audit Committee regularly reviews financial reporting processes, internal control systems, risk management frameworks and compliance mechanisms. The Committee also interacts with internal auditors, statutory auditors and management to assess the effectiveness of governance and control practices.

Based on periodic assessments and reviews conducted during the year, the Company believes that its internal control systems remain adequate and effective considering the size, nature and complexity of its operations.

HUMAN RESOURCES

Human resources continue to be one of the Company s most valuable assets and a key enabler of sustainable business growth. The Company remains committed to fostering a culture of excellence, collaboration, innovation and continuous learning across all levels of the organization.

The Company places significant emphasis on employee engagement, capability development, leadership building and talent management. Various training and development initiatives are conducted regularly to enhance technical competencies, managerial capabilities and functional expertise.

Employee health, safety and well-being remain key priorities. The Company continues to maintain a safe and healthy work environment through robust safety systems, awareness programs, preventive measures and continuous monitoring of workplace conditions.

The Company encourages a performance-driven culture supported by transparent performance management systems, career development opportunities and employee recognition programs. Efforts are continuously made to strengthen employee engagement and build a high-performance organization.

Industrial relations remained cordial and harmonious throughout the year across all manufacturing locations and offices. The Company continues to enjoy constructive relationships with employees, workers and other stakeholders.

As on March 31, 2026, the Company maintained a motivated and committed workforce aligned with its values, strategic objectives and long-term growth aspirations. Continuous investments in people development and organizational capability enhancement will remain a key focus area going forward.

DISCLAIMER

The statements contained in this Management Discussion and Analysis describing the Company s objectives, projections, estimates, expectations, outlook, plans, strategies or predictions may constitute forward-looking statements within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions, expectations of future events and management s current views and assumptions regarding future business conditions.

Actual results may differ materially from those expressed or implied in such forward-looking statements due to various risks and uncertainties. Important factors that could influence the Company s operations and performance include changes in economic conditions, industry trends, demand and supply dynamics, availability and prices of raw materials, fluctuations in foreign exchange rates, interest rates, changes in Government policies and regulations, taxation laws, geopolitical developments, technological changes, competitive pressures, supply chain disruptions and other factors beyond the Company s control.

The Company does not undertake any obligation to publicly update, amend or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these forward-looking statements. The statements made in this Management Discussion and Analysis should be viewed in conjunction with the Company s financial statements and the notes thereto.