Timken India Ltd Management Discussions

As per the World Economic Outlook (WEO) released by the International Monetary Fund (IMF) in April 2025, the global growth is projected to decline from 3.3 percent in 2024 to 2.8 percent in 2025, before modestly recovering to 3 percent in 2026. These projections represent downward revisions of 0.5 percentage points for 2025 and 0.3 percentage points for 2026 compared to earlier estimates, with nearly all countries affected. The widespread downgrades primarily reflect the direct consequences of newly implemented trade measures, as well as their indirect effects through global trade linkages, elevated uncertainty, and weakening economic sentiment. For advanced economies, growth forecast expected to decline from an estimated 1.8 percent in 2024 to 1.4 percent in 2025, followed by a slight increase to 1.5 percent in 2026. The growth projection for 2025 has been revised downward by 0.5 percentage points compared to the earlier projection in January 2025. The revised forecasts for 2025 reflect notable downward adjustments for Canada, Japan, the United Kingdom, and the United States, along with an upward revision for Spain. For emerging market and developing economies, growth forecast projected to decline to 3.7 percent in 2025 and 3.9 percent in 2026, following an estimated expansion of 4.3 percent in 2024. In the case of China, the GDP growth forecast for 2025 has been revised downward to 4.0 percent, compared to 4.6 percent in the earlier estimate. (Source: IMF)

o Global Growth (%)

o Global Outlook

Global Growth hovered around 3 percent in the past few years, and global output came close to potential. The five-year-ahead growth projection stands at 3.2 percent, below the historical average of 3.7 percent recorded during the period 2000–2019.Global headline inflation is anticipated to decline to 4.3 percent in 2025 and further to 3.6 percent in 2026. Inflation is expected to return to target levels earlier in advanced economies, reaching 2.2 percent by 2026, in contrast to emerging market and developing economies, where it is projected to ease to 4.6 percent over the same period. Significant policy shifts are reshaping the global trade system, introducing uncertainty that is once again challenging the resilience of the global economy. Uncertainty, especially that regarding trade policy, has surged to unprecedented levels. Since February, the United States has implemented several rounds of tariffs on trading partners, prompting some of them to respond with countermeasures. The trade policy uncertainty is anticipated to remain elevated through 2025 and 2026. (Source: IMF)

o Bearing Market and Future Development

Indias bearing market size was estimated to be around $2.4 Bn in FY 2024. Based on internal estimates, Indian Bearing market over has grown at a CAGR of 11.9% over the period 2017-2024 while Timken India recorded a CAGR of approx. 15% during the same period. The bearing industry is projected to grow by 5-6% annually over the next 5 years mainly driven by rapid industrialization, infrastructure development and booming new sectors. Under the Make in India initiative, government policies are aimed at promoting domestic manufacturing and minimizing import dependency.

Automotive sector accounts for ~50-55% of the total demand, primarily driven by the production of PVs, 2-wheelers, and CVs.

Industrial sector is currently accounting to about 30-35% driven by advancements in technology, sustainability, and global economic shifts with India increasing their manufacturing footprint.

Railways will remain to be under major focus as the government has hiked budgetary support to the Ministry of Railways by ~INR 2.9 lakh crore - INR 3 lakh crore. High freight demand and upcoming Metro expansion projects along with the government investments helps account this sector in the range of 10-15%. (Internal Insights)

India Economic Overview

o Current Scenario

The International Monetary Fund (IMF) has revised Indias GDP growth forecast for FY26 downward to 6.2%. This is a downward revision by 0.3 percent compared to earlier estimates in January 2025 citing escalating trade tensions and the imposition of tariffs by the United States. A further moderation to 6.3% projected for FY27. Despite these downward revisions, India expected to remain the fastest-growing economy among both emerging and advanced markets. Indian economy is less vulnerable and better positioned to handle the effects of a global growth slowdown, heightened financial market volatility, and weakened consumer and investor confidence, as its growth is primarily fueled by domestic demand. (Source: IMF and Economic Times)

Indias Growth (%)

o Outlook

As per IMF, amidst mounting economic challenges and a weakening outlook in many advanced economies, Indias growth outlook for 2025 remains "relatively more stable" buoyed by private consumption, especially in rural areas. Indias real GDP is expected to reach US$4.3 trillion in 2025, closely trailing Japans US$4.4 trillion and Germanys US$4.9 trillion. Considering this current growth trajectory India is poised to surpass Japan as the worlds fourth-largest economy in 2025 and is expected to overtake Germany to become the third largest by 2028. The Reserve Bank of India (RBI) has retained its inflation projection at 4% for FY 2025–2026, with quarterly estimates at 3.6% for Q1, 3.9% for Q2, 3.8% for Q3, and 4.4% for Q4.United States (US) announced 90-day pause on the higher tariff rates imposed earlier on some countries including India.

o Indian Automotive Industry Commercial Vehicles (LCV and M&HCV)

After a period of stagnation in FY25, the Indian commercial vehicle (CV) industry is gearing up for a modest recovery, with ICRA forecasting a 3-5 per cent year-on-year growth in wholesale volumes for FY26. This projected recovery comes on the heels of a flat volume movement in FY25, which was largely attributed to a demand slowdown during the first half of the financial year due to the general elections.

According to ICRA, the anticipated growth will be fueled by a confluence of factors, including the resumption of construction and infrastructure activities, consistent rural demand, and a surge in replacement sales driven by ageing fleets and government mandates. (Source: ICRA, SIAM, FADA)

o Tractor Market

In the Financial year 2025, the Tractor Industry saw a slight decline, with a total of 8.83 lakh units sold, a 1.04% decrease compared to FY24s 8.92 lakh units. Top OEMs have seen increase in their market share as compared to FY24. A strong festive season from November to December helped in a segment recovery. Q4 2025 also showed a decline signaling a weakness in the segment that serves a critical barometer for Indias agricultural health.

Finance availability in rural markets which is basically a backbone for tractor demand continues to be a critical deterrent of sales.

Looking ahead to 2026, FADA anticipates modest growth for the tractor segment. The industry is also watching several emerging trends, including growing interest in compact tractors (below 30 HP), increased adoption of precision farming technologies, and the gradual introduction of electric and hybrid tractors, though the latter remains in very early stages. (Source: Tractor Junction, FADA)

o Railways

The Railway sector has always played a major role in the countrys progress by re-enforcing/ focusing on infrastructure improvements, safety enhancements and expanding its modern trains like Amrit Bharat and Vande Bharat. The Union Budget of 2025-26 allocates a significant amount of funding to these projects namely 2.55 lakh crore. Significant achievements include the commissioning of 31,180 km tracks and electrification of 41,655 route kms since 2014. Kavach, an Automatic Train Protection system, has been deployed over 1,465 km. (Source: Ministry of Rail, PIB) The Rail outlook for the year:

Coaches: l As per the Ministry of Railways, coach production matched that of FY23 with around 7500 units and is further expected to increase to 9300 units by FY26. All the 3 Coach manufacturing units saw an increase in their overall output as they surpassed their previous record from FY24. The record-breaking coach production aligns with the governments Sabka Saath, Sabka Vikas vision, ensuring improved public transport services while also enabling domestic manufacturing. With more coaches being introduced, passengers can expect better facilities, enhanced safety features and increased capacity to accommodate growing demand. (Source: Indian Railways).

Metro:

l Bangalore Metro Rail Corporation Limited (BMRCL) have major metro rail projects lined up for 2025 which include the completion of the Yellow line and the Pink line. The Airport metro line is also expected to be fully operational by 2025. Other key projects include extensions to the Delhi Metro, Mumbai Metro, and Chennai Metro, as well as new metro systems being developed in cities like Patna, Bhopal, Indore, Meerut, and Surat. The budget for 2024-25, allocated ? 24,785.94 crore as capital expenditure for Mass Rapid Transit System and metro projects. (Source: Economic times)

Passenger

l Railways recorded the highest ever earnings of around Rs 2.7 lakh crore in 2024-25, registering maximum revenue from both freight and passenger segments in its history. Also, the no of passengers who travelled by train last year touched 735 crores, around 6% more than the previous year. In the passenger segment, the earnings from fare were around INR 75,500 crore compared to 70,693 crore in FY24. As per the official data, the railways carried 1,617 million tonnes (MTs) of freight last year compared to 1,591 MT during 2023-24. The revenue from freight movement touched Rs 1.75 lakh crore during the previous year. (Source: Economic times)

o Indian Industrial Industry

Indias manufacturing sector is undergoing a structural transformation, underpinned by strategic policy interventions aimed at strengthening the nations global competitiveness. A key pillar of this initiative is the Production Linked Incentive (PLI) Scheme, which plays a crucial role in the governments objective to establish India as a global manufacturing hub by promoting innovation, enhancing productivity, and driving competitiveness across priority sectors. The Indian manufacturing sector is expected to reach a valuation of ?87.57 lakh crore (US$1 trillion) by FY2026, propelled by significant investments in core industries such as automobiles, electronics, and textiles, as well as by supportive government initiatives like the Make in India campaign and the Production-Linked Incentive (PLI) schemes. (Source: EY-India Economic Pulse & Economic Times)

o Ferrous & Non-Ferrous

Steel is the backbone of Indias Economy. According to provisional data released by the World Steel Association in January 2025, India ranked as the worlds second-largest producer of crude steel. A recent report by CRISILs Market Intelligence and Analytics projects that India will lead major steel-consuming economies in 2025, with an expected 8–9% growth in steel demand. This growth is driven by increased adoption of steel-intensive construction practices in the housing and infrastructure sectors, along with rising demand from engineering, packaging, and various industrial segments. India imposed a provisional safeguard duty of 12% for 200 days on five categories of steel products including hot rolled coils, sheets, and plates to protect domestic manufacturers from a surge in imports. The domestic demand for steel is projected to increase at an annual rate of 10% over the coming years.

In the non-ferrous metals sector, primary aluminum production recorded a year-on-year growth of 1.6% during April to December of FY 2024–25, rising to 31.56 lakh tonnes from 31.07 lakh tonnes in the same period of FY 2023–24. Similarly, refined copper production increased by 7.3% over the same period, reaching 3.96 lakh tonnes compared to 3.69 lakh tonnes in the previous fiscal year. (Source: WSO)

o PowerGen

Coal-based thermal power plants account for approximately 46.7% of Indias total installed power capacity as of March 31, 2025. This figure is based on data from the NITI Aayog and other sources. Indias peak power demand, which has been growing at a compound annual growth rate (CAGR) of 6%, is now expected to accelerate to 7% CAGR over the next five years, driven by rising economic activity and industrial growth, according to the Central Electricity Authority (CEA). This anticipated increase is projected to be effectively managed through the ongoing expansion of thermal and renewable energy generation capacities. As per the latest report, India is poised to add 6.5 gigawatts (GW) of thermal power capacity, 2.2 GW of nuclear capacity, and 3.9 GW of hydroelectric capacity in FY26. The government proposes to set up an additional minimum of 80 GW of coal-based thermal power capacity by the end of 2031-32.

India Ratings and Research (Ind-Ra) has maintained a neutral outlook for the power sector for FY26, projecting the plant load factor (PLF) for thermal power 70% during FY26.The Ministry of Coal expects to meet the power sectors projected coal demand of 906 million tonnes for FY26. (Source: Ministry of Coal, Coal India).

o Cement

The Indian cement industry is one of the largest producers of cement in the world and plays a crucial role in the countrys infrastructure development. Indias cement sector is expected to register a 6.5% to 7.5% increase in demand during FY26, primarily driven by enhanced infrastructure spending and the anticipated positive impact of a normal monsoon on rural housing activity. According to CRISIL Intelligence, infrastructure projects particularly in the road and railway segments are set to play a pivotal role in driving demand. Rural housing is projected to remain the key contributor to overall cement consumption, while urban housing is likely to witness a recovery, supported by government-led initiatives and the potential for interest rate reductions.

Driven by robust demand, ICRA projects that the cement industry will witness a capacity addition of 43–45 million metric tonnes per annum (MTPA) in FY2026, an increase from the estimated 32–35 million MTPA expected in FY2025. In FY2026, the eastern and northern regions of India are anticipated to lead in grinding capacity additions, collectively contributing 22–24 million MTPA, with the supply expected to be almost evenly distributed between the two regions. (Source: ICRA, CRISIL)

o Mining

The mining sector in India is a one of core industries of economy, contributing approximately 3% to the countrys GDP. In FY26, the Government of India plans to auction a substantial number of mineral blocks, including those containing critical minerals, as part of its broader strategy to enhance mineral resource development. The Ministry of Mines has set an ambitious target of auctioning 500 mineral blocks, encompassing rare earth elements (REEs) and precious metals. In January 2025, the Union Cabinet approved the launch of the National Critical Mineral Mission (NCMM) to establish an effective framework for Indias self-reliance in the critical mineral sector with an allocation of Rs. 16,300 crores.

The coal production target for FY26 has been set at 1,193.39 million tonnes (MT), representing a 10.5% increase over the FY25 target of 1,080 MT. Of the projected output, Coal India Limited (CIL) and its subsidiaries are expected to contribute at least 915 MT, while 203.39 MT is anticipated from captive and commercial coal mines. Additionally, Singareni Collieries Company Limited (SCCL) is projected to produce 75 MT. (Source: Ministry of Mines, Ministry of Coal)

Indias iron ore production is projected to rise to 325–330 MT in Fy26, up from 291 MT in FY25, according to estimates by BigMint. (Source: BigMint).

o Renewables

India has emerged as a key player in the global wind energy sector with installed capacity reaching over 50 GW as of March 2025. This growth has been driven by the domestic wind turbine manufacturing sector, which has helped the industry in reducing import bills. However, this progress has not come without its set of challenges. The wind turbine manufacturing space has navigated turbulent winds with OEMs facing the brunt of sudden power tariff regime changes and underutilized capacity due to tepid tender activity. OEMs are now tapping export markets and expect a surge in their order books given the governments push towards offshore wind and repowering of old wind projects. (Source: Renewablewatch)

In 2024, the global wind industry achieved a record year by adding 117 GW of new capacity, according to recent findings. This growth raised the total installed wind power capacity worldwide to 1,136 GW, reflecting an 11% increase compared to 2023. The global wind energy sector reached a new milestone in 2024, adding 117 GW of new capacity—the highest annual increase on record—bringing total installed wind power capacity worldwide to 1,136 GW, an 11% rise from 2023, according to the Global Wind Energy Council (GWEC).

According to a report by SBI Caps, solar capacity growth is set to speed up in FY26 and FY27, with an estimated 85-90 GW of new capacity expected to be added over these two years. (Source: GWEC).

o Index of Industrial Production (IIP)

Indias industrial activity continued its recovery momentum with the Index of Industrial Production (IIP) growing 3 per cent year-on-year in March 2025, according to data released by the Ministry of Statistics and Programme Implementation. This marked a recovery from the six-month low of 2.9 per cent recorded in February. However, growth remained below the 5.5 per cent expansion reported during the same month last year.

Sector-wise growth:

l Manufacturing: Increase by 3% The projected sectoral share of GDP for the manufacturing sector in 2025-2026 is e s t i m a t e d t o b e 3 . 8 m i l l i o n .

Furthermore, the Indian manufacturing sector is poised to grow significantly, with projections of $400 billion in imports by 2025.

l Electricity: Grew by 6.3% the electricity l Electricity: Grew by 6.3% the electricity consumption for agricultural purposes in India is expected to reach 250,517.4 GWh in 2026, indicating a growth in electricity demand from the industrial and manufacturing sectors.

l Mining: Saw a modest growth of 0.4% The mining sector in India is expected to contribute around 2.5% to the countrys GDP and 11% to the industrial GDP by 2026. The global demand for essential and strategic minerals, including rare earth metals, is projected to increase significantly by 2026 and beyond, driven by factors such as the transition to clean energy technologies and the growth in electric vehicle (EV) production. Source : MOSPI

Business Review

Your Companys active operations are in Engineered bearings, Industrial Motions, and related services business. Our parent organization, The Timken Company is a 125 year-old US-based organization with operations across 45 countries around the globe. The Timken Company was founded in 1899 by Henry Timken, who received two patents on the design of a tapered roller bearing. Timken remains the worlds leading authority in tapered roller bearings and has leveraged that expertise to develop a full portfolio of industry-leading engineered bearings and industrial motion products Today, Timken is synonymous with innovation, cutting-edge technology, and quality.

The Timken Company sells its products and services to diverse customer base in India and Global customers through its fellow subsidiaries.

Your Company has been capitalizing on favorable conditions in the Rail front end unit, which has shown strong demand and stability. This positive environment supports the effective utilization of our manufacturing facilities in Jamshedpur, leading to improved production efficiency and cost management. The Heavy Truck market, however, has faced challenges since last year and is expected to remain subdued in the short to medium term.

During the year, the Company could further advance in Process and Distribution market. Our Process segment is well connected to the core sectors and your company is aware of the ongoing trends and is deeply entrenched through its direct and indirect sales and service model. As steel is becoming more attractive, our product offering is second to none and their consumption is significantly increasing. Industrial aftermarket is expected to grow and that give us good opportunity to further grow in terms of revenue. Your company has added one additional MILLTEC site in 2024-25 further strengthening its stronghold in the Metal market. Your company is in process of establishing its hold into the solar business in India through our US counterpart called Cone Drive and have started producing some slew drives at our Bharuch facility.

In line with the earlier announcement of investment of ? 700 crore in Bharuch, Gujarat towards manufacturing of Spherical Roller Bearings (SRB) and Cylindrical Roller Bearings (CRB), your Company has inaugurated the plant in April, 2025 and commenced commercial production in Q1 2025-2026.

Your Company was the recipient of multiple awards and recognitions in the year including various CIIs circle competitions, Best Organization for Customer Experience by ET now, Best safety award at JSW, Golden peacock National Quality award - 2025, Brand of the year award 2025 and is recognized as one of the Top 10 USA-based Manufacturers in India in 2024 by Industry Outlook.

Financial Statement Analysis

The analysis of major items of the Financial Statements is given below:

Profit after tax (PAT) stands at ? 4,474 million for the financial year 2024-25 as compared to ? 3,921 million in previous year, an increased by ? 553 million.

Revenue from Operations

The Company achieved an all-time high revenue of ? 31,478 million during the financial year 2024-25, reflecting a 8.2% increase over previous year. This growth was primarily driven by a strong performance in the domestic market, supported by favorable market conditions and double-digit growth in major front-end units. Export sales recorded modest growth during the year due to a one-time adjustment on BAPA; however, excluding this impact, export witnessed a marginal year-over year decline owing to subdued demand in key global markets.

Other Income

Other income grew by ? 94 million during the year, primarily driven by higher interest and dividend income from surplus cash investments, along with foreign currency exchange gains on transactions and translations, and miscellaneous income. This increase was partially offset by a reduction in the recognition of government grants in the financial statements.

Total Expenses

Total expenses for the year stood at ? 26,453 million, reflecting a 9.0% increase compared to the previous year. This was primarily due to a 10.7% rise in the net material cost, which modestly outpaced revenue growth, a 3.7% increase in employee costs, and a 6.4% rise in other expenses – driven by higher volumes and inflationary pressures. This increase was partially offset by a marginal reduction in depreciation expenses during the year.

Tax Expenses

Tax expense for the year stood at ? 1,053 million, resulting in an effective tax rate of 19.1%, compared to 25.2% in the previous year. The reduction in the effective tax rate was primarily due to a one-time gain arising from the reversal of an earlier provision during the year.

Earnings Per Share

Earnings per share (EPS) for the year stood at ? 59.48, compared to ? 52.13 in the previous year, marking an all-time high for the Company. The increase was driven by strong revenue growth, effective cost management, and favorable one-time adjustments, contributing to overall profitability.

Below is the discussion of major items in Companys Balance Sheet as at 31 March, 2025. The below graph depicts major blocks of Balance Sheet:

Property, Plant and Equipment, Right-of-use assets, Investment Property and Capital work-in-progress

There was a net increase of ? 4,480 million in this asset category compared to the previous year. This increase was primarily attributable to investment in the new manufacturing project at the Bharuch facility, which was classified under Capital Work-in-Progress as at year end. This was partially offset by a reduction in the carrying value of Property, Plant equipment due to depreciation charged during the year.

Intangible Assets and Goodwill

The movement was primarily due to amortization of intangible assets during the year and there is no change in the carrying value of Goodwill compared to the previous year.

Inventories

Inventories decreased by ? 220 million as of 31st March 2025, primarily due to a reduction in finished goods, work- in progress and stock in trade , in line with business volumes and improved productivity. This was partially offset by an increase in raw materials and stores and spares to support ongoing operations. The inventory turnover ratio improved to 2.90, compared to the previous year, reflecting more efficient inventory management.

Trade Receivables

Trade Receivables increased by ? 479 million compared to previous year, primarily due to the higher revenue and slight decline in the receivable turnover ratio. The trade receivables turnover ratio stood at 4.66 as at 31 March, 2025.

Cash and Investments

The Companys cash and cash equivalents, along with investments in mutual funds, increased to ?5,114 million as of 31st March 2025, compared to ? 4,887 million in the previous year – an increase of ? 227 million This increase was driven by effective cash management and strong internal accruals.

Other Assets

Other assets include all remaining line items on the balance sheet not specifically covered in the sections above. The net movement in this category during the year was driven by the following :

l An increase in non-current financial assets by ?56 million; l A decrease in non-current tax assets by ?66 million; l A significant decrease in other non-current assets by ?1,083 million due to a decrease in capital advances l An increase in other financial assets by ?44 million;

l An increase in other current assets by ?509 million, primarily due to a rise in balances with government authorities amounting by ?354 million and higher trade advances by suppliers by ?157 million.

Equity

The Companys equity capital stood at ?752 million as at 31 March, 2025, unchanged from that of the previous year. During the year, the shareholding of Timken Singapore PTE Limited (the Holding Company), decreased from 57.70% to 51.05%.

Trade Payables

Trade payables increased by ? 113 million compared to the previous year, primarily due to higher procurement volumes in line with the business growth. The trade payables turnover ratio stood at 6.10 as at 31 March, 2025

Key Financial Ratios

Parameters	For Year Ended 31 March, 2025	For Year Ended 31 March, 2024
Trade Receivables Turnover	4.66	4.74
Inventory Turnover	2.90	2.78
Interest coverage Ratio (times)	130	139
Current Ratio	3.82	3.91
Debt Equity Ratio	- *	0.2%
Operating Profit Margin	16.1%	16.7%
Net Profit Margin	14.2%	13.5%
Return on Net Worth	15.7%	16.2%

* The ratio has decreased from 0.2% to Nil as at 31 March 2025 because of decrease in the borrowings. Also refer Note No. 41 of the Financial statements .

Strengths, Opportunities, Threats and Outlook

Strengths	Opportunities
? Strong market share in Tapered roller bearings.	? Cross selling abilities by virtue of acquisitions of Industrial motion products.
? R&D capabilities of Timken Group with significant design and process innovation capability.	? Extensive focus on Make in India opportunities for India & the world.
? Vast application knowledge, proactive service and engineering engagement with customer to provide energy and cost-effective solutions.	? Proliferation into general industry MRO space in Distribution business.
? De-risked revenue stream with cross industry presence.	? Digitalization efforts to increase sales in Automotive aftermarket.
Threats	Outlook
? Ongoing Geo-Political concerns.	? Focus on localization and improvement in indigenous components sourcing in the up-coming years.
? Rising trade tensions and new tariffs	? Value proposition of all Timken Associated Brands.
? Global Economic uncertainty
? Any adverse modifications in the industrial environment or government policymaking affecting our customers demand.	? Risk mitigation by educating customers on importance of using genuine high-quality bearings procured from authorized distributors.
Safety and operational risks posed by low quality counterfeit or spurious products.

Internal Control

The Company has established and implemented internal control systems commensurate with the nature, size, and complexities of business operations. These controls are designed to provide reasonable assurance towards the effectiveness and efficiency of operations, reliability of financial reporting, compliance with applicable laws and regulations, prevention and detection of frauds & errors and the safeguarding of assets.

The Company has well documented authorisation matrix covering all key operational processes to ensure appropriate delegation

and oversight.

The Companys SAP ERP system and checks are integral parts of the internal control system. Emphasis is placed on automated controls within the processes wherever possible to minimise deviations and exceptions. The Company uses global shared services for processing of transactions and periodic account reconciliations by adhering to standard operating procedures and policies.

Employee awareness of internal policies and procedures is reinforced through regular communication and structured training sessions, conducted via both online and offline platforms.

The Company has also developed risk control matrix for all critical business processes including procure to pay, order to cash, hire to retire, treasury, fixed assets, inventory, manufacturing operations, record to report.

The risk-based internal audit plan, which covers key business processes is reviewed and approved annually by the Audit Committee. The Company engages independent audit firm to carryout audit of critical areas. The Audit Committee periodically reviews the adequacy and effectiveness of the Companys internal financial controls and the implementation of audit recommendations.

The Statutory Auditors also assess the adequacy of the internal control systems as part of their audit procedures. The Company has not received any adverse remarks from them regarding the internal control framework during the year.

The Company has constituted a Risk Management Committee and adopted an enterprise-wide risk management framework aimed at the timely identification of risks, assessment, evaluation and recording of such risks. Risks are recorded and monitored in alignment with the Companys strategic objectives, and appropriate mitigation strategies and defined and implemented. During the year, relevant updates were made to the Companys risk register to reflect emerging business and operational risks.

The Company is certified by an independent third-party certifying agency for maintaining the risk management system compliant with ISO 31000:2018. All critical risk areas as identified by the Company are re-evaluated on an annual basis.

HR Front

l Overview

HR Strategy aims at reimagining human resources practices to align with the evolving needs of organizations and their workforce. At its core, we focus on engaging and optimizing talent across the business value chain with clear focus on sustained development initiatives and employee recognition in line with our companys culture and goals. HR transformation fosters continuous learning and skill-building, ensuring employees remain adaptable and capable of navigating changing industry demands. Retention strategies prioritize creating a supportive, inclusive work environment that encourages career growth and enhances employee engagement. Meanwhile, employee recognition is redefined to go beyond traditional rewards, focusing on personalized and meaningful acknowledgment of contributions, which fosters a culture of appreciation and drives motivation. Together, these interconnected components form the backbone of a dynamic and effective HR strategy that nurtures both individual and organizational success.

l Performance Management

The Companys comprehensive Performance Management System ensures that individual employee goals are closely aligned with organizational objectives, fostering constructive and meaningful conversations that provide timely support to employees in achieving their desired outcomes. In addition to performance goals, employees are also given development goals, which enable them to focus on enhancing their skills and competencies. This dual approach not only drives better performance in their current roles but also helps to build the necessary capabilities to support in their long-term career aspirations. Employees are encouraged to document their activities and accomplishments within the system and engage in ongoing discussions with their managers to receive timely, actionable feedback. This continuous feedback process allows the Company to remain agile and responsive in a constantly evolving market environment.

Performance Management System places equal emphasis on both results and competencies, with an end-of-year evaluation conducted by both the employee and their manager. Employees are assessed on both their goal achievements and their competencies, with ratings ranging from Exceptional to Unsatisfactory. The final performance rating is determined through an assessment by the manager. To maintain a strong focus on employee engagement and performance, People Managers receive guidance on recommended actions to improve team engagement, incorporating employee feedback from surveys into their goals. At the end of the year, performance discussions serve as an important opportunity for People Managers to provide comprehensive feedback on their team members achievements and evaluate them in relation to their peers. To better adapt to the evolving business landscape, the Company has moved away from traditional performance distribution methods, where we conduct peer reviews to ensure assessments are made in a transparent and balanced manner. This approach directly informs the allocation of merit-based pay and incentive rewards, ensuring a fair and performance-driven compensation structure.

l Talent Management

Talent management initiatives are designed to meet the future business needs and provide them with development actions by understanding the evolving demands of the business, whereby we nurture a pipeline of future leaders and key contributors through targeted development programs combined with coaching, mentoring and planned role changes. We equip these high-potential employees with the skills and experiences necessary to address the challenges and opportunities that lie ahead. This structured approach ensures that we not only meet the current talent needs, but also build a resilient workforce capable of driving long-term organizational success.

l Total Rewards

Reward system follows a very data driven approach; the final output of the Performance Management system flows into our rewards process. The philosophy of Pay for Performance is backed by detailed market studies and benchmarking conducted every year. This helps the Company to be competitive in the job market. The Company offers competitive benefits and long- term incentive plans to Senior Management. The Company also offers an array of wellness programs under the umbrella of Corporate Wellness for all employees. The Corporate Wellness program offers health related sessions, health checks etc. which leads to employees having an active & healthy life. The Company also reimburses annual health check cost for employees. There is also a virtual program called EAP (Employee Assistance Program) which offers employees free counselling services on various topics of mental wellbeing.

l Continued Learning

At Timken, continuous learning is a fundamental pillar of our organizational growth. We adhere to the 70-20-10 Development Model, where 70% of learning is derived from hands-on experience, 20% from social interactions, and 10% from formal education. A comprehensive training needs assessment is conducted across the company, followed by the creation of a training calendar that addresses shared needs. This years Learning and Development initiatives included programs focused on Business Communication, Project Management, Finance for Non-Finance, and Leadership Development, among others. Additionally, we invest in product and technology training, covering the product portfolio, manufacturing processes and application knowledge relevant to various business functions. Our cross-geography training initiatives offered employees exposure to global best practices and enhanced manufacturing systems with clear focus on Digitalization & Automation and further enhancing their capability and versatility in a dynamic industry environment. To further support professional development, we have leveraged the full capabilities of Timken University, global online learning platform, to offer a wide array of educational opportunities. Employees could proactively enroll in courses that fit their professional aspirations or receive targeted recommendations from their managers. Beyond voluntary courses, all employees were required to participate in key training programs that focused on critical issues such as Information Security, inclusivity, POSH (Prevention of Sexual Harassment), and other essential areas, reinforcing our commitment to maintaining a safe, secure, and legally compliant work environment for everyone.

l Resource Groups

Employee Resource Groups (ERGs) are integral to Timkens employee engagement strategy. Currently, three active ERGs contribute to fostering a supportive work environment: the Womens International Network (WIN), the Young Professionals Network (YPN), and the Multicultural Association of Professionals (MAP). Each ERG has its own vision and mission, with goals aligned to the Companys broader objectives. These groups operate with structured leadership roles, where employees take on responsibilities to drive initiatives throughout the year. The mission of these ERGs mirrors the values promoted by global teams.

The central aim of these groups is to promote the professional development of Timken employees. These groups organize a variety of events in line with their respective objectives. WIN, for instance, is dedicated to the personal and professional growth of women at Timken. YPN provides opportunities for networking and collaboration through year-round initiatives, while MAP focuses on enhancing cultural diversity by engaging employees in activities that celebrate our collective global heritage. WIN also organizes the WIN Santhe, a fundraising event that supports an NGO dedicated to the upliftment of distressed women in society. YPN fosters business acumen through its various activities, while MAP encourages employees to explore different languages and celebrate cultural diversity, both within India and around the world.

l Cautionary Statement

Certain statements made in this Report describing industry structure and development, business outlook and opportunities may be "forward looking statement" within the meaning of applicable Securities law and Regulations. Actual results could materially differ from those expressed or implied. Important factors that could make difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statues and incidental factors.

	For and on behalf of the Board of Directors
	Sd/-
	Sanjay Koul
Date: 4 July, 2025	Chairman & Managing Director
Place: Bengaluru	DIN: 05159352