Tolins Tyres Ltd Management Discussions

1. Cautionary Statement

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. The management of Tolins Tyres Limited has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements, reflect in a true and fair manner, the state of affairs and profit for the year.

The following discussions on our financial condition and result of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the annual report. Unless otherwise specified or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "Tolins" are to Tolins Tyres Limited.

2. Financial Overview

The financial year ended 31st March, 2026 marks another significant chapter in Tolins Tyres Limiteds journey of sustained value creation. Building on the strong operational and financial performance delivered in FY2024-25, the Company continued to execute its strategic priorities with focus on volume growth, operational efficiency, and navigating margin pressures arising from input cost inflation, and balance sheet strengthening.

The financial performance for the year ended 31st March, 2026, as compared to the previous year, is presented below (^ in Millions):

Particulars	FY 25-26	FY 24-25	Y-o-Y (%)
Revenue from Operations (^ Mn)	3,271.19	2,924.48	11.86%
EBITDA (Excl. Other Income) (^ Mn)	477.97	557.61	(14.28%)
EBITDA Margin (%)	14.61%	19.07%	(446 bps)
Profit After Tax - PAT (^ Mn)	356.86	386.82	(7.75%)
PAT Margin (%)	10.91%	13.23%	(232 bps)
Earnings Per Share - EPS (^)	9.03	10.87	(16.93%)

Revenue from Operations for FY26 stood at ^3,271.19 Million, reflecting a growth of 11.86% over the previous years revenue of ^2,924.48 Million. This growth is attributable to higher volumes across the Companys core product categories—new tyres, retreaded tyre products, and exports—along with continued improvement in realization per unit driven by a richer product mix and calibrated pricing strategy.

Earnings before Interest, Depreciation, Taxes and Amortisation (EBITDA) for FY26 stood at ^477.97 Million, compared to ^557.61 Million in FY25. The EBITDA margin for the year was 14.61%, reflecting the Companys ongoing focus on operational cost discipline, procurement efficiencies, and overhead absorption through scale.

Profit After Tax (PAT) for FY26 amounted to ^356.86 Million, against ^386.82 Million in FY25, translating into a PAT margin of 10.91%. Earnings Per Share (EPS) for the year stood at ^9.03, demonstrating continued earnings accretion for shareholders.

3. Resources and Liquidity

The Company maintained a healthy liquidity position supported by strong operating cash flows and disciplined working capital management. Cash, cash equivalents, and bank balances as of 31st March, 2026 stood at ^44.15 Million, compared to ^281.93 Million as at 31st March, 2025.

4. Product-wise Revenue Segmentation

During the financial year 2025-26, Tolins Tyres Limited recorded robust performance across its key product categories. The Companys focus on market-specific demand, pricing efficiency, and product quality helped drive volumes and profitability. The product-wise revenue contribution is summarized below:

Tyres

On a consolidated basis, revenue from the Tyres segment stood at ^984.63 Million in FY26, a decline of 13.67% YoY from ^1,140.55 Million in FY25 (restated on the current years consolidated segment revenue-mix basis, per Note 3 to the Consolidated Financial Statements). Enhanced rural penetration, improved dealership outreach, and product upgrades continued during the year even as the segments share of overall revenue moderated in favour of the Retread & Tread Rubber Solutions segment.

Retread & Tread Rubber Solutions

On a consolidated basis, the Retread & Tread Rubber Solutions segment, including pre-cured tread rubber and bonding gum, delivered ^1,623.16 Million in revenue in FY26, growing 20.66% YoY from ^1,345.26 Million in FY25 (restated on the current years consolidated segment revenue-mix basis, per Note 3 to the Consolidated Financial Statements). Continued demand from fleet operators and institutional clients contributed to the solid performance.

Export

Export revenue for FY26 was ^114.50 Million, reflecting broad stability versus the prior years ^113.42 Million (a marginal increase of 0.95%). The management is actively evaluating opportunities to diversify the export customer and geography base, with a focus on expanding market share in high-growth developing markets where demand for affordable, quality tyre solutions continues to rise.

5. Segment-wise Growth Outlook

5.1 Tyres

While the Tyres segments share of consolidated revenue moderated during FY2025-26 as the product mix shifted further towards Retread & Tread Rubber Solutions, the underlying agriculture tyre business registered healthy volume growth, driven by strong demand in the replacement market and continued penetration into new geographies. The Companys key categories-Two-Wheeler, Three-Wheeler, Light Commercial Vehicle (LCV), Agricultural and Off- Road/Specialty tyres-all contributed positively to volume growth during the year.

The Company offers a diversified product portfolio across these segments, catering to varied applications including last-mile mobility, commercial transport, agriculture, and off-road usage. Its product range is designed to deliver durability, performance, and cost efficiency, supported by continuous improvements in tread design, compound formulation, and load-bearing capabilities. During the year, the Company further strengthened its agricultural portfolio with the launch of heavy-duty tractor rear tyres, completing its tractor tyre range and enhancing its presence in the farm segment.

From an industry perspective, the Indian tyre sector recorded steady growth in FY2026, with revenues expected to grow by 7-8%, largely driven by replacement demand, which accounts for nearly 50% of total industry volumes. This replacement-led demand directly underpins the retreading ecosystem, particularly in the commercial vehicle segment. Further, industry estimates indicate that domestic tyre demand is expected to grow at 6-8% in FY2026, supported by improved replacement cycles and stable mobility trends.

The Two-Wheeler and Three-Wheeler segments continued to benefit from rising mobility demand in semi-urban and rural markets, supported by improving last-mile connectivity and expanding fleet sizes for delivery and commute applications. The Companys product portfolio in these categories was further enriched through new SKU introductions designed to address specific performance requirements across terrain types and load ratings.

In the LCV and Off-Road segments, demand was supported by infrastructure activity and agricultural mechanisation, with the Companys tyres gaining traction among fleet operators and construction equipment users. Enhanced tread life, load-bearing capability, and competitive pricing remained key differentiators in these segments.

During the year, the Company continued to invest in tooling, mould procurement, and process optimisation to improve product quality and expand its addressable SKU base. Distribution reach was further deepened through additions to the dealer and sub-dealer network across Tier II and Tier III markets, which are increasingly becoming growth engines for the replacement tyre business.

5.2 Re-treaded Tyres

The retreading business remained a strategically vital and operationally resilient segment for the Company in FY26. Tolins Tyres manufactures and markets a comprehensive range of retreading products-including pre-cured tread rubber and bonding gum-catering to fleet operators, logistics companies, and retreading workshops across India and international markets.

Demand for retreaded tyre solutions remained structurally strong, driven by sustained freight movement and increasing focus on cost optimisation among fleet operators. Retreaded tyres continue to offer a compelling economic proposition, typically costing significantly lower than new tyres while extending lifecycle utilisation.

ICRA estimates that the organised retreading industry is expected to grow at a CAGR of 7-9% through FY2026, driven by advancements in tyre and retreading technology, improving road infrastructure, increasing radicalisation in the commercial vehicle segment, and the Governments emphasis on sustainable disposal of end-of-life tyres.

The Companys retreading business benefited from its reputation for product quality, consistency, and technical support to retreading workshop partners. Investment in quality control systems and adherence to international manufacturing standards continued to underpin customer confidence in Tolins retreading offerings. The management is focused on expanding the retreading product portfolio and deepening penetration in domestic and export markets.

So urce:https://www.icra.in/CommonService/OpenMediaS3?Key=4b1f114a-25c1-4788-9722-99d9de99c74f

6. Export Business Overview and Outlook

The export business of Tolins Tyres continued to demonstrate resilience and steady progress in FY26, building on the momentum established in the previous year. Despite persistent challenges such as regulatory constraints in certain geographies and foreign exchange limitations in select markets, the Company maintained a stable export trajectory and strengthened its international presence.

The global logistics environment remained dynamic during the year, with intermittent supply chain disruptions and freight cost volatility. The Companys focus on product reliability and cost efficiency has enabled it to retain customer preference in these markets.

Looking ahead, the Company remains focused on deepening its presence in established export regions while selectively expanding into new geographies. Strategic emphasis will continue on improving margins, optimizing the product mix, and enhancing distribution networks to drive sustainable growth in the export segment.

7. Risks and Concerns

Risk management remains integral to the Companys governance framework. The Company continuously evaluate the risk landscape and implement appropriate mitigation strategies across financial, operational, and strategic dimensions.

Raw Material Price Volatility:

Natural rubber, synthetic rubber, carbon black, and nylon fabric together constitute a significant proportion of the Companys total manufacturing cost. Global commodity cycles, natural rubber supply disruptions in key producing nations, and crude oil price movements—which directly influence the cost of petroleum-based inputs—represent a material risk to EBITDA margins. The Company mitigates this through strategic inventory management, multi-vendor procurement policies, long-term supplier relationships, and selective use of forward agreements where commercially viable.

Competitive Intensity:

The Indian tyre industry is characterised by the presence of large, organised players with significant financial resources, alongside an active unorganised sector in certain product categories. In the international market, global tyre manufacturers with established brand equity and economies of scale pose competitive challenges. The Company addresses this through product differentiation, superior dealer service, and a focus on niche and underserved market segments where its agility provides a structural advantage.

Electric Vehicle (EV) Disruption:

The accelerating transition towards electric vehicles, particularly in the Two-Wheeler, Three-Wheeler, and Light Commercial Vehicle categories presents both an opportunity and a transition risk. EV tyres require specific compound formulations, load-bearing characteristics, and rolling resistance properties distinct from conventional ICE tyres. While the Company is actively evaluating its EV-compatible product development roadmap, a faster-than-anticipated shift in the vehicle mix could necessitate additional capital investment in product development and tooling.

Regulatory and Compliance Risk:

The tyre industry is subject to evolving quality standards, labelling regulations, and environmental norms, both domestically and in export markets. Non-compliance or delays in certification could affect market access. The Company maintains dedicated quality assurance and regulatory teams to ensure timely compliance and proactive monitoring of applicable requirements.

Foreign Exchange and Export Risk:

Export revenues and import costs of certain raw materials expose the Company to currency fluctuation risks. Management monitors foreign exchange positions and employs appropriate hedging mechanisms to minimise the impact of adverse currency movements on financial performance.

Geopolitical & Supply Chain Risk:

Ongoing geopolitical tensions, particularly in the Middle East, and disruptions in key global shipping routes have led to increased freight costs and extended transit timelines. These factors may impact export competitiveness, inventory cycles, and working capital requirements.

8. Opportunities and Threats

Opportunities:

The Indian tyre industry stands at the cusp of transformation, driven by rising demand across commercial, passenger, and two-wheeler segments, infrastructure expansion, a growing logistics sector, and the adoption of electric mobility. Tolins Tyres is well positioned to harness these opportunities through strategic expansion, innovation, and customercentric product offerings.

• Expansion of the Retread Tyre Market

The global retread tyre market is projected to grow from USD 11.53 billion in 2025 to USD 20 billion by 2033, registering a CAGR of 4.28%. This growth is driven by fleet operators seeking cost-effective and sustainable tyre solutions. In India, more than 70% of truck tyres are retreaded at least once, highlighting the significant role of retreading in the commercial vehicle segment. Tolins Tyres, with its expertise in pre-cured tread rubber and bonding gum, is well- equipped to meet this rising demand.

• Rising Demand in Commercial and Agricultural Sectors

Indias position as the third-largest automotive market globally, coupled with government investments in road infrastructure, is fuelling demand for durable and performance-oriented tyres in commercial and agricultural sectors. The increasing radialisation in commercial vehicles enhances the potential for multiple retreading cycles, offering cost savings and extended tyre life.

• Growth in the Replacement Market & restrictions on tyre imports.

The replacement tyre market in India accounts for over 60% of the sectors volumes. Factors such as a growing vehicle base, improved road connectivity in rural areas, and heightened consumer awareness of safety and performance are driving demand for high-quality replacement tyres. Tolins Tyres robust distribution network and reputation for reliability position it to effectively serve this expanding market.

• Opportunities in Electric Vehicle (EV) Segment

The push for EV adoption, supported by government incentives and a shift towards cleaner mobility, has created a new vertical for tyres tailored to electric powertrains. EVs require tyres with low rolling resistance, extended durability, and noise-reducing features. Tolins Tyres is investing in R&D to develop a portfolio of EV-compatible tyres across two- wheelers, three-wheelers, and commercial EVs.

• Expansion in Export Markets

With the global tyre market projected to surpass USD 150 billion by 2030, Indian tyre companies are increasing their footprint in regions like the Middle East, Africa, Southeast Asia, and Latin America. Tolins Tyres consistent export performance, especially to the UAE and surrounding Gulf regions, presents an opportunity to further expand through competitive pricing, customization, and local partnerships.

Source: https://www.futuremarketinsiahts.com/reports/tire-retreadinci-market https://www.fortunebusinessinsiahts.com/tire-retreadina-market-105109 httDs://www.blueweaveconsultina.com/report/india-retread-tire-market httDs://tvre-trends.com/sDotliaht/70-Dercent-truck-tvres-in-india-are-retreaded-once-icra

https://www.alobenewswire.com/news-release/2024/12/11/2995020/0/en/Retread-Tire-Market-Growth-Drivenby-Fleet-Cost-CuWna-and-Environmental-

Benefits-with-a-CAGR-of-6-Future-Market-Insiahts-Inc.html

https://www.researchandmarkets.com/reports/6216959/retread-tire-market-alobal-industry-

size?srsltid=AfmB0ooVes4oMBR993KLoKeVwamtnxBnkweKvWHaRtw8U99aCGESA6RY#:~:text=This%20industrv%20centers%20on%20the.from%20inexpensive%

20new%20tire%20alternatives.

Threat

• Key Business Risks

The Company operates in an evolving operating environment where macroeconomic volatility, industry dynamics, and structural shifts may impact performance. Key risks are outlined below:

• Supply Chain Disruptions and Logistics Volatility

Global trade flows remained volatile during FY26, with disruptions in key shipping corridors leading to longer transit cycles and elevated freight costs. These challenges can affect export timelines, increase logistics expenses, and exert pressure on working capital cycles.

• Input Cost Sensitivity and Commodity Cycles

The Companys cost structure is closely linked to natural rubber and crude-derived inputs. Volatility in these commodities, driven by global supply-demand imbalances and geopolitical developments, may impact operating margins despite ongoing cost optimisation efforts.

• Competitive Intensity Across Segments

The industry continues to witness strong competition from both established domestic and global players, as well as pricing pressure from the unorganised segment in retreading. Sustaining market share requires continuous focus on product quality, pricing discipline, and dealer engagement.

• Evolving Product Standards and Technology Shifts

Advancements in tyre design, including EV-compatible tyres and performance-enhancing features, are reshaping product expectations. Keeping pace with these changes requires sustained investments in R&D, product development, and manufacturing capabilities.

• Regulatory Landscape and Compliance Requirements

Increasing focus on environmental standards, safety norms, and tyre waste management frameworks continues to shape the operating environment. Adapting to evolving domestic and international regulations may require additional compliance investments.

• Changing Customer Behaviour and Brand Preference

Customer expectations are evolving, with increasing preference for established brands and performance-driven products. This trend necessitates continued investment in brand building, distribution strength, and customer engagement.

• Adoption Barriers in Retreading Segment

While retreading offers strong cost and sustainability benefits, adoption in certain segments remains constrained by perception challenges related to safety and performance, which may limit growth potential in specific applications.

Source: https://www.tvrepower.com.au/news/what-is-tvre-retreadina-and-is-it-safe https://www.tvre-trends.com/spotliaht/collateral-damaae

https://www.alobenewswire.com/news-release/2024/12/11/2995020/0/en/Retread-Tire-Market-Growth-Drivenbv-Fleet-Cost-Cuttina-and-Environmental-

Benefits-with-a-CAGR-of-6-Future-Market-Insiahts-Inc.html

https://www.sciencedirect.com/science/article/pii/S0048969724012920

9. Government Initiatives

The Government of Indias policy initiatives have created a broadly supportive environment for the tyre manufacturing sector during FY2025-26. Several flagship programmes directly or indirectly benefit demand for tyres across segments:

The National Infrastructure Pipeline (NIP) and Pradhan Mantri Gram Sadak Yojana (PMGSY) continue to drive road network expansion, particularly in rural and semi-urban areas. This expansion directly stimulates demand for commercial vehicle and agricultural tyres, as new roads increase vehicle penetration and utilisation in previously underserved areas.

The Bharatmala Pariyojana programme for national highway development, ongoing work on expressway corridors, and logistics park development under the PM GatiShakti National Master Plan collectively contribute to higher freight movement intensity, which in turn drives tyre replacement demand.

The governments focus on Make in India and Atmanirbhar Bharat continues to support domestic tyre manufacturers through procurement preferences, import duty frameworks, and broader manufacturing ecosystem support. The Production Linked Incentive (PLI) scheme for the automotive sector creates positive spill-over effects for ancillary and component manufacturers including tyre companies.

The push for agricultural mechanisation through subsidised machinery programmes and PM-KISAN support for farmers has sustained demand for agricultural tyres and off-road equipment tyres in rural markets.

On the sustainability front, the governments evolving framework for end-of-life tyre management and extended producer responsibility (EPR) regulations are expected to bring greater structure to the tyre waste management ecosystem, indirectly supporting the organised retreading sector which offers a sustainable alternative to tyre disposal.

10. Industry Structure and Developments Market Position & Size

India is the worlds third-largest tyre consumer and second-largest producer, with annual consumption of ~380 million units and production of ~430 million units. The market was valued at USD 14.45 billion in 2025 and is projected to nearly double to USD 27.67 billion by 2034, growing at a CAGR of 7.49%. Domestic tyre volume growth moderated to 4-6% in FY2025, weighed down by a high base effect and subdued commercial vehicle demand. The replacement market, however, remained resilient and provided a floor to overall volumes, with industry revenues clocking 8% year- on-year growth in Q4 FY2025, supported by replacement demand and a pickup in exports even as OEM offiiake continued to lag.

Margin Pressure

Operating margins, which had peaked at 15-17% in FY2024, came under significant pressure in FY2025. A 25-30% surge in natural rubber prices, triggered by supply disruptions in key Southeast Asian producing regions, combined with elevated crude oil costs, eroded profitability across the industry.

Structural Developments

The industry is undergoing meaningful structural evolution. New capacity expansions are underway, with investments focused on debottlenecking existing facilities and R&D. The accelerating shift to radial and tubeless technologies, rising demand for EV-compatible tyres, and supportive government policies including anti-dumping measures and the BIS star-labelling framework, are reinforcing the long-term competitiveness of domestic manufacturers.

https://www.indexbox.io/store/india-tvres-market-analvsis-forecast-size-trends-and-insights/

https://www.imarcgroup.com/india-tvre-market

https://www.tvre-trends.com/news/indian-tvre-industrv-growth-expected-to-moderate-on-cost-pressu res https://www.icra.in/Rating/DownloadResearchSummarvReport?id=6223

https://www.mordorintelligence.com/industrv-reports/india-tire-market

11. Internal Control Systems and Adequacy

Tolins Tvres has instituted a comprehensive internal control framework designed to ensure the efficient and effective conduct of its operations. This framework supports adherence to the Companvs policies, protection of assets, prevention and detection of frauds and errors, and the accuracv and integritv of its financial and operational records. It also facilitates the timelv preparation of reliable financial statements in line with the provisions of the Companies Act, 2013.

The Companvs internal controls are well-aligned with applicable statutorv and regulator requirements, including those related to environmental and safetv standards within the tvre manufacturing sector. These controls are periodicallv reviewed and upgraded to adapt to evolving business needs and regulatorv changes.

As part of the statutorv audit process, the Companvs internal controls are independent^ evaluated bv its Statutorv Auditors. Anv observations or recommendations arising from the audit are thorough^ discussed with the Audit Committee of the Board. Corrective actions, where necessarv, are promptlv implemented to address anv identified gaps or inefficiencies.

Tolins Tvres remains committed to continuous^ strengthening its internal control svstems to enhance operational effectiveness, manage risks proactive^, and safeguard stakeholder interests.

12. Company Strategy

Tolins Tvres is focusing on organic growth initiatives to capitalize on the growing demand in the domestic and international markets. The Companv is expanding its capex plan, which includes:

K Investment in R&D to develop new products and improve existing ones, particular^ in the high-performance and eco-friendlv tvre segments.

K A focused strategv on enhancing its global footprint, targeting both developed and emerging markets.

Through this strategv, Tolins Tvres aims to strengthen its position in the global tvre market and continue providing qualitv products that meet the evolving demands of consumers.

13. Outlook

The medium-term outlook for Tolins Tvres Limited remains positive, underpinned bv favourable macroeconomic conditions, growing tvre demand across kev segments, and the Companvs strategic positioning in niche and replacement-oriented markets.

Indias GDP growth trajectorv, expanding highwav network, and increasing vehicle penetration in Tier II and III cities are expected to sustain demand growth in both the OEM and replacement tvre markets. The replacement market— which is less cvclical and tvpicallv more margin-accretive than OEM supplv—continues to constitute the primarv revenue driver for the Companv, providing relative stabilitv through economic cvcles.

The retreading segment is expected to grow at an above-industrv rate as fleet economics increasing^ favour cost- efficient and sustainable tvre solutions. The Companv is well-placed to benefit from this structural trend, given its established position as a qualitv-focused retreading product manufacturer with a proven track record in both domestic and export markets.

In the EV segment, the Companv is monitoring product development opportunities closelv and intends to align its R&D and tooling investments with evolving EV tvre specifications over the medium term. Management is of the view that the transition to EVs will be gradual in the relevant segments (Two-Wheeler, Three-Wheeler, LCV) and that proactive product development will ensure continuitv of the Companvs market position.

From a financial perspective, the Company is focused on progressive improvement in revenue scale, operating leverage-driven margin expansion, and sustained cash generaton that supports both organic reinvestment and shareholder returns. The management is cautously optmistc about achieving contnued growth in revenue and profitability in FY2026-27, subject to macro-economic conditons remaining broadly stable.

14. Human Resources and Industrial Relations

The Companys human capital is a critcal enabler of its operatonal and strategic goals. As of 31st March, 2026, the total workforce of the Company stood at 104, comprising permanent employees and contractual staff across manufacturing, sales, administration, and support functons.

Employee welfare and engagement remained a priority. The Company maintained a safe, inclusive, and merit-oriented workplace environment, and health, safety, and welfare programmes were actvely implemented at the manufacturing facility. The Companys safety record at its manufacturing plant remained satsfactory, with no material incidents reported during the year.

The Company recognises that sustained investment in human resources—through skills development, performance- linked rewards, and career growth opportunites—is essental for long-term organisatonal compettveness. The management is committed to contnuing these investments in the year ahead, ensuring that the Companys workforce is equipped and motvated to deliver on its strategic ambitons.