Tolins Tyres Ltd Management Discussions

Cautionary Statement:

The statements in the "Management Discussion and Analysis Report" describe the Companys objectives, projections, estimates and expectations which may be "forwardlooking statements" within the meaning of the applicable laws and regulations. The actual results could differ materially from those expressed or implied, depending upon the economic and climatic conditions, government policies, taxation and other laws and other incidental factors.

Financial Overview:

The financial performance of the Company for the financial year ended 31^st March, 2025, is as follows: (In Millions)

Particulars	FY25	FY24
Revenue from Operations	2924.48	2272.18
EBITDA (Excl. Other Income)	557.61	463.74
EBITDA Margin (%)	19.07%	20.41%
Profit after Tax (PAT)	386.82	260.06
PAT Margin (%)	13.23%	11.45%
EPS (Rs.)	10.87	9.52

The Revenue from Operations grew 28.71% YoY to Rs.2924.5 Million, up from Rs.2272.18 Millions in FY24. This marks a significant growth in the Companys operational income, reflecting its strengthened position in key markets.

For the year ended 31st March, 2025, the earnings before interest, depreciation, and tax (EBIDTA) amounted to ^557.61 million, compared to ^463.74 million in FY24. This growth in EBIDTA indicates robust operational profitability.

After making provisions for income tax, the net profit for FY25 stood at ^386.82 million, significantly higher than ^260.06 million in FY24, reflecting strong growth in both revenue and profitability.

Resources and Liquidity:

The cash, cash equivalents and bank balances at the end of 31^st March, 2025 rose to Rs.281.93 million, compared to Rs. 8.81 million YoY, indicating strong cash flow generation.

Business category wise performance:

Tolins Tyres Limited operates predominantly in two segment—tyre and tyre-related products—catering to diverse categories such as LCV, Agri, Two- and Three-Wheeler, and more. The performance during FY2024-25 reflects growth momentum across core categories, supported by strategic expansion, enhanced dealer networks, and increased brand visibility.

Tyres

Tolins manufactures and markets new tyres for Light commercial vehicles, two- wheelers, Three Wheeler and off-road vehicles. The Company witnessed robust demand in the off-road and two-wheeler segments, especially in the replacement market, which contributed significantly to volume and revenue growth. Innovations in tread design and durability improvements helped consolidate its position in key geographies.

Retreaded Tyres

The retreading business continued to be a cornerstone for the Company, catering primarily to fleet operators and logistics companies seeking cost-efficient and sustainable tyre solutions. The Company offers complete retreading products, manufacturing high-quality pre-cured tread rubber and bonding gum under stringent quality standards. FY2025 witnessed a notable increase in demand for retreaded tyres, driven by a surge in road freight movement and growing awareness around environmental sustainability. According to Future Market Insights, the global retread tyre market is expected to grow at a CAGR of 6%, fueled by rising pressure on fleets to reduce operating costs and adopt eco-friendly practices. Retreaded tyres significantly lower carbon footprints compared to new tyres, making them an attractive choice for environmentally conscious fleet owners. The Company remains well-positioned to capitalize on this momentum with its quality-driven and cost-effective retreading offerings.

Source: https://www.globenewswire.com/news-release/2024/12/11/2995020/0/en/Retread-Tire-Market-Growth-

Driven-by-Fleet-Cost-Cutting-and-Environmental-Benefits-with-a-CAGR-of-6-Future-Market-Insights-Inc.html

Exports

Tolins expanded its international footprint, with exports accounting for approximately 6.4% of total standalone revenue during the year. The Middle East and Southeast Asia remained the primary markets, where the Company leveraged competent product, consistent product performance, to grow its brand presence.

Risks & Concerns:

The business of Tolins Tyres, like any manufacturing and consumer-driven enterprise, is subject to a range of risks. The Company has instituted robust internal processes and strategic foresight to mitigate these challenges and ensure business continuity.

• Raw Material Price Volatility

Natural rubber, synthetic rubber, carbon black, and other petrochemical derivatives form the bulk of input materials for tyre manufacturing. Prices of these commodities are influenced by global market dynamics and currency fluctuations. Sudden spikes in prices can adversely impact margins, especially in the short term. The Company mitigates this risk through diversified sourcing, forward contracts, and long-term supplier relationships.

• Competition Risk

A part of our revenue is derived from bias tyres, where pricing pressures could impact profitability. Tolins mitigates this risk by positioning its products as value-for- money, strengthening dealer relationships, and reinforcing brand recall through consistent quality.

• Export Risk

While exports contribute a healthy share to Tolins revenue, the business remains exposed to geopolitical shifts, trade policy changes, and currency fluctuations. Currency hedging mechanisms and regional market diversification help in reducing the impact of these risks.

OPPORTUNITIES & 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 customer-centric product offerings.

• Expansion of the Retread Tyre Market

The global retread tyre market is projected to grow from USD 11.2 billion in 2023 to USD 20 billion by 2033, registering a CAGR of 6%. 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.

• Government Initiatives and Infrastructure Development

The Indian governments focus on infrastructure modernization, including expressways, freight corridors, and rural connectivity, directly impacts tyre demand. Initiatives like PM Gati Shakti, the National Logistics Policy, and the Production Linked Incentive (PLI) scheme for auto components promote indigenous manufacturing and bolster logistics, thereby increasing the usage of heavy-duty tyres across sectors.

• Emphasis on Sustainability and Retreading Solutions

As Environmental, Social, and Governance (ESG) considerations become central to corporate strategies, retreading is gaining traction due to its cost savings and environmental benefits. Tolins Tyres legacy in tread rubber manufacturing and pre-

cured solutions gives it a competitive edge in serving logistics and commercial fleet operators seeking value-driven, green alternatives.

• Growth in Rural and Tier-2/Tier-3 Markets

Improved road infrastructure and rising rural prosperity are stimulating demand for twowheeler and farm vehicle tyres in non-metro areas. Tolins Tyres is tapping into this opportunity through region-specific dealership expansion and targeted marketing strategies to cater to the growing aspirations of rural India.

Threat from Global Tyre Majors

Tolins Tyres, like other Indian manufacturers, operates in a highly competitive landscape that includes large multinational tyre brands with vast financial resources, advanced technology, and deep global distribution networks. These global players have the ability to scale quickly, offer aggressive pricing, and dominate premium product segments, which can challenge market share for Indian mid-sized companies.

• Volatility in Raw Material Supply and Pricing

Tyre manufacturing heavily relies on natural rubber, synthetic rubber, and crude oil derivatives. Fluctuations in raw material prices, coupled with potential disruptions in the global supply chain due to geopolitical tensions, trade restrictions, or climatic factors affecting rubber production, can significantly impact production costs and operational continuity.

• Rapid Technological Advancements Leading to Obsolescence

The tyre industry is witnessing swift advancements in design and material sciences, especially in developed markets. Innovations such as EV-optimized tyres, noise-reducing tread designs, and smart tyres with embedded sensors are becoming industry standards. Companies that fail to keep pace with these trends risk losing competitiveness and market share.

• Stringent Regulatory and Compliance Requirements

Increasing environmental norms related to tyre waste disposal, rolling resistance, and safety labelling standards (e.g., BIS compliance in India or EU labelling norms for exports) present operational and financial challenges. Non-compliance or delays in adapting to new regulations can result in penalties, loss of market access, or damage to brand reputation.

• Competition from Unorganized Retreading Sector

In the retreading segment, Tolins Tyres faces stiff competition from the unorganized sector, where price undercutting and substandard quality offerings often distort market dynamics. This not only affects profit margins but also impacts customer perception toward retreading solutions.

• Shifting Consumer Preferences and Brand Loyalty Challenges

With increasing awareness and a plethora of choices, consumers, especially in urban markets, are becoming more brand-conscious. The preference for premium, internationally recognized brands poses a risk to smaller and mid-tier players unless sustained investments in branding, customer engagement, and innovation are made.

• Perception and Safety Concerns Regarding Retreaded Tyres

Despite technological advancements improving the quality and safety of retreaded tyres, consumer perception remains a challenge. Concerns about the safety and performance of retreaded tyres, particularly for passenger vehicles, can hinder market adoption. Additionally, some insurance companies do not recommend the use of retreaded tyres for passenger cars due to safety considerations.

Product-wise Performance

During the financial year 2024-25, 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:

1. Tyres

Standalone revenue from the Tyre segment stood at ^609.25 Million in FY25, growing 59.55% YoY from ^381.85 Million in FY24. Enhanced rural penetration, improved dealership outreach, and product upgrades contributed to the segments strong performance.

2. Retread & Tread Rubber Solutions

The Retreading segment, including pre-cured tread rubber and bonding gum, delivered ^1174.27 Million in revenue in FY25, as against ^1192.64 crore in FY24. Continued demand from fleet operators and institutional clients contributed to the solid performance.

3. Exports

Export revenue (across all product categories) increased to ^114.15 Million in FY25, compared to ^270.3 Million in FY24. The Gulf countries and Southeast Asian markets contributed the majority, with commercial and bias tyres performing particularly well.

Exports Performance (FY25)

The export business for Tolin Tyres in FY25 has shown promising growth across several key markets. Despite challenges, including ongoing regulatory hurdles and a continued shortage of foreign exchange in certain regions, the Company has managed to stay resilient in its export efforts.

The global shipping landscape remained volatile, with ongoing disruptions in supply chains. However, Tolin Tyres has adapted effectively to these challenges, keeping export shipments on track. Despite these factors, the Company on standalone basis recorded an export turnover of ^114.15 million for FY25.

Regions such as the Far East and Africa continue to show resilience. In these markets, the Company successfully navigated intense price competition and maintained consistent volumes and revenues. Key categories including, light truck, farm, and 2 & 3wheeler tyres have seen continued growth, driven by strong consumer demand and product preference.

For FY26, the Company is focused on consolidating its growth in existing strong markets while expanding its presence in emerging markets, with a strategic push for further growth and profitability in the coming year.

Internal Control System and Adequacy:

Tolin Tyres has instituted a comprehensive internal control framework designed to ensure the efficient and effective conduct of its operations. This framework supports adherence to the Companys policies, protection of assets, prevention and detection of frauds and errors, and the accuracy and integrity of its financial and operational records. It also facilitates the timely preparation of reliable financial statements in line with the provisions of the Companies Act, 2013.

The Companys internal controls are well-aligned with applicable statutory and regulatory requirements, including those related to environmental and safety standards within the tyre manufacturing sector. These controls are periodically reviewed and upgraded to adapt to evolving business needs and regulatory changes.

As part of the statutory audit process, the Companys internal controls are independently evaluated by its Statutory Auditors. Any observations or recommendations arising from the audit are thoroughly discussed with the Audit Committee of the Board. Corrective actions, where necessary, are promptly implemented to address any identified gaps or inefficiencies.

Tolin Tyres remains committed to continuously strengthening its internal control systems to enhance operational effectiveness, manage risks proactively, and safeguard stakeholder interests.

Outlook:

The Indian tyre industry is experiencing consistent growth, driven by rising vehicle sales and rapid infrastructure expansion across the country. With the automotive sector on an upward trajectory, the demand for superior-quality tyres is set to grow substantially in both domestic and international markets. The industrys outlook remains optimistic, supported by robust demand across key segments such as commercial vehicles, and two-wheelers.

Government-led initiatives aimed at boosting infrastructure—such as enhanced road networks, improved transportation facilities, and incentives for electric mobility—are expected to directly benefit the tyre sector. These developments are likely to drive growth in both the replacement and OEM (Original Equipment Manufacturer) tyre markets.

In addition, the growing emphasis on sustainability has spurred innovation within the industry. Tolin Tyres is actively investing in research and development to improve the efficiency, durability, and environmental impact of its products, including the creation of tyres designed for better fuel efficiency and reduced carbon emissions.

Operational Overview:

Tolin Tyres continuously monitors its product position in the market, taking into account demand trends and technological advancements to sustain its growth. The Company is exploring opportunities for innovation, particularly in the development of new tyre models and expansion into emerging markets. The Company operates in a dynamic environment marked by increasing competition, fluctuating raw material prices, and the need for sustainable manufacturing practices.

Industry Structure and Developments:

• The Indian tyre industry is a vital component of the nations manufacturing sector, producing over 200 million units annually across various categories, including two-wheelers, passenger vehicles, commercial vehicles, and off-road vehicles. This extensive production capacity positions India as one of the worlds leading tyre manufacturers.

• Self-Sufficiency and Domestic Capabilities

The Automotive Tyre Manufacturers Association (ATMA) has declared that Indias tyre industry is self-sufficient, capable of meeting domestic demand without reliance on imports. This assertion is supported by substantial investments exceeding ^35,000 crore in capacity expansion, technological upgrades, and research and development by leading manufacturers. These investments have enhanced the industrys ability to fulfil domestic requirements and reduce dependency on imported tyres.

• Export Performance and Global Integration

Indian tyre exports have demonstrated significant growth, with exports reaching ^23,073 crore in FY24, nearly doubling from ^12,844 crore in FY20. This growth underscores the industrys increasing integration with global supply chains. Indian tyres are now exported to over 170 countries, with the United States accounting for approximately 18% of total exports.

• Technological Advancements and Innovation

The industry is embracing technological advancements, including automation, digitization, and the adoption of Industry 4.0 practices. Investments in research and development have increased, focusing on producing high-quality, sustainable, and performance-oriented tyres. These innovations aim to enhance product offerings and meet evolving consumer demands both domestically and internationally.

• Challenges and Future Outlook

Despite its robust growth, the industry faces challenges such as global supply chain disruptions, geopolitical tensions, and rising shipping costs. Additionally, regulatory requirements related to natural rubber imports pose constraints on export performance. Addressing these challenges through policy support and strategic initiatives will be crucial for sustaining growth and enhancing the industrys global competitiveness.

Government Initiatives for the Tyre Industry:

The Indian government has launched various initiatives to strengthen the tyre manufacturing sector, including the introduction of the "Atmanirbhar Bharat" (SelfReliant India) campaign and the PLI (Production-Linked Incentive) Scheme for the automotive sector. These policies focus on reducing dependence on imports and encouraging domestic production, providing tax incentives, and promoting innovation within the sector.

Additionally, the governments focus on improving road infrastructure, including the development of expressways and rural roads, directly benefits the tyre sector, as it drives demand for durable and high-performance tyres.

Companys Strategy:

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

• Investment in R&D to develop new products and improve existing ones, particularly in the high-performance and eco-friendly tyre segments.

• A focused strategy on enhancing its global footprint, targeting both developed and emerging markets.

Through this strategy, Tolin Tyres aims to strengthen its position in the global tyre market and continue providing quality products that meet the evolving demands of consumers.

Material Developments in Human Resources/Industrial Relations:

Tolin Tyres continues to prioritize its human resources as a key factor in achieving its business goals. The Company values a diverse mix of youth and experience to drive innovation and business growth. As of 31st March 2025, Tolin Tyres permanently employed 18 number of people, with a focus on continuous skill development to meet the demands of the evolving tyre manufacturing industry.