Uniparts India Ltd Management Discussions

Global economy

Overview: Over the recent period, softening growth prospects and rising inflation expectations have raised concerns about the nearterm outlook and dampened risk appetite. The global composite PMI, though still in expansion, slowed to a 14-month low in February 2025, falling again from 51.8 in January to 51.4 in February. Global median consumer inflation hit 3.5% in February, with two-thirds of economies seeing rising inflation in 2025.

(Source: World Bank monthly update - March

2025)

Among major economies, U.S. economic activity indicators in early 2025 were volatile amid heightened uncertainty, while China saw trade slow in January and February of 2025. In contrast, in many other emerging market and developing economies (EMDEs), PMI surveys generally indicate continued resilience in activity.

Meanwhile, trade policy uncertainty reached the highest level on record since 1960 in February 2025, reflecting uncertainty about U.S. trade policies and responses from other trading partners. In March 2025, the United States and China imposed additional tariffs on each other.

Global commodity prices eased in recent period in wake of the economic uncertainties with Brent Crude declining below USD 70 per barrel. On the other hand, safe heaven gold and silver have been trending higher.

Leading central banks have commenced policy easing to support demand and economic growth. In March 2025, the EU also announced plans to boost defence spending by ?‚?800 billion.

Global growth is expected to remain stable, albeit lacklustre. At 3.3% in both 2025 and 2026, the forecasts for growth are below the historical (2000-19) average of 3.7%.

(Source: IMF - World economic outlook update - January 2025).

Among advanced economies, growth forecast revisions go in different directions. In the United States, underlying demand remains robust, reflecting strong wealth effects, a less restrictive monetary policy stance, and supportive financial conditions. Growth is projected to be at 2.7% in 2025.

This is 0.5 percentage point higher than the October forecast, in part reflecting carryover from 2024 as well as robust labour markets and accelerating investment, among other signs of strength. Growth is expected to taper to potential in 2026. In the euro area, growth is expected to pick up but at a more gradual pace than anticipated in October, with geopolitical tensions continuing to weigh on sentiment. Weaker-than-expected momentum at the end of 2024, especially in manufacturing, and heightened political and policy uncertainty explain a downward revision of 0.2 percentage point to 1.0% in 2025.

In 2026, growth is set to rise to 1.4%, helped by stronger domestic demand, as financial conditions

loosen, confidence improves, and uncertainty recedes somewhat.

In emerging market and developing economies, growth performance in 2025 and 2026 is expected to broadly match that in 2024.

With respect to the projection in October, growth in 2025 for China is marginally revised upward by 0.1 percentage point to 4.6%. This revision reflects carryover from 2024 and the fiscal package announced in November largely offsetting the negative effect on investment from heightened trade policy uncertainty and property market drag. In 2026, growth is projected mostly to remain stable at 4.5%, as the effects of trade policy uncertainty dissipate and the retirement age increase slows down the decline in the labour supply. In India, growth is projected to be solid at 6.5% in 2025 and 2026.

In the medium term, the balance of risks to the outlook is tilted to the downside. An intensification of protectionist policies, for instance, in the form of a new wave of tariffs, could exacerbate trade tensions, lower investment, reduce market efficiency, distort trade flows, and again disrupt supply chains. Growth could suffer in both the near and medium term, but at varying degrees across economies.

(Sources: World Bank monthly update - March 2025, IMF - World economic outlook update - January 2025)

Indian economy

The Reserve Bank of India has projected real GDP growth at 6.5% for FY2025-26, maintaining the same rate as estimated for FY2024- 25, following a strong expansion of 9.2% in the preceding year. The quarterly projections stand at 6.5% in Q1, 6.7% in Q2, 6.6% in Q3, and 6.3% in Q4.

(Source: RBI Policy April 2025 - Press Information Bureau).

Agriculture remains on a positive footing, supported by healthy reservoir levels and robust crop production, which is expected to sustain rural demand. Manufacturing is showing early signs of revival amid improved business sentiment, and the services sector continues to demonstrate resilience. Consumer Price Index

Industry overview

End-industry overview (Off- Highway Vehicles)

The global off-highway vehicles (OHV) market was valued at USD 544.07 billion in 2024 and is projected to grow at a CAGR of 6.9% from 2025 to 2030. Growth is driven by rising infrastructure development, increasing mechanisation in agriculture, and demand for efficient mining equipment. Chinas Belt and Road Initiative has committed USD 679 billion to global infrastructure, while the U.S. RAISE program allocated USD 1.32 billion in January 2025 to modernise roads and bridges- boosting demand for construction and material-handling machinery.

In mining, countries like India, which conducts 90% of its operations through open-pit methods, are driving demand for high-performance haul trucks and excavators. Indias 100% FDI policy in mining is further accelerating investment in automated and fuel- efficient equipment. Agricultural mechanisation is also rising due to labour shortages and food demand. Indias Sub-Mission on Agricultural Mechanisation offers up to 50% financial assistance for machinery, while China has achieved a 72% mechanisation rate. In the U.S., the USDA has disbursed USD 2.5 billion to over 47,800 distressed farm

(CPI) inflation for FY2025-26 is projected at 4.0%, with quarterly estimates at 3.6% in Q1, 3.9% in Q2, 3.8% in Q3, and 4.4% in Q4.

In its review in April 2025, the Monetary Policy Committee (MPC) unanimously decided to reduce the policy repo rate by 25 basis points, bringing it down to 6%. This is second such cut in the calendar year by RBI after it cut the benchmark rate by 25 basis points in February 2025. The repo rate is the rate at which the Reserve Bank of India (RBI) lends money to commercial banks.

The decision to cut the policy repo rate by 25 basis points to 6% is underpinned by easing inflation, particularly in food prices, and a gradual recovery in economic activity. With GDP growth for

loan borrowers, with an additional USD 300 million announced in December 2024 to support 12,800 more, spurring farm modernisation. However, high initial costs and strict emission regulations remain key challenges. The EUs Stage V and the U.S. EPAs Tier 4 standards require expensive after-treatment systems, increasing compliance costs.

(Source: Grand view Research)

India domestic tractor market

In fiscal 24-25, the India domestic tractor industry grew by approximately 8%. This growth, driven by favourable monsoon and other positive factors, comes after a year of decline in the previous fiscal. Exports also edged up, reversing the degrowth seen last year. The total production as well as sales during the period exceeded the one million mark. Domestic tractor sales stood at approximately 9.4 lakh units while export sales clocked approximately 0.99 lakh units thereby taking the total sales past one million mark.

The production for the year is estimated to be approximately 10.08 lakhs which is still lower than the FY2022-23 peak of approximately 10.71 lakh units. The momentum is expected to continue into the ensuing fiscal as well.

(Source: Business Line - New Delhi

15 April, 2025, TMA - Tractor Manufacturers

Associations)

FY2025-26 projected at 6.5% and inflation expected to remain within the 4% target band, the report signals cautious optimism despite global uncertainties. On the external front, robust services exports and strong remittance inflows have helped cushion the merchandise trade deficit, keeping the current account deficit at sustainable levels. Meanwhile, improved system liquidity, lower short-term borrowing costs, and stable foreign exchange reserves underscore the resilience of Indias financial system. The RBI has affirmed its commitment to closely monitor evolving conditions and take timely, calibrated measures to preserve macroeconomic and financial stability.

(Source: RBI Policy April 2025 - Press Information Bureau)

Off-Highway Vehicles industry and Uniparts positioning

The off-highway vehicles (OHV) industry, which is the core focus for us at Uniparts, is estimated to be over USD 200 billion* in size and our two core product verticals of 3 Point Linkage (3PL) and Precision Machined Parts (PMP) address a market size of over USD 1 billion*. Uniparts has a leading market share in both of these globally. In addition, the adjacent product systems of Power Take Off (PTO), Hydraulic Cylinders and Fabrications have an estimated market size of over USD 10 billion*.

(*Management estimate)

Uniparts is present in the OEM and Aftermarket segments with a strong global business model and marquee customer base. Uniparts is a leading global supplier of 3 Point Linkage and Precision Machined Parts.

Growth drivers

Rising popularity of outdoor recreational activities: There has been a significant increase in consumer interest in activities such as trail riding, off-road racing, and adventure tourism. This surge has led to higher demand for vehicles like All-Terrain Vehicles (ATVs) and Utility Task Vehicles (UTVs). The U.S off-road vehicles market was valuec at USD 12.1 billion in 2024 and is expected to grow at a CAGR of 7.5% from 2025 to 2034.

(Source: Strategy and statics, Global market insights)

Economic factors and disposable

income: Increases in disposable income have enabled more individuals to invest in recreational activities, including off-roading. This economic uplift has contributed to the expansion of the OHV market, with the global market size valued at USD 21.9 billion in 2024 and an estimated CAGR of 7.9% from 2025 to 2034.

(Source: Global market insight)

Infrastructure development and

urbanisation: The global off- highway vehicles market benefits

Company overview

Founded in 1994, Uniparts India Limited (UIL) is a global leader in engineering systems and solutions catering to international original equipment manufacturers (OEMs) and aftermarkets across the off-highway vehicle (OHV), agricultural machinery and

Company strengths

Leading market position: Uniparts has a leading market share in the global 3PL market in tractors as well as in the worldwide PMP market in CFM equipment segment (market share as per last assessment in fiscal 2022 was 16.68% and 5.92% respectively in the mentioned two segments).

Global presence: UIL has a

worldwide footprint, providing products to the leading 10 global off-highway vehicle (OHV) manufacturers in agriculture, as well as servicing half of the leading 10 players in the construction (Ex

from increased investments in infrastructure development, driven by urbanisation. The global urban population has been steadily increasing, reaching 57.25% in 2024. Projections indicate that by 2050, nearly 68% of the worlds population will reside in urban areas. This significant urbanisation is expected to drive demand in sectors such as construction, mining, and infrastructure development, thereby fuelling growth in the global Off- Highway Vehicle market.

(Source: Trading economics)

Government support: Ensuring food security is a key priority for major economies, leading to continued support for agriculture. This includes initiatives like minimum support prices for food grains in India and extensive farm subsidies in the United States.

Infrastructure projects: Many countries are investing heavily in infrastructure to accelerate economic growth, enhance selfreliance, and improve the quality of life for their citizens. This global push includes large-scale upgrades in airports, ports, railways, roads,

construction equipment sectors. Specialising in the production of three-point linkage assemblies, precision machined parts, hydraulic cylinders, power take-off devices and fabrication parts, UIL serves the agriculture and construction industries. With six manufacturing units in India and one in the

China), forestry and mining (CFM) segments.

Revenues through multiple delivery channels: In FY2024-25, the Company generated revenue with 25.1% coming from local deliveries,27.5% from direct exports and 47.4% from warehouse sales facilitated by a global delivery service model offering various delivery options.

Enduring relationships: Uniparts maintains long-standing partnerships with key global clients in the agriculture and CFM sectors. Top three customers as well as several other customers at UIL,

and defence infrastructure-fuelling consistent demand for construction equipment over the medium to long term. Notable initiatives include the United States USD 1 trillion infrastructure plan aimed at revitalising aging systems over eight years.

(Source: IBEF)

Increasing Demand for Food Production: Rising global population-projected to reach 9.7 billion by 2050 is driving the need for increased food production. This growing demand is expected to significantly boost the global market for agricultural equipment.

(Source: population.un.org)

Low Farm Machinery penetration:

Indias farm machinery adoption remains below 50%, significantly lagging behind countries like China (60%) and Brazil (75%). To meet rising production demands sustainably and build modern food systems, accelerating farm mechanisation in India is essential.

(Source: InCla-brlefing.com)

USA, equipped with a range of engineering and manufacturing capabilities such as forging, machining, heat treatment, welding, surface finishing, NPD prototyping and testing, UIL also operates three warehouse facilities (two in the USA and one in Germany) to efficiently serve its global clientele.

contributing significantly to its revenue, have been associated with the Company for more than one and a half decade.

Mitigating global supply chain risks: Uniparts dual-shore capabilities and strategically positioned warehouses empower the Company to produce goods at various sites, ensuring consistent supply to customers and competitive manufacturing operations from alternate locations. The presence of safety stocks at warehouses serves as a precautionary measure against potential supply chain risks.

Engineering-focused vertically integrated precision solution provider: Uniparts stands as an engineering-centric and vertically integrated supplier of off-highway vehicle (OHV) solutions. The Company offers comprehensive solutions from conceptualisation to supply, encompassing products like 3PL and PMP, along with PTO, fabrications and hydraulic cylinders.

Companys financial performance

In FY2024-25, the Companys total revenue came in at H984.9 crore, as compared to previous years H1148.9 crore. Correspondingly, the net profit for the year was reported at H88 crore, viz-a-viz previous years net profit of H124.7 crore.

Experienced promoters and qualified senior management

team: The leadership at Uniparts brings decades of collective experience in the off-highway vehicle (OHV) industry, strategically positioned across crucial end markets such as the United States, India and Germany.

Operating cash flow generation remained very healthy during the year, totalling H182 crore. This could be attributed to healthy Profit After Tax (PAT) and continued focus on working capital performance. Uniparts concluded FY2024-25 with a Net Debt-Free Balance Sheet, exhibiting a group net cash position of H194.5 crore, inclusive of liquid investments.

Product-wise revenues

3-PL 48.6% in FY2024-25 vs 45.8% in FY2023-24

PMP 48.7% in FY2024-25 vs 51.5% in FY2023-24

Adjacent products and others

(including PTO applications , hydraulics and fabrications) 2.7% in FY2024-25 vs 2.6% in FY2023-24.

Particulars	For the year ended 31 March, 2025	For the year ended 31 March, 2024
Revenue from operations (H crore)	963.7	1139.5
EBITDA (H crore)	166.8	210.7
EBITDA Margin %	17%	18%
Profit After Tax (H crore)	88.0	124.7
Profit After Tax Margin %	9%	11.0%
Return on Capital Employed %	13.7%	19.5%
Cashflow from Operations	181.9	199.7

Internal control systems and adequacy

Uniparts India Limited has established an internal control system to ensure the adequacy and effectiveness of its internal controls. The Companys internal control system includes policies, procedures and processes designed to safeguard assets, prevent and detect fraud and ensure the accuracy and completeness of financial reporting. The internal control system is overseen by the Audit Committee of the Board of Directors, which reviews the adequacy and effectiveness of the system on an ongoing basis. In addition, the Companys internal auditors conduct periodic audits of the internal control system and report their findings to the audit committee. Uniparts India Limited believes that its internal control system is adequate to manage the risks inherent in its business operations and to ensure the reliability of its financial reporting.

Human resources

Uniparts India Limited acknowledges the importance of its workforce and is committed to supporting a culture that encourages the growth and retention of top talent. The Company provides a range of employee benefits, including health insurance, retirement benefits and opportunities for training and development to support employee advancement. A performance management system is in place to evaluate employee performance, offering feedback and coaching for ongoing enhancement. Upholding its dedication to diversity and inclusion, Uniparts India Limited has implemented policies and practices that promote equal opportunities for all employees, regardless of gender, ethnicity, or background.

Cautionary statement

Statements in the Management Discussion and Analysis and elsewhere in the Annual Report describing the Companys objectives, projections, estimates, expectations, or predictions, views on the end industry and world economy in general may be forward-looking statements within the meaning of applicable securities, laws and regulations. Forwardlooking statements are necessarily dependent on assumptions, data or methods that may be incorrect or imprecise and that may be incapable of being realised and as such, are not intended to be a guarantee of future results, but constitute our current expectations based on reasonable assumptions. Actual results could differ materially from those projected in any forward-looking statements due to various events, risks, uncertainties and other factors. We neither assume any obligation nor intend to update or revise any forwardlooking statements, whether as a result of new information, future events or otherwise.