Viaz Tyres Ltd Management Discussions

Industry Context: A Product That Moves With the Economy

Tyres occupy a distinctive position within the automotive value chain. They are simultaneously an original equipment component, a recurring aftermarket product and a safety-critical consumable. Unlike many automotive components whose demand is substantially linked to new vehicle production, tyre demand is supported by two separate engines: the production of new vehicles and the replacement requirements of the installed vehicle population.

This characteristic gives the tyre industry a relatively broad demand base. Every new vehicle manufactured adds to original equipment demand in the present and enlarges the population of vehicles that will require replacement tyres over subsequent years. The cumulative vehicle parc therefore assumes considerable importance for the tyre industry.

India has emerged as one of the worlds important automotive manufacturing and consumption markets. During FY26, domestic sales across passenger vehicles, commercial vehicles, three-wheelers and two-wheelers aggregated approximately 28.27 million units. Two-wheelers alone accounted for approximately 21.71 million units, passenger vehicles for 4.64 million units, commercial vehicles for 1.08 million units and three-wheelers for 0.84 million units. Importantly, all four principal categories recorded their highest annual sales in seven years during FY26.

The scale of these numbers is particularly relevant to Viaz Tyres Limited because the Companys vision in manufacturing strategy is concentrated around two-wheelers, three-wheelers, light commercial vehicles and agricultural applications. Its established butyl tube portfolio also serves multiple vehicle categories including two-wheelers, three-wheelers, passenger vehicles, light and commercial vehicles and agricultural vehicles.

The Indian Tyre Industry: Large, Established and Increasingly Sophisticated

The Indian tyre industry has developed into a sizeable domestic manufacturing ecosystem. The Automotive Tyre Manufacturers Association estimates industry turnover at approximately 1 lakh crore for FY25, comprising 28 tyre companies operating 62 plants.

Government data indicates that approximately 226.9 million tyres were manufactured in India during FY25. Large ty re m a n u fa c t u re rs a cco u n t fo r approximately 95% of industry turnover in value and tonnage terms, indicating a high degree of organisation and manufacturing formalisation at the principal tyre-manufacturing level. India is also largely self-suf cient in the manufacture of tyres across vehicle categories.

The composition of domestic tyre production is also particularly relevant. A January 2026 NITI Aayog study, using industry data, indicates that two- and three-wheeler tyres account for approximately 53% of tyre production by volume, passenger-car tyres for approximately 26%, truck and bus tyres for 11%, LCV tyres for 5%, agricultural and farm tyres for 4%, with other categories constituting the balance.

Viazs entry strategy therefore provides exposure to several large-volume and structurally relevant categories rather than a single niche. Its new manufacturing platform is designed for two-wheeler, three-wheeler, LCV and agricultural/farm tyres, with annual capacity of approximately 16 lakh tyres.

Understanding the Two Engines of Tyre Demand

Original Equipment Demand

OEM demand is linked primarily to vehicle manufacturing. A tyre is required before every new vehicle reaches the road. Growth in vehicle production therefore creates direct rst- t demand for the tyre industry.

FY26 was a particularly strong year for the Indian automotive market, with domestic sales reaching 2.17 crore two-wheelers, 46.43 lakh passenger vehicles and 10.80 lakh commercial vehicles, supporting healthy OEM demand for tyres.

Replacement Demand: The Recurring Engine

Replacement demand is structurally different from OEM demand. It is driven by the number of vehicles already operating, distance travelled, road conditions, load, tyre maintenance and age rather than solely by the number of new vehicles produced in a particular year.

Industry work undertaken by ATMA and PwC p l a c e s r e p l a c e m e n t d e m a n d a t approximately 54% of industry tyre volumes in FY24, making it the largest demand channel by volume. This is broadly consistent with Viazs strategic positioning, which estimates that approximately half of industry demand comes from replacement markets.

Why Replacement Cycles Matter

A tyre is a wear product. Its useful life is in uenced by several variables including annual kilometres travelled, vehicle load, road surface, in ation pressure, wheel alignment, driving behaviour, tyre design and maintenance.

Industry benchmarks historically indicate signi cantly different replacement periods across vehicle classes. Two-wheeler tyres may typically enter a replacement cycle in approximately 2 3 years, passenger-car tyres in approximately 3 4 years, LCV tyres around 3 4 years and tractor tyres around 3 4 years. High-utilisation commercial vehicles may experience materially shorter cycles. These ranges are indicative industry benchmarks rather than prescribed product lives; actual replacement timing varies considerably by usage.

Viazs own operating experience is particularly relevant in tubes, where management observes that butyl inner tubes can require replacement more frequently than tyres.

The economic implication is signi cant. Indias tyre opportunity should not be analysed only through annual new-vehicle sales. Every successive cohort of vehicles adds to a cumulative replacement pool. As vehicle ownership, freight movement, last-mile mobility, rural mechanisation and kilometres travelled increase, the installed base creates recurring requirements independent of a single years OEM cycle.

This creates an attractive demand architecture for a company such as Viaz that is building its strategy around the aftermarket and an expanding dealer network.

The Two-Wheeler Opportunity: Indias Largest Mobility Base

Two-wheelers represent the largest vehicle category in India by unit volume. Approximately 21.71 million two-wheelers were sold domestically in FY26, representing more than three-fourths of domestic vehicle sales across the four principal automobile categories reported by SIAM.

This category is particularly relevant to Viaz for three reasons.

First, Viaz already has longstanding manufacturing experience in two-wheeler butyl tubes. Second, two- and three-wheeler tyres together constitute the single largest segment of Indian tyre production by unit volume. Third, a large installed base, combined with relatively frequent replacement, creates an ongoing aftermarket opportunity.

Viaz therefore enters the two-wheeler tyre segment with an existing understanding of the application, rubber processing and distribution environment rather than approaching it as an unrelated business.

Three-Wheelers: A Last-Mile Mobility Opportunity

The three-wheeler market occupies an important position in Indias passenger mobility and last-mile logistics ecosystem. Domestic three-wheeler sales increased to approximately 8.36 lakh units in Fy26.

Three-wheelers frequently operate at relatively high utilisation levels in passenger transport, urban delivery and commercial applications. This usage pro le can support aftermarket demand as the installed eet expands.

Viazs presence in both three-wheeler tubes and its forthcoming complete tyre portfolio provides the Company with the ability to participate progressively across a larger proportion of the customers tyre requirement.

Light Commercial Vehicles: Linked to Commerce and Distribution

LCVs play an increasingly important role in urban logistics, distribution, infrastructure activity, e-commerce and rst- and last-mile movement. Industry leaders have also identi ed last-mile connectivity, e-commerce and infrastructure-linked applications as important structural demand drivers for LCV tyres.

For Viaz, the LCV category provides an opportunity to move towards a higher-ticket product while leveraging its rubber-processing capabilities. It can also provide portfolio diversi cation beyond two- and three-wheeler applications as the tyre business scales.

Agricultural Tyres: Participation in Rural Mechanisation

Agricultural mobility represents a different demand cycle from urban automotive consumption. Tyre requirements are linked to tractor ownership, equipment utilisation, rural income, agricultural activity, replacement frequency and mechanisation.

The sector saw strong tractor demand during FY26, while industry commentary points to improving rural fundamentals and replacement demand as supportive factors for farm tyres.

Viazs planned participation in agricultural and farm-equipment tyres therefore adds another demand pool with different end-use drivers, helping reduce dependence on any single mobility segment.

Why the Organised Nature of Viaz Matters

The signi cance of being an organised manufacturer is particularly important in tyres and tubes because these are engineering and safety products, not merely pieces of moulded rubber.

Automotive tyres and tubes fall within Indias compulsory BIS certi cation framework. Relevant standards cover automotive tubes, two- and three-wheeler tyres, passenger-car tyres and commercial-vehicle tyres. BIS certi cation requires manufacturers to possess appropriate manufacturing infrastructure, process controls, quality-control systems and testing capabilities, while products must conform to applicable Indian Standards.

For two- and three-wheeler tyres, the testing framework includes tyre dimensions, load/speed performance, dynamic growth, endurance, tyre strength and tread-wear indicators. Automotive tubes are subject to requirements covering areas such as form and t, thickness uniformity, elongation, splice strength, ageing and air tightness.

This changes the competitive equation. In an organised manufacturing environment, value is created through repeatability: the ability to reproduce the required compound, dimensions, curing characteristics, strength and performance consistently across large production batches.

The customer may see the nished tyre or tube. Behind that product lies a system of raw-material selection, compounding, mixing, extrusion, moulding, curing, testing, inspection and process control. In safety-critical automotive products, consistency at each of these stages is central to building long-term brand con dence.

For the dealer, organised manufacturing provides product traceability, continuity of supply and an accountable brand relationship. For the consumer, it supports con dence in quality and performance. For the manufacturer, it facilitates wider distribution, institutional relationships, stronger brand creation and progressive participation in more sophisticated product categories.

Viaz has already developed capabilities in rubber compounding, mixing, production, moulding, quality control and distribution through its longstanding inner-tube business. The strategic relevance of this experience increases as Viaz moves into complete tyre manufacturing because the Companys existing organisational knowledge can be applied to a product with higher value per unit and a substantially larger addressable market.

Export Opportunity

The Indian tyre industry has developed meaningful global competitiveness. Tyre exports from India reached a record approximately 27,312 crore in FY26, increasing about 9% year-on-year despite trade and logistics disruptions.

Viaz already has an international business. The Companys immediate growth strategy remains closely connected to building domestic distribution and replacement-market penetration. However, its existing export experience provides an additional avenue over the medium term as its tyre product portfolio, certi cations, manufacturing consistency and capacity mature.

Opportunities for Viaz

The Companys opportunity can be viewed through several interrelated drivers.

Large installed vehicle base and replacement demand:

A growing vehicle population continuously enlarges the potential replacement pool. Replacement is already the largest tyre-demand channel by industry volume.

Two- and three-wheeler scale:

Two-wheelers dominate Indian automobile unit sales and two-/three-wheeler tyres form the largest tyre-production category by volume.

Higher value per unit:

Complete tyres provide signi cantly higher realisation than inner tubes, creating potential to increase revenue through an existing customer and dealer ecosystem.

LCV and logistics growth:

Last-mile commerce, logistics, infrastructure and urban distribution create a structural use case for LCV tyres.

Agricultural and rural mobility:

Tractor utilisation, mechanisation and replacement demand create a separate opportunity in farm tyres.

Distribution-led scalability:

Viaz can leverage existing dealer relationships while simultaneously developing a broader Pan-India network.

Export optionality:

Existing international business gives the Company a foundation from which selected tyre categories can eventually be expanded overseas.

Backward integration:

Reclaimed rubber and tyre recycling can potentially improve circularity and support material economics while aligning with the developing EPR ecosystem.

Energy optimisation:

Captive solar can help manage one of the recurring conversion costs of rubber and tyre manufacturing.

Specialised rubber products:

Over time, Viaz may look to move into more specialised agricultural, commercial, industrial and customised rubber applications, creating scope for improved product mix.

Key Risks and Management Approach Raw-Material Price Volatility

Rubber, carbon black, chemicals and crude-linked inputs are susceptible to price uctuations. Sudden increases can compress margins where selling-price revisions occur with a lag.

Management approach:

Disciplined procurement, inventory planning, calibrated pricing and gradual development of backward-integration capabilities.

Capacity Ramp-Up Risk

The new tyre plant materially increases the Companys manufacturing capability, but installed capacity does not automatically translate into revenue. Utilisation depends on product quali cation, channel penetration, availability, manufacturing yield and market acceptance.

Management approach:

Phased scale-up across categories, use of existing manufacturing experience, expansion of the distributor/dealer network and focus on replacement-driven categories where Viaz has prior channel understanding.

Brand and Competitive Risk

The Indian tyre industry includes several established domestic and multinational manufacturers with signi cant brand equity, distribution and R&D capability.

Viaz does not intend to compete across every segment. Its approach is to build relevance selectively in two-wheelers, three-wheelers, LCVs and agricultural applications and to grow from a relatively small base within a very large addressable market.

Human Capital

Viazs manufacturing transformation requires more than machinery. Rubber formulation, mixing, extrusion, curing, process control, maintenance, testing and quality assurance are knowledge-intensive activities.

The Company has built an employee base of more than 300 people and has accumulated nearly two decades of operating knowledge in rubber and tube manufacturing. Its transition towards tyre manufacturing increases the importance of technical training, process discipline, safety and retention of skilled manufacturing personnel.

As operations scale, the organisation will need to continue building capability across production, quality, product development, supply chain, sales, channel management and nance so that organisational capacity grows alongside physical capacity.

Internal Controls and Governance

As a listed manufacturing company entering a larger scale of operations, Viaz recognises the increasing importance of systems, nancial controls, inventory monitoring, approval processes and governance.

The expansion in manufacturing assets, product categories, working capital and distribution requires corresponding strengthening of internal processes. Managements focus remains on developing controls appropriate to the scale and complexity of the business and on maintaining oversight across procurement, production, inventory, receivables, capital expenditure and statutory compliance.

Outlook: From Capacity Creation to Capacity Utilisation

Viaz Tyres is entering the next phase of its growth journey, supported by its established presence in butyl inner tubes and the addition of complete tyre manufacturing capabilities.

The Company will remain focused on gradually improving capacity utilisation, strengthening its distribution network and expanding its presence across two-wheeler, three-wheeler, LCV and agricultural tyre categories. The existing tube business will continue to provide a stable foundation as the tyre business scales progressively.

Going forward, management will maintain its emphasis on product quality, manufacturing ef ciency, working-capital discipline and prudent capital allocation. Initiatives towards renewable energy, backward integration and broader rubber-product capabilities will also be pursued in a calibrated manner.

With an established manufacturing base, experience in the replacement market and an expanding product portfolio, the Company remains focused on building a stronger and more diversi ed tyre and rubber-products business while pursuing sustainable growth.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

(Amount in lakhs)

	Standalone		Consolidated
Particulars	FY 25-26	FY 24-25	FY 25-26	FY 24-25
Revenue from Operations	8,298.38	5,725.88	10,834.36	5,725.88
Other Income	94.57	52.28	94.57	52.67
Total Income	8,392.95	5,778.55	10,928.93	5,778.55
Direct & other related expenses	6,994.52	4,479.67	9,316.85	4,479.67
Employee Bene t Expenses	171.43	176.35	171.43	176.35
Financial Cost	227.28	147.87	228.67	147.87
Depreciation and amortisation expenses	184.13	186.36	184.13	186.36
Other Expenses	381.94	342.05	389.06	342.05
Total Expenses	7,959.30	5,332.30	10,290.14	5,332.30
Pro t/(Loss) before Exceptional items & Tax	433.65	446.25	638.79	446.25
Less: Exceptional items	0.00	0.00	0.00	0.00
Pro t/(Loss) before Tax	433.65	446.25	638.79	446.25
Less: Total Tax Expenses	90.94	112.45	90.94	112.45
Pro t/ (Loss) after tax	342.71	333.81	547.85	333.80
Earnings per Equity Share ( ) - Face value of 10/	2.67	2.72	4.11	2.72

DETAILS OF KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR:

Description	As at March 31, 2026	As at March 31, 2025	Variance	Remark
Current Ratio	2.06	2.35	-10%	The Variance is Below +/- 25%
Debt Service Coverage ratio	3.80	5.24	19%	The Variance is Below +/- 25%
Debt-Equity Ratio	1.38	1.27	8%	The Variance is Below +/- 25%
Return on Equity Ratio	7	9	-25%	Equity capital raised & Margins reduced in CY
Inventory Turnover Ratio	5.09	3.43	-7%	Stronger market demand
Trade Receivables Turnover Ratio	3.34	2.27	47%	Receivables reduced in CY
Trade Payable Turnover Ratio	25.90	14.02	85%	Higher market demand & payables reduced in CY
Net Pro t Ratio	4	6	-29%	Margins reduced in CY
Return on Capital employed	8	11	-26%	Earnings reduced and Debt increased.