Alicon Castalloy Ltd Management Discussions

GLOBAL ECONOMY

In 2024, the global economy remained steady and managed to navigate a backdrop of ongoing macroeconomic pressures and geopolitical turmoil. Heightened tensions from the conflict in Ukraine and disruptions along the Red Sea continued to affect international shipping and strained supply networks. Trade disagreements between leading economies persisted and added to the external challenges faced by manufacturers and consumers worldwide.

According to the International Monetary Funds World Economic Outlook, global GDP growth reached 3.3% during the year. Regional performance was uneven, with advanced economies seeing a slowdown in activity while many developing regions, particularly across Asia, sustained more consistent levels of expansion.

On the inflation front, there was a clear improvement compared to the previous year. The worldwide inflation rate eased to 5.7% in 2024, which marked a decrease from 6.7% in 2023. Developed countries are expected to achieve targeted inflation levels sooner, with average rates of 2.6% during the year. In contrast, price pressures in emerging markets are anticipated to ease at a more gradual pace. (Source: World Economic Outlook, IMF, Reuters)

P - Projected

The global economy is expected to uphold a steady growth trajectory, with projections indicating expansion of 2.8% in 2025 and 3.0% in 2026. This outlook reflect s a generally favourable environment supported by ongoing progress in major advanced economies as well as key emerging markets.

Growth prospects for the United States are forecast at 1.8% for 2025 and 1.7% in 2026. These figure s take into account anticipated changes in the labour market and a possible slowdown in consumer expenditure as policy and market conditions evolve.

In the Eurozone, economic recovery is anticipated, with growth rates likely to reach 0.8% in 2025 and increase to 1.2% by 2026. These improvements are primarily attributed to a projected rise in consumer spending and a continuing decline in inflation rates across the region.

Emerging and developing economies, especially within Asia, are expected to maintain relatively resilient growth, contributing positively to global momentum due to structural reforms, investment in flow s, and expanding domestic demand.

(Source: World Economic Outlook, IMF)

INDIAN ECONOMY

Indias economy exhibited steady expansion and resilience during FY 2024-25, maintaining its standing as a leading global economy with strong growth momentum. According to the Second Advanced Estimate (SAE), Indias real GDP growth stands at 6.5% in FY 2024-25, reflect ing a moderation from the 9.2% rise recorded in the First Revised Estimates for FY 2023-24. This consistent performance demonstrates the nations firm economic base, effective policy measures, a vibrant services sector, and robust domestic consumption, all supporting a positive outlook for Indias long-term economic trajectory.

Indias economic p rofile continues to strengthen, as the country now ranks as the worlds fourth-largest economy by nominal GDP and third-largest by purchasing power parity (PPP). Ambitious national milestones have been set with a goal of reaching a USD5 Trillion economy by FY 2027-28 and USD30 trillion by 2047. Achieving these targets will depend on ongoing infrastructure development, continued government reforms, and broader technological adoption. The FY 2025-26 Budget reflect s this approach with capital expenditure increasing to Rs. 11.21 Lakh Crore, accounting for 3.1% of GDP.

Major policy initiatives and increased investment in both physical and digital infrastructure are central to Indias accelerated growth and economic self-reliance. Key programmes such as Make in India and the Production-Linked Incentive (PLI) scheme have provided important impetus to this progress.

(Source: Press Information Bureau, World Economic Outlook, IMF, PIB)

Outlook

Indias economy is projected to expand by 6.2% in FY 2025-26. Estimates suggest that by 2030, the country is set to become the worlds third-largest economy, supported by investment in infrastructure, higher private sector capital spending, and growth in finan cial services. Ongoing reforms are expected to help sustain this progress over the longer term.

Initiatives such as Make in India 2.0, ongoing measures to improve the business environment, and the Production-Linked Incentive (PLI) scheme are focussed on strengthening infrastructure, manufacturing, and exports, positioning India as a key participant in global manufacturing. In fiat ion is anticipated to align with targets by the end of 2025, which could allow for a more supportive monetary policy. Capital formation is likely to b enefit from infrastructure projects and government support, while rural demand should rise due to schemes like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

The Union Budget 2025-26 adopts a strategy intended to foster both immediate and long-term growth. Prioritising infrastructure, boosting domestic manufacturing, and increasing disposable income, the budget is designed to sustain economic expansion whilst maintaining fiscal prudence.

A notable provision is the raised income tax exemption limit to Rs. 12.75 Lakhs per year, set to improve disposable income for middle-class households and encourage greater consumer spending. Substantial infrastructure investment, particularly in roads and railways, aims to enhance connectivity and support job creation. The budget also reinforces the PLI scheme in field s such as electronics and textiles, while continuing to endorse the Make in India vision for strengthening Indias presence in global manufacturing.

(Source: Press Information Bureau, World Economic Outlook, IMF)

INDUSTRIAL OVERVIEW

Metal Casting Market

The global metal casting market was valued at approximately USD 177.28 Billion in 2024 and is forecast to reach around USD 325.69 Billion by 2033, growing at a compound annual growth rate (CAGR) of about 6.94% over 2025-2033. This growth is primarily driven by accelerating industrialisation, rising demand from the automotive sector, and expanding infrastructural developments worldwide.

The Asia- Pacific region remains dominant, holding over_ 54% market share in 2024, fuelled by increased manufacturing capabilities and substantial investments in infrastructure in countries such as China and India. The automotive industrys shift towards lightweight and fuel-e fficien t vehicles has s ignifi cantly boosted demand for advanced casting processes, particularly aluminium casting, which offers favourable strength-to-weight characteristics and recyclability.

Technological advancements such as automation, additive manufacturing (3D printing) in casting, are continuously enhancing production e fficien cy and improving product quality. Additionally, growing environmental concerns have prompted the adoption of sustainable casting methods, aligning the industry with global sustainability objectives.

The automotive and transportation sector is the largest end-user industry with demand further supported by construction, aerospace, and heavy machinery also contribute substantially to market growth. Despite strong fundamentals, the industry continues to face challenges from supply chain disruptions and price volatility in raw materials, which necessitate strategic investments in research and the d iversifi cation of supply chains to ensure resilience and competitiveness.

(Source: IMARC Group)

The Indian metal casting market reached a value of approximately_ USD13.2 Billion in 2024_ and is expected to grow to around USD21.9 Million by 2033, registering a CAGR of_5.5% from 2025 to 2033. This steady growth is supported by robust demand from the automotive sector, rapid industrialisation, and expanding infrastructural projects across the country.

Metal casting remains the process of choice owing to its cost-effectiveness, ability to reduce scrap waste, and suitability for producing complex, lightweight components ?€“ especially using non-ferrous metals like aluminium, zinc, and magnesium. The surge in disposable incomes has increased demand for lightweight vehicles, catalysing the use of aluminium and magnesium alloys. Meanwhile, the shift towards electric vehicles has ampli_ed demand for precision cast components for hybrid and EV platforms.

Beyond automotive, metal casting is crucial for sectors such as construction, aerospace, machinery, home appliances, and medical devices. Sand casting is the dominant method, and cast iron holds the largest material share. The automotive and transportation segment leads in market share, with key cast products including alloy wheels and body assemblies.

Technological advancements, including automation, 3D printing, and digital manufacturing integration, are enhancing production quality and e fficien cy. Growing government initiatives such as "Make in India" and infrastructure development projects are expected to sustain market growth. Furthermore, manufacturers are investing in sustainable casting methods that prioritise energy e fficien cy and waste reduction, aligning with evolving environmental regulations. (Source: IMARC)

The Indian foundry market is poised for substantial growth, estimated to reach approximately USD25.57 Billion in 2025_and expected to expand to around USD42.61 Billion by 2030, with a CAGR of about 11.13% over 2025 to 2030. This growth is predominantly driven by rapid

India ranks as the worlds second-largest casting producer, with a production volume of around_12.49 Million tonnes, trailing only China. The automotive industry is a key growth engine, with India producing close to_25.93 Million vehicles, supported by rising vehicle sales and increasing demand for auto components that rely on castings. Additionally, infrastructure development projects have spurred demand for heavy machinery and equipment, further boosting the requirement for metal castings.

The foundry sector in India is characterised by a s ignifi cant presence of micro, small, and medium enterprises (MSMEs), which contribute over 96% of registered enterprises and play a pivotal role in employment generation, providing jobs to an estimated_ two Million workers directly and indirectly. Government initiatives such as_ Make in India ,_ Skill India, and_ Startup India _ are fostering the growth and technological capabilities of these foundries.

Foundries are increasingly investing in modern technology and equipment to improve energy e fficien cy, production processes, and product quality. These advancements are expected to raise operational e fficien cy and p rofit margins. The sector is also witnessing a focus on environmentally sustainable practices to meet evolving regulatory standards.

AUTOMOBILE AND AUTO COMPONENT INDUSTRY

The Indian automobile industry is a cornerstone of the countrys manufacturing sector and a s ignifi cant contributor to the economy. As of FY 2024-25, the industry witnessed a remarkable recovery, with overall vehicle sales reaching approximately 4.5 Million units, marking a growth of 12% compared to FY 2023-24. This growth trajectory was driven by a resurgence in consumer demand, a trend towards premiumisation, favourable government policies, and advancements in technology.

It is anticipated that the average price of luxury automobiles will reach Rs. 1 Crore, while mass-market vehicles will see prices rise to Rs. 13 Lakhs. This is due to price increases of 2-4% implemented by manufacturers to mitigate rising costs.

In FY 2024-25, Indias automobile industry demonstrated remarkable resilience and growth, solidifying its position as the worlds third-largest automotive market. The overall market size of the Indian automobile industry reached approximately USD137.06 Billion, reflect ing the sectors strong performance. The sectors expansion was driven by evolving consumer preferences, policy support, and s ignifi cant investments in infrastructure and technology. (Source: Mordor Intelligence)

The industry witnessed a total production of 30.61 Million vehicles, encompassing passenger vehicles, commercial vehicles, three-wheelers, two-wheelers, and quadricycles, marking an 11.3% increase from the previous years 27.5 Million units. This surge was primarily attributed to heightened demand across various segments, reflect ing positive consumer sentiment and economic recovery.

The electric vehicle market in India, though still emerging, demonstrated promising growth. EVs accounted for approximately 2.5% of the 4.3 Million cars sold in 2024, representing a 20% increase in EV sales compared to the previous year. This growth outpaced the overall car market expansion of 5%, signalling increasing consumer acceptance and interest in electric mobility solutions. The governments push towards electric mobility, through initiatives such as the FAME India Scheme, played a crucial role in promoting EV adoption.

Automakers responded proactively to this trend, with plans to introduce nearly a dozen new EV models in 2025. These upcoming models are expected to feature longer driving ranges and faster charging times, addressing two critical factors in fluenc ing consumer adoption of EVs.

Automobile Domestic Sales Trend

						(in Numbers)
Category	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25
Passenger Vehicles	27,73,519	27,11,457	30,69,523	38,90,114	42,18,746	43,01,848
Commercial Vehicles	7,17,593	5,68,559	7,16,566	9,62,468	9,67,878	9,56,671
Three-Wheelers	6,37,065	2,19,446	2,61,385	4,88,768	6,91,749	7,41,420
Two-Wheelers	1,74,16,432	1,51,20,783	1,35,70,008	1,58,62,087	1,79,74,365	1,96,07,332
Quadricycles	942	(12)	124	725	725	120
Tractors	7,05,011	8,99,407	8,42,266	9,45,311	8,67,237	9,39,713
GrandTotal	2,22,50,562	1,95,19,640	1,84,59,872	2,21,49,473	2,47,20,700	2,56,07,391

(Source: Society of Indian Automobile Manufacturers)

The Indian governments commitment to sustainable mobility was evident in the Union Budget 2025-26, which introduced several measures to support the automotive sector. Key among these was the proposed elimination of basic customs duty on 35 capital goods required for EV battery manufacturing, aiming to lower production costs and boost domestic manufacturing, thus making electric vehicles more affordable.

The budget also emphasised continued support for the Production-Linked Incentive (PLI) scheme to further boost domestic EV production, reduce import reliance, and promote self-reliance. Increased budget allocations were also designated for expanding EV charging infrastructure across highways and urban areas, addressing range anxiety and supporting broader EV adoption.

Despite the positive growth, the automobile industry faced challenges in FY 2024-25, including supply chain disruptions, especially in semiconductor availability, which impacted production schedules. Additionally, fluct uating raw material prices and regulatory changes posed hurdles for manufacturers. However, the sector demonstrated resilience through strategic partnerships and investments in local manufacturing capabilities.

Auto Component Industry

Indias auto component industry serves as a crucial driver of macroeconomic growth and employment. It contributes 2.3% to Indias GDP and directly employs over 1.5 Million people. Projections indicate this sector will account for 5-7% of Indias GDP by 2026. The Automotive Mission Plan (2016-26) forecasts direct incremental employment for 3.2 Million individuals by the same year, contributing to the industrys overall support of over 37 Million jobs.

The industry comprises diverse players, ranging from large corporations to micro entities, spread across various national clusters. It is broadly categorised into organised and unorganised sectors. While the unorganised sector typically handles low-value items for the aftermarket, the organised sector serves OEMs with high-value precision instruments. The industrys turnover reached Rs. 6.14 Lakh Crore (USD74.1 Billion) in FY 2023-24, representing a 9.8% revenue growth compared to FY 2022-23. Domestic OEM supplies contributed approximately 54% to this turnover, growing by 8.9% to Rs. 5.18 Lakh Crore (USD62.4 Billion). The domestic aftermarket also saw a 10.0% growth, reaching Rs. 9.38 Lakh Crore (USD11.3 Billion) in FY 2023-24.

The auto component industry stands as a leader in exports. In FY 2023-24, export value was estimated at USD21.2 Billion. North America accounted for 33% of total exports, increasing by 5%. Europe contributed 32%, with a 12% increase. Asia represented 24%, showing fiat growth. Key export items included drive transmission and steering, engine components, body and chassis parts, and suspension and braking systems. This market share has expanded s ignifi cantly, driven by rising domestic demand from a growing middle class and increasing global exports. The demand for Indian auto components has encouraged the entry of several Indian and international players into the sector. Over FY 2016 - FY 2024, the industry registered a CAGR of 8.63%, reaching USD74.1 Billion in FY 2023-24. (Source: IBEF)

Outlook

The Indian automobile industry is projected to continue its growth trajectory, with total vehicle sales expected to exceed 5 Million units, with several key factors in fluenc ing its trajectory. The passenger vehicle segment is expected to maintain its upward trend, driven by sustained consumer interest in SUVs and the introduction of new models catering to this demand. Automakers are likely to focus on innovation and feature enhancements to attract a broader customer base.

The commercial vehicle sector is anticipated to experience a rebound, supported by increased infrastructure investments and economic activities. Government initiatives aimed at boosting infrastructure development are expected to stimulate demand for commercial vehicles, particularly in the construction and logistics sectors.

The two-wheeler market is projected to sustain its growth momentum, supported by strong rural demand and the introduction of affordable models. Additionally, the emergence of electric two-wheelers may contribute to the segments expansion, offering consumers cost-effective and environmentally friendly transportation options.

The electric vehicle market is poised for exponential growth, with projections indicating sales could reach 3 Lakh units by FY 2025-26. As manufacturers ramp up production and expand their EV offerings, along with continued government support, the transition towards sustainable mobility is expected to gain s ignifi cant traction. This surge will be driven by new model launches, improved charging infrastructure, and supportive government policies.

(Source: Siam, Reuters, Reuters, Zee Business, The Times of India, Reuters)

GOVERNMENT INITIATIVES

The Government of India actively encourages foreign investment in the automotive sector, allowing 100% Foreign Direct Investment (FDI) via the automatic route. This liberal policy, combined with strategic initiatives, aims to boost domestic manufacturing, accelerate electric vehicle (EV) adoption, and cultivate a robust automotive ecosystem.

Key recent initiatives include:

?€  PM E-DRIVE Scheme: Launched with a budget of USD1.30 Billion ( Rs. 10,900 Crores) from 1 st October, 2024, to 31 st March, 2026. This comprehensive initiative seeks to s ignifi cantly accelerate EV adoption, establish extensive charging infrastructure, and promote a self-reliant EV manufacturing ecosystem, covering e-buses, commercial EVs, and public charging stations.

?€  Electric Mobility Promotion Scheme (EMPS): Implemented for four months (1 st April, 2024, to 31 st July, 2024) with a Rs. 500 Crore outlay. This fund-limited scheme targets the procurement of 372,215 electric vehicles, primarily e-2 wheelers (333,387 units) and e-3 wheelers (38,828 units), aiming to sustain EV sales momentum post-subsidy.

?€  Production Linked Incentive (PLI) Scheme for Automobile and Auto Components: Extended by one year in January 2024, b enefit s now apply for five consecutive finan cial years until 31 st March, 2028. This extension aims to further boost domestic manufacturing of Advanced Automotive Technology (AAT) products, encourage deep localisation, and attract investments, particularly for electric and hydrogen fuel-cell components.

?€  EV Incentive Scheme: The Ministry of Heavy Industries (MHI) plans a new EV incentive scheme to further encourage electric vehicle purchases and enhance charging infrastructure, aligning with the interim budgets focus on eco-friendly transport. A substantial allocation of USD321.5 Million ( Rs. 2,671.33 Crores) for FY 2024-25 is earmarked for this purpose, expected to strengthen green mobility and the national EV ecosystem. (Source: IBEF)

COMPANY OVERVIEW

Alicon Castalloy Limited (referred as Alicon or the Company) is a leading integrated manufacturer of aluminium castings in India, with nearly five decades of industry experience. Its operational strength comes from a unique blend of expertise drawn from three key entities: Alicon Castalloy, Atlas Castalloy, and Illichmann Castalloy. This combination brings together the precision of European engineering, the meticulous standards of Japanese quality, and the inventive e fficien cy of Indian manufacturing. The Company has developed a strong specialisation in advanced casting domains, including the Pro-Cast and Magma sectors.

As a provider of comprehensive engineering solutions for aluminium alloy castings, Alicon serves a wide range of vital industries. Its client base spans the automotive, infrastructure, aerospace, energy, agriculture, defence, and healthcare sectors, with a presence both within India and global markets.

The Companys manufacturing operations are supported by four state-of-the-art facilities strategically situated in Shikrapur and Chinchwad (Maharashtra), Binola (Haryana), and Slovakia. These technologically advanced plants are meticulously designed to optimise production e fficien cy, reducing time-to-market and enhance cost-effectiveness. Recognised for operating one of the largest aluminium foundries in India, Alicon a dynamic product development pipeline and international presence in 18 countries. The Company has an international marketing office located in Austria.

Alicon provides a full spectrum of high-quality casting services. This encompasses meticulous design, precision engineering, diverse casting methodologies, advanced machining, assembly, painting, and surface treatment. The Company is a pioneer in India for the application of both Low Pressure Die Casting (LPDC) and Gravity Die Casting (GDC) technologies. Its comprehensive capabilities, combined with an internally developed multistage operational methodology, have made it a preferred supplier to numerous domestic and international Original Equipment Manufacturers (OEMs) and prominent Tier-I non-automotive companies. Alicon consistently delivers technologically advanced and cost-e fficien t solutions throughout the product lifecycle.

FINANCIAL OVERVIEW

Alicons strategic direction continues to centre on core objectives designed to drive expansion and ensure long-term viability. The Company is consistently refin ing its product portfolio, with a notable increase in the proportion of Passenger Vehicles (PV) and Commercial Vehicles (CV) components within its sales. This segment now represents 60% of total sales for the finan cial year 2024-25, a rise from 52% in the preceding finan cial year. This deliberate pivot towards products with higher margins has been a s ignifi cant factor in boosting sales volumes and enhancing overall p rofit ability.

Furthermore, Alicons client base is transforming, attracting prestigious international partners, including prominent Original Equipment Manufacturers (OEMs) and Tier 1 enterprises. This growing recognition within the industry highlights the Companys successful evolution from a mere provider of cost-effective components to a valued solutions partner, distinguished by its innovative capabilities, technological prowess, and design expertise.

Parallelly, the Company remains dedicated to ongoing initiatives aimed at reducing operational expenditures. By applying the principles of Kaizen, Alicon achieves e fficien cies at a granular level across its operations. Through close collaboration with its customers, Alicon has successfully implemented necessary price revisions, which have further strengthened its finan cial outcomes.

Alicons commendable performance during FY 2024-25 was s ignifi cantly in fluenc ed by several strategic advancements, including the successful introduction of new components and client relationships, a broadened revenue base, and sustained momentum across its international operations. The Companys continuous progression and transformation efforts have yielded tangible enhancements, leading to substantial overall growth.

Financial Performance FY 2024-25

		( Rs.	in Crores)
Particulars	FY 2024-25	FY 2023-24	Y-o-Y (%)
Revenues	1,724	1,563	10%
EBITDA	198	199	-1%
P rofit BeforeTax	62	81	-23%
(PBT)
P rofit AfterTax (PAT)	46	61	-25%

For the year ended 31 st March, 2025, Alicon reported impressive revenue totalling Rs. 1,724 Crores, representing an 10% Y-o-Y increase from Rs. 1,563 Crores recorded in the preceding fiscal . This upward trajectory was primarily attributable to a deliberate strategic emphasis on higher-value opportunities within the Passenger and Commercial Vehicle segments, alongside the successful acquisition of prestigious global clientele. Alicons dedication to building capabilities for emerging technology platforms in the automotive sector, expanding into new geographical territories, and refin ing its value engineering and overall capability enhancement initiatives further contributed to this robust performance.

The Companys EBITDA for FY 2024-25 stood at Rs. 198 Crores, reflect ing a 1% decline from Rs. 199 Crores in FY 2023-24. The EBITDA margin also declined, reducing to 11.5% from 12.7% in the prior year ?€“ a contraction of 120 basis points.

P rofit Before Tax (PBT) experienced a 23% year-on-year decline, decreasing from Rs. 81 Crores in FY 2023-24 to

Rs. 62 Crores in FY 2024-25. Similarly, P rofit After Tax (PAT) declined by 25%, reaching Rs. 46 Crores compared to Rs. 61 Crores in the previous year. Furthermore, the Companys Return on Capital Employed (ROCE) declined from 14.5% in FY 2023-24 to 11.5% in FY 2024-25. The Companys long-term credit rating by CRISIL was reaf firm ed at A with a Positive outlook.

Key Ratio Analysis
Ratios	31 st March		Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year)
	2025	2024	(%)
Debtors Turnover Ratio (times)	3.37	3.24	4%
Inventory Turnover Ratio (times)	11.88	9.41	26%
Interest Coverage Ratio (times)	4.45	4.89	-9%
Current Ratio (times)	1.22	1.36	-10%
Debt to Equity Ratio (times)	0.58	0.55	5%
Operating P rofit Margin (%)	11.48%	12.74%	-10%
Net P rofit Margin (%)	3.61%	5.19%	-30%
Return on Net Worth (RONW) (%)	7.78%	11.03%	-29%

OPERATIONAL OVERVIEW

FY 2024-25 was a year of strategic execution and operational resilience for Alicon Castalloy Limited. The company solidi_ed its position as a leading supplier of light alloy casting solutions, leveraging its integrated manufacturing capabilities and d iversifi ed customer base to navigate a dynamic global environment.

A key operational highlight was the continued focus on expanding the product portfolio, particularly in the high growth e-mobility segment. Alicons strategic focus in this area paid off as it successfully scaled production of motor housings, aligning with the rising demand for electric vehicles. The company also commenced production for a new controller housing supplied to the USA market and developed an innovative E-axle with an integrated thermal management solution, showcasing its commitment to advanced technologies.

Operational e fficien cy remained a core priority, with continuous efforts to optimise processes and manage costs effectively across all facilities. The Companys global footprint, encompassing plants in India and Slovakia, contributed to its ability to serve a wide array of international and domestic clients. Alicon continued to be a preferred supplier to major Original Equipment Manufacturers (OEMs) and Tier-1 companies across various sectors, including automotive (two-wheelers, passenger vehicles, commercial vehicles) and non-automotive segments.

Despite broader market challenges, particularly in certain vehicle segments and export markets, Alicons strategic initiatives, such as product d iversifi cation and market expansion, helped maintain operational stability. The Companys ability to deliver a diverse range of components across established and emerging technologies positioned it well for future growth. Alicons long-term fundamentals remain strong, and its operational strategies are geared towards capitalising on emerging opportunities in the evolving automotive and non-automotive landscapes.

STRATEGICAL OUTLOOK SWOT ANALYSIS

Strengths

?€  Market Leadership and Reputation: The Company is a well-established and leading player in Indias aluminium casting sector, with a strong reputation built over five decades.

?€  Global Quality Standards: Adherence to globally recognised accreditations and the infusion of EuropeanengineeringandJapanesequalitystandards provide a s ignifi cant competitive advantage.

?€  Integrated Capabilities: Integrated, in-house capabilities, including design, tooling, and advanced technology centres, enable the Company to offer end-to-end solutions and shorten the product development lifecycle.

?€  D iversifi ed Client Base: Alicon maintains a broad and d iversifi ed client base across critical sectors, including automotive, industrial, and infrastructure, providing a natural hedge against volatility in any single segment.

?€  Strategic Manufacturing Footprint: State-of-the-art facilities in India and Slovakia ensure consistent, high-quality output and position the Company to serve both domestic and international markets effectively.

?€  E-Mobility Expertise: A demonstrated ability to innovate and successfully scale production for key e-mobility components like motor housings and E-axles, positioning the company at the forefront of the industry shift.

?€  New Strategic Vertical: The recent establishment of a dedicated vertical for Defense, Aerospace, and Railways (DAR) signals a proactive and focussed strategy to diversify beyond automotive and tap into high-potential, high-growth sectors.

Weaknesses

?€  Cyclicality of Key Markets: A s ignifi cant portion of revenue remains tied to the automotive industry, which is cyclical and sensitive to economic fluct uations and consumer sentiment.

?€  High Capital Expenditure: The capital-intensive nature of operations requires continuous and substantial investments in technology, automation, and capacity upgrades, which can impact short-term p rofit ability as new units are not yet operating at full scale.

?€  Vulnerability to Supply Chain Disruptions: While the company has established supply chain relationships, specific customer-related production shutdowns and geopolitical events can still disrupt order volumes and impact operational stability, as observed in Q1 FY26.

Opportunities

?€  Growth in E-Mobility: The accelerating shift toward electric vehicles (EVs) and stricter emissions norms are driving a secular increase in demand for lightweight aluminium components, a core competence of Alicon.

?€  Government Initiatives: Continued government support through "Make in India" and Production-Linked Incentive (PLI) schemes is enhancing domestic manufacturing growth and reducing reliance on imports.

?€  Non-Automotive Market Expansion: The new DAR vertical represents a s ignifi cant opportunity to grow in high-value, non-automotive sectors like aerospace, defence, and renewable energy, diversifying the revenue mix.

?€  Technological Advancements: Further integration of automation, robotics, and digital technologies in manufacturing processes can lead to improved e fficien cy, cost optimisation, and enhanced competitiveness.

?€  Global Market Recovery: Potential for expansion into new export markets as global industrial and automotive production is forecasted to recover and stabilise in the latter half of 2025 and beyond.

Threats

?€  Geopolitical and Trade Tensions: Persistent global geopolitical uncertainties and potential tariff escalations pose a risk to export dynamics and the stability of raw material imports.

?€  Raw Material Price Volatility: Fluctuations in the price of raw materials, particularly aluminium, in fluenc ed by global supply-demand imbalances, can pressure gross margins despite some relief from easing alumina prices.

?€  Supply Chain Disruptions: Ongoing risks in the global automotive supply chain and the potential for shortages of key components (e.g., rare earth magnets for EVs) can affect production schedules and order fulfil ment.

?€  Heightened Competition: Intense competition from both domestic players and international foundries that are also adopting advanced manufacturing technologies could put pressure on market share and pricing.

HUMAN RESOURCES

Alicon had a team of 880 full-time staff members as of 31 st March, 2025. The Company believes its employees are key to its ongoing success and long-term stability. To support this, a strong set of HR policies has been carefully put together and consistently applied, creating a positive and helpful work environment. These policies are designed to attract talented individuals and help keep them with the Company. The Companys growth clearly shows the strong commitment, skills, and consistent enthusiasm of its people.

The Human Resources department focusses on helping employees grow professionally through s pecifi c training and skill-building programmes. It also actively promotes a good work-life balance, recognising how important this is for overall employee well-being. The Company is dedicated to creating a workplace that is safe, productive, and satisfying for everyone. Our HR plans are carefully aligned to match individual career goals with the Companys broader objectives, supporting well-rounded development for all employees.

A core part of the Companys culture is its 3R framework: Re_ection, Resilience, and Reimagination.These principles, along with the cultural values of Agility, Innovation, and Passion, are important for keeping employees motivated and for improving both e fficien cy and overall productivity.

To further support employee engagement and performance, several s pecifi c HR initiatives are in place. These include offering attendance-based incentives and pay adjustments for Senior Operators. A clear production incentive policy is used to boost output. Additionally, the Leave Policy ensures employees get enough time off. The Company also runs a dedicated programme, called HOPE, which helps with the smooth transition of contract associates, allowing 3-4 operators to move from contractual to permanent roles each year.

RISK MANAGEMENT

While there are numerous opportunities for business growth across various segments and regions, the organisation operates within a constantly changing environment that presents several inherent risks. To ensure continuous operations and sustainable growth, it is essential to minimise or mitigate the potential adverse effects of these risks. The company has implemented a comprehensive risk management system designed to promptly identify, evaluate, and respond to critical business risks. The principal risks and their associated strategies for alleviation are outlined below:

Risks	Impact	Mitigation Strategy
Geopolitical	Global geopolitical dynamics, while not directly involving India in current conflict s, can nonetheless create ripple effects that in fluenc e the domestic economy. Such international instability frequently leads to disruptions within global supply chains and contributes to inflation ary pressures, circumstances that the Company must navigate within this broader macroeconomic environment.	The Company operates in 18 countries, minimising dependence on any single region. It actively monitors global trends, geographical risks, and operational viability. With a broad presence in diverse sectors and a strong customer base, the Company\u2019s comprehensive business continuity plan guarantees resilience in uncertain times.
Demand Slowdown Risk	Any deceleration in economic activity, coupled with persistent inflation ary trends or other macroeconomic shifts, could curtail overall demand for products. This scenario would invariably impact the Companys operational performance, both within India and across its international markets. A s ignifi cant aspect of the Companys revenue generation remains intrinsically linked to the vitality and expansion of the countrys manufacturing sector, making it susceptible to fluct uations in this key industry.	In the face of global economic challenges, India\u2019s economic growth and falling inflation are anticipated to drive expansion across multiple sectors. The Company\u2019s broad presence across diverse industries and regions allows it to effectively cushion against slowdowns in particular areas. Additionally, a key growth strategy focusses on broadening its product range with innovative offerings, further diversifying its business and reducing risks related to fluct uating demand.
Raw Material Risk	Operationalcontinuityand finan cialperformance are also sensitive to challenges concerning raw materials. Issues such as limited availability, potential delays or interruptions in supply, and volatility in raw material costs can directly affect the Companys manufacturing processes. These factors may result in elevated input costs, thereby in fluenc ing overall p rofit ability.	The Companys material needs are minimal, primarily because alloy variants have been restricted through the standardisation of the alloy policy. To address margin pressures resulting from raw material price fluct uations, the Company incorporates a pass-through clause in its sales contracts.
Competition Risk	The inherent attractiveness and growth potential of the industry naturally draw a multitude of market participants. This expanding competitive landscape could exert pressure on the Companys business operations and its strategic path of expansion.	The Company offers complete engineering solutions for aluminium alloy castings, positioning itself as a single- source provider. With 50 years of industry experience, it has built a reputation for technological excellence, strong brand presence, a wide range of innovative products, an in-house R&D department, and solid business operations. Additionally, local government support for domestic manufacturers helps reduce competitive pressure from international competitors.

INTERNAL CONTROL SYSTEMS

The Company has put in place strong internal control systems that match the size, nature, and complexity of its business. This framework outlines the various processes, guidelines, and procedures that direct operations. The internal controls are designed to protect assets and infrastructure, enhance operational e fficien cy, optimise resource use, manage finan cial operations, address evolving business risks, and ensure compliance with relevant laws and regulations. They also safeguard against unauthorised use and conduct thorough risk assessments.

These controls are regularly reported to management to support informed decision-making. Effective governance, a vigilant finan ce team, and independent internal reviews strengthen the companys ability to adapt to new challenges. Continuous reviews and testing maintain the effectiveness of the internal control system across all business areas.

The Audit Committee closely monitors business operations to ensure compliance. The internal audit function evaluates critical audit areas independently, and the Audit Committee reviews these find ings periodically.

The Board receives observations and recommendations from the Audit Committee and takes necessary actions to address any issues i dentifi ed.

CAUTIONARY STATEMENT

The Management Discussion and Analysis includes statements that outline the Companys goals, forecasts, estimates, and expectations, which may be considered "forward-looking statements" under applicable laws and regulations. These statements are based on informed judgements and estimates. The Companys past performance is not necessarily a predictor of future outcomes, and actual results may vary s ignifi cantly from those stated or implied. These forward-looking statements are subject to various risks and uncertainties, such as economic conditions impacting supply and demand, market price fluct uations both domestically and internationally, changes in government regulations and policies, tax laws, availability and costs of raw materials, and other legal factors. The Company does not undertake any obligation to publicly update, amend, or revise any forward-looking statements in light of new developments, information, or events.