Shivam Autotech Ltd Management Discussions

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Industry Overview

Indias auto component industry continues on a strong growth trajectory, driven by a resurgence in domestic vehicle demand, a push toward localisation, and rising global sourcing opportunities. As per the Automotive Component Manufacturers Association (ACMA), the sector recorded an 11% year-on-year growth in H1 FY25, reaching Rs.3.32 lakh crore (US$ 38.4 billion). With a CAGR of 7-8%, the industry is projected to reach Rs.16.7 lakh crore (US$ 200 billion) by 2026.

Retail growth remained modest but stable, with the Federation of Automobile Dealers Associations (FADA) reporting a 4.87% YoY increase. Two-wheelers led the recovery at 7.71%, while commercial vehicles remained nearly flat at -0.17%, underscoring the impact of variable monsoons, financing challenges, and evolving consumer sentiment.

A particularly encouraging trend was the robust demand in rural areas. Rural two-wheeler sales grew 8.39% YoY, outperforming urban growth at 6.77%. Similarly, rural three-wheeler sales surged 8.70%, compared to just 0.28% in urban regions. Passenger vehicles also followed this pattern, with rural sales rising 7.93% versus 3.07% in urban markets—highlighting rural Indias growing consumption power and importance to the sectors long-term demand fundamentals.

Electric vehicles continued to gain ground across segments, with overall EV sales in India crossing 1.6 million units in FY 2024-25, marking a growth of over 40% year-on-year. Twowheeler EVs accounted for the largest share of this growth, with the segment alone contributing nearly 56% of total EV volumes. This surge in adoption is reshaping component demand and opening new avenues for suppliers aligned with electrification trends.

Automobile Domestic Sales Trends

						(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	7,17,599	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
Grand Total	2,15,45,551	1,86,20,233	1,76,17,606	2,12,04,162	2,38,53,463	2,56,07,391

Advantages in India

1. Robust Demand

• India is the worlds third-largest automobile market, backed by a young demographic, growing middle class, and increasing disposable income.

• The EV market is poised for exponential growth, with projections of 10 million EVs sold annually by 2030.

• The domestic push to reduce import dependence is creating new opportunities for local auto component manufacturers.

2. Competitive Advantage

• India offers a cost advantage of 10-25% compared to Europe and Latin America.

• A strong base of skilled and semi-skilled labour, supported by a robust technical education system.

• Being the second-largest steel producer globally offers a material cost edge.

• Indias proximity to ASEAN, Japan, Korea, and Europe makes it a preferred global sourcing hub.

3. Export Opportunities

• India exports over 25% of its auto component production.

• In FY24, India exported components worth US$ 21.2 billion, with a trade surplus of US$ 300 million.

• Export targets aim for US$ 80 billion by 2026, aided by rising global sourcing demand and China+1 strategies.

• The industry plans to invest Rs.58,000 crore (US$ 7 billion) by FY28 in advanced technologies like EV motors and automatic transmissions.

4. Policy Support

• Rs.1,500 crore (~US$ 180 million) additional allocation approved for FAME-II in 2024.

• 100% FDI allowed under the automatic route for auto components.

• The PLI scheme for the auto and components sector (worth US$ 7.8 billion) is expected to drive Rs.74,850 crore (US$ 9.58 billion) in investments.

• Initiatives like Bharat NCAP are expected to boost demand for high-quality, safety-focused components.

Market Size

Indias automobile sector remains a vital barometer of economic health—contributing significantly to GDP, employment, and innovation. Two-wheelers continue to dominate in terms of volume, fueled by a youthful population and expanding rural reach. Growth in commercial vehicles is supported by rising logistics and passenger transport needs, while electrification trends— particularly in three-wheelers and compact vehicles—are reshaping industry dynamics.

India holds a strong position in the global heavy vehicle segment—ranking first in tractor production, second in buses, and third in heavy trucks. On the export front, Indias reputation as a quality and cost-effective hub continues to gain ground. Policy tailwinds like the Automotive Mission Plan 2026, scrappage policy, and PLI schemes are reinforcing Indias ambition to become a global leader in two- and fourwheeler markets.

Company Performance

Shivam Autotech primarily operates in the automotive segment, with ~98% of its revenue derived from auto components across segments such as two-wheelers, three- wheelers, passenger vehicles, commercial vehicles, and tractors. Key product categories include transmission gears and shafts, steering parts, and starter motor and alternator components. The non-automotive business spans aerospace, industrial and renewable energy, and power and construction tools.

The Company manufactures a diverse portfolio of gear and transmission components, including ring gears, pinions, shafts, differential gears, and sub-assemblies, catering primarily to automotive applications. This product line contributed approximately 66% of the Companys total revenue in FY25. Additionally, Shivam Autotech offers steering parts, starter motor and alternator components for passenger vehicles, and axles for the e-rickshaw segment. These are supplied to leading Tier 1 suppliers and OEMs across domestic and international markets. The Company has recently designed and developed a gearbox for a 9-kW electric bike motor, strengthening its presence in emerging EV drivetrain technologies.

Segmental Performance

Shivam Autotech primarily operates in the automotive segment, with ~98% of its revenue derived from auto components across segments such as two-wheelers, three- wheelers, passenger vehicles, commercial vehicles, and tractors. Key product categories include transmission gears and shafts, steering parts, and starter motor and alternator components. The non-automotive business spans aerospace, industrial and renewable energy, and power and construction tools.

The Company manufactures a diverse portfolio of gear and transmission components, including ring gears, pinions, shafts, differential gears, and sub-assemblies, catering primarily to automotive applications. This product line contributed approximately 66% of the Companys total revenue in FY25. Additionally, Shivam Autotech offers steering parts, starter motor and alternator components for passenger vehicles, and axles for the e-rickshaw segment. These are supplied to leading Tier 1 suppliers and OEMs across domestic and international markets. The Company has recently designed and developed a gearbox for a 9 kW electric bike motor, strengthening its presence in emerging EV drivetrain technologies.

INPUT DATA OF GROWTH COMPARING GROWTH ACROSS SEGMENTS IN FY24 VS 25 & THE REVENUE BREAKUP GRAPH FROM CORP PRESENTATION.

Safety and Sustainability

Safety is deeply embedded in Shivam Autotechs operational ethos and continues to be a top priority across all manufacturing locations. The Company prohibits the use of hazardous materials such as kerosene and asbestos and ensures all employees are equipped with appropriate protective gear. Regular internal safety audits, safety committee meetings, mock drills, and fire and first-aid training sessions are conducted at all sites. The Company adheres to 5S principles and Kaizen methodology to maintain a safe, disciplined, and efficient workplace environment.

Sustainability is a core pillar of Shivam Autotechs longterm strategic vision. The Company is focused on reducing its environmental footprint through energy-efficient manufacturing, responsible resource utilisation, and increased use of renewable energy.

In FY24, Shivam Autotech formally launched its ESG journey by developing a comprehensive Greenhouse Gas (GHG) inventory. The Companys total emissions during the year stood at 32,942.91 tonnes of CO₂e, with Scope 1 emissions accounting for 5.7%, largely from power backup units and operational fuel use. Scope 2 emissions, which made up 94.3%, were attributable to electricity purchased from the grid. Using FY24 as the base year, the Company will continue to monitor and track its emissions annually, with the aim of achieving year-on-year reduction trends.

At the plant level, Haridwar contributed the highest share of emissions at 42.3%, followed by Binola (29.6%), Bangalore (16%), and Rohtak (12.1%). Among all units,

Rohtak performed best in terms of carbon emissions per crore of revenue, while Bangalore outperformed on the metric of carbon emissions per ton of product produced.

These insights will guide targeted efficiency and reduction initiatives going forward.

As part of its sustainability roadmap, the Company is taking measurable actions to optimise energy usage, reduce waste, and adopt cleaner technologies and fuels. Rooftop solar systems are already operational at the Binola and Rohtak plants, and the Company plans to significantly expand its solar capacity to 2 MW in FY26. Additional initiatives include switching from diesel to PNG for DG sets at the Rohtak plant, upgrading energy-intensive assets, and improving process efficiency through automation and employee awareness campaigns.

To stay ahead of the curve on regulatory preparedness, Shivam Autotech is currently in the process of drafting an internal BRSR (Business Responsibility and Sustainability Report). This proactive step will help the Company gear up for mandatory disclosures under SEBIs upcoming guidelines for all listed companies in India. In parallel, the Company is also compiling CBAM (Carbon Border Adjustment Mechanism)-related data to meet emerging regulatory requirements from export customers in Europe. Shivam Autotech continues to work closely with all its customers to support their evolving sustainability and reporting needs.ESG considerations are being increasingly embedded into strategic and operational decision-making, with a commitment to improved transparency, monitoring, and performance reporting.

Plant Name	Revenue (Cr)	Plant Emissions	Carbon Emission per Cr of revenue tCO2e/Cr	Production (Ton)	Carbon Emission per ton of product
Haridwar	201.00	13949.74	69.40	3952.52	3.53
Binola	100.20	9755.42	97.36	2377.79	4.10
Bangalore	69.80	5254.69	75.28	3118.40	1.65
Rohtak	63.50	3983.06	62.73	1118.58	3.56

Internal Control System and its Adequacy

Shivam Autotech has a robust internal control system that ensures operational efficiency, accuracy in financial reporting, and compliance with applicable laws. The Internal Auditor reports directly to the Audit Committee and is responsible for areas such as inventory norms, scrap reconciliation, BOM verification, and spares management. Audit findings and recommendations are reviewed in periodic Audit Committee meetings to ensure timely implementation and process improvement.

Human Resources & Industrial Relations

Human Resources continues to play a key role in driving organisational capability, performance, and employee engagement. The Company employs both skilled and unskilled personnel and maintains structured policies for recruitment, training, performance management, and compliance. Initiatives in training and upskilling are aligned with strategic goals to ensure workforce adaptability in a dynamic industry environment.

Discussion on Financial Performance with respect to Operational Performance

The Companys Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of these Indian Accounting Standards financial statements (Ind AS) that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the Indian Accounting Standards prescribed under Section 133 of the Act read with the Companies Rules, 2015, as amended, and other accounting principles generally accepted in India. The financials have been prepared considering the above requirements of applicable laws.

During the financial year 2024-25, revenue from operations was Rs. 45,398.28/- lacs as compared to Rs. 46,966.42/- lacs in 2023-24, registering a decrease in 3.34%.

Key Financial Ratios

In accordance with the SEBI LODR (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to give details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

S. No. Ratio	FY 2024-25	FY 2023-24	% Changes
(i) Return on Equity Ratio	-1.10	-0.63	75.15
(ii) Net Profit Margin (%)	-10.58	-10.69	-1.01
(iii) Return on Investment (%)	-0.09	-0.10	-6.86
(iv) Return on Capital Employed	0.04	0.03	36.31
(v) Net Capital Turnover Ratio	1.35	1.15	17.40

Road Ahead

The role of industry bodies and the government could be a critical differentiator in the recovery of the automotive sector. For instance, the government could enhance cost effectiveness in automotive manufacturing by reducing logistics and energy costs. Meanwhile, sustaining the momentum on the ongoing policy shifts and investing in innovation could assure growth for the entire sector. The auto component industry will grow by catering to shifting mobility needs and consumer sentiment. Focusing on local manufacturing, investing in innovation and collaboration with the government and automotive industry bodies will ensure that the segment emerges stronger and more resilient, ready to flourish.

The adoption of BSVI standards and stricter emissions regulations will drive automobile companies to adopt technologies that limit emissions, leading to greener transportation. Additionally, the mandatory upgrade of safety features and enhanced premiumisation in mass- market cars will spur the automotive sectors evolution. This is an exciting opportunity for Shivam Autotech as the company is working diligently to optimise energy consumption, reduce wastes and enhance renewable energy capacities. The company is committed to integrating sustainability into its operations and strategic choices, aiming to create both a robust business and a more ecofriendly world.

Shivam Autotech is strategically focused on organic growth by expanding wallet share with existing domestic and international customers and leveraging long-standing relationships. Diversification into new product verticals such as off-road vehicles, aluminum components, and steering parts is already showing results. The Companys focus on steering components, which are agnostic to engine technology, acts as a strategic risk hedge in a rapidly evolving mobility landscape.

To address liquidity constraints and strengthen its financial foundation, the Company is undertaking a financial restructuring plan. This includes equity infusion through a Qualified Institutional Placement (QIP) followed by a Rights Issue. The proceeds will be used to meet working capital requirements, fund capital expenditure, and support scaling efforts aligned with new market opportunities.

Cautionary Statement

Certain Statements in the Management Discussion and Analysis describing the companys objectives, projections, estimates and expectations or predictions may be forward looking statements within the meaning of applicable laws and regulations. It cannot be guaranteed that these assumptions and expectations are accurate or will be realized. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statues and incidental factors.

	For and on behalf of the Board	For and on behalf of the Board
	Neeraj Munjal	Charu Munjal
Place: Gurugram	Managing Director	Whole Time Director
Date: August 14, 2025	DIN:00037792	DIN:03094545