Reaffirmation of Credit Ratings by ICRA

August 4, 2026 BSE Limited 25th Floor, P.J. Towers, Dalal Street, Fort, Mumbai- 400 001 Sub: Reaffirmation of Credit Ratings (after annual review) by ICRA Ref: BSE Scrip Code: 505163 Dear Sir/ Madam, Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, we have to inform you that ICRA has reaffirmed the earlier Credit Ratings of our Company and the Outlook on rating long-term fund/ non-fund based facilities has been reaffirmed as ‘Stable’. The Credit Rating of our Company is as under: Credit Facility Amount (Rs. in Rating Action crore) Long-term and Short- Reaffirmed Long-Term [ICRA] A+ (ICRA A plus) term Fund/ Non-fund Outlook on the Long-term rating has been reaffirmed Based – Working 105.00 as ‘Stable’. Capital Facilities and Reaffirmed Short-term [ICRA] A1+ (ICRA A One Plus) The communication received from ICRA on the subject is enclosed herewith. Further, you are requested to take the aforesaid disclosure on your record and disseminate the same for the information of Investors. Thank You, Yours faithfully, for ZF Steering Gear (India) Limited Satish Mehta Company Secretary & Compliance officer Membership No. F3219 Page 1 of 1 August 4, 2026 ZF Steering Gear (India) Limited: Ratings reaffirmed Summary of rating action Previous rated Current rated Instrument* amount amount Rating action Financial Sector Regulator# (Rs. crore) (Rs. crore) Long-term/Short-term fund- [ICRA]A+ (Stable)/[ICRA]A1+; based/ non-fund based – 105.00 105.00 RBI reaffirmed Working capital facilities Total 105.00 105.00 *Instrument details are provided in Annexure I #SEBI’s grievance redressal/dispute resolution and SEBI investor protection mechanisms such as SCORES and ODR shall not be available for activities and instruments, which fall under the regulatory purview of Financial Sector Regulators other than SEBI. Rationale The rating reaffirmation for ZF Steering Gear India Limited (ZFI/the company) continues to factor in its dominant position in the domestic power steering segment and established relationships with key Original Equipment Manufacturers (OEMs) in the domestic commercial vehicle (CV) and tractor sectors in addition to its strong credit profile characterised by healthy earnings, strong liquidity position and minimal utilisation of working capital lines. ICRA notes that the company has incorporated a subsidiary – DriveSys Systems Private Limited (DriveSys; rated [ICRA]BBB+(Stable)/[ICRA]A2) – and has also formed a joint venture (JV) – Metacast Auto Private Limited (Metacast) – as part of its backward integration efforts. While this is expected to support profitability through in-house manufacturing of machined castings and reduce dependence on external suppliers to an extent, timely and commensurate returns from the capital expenditure (capex) incurred towards setting up these entities remain a key rating monitorable. However, healthy ramp up in the scale of operations of these two entities in FY2026 provides some comfort in this regard. ICRA also notes that the company has set up an aluminium extrusions division as well under DriveSys, and a new manufacturing facility for the same is expected to be commissioned in Q2 FY2027. Supported by healthy growth in the domestic CV wholesale volumes, the company registered a comfortable YoY consolidated revenue growth of 15% and 11% in FY2026 and Q1 FY2027, respectively. Operating leverage benefits supported operating profit margin (OPM) expansion to 14.6% in FY2026 from 11.6% in FY2025. While commodity inflation and operating expenditure towards setting up the aluminium extrusion plant led to some moderation in OPM in Q1 FY2027 (at 11.9%), a gradual improvement in the same is envisaged over the medium term, supported by backward integration benefits. Revenue growth estimates for FY2027 remain robust, supported by steady performance of the standalone entity and incremental revenue generation from the aluminium extrusion facility from H2 FY2027. While ZFI has reported a healthy financial risk profile over the years, characterised by comfortable capitalisation and strong liquidity metrics, ICRA notes that it has consolidated capex plans of Rs. 140-150 crore over FY2027 and FY2028, primarily for backward integration and capacity addition. ICRA expects the capitalisation and coverage indicators to remain comfortable over the medium term, aided by its steady earnings profile. The company’s liquidity position is also likely to remain strong over the medium term, supported by its healthy operational profile and cash accruals; nevertheless, developments on the patent infringement allegation by ZF Germany, and payouts for penalties/settlements if any towards the same remain monitorable. The ratings continue to remain constrained by the company’s modest scale of operations compared to industry peers, susceptibility to the inherent cyclicality in the domestic CV and tractor industries, and the constant need to upgrade and develop new technology-driven products. Incremental revenue potential from DriveSys through its aluminium extrusion business is likely to support the expansion of ZFI’s consolidated scale of operations in the medium term. www.icra.in Sensitivity Label : Restricted Page The Stable outlook on the long-term rating factors in ICRA’s expectation that ZFI would continue to benefit from its strong business position with various OEMs, helping it to generate stable cash flows and maintain a strong credit profile despite the sizeable capex lined up over the near to medium term. Key rating drivers and their description Credit strengths Strong position in domestic steering systems industry for M&HCVs1 and tractors; established relationships with leading OEMs – The Indian steering gear market is primarily dominated by three major players, viz., JTEKT India Limited (erstwhile Sona Koyo Steering Systems Limited; rated [ICRA]AA/Stable/A1+), ZF Rane Automotive India Private Limited (Rane Group; rated [ICRA]AA-/Stable/A1+) and ZFI. While JTEKT is primarily present in the passenger vehicle (PV) segment, ZFI and the Rane Group are mainly present in the CV and tractor segments. Overall, the domestic M&HCV and tractor steering systems market is essentially duopolistic, with ZFI and the Rane Group jointly commanding almost the total market share. Established relationships with leading CV OEMs such as Tata Motors Limited (rated [ICRA]AA+(Stable)/[ICRA]A1+), Ashok Leyland Limited (rated [ICRA]AA+(Stable)/[ICRA]A1+), and VE Commercial Vehicles Limited (rated [ICRA]AA+(Stable)/[ICRA]A1+) provide ZFI with sufficient revenue visibility. Comfortable capitalisation indicators and strong liquidity position – ZFI continues to demonstrate a fairly comfortable capital structure, with a gearing of 0.2 times as of March 31, 2026 (previous year [PY]: 0.2 times), in turn supported by healthy accruals generation and containment of the overall debt level, as the standalone entity continues to remain long-term debt free. ZFI’s consolidated debt profile is dominated by debt at the subsidiary/ JV levels. While gross debt of DriveSys stood at Rs. 195.3 crore as on March 31, 2026, majority of the said debt was in the form of unsecured loans extended by ZFI to DriveSys, mainly to support the latter’s capex funding requirements. ZFI’s TD/OPBDITA (consolidated) improved to 1.3 times as on March 31, 2026, from 1.7 times as on March 31, 2025, supported by improved profitability in FY2026. ICRA expects the coverage indicators to remain healthy in the medium term, supported by comfortable profitability. Its liquidity position remains strong, supported by free cash and liquid (unpledged) investments worth around Rs. 87 crore as on March 31, 2026, and unutilised working capital limits of around Rs. 30 crore as of March 31, 2026 (i.e., entire buffer available for drawdown). Although the company has some debt-funded capex plans lined up over the near term pertaining to backward integration initiatives and capacity a [Showing first 8,000 characters — download PDF for full document]