Investor Presentaiton

MRP MANAGEMENT DISCUSSION AND ANALYSIS (Within the limits set by Company's competitive position) MRF maintained its leadership in the Indian market in the year gone by. Brand Finance rated MRF as the second strongest tyre brand in the world, besides rating MRF the most valued Indian tyre brand. The world was largely free of the impact of Covid in 2022-23. The war in Ukraine dragged on with progressive reduction in the impact on commodities during the course of the year. Supply chain disruptions are receding while impact on food and energy markets have reduced. War on inflation continued with Central Banks around the world raising interest rates and tightening monetary conditions. Inflation appears to have peaked and seem to be slowly receding. However, tight labour markets in advanced economies ensured demand did not slacken even with multiple interest rate hikes which leaves us with prospects of more rate increases to rein in inflation. US Federal Reserve raised interest rates by a cumulative 3.5% in the past one year ending March 2023. The terminal rate that was initially thought to be around 4.6% is now seen crossing 5%, which shows that inflation is entrenched. The consistent rate increases have led to stress in some parts of the Banking system. Tighter financial conditions lead to forecasts of recession for parts of the western world. World Bank warned in a paper in September, 2022 that the world wide slow down and tightening financial conditions will give rise to significant financial stress and trigger a global recession in 2023. World economy performed better in the second half than what was forecasted in the earlier part of the year. International Monetary Fund ("IMF") has estimated that world economy grew by 3.4% in calendar year 2022. As per IMF forecasts, growth will reduce to 2.8% in 2023 and improve modestly to 3% in 2024. Growth would depend on the trajectory of Inflation and the extent to which Central Banks would hike interest rates to combat inflation. The challenge before the world is to sustain growth in a situation where inflation is still not under control despite consistent rate hikes by Central Banks. Market & Industry Overview India retained the tag of the fastest growing major economy in the year gone by. During the year, India became the 5th largest economy in the world, overtaking Britain. RBI in its March, 2023 projection estimated India's Gross Domestic Product ("GDP") to grow at 7% in financial year 2023. Growth was led by the construction and infrastructure sectors while weakness in consumption impacted growth in manufacturing. Global slow down acted as a drag on exports. India's merchandise exports grew by 6% while overall exports including both Goods and Services grew by 13.8%. Service exports was a bright spot with a growth of 27%. Electronics exports picked up showing the effectiveness of the make in India program and Production Linked ("PLI") scheme. The year saw RBI continuously increasing interest rates, with a cumulative increase of 2.5% in financial year 2023. Inflation peaked in the 1st quarter and thereafter we saw a declining trend, reflecting the pass through in commodity prices. Government took several measures in the first quarter to rein in prices and improve availability of key products. The budget was presented against a backdrop of a challenging global environment. The budget aims to give a bold push to growth with a 33% increase in the Capital expenditure budget to 10 lacs crore. The high Capex should further strengthen the private sector recovery. As in the past, this budget too aligned indirect tax rates to encourage domestic manufacturing. Import duty exemption on capital goods and machineries used for manufacture of lithium ion cells for batteries will give a further fillip to sales of Electric Vehicles. budget also nearly doubled allocation to subsidies under the FAME 2 scheme. RBI has projected financial year 2024 growth for India at 6.5% while IMF has projected growth at 5.9%. The moderating inflation prompted RBI to pause interest rate hike in April, 2023. Monsoon is forecasted to be a little. less than normal but spatial distribution is key. The Economic Survey noted a rebound in private consumption which together with strong public spending by Government is leading to private investments. Union budget's focus on infrastructure spending coupled with moderating inflation should be a positive for growth. Export performance being linked to global economy is unlikely to be a growth driver. RBI in its monthly state- of-the-economy report (March, 2023 RBI Bulletin) said that India will likely maintain its growth trajectory. It said "The Indian economy is intrinsically better positioned than many parts of the world to head into a challenging year ahead, mainly because of its demonstrated resilience and its reliance on domestic drivers". Global auto industry which was recovering from the effects of the Covid pandemic had further supply chain shocks arising from the war in Ukraine, with consequent adverse impact on input costs. Second half of calendar year 2022 showed improvement in supply chain issues with commodity prices moderating. Growth of Electric Vehicles ("EV") was robust in an otherwise challenging market. Along with managing the supply chain, Auto industry has to also manage the transition to Electric Vehicles and handle 33

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