Carraro India Limited has announced a postal ballot to seek shareholder approval for material related party transactions (RPTs) with Carraro Drive Tech Italia S.p.A. (CDTI) worth ₹10,129.49 million for the financial year 2026-27. The company has issued a formal notice to shareholders dated February 27, 2026, outlining the comprehensive transaction details and voting procedures.

Transaction Overview

The proposed material RPT encompasses multiple business activities between Carraro India and CDTI, its related party within the Carraro Group. The transaction structure includes both sale and purchase components designed to support the company's manufacturing and operational requirements.

The sale of goods component includes agricultural transmissions, construction equipment transmissions, axles, gears, and allied components. Purchase activities involve ECUs, brakes, clutches, Double-U joints, switches, and various consumables required for manufacturing operations.

Historical Transaction Performance

Carraro India has maintained consistent business relationships with CDTI over recent financial periods. The company's transaction history demonstrates substantial engagement with the related party across multiple business segments.

The proposed transaction value represents 56.04% of the company's annual consolidated turnover for the immediately preceding financial year, qualifying it as a material RPT under regulatory requirements.

E-Voting Process and Timeline

The company has appointed MUFG Intime India Private Limited (formerly Link Intime India Private Limited) to provide e-voting services for all shareholders. The voting process will be conducted exclusively through electronic means, with no physical postal ballot forms being distributed.

Regulatory Compliance and Approval Structure

The Board of Directors, based on the Audit Committee's recommendation, approved the proposed transactions at their meeting held on February 11, 2026. The transactions require ordinary resolution approval from shareholders due to their material nature under SEBI Listing Regulations.

Ms. Ashwini Inamdar (Membership No. 9409) or alternatively Ms. Alifya Sapatwala (Membership No. 24091), Partners at Mehta and Mehta, Practicing Company Secretaries, have been appointed as Scrutinizers for the postal ballot process.

Related Party Details

CDTI operates as a wholly owned subsidiary of Carraro S.p.A., the ultimate parent company of Carraro India Limited. The Italian company serves as a leader in driveline business within the Carraro Group, specializing in manufacturing and selling axles, clutches, transmissions, drives, and related components.

Key personnel with interests in the transaction include Mr. Tomaso Carraro (Promoter and Non-Executive Director), who serves as Chairman and Ultimate Beneficial Owner of CDTI, along with Mr. Andrea Conchetto and Mr. Enrico Gomiero (both Non-Executive Directors), who serve as Chief Executives of CDTI.

Business Rationale and Strategic Importance

The proposed transactions support Carraro India's contract manufacturing arrangement with CDTI, wherein the company manufactures and sells axles, transmission systems, and related components. This legacy arrangement has significantly contributed to the company's revenues and foreign exchange earnings over several years.

The transactions are structured to be conducted in the ordinary course of business on an arm's length basis, with pricing determined using the Transactional Net Margin Method (TNMM) to ensure compliance with transfer pricing regulations.

Carraro India Limited, an independent Tier-I solution provider for axles, transmission systems, gears and other related components, delivered exceptional financial performance in Q3 FY26, demonstrating strong momentum across its key business segments. The company reported robust growth in both quarterly and nine-month periods ended December 31, 2025.

Financial Performance Highlights

The company's financial results showcase significant improvement across all key metrics. For Q3 FY26, total income reached INR 5,768 Mn compared to INR 4,528 Mn in the previous year, representing a substantial 27% year-on-year growth.

*Includes impact of New Labor Code of INR 95 Million

The nine-month performance was equally impressive, with total income of INR 16,698 Mn reflecting 21% year-on-year growth. EBITDA margins improved to 10.6% from 10.0% in the corresponding period, while PAT margins expanded to 5.3% from 4.7%.

Segment-wise Operational Performance

The company demonstrated strong performance across all business segments. Agricultural equipment revenue reached INR 2,608 Mn in Q3 FY26, showing 27% growth, while construction equipment generated INR 2,386 Mn with 20% year-on-year increase.

The domestic market contributed INR 3,782 Mn in Q3 FY26 with 28% growth, while exports generated INR 1,913 Mn, marking 26% year-on-year increase. Export performance was particularly strong for the nine-month period, growing 29% to INR 6,027 Mn.

Key Business Developments

Several strategic initiatives contributed to the company's strong performance. The Tele Boom Handler axles business continued its ramp-up for a major international OEM, showing healthy traction with strong visibility for sustained growth. Sales of drivelines to construction equipment customers increased approximately 4% during the nine months, outperforming the broader market decline of 5%.

The engineering services business gained significant traction, generating INR 50 Mn in Q3 FY26 and INR 100 Mn for the nine-month period. The company signed an engineering services agreement worth INR 17.5 crore with Montra for industrialization and supply of e-transmissions.

Capacity Expansion and Strategic Investments

The Board approved a capex outlay of INR 623 Mn to expand axle capacity from 115,000 to 154,160 units over the next 18 months. This expansion addresses the strong demand outlook, with the plant currently operating at over 90% utilization. During 9M FY26, the company deployed capex of INR 304 Mn to support new telescopic handler axle production and high-performance transmission range for agricultural applications.

Management Commentary

Dr. Balaji Gopalan, Managing Director, highlighted the company's transformation and innovation leadership across markets and technologies. He emphasized the strong revenue growth supported by healthy momentum across domestic and export markets, with domestic revenues increasing 17% year-on-year and exports growing 29% year-on-year. The management expressed confidence in scaling Carraro India beyond earlier guidance in revenues by FY30, while maintaining focus on disciplined execution and value-driven growth.