kei industries ltd Management discussions

ECONOMIC REVIEW

Global Economy

The global economy is showing signs of resilience in 2023 after a turbulent year. The slowdown is expected to be less pronounced in 2023 than previously anticipated.

Higher inflation, tightening financial conditions, and the Russia-Ukraine war continue to impact the global economy. Further, the banking crisis in March 2023 and a debt-ceiling crisis in the United States have raised concerns over macroeconomic stability across the markets and an impending global recession. However, the rebounding of Chinas economy, improved supply-chain functioning, and the decline in energy and food prices indicate the improvement in economic activity in 2023.

Further, with the central banks efforts to tame inflation by substantial tightening in monetary policy, headline inflationhas started to fall. Global inflation is projected decline from 8.7% in 2022 to 7% in 2023 and 4.9% in 2024.

Notwithstanding the headwinds, the real Gross Domestic Product (GDP) of the United States grew at 2.1% in 2022 on the back of increased private investment and consumer spending. It is projected to grow at 1.6% in2023 and 1.1% in 2024. The European economy recorded 2.7% growth in 2022 and is projected to grow at 0.8% in 2023 before rising to 1.4% in 2024. According to the International Monetary Fund (IMF), global GDP growth is projected to decline from 3.4% in 2022 to 2.8% in2023 and rise to 3% in 2024. The growth of Advanced Economies (AEs) is expected to decline from 2.7% in2022 to 1.3% in 2023 before rising to 1.4% in 2024. Economic prospects for Emerging and Developing Economies (EMDEs) are on average stronger than for Advanced Economies. EMDEs grew at 4% in 2022 and are expected to grow at 3.9% in 2023 and 4.2% in 2024. The developing economies like South-East Asia and Latin America are poised to do well and benefit strong job markets and ambitious investment plans by governments in many countries. Asia-Pacific the most dynamic of the worlds major regions in 2023, predominantly driven by the buoyant outlook for China and India, which will be the major contributors to global economic growth in 2023.

Region-wise growth estimates (%)

Region	2022	2023 (P)	2024 (E)
Global Economy	3.4	2.8	3.0
Advanced Economies (AEs)	2.7	1.3	1.4
Emerging Markets and	4.0	3.9	4.2
Developing Economies
(EMDEs)

(P- Projections, E- Estimates) Source: International Monetary Fund

Indian Economy

The Indian economy is relatively insulated from global spillovers and continues to be among the fastest growing economies in the world. Indias real GDP growth is pegged at 7.2% in FY 2022-23 as against 9.1% in

FY 2021-22 and reflects robust domestic consumption and lesser dependence on global demand. Despite the weakening external demand, the merchandise exports have registered the highest-ever annual exports of US$ 447.46 billion with 6.03% growth during FY 2022-23 surpassing the record exports of US$ 422 billion in FY 2021-22. Indias IIP growth of 5.1% in FY 2022-23 shows modest growth in the industrial sector. Further, the gross Goods and Services Tax (GST) revenue collection inApril 2023 was the highest ever at Rs 1.87 trillion compared to Rs 1.68 trillion in April 2022. Domestic economic growth is gaining strength and further traction in 2023.

Higher inflation remains a challenge and the Reserve Bank of India (RBI) increased the repo rate by 250 basis points in FY 2022-23 to tame inflationary pressures. As a result, Indias CPI inflation rate subsided to 4.25% (provisional) in May 2023 against 4.70% recorded in April 2023. Further, the RBI approved international trade settlements in Indian Rupees (INR) to promote the growth of global trade with an emphasis on exports from India and to support the increasing interest of the global trading community.

According to the IMF, the Indian economy is expected to advance steadily at 5.9% in FY 2023-24 before rising to 6.3% in FY 2024-25. The economic growth is primarily driven by robust domestic consumption, will be abating of inflation, technology-enabled development, export growth, and revival in credit growth among others. Additionally, increased capital expenditure on infrastructure and the growth-enhancing policies such as the PLI schemes, ‘Make in India and ‘Atmanirbhar Bharat will strengthen the infrastructural and manufacturing base, lead to higher productivity, promote Indian products in the global markets and build a strong foundation for economic growth. With its strong fundamentals, massive demographic strengths and multiple growth levers in place, Indian economy is expected to sustain the growth momentum in the long term and reach US$ 5 trillion by FY 2026-27.

INDUSTRY OVERVIEW

Cables & Wires (C&W) Industry

The global wires and cables market size surpassed US$ 215.8 billion in CY 2022 and is expected to grow at a CAGR of 8.5% to reach US$ 500.4 billion in CY 2032 backed by the increasing infrastructure development, growing demand for consumer electronic products and technological advances in the communication industry.

Sharp inflation and surge in prices of raw materials are the major headwinds for the sector. This sector is characterized by intense competition from existing and new players. Its fragmentation is marked by the presence of both larger organized players and numerous smaller players in the unorganized segment.

The wires and cables (W&C) sector comprises ~45% of the electrical equipment industry in India. The domestic W&C market is expected to grow at an impressive CAGR of 12% over FY 2021-26. The rapid rise of the organized sector and the governments focus on investment in infrastructure and development projects would promote large-scale growth across sectors, such as infrastructure, power, telecom, transmission and distribution, manufacture, real estate, engineering, and automotive. Growth in renewable power generation, expansion and revamping of Transmission & Distribution (T&D) infrastructure, increasing investments in metro railways and smart grid projects and growth in the data center sector will also contribute to a robust demand for wires and cables in India. Increasing urbanization and commercialization are expected to bolster investments in the real estate industry and drive the demand for wires and cables.

Power Industry in India

India is the third-largest producer of electricity worldwide with a total installed power generation capacity of 417.66 GW as on May 31, 2023. Power generation sources range from conventional sources such as coal, lignite, natural gas, oil, hydro, and nuclear power to non-conventional renewable sources such as wind, solar, and agricultural and domestic waste. Fossil fuel sources make up the largest share, i.e., 57% of total installed generation capacity, followed by renewable energy resources including hydro with 41.4% and nuclear with 1.6%. The renewable energy (RE) generation capacity is 173.61 GW as on May 31, 2023. The total generation of electricity (including renewable sources) in FY 2022-23 was 1,624.158 BU compared to 1,491.859 BU during FY 2021-22, representing 8.87% Y-o-Y growth.

The electricity generation target including renewable energy for FY 2023-24 has been fixed at 1,750 BU.The demand for electricity in India has been growing rapidly, driven by the growing population, rapid urbanization, accelerating industrial and economic activities, infrastructure development, rising electrification and per-capita consumption. The governments initiative ‘Power for All has accelerated capacity addition in the country. Power consumption in India grew 9.5% to 1,503.65 BU Y-o-Y in FY 2022-23. The Central Electricity Authority (CEA) estimates Indias power requirement to grow to reach 817 GW by 2030.

Key growth drivers for the Indian power industry

Increasing electrification across the country with the support of the governments flagshipschemes, like Saubhagya, Deen Dayal Upadhyay Gram Jyoti Yojana (DDUGJY), Ujjwal Discom Assurance Yojana (UDAY), and Integrated Power Development Scheme (IPDS) led to the growing demand of power supply

The National Infrastructure Pipeline (NIP) initiative which expanded to 9,335 projects with total envisaged investments of Rs 108 trillion are at different stages of implementation, resulting in further power requirements

A surge in power demand due to expansion in industrial activity, rapid growth in urbanization and the housing sector

Increasing per-capita power consumption due to the growing population and increasing disposable income

Increased investments in railway electrification and metro trains fueled the demand for additional power

Transmission and Distribution (T&D) Industry in India

The transmission and distribution (T&D) sector plays a catalyst role in the energy transition in India by supplying power to the consumers through the vital link between the generating stations and the distribution system and by extending the grid to renewable rich areas and facilitating

Renewable Energy (RE) projects to connect into the grid. The transmission network has been growing at a significant capacity both at interstate and intra-state levels, the governments focus on increasing renewable energy (RE) capacity and the transition to renewable energy.

India has become one of the largest synchronous interconnected electricity grids in the world with 4,71,817 ckm of transmission line and 11,85,058 MVA of transformation capacity (as on April 2023). The country added 1,77,641 ckm of transmission line and 6,28,329 MVA of transformer capacity in FY 2022-23. This has led to 1,12,250 MW inter-regional power transfer capacity with a staggering increase of 212% since 2014. The growth of electrificationand consumption has led to a need for the expansion and upgradation of the T&D systems which are core enablers for the energy transition. Electrification in rural regions is facing massive challenges due to inadequate and inefficient infrastructure. Due to the skewed distribution of electricity in the country, there is a need to develop a robust transmission system including the establishment of inter-regional corridors for the seamless transfer of power from generating stations to load centers and from surplus to deficit regions.

The government launched Revamped Distribution

Sector Scheme (RDSS) with an outlay of Rs 3.03 trillion for the next five years from FY 2021-22 to FY 2025-26. The scheme aims to provide financial assistance to Power Distribution Companies (DISCOMs) for the modernization and strengthening of distribution infrastructure, aiming to improve the quality, reliability and affordability of power supply through a financially sustainable and operationally efficient and distribution sector. Further, under PMs Gati Shakti Master Plan, 27,000 circuit km of transmission lines will be added at an investment of Rs 75,000 Crore by FY 2024-25. The governments support to improve the state power discoms, increasing privatization of the power distribution sector, expansion of power distribution infrastructure, smart grid projects and growth in the industrial and housing sector will propel the growth of the transmission sector.

Renewable Energy Industry in India

In the National Action Plan on Climate Change 2008, the government announced that the development of renewable energy will be one of its goals for reducing dependence on fossil fuels and combating climate change. Further, the government is pushing renewable energy (RE) to the forefront and undertaking various measures to increase RE capacity to meet the rising power demand. The CEA estimates that the share of renewable energy generation would increase from 18% to 44% by 2030. The government aims to achieve 450

GW of installed renewable energy capacity by 2030 and about 280 GW (over 60%) is expected from solar energy.

Increasing renewable power generation is creating considerable demand for electrical and speciality solar cables. Further, with wind energy technology being one of the sustainable means to achieve the increasing electricity demand, the government has set a target of 30 GW of offshore wind turbine installations by 2030 to exploit the wind energy potential of the Indian Coast. These offshore wind turbines will require a large volume of power cables and subsea umbilical cables.

The Union Budget 2023-24 consisted of the following initiatives by the government to promote renewable energy in India:

• In the Budget, ‘green growth is identified as one of the seven priorities or ‘SAPTARISHI •An outlay of Rs 19,700 Crore for the Green Hydrogen Mission Allocation of Rs 8,300 Crore for strengthening of interstate transmission system for evacuation and Grid Integration of 13 GW renewable energy from Ladakh

• Allocation of Rs 10,222 Crore to the Ministry of New and Renewable Energy to boost the renewable energy sector transmission

• Allocation of Rs 19,500 Crore for a PLI scheme to boost the manufacturing of high-efficiency solar modules

•Allocation of Rs 35,000 Crore for priority capital investments towards energy transition and net zero objectives, and energy security

• Total investment of Rs 10,000 Crore to establish 500 new ‘waste to wealth plants under the new GOBARdhan (Galvanizing Organic Bio-Agro Resources Dhan) scheme

• Extension of customs duty exemption up to March 31,•2024 for import of capital goods and machinery required for the manufacture of lithium-ion cells for batteries used in electric vehicles (EVs)

Outlook

The cables and wires (C&W) industry is well-poised to witness robust growth in the coming years driven by factors such as the governments push for the development of the power and infrastructure sectors, increasing demand for renewable power generation, upbeat construction activities in the real estate sectors, improvement of transmission and distribution systems, increased investments in railway electrification, metro trains and smart grid solutions. Further, the surging solar energy market will create huge requirements for solar cables.

Investment in infrastructure is one of the seven priorities of the Union Budget 2023-24. The government has increased capital investment outlay by 33.4% to Rs 10 lakh Crore in FY 2023-24 from Rs 7.50 lakh Crore in FY 2022-23 to catapult the infrastructure sector.

Further, the real estate sector is expected to reach a market size of US$ 1 trillion by 2030, accounting for 18-20% of Indias GDP. An increased outlay of Rs 79,000 Crore in PM Aawas Yojana for the development of affordable housing, the push for creating urban infrastructure in Tier 2 and Tier 3 cities through Urban

Infrastructure Development Fund (UIDF) of Rs 10,000Crore per annum in the Union Budget FY 2023-24 and the governments initiative ‘Smart Cities Mission augur well for the growth of infrastructure and real estate sectors and uplift the demand for cables and wires.

As per the National Infrastructure Pipeline (NIP), energy sector projects accounted for the highest share (24%) out of the total expected capital expenditure of Rs 111 lakh Crore during FY 2020-25. The development of high-quality infrastructure across the country will propel the demand for wires and cables. Increased focus on ‘Atmanirbhar Bharat and initiatives such as ‘Make in India and the PLI scheme will attract capital investment and further the W&C industry. There is a surge in private investment driven by increasing transparency and returns due to regulatory reforms, such as the Real Estate (Regulation and Development) Act (RERA), the Goods and Services Tax (GST), the Insolvency and Bankruptcy Code (IBC), labor laws, the Corporate Tax rate, and the progressive relaxation of foreign direct investment (FDI) norms among other measures.

Further, the increasing adoption of electric vehicles (EVs) and hybrid models results in the growing need for EV infrastructure to support the EV demand. Indias electric vehicle (EV) industry recorded robust growth with 1.17 million unit sales in FY 2022-23. There are only 6,586 public charging stations (PCS) operational in India as on March 21, 2023, with the majority concentrated in a few states and primarily in urban areas. Under Phase-II of the FAME India Scheme, Rs 1,000 Crore is allocated for the development of charging infrastructure. The Ministry of Heavy Industries has sanctioned 2,877 electric vehicle charging stations in 68 cities across 25 states/UTs.

Further, 1,576 charging stations across 9 Expressways and 16 Highways under Phase-II of the FAME initiative have also been sanctioned. The requirement for EV charging infrastructure due to a surge in EV sales in India will create lucrative opportunities for the W&C sector.

BUSINESS REVIEW

Established in 1968, KEI Industries Limited (henceforth referred to as "KEI" or "the Company") is one of Indias leading manufacturers of cables and wires (C&W) and successfully expanding its global footprint. The Company supplies a vast array of cable and wire products and caters to core sectors of the country, including real estate, infrastructure, power, steel, fertilizer, refinery, transportation and energy, etc. KEIs wide product portfolio spreads across Low Tension cable (LT), High Tension cable (HT), Extra High Voltage cable (EHV), House Wires (HW), Winding Wires (WW) and Stainless Steel Wires (SSW). KEI also provides Engineering, Procurement and Construction (EPC) solutions in the area of GIS and AIS Substations, Overhead as well as

Underground Power Transmission and Distribution Systems and Substations on turnkey basis. It has fortified its position as a one-stop solution provider in the Cables & Wires industry by providing high-quality products and services with its proven track record of successfully executing EPC projects.

The Company is focused on expanding its product portfolio and de-risking the business by increasing Customer diversification. The Company has expanded its market with the help of its robust R&D which enabled it to offer customized solutions to consumers and specialty cables designed to their specific needs, coupled with competitive pricing. The R&D facility with an in-house NABL-accredited lab, is always focused on developing innovative products. KEI has a Pan-India retail presence with a wide distribution network, comprising 23 depots and 1,900+ dealers/ distributors. The Company is focused on marketing through various brand promotion activities through multiple communication channels.

Product Portfolio

Cables

The Company has a diversified product portfolio. It manufactures a wide range of cables including:

Extra-High Voltage cable (EHV)

High Tension (HT), and Low Tension (LT) power cables

Instrumentation and Control cables Flexible and House wires Rubber cables Solar power cables Fire Survival/Resistant cables

Marine and offshore submersible cables

Communication cables Thermocouple cables

The Company strategically entered the EHV cable segment through a joint technical collaboration with Switzerland-based Brugg Kabel, foreseeing a high demand for EHV cables in transmission and distribution that outperform conventional overhead lines. It has also strengthened its EHV segment by undergoing forward integration through EPC project execution.

House Wires (HW) and Winding Wires (WW)

The Companys house wires are used in residential and commercial construction, providing reliability, energy efficiency, and the highest level of safety. KEI also makes high-quality winding wires for submersible motors. Due to their features like high-grade insulation and water resistance, these wires are preferred by pump manufacturers.

Stainless Steel Wires (SSW)

The stainless steel wires (SSW) segment includes hard stainless steel, cold heading, and fine stainless steel wires as well as general-purpose wires, which are used in manufacturing spring, wire mesh / wire cloth, conveyor belt, ball, fasteners, screws, brushes, ropes, pins, hose/pipe braiding, knitting, baskets, kitchen ware items, medical tools, etc., used in engineering, chemicals and building. These wires are manufactured as per international standards and the unique and niche requirements of clients from diverse sectors. More than

50% of the SSW segments production is exported to developed countries.

EPC Projects

The Company offers EPC solutions in India and overseas markets. It has a proven track record of successfully completing turnkey projects while following deadlines and quality standards with the support of its skilled staff and industry expertise. Some of the important services offered by the Company include designing, engineering, supplying, installing, testing, and commissioning of EPC Projects related to transmission & distribution and substation for townships, smart cities, railways, and projects for electricity supply in urban and rural regions.

Manufacturing Facilities

The Company has five state-of-the-art manufacturing facilities located at Bhiwadi, Chopanki and Pathredi in Rajasthan and Rakholi and Chinchpada in Dadra &

Nagar Haveli Daman and Diu. It also has two plants in Harchandpur (Rajasthan) and Dapada (Dadra & Nagar Haveli Daman and Diu) for backward integration of PVC compound.

Business Segments

Retail

KEIs retail segment consists of household wires, LT and HT cables. The Company successfully carves out high margins from this business segment due to its superior quality products and strong brand positioning. Additionally, faster product offtake leads to lower working capital requirements, resulting in superior return ratios. Considering these attributes, KEI continues to strategically expand its retail segment by proactively engaging in various marketing and sponsorship activities and strengthening its dealership network.

Institutional

The Companys institutional segment offers superior quality EHV cables, HT and LT cables, stainless steel wires, and undertakes comprehensive EPC projects on a turnkey basis. The segment has significant due to high capital intensity, technological know-how, an excellent track record, and tough compliance criteria to win projects. The Company has built a strong institutional business over the years by focusing on high-quality products, state-of-the-art manufacturing facilities, consistent R&D investment, and appropriate marketing activities. The institutional segment is witnessing strong demand from oil and gas, refinery, railways, metro rail projects, transmission, solar projects, cement, steel and real estate sectors.

Exports

KEIs export business has expanded over the years owing to its technologically advanced product line that meets stringent international standard benchmarks. It has a presence in over 60 countries with offices in 5 countries. It exports EHV, MV, and LV cables to overseas customers in the oil and gas, renewable energy, and utility industries. Australia, Kuwait and Abu Dhabi (in the Middle East), Nigeria and Ghana (in Africa) are the major export destinations for the Company. In FY 2022-23, exports accounted for 10% of total sales. KEI expects to increase its export contribution in FY 2023-24 and gain a strong foothold in the USA markets with export approval for its product.

Financial Performance

During the year, your Companys net sales amounted to Rs 6,912.33 Crore as against Rs 5,726.99 Crore in FY 2021-22, showing a strong growth of 20.70%. During the year under review, turnover from Cables & Wires segment stood at Rs 6,253.91 Crore compared to Rs 5,123.12 Crore in FY 2021-22, turnover from Stainless Steel Wire segment was Rs 255.09 Crore during FY 2022-23 as against Rs 225.94 Crore in FY 2021-22 and EPC Projects Segment revenue (excluding Cables) contributed a turnover of Rs 403.33 Crore in FY 2022-23 compared to Rs 377.93 Crore in FY 2021-22. During the year under review, Profit beforeTax stood at Rs 642.05 Crore compared to Rs 507.73 Crore in the preceding year. In FY 2022-23, EBITDA stood atRs 733.83 Crore as against Rs 603.58 Crore in FY 2021-22 and Net Profit stood atRs 477.38 Crore compared to Rs 376.22 Crore in the previous year, showing a growth of 26.89%. Sales through dealer network was Rs 3,030 Crore in FY 2022-23 as against Rs 2,319 Crore last year, recording a growth of 31%. The export sales in FY 2022-23 stood at Rs 693 Crore as against Rs 585 Crore in the previous year, showing a growth of 18%.

Key Standalone Financial Ratios

Particulars	FY 2022-23	FY 2021-22	Explanation for change in the ratio by more than 25% as compared to the previous year
Debtor Turnover Ratio	4.97	4.17	Not Applicable
Inventory Turnover Ratio	6.34	6.22	Not Applicable
Interest Coverage Ratio	19.50	13.57	Better profitability
Current Ratio	2.83	2.22	Debt repayment and better profitability
Debt Equity Ratio	0.05	0.16	Debt repayment
Operational Profit Margin	10.22%	10.28%	Not Applicable
Net Profit Margin	6.91%	6.57%	Not Applicable
Return on Net Worth	20.21%	19.25%	Not Applicable

Opportunities and Threats

Opportunities

Rising demand for EHV cables due to increased EPC infrastructure projects, where the Company faces less competition

Growth in the exports revenues owing to KEIs increasing geographical presence and penetration

Increasing revenue share of the retail segment due to better working capital and higher profitability

Increased expenditure on infrastructure and construction activities, the governments focus on increasing electrification, renewable energy production and expansion of T&D systems, leading to high demand for wires and cables

Increasing demand for wires and cables due to rapid urbanization and growth in the housing sector

Strong demand outlook in sectors like infrastructure, railway, power, data centers, etc.

Threats

The global economic slowdown and disruptions in trade and sectors

CAPEX deferment and delays in key infrastructure projects

Volatility in exchange rates and prices of key raw materials

Increasing competition in the wires and cables industry

Fast-changing technology and constant need for upgradation

RISK MANAGEMENT

The Company has a comprehensive Enterprise-wide Risk Management (ERM) framework for the timely and effective identification, potential risks that may impact its businesses. KEI has a dedicated Risk Management Committee that periodically reviews the Companys performance against the key risks emanating from a dynamic business scenario and identified by the management and formulates robust mitigation strategies. The key risks and their corresponding mitigation measures are depicted below:

Policy Change Risk

The Companys institutional, EHV and EPC businesses are largely dependent on the government and PSU-led projects. Any change in the governments policies and regulations and legislation may impact the Companys ongoing projects and order book, leading to a loss of revenue and profitability.

Mitigation

The Company has diversified its product portfolio that caters to multiple core industries, which enables it to benefit from the governments spending on infrastructure development. Further, it aims to increase the share of its retail segment in the overall revenue mix and reduce its dependence on government-led projects.

Currency Fluctuation Risk

The Company is exposed to foreign exchange fluctuation as it imports various raw materials and exports its products to several international markets. Currency rate volatility may adversely impact the Companys profitability.

Mitigation

The Company follows an efficient hedging policy to minimize the impact of adverse currency fluctuations. It also benefits from partial natural hedging due to its engagement in both exports and imports activities. It closely monitors exchange rate movements.

Geopolitical and Economic Risk

The geopolitical tensions and subdued global economic conditions may lead to demand compression in the retail segment, project delays and deferments in the institutional segment and may dampen the Companys export business. In addition, any volatility in capital and finance markets may lead to higher interest rates and borrowing costs, impacting the Companys growth plans. Further, the Russia-Ukraine war which caused disruptions to global supply chain operations and a sharp increase in freight cost, may negatively impact the production, logistics and profitability of the Company.

Mitigation

The Company evaluates various strategic sourcing and supply options to achieve flexible manufacturing and supply chain management to maintain a lean cost structure. This enables it to promptly cut expenditures and save cash and liquidity in adverse demand and operational scenarios. Further, the Companys diversified business portfolio spread across various sectors and its global presence in over 60 countries reduce its dependence on any sector or geographical region and enable it to mitigate the country-specific market slowdown.

Raw Material Risk

Volatility in the availability and prices of key raw materials such as copper, aluminium, steel, and nickel may impact the Companys profit margins and return ratios.

Mitigation

The Company carefully monitors raw material prices and tries to pass on variations in the prices of raw materials to customers through an additional clause in large supply orders and three months price validity for small-scale projects. It revises the price list of wires/cables in the retail segment on bi-monthly/monthly basis to protect margins. It also maintains adequate inventory levels and explores methods to hedge the costs of raw materials to ensure uninterrupted production.

Liquidity Risk

The unavailability of sufficientliquidity and surplus capital may lead to failure in meeting short-term obligations, affecting the Companys credit ratings and reputation in the capital markets. Further, it may adversely impact the Companys working capital position, resulting in manufacturing disruption.

Mitigation

The Company has a strong balance sheet with a low debt-to-equity ratio of 0.05 and a current ratio of 2.83.

The Company also has a robust cash flow monitoring system and a prudent and judicious capital allocation approach to ensure low levels of liquidity risk.

Operational Risk

The Companys operations may get disrupted due to natural disasters or severely constrained due to technical failures, IT system collapse, inability to meet client requirements for timely deliveries or product quality, or failure to comply with statutory regulations. This may lead to loss of business and customers, project delays, litigations or even shutdown of the business.

Mitigation

The Company has established robust internal controls and monitoring systems to ensure business survival during unpredictable crises, operational continuity and efficiency, compliance with regulatory processes and appropriate authorizations to safeguard its assets against misuse. While it undertakes periodic reviews of its internal functions to ensure smooth functioning and improve operational efficiencies, it is adequately insured against exigencies and unexpected business losses.

Competition Risk

The Company operates in a highly competitive industry and faces intense competition from both organized and unorganized players. Its inability to offer superior products and services at competitive pricing may impact the Companys market share and profitability.

Mitigation

The Company consistently invests in R&D activities to upgrade its product portfolio and develop innovative, superior and value-added products to differentiate itself from its competitors. It also engages in extensive market research to identify changing customer requirements.

Further, the Company strengthens its brand recall through various marketing and promotional activities to gain a competitive advantage.

Human Resource Risk

The availability of a skilled and competent workforce is crucial for sustained operations, production and seamless execution of the Companys growth strategies.

Shortage of skilled workforce, high attrition rates, or lack of the right skills may impact the Companys operations, productivity, growth prospects and profitability.

Mitigation

The Companys robust and employee-friendly HR policies strive to create and maintain a conducive and productive work environment. It undertakes numerous initiatives to attract and retain a talented workforce and improve employee engagement while ensuring growth opportunities based on performance and meritocracy. It also regularly conducts training programs and workshops for the technical and behavioral upgradation of its employees and workers.

HUMAN RESOURCES

The Companys HR policies are well-designed and aim to develop a professional, skilled and talented workforce. The policies are employee-friendly and focus on recruiting, staffing and retaining talent, compensation and benefits and training and skill development. The Company endeavors to create and maintain a safe, inclusive, collaborative and engaging work environment to boost employee morale and ensure high work productivity. It has also developed a well-designed appraisal system to align individual efforts with the long-term strategy and growth objectives of the Company. It conducts timely performance review of its employees, create individualized growth plans and provide performance-based rewards and career development options based on their strengths.

The Company uses talent development strategies to enhance employees existing skills while identifying new skills and opportunities to thrive in their roles, maintain competitiveness and contribute to the Companys success. It leverages its internal bandwidth and resources to establish formal internal programs, which focus on developing specific behavioral skill, technical skills and preparing future leaders to effectively manage a diverse workforce. The Company also provides comprehensive wellness programs that encompass access to fitness facilities, mental health resources, and employee assistance programs. It fosters a sense of camaraderie, teamwork, and healthy competition among employees by organizing sports events and activities such as Corporate Cricket Tournament, outdoor games at picnic, etc.

The Company believes that a strong foundation of employee engagement creates a positive work environment and can significantly boost productivity, retention, and overall employee satisfaction in driving organizational success. It provides a platform for employees across all hierarchies to communicate and exchange information and ideas and help to improve the Companys overall workforce competencies. The Company is striving to establish a structured mechanism for feedback to proactively identify and address gaps in collaborative processes and help employees to actively seek input, acknowledge suggestions, and implement changes accordingly.

Environment, Health, and Safety (EHS)

The Company has established a well-designed

Environment, Health and Safety (EHS) framework to ensure all Company processes strictly adhere to its principles through appropriate benchmarks and rules. Training and awareness programs are conducted throughout the year for the employees to enhance their skills and capabilities and provide them with the newest industry knowledge.

The Company has incorporated the best safety measures across various stages of operations in all the manufacturing facilities. It regularly conducts fire-fighting, safety and mock drill training for the operators and staff.

It also includes worker training in accident prevention, response and emergency planning. The Companys EHS management involves organizing activities and procedures for recognizing workplace potential risks, which aids to reduce accidents and exposure to hazardous conditions.

The Company conducted various employee training sessions throughout the fiscal year under review.

Sessions on the Sexual Harassment of Women at

Workplace (Prevention, Prohibition, and Redressal)

Act of 2013 were also held to raise awareness among female employees.

Environmental Improvements (ISO 14001)

Sewage treatment plant (STP) installed

Cable scrap cutter machine installed for cable scrap of higher sizes

XLPE Power cable core up to 95sqmm used without curing process

Replace Furnace Oil (FO) to Light Diesel Oil (LDO) for steam generator

One more dust collector added at compounding plant

Occupational Health and Safety Improvements (ISO 45001)

Convex mirror fitted at critical blind turning places inside the plant

IR Sensors are installed on Extruder take up machine

Quality Control

The Company fosters a culture of relentless improvement and strives to protect its reputation as a superior quality supplier by emphasizing on maintaining and improving its quality control, which enables it to nurture customer relationships and achieve sustainable business growth.

It has established competent Quality Control (QC) and Quality Assurance (QA) departments for preparing, issuing and reviewing the IMS (Integrated Management System) documentation. The QA head supervises and undertakes rigorous data analysis to achieve consistent quality improvements. The Company also conducts third-party inspections, raw material measurements and FAT (Factory Acceptance Tests) inspections to augment its quality control. Further, it regularly invests in technological upgrades to achieve consistency in product quality and strictly follows both standard and project-specific plans to minimize errors in orders and execution.

Internal Control System and their Adequacy

The Company maintains a robust internal control framework which is responsible for addressing a range of governance, compliance, audit, control, and reporting issues that may impact the Companys business. These internal controls are essential for complying with regulatory requirements, safeguarding of assets, avoiding fraud, and preserving the accuracy of financial reporting. The internal auditors of the Company are responsible for regular monitoring and reviewing the internal control systems. Key observations are communicated to the management who undertakes prompt corrective actions.

Cautionary Statement quality

The Management Discussion and Analysis contains statements describing the Companys objectives, projections, estimates and expectations, which may be forward-looking in nature. These statements are made within the meaning of applicable laws and regulations and are based on informed judgments and estimates.

There cannot be any guarantee of previous performance continuity as future performance also involves risks and uncertainties. These may include but are not limited to the general market, macroeconomic, interest rate movements, competitive pressures, technological and legislative developments, changes in government regulations, tax laws and other key factors that may affect the Companys business and financial performance.