Amber Enterprises India Ltd Management Discussions

Indian Industry Overview

Consumer Durables Industry

Indias consumer durables industry is undergoing a transformative phase, driven by a convergence of rising incomes, supportive government policies, rapid technological advancement, and evolving consumer preferences. The sector is projected to expand at around 11% CAGR to reach f 3 Lakh Crore by Financial Year 2028-29 and is set to become the fourth-largest market globally by 2027. This growth is underpinned by several interconnected trends and policy measures, including a shift towards premiumisation, as urban demand for smart appliances such as IoT-enabled, AI-driven, and BEE 5-star rated products continues to accelerate. This trend is further amplified by sustainability imperatives, with brands prioritising alignment with Indias Net Zero goals.

A major catalyst that has been influencing the demand is the governments introduction of a zero-tax regime forannual incomes uptoRs12 Lakh, which is significantly increasing disposable incomes for a broad segment of the population.

This tax relief is reviving discretionary spending, especially among the middle class, and is directly translating into higher demand for premium, feature- rich, and energy-efficient appliances. Additionally, the proliferation of credit- scheme-backed sales, such as no-cost or low-cost EMIs and longer-tenure loans, has made it easier for consumers to upgrade to higher-capacity and smarter products, further fuelling market expansion.

On the supply side, the governments Make in India initiative, the white goods and Electronics Component Manufacturing Schemes, and the overarching vision of Viksit Bharat 2047 have been pivotal. These measures are attracting investments, advancing technology, and strengthening supply chains, helping India reduce import dependence and boost domestic manufacturing. As a result, the sector is not only meeting domestic demand but is also poised to become a key exporter of electronics and appliances, aligning with Indias ambition to establish itself as a global manufacturing and export hub. The emphasis on quality, standardisation, and the adoption of Indian standards globally is enhancing the countrys reputation in international markets, along with supporting its export ambitions and global leadership vision.

These reforms, along with Indias cost- effective labour force and stable political climate, have positioned the country as a manufacturing hub and a preferred destination for companies adopting the China Plus One strategy.

(Source: https:/www.ey.com/en _in/industries/ consumer-products/how-indias-consumer- durables-industry-can-foster-global-leadership- by-2030)

Room Air Conditioner (RAC) Market Review

The RAC market continues its rapid growth trajectory, driven by factors such as rising temperatures, increasing disposable incomes, urbanisation, rapid commercialisation, replacement cycles, and favourable consumer financing options.

The Room Air Conditioner (RAC) industry is projected to grow at a CAGR of 15-20% over the next five years. This growth is being driven by relatively low RAC penetration levels and a shift in consumer perception, with frequent heatwaves reinforcing the view of RACs as essential rather than luxury products. While the industry remains seasonal and demand is influenced by weather patterns, it has consistently demonstrated the ability to sustain long-term growth despite such fluctuations.

Urbanisation, the development of new housing societies, and expansion in the residential sector, particularly in metropolitan and Tier 2 cities, are major demand drivers. The rise in residential and commercial construction projects across these urban hubs, coupled with rapid commercialisation, continues to augment RAC uptake. Despite strong growth, penetration in households remain relatively low at approximately 10%, compared to around 68-80% in countries such as China and Malaysia, highlighting the substantial headroom for expansion. Additionally, the increasing number of RAC units per household and shortening replacement cycles, led by technology upgrades and energy- efficiency, are expected to support both volume and value growth in the coming years.

Consumer preferences are also shifting. There is a growing demand for premium, energy-efficient models (4-star and 5-star ratings), which is gaining ground even in rural markets. Smart and loT- enabled RACs are becoming increasingly popular, especially among younger, tech-savvy consumers who value connectivity, convenience, and energy management. Inverter-based RACs and energy-efficient models are steadily capturing market share, reaching 77% in 2022-23. Split ACs remain dominant in the market due to their compact design and efficient performance.

The Government of Indias Production Linked Incentive (PLI) scheme has been pivotal in reducing import dependence, fostering backward integration. It has enabled OEMs to scale up and accelerated the shift towards domestic assembly. The scheme has also spurred investments in high-value components like compressors, heat exchangers, motors, and PCBs, strengthening the domestic supply chain and boosting Indias manufacturing and export capabilities.

GROWTH DRIVERS

Rising Temperatures

In 2024, global temperatures surpassed 1.5?C above pre-industrial levels for the first time, marking the culmination of an extraordinary ten-year streak of record-breaking heat. This trend has been notably strong in India, which recorded its hottest year since 1901 in 2024. Moreover, the average number of heatwave days per year has steadily risen over the past three decades. Hotter weather conditions are leading to longer summers and more pronounced seasonal demand cycles.

(Source: https:/wmo.int/news/media-centre/ wmo-confirms-2024-warmest-year-record- about-155degc-above-pre-industrial-level)

Growing Preference for Energy-Efficient RACs

Rising electricity consumption for cooling demand and growing sustainability awareness is driving a strong shift towards energy-efficient air conditioners. Consumers increasingly prioritise energy efficient models that offer higher energy savings. This eco-conscious trend is pushing manufacturers to innovate high- efficiency cooling solutions, further accelerating demand for sustainable RACs, triggering replacements in both residential and commercial sectors.

Development of Housing Societies and Real Estate Expansion

New housing societies and rapid commercialisation in metropolitan and Tier 2 cities are increasing demand for RACs. Government initiatives like Smart Cities Mission further support this growth.

Expanding Middle Class

Indias rising middle class and high-income households are poised to grow significantly by 2031, influencing market dynamics and expanding addressable market size. Rising incomes and improved living standards are driving a surge in demand for comfort and convenience, making air conditioning a necessity rather than a luxury. This expanding consumer base is expected to fuel rapid growth in the RAC segment, boosting demand for energy-efficient and smart cooling solutions across urban and semi-urban markets.

Distribution of Indian Households across Income Segments

Government Thrust on Local Manufacturing

The governments focussed push for local manufacturing is also driving growth in the consumer durables industry. As part of its self-reliance agenda, the government f^has also implemented the Phased Manufacturing Programme (PMP), a structured initiative that progressively raises customs duties on RACs and their components, making imports less viable and accelerating the shift to local sourcing. In parallel, the PLI scheme for White Goods is incentivising domestic production.

OUTLOOK

Driven by rising per capita income, the Indian Room Air Conditioner (RAC) market is expected to grow significantly to reach 30-35 Million units by Financial Year 2029-30, up from 14 Million units currently. This anticipated growth, at a CAGR of 15-20%, is further supported by low market penetration and a fundamental shift in consumer perception, with RACs increasingly viewed as essential rather than luxury products.

With a rise in aspirational consumers and easier access to financing, this widespread demand reflects the sectors inclusive and sustained expansion. The ongoing shift towards localisation, supported by the PLI scheme, is strengthening Indias position as a global manufacturing hub, while rising adoption of smart, energy- efficient products is fuelling innovation. Strategic investments in technology, backward integration, and regulatory streamlining will be key to unlocking the industrys full potential.

(Sources: https:/brandequity.economictimes. indiatimes.com/news/marketing/icra-forecasts- 20-25-growth-for-indian-room-air-conditioner- industry-in-fy25/114269214 https:Ztimesofindia.indiatimes.com/india/2024- was-indias-hottest-year-since-records-began- in-1901/articleshow/116867730.cms https:Zwww.angelone.in/news/heatwaves-to- drive-ac-sales-in-india-market-projected-to-reach- rs-50000-crore-by-2029)

Electronics Industry

The Make in India programme has catalysed a transformation in the electronics industry, driving robust investment inflows and strengthening local production. This evolution is contributing to Indias journey towards self-reliance, reducing its historical dependence on imports. Electronics production in the country has nearly doubled to US$ 101 Billion from US$ 48 Billion in Financial Year 2016-17, registering a CAGR of 13%. electronics across the country, propelled by robust government initiatives such as the PLI scheme, Make in India initiative and the Viksit Bharat vision, alongside rapid technological advancements.

(Source: NITI Aayog Report)

Scenario 1

Indias electronics manufacturing sector is currently growing at a CAGR of 13%. If this trend continues under a Business-as-Usual (BAU) scenario, total electronics production is projected to reach US$ 278 Billion by 2030.

Scenario 2

While the BAU path caps production at US$ 278 Billion by 2030, a more ambitious trajectory, driven by policy interventions and targeted focus on key components, could push this figure to US$ 500 Billion, requiring a CAGR of around 25%.

(Source:https:/www.niti.gov.in/sites/default/files/2024-07/

GVC%20Report_Updated_Final_11zon.pdf)

The consumer electronics market was valued at 110 Lakh Crore in Financial Year 2018-19 and is projected to reach 300 Lakh Crore by Financial Year 2028-29. While this represents robust growth within the consumer segment, the broader Indian electronics industry including mobile phones, industrial and automotive electronics, and components has set even more ambitious targets.

Parallelly, the Indian printed circuit board (PCB) market has witnessed robust growth, with demand projected to rise sharply, driven by surging electronics production, localisation efforts, the growing adoption of connected devices, and targeted government incentives. However, much of the countrys PCB demand continues to be met through imports.

The Ministry of Finance imposed a 30% anti-dumping duty on Bare PCBs (manufactured in China and Hong Kong) up to six layers that are used for applications in automobiles, IT, and consumer durables, among others. This provides significant import substitution and a level playing field for domestic players. As the electronics sector graduates from US$

100 Billion to US$ 278-500 Billion by Financial Year 2029-30, the demand for PCB assembly and Bare PCB is anticipated to expand exponentially.

(Sources: https://www.custommarketinsights.com/ report/india-consumer-electronics-market/ https:/economictimes.indiatimes.com/industry/ cons -products/electronics/indias-electronics- sector-eyes-major-growth-with-12-million-jobs- projected-by-2027/articleshow/116736956.cms https:/www.marknteladvisors.com/research- library/india-semiconductor-market.html https:/www.imarcgroup.com/indian-pcb-market)

PCB AND PCB-ASSEMBLY-A CRITICAL ELEMENT FOR INDIAS ELECTRONIC AMBITION

Printed Circuit Board Assemblies (PCB-As), comprising circuit boards integrated with electronic components, play a vital role in the functionality of modern electronic systems across diverse sectors, including consumer electronics, automotive, telecom, and healthcare. Indias PCB-A ecosystem is witnessing strong growth, driven by the countrys wider thrust on strengthening domestic electronics manufacturing. PCB is a high-potential category for India, as it is a high-growth sector, a low- hanging opportunity, and India already has the capabilities to assemble PCBs at scale. Driven by the governments focus on domestic electronics manufacturing and integration into global value chains, the PCB market is expected to witness strong growth, being a key component of the ecosystem.

A key enabler of this growth is the Electronics Manufacturing Services (EMS) industry, which is witnessing rapid expansion due to increased outsourcing by Original Equipment Manufacturers (OEMs), the China Plus One strategy being adopted by global players and surging domestic demand for advanced electronics and appliances. With an increasing focus on design led manufacturing, India is becoming a crucial part of the global electronics value chain, attracting strategic investments from both international and domestic players.

The MEITY has launched an ambitious incentive policy for Electronics Component Manufacturing Scheme with an outlay of around 22,919 Crore (approximately US$ 2.75 Billion) to make India Atmanirbhar in electronics supply chain.

This scheme aims to deepen domestic value addition, targeting various components including Multi-layer

PCBs and High-density interconnect

(HDI)/Modified Semi-Additive Process

(MSAP)/Flexible PCBs. The scheme envisages investment of 59,350 Crore, production of 4,56,500 Crore and direct employment for 91,600 people, along with many indirect jobs.

(Sources: https:/www.niti.gov.in/sites/default/ files/2024-07/GVC%20Report_Updated_

Final_11zon.pdf

https://www.marknteladvisors.com/research-

library/india-semiconductor-markethtm

https:Zwww.imarcgroup.com/indian-pcb-market

https:Zwww.indiaelectronicsexpo.com/indian- electronics-industry/

https: /www.ft.com/content/def3e2bf-d2a6- 44be-9876-4d71f0f0326c

https: /www.reuters.com/world/india/india- budget-india-axes-import-tax-some-smartphone- parts-boost-apple-xiaomi-2025-02-01/)

GROWTH DRIVERS

Booming Consumer Electronics Production

Indias ambitious aim to take electronics production to US$ 278-500 Billion, along with integration into the global value chain possesses immense potential for Electronic Manufacturing Services (EMS). The enhanced value chain integration and high-tech manufacturing unlock new avenues of growth for both Bare PCB and PCB-Assembly in the country.

Surge in IoT-enabled and Connected Products

The rising adoption of IoT-enabled products signal a significant shift in consumer behaviour, especially among younger, digitally inclined users who seek enhanced connectivity and ease of use. This evolving demand is spurring innovation across the electronics ecosystem, with PCBs emerging as a critical enabler of smart features and seamless integration.

Emerging Momentum in Sectors like Automobile, Industrials, Aerospace and Defence

Indias automotive sector is poised for significant growth, coupled with a strong outlook for the industrial sector. At the same time, Indias aerospace and defence sector is scaling new heights. Government-led initiatives to enhance domestic manufacturing and reduce import dependency are driving innovation in critical systems.

Governments Thrust on Electronics Components

The Governments Electronics Component Manufacturing Scheme is poised to be a transformative driver in building a resilient and self-sustaining domestic electronics ecosystem. By incentivising local production of critical components, including multi-layer PCBs, and HDI and Flex PCBs, which have traditionally been heavily import- dependent, the scheme aims to foster indigenous capabilities.

(Sources: https:Zwww.niti.gov.in/sites default/files/2024-07/GVC%20Report

Updated_Final_11zon.pdf

https:Zwww.marknteladvisors.com/

researchlibrary/india-semiconductor- market.htm

https:Zwww.imarcgroup.com/indian-

pcb-market

https:Zwww.indiaelectronicsexpo.com/

indianelectronics-industry/

https:Zwww.ft.com/content/def3e2bf- d2a6-44be-9876-4d71f0f0326c https:/www.reuters.com/world/india/ indiabudget-india-axes-import-tax- some-smartphoneparts-boost-apple- xiaomi-2025-02-01/)

Indian Railway Subsystems and Mobility Market

Indias railway subsystems and mobility market is set for significant expansion, driven by the governments ongoing modernisation efforts and increased investments in infrastructure. The Indian Railways is aggressively modernising its rolling stock, with plans to introduce 200 Vande Bharat trains, 100 Amrit Bharat trains and 50 Namo Bharat trains over the next few years. Additionally, 40,000 rail bogies will be upgraded to Vande Bharat standards, enhancing speed, passenger comfort, and safety.

The Union Budget for 2025-26 has allocated Rs 2.65 Lakh Crore to Indian Railways, showcasing a strong commitment to enhancing safety, efficiency, and passenger experience. Electrification remains a key focus, aimed at improving operational efficiency, reducing carbon emissions, and supporting sustainability goals. These initiatives open up substantial opportunities for subsystems and mobility solutions providers.

To enhance freight transportation, dedicated freight corridors are being expanded, driving demand for advanced signalling systems, train control systems, and rolling stock. Simultaneously, urban mobility is receiving a significant boost, with plans to double Indias operational metro rail network to 1,700 km within the next 3-4 years, necessitating 2,0002,500 new metro coaches. With its rapid infrastructure expansion, strong policy support, and rising investments in technology, Indias rail subsystems and mobility market is at the cusp of unprecedented growth. These initiatives are set to unlock vast opportunities for manufacturers and service providers in this space, solidifying Indias position as a key player in the global rail industry.

(Sources: https:Zpib.gov.in/PressReleasePage. aspxRsPRID=2099337&utm https:Ztimesofindia.indiatimes.com/business/ india-business/railway-budget-2025- live-updates-announcements-highlights- vande-bharat-bullet-train-kavach-safety- capex-railway-projects-funding-allocations/ articleshow/117812775.cms)

GROWTH DRIVERS

Record Government Investments and Modernisation Push

The Indian government has significantly ramped up capital expenditure on railways, allocating Rs 2.65 Lakh Crore in the Union Budget 2025-26, marking a historic high. These funds are being directed towards expanding capacity, upgrading infrastructure, and fasttracking the rollout of modern trains such as Vande Bharat.

Surge in Urban Population

As per the United Nations projections, Indias urban population is expected to surpass its rural population by 2050. Between 2022 and 2047, rapid urbanisation is likely to drive a significant expansion of metro-rail projects across the country, creating an extensive network of urban connectivity.

Surge in Passenger and Freight Demand

Indian Railways carried over 6.4 Billion passengers in Financial Year 2023-24, registering an 8% year-on-year (YoY) growth in passenger volumes. The rise in passenger capacity is projected to drive an increase in the number of trains, thereby fuelling the expansion of the railway infrastructure ecosystem.

Public-Private Partnerships (PPP) and Industry Collaboration

The government is actively encouraging private sector participation in station redevelopment, rolling stock manufacturing, and logistics infrastructure. This not only helps in bringing advanced technology and global practices but also mobilises additional capital and expertise to fast- track project execution.

(Sources: https:Zwww.ren21.net/gsr-2024/ snapshots/india/ https: /www.globenewswire.com/news-re lease/2024/10/22/2967148/28124/en/

India-Digital-Railway-Industry-Research-

Report-2024-Market-Trends-Regional-

Insights-Competitive-Landscape-Forecast-and-

0pportunities-2020-2030.html

https: /economictimes.indiatimes.com/industry/ transportation/railways/economic-survey-

2024-25-train-passenger-traffic-registers- 8-per-cent-growth-freight-revenue-5-2-pc/ articleshow/117794755.cms https: /economictimes.indiatimes.com/industry/ transportation/railways/railways-saw-progress- on-several-projects-in-2024-but-faced- persistent-challenges/articleshow/116848313. cms)

Business Overview

ABOUT AMBER GROUP

Amber Enterprises India Limited (also referred to as Amber or the Company; Amber Group includes all subsidiaries and joint ventures) has been a trusted leader in the HVAC industry. The Company, along with its subsidiaries, has undergone a remarkable transformation over the years, evolving from a specialised manufacturer of Room Air Conditioners (RAC) and components into a diversified technology-driven B2B solutions provider, spanning consumer durables, electronics manufacturing services including EMS, and railway subsystems & defence sectors. Amber has strategically expanded its product portfolio, enhanced technical expertise and leveraging strategic alliances both domestically and internationally through backward integration and alliances, allowing it to develop a strong foothold in multiple high-growth industries.

Today, Ambers portfolio extends far beyond RACs, covering a broad spectrum of industries through three divisions namely Consumer Durables, Electronics and Railway Subsystems & Defence. The Consumer Durables division includes RAC, CAC finished goods and RAC components & Non-RAC components. The Electronics division, comprising PCB-Assembly, Bare Printed Circuit Board (PCB) and Box Build verticals, delivers solutions to a broad range of industries including consumer durables, hearables and wearables, smart meters, automotive, telecom, aerospace and defence applications. Initially driven by the industrys transition from fixed- speed ACs to inverter technology, the Company diversified into new opportunities beyond air conditioning. The Railway Subsystems & Defence division provides integrated and customised solutions to rolling stock customers, such as Indian Railways, Metro networks, RRTS systems, buses, and the defence sector, with offerings across HVAC systems, Pantry Modules, Automated Doors, Gangways, Driving Gears, Couplers, Pantographs and Brakes.

Ambers growth has been fuelled by a commitment to innovation, operational excellence, and strategic diversification. By broadening its capabilities in Electronics Manufacturing Services (EMS) and the Railway segment, and strengthening its presence in non-AC categories, the Company has positioned itself as a key player in Indias evolving manufacturing landscape. Additionally, its deep backward integration, supported by strategic acquisitions, has enabled it to serve a wider customer base with cutting-edge solutions.

With a robust nationwide presence spanning 30 state-of-the-art manufacturing facilities across 9 states, Amber continues to drive innovation and efficiency. Through its three core business divisions, the Company remains focussed on delivering tailored, high-quality solutions that align with the evolving needs of the industries.

BUSINESS DIVISIONS

CONSUMER DURABLES

The Consumer Durables division of Amber Enterprises India Limited, including RAC, CAC finished goods and RAC components & Non-RAC components, delivered a strong performance in Financial Year 202425, underscoring its strategic agility, manufacturing excellence, and deepening customer relationships. Leading the Room Air Conditioner (RAC) segment, Amber offers a diverse portfolio including completely built Window Units (WAC) and Split ACs (SAC) (ranging from 0.75 to 2.0 ton), across various energy ratings, in both fixed speed and inverter segments. Notably, Amber Group can cater to approximately 70% of the bill of materials of an AC, positioning itself as a preferred partner for leading brands seeking comprehensive solutions. Expanding strategically beyond its core RAC business, this division is gaining strong traction in the Commercial AC segment, driven by the addition of a new customer and an enhanced product range, including cassette, tower and ductable ACs, further broadening its addressable market.

Through its backward integration strategy, the division strengthens its market positioning by offering a comprehensive range of components, including heat exchangers, motors, cross flow fans, metal and plastic components, copper tubing, and tooling, among others.

The divisions R&D-led innovation strategy has been a key enabler of differentiation. Amber is now Indias first B2B player to offer ODM solutions for products such as tower air conditioners, window top throw inverter series, tropical high-efficiency split ACs, and cassette ACs. These first-to-market solutions highlight Ambers technical leadership and keen insight into evolving customer expectations.

During the year, the division recorded a remarkable revenue growth of 46%, reaching Rs 7,329 Crore, as compared to Rs 5,009 Crore in Financial Year 202324. This growth was led by robust performances across both RAC and non-RAC verticals, with RAC registering a growth of 49% and non-RAC expanding by 31%. The Operating EBITDA* for the year also grew by 59%, reaching Rs 562 Crore, driven by strong business performance.

Amber maintained its market leadership with a 26-27% share of the manufacturing footprint (in value terms). Growth was driven by underlying industry demand, and successful conversion of an MNC customer from gas charging to ODM/OEM, highlighting the deepening relationship and customer-centric approach.

Strategic Alignment with Industry Trends

Ambers growth has been further supported by macro-industry tailwinds. Indias CBU imports have dropped to under 5% over the years, reflecting the success of government policies in promoting domestic manufacturing. The PLI scheme has acted as a catalyst in creating a local component ecosystem for the air conditioning industry, enabling greater self-reliance and reducing import dependence. As a result, the country aims for more than 80% value addition by 2028, a significant increase from around 25% in 2021. Amber is well- positioned to capitalise on the Make in India initiative and the expanding export potential that comes with a stronger domestic manufacturing base.

ELECTRONICS DIVISION

The Electronics division delivered exceptional performance in Financial Year 2024-25, solidifying its position as a key pillar in the Companys long-term diversification and growth strategy. With its focus on Printed Circuit Board Assemblies (PCB-As), Bare PCB and Box Build, the division has expanded both in scale and scope, positioning itself as a comprehensive full stack Electronic Manufacturing Services (EMS) company with a strong backward integration advantage.

During the year, the division achieved strong growth, driven by strategic customer acquisitions, expansion into new sectors, and investments in advanced manufacturing technologies. Initially rooted in the consumer durables segment, supplying PCB-

Assembly solutions for air conditioners, refrigerators, and washing machines, the Electronics division expanded its portfolio to include microwave, water purifier, and BLDC fan, among others, and diversified into high-potential sectors such as hearables and wearables, smart meters, automotive, telecom, aerospace and defence applications.

In another significant move, Amber acquired Ascent Circuits, one of Indias prominent Bare PCB manufacturers with a strong foothold in the automotive, telecom, and aerospace & defence sectors. This acquisition substantially augmented the Companys backward integration into PCB manufacturing and advances its strategy of import substitution in the Indian PCB market, which remains heavily reliant on imports.

Building further on this momentum, ILJIN Electronics signed a joint venture agreement with South Koreas Korea

Circuit Company, a globally reputed PCB manufacturer. ILJIN Electronics and Korea Circuit respectively hold 70% and 30% ownership in the JV.

This partnership is focussed on advancing the manufacturing of High-

Density Interconnect (HDI), flexible, and semiconductor substrate PCBs in India. A distinctive feature of this collaboration is the buyback commitment by Korea Circuit over the first two years, ensuring optimal capacity utilisation and providing early revenue visibility. The association is expected to significantly expand Ambers technological capabilities and leverage customer relationships.

The anticipated growth of domestic electronic production to US$ 278500 Billion, with PCBs being a key component, unlocks substantial expansion in the countrys addressable market.

During the year, the division recorded a remarkable revenue growth of 77%, reaching 2,194 Crore, as compared to 1,241 Crore in Financial Year 2023-24. The Operating EBITDA* for the year also grew by 119%, reaching 151 Crore.

On the manufacturing side, construction of the new facility in Hosur is progressing well, with a total envisaged investment of 650 Crore, expanding our mutli- layer capacity by more than 200%, significantly enhancing the divisions ability to meet growing domestic demand.

Looking ahead, the Electronics division is expected to be a key growth engine for Amber. With a strong emphasis on domestic manufacturing, import substitution, and backward integration, the division is poised for multi-fold scale-up. Ambers ability from R&D and PCB assembly to backward-integrated Bare PCB manufacturing positions the Company as a leading, full-stack EMS player in Indias rapidly expanding electronics manufacturing ecosystem.

RAILWAY SUBSYSTEMS & DEFENCE DIVISION

Financial Year 2024-25 was a transitional year for Ambers Railway Subsystems and Defence division, marked by short-term operational challenges but significant progress on long-term strategic initiatives. The Company focussed on deepening its capabilities, expanding its product portfolio, and building a robust foundation for scalable and sustainable growth in both the railway and defence sectors.

Revenue performance during the year was impacted by delays in product offtake and a temporary shift in government focus within Indian Railways towards the production of non-AC coaches.

During the year, Sidwal entered into a joint venture with Yujin Machinery of South Korea to design, manufacture, and develop Driving Gears, Couplers, Pantographs and Brakes.

Strategic capacity expansion is also well underway. The greenfield facility of Sidwal, dedicated to the manufacturing of HVAC systems, Pantry Modules, Automatic Doors, and Gangways, is progressing steadily, with commercial operations expected to begin by late Financial Year 2025-26. Similarly, the joint venture with Yujin Machinery (South Korea) for the production of critical railway subsystems such as Driving Gears, Couplers, Pantographs and Brakes is advancing as per plan, with plant readiness and product trials scheduled for late Financial Year 202526.

Ambers vision for the division extends beyond HVAC, and this year marked a pivotal step towards broadening its addressable market per coach. Transitioning from HVAC systems and Pantry, the division has diversified into a portfolio comprising Doors and Gangways, via a Technology Transfer (TT) with the Ultimate Group. The Company also entered into a strategic joint venture with Yujin Machinery to manufacture Couplers, Gears, Pantographs and Brakes. These efforts are expected to significantly increase wallet share and deepen customer engagement, uniquely positioning this division to address 16%-18% of the BoM wallet share per passenger coach.

In the defence segment, Sidwal continued to gain traction, supported by an expanding product range, including instant cooling systems.

During the year, the division witnessed a revenue decline of 6%, from Rs 480 Crore in Financial Year 2023-24 to Rs 450 Crore in Financial Year 202425, due to delayed off-take of the products. The Operating EBITDA* for the year also saw a decline of 15% from Rs 98 Crore in Financial Year 2023-24 to Rs 83 Crore in Financial Year 2024-25.

While the Financial Year was marked by external challenges, Amber remains firmly committed to the long-term potential of the Railway Subsystems & Defence division. The Company remains optimistic about strong growth of the division from Financial Year 2026-27 onwards, backed by a strong order book, capacity expansion, and new products.

Despite these short-term headwinds, the division took decisive steps towards long-term value creation. The order book remained strong with growing momentum in the defence sector. As of year-end, the division maintained a robust order visibility of over Rs 2,000 Crore, positioning it well for a turnaround and growth revival in the near term.

The division remains aligned with Indias national imperatives of infrastructure modernisation and self-reliance and is poised to play a pivotal role in Ambers next phase of growth.

OPPORTUNITIES

Boost from Production- Linked Incentive (PLI) Scheme

The Indian governments PLI scheme has played a transformative role in strengthening domestic manufacturing. The scheme is expected to significantly increase domestic value addition to 7580% from the initial level of 15-20%, while fostering backward integration.

Surging Demand for Room Air Conditioners (RAC)

Air conditioners are no longer considered a luxury in India but a necessity. Driven by rising temperatures, increasing affordability, and a growing middle class, the RAC industry demand is poised to grow. Additionally, the replacement cycle for ACs, with consumers upgrading more frequently to energy-efficient models, is further boosting demand.

Governments Infrastructure Push Driving HVAC Growth

With massive investments in infrastructure projects over the next five years, the sector is poised for rapid growth. The construction of modern airports, metro stations, smart cities, and commercial hubs will drive increased adoption of HVAC solutions, strengthening the industrys long-term prospects.

Indias Focus on Electronic Components

A dedicated Electronic Component Manufacturing Scheme has been introduced, with an outlay of Rs 22,919 Crore over six years. The scheme aims to attract investments worth Rs 59,350 Crore, and generate production valued at over Rs 4.5 Lakh Crore, thereby significantly strengthening the local manufacturing ecosystem and boosting value addition across the electronics supply chain.

Railway Modernisation: Vande Bharat and Namo Bharat Projects

Indian Railways has set an ambitious target to produce 4,500 Vande Bharat trains by 2047 as part of its modernisation plan. Additionally, the Namo Bharat project and other projects will significantly boost demand for electrical, electronic, and HVAC components.

Indias Thrust on Defence Production

A visible surge in self-reliance is evident from Indias growing focus on domestic defence capabilities and manufacturing. As a result of this vision, there has been an uptick in Indias role in global exports. With a continued focus on indigenisation, this sector is expected to witness sustained growth.

THREATS

Fluctuations in Commodity Prices and Currency Fluctuations

The unpredictability of commodity prices poses a risk to business growth. A rise in these costs directly impacts manufacturing expenses, which may, in turn, influence consumer purchasing behaviour. Additionally, currency depreciation further compounds these challenges.

Geopolitical Uncertainty

Ongoing international conflicts and geopolitical tensions can disrupt global trade networks, affecting supply chains and business continuity. These disruptions may hinder the seamless flow of goods and services, posing operational challenges for companies reliant on stable trade environments.

Market Competition

The Companys operations face pressure from both well-established players and new entrants. The evolving competition demands continuous innovation and strategic positioning to maintain market relevance and sustain growth.

FINANCIAL OVERVIEW

On a consolidated basis, total revenue stood at Rs 9,973 Crore in Financial Year 2024-25, compared with Rs 6,729 Crore in Financial Year 2023-24. Further, the Company achieved an Operating EBITDA* of Rs 796 Crore in Financial Year 2024-25, compared with Rs 519 Crore in Financial Year 2023-24. PAT stood at Rs 251 Crore in Financial Year 2024-25, compared with Rs 139 Crore in Financial Year 2023-24.

Particulars	Financial Year 2024-25	Financial Year 2023-24
Debtors Turnover Ratio (Revenue from Operations/Average Debtors)	6.01	4.04
Interest Coverage Ratio (EBIT/Finance Cost)	2.92	2.15
Current Ratio (Current Assets/Current Liabilities)	1.02	1.02
Debt-to-Equity Ratio [Total Debt (Long-term Borrowings + Short-term Borrowings)/Shareholders Equity]	0.84	0.68
Operating EBITDA Margin (%) [EBITDA (Before impact of ESOP expense and other non-operating income and expenses)/Revenue from Operations]	8.0	7.7
Net Profit Margin (%) [Net Profit/Revenue from Operations]	2.5	2.1

RISK MANAGEMENT

Ambers risk management framework is built on a proactive and structured approach to identifying, assessing, and mitigating potential risks that could impact business operations. By integrating robust governance practices, advanced analytics, and continuous monitoring, Amber ensures resilience across its operations. The Companys risk management strategy focusses on financial stability, regulatory compliance, cybersecurity, operational continuity, and market dynamics, enabling it to navigate uncertainties with confidence. Through regular risk assessments and a culture of accountability, Amber remains committed to safeguarding stakeholder interests while driving sustainable growth.

Risks	Impact	Mitigation
Transforming Market Environment	The constantly shifting competitive landscape and evolving competition pose challenges to financial stability.	To address this, Amber continues to expand its scale, leveraging its expertise in HVAC manufacturing, enhanced product portfolio and diversified across three divisions namely Consumer Durables, Electronics, and Railway Subsystems & Defence. The Company has strengthened its infrastructure, operational excellence, and optimised cost structures to maintain competitiveness and profitability.
Coping with Changing Technology	Rapid advancements in technology and the emergence of new products may necessitate strategic adjustments in the Companys product portfolio.	Amber remains committed to delivering cutting-edge solutions that exceed customer expectations. Its strong in-house R&D capabilities enable it to stay ahead of industry trends, drive innovation, and ensure its products remain relevant and competitive.
Procurement-related Risk	Supply chain disruptions, whether due to supplier issues, natural disasters, or unforeseen events, can impact the availability and cost of raw materials.	To mitigate these risks, Amber has established a diversified supplier base across multiple geographies, standardised procurement processes, and has longstanding relationships with the key suppliers. These efforts ensure a stable and cost-effective supply chain.
Environmental Issues and Climate Change	Increasing environmental regulations, particularly around greenhouse gas emissions and energy efficiency, may lead to higher compliance costs and potential business disruptions.	Amber Group is committed to environmental sustainability through its innovation-led approach, spearheaded by the extensive R&D team. The Company is proactively developing a pipeline of energy-efficient products that meet evolving energy regulations and reduce ozone depletion and global warming. On the manufacturing front, Amber Group undertook various initiatives aimed at reducing its environmental footprint and supporting long-term sustainable growth.

HUMAN RESOURCES

Amber recognises that its people are the driving force behind its success. The Company fosters a dynamic and inclusive work environment that nurtures talent, encourages innovation, and enhances productivity. Its human resource strategy focusses on attracting, developing, and retaining top talent through structured training programmes, leadership development initiatives, and a culture of continuous learning. By promoting diversity, collaboration, and employee well-being, Amber empowers its workforce to excel and contribute meaningfully to the Companys growth.

In recognition of its ongoing commitment to advancing Diversity & Inclusion (D&I) in the workplace, Amber was honoured with the DivHERsity Award 2025 by HerKey.

The Company places strong emphasis on employee engagement and career development by offering competitive benefits, performance-driven rewards, and opportunities for skill enhancement. A commitment to workplace safety, ethical business practices, and a supportive organisational culture ensures a motivated and high- performing team. As Amber continues to expand, its HR initiatives remain aligned with its vision of building a future-ready workforce that is agile, resilient, and committed to excellence.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

The Company has implemented a comprehensive internal control system designed to align with its business scale and industry standards, ensuring the safeguarding and preservation of its assets. To strengthen this framework, the Audit Committee has empowered external auditors to conduct thorough internal audits across all manufacturing facilities. These audits assess the effectiveness of existing procedures, systems, and controls. The Audit

Committee routinely reviews audit findings, evaluates proposed action plans, and monitors the reliability of financial reporting, risk management systems, and internal controls. Additionally, the internal audit team conducts independent assessments to verify the operational efficiency of these controls. Based on a detailed evaluation, the Board of Directors confirms that, as of 31 March 2025, the Company has successfully implemented a robust internal financial control system.

CAUTIONARY STATEMENT

The Statement in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, or predictions may be forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include demand-supply conditions, changes in Government and international regulations, tax regimes, economic developments within and outside India and other factors such as litigation and labour relations.