Avana Electrosystems Ltd Management Discussions

OVERVIEW

Avana Electrosystems Limited ("AVANA" or "the Company"), is a pioneering Indian Company dedicated to delivering innovative and high-quality electrical solutions to the Industrial Customers predominantly in India and to Customers in a few other Countries viz., Bangladesh, Kuwait, Zimbabwe, Ghana and Kenya. Established with a commitment to excellence, your Company specializes in manufacturing and supplying a wide range of electrical products and systems that cater to various industries. With a focus on sustainability and technological advancement, Avana aims to empower businesses through reliable and efficient electrical solutions. Our state of-the art manufacturing facilities and skilled workforce enable us to maintain the highest standards of quality and service.

Your Company is an established and reliable player in providing control and protection solutions for electrical power systems. The Company manufactures customized Control and Relay Panels and electrical protection relays for power systems. Your Company provides end to end monitoring, control and automation solutions for the power transmission and renewable energy sectors. Your Company has in-house facility for design, development and manufacture of protection relays and electromechanical auxiliary and trip relays and design, wiring, manufacture and testing of all types of panels generally used for power system applications. Your Company has experienced and talented team to design the required scheme for control and protection, development of SCADA (Supervisory Control and Data Acquisition) and automation and testing and commissioning of panels manufactured by the Company.

Your Company has well equipped calibrated testing and measuring instruments, high end 3 phase numerical power system simulator for testing and commissioning of latest numerical protection relays. Your Company has also provided complete SCADA (Supervisory Control and Data Acquisition Data Acquisition) and automation systems upto 400kV in utility substations and also renewable energy substations.

Your Companys products are in operation for over several years in various power utilities and other substations both in India and overseas like Bangladesh, Kuwait, Zimbabwe, Ghana and Kenya for voltages upto 380kV.

AVANA is a Listed Company, listed its Equity Shares on the NSE EMERGE platform (SME) of National Stock Exchange of India Limited and having its Registered Office in Bengaluru, Karnataka, India.

The Financial Statements of the Company are prepared as per the Accounting Standards, the provisions of The Companies Act, 2013 and the guidelines issued by the Securities and Exchange Board of India (SEBI)

GENERAL ECONOMIC SCENARIO & INDUSTRY STRUCTURE

The global power transmission and distribution sector is undergoing significant transformation, driven by increasing electricity demand, rapid urbanization, renewable energy integration, and modernization of ageing grid infrastructure. As countries strive to build reliable, resilient, and sustainable power systems, investments in transmission substations, distribution networks, and smart grid technologies continue to accelerate, creating substantial opportunities for manufacturers of control and relay panels, protection relays, SCADA and Automation, switchgear panels, and switchyard equipment.

Manufacture of Control & Protection Panels and Protection Relays form the backbone of modern substations by ensuring the safe, reliable, and efficient operation of electrical networks. These panels incorporate protective relays, control systems, metering devices, annunciation systems, communication modules, and automation equipment that continuously monitor electrical parameters and isolate faults within milliseconds. The widespread adoption of numerical relays compliant with IEC 61850 standards, Supervisory Control and Data Acquisition (SCADA) systems, and Intelligent Electronic Devices (IEDs) has significantly enhanced the reliability, flexibility, and operational efficiency of power utilities across the world.

The demand for Control & Relay Panels and Protection Relays has increased substantially with the development of renewable energy projects, including solar parks, wind farms, hydroelectric plants, battery energy storage systems (BESS), and hybrid power projects. Grid operators require advanced protection schemes capable of managing bidirectional power flow, variable generation sources, and increasingly complex grid operations while ensuring system stability and minimizing outages.

Utilities worldwide are increasingly replacing conventional air-insulated equipment with compact Gas-Insulated Switchgear (GIS) and hybrid substations which requires use of Control & Relay Panels, particularly in urban areas where land availability is limited.

Switchyards continue to play a pivotal role in the transmission and distribution of electricity by facilitating voltage transformation, circuit isolation, and network interconnection between generating stations, transmission lines, and distribution systems. Expansion of Extra High Voltage (EHV) and Ultra High Voltage (UHV) transmission networks has significantly increased demand for sophisticated switchyard solutions incorporating circuit breakers, disconnectors, instrument transformers, surge arresters, busbar systems, control and relay panels, protection schemes, and communication infrastructure.

Governments across major economies are investing heavily in grid expansion and modernization to accommodate increasing electricity demand and renewable energy integration. Electrification initiatives, cross-border transmission projects, smart grid deployment, electric vehicle charging infrastructure, and industrial development continue to drive investments in substations and associated electrical equipment. Emerging economies are also strengthening rural electrification and power reliability through substantial investments in transmission and distribution infrastructure.

Technological advancements are reshaping the industry through digital substations, IEC 61850-based communication architecture, process bus technology, fibre-optic communication networks, artificial intelligence-enabled asset management, predictive analytics, cybersecurity solutions, and cloud-based monitoring platforms. These innovations enable utilities to improve grid visibility, reduce operational costs, enhance asset utilization, and ensure higher levels of system reliability.

Despite positive market fundamentals, the industry continues to face challenges arising from volatility in raw material prices, supply chain constraints, geopolitical uncertainties, and evolving environmental regulations. Rising costs of copper, aluminum, electrical steel, semiconductors, and electronic components have impacted manufacturing costs, while utilities increasingly demand shorter project execution timelines and customized engineering solutions.

Looking ahead, the long-term outlook for the industry remains highly favorable. Global commitments towards clean energy transition, expansion of renewable energy capacity, increasing investments in transmission infrastructure, electrification of transport, industrial automation, and modernization of ageing electrical networks are expected to sustain robust demand for control and protection panels, switchgear panels, and switchyard solutions. Manufacturers capable of delivering technologically advanced, reliable, energy-efficient, and digitally integrated electrical systems will be well positioned to capitalize on the evolving requirements of utilities, infrastructure developers, and industrial customers worldwide.

INDIAS MARKET FOR ELECTRICAL CONTROL AND RELAY PANELS AND PROTECTION RELAYS DRIVEN BY INDUSTRIALISATION, AUTOMATION AND POWER INFRASTRUCTURE UPGRADES

General Industry Scenario

The Indian electrical and electronics industry continues to be a critical component of the countrys economic and industrial development. Increasing industrialisation, urbanisation, electrification, infrastructure development and rising electricity consumption are driving sustained investments across the power generation, transmission and distribution value chain.

Indias installed power generation capacity reached approximately 532.74 GW as of March 2026, compared with around 248 GW in 2014. Renewable energy capacity has also expanded significantly, reaching approximately 274.69 GW as of March 2026. The continued expansion of generation capacity, particularly renewable energy, is creating a corresponding requirement for strengthening transmission and distribution infrastructure and improving grid reliability.

The countrys electricity demand is also increasing with economic growth and rising industrial and commercial activity. India achieved a record peak electricity demand of approximately 256.1 GW on April 25, 2026, which was met without power shortage. The growth in peak demand highlights the increasing requirement for reliable generation, transmission, distribution and electrical control infrastructure.

The electrical equipment industry is consequently witnessing increasing demand for switchgear, transformers, cables and wires, control & relay panels, protection relays, power electronics and other associated products. Industry analysis indicates that Indias domestic consumption of electrical equipment grew at approximately 11% CAGR between 2020 and 2025, reaching around US$59 billion in 2025. Transmission and distribution accounted for nearly 40% of the market, while storage, grid management and power electronics are among the faster-growing segments.

The industry is also benefiting from the Governments continued focus on domestic manufacturing, infrastructure development, renewable energy integration, grid modernisation, smart metering and distribution-sector reforms. Initiatives such as the Revamped Distribution Sector Scheme (RDSS) and various manufacturing and localisation initiatives are expected to support investments in electrical infrastructure and create opportunities for domestic manufacturers.

The increasing emphasis on energy efficiency, digitalisation and automation is further changing the nature of electrical equipment demand. Customers are progressively seeking equipment that provides enhanced reliability, safety, monitoring capabilities, energy efficiency and operational flexibility.

Specific Industry Scenario Control & Relay Panels and Protection Relays

Control and relay panels and protection relays form an important part of the protection, monitoring and automation infrastructure used across power generation, transmission, distribution and industrial applications. These systems facilitate the protection, control, monitoring and management of electrical equipment and networks, thereby contributing to the safe and reliable operation of electrical installations.

The market for electrical control panels in India is expected to witness sustained growth, supported by industrial expansion, grid reinforcement, renewable-energy evacuation, infrastructure development, manufacturing investments, data centres, railways, water infrastructure and commercial projects. A recent industry assessment estimates the Indian electric control panel market at approximately US$486 million in 2025, with the market projected to reach approximately US$790 million by 2031, representing an estimated CAGR of 8.4%.

The growth drivers for the specific segment include:

1. Industrialisation and Manufacturing Expansion

The expansion of manufacturing facilities, industrial corridors and process industries is increasing the requirement for reliable electrical distribution and control systems. New manufacturing facilities as well as brownfield expansion and modernisation projects require electrical panels, motor control centres, control panels, protection systems and automation solutions.

2. Power Transmission and Distribution Upgrades

The continued expansion and modernisation of Indias transmission and distribution network is a major demand driver. With the transmission network expanding and renewable-energy capacity increasing, there is a growing requirement for protection, control, monitoring and automation equipment at substations and distribution facilities. Indias transmission infrastructure of 220 kV and above had already exceeded 5 lakh circuit kilometres by January 2026, with further expansion planned.

3. Renewable Energy Integration

The rapid growth of solar and wind power is creating additional requirements for grid integration, power evacuation, protection and control systems. Renewable generation is more variable than conventional generation, increasing the importance of sophisticated monitoring, protection, grid-management and control infrastructure. Indias transition towards a larger renewable-energy base is therefore expected to create new opportunities for manufacturers of electrical control and protection equipment.

4. Industrial Automation and Digitalisation

The adoption of automation, programmable logic controllers, SCADA systems, intelligent electronic devices and digital monitoring is increasing across manufacturing and infrastructure sectors. Modern control panels are increasingly required to integrate protection, automation, communication and monitoring functions rather than merely provide conventional electrical distribution.

This shift is creating opportunities for manufacturers capable of providing engineered, customised and technologically advanced panel solutions. Industry analysis indicates that smart and connected panels are gaining importance as customers increasingly seek remote diagnostics, energy monitoring and improved operational visibility.

5. Modernisation of Existing Infrastructure

In addition to greenfield projects, a significant opportunity exists in the replacement, retrofitting and modernisation of existing electrical infrastructure. Ageing substations, industrial installations and distribution systems require upgrading of protection relays, control systems, switchgear, metering and automation systems.

This creates opportunities for manufacturers and system integrators that can provide customised retrofit solutions while ensuring minimum operational disruption.

6. Increasing Focus on Reliability and Safety

As electrical networks become more complex and interconnected, the importance of reliable protection and control systems is increasing. Relay panels and associated protection systems play an important role in detecting abnormal electrical conditions, isolating faults and protecting critical equipment.

Consequently, customers are placing greater emphasis on quality, reliability, technical compliance, testing, customisation and after-sales support, in addition to price.

7. Emergence of Smart and Connected Electrical Systems

The electrical equipment industry is gradually moving towards intelligent and connected systems. Digital protection relays, remote monitoring, communication-enabled control systems and data-driven maintenance are increasingly being adopted to improve asset utilisation and reduce unplanned downtime.

The shift towards smart-grid technologies and digital substations is expected to further increase the technology content of relay and control panels.

8. Growth Opportunities for Domestic Manufacturers

The Governments emphasis on domestic manufacturing and reducing dependence on imported equipment and components is expected to provide opportunities for Indian manufacturers. The broader electrical-equipment industry has significant potential to expand domestic production and exports, with control panels already forming part of Indias electrical-equipment export basket. McKinsey and IEEMA estimate that Indias electrical-equipment production could potentially scale to more than US$195 billion by 2035, supported by domestic demand and export opportunities.

Outlook

The outlook for the electrical relay panel and control equipment segment remains positive, supported by the convergence of industrialisation, power-sector expansion, renewable-energy integration, infrastructure development, automation and digitalisation.

The Companys operating segment is positioned to participate in these opportunities through the manufacture and supply of electrical control & relay panels, protection relays and associated electrical equipment. Continued investments in power generation, transmission and distribution, industrial infrastructure and renewable energy are expected to provide a favourable demand environment.

Going forward, the ability to deliver quality products, customised engineering solutions, technological capability, competitive pricing and timely execution will remain important factors in determining competitiveness within the industry.

Power-Related Investments

The Government of India continues to place significant emphasis on strengthening the power sector and creating adequate generation, transmission and distribution infrastructure to meet the countrys growing energy requirements. The Union Budget 2026-27 reinforces the focus on infrastructure-led growth, with the Union Government proposing capital expenditure of 12.22 lakh crore and effective capital expenditure of 17.15 lakh crore during FY 2026-27.

The power sector is expected to witness continued investments across generation capacity, transmission networks, distribution infrastructure, renewable energy and energy storage. As of January 2026, Indias installed power generation capacity stood at approximately 520.51 GW, while substantial investments are being undertaken to strengthen the transmission and distribution network and integrate increasing renewable energy capacity.

Particular emphasis is being placed on strengthening transmission infrastructure to facilitate the integration of renewable energy into the national grid. Transmission systems are being planned to integrate more than 500 GW of renewable energy capacity by 2030 and more than 600 GW by 2032. The transmission network of 220 kV and above is projected to expand to approximately 6.48 lakh circuit kilometres, with transformation capacity expected to increase to around 2,345 GVA by 2031-32.

Investment in the distribution sector is also expected to remain significant. Under the Revamped Distribution Sector Scheme (RDSS), works amounting to approximately 1.53 lakh crore for strengthening distribution infrastructure and 1.30 lakh crore for smart metering have been sanctioned, supporting the modernisation and strengthening of Indias electricity distribution network.

The increasing deployment of renewable energy and battery energy storage systems is further expected to create requirements for modern grid infrastructure, including electrical protection, control and automation systems. The Government is also supporting Battery Energy Storage Systems through viability gap funding mechanisms to facilitate greater integration of renewable energy into the grid.

In addition, the Governments continued focus on domestic manufacturing of power and renewable energy equipment is expected to provide opportunities for manufacturers and suppliers forming part of the electrical and power equipment ecosystem.

The above developments are expected to provide favourable opportunities for the Companys business, particularly in relation to electrical control & relay panels, protection relays and protection systems and other associated electrical equipment, as investments in power generation, transmission, distribution, renewable energy and industrial infrastructure are expected to drive demand for such equipment. The Company remains well positioned to participate in the emerging opportunities arising from the continued expansion and modernisation of Indias power infrastructure.

Highlights of Union Budget 2026-27

The Union Budget 2026-27 was presented by the Honble Union Minister for Finance and Corporate Affairs, Smt. Nirmala Sitharaman, on February 1, 2026. The Budget lays emphasis on strengthening infrastructure, promoting domestic manufacturing, supporting the power and renewable energy sectors, and accelerating investment-led economic growth. Some of the key announcements relevant to the electrical and power equipment industry are as follows: Higher Public Capital Expenditure: The Government has proposed to increase public capital expenditure to 12.2 lakh crore in FY 2026-27, with continued focus on infrastructure development and connectivity. The increased infrastructure spending is expected to support demand across various segments of the electrical and power equipment industry.

Focus on Power and Renewable Energy Equipment Manufacturing: The Government continues to promote domestic manufacturing of power and renewable energy equipment through dedicated manufacturing zones, with an emphasis on cutting-edge, clean and energy-efficient technologies and reducing dependence on imports of equipment, critical components, raw materials and spares.

Strengthening of the Power Sector: The Budget proposes measures to improve the efficiency and scale of Public Sector NBFCs, including restructuring of Power Finance Corporation and Rural Electrification Corporation. This is expected to support financing and investment in the power sector. Infrastructure Development: The Budget provides for continued development of infrastructure, including dedicated freight corridors, national waterways and high-speed rail corridors. Such infrastructure expansion is expected to create opportunities for ancillary industries and suppliers of electrical, control, protection and related equipment.

Growth Opportunities for Electrical and Relay Panel Industry: The continued emphasis on power infrastructure, transmission and distribution, renewable energy, industrial development and domestic manufacturing is expected to provide a favourable environment for the electrical equipment industry, including manufacturers and suppliers of control & relay panels, protection relays. The Companys business in this segment is expected to benefit from the increased focus on infrastructure creation and strengthening of the domestic power ecosystem. Overall, the Union Budget 2026-27 reflects the Governments continued focus on infrastructure-led growth, domestic manufacturing, energy security and strengthening of the power sector. These initiatives are expected to create favourable opportunities for the Companys business and support its growth prospects over the medium to long term.

BUSINESS-WISE PERFORMANCE OF THE COMPANY

During the year under review, your Company recorded a total income of 8,483.09 Lakhs as against 6,293.39 Lakhs representing an increase of 34.79 % over that of the previous year. The PBDIT has increased from 1,396.77 Lakhs (FY 2024-2025) to 1,729.94 Lakhs (FY 2025-2026) representing an increase of 23.85 %. The Net Profit during the year was 1,172.28 Lakhs in comparison with previous year which stood at 847.08 Lakhs resulting in an increase of 38.39 %.

EXPORTS

Indias export sector continued to demonstrate resilience and diversification during FY 2025-26, supported by growth in engineering goods, electronics, electrical machinery and other value-added manufacturing segments. Indias total exports of goods and services reached a record USD 860.09 billion in FY 2025-26, reflecting the increasing competitiveness of Indian businesses in global markets.

The electrical and electronics segment has emerged as an important contributor to Indias export growth. Electronics exports increased substantially, reaching approximately 4.24 lakh crore in FY 2025-26, compared with approximately 38,263 crore in FY 2014-15. Electronic goods exports were valued at approximately USD 47.96 billion during FY 2025-26, reflecting the rapid expansion of Indias electronics manufacturing capabilities and integration with global supply chains.

The engineering goods sector also continued to be a significant contributor to Indias merchandise exports. Electrical machinery and equipment accounted for approximately 12.5% of Indias engineering exports during FY 2025-26, highlighting the growing importance of the electrical equipment segment in Indias export basket.

India is also demonstrating increasing competitiveness in power equipment and electrical control equipment, including electrical control panels. NITI Aayogs analysis indicates that Indias export share in power equipment and electrical control panels has increased, reflecting the countrys growing capabilities in electro-mechanical and power-related equipment.

The Governments continued focus on Make in India, Atmanirbhar Bharat, domestic manufacturing, infrastructure development and integration with global value chains is expected to provide further opportunities for Indian manufacturers to expand their international presence. Recent trade initiatives and tariff liberalisation measures are also expected to improve market access for Indian electrical machinery and equipment, including products such as circuit breakers, control panels, generating sets, electric motors and insulated conductors.

The growth in global demand for electrical and power-related equipment, coupled with Indias expanding manufacturing capabilities, presents opportunities for the Company to explore and strengthen its presence in international markets. The Company remains focused on leveraging its capabilities in electrical control & relay panels, protection relays and associated electrical equipment to participate in the opportunities emerging from the growth of Indias electrical and power equipment export market.

NEW PRODUCT DEVELOPMENT

The Company continues to focus on innovation and development of products and solutions in line with the evolving requirements of the electrical and power sector. The increasing adoption of automation, digitalisation, renewable energy and smart-grid technologies is creating demand for more efficient, reliable and technologically advanced electrical and control systems.

The evolving power sector is increasingly adopting advanced digital technologies, smart-grid solutions, automation and improved protection systems to enhance grid reliability and facilitate the integration of renewable energy. The Draft National Electricity Policy, 2026 also emphasises indigenous technology development, research and development, smart-grid technologies and domestic manufacturing of power-sector equipment and components.

In this environment, the Company is continuously evaluating opportunities for development and enhancement of its electrical control & relay panels, protection relays and other associated electrical products, with a focus on improving product reliability, operational efficiency, safety and customisation to meet specific customer requirements.

The Company also intends to leverage its technical capabilities and manufacturing infrastructure to develop products aligned with the changing requirements of the power generation, transmission and distribution sectors. The increasing deployment of renewable energy, grid modernisation, distribution automation and energy storage systems is expected to create new opportunities for technologically advanced electrical and control equipment.

The Company remains committed to strengthening its product portfolio through continuous improvement, technology adoption and customer-oriented product development, while exploring opportunities to introduce new and value-added products that can enhance its competitiveness and support sustainable growth.

DETAILS OF SIGNIFICANT CHANGES (i.e., CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS WITH EXPLANATION:

(i) Debtors Turnover Ratio (in Days) - This stands at 3.86 times compared to the previous years 3.41 times There is a change to the extent of 13.21%. There is no significant change.

(ii) Inventory Turnover Ratio This stands at 2.68 times compared to previous years 2.41 times There is a change to the extent of 11.32%. There is no significant change.

(iii) Interest Coverage Ratio This stands at 0.05 times compared to previous years figure of 0.07 times The change is 25.51%. The significant change is mainly due to lower operating earnings relative to the Companys interest obligations during the year.

(iv) Current Ratio This stands at 3.34 times compared to previous years figure of 2.10 times The change is 59.15% The significant change is due to improvement in liquidity position and repayment of unsecured working capital loans during the year.

(v) Total Debt to Equity Ratio This stands at 0.01 times compared to previous years figure of 0.26 times. The significant change by decrease of 96.15% is mainly due to repayment of loans during the year, resulting in lower debt

(vi) Operating Profit Margin (%) This stands at 19.86% compared to previous years figure of 21.49% The change is 1.63%. There is no significant change.

(vii) Net Profit Margin (%) This stands at 13.98% compared to previous years figure of 13.78% The change is 1.47%. There is no significant change.

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF.-

Pursuant to Section 23 (1) of the Companies Act, 2013 and other provisions under the said Act and Rules made thereunder read with chapter IX of the securities and exchange board of India (issue of capital and disclosure requirements) regulations, 2018 (“SEBI (ICDR) regulations”), as amended in terms of Rule 19(2)(b) of the securities contracts (regulation) Rules, 1957 , your Company had made Initial Public Offer aggregating to INR 3,522.30 Lakhs (“Issue Size”) and has issued and allotted 59,70,000 equity share at a price of INR 59/- per share (including Face Value of Rs.10/- and a Premium of Rs. 49/- per share) through an Initial Public Offer. Furthermore, the Equity Shares of your Company were listed on National Stock Exchange of India Limited on Small, Medium Enterprise (“SME”) platform on Tuesday, January 20, 2026.

Besides the SME IPO, the Companys Operations resulted in transfer of Surplus to Reserves which has resulted in increase in the Net worth of the Company.

OPPORTUNITIES

Some of the factors that contribute to the growth of the industry are as follows:

Significant Industrial Activity, Expansion and Power Infrastructure Upgrade Across India Drives the growth of the market for Electrical Control & Relay Panels and Protection Relays

Indias continued industrialisation, expansion of manufacturing capacity and significant investments in power infrastructure are creating a favourable environment for the electrical equipment industry. The growth of industrial, infrastructure, renewable energy and commercial projects is increasing the requirement for reliable electrical distribution, protection, control and automation systems.

The countrys industrial activity has shown continued momentum. During June 2026, Indias Index of Industrial Production (IIP) recorded a year-on-year growth of 7.3%, with the manufacturing sector growing by 7.8% and electricity and gas supply growing by 10.6%. Notably, the manufacture of electrical equipment recorded growth of 34.0%, with electrical apparatus for switching or protecting electrical circuits, including switchgear, circuit breakers, switches and control/meter panels, being among the significant contributors to growth.

The expansion of industrial and manufacturing activities is accompanied by increasing investments in captive power systems, substations, electrical distribution networks, industrial automation and process-control infrastructure. New manufacturing facilities as well as expansion and modernisation of existing facilities require dependable electrical systems to ensure operational continuity, equipment protection and efficient energy management.

The power sector is another significant driver of demand. Indias installed generation capacity stood at approximately 524 GW as of February 2026, while the country successfully met a peak electricity demand of 256.1 GW in April 2026 without shortage. The continued increase in electricity demand is necessitating corresponding investments in generation, transmission, distribution and grid-management infrastructure.

The Governments transmission-development roadmap provides significant visibility for future investment. The National Electricity Plan envisages transmission-sector investment opportunities exceeding 9.15 lakh crore up to 2032, along with substantial expansion in transmission and transformation capacity. The plan also provides for adoption of advanced technologies, including hybrid substations, dynamic line rating, high-performance conductors and advanced grid-management systems.

The integration of renewable energy is further accelerating the need for transmission and distribution upgrades. The transmission network is being expanded to facilitate the evacuation and integration of large quantities of renewable energy, while advanced protection and control technologies are becoming increasingly important for maintaining grid stability and reliability.

Against this backdrop, electrical relay panels and control systems form an essential component of modern electrical infrastructure. Relay panels and protection systems enable detection of electrical faults and abnormal operating conditions and facilitate the timely isolation of affected equipment. Control panels, meanwhile, provide the interface for monitoring, controlling and automating electrical systems and industrial processes.

The increasing adoption of digital protection relays, intelligent electronic devices, SCADA systems, automation, remote monitoring and smart-grid technologies is further enhancing the role of relay and control panels in modern power and industrial installations. The transition from conventional electrical systems to digitally enabled and automated systems is expected to increase the technology content and value of electrical control and protection solutions.

The growth opportunities are therefore not limited to new power projects. Significant potential also exists in the upgradation, replacement and retrofitting of existing electrical infrastructure, including ageing substations, industrial electrical systems and distribution networks. Such modernisation requires replacement of conventional protection and control equipment with technologically advanced systems.

The continued expansion of Indias manufacturing base, together with investments in power generation, transmission and distribution, renewable energy, industrial automation, infrastructure and grid modernisation, is expected to sustain demand for electrical control & relay panels, protection relays and associated equipment.

The Company is well positioned to participate in these emerging opportunities through its capabilities in electrical control & relay panels, protection relays and associated electrical equipment. The Company remains focused on product quality, customised solutions, technological advancement and timely execution to cater to the evolving requirements of industrial and power-sector customers.

Supportive Government Schemes to Contribute to the Stellar Growth of the Market

The Government of India continues to undertake various policy initiatives and schemes aimed at strengthening domestic manufacturing, improving power infrastructure, promoting energy efficiency and developing a robust electronics and electrical equipment ecosystem. These initiatives are expected to create favourable opportunities for Companies operating in the electrical and electronics industry.

Revamped Distribution Sector Scheme (RDSS): The Revamped Distribution Sector Scheme is aimed at improving the operational efficiency and financial sustainability of electricity distribution utilities and enhancing the quality and reliability of power supply. As of March 2026, distribution infrastructure and smart metering works aggregating approximately 2.83 lakh crore had been sanctioned under the scheme. The infrastructure component includes augmentation of substations and distribution transformers, creation of new substations, feeder segregation and deployment of SCADA/DMS systems. These investments are expected to generate sustained demand for electrical, control and protection equipment.

Production Linked Incentive (PLI) Schemes: The Governments PLI framework covering 14 key sectors is aimed at enhancing domestic manufacturing capabilities, attracting investments, increasing exports and improving Indias global competitiveness. As of March 31, 2026, the PLI schemes had attracted actual investments exceeding 2.40 lakh crore and generated employment of more than 14.15 lakh direct and indirect jobs. The electronics sector has been a significant beneficiary of the PLI initiatives, supporting the development of domestic manufacturing capabilities.

Electronics Component Manufacturing Scheme (ECMS): The ECMS is intended to deepen Indias electronics component ecosystem and encourage domestic manufacturing of components, sub-assemblies and related products. The Government has increased the budgetary outlay for the scheme to 40,000 crore in Budget 2026, following strong industry participation. The scheme is expected to encourage localisation, increase domestic value addition and strengthen the domestic supply chain for electronic and electromechanical components.

Manufacturing Zones for Power and Renewable Energy Equipment: The Government has been promoting dedicated manufacturing zones for power and renewable energy equipment with a focus on advanced, clean and energy-efficient technologies and reducing dependence on imported equipment, critical components, raw materials and spares. Such initiatives are expected to strengthen domestic manufacturing capabilities and create opportunities across the power equipment value chain.

Support for Energy Storage and Renewable Energy: Government initiatives supporting Battery Energy Storage Systems and renewable energy integration are expected to facilitate the development of grid-scale energy storage and enable greater integration of renewable energy into the electricity grid. The resulting investments in grid infrastructure, protection, control and power management systems are expected to create additional opportunities for the electrical equipment industry. Energy Efficiency Initiatives: Various Government programmes aimed at promoting energy efficiency across industries and establishments encourage businesses to adopt energy-efficient technologies and improve energy management. Such initiatives are expected to support demand for efficient electrical equipment and modernisation of industrial electrical systems.

Overall, the Governments continued emphasis on domestic manufacturing, power-sector reforms, renewable energy, distribution infrastructure, electronics manufacturing and energy efficiency is expected to provide a supportive environment for the growth of the electrical and electronics industry. These initiatives are likely to create opportunities for manufacturers of electrical panels, relay panels, control panels, switchboards, protection systems and associated electrical equipment, thereby supporting the Companys growth prospects over the medium to long term.

Projected Key Trends for 2026-27

Continued Market Growth:

The Indian electrical and power equipment industry is expected to maintain a strong growth trajectory during FY 2026-27, supported by sustained economic growth, increasing electricity demand, industrial expansion and continued investments in power generation, transmission and distribution infrastructure. Indias electricity demand is projected to continue growing over the coming years, supported by rising industrial and residential consumption.

The expansion of renewable energy is expected to be an important driver of industry growth. Indias transmission system is being planned to integrate more than 500 GW of renewable energy capacity by 2030, while the transmission network at 220 kV and above is projected to expand from approximately 5.04 lakh circuit kilometres in February 2026 to 6.48 lakh circuit kilometres by 2032.

The distribution segment is also expected to witness continued investments in network strengthening, substations, distribution transformers, feeder segregation, smart metering and automation. Under the Revamped Distribution Sector Scheme, distribution infrastructure works of approximately 2.83 lakh crore have been sanctioned, including 1.53 lakh crore towards loss-reduction infrastructure and 1.31 lakh crore towards smart metering.

The increasing adoption of renewable energy, smart-grid technologies, energy storage and industrial automation is further creating demand for advanced electrical protection, control and monitoring systems. The Government is also encouraging investments in transmission infrastructure and technologies such as HVDC systems, STATCOMs and other grid-stability solutions to support the evolving power ecosystem.

These developments are expected to provide sustained opportunities for manufacturers of electrical control & relay panels, protection relays and associated electrical equipment. The Company expects to benefit from the continued expansion and modernisation of Indias power and electrical infrastructure and remains focused on strengthening its manufacturing capabilities, product portfolio and customer base to participate in the emerging market opportunities.

Technological Advancements:

The electrical and power equipment industry is undergoing rapid technological transformation, driven by increasing electrification, renewable energy integration, industrial automation, digitalisation and the growing requirement for reliable and efficient power infrastructure. India is also witnessing increasing adoption of advanced technologies across generation, transmission and distribution systems.

Key technological developments expected to influence the industry include:

Smart Grid Technologies: Increasing adoption of smart-grid solutions, smart metering, digital substations and automated distribution systems is expected to improve grid reliability, real-time monitoring, energy management and fault detection. Under the Revamped Distribution Sector Scheme, smart metering and SCADA systems are being deployed on a significant scale.

Digitalisation and Automation: Artificial Intelligence (AI), data analytics, digital monitoring, automation and advanced communication technologies are increasingly being integrated into power-sector operations. The Draft National Electricity Policy, 2026 specifically envisages adoption of AI, augmented reality, virtual reality and smart-grid technologies across the power sector. Advanced Protection and Control Systems: The increasing complexity of electricity networks and renewable-energy integration is driving demand for sophisticated protection, control, monitoring and automation systems. This is expected to support opportunities for manufacturers of control & relay panels, protection relays and associated protection equipment.

Power Electronics and Intelligent Equipment: Power electronics and power software are emerging as important growth areas within the electrical equipment industry, particularly in renewable energy, energy storage, electric mobility and grid-management applications.

Renewable Energy Integration: The increasing share of renewable energy in the power mix is creating demand for technologies capable of managing variable power flows, maintaining grid stability and enabling efficient power evacuation and distribution.

Indigenous Technology Development: Greater emphasis is being placed on domestic R&D, indigenous technology development and localisation of critical power-sector equipment and components. The Draft National Electricity Policy, 2026 also proposes measures for promoting domestic technologies, R&D and vendor development.

Digital Manufacturing: Manufacturers are increasingly adopting digital manufacturing, automation and AI-enabled quality and production-management systems to improve productivity, reduce defects and enhance consistency. Such technologies can support improved cost and quality competitiveness in the electrical equipment industry.

These technological advancements are expected to create significant opportunities for the Companys business, particularly in electrical control & relay panels, protection relays and other associated electrical equipment. The Company remains focused on adopting appropriate technologies, improving manufacturing processes and developing products aligned with the evolving requirements of the power, infrastructure and industrial sectors.

Changing Distribution Channels:

The distribution landscape in the Indian electrical and electronics industry is evolving with the increasing adoption of digital technologies, organised procurement practices and direct customer engagement. While traditional distribution networks comprising manufacturers, authorised distributors, dealers, stockists and electrical contractors continue to remain important, businesses are increasingly adopting multiple channels to improve market reach, customer engagement and supply-chain efficiency.

For standard electrical products, distributors and dealers continue to play an important role, particularly in serving regional markets and smaller customers. At the same time, large infrastructure, power and industrial projects increasingly involve direct sales, competitive tenders, EPC contractors, system integrators and institutional procurement, enabling manufacturers to engage directly with project owners and end users.

The increasing adoption of digital B2B platforms, online product catalogues, manufacturer portals and technology-enabled procurement systems is further changing the way electrical products are discovered, evaluated and procured. Buyers are increasingly using digital channels to compare products, check availability, obtain quotations and manage procurement, while traditional relationship-based channels continue to remain relevant for technical consultation, project execution and after-sales support.

The electrical equipment industry is therefore moving towards an omni-channel distribution model, combining direct sales, distributors and dealers, project-based procurement and digital channels. This provides manufacturers with opportunities to expand geographical reach, improve customer access and strengthen market visibility while also requiring greater investment in digital capabilities, logistics, customer support and channel management.

For manufacturers of electrical control & relay panels, protection relays direct engagement with customers, EPC contractors and system integrators remains particularly important due to the customised and project-specific nature of such products. Digital channels can complement these relationships by improving product visibility, enquiry generation, communication and order management.

The Company continues to evaluate and strengthen its distribution and customer engagement channels in line with changing market requirements. The Company intends to leverage direct customer relationships, project-based opportunities, channel partners and appropriate digital platforms to enhance market reach, improve customer service and support sustainable business growth.

Focus on Value-Added Products:

Industry analysis indicates that storage, grid management and power electronics are among the faster-growing segments of the electrical equipment market, creating opportunities for manufacturers to move beyond conventional equipment towards technologically advanced solutions.

Customers are increasingly seeking electrical equipment that offers enhanced reliability, safety, efficiency, customisation, automation and monitoring capabilities, rather than products based solely on basic functionality. The adoption of digital substations, intelligent electronic devices, microprocessor-based protection relays and automated switchgear is further increasing the demand for advanced electrical and control solutions.

In this environment, manufacturers of electrical control & relay panels, protection relays have opportunities to enhance their product offerings through improved design, engineering, automation, digital monitoring and customer-specific configurations. The shift towards value-added products can also help manufacturers improve product differentiation, strengthen customer relationships and enhance their competitiveness.

The Company intends to focus on developing and offering value-added and customised electrical solutions aligned with the evolving requirements of the power, infrastructure, renewable energy and industrial sectors. The Company will continue to explore opportunities for technology adoption, product enhancement and process improvement with a view to increasing the value proposition of its products and strengthening its market position.

The Companys focus on value-added products is expected to support better customer engagement, enhanced product differentiation, improved operational efficiency and sustainable long-term growth, while enabling the Company to participate in emerging opportunities arising from the modernisation and digitalisation of Indias electrical infrastructure.

Your Company has the excellent work force to achieve its goals, implement strategies and thus constantly improve its performance and rewarding all its stakeholders. The existing Human Resource is proving to be opportunity to unearth the potential of the Company, achieve the targets / milestones and mitigate the risks due to the unforeseen external negativities like fluctuating weather conditions, competitions, etc.

THREATS

Low Productivity:

Low productivity remains a challenge for the electrical and electronics manufacturing industry, particularly in areas involving labour-intensive manufacturing processes. The requirement for skilled technical manpower, coupled with gaps in practical training and limited adoption of advanced manufacturing technologies, can affect production efficiency, product quality, delivery schedules and overall cost competitiveness. Recent industry analysis also identifies workforce capability and productivity improvement as important factors for strengthening the competitiveness of Indias electrical equipment industry.

The increasing complexity of electrical equipment and the adoption of automation, digital manufacturing and advanced production systems require continuous upgradation of workforce skills. Inadequate availability of appropriately skilled personnel and dependence on manual processes may result in lower productivity and higher manufacturing costs.

The Company seeks to mitigate these challenges through process improvement, workforce training, adoption of appropriate automation and technology, better production planning and continuous monitoring of operational efficiency. The Company remains focused on improving productivity and manufacturing efficiency while maintaining the required standards of quality and safety.

Quality Issues:

Quality and reliability are critical factors in the electrical and electronics industry, particularly for products such as electrical control & relay panels, protection relays, where product performance and safety are essential. Deficiencies in product quality, component reliability, manufacturing processes or testing may result in rework, rejection, warranty claims, delays in delivery and reputational impact.

The industry is also subject to evolving technical standards and quality-control requirements. The Bureau of Indian Standards (BIS) has prescribed mandatory conformity requirements for various electrical equipment and low-voltage switchgear and control gear products, requiring appropriate manufacturing infrastructure, process controls, quality-control systems and testing capabilities.

In addition, increasing customer expectations for customised, reliable and technologically advanced electrical equipment require continuous monitoring and improvement of manufacturing and testing processes. Any failure to consistently meet applicable specifications, standards or customer requirements may adversely affect customer relationships and business prospects.

The Company seeks to mitigate these risks through stringent quality-control procedures, inspection and testing at various stages of production, use of quality components and raw materials, adherence to applicable standards and specifications, and continuous improvement of manufacturing processes. The Company remains committed to maintaining consistent product quality and reliability and strengthening its quality-management practices as its operations expand.

Market Challenges:

The Indian electrical and electronics industry is witnessing significant growth; however, Companies operating in the sector continue to face challenges arising from intense competition, cost pressures, technological changes and evolving customer requirements. The electrical equipment industry is increasingly required to compete on the parameters of cost, quality, technology, delivery capability and after-sales support.

Intense Competition: The presence of established domestic manufacturers, multinational Companies and regional players has resulted in a highly competitive market. Competitive bidding and price-sensitive procurement, particularly in infrastructure and power projects, may exert pressure on product realisations and operating margins.

Raw Material and Component Costs: The prices of key inputs such as copper, aluminium, steel and other electrical components are subject to fluctuations. Recent increases in copper and aluminium prices have added cost pressures for power and electrical equipment manufacturers. The inability to pass on the entire increase in input costs to customers may adversely affect margins.

Import Dependence and Supply Chain Risks: Dependence on certain imported components and specialised equipment exposes manufacturers to fluctuations in foreign exchange rates, international logistics costs, geopolitical developments and supply-chain disruptions.

Technological Advancement: Rapid developments in automation, digitalisation, smart-grid technologies, power electronics and intelligent protection systems require continuous investment in technology, product development and skilled manpower. Failure to keep pace with technological advancements may affect competitiveness and market opportunities.

Project and Order Execution: The electrical equipment industry is closely linked to investments in power, infrastructure, industrial and renewable energy projects. Delays in project approvals, tendering, financing or execution may result in postponement or bunching of orders, thereby affecting production planning, capacity utilisation and revenue visibility.

Regulatory and Compliance Requirements: Electrical equipment manufacturers are required to comply with applicable technical, safety, quality and certification requirements. Changes in regulatory standards and customer-specific specifications may necessitate additional investment in testing, certification, product development and manufacturing processes.

Despite these challenges, the Company continues to focus on quality, cost optimisation, efficient production processes, timely delivery, technology adoption and development of customer-specific solutions to strengthen its competitive position and mitigate the impact of market-related challenges.

Climate Change Impacts:

The transition towards a lower-carbon economy is creating opportunities for the electrical industry through increased investments in renewable energy, energy storage, grid modernisation, smart-grid technologies and energy-efficient electrical systems. The increasing integration of renewable energy into the grid is also driving requirements for advanced protection, control and grid-stability solutions.

The Company continues to monitor climate-related developments and their potential impact on its operations and supply chain. The Company remains focused on operational resilience, efficient resource utilisation, technology adoption, appropriate contingency planning and compliance with applicable environmental and regulatory requirements to mitigate potential climate-related risks while pursuing opportunities arising from the transition towards a more sustainable and resilient power infrastructure

Infrastructure and Logistics:

The availability and efficiency of infrastructure and logistics networks are important factors influencing the competitiveness of the electrical and electronics manufacturing industry. Timely availability of raw materials and components, efficient transportation, warehousing and reliable connectivity are essential for maintaining production schedules and meeting customer delivery requirements.

India has been making significant investments in infrastructure and logistics through initiatives such as PM GatiShakti National Master Plan and the National Logistics Policy. PM GatiShakti focuses on integrated and multimodal infrastructure planning, including first- and last-mile connectivity, while the National Logistics Policy aims to improve logistics efficiency through process reforms, digitalisation, technology adoption and development of human resources.

As of February 2026, the Network Planning Group under PM GatiShakti had evaluated 352 infrastructure projects with an estimated value of 16.10 lakh crore, demonstrating the scale of infrastructure development being undertaken across the country.

The expansion of multimodal freight infrastructure is also expected to improve the movement of goods. As of January 2026, Indian Railways had approved 306 Gati Shakti Multi-Modal Cargo Terminals, of which 118 had been commissioned, with a combined approved capacity of approximately 192 million tonnes per annum.

Despite these developments, challenges relating to transportation costs, availability of specialised logistics services, supply-chain disruptions, congestion and delays in movement of goods may impact manufacturing schedules and delivery timelines. Any disruption in the availability of critical raw materials or electrical components may also result in increased procurement and inventory costs.

The Company seeks to mitigate such risks through efficient procurement and inventory planning, supplier diversification, production planning, timely procurement of critical components and close monitoring of logistics and delivery schedules. The continued improvement in Indias infrastructure and logistics ecosystem is expected to provide long-term benefits to the manufacturing sector and support the Companys ability to serve its customers efficiently.

Consumer Behavior:

Consumer behaviour in the electrical and electronics industry is evolving with increasing awareness of quality, reliability, energy efficiency, safety, technology and overall product value. Customers are increasingly seeking products that offer improved performance, longer service life, lower energy consumption and greater operational efficiency.

The growing adoption of automation, digitalisation and smart technologies is also influencing purchasing decisions. Demand is gradually shifting towards technologically advanced and energy-efficient electrical products, including smart control and monitoring solutions. The increasing adoption of smart-home technologies and connected electrical devices reflects the growing preference for convenience, efficiency and technology-enabled solutions.

In the industrial and infrastructure segments, customers are increasingly evaluating electrical equipment based on product quality, technical specifications, reliability, customisation, delivery timelines, after-sales service and total cost of ownership, rather than solely on initial purchase price. This trend is particularly relevant for products such as electrical control & relay panels and protection relays, where safety and dependable performance are critical.

The increasing focus on renewable energy, power infrastructure modernisation and industrial automation is also creating demand for advanced electrical and control equipment. Indias electrical equipment industry is projected to witness strong growth, supported by investments in power infrastructure, renewable energy, batteries, power electronics and industrial modernisation.

At the same time, customers are becoming more price-conscious and expect shorter delivery periods, improved product performance and responsive technical support. These changing expectations require manufacturers to continuously improve product quality, manufacturing efficiency, technology and customer service.

The Company continues to monitor changing customer preferences and market requirements and remains focused on quality, innovation, product customisation, timely delivery and customer satisfaction. The Company seeks to align its product offerings with the evolving requirements of customers and the emerging opportunities in the electrical and power equipment industry.

Your Company enters new markets by expanding geographical areas, launching new product range, adopting to new technologies.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has established and maintains appropriate internal control systems and procedures that encompass all financial and operational aspects.

INFORMATION TECHNOLOGY

Successful implementation of Design Software facilitates an effective product design, which helps in effective operations at all the units of the Company. Your Company constantly upgrades and reconfigures this application to effectively monitor the increasing scale of operations of the Company. The hardware and network infrastructure is being constantly reviewed to increase the bandwidth and reduce operational costs. This is an ongoing process and your Company is committed to leverage the benefits of IT to enhance and optimize benefits to itself and its customers. Constant training and guidance has been provided to all the end users.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Your Company values its human resource as the most significant asset and the key focus is to attract, retain and develop talent as a resource. Your Company provides a congenial working atmosphere which will foster creative thinking. As part of manpower development and to enhance operational efficiency, training programmes have been organized for employees at all levels, wherever necessary.

The HR programmes of the Company focus on building capabilities and engaging employees through various initiatives to help the organization consolidate and achieve sustainable future growth for the business.

Industrial Relations remained cordial at all manufacturing locations during the year.

Effective employee communication through various channels ensured that all the employees are kept abreast of the current business situation. This has helped your Company to build mutual trust and confidence with the employees. The total strength of the Company as on 31^st March, 2026 stood at154.

OUTLOOK AND RISKS & CONCERNS ARE COVERED UNDER OPPORTUNITIES AND THREATS.

FORWARD LOOKING STATEMENTS

Statements in this report describing the Companys objectives, projections, estimates and expectations may constitute “forward looking statements” within the meaning of applicable laws and regulations that involve risks and uncertainties. Such statements represent the intention of the Management and the efforts being put or implied in the statement depending on the circumstances. Therefore, the investors are requested to make their own independent assessments and judgments by considering all relevant factors before making any investment decision.