B P Capital Ltd Management Discussions

Increasing use of digital platforms for communication, education, work, entertainment and financial services is driving demand for smartphones, computers, tablets, communication devices and other digital products.

Increasing consumer preference for smart devices, wearables, smart-home products and IoT-enabled solutions is creating new demand across consumer electronics categories.

The continued growth of e-commerce and digital sales channels is improving the availability and accessibility of consumer electronics products across different geographies and customer segments.

Rising awareness, evolving lifestyles and preference for convenience, efficiency and technologically advanced products are supporting demand for electronic appliances, home entertainment products, accessories and other consumer durables.

Rapid technological developments, new product features and shorter technology cycles are encouraging consumers to upgrade and replace existing electronic devices, thereby supporting recurring demand for new products and related accessories.

Geographic Distribution of Consumer Electronics in India

The Indian consumer electronics market has a broad geographic presence, with demand concentrated in major metropolitan and Tier-I cities while steadily expanding across Tier-II, Tier-III, semi-urban and emerging markets. Increasing internet penetration, digitalisation, improving logistics infrastructure and the growth of e-commerce have enabled consumer electronics products to reach a wider customer base across the country.

The regional distribution of the consumer electronics market is broadly estimated as follows:

North India 29.8%: Largest regional market, supported by Delhi-NCR, Uttar Pradesh, Punjab and Haryana, with strong urban and emerging-market demand. South India 27.4%: Major markets include Karnataka, Tamil Nadu, Telangana, Andhra Pradesh and Kerala, supported by technology adoption, urbanisation and established electronics ecosystems. West India 24.6%: Maharashtra and Gujarat are key markets, supported by higher purchasing power, developed commercial infrastructure and strong demand for premium electronics. East India 18.2%: Includes West Bengal, Odisha, Bihar, Jharkhand and the North-Eastern markets, with increasing demand driven by digital connectivity and expanding distribution networks. Emerging Markets: Demand is increasingly expanding beyond metropolitan centres into Tier-II, Tier-III and smaller cities, supported by e-commerce, improving logistics and wider digital connectivity.

MARKET SIZE & GROWTH

The Indian consumer electronics market has witnessed sustained growth over the years and is expected to continue expanding, supported by increasing adoption of digital and connected products, technological advancement and changing consumer preferences. Key areas contributing to the growth of the market include smartphones and communication devices, consumer durables, home appliances, computers and peripherals, wearables, smart-home products, IoT-enabled devices and electronic accessories. The growth of e-commerce and digital distribution channels is further supporting market expansion by enabling wider product availability and geographic reach. In addition, shorter technology cycles and increasing consumer preference for upgraded products are creating recurring demand for replacement and newer-generation devices.

The Company believes that the long-term growth prospects of the sector remain favourable, although the actual growth trajectory will depend upon consumer demand, economic conditions, technological developments, competitive intensity and other market factors.

GOVERNMENT INITIATIVES

The Government of India has undertaken several policy initiatives to strengthen the electronics ecosystem, promote domestic manufacturing, enhance local value addition, reduce import dependence and position India as a competitive global electronics manufacturing hub. The principal initiatives relevant to the consumer electronics sector include the following:

1. Production Linked Incentive Scheme for Large Scale Electronics Manufacturing

The Production Linked Incentive (“PLI”) Scheme for Large Scale Electronics Manufacturing (“LSEM”), introduced in 2020, has been a key initiative for promoting domestic manufacturing of mobile phones and specified electronic components. The scheme provides incentives linked to incremental sales and is aimed at attracting investment, increasing domestic value addition and strengthening Indias electronics manufacturing ecosystem.

As reported by the Government, up to March 2026, the PLI-LSEM scheme had recorded cumulative investment of approximately 20,587 crore, against the scheme target of 7,000 crore. Cumulative production stood at approximately 11,61,581 crore, against the target of 8,12,550 crore, while cumulative exports stood at approximately 6,43,323 crore, against the target of 4,87,530 crore.

The scheme has contributed significantly to the development of Indias mobile manufacturing ecosystem. As of FY 2025 26, approximately 99.2% of mobile phones used in India were manufactured domestically, and India had emerged as the worlds second-largest mobile phone manufacturer by volume.

2. PLI Scheme 2.0 for IT Hardware

The Government has also implemented PLI Scheme 2.0 for IT Hardware to encourage domestic manufacturing of laptops, tablets, servers and other specified IT hardware products.

The scheme is intended to attract investment, increase domestic production, strengthen the domestic supply chain and reduce dependence on imports. As reported by the Government, the scheme had generated cumulative production of approximately 24,385.89 crore, cumulative investment of approximately 1,056.36 crore and 5,216 direct jobs as of the latest reported position in FY 2025 26.

3. Electronics Components Manufacturing Scheme

The Electronics Components Manufacturing Scheme (ECMS) is aimed at developing a strong domestic ecosystem for electronic components and strengthening Indias position across the electronics value chain.

The initiative focuses on promoting domestic manufacturing of critical components and sub-assemblies, thereby supporting higher domestic value addition and reducing dependence on imported components. The scheme is particularly relevant to the broader consumer electronics industry as the availability of domestic components can strengthen supply-chain resilience and support the development of local manufacturing capabilities.

4. Semicon India Programme

The Governments Semicon India Programme is aimed at developing a sustainable semiconductor and display manufacturing ecosystem in India. The programme supports the development of semiconductor fabrication, display manufacturing, semiconductor packaging and other related capabilities.

The development of a domestic semiconductor ecosystem is expected to strengthen Indias electronics value chain over the long term by improving access to critical components and supporting higher domestic value addition in electronics manufacturing.

5. Electronics Manufacturing Clusters and Supporting Measures

The Government has also implemented initiatives such as the Modified Electronics Manufacturing Clusters (EMC 2.0) Scheme, along with measures relating to electronic components and semiconductor manufacturing, to facilitate the development of manufacturing infrastructure and supporting ecosystems.

In addition, the Public Procurement (Preference to Make in India) Order supports domestic manufacturing by providing preference to locally manufactured products in specified government procurement, while the policy permitting 100%

Foreign Direct Investment in the electronics sector under the applicable route has supported investment and participation in the sector.

Impact on the Electronics Sector

The cumulative impact of these initiatives is reflected in the significant expansion of Indias electronics manufacturing ecosystem. According to Government data, electronics production increased from approximately 1.9 lakh crore in FY 2014 15 to around 12 lakh crore in FY 2024 25, while electronics exports increased from approximately 38,000 crore to around 3.3 lakh crore over the same period. Mobile phone production increased to approximately 5.45 lakh crore in FY 2024 25, while mobile phone exports reached approximately 2 lakh crore.

Further, as at March 2026, the PLI-LSEM scheme had exceeded its original five-year targets for investment, production and exports, demonstrating the growing scale of Indias electronics manufacturing ecosystem.

Relevance to the Company

The policy environment and continued development of Indias electronics ecosystem provide a supportive backdrop for the Companys new business activity in consumer electronics and allied products. The Companys proposed activities are primarily focused on trading, distribution, sourcing, procurement, marketing, import, export, warehousing, logistics, supply chain management, wholesale, e-commerce and other allied activities.

Accordingly, the Companys business may benefit indirectly from the increasing scale of domestic electronics manufacturing, wider availability of products and components, development of organised supply chains and expanding distribution opportunities.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian consumer electronics industry is a rapidly evolving sector comprising mobile phones, communication devices, home appliances, computers, smart devices, accessories and other allied products. The industry is driven by increasing digitalisation, technological advancement, changing consumer preferences and expanding e-commerce and distribution networks.

Key developments include:

Growing domestic electronics production and increasing localisation.

Rising adoption of smart and connected devices, including IoT products and wearables. Expansion of e-commerce and digital distribution channels, increasing market reach. Increasing demand from Tier-II, Tier-III and emerging markets. Government support for electronics manufacturing and component ecosystem. Rapid technological advancement, encouraging product upgrades and replacement.

Overall, the industry presents favorable long-term growth opportunities, supported by increasing digital penetration, evolving consumer demand and continued development of Indias electronics ecosystem.

SWOT ANALYSIS OF THE INDUSTRY

Strengths

Large Consumer Base: India has a large and diverse consumer market, providing a broad customer base for mobile phones, appliances, smart devices, computers and other electronic products.

Increasing Digitalisation: Rapid adoption of smartphones, internet services and digital platforms continues to support demand for electronic and connected products.

Growing Domestic Ecosystem: Increasing domestic production and development of local component and supply-chain capabilities are strengthening Indias position in the global electronics industry.

Wide Product Portfolio: The industry covers multiple categories, including communication devices, consumer durables, smart devices, accessories and electronic components, reducing dependence on a single product category.

Expanding Distribution Network: Development of e-commerce, wholesale and organised distribution channels is improving product availability and geographic reach.

Weaknesses

High Competition: The industry has a large number of domestic and international players, resulting in significant competition and pricing pressure.

Rapid Product Obsolescence: Frequent technological advancements can shorten product life cycles and require businesses to continuously update their product portfolio.

Supplier Dependence: Businesses may depend significantly on manufacturers, suppliers and imported components for product availability and competitive pricing.

Working Capital Requirements: Trading and distribution activities may require substantial working capital for inventory, procurement and receivables.

Supply Chain Dependence: Efficient logistics, warehousing and timely availability of products are critical to maintaining competitiveness.

Opportunities

Growing Demand for Smart Devices: Increasing adoption of smartphones, wearables, IoT products and smart-home devices provides opportunities across multiple product categories.

Expansion into Emerging Markets: Rising digital penetration and improving connectivity are creating opportunities in Tier-II, Tier-III, semi-urban and other emerging markets.

Growth of E-Commerce: Increasing online purchasing provides businesses with opportunities to reach customers across a wider geographic area without relying entirely on traditional distribution channels.

Government Support: Government initiatives promoting domestic electronics manufacturing, localisation and development of the component ecosystem can create opportunities across the electronics value chain.

Growing Demand for Accessories and Components: Expansion of the installed base of electronic devices is supporting recurring demand for chargers, cables, batteries, headphones, spare parts, components and other allied products.

Threats

Intense Market Competition: Strong competition from established brands, manufacturers, importers, distributors and online platforms may affect margins and market share.

Technological Changes: Rapid innovation may result in existing products becoming outdated and may require continuous investment in product sourcing and market development.

Changing Consumer Preferences: Consumer demand can change quickly based on technology, pricing, product features and brand preferences.

Supply Chain Disruptions: Global supply-chain issues, logistics disruptions, shortages of components or dependence on overseas suppliers may affect product availability and costs.

Regulatory and Economic Risks: Changes in import duties, taxation, foreign exchange rates, government policies and other regulatory requirements may impact the cost and profitability of the business.

SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

During the financial year under review, the Company did not undertake any business operations and there was no revenue generated from any business segment or product category. Accordingly, there was no segment-wise or product-wise operational performance to report for the financial year.

The Companys proposed new business activity relating to computer software and hardware, consumer electronics and allied products is proposed to be initiated subsequent to the closure of the financial year and, therefore, did not have any impact on the financial or operational performance for FY 2025 26.

FINANCIAL PERFORMANCE

During the financial year under review, the Company did not undertake any business operations and accordingly revenue from operations was NIL.

The financial performance of the Company for the year was limited to the transactions and expenditure incurred in the ordinary course of maintaining the Companys corporate and statutory requirements. There was no revenue contribution from the proposed new business activity during the year under review, as such activity was initiated only after the close of the financial year.

The detailed financial position and results of the Company are set out in the audited financial statements forming part of the Annual Report.

FUTURE OUTLOOK

The Company has initiated steps to undertake a new business activity in the consumer electronics and allied products sector subsequent to the closure of the financial year.

The proposed activities include sourcing, procurement, trading, distribution, wholesale, import, export, marketing, e-commerce and other allied activities relating to computer software and hardware, consumer electronics, communication devices, electrical and electronic appliances, digital products, accessories, components, spare parts and peripherals.

The Company intends to establish the new business activity in a phased and commercially prudent manner, taking into consideration market conditions, availability of resources, working capital requirements, supplier arrangements, regulatory requirements and overall commercial feasibility.

As the new business activity was not operational during FY 2025 26, its financial impact will arise only in the periods in which the proposed activities are actually commenced and undertaken.

RISK AND CONCERNS

The proposed new business activity will be subject to various business, market and operational risks. The principal risks include: Market Competition: Competition from established domestic and international manufacturers, traders and distributors may affect pricing and margins. Technology Risk: Rapid technological developments may result in product obsolescence and changing consumer preferences. Supplier and Supply Chain Risk: Dependence on suppliers, manufacturers and logistics networks may affect product availability and delivery timelines. Working Capital Risk: The proposed trading and distribution activities may require adequate working capital for procurement, inventory and receivables.

Regulatory Risk: Changes in taxation, import duties, government policies and other applicable regulations may impact the business. Foreign Exchange Risk: Import and export activities, if undertaken, may expose the Company to foreign exchange fluctuations.

The Company will monitor these risks on an ongoing basis and take appropriate measures for their mitigation.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

During the financial year under review, the Companys operations were limited and no business operations were undertaken. Accordingly, the existing internal control systems were commensurate with the Companys activities during the year.

As the Company establishes its new business activity, the internal control framework will be suitably strengthened and aligned with the scale and nature of the proposed operations. Appropriate controls relating to procurement, inventory, sales, receivables, payments, accounting, financial reporting, logistics and regulatory compliance will be implemented.

The adequacy and effectiveness of the internal control systems will be reviewed periodically by the Management and the Audit Committee, wherever applicable, and necessary corrective measures will be undertaken.

FINANCIAL YEAR OF THE COMPANY

The financial year of the Company commenced on April 1, 2025 and ended on March 31, 2026. During the financial year under review, the Company did not undertake any business operations and revenue from operations remained NIL.

OPERATIONS

There were no business operations undertaken by the Company during FY 2025 26 and consequently, the Company did not generate any revenue from operations during the year. Subsequent to the closure of the financial year, the Company is proposed to be initiated steps towards undertaking a new line of business in the computer software and hardware, consumer electronics and allied products sector. The proposed activity was therefore not part of the Companys operations during FY 2025 26.

The Company proposes to commence the new activity in a phased manner, subject to commercial feasibility, availability of resources and compliance with applicable statutory and regulatory requirements.

HUMAN RESOURCES

As the Company did not undertake any business operations during the financial year under review, its human resource requirements remained limited.

With the proposed commencement of the new business activity, the Company will evaluate its manpower requirements and, as necessary, develop an appropriately skilled workforce having relevant experience in sourcing, procurement, trading, distribution, logistics, e-commerce, finance and compliance.

The Company continues to recognise human resources as an important factor for the successful implementation and development of its new business activity.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

As the Company did not undertake any business operations during FY 2025 26 and revenue from operations was NIL, certain operating and profitability ratios may not be meaningful or may not be applicable for the year under review.

CAUTIONARY STATEMENT

This Management Discussion and Analysis contains certain statements relating to the Companys future plans, prospects, expectations and business strategies, which may constitute forward-looking statements.

These statements are based on the Companys current expectations and assumptions and are subject to various risks and uncertainties. Actual results may differ materially from those expressed or implied due to factors including changes in economic conditions, market demand, competition, technological developments, consumer preferences, regulatory requirements, taxation, availability of finance, supply-chain conditions and other factors beyond the Companys control.

The proposed consumer electronics business represents a new business activity for the Company, and there can be no assurance regarding the timing, scale or financial outcome of such activity. The Company will undertake the proposed business based on market conditions, commercial feasibility and availability of requisite resources.

The Company does not undertake any obligation to publicly update or revise any forward-looking statements, except as may be required under applicable laws and regulations.