Chamunda Electrical Ltd Management Discussions

1. Industry Structure and Developments

Power is among the most critical components of infrastructure, crucial for the economic growth and welfare of nations. The existence and development of adequate power infrastructure is essential for sustained growth of the Indian economy. The fundamental principle of Indias power industry has been to provide universal access to affordable power in a sustainable way. The Ministry of Power has made significant efforts over the past few years to turn the country from one with a power shortage to one with a surplus by establishing a single national grid, fortifying the distribution network, and achieving universal household electrification.

Indias power sector is one of the most diversified in the world. Sources of power generation range from conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear power, to viable nonconventional sources such as wind, solar, agricultural, and domestic waste. Electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required.

With a generation capacity of 442.85 GW, India is the third-largest producer and consumer of electricity in the world. Although power generation has grown more than 100-fold since independence, growth in demand has been even higher due to accelerating economic activity. Indias energy firms have made significant progress in the global energy sector. According to the S&P Global Platts Top 250 Global Energy Rankings 2022, Oil and Natural Gas Corp. Ltd. ranked 14th. In June 2021, the Export-Import Bank of India (Exim Bank) announced that it has extended a line of credit (LOC) worth US$ 100 million to the Sri Lankan government for the purpose of funding projects in the solar energy sector and assuring that the countrys 70% power requirements are met by renewable energy sources by 2030.

Market Size

Indias power generation witnessed its highest growth rate in over 30 years in FY23. Power generation in India increased by 8.87% to 1,624.15 billion kilowatt-hours (kWh) in FY23. In FY24 (until January 2024), the power generation in India was 1,452.42 BU. During FY10-FY23, electricity generation in India increased at a CAGR of 4.75%. In the Union Budget 2022-23, the government allocated Rs. 7,327 crore (US$ 885 million) for the solar power sector including grid, off-grid, and PM-KUSUM projects.

For FY24, the electricity generation target from conventional sources has been fixed at 1,750 BU, comprising

1,324.11 BU of thermal energy, 156.70 BU of hydro energy, 46.19 BU of nuclear energy, 215 BU of RES

(excluding hydro), and 8 BU to be imported from Bhutan. Indias power consumption grew over 8% to 127.79 BU in February 2024 as compared to the year-ago period, according to government data. The Nathpa Jhakri Hydro Electricity Station of Satluj Jal Vidyut Nigam (SJVN) has set a new monthly power generation record, increasing from 1,213.10 million units to 1,216.56 million units on July 31, 2021.

Indias energy demand is expected to increase more than that of any other country in the coming decades due to its sheer size and enormous potential for growth and development. Therefore, most of this new energy demand must be met by low-carbon, renewable sources. Indias announcement India that it intends to achieve net zero carbon emissions by 2070 and to meet 50% of its electricity needs from renewable sources by 2030 marks a historic point in the global effort to combat climate change. India was ranked fourth in wind power capacity and solar power capacity, and fourth in renewable energy installed capacity, as of 2023. Installed renewable power generation capacity has increased at a fast pace over the past few years, posting a CAGR of 15.4% between FY16 and FY23. India has 125.15 GW of renewable energy capacity in FY23. India is the market with the fastest growth in renewable electricity, and by 2026, new capacity additions are expected to double.

With the increased support of the Government and improved economics, the sector has become attractive from an investors perspective. As India looks to meet its energy demand on its own, which is expected to reach 15,820 TWh by 2040, renewable energy is set to play an important role.

2. Opportunities and Threats

Opportunities

> Expansion in Renewable Energy sector

The growing focus on renewable energy, especially solar power, offers significant growth opportunities. Our Companys expertise in setting-up and managing of solar parks positions it well to capture a share of this expanding market.

> Government initiatives for Infrastructure and Energy

Indian government policies promoting infrastructure development and renewable energy create new project opportunities. We can benefit from these initiatives, particularly in rural and underserved areas.

> Collaborations and Joint-Ventures

Partnering with other companies can enable our Company to bid for larger projects and access new markets. These collaborations can also bring in additional expertise and resources, supporting growth and innovation.

> NABL-certified Lab development

Establishing a NABL-certified lab will diversify our Companys offerings and boost its reputation for quality, attracting higher-margin contracts and enhancing credibility in the industry.

Threats

> Regulatory Changes

Shifts in government regulations or policies, especially related to renewable energy and infrastructure, could impact project approvals, compliance costs, and overall business operations.

> Intense competition

The power and renewable energy markets are highly competitive, with numerous players vying for contracts. This competition can lead to pricing pressures, reduced profit margins, and the need for continuous innovation.

> Economic Downturns

Economic slowdowns or recessions can lead to reduced infrastructure spending, project delays, or cancellations, impacting the companys revenue and growth prospects.

> Technological Downturns

Rapid technological advancements require constant investment to stay competitive. Failure to adopt or integrate new technologies could diminish the companys market position and operational efficiency.

> Supply-chain Disruptions

Interruptions in the supply chain, whether due to logistical issues, material shortages, or geopolitical factors, can affect project timelines, increase costs, and impact overall project execution.

> Skilled -labour shortage

A shortage of skilled labour can hinder the companys ability to execute projects effectively and on time. Attracting and retaining qualified professionals is crucial to maintaining project quality and meeting deadlines.

3. Segment-wise or Product-wise Performance

The turnover/performance of the Company has been disclosed in the Directors report under the Head "Review of Operations, sales and working results."

4. Outlook

Your Company remains committed to upholding the highest standards of governance, transparency, and ethical practices. With India racing towards growth and becoming a strong economy, we look forward to emerge as a strong, reliable, and sustainable company. Together, we shall embrace the future with optimism, determination, and the desire to build a brighter tomorrow.

5. Risks and Concerns

Key risks faced by the Company include:

> Over-reliance on Substation Services:

A substantial portion of Chamundas revenue comes from operation, maintenance, testing, and commissioning (OMTC) of electrical substations. Any project delays, rising material costs, or execution problems could significantly dent its revenue and cash flow

> Customer Concentration

All of the companys revenue is generated from just its top ten customers. Should it lose one major client, the impact on revenue and profitability could be substantial-even though such a disruption hasnt occurred in recent years.

> Geographic Concentration in Gujarat

Chamunda conducts most of its operations in Gujarat in recent years. Any economic downturn, policy shift, or regional regulatory changes in Gujarat could severely impact the business.

> Dependence on Government Contracts

A significant portion of Chamundas business is tied to state electricity boards (like GETCO) and government tenders. The companys growth and stability hinge on maintaining favorable relations, timely payments, and continued access to such contracts.

6. Internal Control Systems and Their Adequacy

The Company has a sound internal control system commensurate with its size and nature of operations. It includes policies and procedures to ensure:

?€? Efficient use and protection of resources.

?€? Accuracy and completeness of accounting records.

?€? Compliance with applicable laws and regulations.

Periodic internal audits are conducted and findings reported to the Audit Committee and Board for necessary action. No significant internal control weaknesses were observed during the year.

7. Financial Performance with Respect to Operational Performance

PARTICULARS	Standalone
	31.03.2025	31.03.2024
X. Net Sales/Income from Operations	2528.57	1994.94
XI. Other Income	16.30	8.40
XII. Total Revenue (I+II)	2544.87	2003.34
XIII. Earnings Before Interest, Taxes, Depreciation and Amortization Expense	644.25	468.63
XIV. Finance Cost	42.06	43.85
XV. Depreciation and Amortization Expense	91.93	87.39
XVI. Prior Period Items	60.72	16.39
XVII. Profit Before Tax (IV-V-VI)	449.54	321.00
XVIII. Tax Expense:
Less: Current Tax Expense	144.26	95.01
Less: Deferred Tax	(30.35)	(2.94)
Profit After Tax (VII-VIII)	335.63	228.93

8. Material Developments in Human Resources / Industrial Relations

The Company continues to give utmost importance to Human Resources Development and keeps relations normal. As on 31st March, 2025, there are 835 employees.

Industrial relations continue to be harmonious and normal.

9. Details of Significant Changes in Key Financial Ratios

Ratios	For the Year ended March 31, 2025	For the Year ended March 31, 2024	Variation (%)
(a) Current Ratio	3.48	1.23	182.93%
(b) Debt-Equity Ratio	-	0.73	(100.00%)
(c) Debt Service Coverage Ratio	NA	1.68	(100.00%)
(d) Return on Equity Ratio	21.36%	36.11%	(40.85%)
(e) Inventory turnover ratio	N/A		N/A
(f) Trade Receivables turnover ratio	6.09	9.51	(35.96%)
(g) Trade payables turnover ratio	415.54	328.66	26.43%
(h) Net capital turnover ratio	5.60	16.32	(65.69%)
(i) Net profit ratio	13.27%	11.48%	15.59%
(j) Return on Capital employed	23.38%	41.19%	(43.24%)
(k) Return on investment	N/A		N/A

Reasons for Variation more than 25%:

a. Current Ratio:

In FY 24-25 ,Variation in ratio is mainly due to Vendor Advances and Unbilled Revenue from ongoing projects.

b. Debt Equity Ratio:

In FY 24-25 ,Variation in ratio is due to repayment of almost all outstanding loans during the year.

c. Return-on-Equity Ratio:

In FY 24-25, Variation in ratio is due to increase in Equity base following fresh issue of shares at premium, resulting in higher Equity Share Capital and Reserves, despite increase in earnings.

c. Trade Receivables turnover Ratio:

In FY 24-25, Variation in ratio is due to increase in trade receivables.

d. Trade Payable turnover Ratio:

In FY 24-25, Due to increase in revenue in current year

e. Net Capital Turnover Ratio:

In FY 24-25, Due to increase in revenue and vendor advances & unbilled revenue, we can see change in ratio.

f. Net Profit Ratio:

In FY 24-25, Due to increase in revenue and decrease in finance cost, earning for Equity shareholder has increased ( i.e. profit during the year)

g. Return on Capital employed

In FY 24-25, Variation in ratio is due to increase in Equity base following fresh issue of shares at premium, resulting in higher Equity Share Capital and Reserves.

10. Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various factors including changes in economic, political, and regulatory environments, natural calamities, and market conditions.

For and on behalf of Board of Directors Chamunda Electrical Limited

Date: 28 th August, 2025	Mr. Chiragkumar N. Patel	Mr. Natvarbhai K. Rathod
Place: Palanpur	Managing Director	Whole-time Director
	DIN: 06601915	DIN: 06601995