Eimco Elecon India Ltd Management Discussions

Indian Economy Outlook

Indias economy demonstrated notable resilience during FY 2025-26, maintaining its position as the worlds fastest- growing major economy despite global trade disruptions arising from trade tariff tensions. According to the World Banks April 2026 India Development Update, GDP growth accelerated to 7.6% in FY 2025-26, supported by strong domestic consumption, continued public infrastructure spending and sustained momentum in the services sector. However, the year-end was also marked by renewed tensions arising from the US-Iran conflict, which contributed to volatility in global crude oil prices, higher logistics costs and uncertainty across international trade routes heading into the next financial year. As a major crude oil importer, India experienced pressure on inflation and industrial input costs. Looking ahead to FY 2026-27, Indias economic outlook remains constructive, although global uncertainties may moderate growth from the exceptionally strong levels seen in FY 2025-26. The IMF estimates growth at around 6.5%, keeping India among the fastest-growing large economies globally. Government capital expenditure, improving private sector investments and continued manufacturing expansion are expected to remain key growth drivers.

At the same time, risks from commodity price volatility, geopolitical tensions and weaker global trade conditions may continue to affect inflation and external balances. Nevertheless, Indias economic resilience, ongoing infrastructure investments and favourable long-term industrial outlook are expected to support medium-term growth, creating a positive environment across core sectors.

Indias coal sector continues to demonstrate strong structural resilience, underpinning sustained long-term demand for mining equipment. Domestic coal production has crossed the 1 billion tonne milestone for the second consecutive year and remains on a steady growth trajectory, supported by ongoing sectoral reforms, commercial coal mining, faster project approvals, and increased import substitution. Coal is expected to remain a critical component of Indias energy security framework over the medium term, thereby supporting stable mining activity and equipment demand.

While Indias coal production profile remains predominantly opencast due to its cost advantages and scalability, underground mining is assuming increasing strategic importance for accessing deeper, geologically complex, and land-constrained reserves. This shift is expected to gain further momentum as India advances toward its long- term production targets and seeks to improve resource sustainability.

Recognizing the importance of underground mining, the Government of India has introduced several policy initiatives aimed at improving project viability and accelerating technology adoption. Measures such as rationalization of revenue share mechanisms, waiver of upfront payments, and incentive structures for underground projects are helping address the historically high capital intensity and longer gestation cycles associated with underground mining operations.

At the same time, the industry is witnessing a gradual but meaningful transition toward mechanized and technology- driven underground mining. Adoption of advanced equipment such as continuous miners, longwall systems, digital monitoring platforms, remote operations, and safety- enhancing technology is expected to drive productivity improvements, operational efficiency, and compliance standards across the sector. Consequently, demand for underground mining equipment is increasingly expected to be driven by modernization, replacement cycles, and technology upgradation rather than only incremental capacity additions.

The outlook for FY26-27 and beyond remains stable with selective growth opportunities. Increasing participation from private sector operators in commercial coal mining is likely to accelerate investments in modern underground equipment, particularly for technically challenging and deeper deposits. In parallel, initiatives such as Underground Coal Gasification (UCG) and greater focus on extraction from deep-seated reserves are expected to expand the long-term opportunity landscape for specialized underground technologies.

The evolving geopolitical environment is also expected to influence the industry outlook. Global supply chain disruptions, resource security concerns, and increasing emphasis on critical mineral and energy security are encouraging India to strengthen domestic mining capabilities and reduce dependence on imported equipment and components. This is expected to benefit domestic manufacturers through localization opportunities, technology partnerships, and increased policy support under the "Make in India" initiative.

However, geopolitical tensions may also create challenges in the form of supply chain volatility, elevated input costs, and longer lead times for certain imported components and technologies. Companies with established domestic manufacturing capabilities, strong service networks, and technological adaptability are likely to be better positioned to navigate these risks.

Overall, the underground mining equipment segment is expected to witness gradual, policy-supported growth over the medium term, driven by modernization, mechanization, safety compliance, and the strategic need to exploit deeper reserves. As underground mining assumes greater importance within Indias long-term energy and resource security framework, the sector is expected to offer sustainable opportunities for the Company.

The domestic construction equipment industry witnessed a modest contraction in FY 2025-26, with overall sales declining by ~2% year-on-year, primarily driven by a temporary slowdown in infrastructure execution, project deferments and geopolitical uncertainties.

On the macroeconomic front, India continued to demonstrate strong policy intent toward long-term infrastructure development, with the Union Budget announcing a record infrastructure outlay of Rs. 12.2 trillion, aimed at sustaining multi-year project pipelines across transport, energy, and urban development.

Looking ahead to FY 2026-27, the industry outlook remains cautious, considering possible economic uncertainties. However, industry estimates project a return to moderate growth of approximately 2-4% in equipment volumes supported by expectations of improved project execution and a gradual recovery in domestic demand.

The Company delivered a resilient operational performance during the year under review, supported by sustained demand from the underground mining sector, improved execution capabilities, and a continued focus on product innovation. Revenue from operations stood at Rs. 231 Crore as compared to Rs. 247 Crore in the previous year, reflecting a decline of 6%. Profit Before Tax (PBT) was Rs. 50 Crore, while Profit After Tax (PAT) stood at Rs. 39 Crore.

Eimco Elecon continues to maintain a strong position in the underground mining equipment industry in India, supported by long-standing relationships with key customers in the sector, alongside a robust after-sales service network. The Companys strategic focus on enhancing operational efficiency and expanding its product portfolio has contributed to improved order inflows and execution during the year.

During the year, the Company undertook key operational expansion initiatives to strengthen its manufacturing capabilities and future growth prospects.

Further, the Company continued to expand its presence in construction equipment, building on its established expertise in mining machinery. The introduction and scaling up of indigenous high-end equipment such as piling rigs, developed under ‘Make in India initiatives, has enabled the Company to diversify its revenue streams and tap into infrastructure-led opportunities across sectors such as metro rail, roads, and urban development projects. The ongoing addition of new models to the product portfolio is expected to further strengthen market competitiveness.

Operationally, the Company also benefited from its widespread service and distribution network across key mining regions in India, enabling timely customer support and higher equipment uptime. This, combined with a focus on indigenisation and cost optimisation, has supported margin improvement during the year.

Overall, the Companys performance reflects a balanced approach towards growth and operational excellence. Continued investments in capacity expansion, product development, and market diversification position the Company well to capitalise on emerging opportunities in Indias mining and infrastructure sectors, while maintaining a strong foundation for sustainable long-term growth.

Pursuant to Schedule V(B) to the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015, the Key Financial Ratios:

*The Interest Coverage Ratio was impacted by more than 25% due to an increase in lease liabilities and borrowings undertaken by the Company.

Return on Net Worth was impacted by more than 25% due to a drop in Net Profit.

The Companys performance remains inherently linked to the cyclical nature of the underground mining and construction sectors. Any slowdown in capital expenditure by key end- user industries, particularly coal mining, may impact order inflows and execution timelines. Additionally, fluctuations in commodity prices and overall economic conditions can influence investment sentiment, thereby affecting demand for the Companys products and services.

The business is also exposed to risks arising from macroeconomic uncertainties, including inflationary pressures, volatility in raw material prices, and supply chain disruptions. Dependence on critical inputs such as steel and components makes the Company vulnerable to cost escalations, which may impact margins if not adequately passed on to customers.

Geopolitical developments, including ongoing global conflicts such as the US - Iran War and other regional tensions, continue to pose risks to global trade flows, energy prices, and supply chain stability. Such unforeseen events may lead to delays in procurement, increased logistics costs, and overall uncertainty in business operations.

Further, the Company operates in a highly competitive environment with both domestic and international players, necessitating continuous innovation and cost competitiveness.

Regulatory risks, including changes in mining policies, environmental norms, and government regulations, may impact project approvals and execution. The Company continues to closely monitor these developments and adopts proactive risk mitigation strategies, including diversification of its product portfolio, strengthening vendor relationships, and maintaining a prudent financial approach to navigate uncertainties effectively.

Internal Control Systems *

The Company has in place an adequate internal control system commensurate with the size, scale, and complexity of its operations. The internal control framework is designed to ensure orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

The adequacy and effectiveness of the internal control systems are periodically reviewed by the Internal Auditors and Statutory Auditors. The Internal Audit function evaluates the design and operating effectiveness of controls, reviews risk management processes, and benchmarks practices with industry standards.

The Audit Committee of the Board of Directors oversees the internal control environment and ensures compliance with regulatory requirements. The Committee also provides guidance for strengthening internal controls.

While the internal control systems are designed to provide reasonable assurance, they are subject to inherent limitations. The Company continues to strengthen its controls through ongoing monitoring and improvements.

Despite persistent geopolitical tensions, supply chain uncertainties, and commodity price volatility, Eimco Elecon remains well-positioned to capitalise on Indias growing emphasis on underground mining mechanisation and energy security.

The Companys diversified product portfolio provides a strong foundation for sustained growth. Key offerings include the Continuous Miner package, the newly launched battery-operated Mine Car, and the Multi Utility Vehicle - all purpose- built for the demands of modern underground mining operations.

Underpinned by indigenous manufacturing capabilities, operational excellence, and a customer-centric approach to innovation, Eimco Elecon continues to deepen its market presence across Indias mining and construction sector.

The Company is confident in its ability to navigate near-term macroeconomic headwinds while delivering long-term value to its stakeholders.

The Company prioritises human resource development, continuously upgrading employees skills to meet evolving business challenges. Workforce planning ensures alignment with strategic objectives, while industrial relations remain cordial and constructive.

As on March 31, 2026, the Company had 138 permanent employees, reflecting its commitment to a skilled, motivated, and stable workforce that supports sustainable growth.