Electrotherm India Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The objective of this report is to convey the Managements perspective on the performance of the Company for financial year 2025-26. This Report should be read in conjunctionwith the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Annual Report 2025-26. The Companys financial statements have been prepared in accordance with Indian Accounting Standards ("Ind AS") complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India ("SEBI") from time to time.

GLOBAL ECONOMIC OUTLOOK

During FY 2025 26 and into FY 2026 27, the global economy has remained resilient but increasingly exposed to geopolitical, energy and trade-related uncertainties. According to the International Monetary Funds July 2026 World Economic Outlook Update, global growth is projected at 3.0% in 2026 and 3.4% in 2027. The outlook is being shaped by two contrasting forces: the economic impact of the war and associated energy disruptions, and a technology-led investmentcycle,particularly artificial intelligence. Global disinflation has also around slowed, keeping monetary policy and financial-market conditions important variables for businesses worldwide.

Geopolitical tensions, changes in trade policies,tariffmeasures,supply-chainrealignmentandvolatilityin crude oil and other commodities continue to create uncertainty for manufacturing industries. At the same time, the reconfiguration of global supply chains is creating opportunities for economies with strong domestic markets, competitive manufacturing capabilities and improving well positioned to benefit from this structural shift, supported by its large domestic market, improving logistics, digital infrastructure and continued policy emphasis on manufacturing and investment.

INDIA OUTLOOK

India continues to demonstrate strong economic resilience and remains one of the fastest-growing major economies. Real GDP growth for FY 2025 26 is 7.7%, compared with 6.5% in FY 2024 25. The growth outlook is supported by domestic consumption, public investment, manufacturing, construction and a strong services sector. For FY 2026 27, the Government has maintained an investment-oriented fiscal approach while continuing fiscal consolidation.

Domesticdemand remains a key strength of the Indian economy. Private final consumption expenditure has grown by 7% in FY 2025 26 and account for 61.5% of GDP, while gross fixed capital formation has rose by 7.8%. Public investment continues to provide a strong foundation for infrastructure and industrial activity. Union Government capital expenditure is budgeted atRs. 12.22 lakh crore for FY 2026 27, while effective capital expenditure, including grants for creation of capital assets, is estimatedat Rs. 17.15 lakh crore.

The medium-term Indian growth story remains supported by infrastructure development, urbanisation, manufacturing localisation, digitalisation, formalisation of the economy and increasing private-sector investment. However, external risks remain relevant, including global trade restrictions, commodity-price volatility, geopolitical disruptions, currency

INDIAN STEEL INDUSTRY OUTLOOK

Indias steel industry continues to benefit from structural domestic demandarisingfrominfrastructure,construction,housing, transportation, renewable energy and industrial investment. Indias crude steel production reached 164.89 million tonnes in calendar year 2025, registering growth of 10.4% over 2024. During April May 2026, crude steel production increased by 2.7% year-on-year, while finished increased by 8.7%, demonstrating continued strength in domestic demand. The Indian steel market nevertheless remainshighlycompetitive.Domesticproducerscontinueto face fluctuations in raw-material prices, imported steel, global oversupply, changes in international trade flows and pressure on selling prices. Accordingly, profitability will increasingly depend on cost efficiency, raw-materialsecurity,productdifferentiation,capacity utilisation, working-capital discipline and a greater share of value-added products.

Indias long-term steel demand outlook remains favourable. Continued government expenditure on roads, railways, ports, water infrastructure, urban development and industrial corridors, together with private investment, is expected to support steel consumption over the medium to long term.

India continues to be one of the fastest-growing steel producing nations in the world. Rapid urbanization, expanding infrastructure projects, increasing investments in renewable energy, railways, defence, automobiles and manufacturing under the "Make in India" initiative are expected to sustain long-term demand for steel and allied products.

The Indian induction furnace market is projected to grow at a CAGR of approximately 7.3% over the next five years, supported by increasing of secondary steel manufacturing. Induction furnace technology continues to gain preference steelproductioncapacities owing to its superior thermal efficiency, precise temperature control, improved metallurgical consistency and lower environmental footprint compared to conventional melting technologies. Growing emphasis on energy conservation, digital automation expected to further accelerate demand for technologically advanced induction melting solutions.

Globally, steel manufacturers are increasingly investing in energy-efficient and digitally integrated plants to improve productivity while complying with environmental regulations. The adoption of Industry 4.0 technologies, intelligent automation, AI-based process optimization and predictive maintenance is creating significant opportunities for technologically advanced equipment manufacturers such as Electrotherm (India) Limited ("Electrotherm").

BUSINESS OVERVIEW

Electrotherm continues to operate across engineering and technology, special steel and electric mobility businesses. The Companys operating philosophy remains centred on customer satisfaction, product quality, engineering capability, resource optimisation and long-term customer relationships. The Companys facilities and established capabilities provide a platform to participate in Indias continuing industrial and infrastructure expansion.

During the year, the Company continued to focus on improving capacity utilisation, optimising energy and raw-material consumption, strengthening operational efficiency and increasing the contribution of value-added products. The Companys location and connectivity raw-material sources and major markets remain important competitive advantages, while disciplined cost management remains critical in a volatile commodity environment.

A. ENGINEERING & TECHNOLOGIES DIVISION

The Engineering & Technology Division of Electrotherm continued its leadership position during FY 2025-26, reinforcing its standing as one of Indias most respected manufacturers of metallurgical equipment with export footprints spanning over 81 countries. The Division further strengthened its reputation by delivering technologically advanced, energy-efficient and customized solutions to steel, foundry and metallurgical industries across domestic and international markets.

Electrotherms competitive continuesto stem from its unwavering commitment to quality, engineering excellence strength and customer-centric innovation. Every equipment manufactured by the Company is designed to meet the specific operational requirements of individual customers. The Companys integrated quality assurance system encompasses the complete value chain from procurement of premium raw materials, engineering design, manufacturing and stage-wise inspection to commissioning and after-sales support. Continuous interaction with customers enables the Company to monitor equipment performance throughout its lifecycle, gather valuable operational feedback and continuously enhance product reliability, productivity and energy efficiency. This customer-focused approach has enabled Electrotherm to build long-standing relationships with steel producers across the globe. Sustainability remains a core pillar of the Companys technology development initiatives. As the global steel industry accelerates its transition towards lower carbon emissions and improved energy efficiency, Electrotherm continues to introduce technologies that significantly reduce specific power consumption, improve productivity and minimize environmental impact. The Companys induction melting systems are among the most energy-efficient available in the market, enabling customers to reduce operating costs while improving metal yield and production consistency. Simultaneously, the Companys advanced Air Pollution Control Systems help customers comply with increasingly stringent environmental regulations while promoting cleaner manufacturing practices. The Companys highly experienced engineers, scientists and technicians continue to remain its greatest strength. Their expertisein power electronics, automation, metallurgical engineering and material science has enabled Electrotherm to remain at the forefront of technological innovation, continuouslydevelopingsolutions efficiency, digital process control and overall thatimproveoperational equipment reliability.

B. SPECIAL STEEL DIVISION

TMT Steel

The Indian TMT market remains structurally positive, supported by infrastructure development, urbanisation, housing, industrial investment and government capital expenditure. At the same time, the market is highly competitive and exposed to fluctuations in raw-material costs, imported steel, regional price competition and changes in project demand.

In this environment, Electrotherms focus is increasingly utilisation, strengthening the distribution and retail improvingcapacity institutional and project business, and increasing the contribution of differentiated products. Value-added network,developing offerings such as Epoxy Coated TMT and Cut & Bend TMT provide opportunities to improve product mix, margins while reducing dependence on commodity-grade volume.

Epoxy-coated TMT bars have particular relevance in coastal and corrosion-prone applications, including bridges, water infrastructure, industrial facilities and other long-life structures. With its integrated manufacturing capability, Electrotherm is positioned to further develop this segment, particularly in Gujarat and other coastal markets.

DI Pipes

The Indian ductile iron pipe industry is closely linked to public expenditure on drinking-water supply, irrigation and urban water infrastructure. The sector experienced a moderation in demand during the latter part of FY 2024 25 and subsequently, primarily reflecting the timing of government project execution and order conversion.

The medium to long-term outlook remains favourable because India continues to require substantial investment in water transmission and distribution infrastructure. Jal Jeevan Mission remains a major national programme, and operational guidelines for Jal Jeevan Mission 2.0 were issued in 2026. The opportunity for the industry will therefore depend not only on headline budget allocations but also on the pace of tendering, project execution, fund release and conversion of orders into physical dispatches.

Electrotherm will focus on improving market reach, strengthening relationships with project owners and channel partners, improving capacity utilisation and pursuing strategic alliances and new markets. Greater geographic diversification and disciplined working-capital management will remain important priorities.

C. ELECTRIC VEHICLE DIVISION

Indias automobile market entered FY 2026 27 with strong momentum. According to SIAM, passenger-vehicle sales reached a record 46.43 lakh units in FY 2025 26, while two-wheeler sales reached a record 2.17 crore units, registering 10.7% growth. The first quarter of FY 2026 27 continued this momentum, with two-wheeler sales of 56.3 lakh units, up 20.3% year-on-year. The electric mobility ecosystem continues to evolve with increasing consumer acceptance, improving product technology, wider charging infrastructure and greater participation by established and new manufacturers. At the same time, the segment remains competitive and sensitive to product pricing, battery costs, financing, regulatory policy and after-sales support.

Electrotherms electric vehicle brand, "Yo Bykes", has an established presence and customer base in India. Going forward, the Division will need to focus on product relevance, quality, reliability, battery technology, service capability, dealer productivity and disciplined working-capital deployment.

OPPORTUNITIES AND KEY CHALLENGES

Opportunities

The Company expects significant growth opportunities arising from:

Expansion of steel manufacturing capacities in India.

Modernization and replacement demand from existing induction furnace installations.

Growing emphasis on energy-efficient and environmentally sustainable steelmaking technologies.

Rising investments in downstream steel processing facilities.

Increasing export opportunities across Africa, Southeast Asia, Latin America and selected Middle

Demand for digitally connected smart manufacturing solutions incorporating automation, remote diagnostics and predictive maintenance.

Increasing adoption of advanced refining technologies including LRF, AOD and productivity enhancement systems.

Challenges

The business environment continues to face certain challenges including:

Global geopolitical tensions, energy-price volatility and disruptions

High volatility in steel, iron ore, coal, coke, scrap and other raw-material prices.

Import pressure and changing international trade and tariffpolicies. commodity steel and pressure on selling Intensecompetition in prices.

Execution and payment cycles associated with government and infrastructure projects.

Need for continuous investment in technology, quality, environmental compliance and customer service.

Working-capital requirements and the need for disciplined inventory and receivables management.

Intense price competition from low-cost equipment manufacturers.

Continued geopolitical instability affecting international project execution.

Supply chain disruptions and fluctuations in prices of copper, CRGO steel and other key raw materials.

Delays in customer investment decisions due to uncertain global economic conditions.

Exchange rate volatility impacting export competitiveness.

Increasing compliance requirements relating to environmental and sustainability regulations.

OUTLOOK

Indias structural growth story remains favourable despite a challenging and uncertain global environment. Strong domestic demand, continued public investment, infrastructure development and gradual improvement in private-sector investment provide a supportive operating environment for Electrotherms businesses.

The Companys strategic focus will remain on improving operating efficiency, increasing capacity utilisation, strengthening the product mix, expanding value-added products, developing new markets, improving working-capital efficiency and on quality and customer service.

Going forward, Electrotherm will seek to leverage its engineering heritage, manufacturing capabilities and relationships to participate selectively in attractive growth opportunities while maintaining financial and operational discipline. The Company remains committed to building sustainable long-term value through cost competitiveness, technology, product differentiation, customer focus and prudent capital allocation.

FINANCIAL LIABILITY STATUS

Originally the Company had 19 lenders and ten of them have assigned their debts to Edelweiss Asset Reconstruction Company Limited ("EARC"), Invent Assets Securitisation & Reconstruction Pvt. Ltd. ("Invent ARC") and Rare Asset Reconstruction Limited ("Rare ARC"). As a part of debt resolution with lenders, the Company has One Time Settlement arrangement, wherein entire settlement amount had been paid to ICICI Bank, UCO Bank, Vijaya Bank, Syndicate Bank, International Finance Corporation, Standard Chartered Bank, Union Bank of India (including debt of Corporation Bank), Central Bank of India and Invent ARC (for debts of Oriental Bank of Commerce). Except pending settlement with Rare ARC (assignee of Indian Overseas Bank), the Company has entered into revised settlement / restructuring with all three ARCs.

Segment-Wise Performance:

The business segment of the Company comprises of Engineering & Technologies Division, Special Steel Division and Electric Vehicle Division. The Segment wise performance of the Company for all the three divisions for the year ended on 31^st March, 2026 is as under: (Rs. In Crore)

Particulars	Engineering & Technologies Division	Special Steel Division	Electric Vehicle Division
Revenue from operations	1,206.78	2,465.65	39.60
Segment Profit / (Loss) Before Finance Cost & Tax	23.80	(10.60)	(8.87)
Capital Employed	139.56	771.48	20.39

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE Revenue from operations:

The revenue from operations of the Company for the financial year ended on 31 ^st March, 2026 was Rs. 3,692.02 Crore as compared to Rs. 4,115.37 Crore of previous financial year.

Cost of Materials consumed including purchase of traded goods:

The cost of materials consumed including purchase of traded goods for the financial year ended on 31^st March, 2026 was Rs. 2,680.38 Crore as compared to Rs. 2,779.35 Crore of previous financial year. amortization: Depreciation and financial year ended on 31 Depreciation and amortization ^st March, 2026 is Rs. 43.28 Crore as compared to Rs. 44.39 Crore of the previous financial year.

Finance Costs:

Finance costs for the financial year ended on31 ^st March, 2026 is of Rs. 24.13 Crore as compared to Rs. 45.52 Crore of previous financial year.

Indian Overseas Bank had classified the loan account of the Company as non-performing assets during August 2011, which was subsequently assigned to Rare ARC, but with whom the settlement terms have not been entered into. Further, the Honble Debt Recovery Tribunal ("DRT"), Ahmedabad has passed judgment against Company & personal guarantors for recovery along with future interest on the amount due @12.75% p.a. with monthly rests. As per the details available with the company, the amount of unprovided interest, on approximate basis, on the said loan is Rs. 149.61 Crore for the year under consideration and the total amount of such unprovided interest till 31 ^st March 2026 is Rs. 1,066.12 Crore.

Profit / (Loss) Analysis:

The Profit before Finance Costs, Depreciation and Amortisation was Rs. 47.60 Crore as compared to Rs. 379.59 Crore of previous financial year. The net loss for the current financial year (excluding exceptional items & deferred tax) was Rs. 19.81 Crore as compared to net profit of Rs. 289.68 Crore of previous financial year.

Key Ratios:

PursuanttoRegulation34 of the SEBI LODR Regulations, 2015, the details of the key financial ratios of the Company and comparison to previous year has been provided in Note No. 51 to standalonefinancialstatements of the Company.

RISK AND CONCERNS

The Company has established a well-defined process of risk management, whereintheidentification, analysis and assessment of the various risks, measuring of the probable impact of suchrisks,formulationof risk mitigation strategy and implementation of the same takes place in a structured manner. Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks in the operations of the Company.

At present, there are elements of risks in the nature of various legal cases including for recovery of dues and attachment of certain properties may threaten the existence of the Company. which

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Internal Control System is designed to prevent operational risks through a framework of internal controls and processes. The Company has in place adequate system of internal control and internal audit commensurate with its size and the nature of its operations. Our internal control system ensures that all business transactions are recorded in a timely manner, resources are utilized effectively and our assets are safeguarded. Internal Audit is conducted by experienced Chartered Accountants in close coordination with companys Finance, Accounts and other departments of the Company. Thefindingsof the Internal Audit team are discussed internally with the Executive Directors as well as in Audit Committee Meetings and their suggestion for improvement & strengthening is reviewed by the Audit Committee / Board. The Company is in process to strengthen its internal control system by implementing Standard Operating Procedures ("SOP") for all its major areas under the guidance of Audit Committee / Board.

DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The employees are the most valuable assets of Electrotherm. The Company on regular basis takes initiatives to provide training to its employees on environment, health and safety and also provide training on soft skill up-gradation to improve their skills as may be relevant to the respective functions.We are sincerely grateful to all employees for their close and constructive cooperation in the year 2025-26. Further, we were able to achieve progress against many strategic challenges and continuing that partnership will be a key to implementing the significant changes announced under Human Resource Development Strategy. The Company also hire contract labour on time-to-time basis for success and growth of the Company. As on 31 ^st March, 2026, there were 2,824 Permanent employees employed by the company.

During the year 2025-26, we could (i) achieved 6.93 training man-days per employee covering 86% employees, (ii) trained 57 customer service engineers on product knowledge & automation (iii) achieved overall skill % of plant @ 63% (iv) contractual manpower pipeline is more skilled with 29 Level-3 & 128 Level-2 operators under various skill sets.

The Company develops the training programs by assessing required skills and imparting such skills to fulfil the skill gaps which directly contribute to the human & machine efficiency & to our overall business performance. On TEI front, employee participation is 100%. 5 of our Kaizen teams won Gold Trophies at CCQC 2025. 5 of our Kaizen teams won Par Excellence Trophies at NCQC 2025.

The Human Resources Development Strategy provides transparency on the companys employee metrics and how we are translating our strategic priorities into action. It helped to achieve the goals in organizational culture; diversity and inclusion; talent and development; talent acquisition; compensation and benefits; managing change; and collaboration with our social partners. For Electrotherm, investing in our employees remains of paramount importance. The success of Human Resource Development Strategy will depend in part on our ability to retain, motivate, develop, and continue to attract employees with the skills and experience . tohelpthechallengesandmakethemostofopportunities

HEALTH & SAFETY

We value the human life and believe, all injuries are preventable. Our aim is zero accident. We are committed to conduct all our operations in a manner, so as to avoid harm to employees, contractors, workmen, visitors, local public and the environment. This responsibility starts with each one of us.

The Company has made necessary arrangement to ensure that the employees and stakeholders are safe and comfortable at work place.

We provide safe machines and need based Personal Protective Equipments to employees to reduce risk at work place. We create awareness among employees / vendors / contractors through training and partner to demonstrate our commitment and involvement, responsibility and accountability to achieve HSE performance and provide a safe and healthy work environment for all employees. During the year 2025-26, we conducted 24 safety related training programs.

CORPORATE SOCIAL RESPONSBILITY ("CSR")

The Company strives to be a socially responsible company and strongly believes in development which is beneficialfor the society at large. We also wish to keep the environment clean and safe for the society by adhering to the best industrial practices, adopting best technologies and investing in greener initiatives, and so on. It is our intent to make apositive contribution to the society in which the Company lives and operates. CSR is an evolving business practice at Electrotherm that incorporates sustainable development into a companys business model and leaving a positive impact on social, economic and environmental factors.

At Electrotherm our purpose is to improve the quality of life of the communities, we serve and we also believe society, what we earn. We also focus majorily on rural development and environment friendly initiatives, providing healthcare facilities to nearby villagers, focusing on education, and much more. Our CSR approach stands for eradicating extreme poverty & hunger, health & sanitation, basic needs fulfillment (sharing & caring), ensure environmentsustainability,animalwelfareactivities in nearby villages etc.

Being Social cause, during the year 2025-26, the Company has completed ‘Oxygen Park Garden Development Project, in consultation with Ahmedabad Municipal Corporation (AMC), at South Bopal, Ahmedabad, Gujarat with aim to promote environment sustainability and enhance community well-being. The Company has also undertaken CSR activities related to provide medical / health care facilities through Shree Jalaram Abhyuday Sadbhavna Trust, Ahmedabad, for medical treatment of children suffering from Thalassemia. Also, the Company has undertaken various CSR initiatives related to providing training to basketball sport person, promoting education by constructing ground floor for Mahila adhyapan building, ecological balance & environmental sustainability program by native plantation for carbon sequestration, and empowering women & reduce gender inequality through womens skill development project i.e. vocation training in computer accounting and sewing machine.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis Report detailing Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" with the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand supply conditions, finished goods prices, raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in government regulations, tax regimes, economic developments within India and the countries within which the company conducts its business and other factors such as litigation.