Elin Electronics Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

In 2024, the global economic landscape was shaped by a delicate balance between resilience and uncertainty. A slew of geopolitical flashpoints, including the prolonged Russia-Ukraine war, Israel-Gaza conflict, and the U.S.-China trade disputes, coupled with inflationary pressures driven by disrupted supply chains and rising energy costs, weighed heavily on investment climate. Moreover, escalating political instability, stemming from electoral transitions in major economies and evolving policy trajectories in emerging markets, added to the complexity of the macroeconomic environment. Despite these headwinds, and volume rebound with a growth of 3.6%, as economies realigned supply globaltradedemonstratedsignificant chains and diversified trade routes.

Looking ahead, the global economic outlook remains relatively steady, with the International Monetary Fund (IMF) projecting a stabilization of GDP growth at 3.3% for two consecutive years, 2025 and 2026. While this estimate reflects a moderation from the historical average of 3.7% witnessed between 2000 to 2019, it also marks an upward revision for the U.S., offsetting downward adjustments in other major economies. Advanced economies are expected to register a subdued pace, with growth rates ranging between 1.9% in 2025 to 1.8% in 2026. On the contrary, emerging markets and developing economies are poised to sustain stronger momentum, with projected growth rate of 4.2% and 4.3%, respectively, during the same period.

Estimate: 2024 Projections: 2025 and 2026 Amidst a complex mix of evolving monetary policies, easing inflation, and region-specific headwinds, the global growth narrative for 2025 presents divergent momentum across advanced and emerging economies. Global headline inflation is expected to continue its downward trajectory, declining from 4.2% in 2025 to 3.5% in 2026. Advanced economies are on course to return to their inflation targets sooner than their emerging market counterparts. In the U.S., growth is projected at 2.7% in 2025, supported by robust consumer demand, wealth effects, and a more accommodative monetary policy. Conversely, the Euro Area is faced with a more gradual recovery, with growth projected at 1.0% in 2025, constrained by persistent geopolitical tensions, policy uncertainties, and weak manufacturing momentum. Meanwhile, China is anticipated to grow at a rate of 4.6% in 2025, though its outlook remains clouded by structural imbalances, including tepid domestic consumption and ongoing concerns in real estate market. While financial conditions are expected to ease globally, trade uncertainties and geopolitical risks continue to influence investment sentiment, leading to an uneven pace of economic expansion across different regions.

(Source: World Economic Outlook, January 2025)

At the backdrop of a volatile global economic context, India continues to chart a robust and resilient trajectory. Surging at a 6.5% GDP growth, the Indian economy is firmly positioned among the fastest-growing major economies of the world. This growth is primarily driven by robust domestic demand, increased capital expenditures, and a resilient services sector now accounting for approximately 55.3% of the Gross Value Added (GVA). Exports activity within the sector remains a prime enabler, with double-digit growth led by information technology and computer-related domains. Industrial activity is also expected to gain traction, bolstered by strong performances in electricity and construction. Urban real estate market is experiencing renewed dynamism, driven by a surge in housing demand.

Simultaneously, Indias transition to a low-carbon economy is propelling steadily, with renewable energy capacity rising by 15.8% year-on-year. Comprising 47% of the total installed power mix, this development reaffirms the nations commitment to accelerating the adoption of clean energy. The digital economy stands as a transformational pillar and is on track to surpass USD 1 Trillion by 2025, with burgeoning digital infrastructure and innovation ecosystems catalysing inclusive and sustainable growth.

Indias medium to long-term growth aspirations are backed by a sound reform agenda, focused fiscal discipline, and a commitment to cultivate a globally competitive business ecosystem. Inflation is projected to remain stable, supported by prudent fiscal and monetary policies. Growth momentum is further strengthened by sustained India is poised to become infrastructure investments and targeted incentives under the Production-Linked Incentive (PLI) scheme. This focused intervention continues to catalyse domestic and manufacturing, attract significant generate substantial employment opportunities across various sectors. To remain on track to achieve its long-term vision of Viksit Bharat by 2047, India aims to sustain an 8% annual growth rate an ambition backed by robust structural reforms, continued emphasis on innovation and investment, and improvements in institutional efficiency. The key policy measures, including Ease of Doing Business 2.0, systemic deregulation, labourlawsimplification,tax rationalization, and digital governance, are driving the nation toward sustainable and inclusive growth. To foster a more conducive business climate, the Indian Government implemented extensive regulatory streamlining under the Ease of Doing Business 2.0 initiative, eliminating over 39,000 compliance and decriminalizing more than 3,400 legal provisions.

(Source: https://www.india-briefing.com/news/economic-of-india-2024-25-key-highlights-36004.html/)

Indias electronics industry is emerging as a critical enabler of the countrys technological and industrial transformation, backed by strong policy support, rising investments, and surging domestic demand. The sector is witnessing an exponential growth, and is projected to reach USD 115 Billion in 2024. This sound trajectory is positioning India as a key global hub for electronics and semiconductor manufacturing. The semiconductor segment, in particular, is experiencing accelerated momentum, with projections indicating a surge from USD 38 Billion in 2024 to USD 105 Billion by 2030. An increased adoption across industries and focused government initiatives in chip design, fabrication, and packaging are propelling the pace. The Electronics Manufacturing Services (EMS) sector continues to scale rapidly. Expected to touch USD 220 Billion by 2025, the sector is drawing strength from ongoing diversification of global supply chains, rising domestic consumption, and an ever-increasing shift toward OEM outsourcing. To further bolster this momentum, the Government approved a USD 2.7 Billion PLI scheme in March 2025, aimed at mobilizing USD 7 Billion in investments and creating an estimated 91,000 new jobs. Complementary measures such as the rationalization of import duties on key components were implemented to further augment cost competitiveness and encourage domestic value addition. With a robust, policy-driven ecosystem and growing investor confidence, a leading destination in global electronics manufacturing and next-generation semiconductor innovation.

(Source: https://www.marknteladvisors.com/research-library/ india-semiconductor-market.htm, https://www.imarcgroup.com/ indian-pcb-market, https://www.indiaelectronicsexpo.com/indian-electronics-industry/, https://www.ft.com/content/def3e2bf-d2a6-44be-9876-4d71f0f0326c, https://www.reuters.com/world/ india/india-budget-india-axes-import-tax-some-smartphone-parts-boost-apple-xiaomi-2025-02-01/)

In 2025, the EMS sector continues to gain significant traction, driven by rising domestic demand, export competitiveness, and sound policy support, cementing its role as a critical pillar in the nations electronics value chain. Valued at USD 61.85 Billion in 2024, the India EMS market is projected to expand at a CAGR of 28% between 2025 and 2031, reaching an estimated USD 348.17 Billion by 2031, according to projections revealed by BlueWeave survey- Consulting. This standout performance is the culmination of a host of factors that include rising domestic demand for electronic devices, especially smartphones and IT hardware. In addition, the Governments continued push through initiatives like PLI Scheme, Make in India, and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS) are fortifying the growth trajectory.

Consumer electronics continue to dominate the EMS worlds space, with India now firmly second-largest mobile phone producer, delivering skyrocketing exports performance over the past decade. South India, particularly Tamil Nadu, has emerged as a key hub due to the concentration of major manufacturing facilities, including global players like Apples supply chain partners, such as Foxconn.

Concurrently, the EMS opportunity is diversifying into high-growth verticals, including industrial automation and automotive electronics. The rapid adoption of electric vehicles, the roll-out of Industry 4.0 practices, and increasing demand for leading-edge automotive and industrial electronics are catalysing further expansion in the EMS space. The integration of artificial intelligence (AI) and automation is revolutionizing production processes, optimizing quality control, and enabling predictive maintenance, collectively efficiency and augmenting cutting down costs.

While the sectors growth prospects remain strong, challenges continue to cast a shadow on the trajectory. Periodic component shortages, supply chain disruptions, and global geopolitical uncertainties persistently mount pressure on input costs and lead times. Nonetheless, the sector remains competitive and resilient, with leading players such as Dixon Technologies, Foxconn, Flex, Sanmina, and Jabil scaling up operations through partnerships, joint ventures, and capacity expansion. Against this backdrop, Indias EMS industry is set to play a pivotal role in Indias ambition to surpass USD 300 Billion in overall electronics manufacturing by 2025-26 driven by policy support, technological progress, and rising aggregate demand.

Sources:

Indias EMS sector is experiencing sound demand-side momentum, primarily driven by a burgeoning middle class, increasing disposable incomes, and rapid digitalization across the economy. The consumer electronics segment, especially smartphones and IT hardware, remains the primary engine of demand, supported by Government initiatives, such as PLI scheme and Make in India. Additionally, there is strong traction in emerging verticals such as automotive electronics, industrial automation, and medical devices, as more sectors integrate advanced electronics into their products and services.

Indias industrial policy has sharpened its focus on import substitution, aiming to build greater self-reliance across the electronics value chain. Through the PLI scheme and the SPECS, the Government is incentivizing local manufacturing of components and sub-assemblies. These fiscal and regulatory enablers are encouraging OEMs and EMS providers to shift focus toward local vendors, thereby reducing reliance on imports and strengthening the domestic supply chain.

India is increasingly gaining prominence as a competitive and dependable electronics export hub. The EMS exports of the country have seen a dramatic rise, with mobile phone exports alone increasing by over 7,500% in the last decade, a reflection of Indias manufacturing maturity and policy impetus. The global ‘China Plus One strategy is further boosting the momentum, as leading OEMs continue to diversify their manufacturing base, bringing more international business to Indian EMS firms.

The EMS industry is entering a new era of intelligent manufacturing, driven by the integration of AI, automation, IoT, and Industry 4.0. Smart factories, predictive maintenance, and robotics are redefining manufacturing agility and precision. The roll-out of 5G infrastructure and the growing adoption of electric vehicles are unlocking fresh avenues for expansion, pushing the demand for cutting-edge electronics manufacturing.

Indias booming e-commerce sector and rapidly expanding digital economy are creating a ripple effect across the

EMS landscape. High internet penetration, affordable data, and digital-first consumer behaviour are accelerating the demand for a wide range of electronic products, from smartphones to home appliances.

• Government Policy Support: Continued incentives via PLI, SPECS, and Make in India are drawing investments, fostering innovation, and building a globally competitive EMS ecosystem.

• Export Expansion: A sustained growth in global demand, particularly in the context of international brands diversifying away from China, opens up fresh opportunities for Indian EMS providers to tap into new export markets.

• Technological Leadership: Adoption of Industry 4.0,

AI, and automation enables Indian EMS companies to move up the value chain and offer higher-value services.

• Regional Manufacturing Hubs: States like Tamil Nadu and hyper local bases like Greater Noida are emerging as EMS powerhouses, synergizing world-class infrastructure with conducive supply chain dynamics.

• Sustainability: Prioritization of energy efficiency, eco-friendly manufacturing, and green supply chains continues to augment competitiveness, enhancing Indian EMS value proposition to global partners.

• Global Competition: Emerging manufacturing hubs such as Vietnam, Indonesia, and the Philippines continue to pose competitive pressure, offering OEMs attractive alternatives with lower labor costs and favourable policies.

• Component Supply Chain Risks: Persistent shortages of electronic components, often due to geopolitical tensions or global disruptions, present a material risk to output continuity and cost efficiency.

• Import Dependence: Despite ongoing localization efforts, India remains reliant on imported components, especially semiconductors, making the sector vulnerable to currency fluctuations and global supply shocks.

• Infrastructure and Regulatory Bottlenecks:

Inadequate logistics, power supply, and bureaucratic hurdles can slow expansion and deter investment.

• Rapid Technology Shifts: The need to constantly invest in new technologies (AI, IoT, 5G) places financial and operational pressure on EMS providers, particularly smaller firms

• Macroeconomic and Geopolitical Uncertainty: Global economic slowdowns, trade disputes, and regional conflicts can impact demand and disrupt supply chains.

Elin Electronics Limited (Elin Electronics or ‘The Company), established in 1982, stands as a trusted name in Indian Electronics Manufacturing Services (EMS) landscape, raising the benchmark of quality in the industry. The Company offers innovative and comprehensive product solutions to leading Indian and global brands across high-demand categories, including lighting, fans, small appliances, and kitchen appliances. Elin Electronics is also one of the largest manufacturers of fractional horsepower

(FHP) motors in India, marketed under its flagship ‘Elin brand widely associated with quality, consistency, and engineering reliability.

Elin Electronics business model spans both Original Equipment Manufacturing (OEM) and Original Design Manufacturing (ODM), enabling it to deliver scale with flexibility. While the OEM model involves precision manufacturing as per customer specification, the ODM approach enables Elin Electronics to design and develop its own products that clients then market under their own brands. The Companys well-established ODM capabilities, particularly in small appliances and LED lighting, serve as powerful levers for growth and product differentiation. Listed on both the National Stock Exchange Limited (NSE Limited) and BSE Ltd., and headquartered in New Delhi, Elin Electronics continues to build on a manufacturing legacy of over four decades. The Company remains focused on augmenting operational excellence, deepening customer relationships, and expanding its role in Indias growing electronics manufacturing ecosystem.

During 2024-25, EMS continued to steer Elin Electronics performance, generating 76.43% of total revenues, broadly mirroring the previous years contribution of 76.42%. The non-EMS segment accounted for the remaining 23.57%, reflecting sustained traction and a well-balanced business portfolio.

Elin Electronics diversified product portfolio spans several high-opportunity segments, each contributing uniquely to the overall business momentum.

• LED Lighting: Despite facing industry-wide headwinds in 2023-24, including price pressures and subdued demand, Elin Electronics maintained its domination in this segment. Though revenue declined to 2,147 Million in 2024-25 from 2,408 Million the previous year, the long-term outlook remains favourable, supported by national energy-efficiency initiatives and rising adoption.

• Fans: With demand for BLDC and TPW fans gaining momentum, this segment delivered over 62% year-on-year growth in 2024-25. Annual revenue rose to 597 million in 2024-25, from 368 million in 2023-24, to growing consumershifttowardsenergyefficiency and the Companys ability to scale production of next-generation fan models.

• Home Appliances: A key strength area for Elin Electronics, this segment, comprising mixer grinders, toasters, irons, ovens, and Personal grooming products, recorded a revenue of 2,859 Million in 2024-25 compared to 2,368 Million in 2023-24. The enablers driving this momentum included sound volume traction, new product launches, and improved capacity utilization. The Company is set to expand its portfolio and venture into personal care and beauty appliances, maintaining it diversification agenda.

• FHP Motors: Elin Electronics remains a leading player in this segment, a critical component in appliances like mixer grinders, FAN, AC ODU/IDU and chimneys. Segment revenue rose to 2,466 Million in 2024-25 from 2,055 Million in 2023-24, with growth primarily driven by fan motor demand despite some moderation due to internal consumption.

• Medical Diagnostic Cartridges: This specialized vertical under the non-EMS segment demonstrates Elin Electronics diversification strategy and entry into high-value, niche markets. With rising global demand for personalized diagnostics, the Companys capabilities in medical cartridge manufacturing provide a differentiated revenue stream. Elin Electronics agile response

• Moulded and Sheet Metal Components: Serving key sectors, including auto and consumer durables, these non-EMS components support a resilient base business and generate vertical integration benefits.

Elin Electronics enters 2025-26 with strong manufacturing fundamentals and a sound growth trajectory, driven by integrated operations, diversified portfolio, and a focused innovation-led approach. The Company issued revenue guidance of 15-18% for the ongoing financial year, with home appliances, fans, and motors expected to be the key growth enablers. As it continues to expand capabilities, widen its addressable market, and bolster customer engagement, Elin Electronics remains on a sustainable growth path, creating enduring value for all stakeholders.

(Consolidated Numbers)

Rs

The debt-equity ratio has increased primarily due to a rise in borrowings. Improvedprofitability metrics, including the Interest Coverage Ratio, Return on Equity/ Net Worth, and Net Profit.

There were no transactions during the period between the Company and any individual or entity forming part of the promoter/ promoter group that holds 10% or more shareholding in the Company.

At Elin Electronics, people are the true enabler behind its sustained progress. The Company, guided by the belief that organizational success is built on the strength of its workforce, continues to shape a workplace culture where creativity, collaboration, and individual growth are actively nurtured.

Elin Electronics human capital strategy is rooted in inclusivity, continuous learning, and leadership development. A wide array of initiatives, including structured skill enhancement programs, wellness endeavors, digital learning platforms, and employee recognition frameworks, is designed to elevate engagement and build a future-ready workforce. By cultivating every touchpoint, the Company continues to build capability and create an empowering and empathetic environment. As of 31st March 2025, Elin Electronics workforce stood at 2,376 employees, marking another year of sustainable expansion. This growth highlights Elin Electronics commitment to create meaningful employment opportunities and fortify its capacity to deliver excellence across product lines and geographies. With a forward-looking HR agenda closely aligned to business strategy, Elin Electronics remains focused on building a resilient, agile, and future-leaning organization where people lead the way.

Elin Electronics instituted a robust and well-calibrated internal control system that is aligned with the scale and complexity of its operations. The framework is fully compliant with all relevant statutory and regulatory requirements. It is designed to uphold disciplined business conduct, safeguard corporate assets, prevent and detect fraud or errors, and maintain the integrity of accounting records. It also plays a vital role in enabling the timely and accurate preparation of financial statements, supporting Elin Electronics commitment to transparency, accountability, and good governance.

The effectiveness of the internal control system is regularly evaluated through a combination of internal audits and independent statutory reviews. These audit mechanisms provide valuable feedback on the adequacy of controls and help identify opportunities for process improvements. Oversight is exercised by the Audit Committee, ensuring that any recommended changes are implemented in a timely manner. Elin Electronics continues to strengthen its control environment to support sound decision-making, operational resilience, and sustainable business performance.

This Management Discussion and Analysis Report contains certain forward-looking statements in line with applicable laws and regulations. These statements reflect the Companys current expectations, strategic intentions, and outlook, including plans, projections, estimates, and anticipated performance.

However, actual results may materially differ from those expressed or implied due to a range of external and internal factors. These may include fluctuations in demand and supply dynamics, changes in government policies and international regulations, shifts in tax frameworks, macroeconomic conditions both in India and globally, and other uncertainties such as legal proceedings and workforce-related matters. The Company undertakes no obligation to publicly update any forward-looking statements, which are subject to change based on evolving circumstances.