Elin Electronics Ltd Management Discussions

Global Economy

The global economy navigated a complex environment in CY25, marked by sticky inflation, evolving industrial policies and rising geopolitical friction. Global growth is expected to moderate to 3.1% in 2026, before recovering to 3.2% in 2027, according to IMF projections.

Two aspects of this environment are directly relevant to EMS manufacturers. First, elevated and volatile crude oil prices, driven in part by the ongoing geopolitical conflict, have kept polymer and other crude-linked input costs elevated for manufacturers reliant on plastic components. Second, heightened geopolitical friction continues to accelerate a shift from cost-optimised global sourcing towards more resilient, regionally diversified supply chains, reinforcing Indias relevance as a manufacturing destination.

Volatility in crude-linked input costs, particularly polymers, directly affects Elins raw material costs and gross margins. At the same time, the global shift towards supply-chain diversification supports Indias growing role in electronics manufacturing, reinforcing demand for Elins EMS, OEM and ODM capabilities.

Source: IMF World Economic Outlook, April 2026.

Indian Economy

The Indian economy sustained broad-based growth in FY26, with real GDP expanding by 7.7%, supported by resilient domestic demand and continued industrial momentum. The secondary sector grew by 8.8% during the year, aided by policy-led incentives, automation and capacity expansion across electronics and allied industries.

Retail inflation eased to 3.40% on a provisional basis by March 2026, supporting a stable operating environment. Gross GST collections rose 8.3% to H22.27 lakh crore, reflecting deepening formalisation across the economy and a more transparent, organised business environment. Growth is expected to moderate slightly in FY27 amid global headwinds, though Indias structural fundamentals, including manufacturing competitiveness, formalisation and infrastructure investment, remain supportive over the medium term.

Rising domestic consumption, formalisation and manufacturing-led growth support demand for Elins consumer durables, appliances and EMS businesses, while continued policy support for domestic manufacturing strengthens the operating environment for its OEM/ODM and backward- integrated capabilities.

Sources: MOSPI, PIB, RBI.

Industry Overview

Indian Electronics Industry Review

The Indian electronics industry continued to gain momentum during FY26, supported by rising domestic production, policy support, increasing consumer demand and global supply-chain diversification.

Production-linked incentive schemes, the China-plus- one strategy, and Indias improving manufacturing capabilities have strengthened the countrys relevance within the global electronics manufacturing ecosystem.

Mobile phone manufacturing remained a key contributor to Indias electronics expansion, alongside increased output in industrial hardware, consumer electronics and appliance-related categories.

Indias electronics industry is targeting a long-term manufacturing output of approximately USD 500 billion by 2030, supported by policy initiatives, domestic manufacturing incentives and efforts to deepen the component ecosystem.

Indian EMS Industry Review

Market Context

Structural Growth in EMS: The Indian EMS industry is entering a phase of structural growth, supported by rising outsourcing by brands, increasing domestic electronics consumption, policy-led manufacturing incentives, and global supply chain diversification.

Consumer Electronics and Appliance Demand:

Consumer electronics remain a key demand driver, supported by rising consumption, premiumisation and demand for smart, connected and energy-efficient prooducts.

Shift Towards Value-added Manufacturing: The sector is gradually moving from basic assembly towards product engineering, Original Design Manufacturing (ODM), box-build solutions, backward integration and automation-led productivity improvement.

Policy Support and Supply-chain Diversification:

Government initiatives such as Production-Linked Incentive (PLI) schemes and component manufacturing programmes are strengthening Indias position as an emerging electronics manufacturing destination.

Opportunities

• Moving up the value chain through ODM and box- build solutions, capturing a larger share of customer value.

• Component ecosystem localisation, reducing import dependence and improving supply-chain control.

• Growth in consumer durables and appliances, supported by rising incomes, urbanisation and premiumisation.

• Export optionality as global brands evaluate India- based manufacturing partners.

• Premiumisation in medium-sized appliances such as OFRs, chimneys, air coolers and air fryers.

• Automation and smart manufacturing improve productivity, quality consistency and operating efficiency.

Threats and Structural Challenges

• Critical import dependency across semiconductors, displays, PCBs and passive components, exposing manufacturers to currency volatility and supply disruption.

• Human capital and skill requirements are shifting towards more complex, higher-value products.

• Supply-chain and ecosystem constraints, including gaps in domestic component availability and supplier depth.

• Margin pressure from competitive intensity and input-cost volatility.

ELINS MANUFACTURING ADVANTAGE —

CONVERTING EMS TAILWINDS INTO SCALABLE GROWTH

Outsourcing by Brands Integrated Manufacturing Partner.

As brands increasingly adopt asset-light manufacturing models, Elin is positioned to support them through its EMS, OEM and ODM capabilities.

Rising Appliance Demand * Broader Product Participation.

Elins diversified portfolio allows it to participate across multiple demand pools rather than depend on a single product segment.

Value-added EMS * Backward-integrated Capability.

Elins capabilities across tool room operations, moulding, sheet metal, die-casting, surface coating, PCB assembly, motors, product engineering and testing strengthen its value-added manufacturing offering.

Localisation * India-based Scale Advantage.

Elins multi-location footprint and expanding capacity base, including the upcoming Bhiwadi facility, support its ability to serve evolving sourcing requirements.

Margin Pressure * Cost Engineering and Portfolio Upgrade.

Backward integration, operational efficiency and higher-value product categories are expected to support long-term profitability and resilience.

Company Overview

Elin Electronics Limited is an established Electronics Manufacturing Services (EMS) provider with a diversified presence across home appliances, small appliances, personal care products, lighting, fans, switches, fractional horsepower (FHP) motors, medical diagnostic cartridges, moulded components and sheet-metal components. With a legacy spanning more than five decades through the Elin Group, the Company has built strong capabilities in design, engineering, component manufacturing and large-scale assembly for leading domestic and international brands.

The Company operates across both Original Equipment Manufacturing (OEM) and Original Design Manufacturing (ODM) models, enabling it to serve customers with scale, flexibility and product- development support. Elins differentiated strength lies in its backward-integrated manufacturing model, spanning tool room operations, moulding, sheet metal, aluminium die-casting, surface coating, PCB assembly, motor manufacturing, product assembly and testing.

During FY26, the Company continued to strengthen its transition towards higher-value, multi-category growth, with expansion in fans, small appliances, personal care products and medical diagnostic cartridges, customer additions in lighting, and progress on the upcoming Bhiwadi facility, which is expected to contribute approximately H5,000 million of revenue once fully i amped up.

Strategic Position Assessment

Strengths: A diversified product portfolio, long-standing customer relationships, OEM/ODM capabilities, backward-integrated operations and a strong presence across EMS and non-EMS categories, with the upcoming Bhiwadi facility strengthening scale-up potential.

Weaknesses: Exposure to a margin-sensitive industry where pricing pressure, raw material volatility and customer concentration can affect profitability; lighting and precision components have faced near-term headwinds, and Bhiwadi will require a timely ramp-up to deliver expected returns.

Opportunities: Elins OEM/ODM capabilities, backward- integrated manufacturing model, multi-location footprint and expanding portfolio position it well to participate in the next phase of Indias EMS growth, with the upcoming Bhiwadi facility further strengthening this opportunity.

Rising EMS outsourcing, growing demand for energy- efficient fans and appliances, expansion in personal care and medical diagnostic products, component localisation, and the Bhiwadi facilitys ability to scale higher-realisation categories such as OFRs, chimneys, OTGs and coolers.

Threats: Competitive intensity among EMS players, dependence on imported components, raw material and foreign exchange volatility and the pace of Bhiwadi ramp-up.

The evolving Indian EMS landscape presents a significant opportunity for Elin to strengthen its role as an integrated manufacturing partner. Elins OEM/ ODM capabilities, backward-integrated manufacturing model, multi-location footprint and expanding portfolio position it well to participate in the next phase of Indias EMS growth, with the upcoming Bhiwadi facility further strengthening this opportunity. At the same time, continued dependence on imported components, raw material volatility and competitive intensity reinforce the need for cost engineering, productivity improvement and localisation-led resilience.

The evolving Indian EMS landscape presents a significant opportunity for Elin to strengthen its role as an integrated manufacturing partner. Elins OEM/ ODM capabilities, backward-integrated manufacturing model, multi-location footprint and expanding portfolio position it well to participate in the next phase of Indias EMS growth, with the upcoming Bhiwadi facility further strengthening this opportunity. At the same time, continued dependence on imported components, raw material volatility and competitive intensity reinforce the need for cost engineering, productivity improvement and localisation-led resilience.

Strategic Priorities and Business Transformation

FY26 marked an important phase in Elins transition towards a more diversified, value-added manufacturing platform. The Companys strategy is anchored around four priorities: product diversification, Bhiwadi- led capacity expansion (detailed further below), customer diversification, and cost engineering. Customer additions in lighting and discussions on export opportunities support market expansion, while operational excellence initiatives and backward integration remain important to margin recovery.

Business Performance and Segment-wise Growth Drivers

Elin delivered a resilient performance across its diversified portfolio during FY26, supported by product diversification, customer additions, new product launches and improvements in capacity utilisation. Fans, small appliances and medical diagnostic cartridges recorded strong momentum, while lighting and precision components saw near-term headwinds, underscoring the importance of customer diversification and portfolio rebalancing.

Fans

Revenue increased by approximately 79.56% year-on- year to H1,072 million, driven by volume expansion in the Brushless DC (BLDC) ceiling fan category as consumer preference shifted towards energy-efficient products. The Table, Pedestal and Wall (TPW) fan portfolio also recorded healthy traction.

Small Appliances (Kitchen, Home Care and Personal Care)

Revenue increased to H4,059 million during FY26. Growth in kitchen and home care was supported by new product launches and a strong volume ramp-up in Oil-Filled Radiators (OFRs), aided by an earlier festive season. Personal care revenue reached H1,274 million, up approximately 13.65% year-on-year, supported by demand for hair dryers, electric sterilisers and heated hair brushes, though elevated raw material prices affected demand for mixer grinders and irons towards the year-end.

<p >Medical Diagnostic Cartridges

Revenue increased from H204 million in FY25 to H395 million in FY26, benefiting from consistent, recurring customer demand and resulting in high capacity utilisation. The Company has initiated capacity expansion plans to support future growth in this specialised vertical.

Fractional Horsepower (FHP) Motors

Revenue stood at H2,262 million during FY26. While third-party sales in categories such as mixer-grinder and synchronous motors were affected by lower volumes, a growing share of motor production is being utilised internally to support Elins expanding appliance and fan businesses, reinforcing its backward-integrated model.

LED Lighting

Revenue stood at H1,652 million, down H495 million from the previous year, primarily reflecting lower volumes from a key customer following a business restructuring initiative. Elin onboarded five new lighting customers during the year and implemented selective price increases to protect profitability.

Moulded and Sheet Metal Components (Precision Components)

Revenue stood at H2,483 million, down from H2,578 million in the previous year, primarily due to planned maintenance activity during the third quarter. The segment remains an important contributor to Elins integrated manufacturing ecosystem, supporting auto ancillary and consumer durables applications.

Bhiwadi Expansion: Building the Next Growth Platform

The upcoming Bhiwadi facility represents a key milestone in Elins growth journey, supporting the Companys transition into higher-realisation, mediumsized appliance categories such as OFRs, chimneys, coolers and OTGs.

Beyond incremental capacity, Bhiwadi is strategically important for product diversification, operating scale, customer engagement and margin improvement. Capital expenditure towards Bhiwadi stood at H260 million during FY26 (excluding land), not yet capitalised and held in capital work-in-progress. As the facility ramps up, timely customer approvals, production stabilisation and cost control will be important to achieving the expected revenue and return profile.

Outlook for FY27

Elin enters FY27 targeting revenue growth of approximately 15%, led largely by the Home Appliances and Fans segments, supported by new product launches, customer additions and commercial contribution from Bhiwadi, which is expected to contribute approximately H5,000 million to FY27 revenue. Given ongoing geopolitical volatility and its impact on raw material costs, the Company has not issued specific EBITDA margin guidance for FY27 and remains focused on cost engineering and margin recovery.

Planned capital expenditure of approximately H70 crore will be directed towards Bhiwadi (H45 crore) and scaling of existing operations (H25 crore). The Company also aims to improve net working capital days to approximately 50 days, from 59 days at the end of FY26, supported by tighter inventory and payables management. Raw material volatility, foreign exchange movements, competitive intensity and the pace of Bhiwadi ramp-up remain key monitorables.

Financial Performance

(Consolidated numbers, H in million)

Particulars	FY26	FY25
Revenue	12,877	11,802
EBITDA	546	524
EBITDA Margin (%)	4.2	4.4
PAT	226	293

Consolidated revenue increased to H12,877 million from H11,802 million in FY25, supported by growth across small appliances, fans and medical diagnostic cartridges. EBITDA stood at H546 million compared with H524 million in the previous year, with EBITDA margin at 4.2% against 4.4% in FY25. The margin contraction at the gross level was driven by a sharp increase in polymer prices, linked to elevated crude oil prices amid the prevailing geopolitical conflict, together with the depreciation of the Rupee against the US Dollar.

Profit After Tax stood at H226 million, down from H293 million in FY25. A meaningful portion of the year-on- year decline reflects a high FY25 base, which included a one-time gain of H75 million from a share sale; adjusting for this non-recurring item, the underlying movement in profitability is more moderate than the headline comparison suggests. The Companys focus remains on improving profitability through product mix enhancement, Bhiwadi-led scale benefits, cost engineering and working capital discipline.

Key Financial Ratios

	FY26	FY25	Change %
Inventory Turnover (x)	6.72	7.34	8.45
Debtors Turnover Ratio (x)	5.95	5.54	7.40
Interest Coverage Ratio (x)	4.73	6.08	-22.20
Current Ratio (x)	2.44	2.62	6.87
Debt-Equity Ratio (x)	0.02	0.04	-50.00
Operating Profit Margin (%)	2.35	2.35	Nil
Net Profit Margin (%)	1.75	2.48	-29.44
Return on Equity/Return on Net Worth (%)	4.14	5.65	-26.73

Explanation for Variances

Net Profit Margin declined from 2.48% to 1.8%, driven by a contraction in gross margin due to polymer price inflation and Rupee depreciation, as described above and by the high FY25 base resulting from the onetime H81 million share-sale gain. Ratio movements dependent on balance sheet closing figures (inventory, debtors, interest coverage, current ratio, debt-equity, return on equity) are pending confirmation from the client-approved financial statements.

Transactions with Promoter Group Entities

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

Risk Management

Risk Category	Description / Impact	Mitigation Strategy
Customer Concentration Risk	Dependence on a few large customers across EMS, lighting and appliance businesses may impact revenues if demand declines or contracts are not renewed.	Diversify the customer portfolio across product categories and geographies; deepen existing relationships; onboard new customers.
Raw Material Price and Input Cost Risk	Volatility in key raw materials, including copper, steel, aluminium, imported electronic components and crude-linked polymers, may affect gross margins and pricing stability.	Customer-level repricing mechanisms, procurement planning, supplier diversification, inventory discipline and value engineering.
Supply Chain Disruptions	Dependence on imported components and global supply chains exposes the Company to logistics bottlenecks, geopolitical tensions and material shortages.	Supplier diversification, localisation initiatives, strategic inventory management and strengthening of domestic sourcing.
Technology and Product Obsolescence Risk	Rapid technological advancements and changing consumer preferences may render existing products less competitive.	Continuous investment in product development, ODM capabilities, engineering and customer-led innovation.
Competitive Intensity and Margin Pressure	Increasing competition from domestic and global EMS players may lead to pricing pressure and lower margins.	Focus on operational excellence, value-added manufacturing, product diversification and long-term customer partnerships.
Regulatory and Compliance Risk	Changes in manufacturing regulations, environmental norms, labour laws or trade policies may increase compliance costs.	Robust compliance framework, regular audits, employee training and proactive monitoring of regulatory developments.
Foreign Exchange Risk	Imports of raw materials and export transactions expose the Company to currency fluctuations, impacting costs and profitability.	Natural hedging, prudent treasury management, forward contracts and continuous monitoring of currency exposures.
Cybersecurity and Information Technology Risk	Increasing digitalisation exposes the Company to cyber threats, data breaches and disruption of business operations.	Cybersecurity systems, access controls, data protection protocols, periodic audits and employee awareness programmes.
Human Capital Risk	Shortage of skilled engineers, technicians and specialised manufacturing talent may affect operational efficiency and future growth.	Structured talent acquisition, continuous training, leadership development and succession planning.
Operational and Capacity Utilisation Risk	Manufacturing disruptions from equipment breakdowns, quality issues or underutilisation can affect productivity and profitability.	Preventive maintenance, quality management systems, automation and continuous capacity monitoring.
Bhiwadi Ramp-up Risk	Growth plans depend partly on the timely stabilisation and utilisation of the Bhiwadi facility. Delays in commissioning, customer approvals or demand ramp-up may affect revenue and margin expectations.	Phased ramp-up planning, customer engagement, capacity monitoring and continued focus on cost engineering and working capital management.

Human Resources

People capability plays a critical role in supporting manufacturing excellence, product development, quality assurance and operational efficiency across Elins operations. During FY26, the Company continued to strengthen its talent base in line with its evolving product portfolio and capacity expansion plans.

As Elin prepares for the Bhiwadi ramp-up and expands into higher-value appliance categories, technical training, shop-floor discipline, safety and leadership development remain key focus areas. As of March 31,2026, Elin employed 2,391 people across its operations.

Internal Control System and Its Adequacy

Elin maintains a robust internal control framework aligned with the scale and complexity of its multi-location manufacturing operations, covering procurement, inventory management, production planning, quality control, financial reporting, statutory compliance, asset safeguarding and operational governance.

The framework is designed to uphold disciplined business conduct, prevent and detect fraud or errors, maintain the integrity of accounting records and enable timely, accurate preparation of financial statements, supporting the Companys commitment to transparency and good governance.

The effectiveness of the internal control system is regularly evaluated through internal audits and independent statutory reviews, with oversight from the Audit Committee to ensure recommended changes are implemented in a timely manner.