Focus Lighting & Fixtures Ltd Management Discussions

A. INDIAN LIGHTING & FIXTURES INDUSTRY STRUCTURE AND DEVELOPMENT:

The Indian lighting and fixtures industry has witnessed remarkable growth and transformation over the years. This sector plays a pivotal role not only in illuminating spaces but also in sustainability imperatives and energy efficiency across residential, commercial, and industrial segments.

As the demand for energy-efficient, cost-effective, and aesthetically pleasing lighting solutions increases, the lighting market in India is experiencing significant growth. With a growing urban population, increased construction activities, and a strong push toward sustainability, the lighting market is expected to grow from approximately USD 22.00 billion by 2032.

The rise in residential, commercial, and industrial sectors is further accelerating the demand for advanced lighting solutions. Furthermore, the governments initiatives like Make in India and the promotion of energy -efficient lighting solutions, particularly LEDs, have been instrumental in driving this growth. The increasing adoption of smart lighting systems, especially in urban areas, combined with greater awareness of energy conservation, is expected to propel the market at a CAGR of approximately 15.3% from 2025 to 2030.

Key Trends and Drivers of Market Growth:

• Advancement in LED Technology: With new technological design era, LED lighting trends are set to recreate a role in changing moods and enriching spaces. LED lighting has emerged as the cornerstone of the industry, owing to its energy efficiency, longer lifespan, and decreasing costs. In recent years, there has been a massive shift from conventional lighting to LED lighting across residential, commercial, and industrial sectors in India supported by government initiatives promoting energy-efficient lighting solutions.

• Human Centric designs: Consumer preferences have evolved towards personalized and aesthetically pleasing lighting solutions. Human-centric designs are the key trends fostering the mental and physical well-being of the users. HCL, Human Centric Lighting is becoming popular as they can adjust colours, and temperature and sense the rhythm of the users movement. Especially in workspaces, this system can enhance productivity and foster interaction with warmer tones and shades. In residential architecture, this Lighting trend can improve sleep, and mental conditions and enable us to relax and rest.

• Local Craftsmanship and Fixtures: The uniqueness in design, the individuality of the user and the bespoke character adds depth to the space. In the era where mass production is functional, the revival of craftsmanship and unique design faces challenges. Handcrafted LED lights will serve as the focal point for upcoming trends in 2025. It can range from brown glass chandeliers to intricately detailed pendant LED lights.

• Focus on Sustainability: Environmental sustainability has become a critical focus area for industry players. When it comes to upcoming trends, sustainability has always been at the core of design. There has been a significant shift towards eco-friendly materials, recyclable components, and manufacturing processes that minimize carbon footprint. This aligns with global trends towards sustainable development goals (SDGs) and circular economy principles. The advanced systems with the use of sensors, adjust the daylighting, and at times weather conditions create a smart environment integrating energy-efficient techniques. This trend focuses especially in commercial sectors and smart building initiatives where energy consumption becomes an environmental priority.

• Durability and Materiality: In 2025, the trends of LED lighting on a variety of materials like glass, textiles, and concrete has presented flexibility in bespoke interiors. The blending of architecture and interiors enhances the space with clean lines, forms and a minimalistic aesthetic. With technological advancement custom lighting opens new possibilities to give individualistic expression to the space. The latest trends allow users to interact with the LED lighting system, allowing them to change conditions through voice commands and apps. It can enhance the comfort, convenience and user experience.

B. TECHNOLOGICAL ADVANCEMENTS

India, worlds largest population, being the most extensive powerhouse with effective electrical demand and supply. As new appliances continue such as Biological Lighting, Entertainment Lighting, and Advertisement Lighting there is a need for new and innovative techniques in the LED industry. As LED lighting provides various advantages over traditional lighting, the demand has increased for smart, energy efficient lifestyles, and ecological techniques

and the Indian LED lighting market is rapidly developing. With the help of government efforts, awareness and cost-effective LED lights, LED lighting has emerged as Indias fastest growing sector.

LED UPRISING: The shift from traditional lighting technologies to LED has been transformative. LEDs offer energy efficiency, longer lifespan, and superior performance compared to incandescent and CFL bulbs. LEDs work for longer spans and last longer as they have a lifespan of approximately 50,000 to 100,00 hours or more. Smart LED Lighting systems can be controlled remotely with our electronic devices. LED bulbs use 50% less energy compared to traditional fluorescent bulbs, which allows reducing the cost. As per the researcher, it is said that 15% of the worlds electricity is used for lighting contributing to carbon emissions. This transition has been accelerated by government initiatives promoting energy-efficient lighting solutions.

DYNAMIC ARCHITECTURAL LIGHTING: Architecture building is a tale which evolves and transforms with new trends and dynamic experiences in changing the narration of the spaces. With recent developments in the LED industry, the unimaginable is attainable. We can create facades that change, and transform their form and colour, react to weather conditions and adapt the environmental measures. When we integrate functionality and aesthetics, this trend is popular especially in public spaces and luxurious interiors to create a lasting impression.

SMART HOMES: The adoption of smart lighting systems has gained momentum in urban areas and commercial spaces. These systems allow for remote operation, energy management, and integration with IoT (Internet of Things) platforms for enhanced control and efficiency. Indian manufacturers are increasingly focusing on design innovation to cater to diverse aesthetic preferences. This includes sleek, modern fixtures as well as culturally inspired designs that appeal to both domestic and international markets.

C. DRIVER - DECLINING MANUFACTURING COST OF LED LIGHTS

One of the key macroeconomic and industry-specific tailwinds benefiting the LED lighting and fixtures industry, is the continued decline in manufacturing costs of LED lights. This structural shift has significant implications for margins, market expansion, and product innovation, positioning the industry for long-term sustainable growth.

Declining Input Costs and Economies of Scale

Over the past decade, the cost of manufacturing LED lights has decreased dramatically, driven by several key factors:

• Technological Advancements: Innovations in chip design, packaging, and heat dissipation have led to more efficient and compact LED modules, reducing material usage and energy input requirements.

• Vertical Integration and Automation: Enhanced automation across production lines and increased backward integration have lowered labour intensity and reduced overheads.

• Raw Material Price Optimization: Improved sourcing strategies, long-term supply agreements, and alternative material development have contributed to reduced dependency on volatile raw materials like rare earth phosphors.

• Global Economies of Scale: Rapid global adoption of LED technology has led to larger production volumes, facilitating economies of scale and better utilization of manufacturing assets.

D. OPPORTUNITIES AND CHALLENGES/THREATS:

The Indian lighting and fixtures market offers immense opportunities for growth and innovation. The increasing focus on energy efficiency, the rise of smart lighting solutions, and the need for outdoor and architectural lighting present favourable prospects for companies operating in this industry. Additionally, the ongoing infrastructure development and urbanization create a steady demand for lighting products.

Major factor driving the expansion of the lighting industry is Indias growing urbanization. With the urban population estimated to exceed 600 million by 2031, the need for residential, commercial, and street lighting will only increase. According to the Ministry of Housing and Urban Affairs, Indias urban infrastructure development programs, such as the Smart Cities Mission, are intended to deliver modern urban lighting solutions. This will involve the implementation of energy-efficient LED street lighting systems and intelligent lighting networks, which will drive market development in the years ahead.

The residential lighting segment in India is experiencing rapid expansion due to the rise of home automation and smart lighting systems. The Smart Homes trend encourages consumers to adopt remote-controlled lighting solutions, offering convenience and energy efficiency. The governments Digital India initiative has facilitated this adoption. This combination of urban growth, government initiatives, and consumer demand for smart solutions ensures residential lighting remains the fastest-growing application in Indias lighting market.

However, the market also faces certain challenges. A considerable energy loss happens in incandescent lamps as most of the power consumed is dissipated in the form of heat. In addition, the lighting efficiency of these lights is also reduced when exposed to high temperatures, high moisture, and other hazardous environments common in commercial and industrial areas.

Furthermore, despite the increasing availability of energy-efficient lighting options, there is still a lack of general knowledge of their benefits, particularly in rural regions. While metropolitan areas are progressively embracing LEDs, rural areas continue to have limited access to knowledge about energy-saving lighting options. This lack of information and awareness stifles the full potential of government efforts such as UJALA, particularly in underserved areas, lowering the overall adoption rate of energy-efficient lighting systems across the country. Moreover, these lights are vulnerable to high temperatures, and when used in an enclosed area, they can hurt the light output and lifespan of these products. Furthermore, lamps and fixtures connected to external light drivers often fail prematurely due to high internal operating temperatures. In addition, as the temperature inside the industrial facilities and manufacturing plants tends to be high, it raises the internal temperature of an LED driver above the case temperature (Tc) point. Therefore, the light drivers often fail prematurely which can negatively impact the market. Hence, such factors are hindering the market growth during the forecast period.

Despite the benefits of LED technology, initial costs remain a barrier for some consumers, particularly in rural areas. Efforts are ongoing to address affordability through subsidies and financing options. Indian manufacturers face competition from international players offering advanced technologies and established brands. Differentiation through innovation and quality remains crucial for sustaining growth.

E. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The following is the Income mix in terms of value of total income of our Company for sale of products and Profit After Tax:

(Rs. in Lacs) Sr. No.	Financial Year	Trading	Manufacturing	Profit After Tax
1.	2024-25	3,835.34	11,560.77	1437.11
2.	2023-24	4,266.99	11,291.95	1,131.26
3.	2022-23	4,086.12	12,129.77	2,243.19891
4.	2021-22	3,369.36	2,626.45	(232.85)
5.	2020-21	4,625.78	5,306.51	229.54
6.	2019-20	6,565.14	5,536.79	975.57
7.	2018-19	6,460.33	2,762.27	596.12
8.	2017-18	7,138.16	-	401.60

F. OUTLOOK

The future of the Indian lighting and fixtures industry looks promising with continued innovation in LED technology, smart lighting solutions, and sustainable practices. As consumer awareness grows and infrastructure development expands, the demand for efficient and aesthetically pleasing lighting solutions is expected to rise further. Government support and industry collaborations will play a pivotal role in shaping the industrys evolution towards a more sustainable and technologically advanced future. The light emitting diode (LED) lighting market in India size is forecast to increase by approximately USD 2.93 billion at a CAGR of 11.4% between 2024 and 2029.

G. RISKS AND CONCERNS

The Indian lighting and fixtures industry continues to evolve rapidly, driven by shifting consumer preferences, energy efficiency mandates, and the rise of smart technologies. While the long-term outlook remains optimistic, there are several risks and concerns that require strategic foresight and operational vigilance. Our risk management framework is designed to proactively identify, assess, and mitigate these challenges to safeguard our business continuity and shareholder value.

1. MARKET CHALLENGES

• Intense Competition and Price Pressure

The LED lighting segment has witnessed an influx of domestic and international players, leading to commoditization of core products and significant pricing pressure. This affects industry-wide profit margins, particularly in the mass and budget categories where price sensitivity is high. Unorganized sector players offering low-cost alternatives further exacerbate the pricing challenge.

• Demand Volatility

Market demand, particularly from institutional and infrastructure projects, is subject to delays and cancellations due to fiscal constraints, administrative bottlenecks, or shifts in government priorities. Seasonal fluctuations, uneven rural electrification, and changing consumer sentiments also contribute to demand unpredictability.

• Slower-than-Expected Rural and Tier-II Penetration

While urban demand has matured, deeper market penetration in rural and semi-urban areas is slower due to affordability issues, lack of awareness about LED benefits, and limited retail infrastructure.

2. REGULATORY AND POLICY ISSUES

• Inconsistent Policy Implementation

Though the Government of India has undertaken several initiatives, the enforcement of standards and quality norms remains inconsistent across states. This creates an uneven playing field and allows substandard products to thrive.

• Environmental and E-Waste Regulations

Increasing scrutiny on environmental sustainability, including e-waste disposal and use of hazardous materials, could result in additional compliance costs and redesign of products to align with eco-friendly norms.

3. TECHNOLOGICAL RISKS

• Rapid Technological Obsolescence

The lighting industry is undergoing continuous technological transformation, particularly with the integration of IoT, smart controls, and Li-Fi. Failure to keep pace with these innovations or mismatched R&D investments could render current products outdated, affecting competitiveness and relevance.

• Cybersecurity and Data Privacy in Smart Lighting

With the growing adoption of smart and connected lighting systems, particularly in commercial and urban infrastructure, the risks associated with cybersecurity breaches and data privacy violations have increased. Vulnerabilities in firmware or app interfaces could pose reputational and legal risks.

4. SUPPLY CHAIN AND OPERATIONAL RISKS

• Global Supply Chain Disruptions

The Indian lighting industry is partially dependent on imports of key components. Global disruptions due to geopolitical tensions, port delays, or pandemics (as seen during COVID-19) can impact production schedules and cost structures.

• Logistics and Infrastructure Challenges

Inadequate infrastructure in certain regions, including inconsistent power supply, underdeveloped transport networks, and warehouse limitations, can result in increased distribution costs, delays, and reduced supply chain efficiency.

• Skilled Labor Shortage

As manufacturing becomes more technology-intensive, the demand for skilled technicians and engineers continues to rise. A shortage of trained manpower can lead to productivity losses and quality inconsistencies.

H. INTERNAL CONTROL SYSTEMS AND THETR ADEQUACY

Internal control systems play a vital role in supporting efficient business operations, ensuring regulatory compliance, and protecting organizational assets across all industries, including the LED lighting and fixtures sector. These systems consist of a framework of policies, procedures, and best practices aimed at achieving accurate financial reporting, operational efficiency, and risk mitigation. Evaluating their effectiveness involves examining how well these controls align with industry-specific risks and support the strategic goals of the organization.

Key Elements of Internal Control Systems:

Control Environment:

The foundation of a sound internal control system is a strong control environment, which shapes organizational culture and influences the conduct of employees at all levels. In the LED lighting industry, this involves a leadership team that demonstrates a commitment to ethical practices, adherence to industry norms, and a culture that values compliance and accountability. Clear communication of expectations and policies, along with visible management involvement, reinforces a high standard of integrity across the company.

Risk Identification and Assessment:

Identifying and evaluating internal and external risks is critical to maintaining business continuity and achieving longterm objectives. In the context of the LED sector, key risks might include evolving technology trends, supply chain vulnerabilities, environmental regulations, and market volatility. A robust risk assessment process includes continuous monitoring and the proactive adjustment of internal controls to address emerging threats and reduce exposure.

Control Activities:

Control activities are the operational procedures put in place to manage identified risks and achieve business objectives. In the LED lighting industry, such controls may include:

Inventory Controls: Maintaining real-time, accurate inventory data to minimize shortages, avoid excess stock, and optimize storage costs.

a. Financial Oversight: Implementing strict financial controls such as approval hierarchies, audit trails, and segregation of duties to prevent fraud and errors.

b. Product Quality Assurance: Enforcing consistent quality checks and testing protocols to uphold product standards and customer satisfaction.

c. IT and Data Security Controls: Ensuring robust cybersecurity measures to protect operational data, proprietary designs, and customer information from potential breaches.

Information Flow and Communication:

Reliable information systems and open communication channels are essential for effective control mechanisms. In the LED industry, access to real-time data on market trends, product performance, and regulatory developments supports agile decision-making. Transparent internal communication ensures that policies are well-understood and that employees are aligned with organizational goals.

Monitoring and Continuous Improvement:

Ongoing monitoring helps ensure that control systems remain effective over time and can adapt to changes in the business environment. This includes conducting periodic audits, management reviews, and feedback mechanisms to identify inefficiencies or compliance gaps. In the dynamic LED lighting sector, continuous improvement of internal controls is essential to maintain competitiveness and respond effectively to technological advancements and regulatory shifts.

I. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Particulars	As at March 31 of the Financial Years
	2025	2024	2023	2022	2021	2020	2019
Income
Revenue from Operations	15,396.11	15,558.94	16,215.90	5,995.80	9,932.29	12,101.93	9,222.59

Overview of Revenue & Expenditure

(Rs. in Lakhs)

The financial performance of a company is closely linked to its operational performance, as revenue from operations serves as a key indicator of business growth and success. A comparison of the revenue from operations for the financial year 2024-25 is Rs. 15,396.11 Lakhs with the previous financial year 2023-24 of Rs. 15,558.94 Lakhs provides insights into the companys financial and operational progress.

The minor decline in the revenue from operations of an LED lighting and fixture Company could be attributed to a variety of variables within the industrys changing landscape. Understanding the various causes of this decline necessitates a thorough examination of both internal and external factors influencing the Companys operations.

Market Competition and Pricing Pressures: A key contributor to revenue decline could be the intensifying competitive landscape within the LED lighting industry. As the market continues to evolve and attract new entrants, companies are increasingly resorting to aggressive pricing strategies to secure or expand their market share. This heightened competition often results in downward pressure on prices. While such strategies may drive higher sales volumes, they can significantly compress profit margins, ultimately impacting overall revenue performance.

Shifts in Consumer Preferences or Trends: Revenue can also be influenced by changing consumer preferences and the emergence of new market trends. For example, a growing inclination toward advanced lighting technologies—such as smart or connected lighting solutions—may reduce demand for conventional LED products. Companies that are slow to adapt to these shifts or fail to align their offerings with evolving customer expectations risk losing relevance, which can lead to diminished sales and reduced market share.

Consumer Skepticism and Familiarity Preference: Despite the growing availability and promotion of smart lighting solutions, widespread consumer adoption remains relatively slow, especially in price-sensitive and semiurban markets. A key reason is persistent consumer skepticism regarding the reliability, ease of use, and data privacy associated with smart LED lights. Concerns about the durability of connected lighting systems, potential technical glitches, dependency on internet connectivity, and complex installation processes deter many first-time users. Furthermore, app-based control systems or voice-activated assistants, while appealing to tech-savvy consumers, may be perceived as overly complicated or unnecessary by mainstream users who prioritize functionality over advanced features.

In many Indian households and small businesses, there is a strong preference for conventional lighting solutions due to their proven track record, perceived simplicity, and ease of maintenance. This familiarity bias creates resistance to change, especially among older generations or non-urban populations who may be less exposed to emerging technologies or wary of frequent product upgrades. Additionally, limited awareness and insufficient after-sales support for smart lighting products can contribute to a lack of trust in newer offerings. Consumers often associate smart products with higher upfront costs and are uncertain about long-term benefits, further discouraging adoption.

To address these challenges, companies must focus on consumer education, user-friendly interfaces, affordability, and robust service infrastructure. Building trust through warranties, demo-based marketing, and simplified product ecosystems will be critical to converting skeptics and expanding the smart lighting consumer base in India.

Economic Conditions and Market Volatility: Broader economic factors, such as fluctuations in GDP growth, consumer spending patterns, or global supply chain disruptions, can influence business outcomes. Economic downturns or uncertainty may lead to reduced investment in new lighting installations or renovations, affecting overall sales and revenue for LED companies.

Regulatory Changes and Compliance Costs: Regulatory changes, especially related to energy efficiency standards or environmental regulations, can impact product development cycles and necessitate costly compliance

measures. These additional expenses can put pressure on profit margins and contribute to a decline in revenue if not adequately managed. Furthermore, frequent updates to regulatory frameworks may require companies to invest in continuous staff training, certification processes, and upgrades to existing technologies or manufacturing equipment.

Non-compliance or delays in meeting new regulations can also result in penalties, legal risks, or reputational damage, further exacerbating financial strain. In highly regulated industries, businesses may also need to allocate resources for specialized legal and regulatory advisory services, increasing operational costs. Additionally, adapting to differing regional or international standards can complicate global market strategies, requiring customized solutions for various jurisdictions, thereby lengthening time-to-market and reducing economies of scale.

J. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company has continued to prioritize employee development, implementing several initiatives that have significantly boosted employee morale and strengthened team cohesion. A strong focus has been maintained on nurturing human capital and fostering overall professional growth within the organization. As of March 31, 2025, the total workforce stood at 179 Employees.

During the year, the Company onboarded a number of highly qualified and skilled professionals, further enhancing its capabilities and supporting its growth trajectory. Management takes pride in reporting that there were no incidents of strikes, lockouts, or any form of employee unrest that disrupted operations. It is also noteworthy that the Company operates without an employee union, reflecting a harmonious and collaborative work environment.

K. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING

The details in the change of 25% or more for financial year 2024-25 as compared to the Financial Year 2023-24 in key financial ratios along with detailed explanations, wherever required are mentioned in Note No. 1.34 to the Notes of Standalone Financial Statement.

L. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF.

The details of change, if any, in the return on net worth for the Financial Year 2024-25 as compared to the immediately previous Financial Year 2023-24 along with a detailed explanation thereof, are mentioned in Note No. 1.34