GOCL Corporation Ltd Management Discussions

The Indian economy demonstrated resilience amid global geopolitical and trade uncertainties, recording real GDP growth of 7.7%, fuelled by robust domestic demand1. Inflation moderated to 3.48%, enabling the Reserve Bank of India (RBI) to implement a cumulative policy repo rate cut of 125 basis points. These measures helped stabilise borrowing costs and supported overall market sentiment across sectors.

Private consumption improved, supported by strengthening rural and urban market conditions. This was aided by monetary easing and GST rate rationalisation. Favourable financial conditions and ongoing structural reforms further sustained investment activities.

The Indian economy is projected to grow at a 6.6% rate in FY 202627, driven by strong domestic fundamentals and continued policy support. However, volatility in global energy prices and supply disruptions arising from geopolitical tensions in West Asia may exert inflationary pressure and moderate growth prospects.

CPI inflation for FY 2026-27 is projected at 5.1%, supported by stable supply-side conditions and the ongoing impact of GST rate rationalisation.

Despite global uncertainties, domestic growth drivers are expected to remain resilient. Stable macroeconomic conditions and continued structural reforms are likely to support sustained growth in the near term.

The EMS business benefited from Indias strong electronics manufacturing momentum, driven by PLI-led investments, expansion of the domestic component ecosystem, semiconductor initiatives, increasing exports, and the "Make in India" program. These initiatives strengthened the overall manufacturing ecosystem and created new growth opportunities for EMS companies.

In India, the EMS industry is evolving beyond traditional contract manufacturing into two distinct segments: EMS and ODM (Original Design Manufacturing). ODM capabilities play a critical role in supporting OEMs through Design for Manufacturability (DFM), enabling faster product development, improved quality, and cost optimization.

Sustainability initiatives are gaining traction across the industry, reflecting a broader focus on environmentally responsible manufacturing practices. Simultaneously, technological advancements are enabling manufacturers to offer innovative products that meet specific client requirements. This combination of technology adoption and specialised product development continues to strengthen competition across the industry.

To support the sector, the Government of India (GoI) has launched several initiatives through the India Semiconductor Mission (ISM) to strengthen domestic capabilities in design, manufacturing and ecosystem development. In addition, the GoI has expanded the Electronics Components Manufacturing Scheme with an outlay of Rs.40,000 crore4. These initiatives, coupled with strong domestic demand and growing export competitiveness, have positioned India as a preferred manufacturing destination.

Indias next phase of EMS growth requires a strategic shift from incentivising capacity creation to building deep, sustainable capabilities. This transition includes developing local component ecosystems and investing in advanced manufacturing technologies. It also requires strengthening R&D capabilities, enhancing design expertise and building a skilled workforce aligned with Industry 4.0 requirements.

Energy remains a critical pillar of economic transformation, supporting households, industries and transport networks. Over the past decade, Indias power sector has undergone structural change, transitioning to a system defined by adequacy, expanded capacity and improved reliability.

The total installed generation capacity is 5,20,511 MW, comprising 2,48,542 MW (47.7%) from fossil-fuel and 2,71,969 MW (52.3%) from non-fossil fuel sources. This capacity expansion positions the country to meet rising demand while supporting sustained economic growth.

The thermal power segment is evolving toward greater flexibility, efficiency and fuel security. Out of the total 52,536.49 MW capacity additions, 8,810 MW has been added in the thermal category, entirely from coal-based projects. Coal continues to remain a key energy source due to domestic availability and cost efficiency.

Power demand is expected to be supported by agriculture, households, industrial activity and emerging sectors such as electric vehicles and data centres. According to the National Electricity Plan (NEP), installed capacity is projected to reach 874 GW by 2031-32. Thermal capacity requirements (coal and lignite) are estimated at approximately 3,07,000 MW by 2034-35. To meet this requirement, the Ministry of Power has envisaged setting up an additional minimum of 97,000 MW of coal and lignite-based thermal capacity6. The countrys relatively low per capita electricity consumption, at around 1,200 kWh compared with the global average of about 3,600 kWh, also indicates significant long-term demand potential.

Coal is expected to remain an important fuel for power generation to meet growing baseload requirements and address the intermittency associated with renewable energy. Coal demand for the power sector is projected to increase from approximately 784 million tonnes in FY23 to about 1,037 million tonnes by FY31, reflecting the continuing role of thermal generation in supporting Indias energy security and economic growth.

The Indian real estate sector witnessed a significant transformation in 2025, accelerated by a rising urban population, increasing nuclear families, growing middle-class incomes and stronger homeownership aspirations. Fuelled by substantial capital inflows targeting land, development sites and built-up assets, year-on-year equity investments rose by 25% to reach a record USD 14.3 billion. However, the Indian real estate sector currently faces the following challenges: High land acquisition costs, rising construction costs, skilled labour shortages, geo-political risks, project delays, market volatility, etc.

Geopolitical frictions and strategic trade restrictions continue to fragment global freight routes. Delays in multi-modal transport corridors slow down the movement of critical industrial parts. A major obstacle for electronic manufacturing services (EMS) companies is the rising cost of doing business. Manufacturers may face higher expenses due to rising wages, labour inflation, logistics and raw materials in key manufacturing regions. Further, sub-par rainfall and the El Nino effect place severe stress on thermal power plants by causing acute cooling water shortages. This will drive up electricity demand for cooling and agricultural pumping, forcing facilities to operate at maximum capacity under intense thermal strain.

GOCL Corporation Limited (GOCL), established in 1961 as Indian Detonators Limited and formerly known as Gulf Oil Corporation Limited, is part of the Hinduja Group. The Company has historically operated across the energy, mining, infrastructure and real estate sectors. Through its focus on safety, innovation and operational efficiency, GOCL has supported the development of Indias industrial landscape.

The Company has undertaken a strategic transition by exiting its legacy explosives and detonators business. GOCL is now focused on electronics manufacturing, real estate and the power sector. This business realignment reflects its focus on opportunities in technology, energy and mobility. The Company also integrates sustainability and environmental considerations into its operations, supporting long-term value creation.

To strengthen its presence in the power sector, GOCL has initiated a ‘Scheme of Merger by Absorption of Hinduja National Power Corporation Limited (‘HNPCL), subject to requisite approvals. HNPCL operates a 1040 MW thermal power plant (520 MW X 2) near Visakhapatnam, Andhra Pradesh. This strategic region is an industrial cluster attracting prestigious projects and big data centres from Google, Meta and HCL Tech and it is expected to witness a major surge in power demand in the coming years.

*includes discontinued operations

The Electronics Manufacturing Service (GOCL-EMS/EMS) division was initially established to support in-house chip production for electronic detonators. While originally integrated within the Energetics segment, EMS is now becoming an independent business vertical. Additionally, the new EMS facilities at Gummadidala near Hyderabad are now fully operational following the receipt of their factory licence.

Recognizing the industry trend, GOCL-EMS has positioned itself as a niche ODM solutions provider, working closely with customers to support product design, engineering, manufacturing, and lifecycle management. Through collaboration, innovation, and customer-centric engagement, GOCL-EMS aims to build long-term strategic partnerships and deliver value beyond manufacturing services.

Bangaluru: The Company is in the process of early monetization of the aforesaid ‘ecopolis project by sale of the entire project.

Hyderabad: The Company has so far completed sale of about 157.21 acres of land and the sale consideration amounts have been temporarily deployed in inter corporate loans.

The financial performance of these segments has been mentioned in the Boards Report.

The changes in the consolidated key financial ratios of the Company are represented in a tabular format. This includes significant changes in the ratio of 25% or more than that for the current year and the previous year. In addition to the quantitative figures, the explanation for a better understanding.

*Note: The Company has discontinued its main operating business segment namely Energetics and Explosives. The major revenue during the year 2025-26 is from the sale of land. Therefore, key financials of the current year are not comparable with the previous year(s).

Outlook and plans have been mentioned in the Boards Report.

The Company has a well-established risk management system that supports the identification of risks and the implementation of mitigation strategies affecting its operations. The Risk Management Committee, consisting of senior executives, regularly reviews and oversees the risk management processes.

The workforce is central to the Companys long-term success. GOCLs human resource practices and values play a key role in fostering a culture of professionalism, integrity and respect. The Company is committed to promoting diversity, equity and inclusion across the organisation.

To maintain a safe and inclusive workplace, the Company has implemented a robust Prevention of Sexual Harassment (POSH) framework. The Whistle Blower Policy supports transparency, accountability and ethical conduct across the organisation. The policy is periodically reviewed by the Audit Committee, reinforcing GOCLs commitment to high standards of corporate governance and ethical business practices.

The Company recognises that internal control is necessary for effective governance and believes in striking a balance between independence and accountability. The Company has robust internal and financial controls tailored to its activities size, scope and complexity. Continuous evaluation ensures adequate, effective and efficient financial and operational risk management procedures. The Companys internal and financial control systems include robust procedures for operations management, financial reporting, compliance with policies and regulations, asset protection and resource optimisation. The Company engages outside experts to assesses its systems regularly to ensure they are in line with its growing operations. The Companys internal and financial control system is supported by SAP-ERP, Risk Management procedures, Corporate Policies and Standard Operating Procedures. These aspects work together to properly implement quality and control systems.

The Internal Audit supports management by providing objective reviews of operational areas. Independent assurance helps the Audit Committee and Board of Directors assess the effectiveness of risk management, financial and operational controls and corporate governance systems. The Internal Audit function reports directly to the Audit Committee. The Audit Committee oversees the Companys internal control systems. They examine critical findings and provide strategic recommendations. The Audit Committee and the Companys Statutory Auditors meet regularly to discuss the sufficiency and efficiency of internal control systems. Each year, an approved Internal Audit Plan is prepared based on the risk profile of the business activities and operations. This plan is used as a guidance for the Internal Audit function. Process owners develop Action Taken Reports in response to internal audit findings to strengthen Company processes, comply with regulations and improve controls. The Audit Committee receives periodic reports and recommendations from the Statutory Auditors. This collaborative approach helps accomplish critical activities. During the year, the Audit Committee met 4 (four) times to deliberate and review the internal audit reports, including action reports on important observations. The team examined agreed-upon measures and discussed Internal Financial Control (IFC), Internal Audit, Financial and Statutory Audit and related reports. These meetings facilitated the timely and successful implementation of identified activities.