Lakshmi Electrical Control Systems Ltd Management Discussions

Economy Overview Global:

As per the International Monetary Fund (IMF), the global economy has entered a phase of cautious stabilization. Growth remains modest and projections for global output have been revised downward due to a steep rise in trade tariff rates and policy uncertainty. Global inflation is expected to decline, although at a slower pace and downside risks such as trade tensions and volatile financial markets continue to weigh on the global economy outlook. The IMF has also revised growth estimates for major economies such as China and the United States of America.

India Scenario:

As per the IMF, India is expected to remain the fastest growing major economy over the next two years. India Rs.s economy is expected to grow by 6.2 per cent in 2025 and 6.3 per cent in 2026, maintaining a solid lead over global and regional peers. This is subject to global trade tensions and geopolitical reasons. India is expected to be a key driver for global growth with a steady expansion for India Rs.s economy ably supported by firm private consumption, particularly in rural areas.

Industry structure and developments

The Indian manufacturing industry is projected to continue its growth trajectory, driven by domestic demand, global shifts in supply chains and government support. Key sectors like electronics, renewable energy and healthcare are expected to lead the way. While the sector has experienced some slowdowns in production, it is still expected to contribute significantly to India Rs.s economic growth.

The Indian smart meter market is experiencing strong growth, driven by government initiatives on the need for grid modernization and power theft reduction. The market is expected to reach USD 3.02 billion by 2033. This growth rate is largely influential with factors including government support, investment in smart grid infrastructure, political and social compulsion.

The Indian Electric Vehicle (EV) charging market is poised for rapid growth, driven by government initiatives, increasing EV sales and private sector investments. The market is expected to expand significantly, with projections of reaching USD 754.20 million by 2030.

Opportunities

The Indian government has set an ambitious target to install 250 million smart meters by end of the year 2025 under the Revamped Distribution Sector Scheme (RDSS). The power utilities in Tamilnadu, Maharashtra, Punjab and other utilities are more active on the Smart Meter projects.

The expansion of EV charging infrastructure is crucial for supporting the growing number of EVs. As of 2024, India has over 12,000 public EV charging stations, with plans to increase this number significantly in the coming years.

The increase in requirements for industrial plastics and medical plastics equipment are expected as a good opportunity for the plastics segment of the Company. In Electricals and Plastics segments, the Company continues to put its efforts to increase the productivity levels, reduction of cost and adding new customers.

Threats

Smart Meter Opex model leads to high Initial Costs and Financial Constraints, consumer resistance and awareness gaps are major threats.

The high upfront cost of EVs remains a significant barrier to widespread adoption. India Rs.s dependence on imports for these components makes the sector vulnerable to global supply chain disruptions and export restrictions.

The countries like China and Vietnam offer lower production costs and more developed manufacturing ecosystems, posing stiff competition to Indian manufacturers.

There is a significant shortage of skilled labor in the manufacturing sector. Many workers lack the necessary technical skills, which affects productivity and quality.

The increasing price of commodities is becoming difficult to retain the buying price, the shortage of electronics and supply chain disturbance becomes a threat to the execution.

Segment wise performance

The Company achieved revenue from operations in the financial year 2024-2025 of Rs. 21,231.22 Lakhs (previous financial year 2023-2024 of Rs. 33,796.50 Lakhs) a drop in revenue by 37.18% over the previous financial year. The profit before exceptional items and tax for the financial year 2024-2025 is Rs. 618.79 Lakhs as against Rs. 1,905.68 Lakhs for the previous financial year 2023-2024. The profit after exceptional items and tax is Rs. 347.23 Lakhs as against Rs. 1,396.01 Lakhs for the previous financial year.

The major revenue segment of the Company, Electricals achieved a turnover of Rs. 18,614.75 Lakhs (previous financial year Rs. 29,828.59 Lakhs). The Plastics segment achieved a turnover of Rs. 2,682.48 Lakhs (previous financial year Rs. 4,030.64 Lakhs). The revenue from Wind Power Generation was Rs. 62.37 Lakhs for the financial year 2024-2025.

Outlook and Risks & Concerns

The Company foresees market growth and revenue improvement in the forthcoming year and strives to expand the customer segments. With a strong commitment, technology and sustainability, the Company is well-positioned to lead in the electrical energy sector. Our strategic underscore is our potential for long-term success.

Market competition leads to price erosion and order challenges, regulatory changes leads to distribution of materials on plastics and switch gears. As more projects are moving towards design, finance and operation models the cash flow becomes a concern, the global war and change in geopolitical situation may impact the overall industrial sectors. The Company is confident to overcome the concerns.

Internal Control System and Adequacy

The Company has an adequate internal control system, commensurate with its size and nature of its business. The management has the overall responsibility for the Company Rs.s internal control system to safeguard the assets and to ensure reliability of the financial records. The Company has a budgetary control system and periodically the actual performance is reviewed and the deviations, if any, are addressed accordingly. The audit committee reviews all financial statements and ensures the adequacy of internal control systems.

Financial Performance

Particulars	Financial Year 2024-2025	Financial Year 2023-2024
	(Rs. in Lakhs)	(Rs. in Lakhs)
Revenue from operations	21,231.22	33,796.50
Other Income	554.00	681.51
Profit before Interest and Depreciation and amortization expense	1,037.25	2,271.05
Less: Interest	53.10	52.77
Profit before Depreciation & amortization expense	984.15	2,218.28
Less: Depreciation & amortization expense	365.36	312.60
Profit before Tax	618.79	1,905.68
Less: Exceptional item	44.03	14.00
Less: Provision for Taxes	227.53	495.67
Profit after Tax	347.23	1,396.01

Human Resources

The organisation aims to achieve sustained growth through developing a skilled, motivated, and committed workforce.

Risk Management

The Company adopts a comprehensive and integrated risk appraisal, mitigation and management process. The risk appraisal and risk mitigation measures of the Company are being placed before the Board periodically for review and for improvement.

Details of key financial ratios

S.No Name of the Ratio	Financial Year 2024 - 2025	Financial Year 2023 - 2024	% of Change
1 Debtors Turnover Ratio	3.57	4.54	-21.36
2 Inventory Turnover Ratio	6.87	10.82	-36.50
3 Interest Coverage Ratio	11.82	36.85	-67.92
4 Current Ratio	2.16	2.51	-13.94
5 Debt Equity Ratio	0.03	0.02	50.00
6 Operating Margin (%)	0.81	4.34	-81.33
7 Net Profit Margin (%)	1.63	4.13	-60.53

• Decrease in Interest Coverage Ratio is due to the decrease in profit for the financial year 2024-25.

• Decrease in Inventory Turnover Ratio is due to the decrease in Turnover during the financial year 2024-25.

• Increase in Debt Equity Ratio is due to the increase in working capital borrowings during the financial year 2024-25.

• Decrease in Operating profit margin is due to the decrease in operating profit and decrease in Turnover during the financial year 2024-25.

• Decrease in Net profit margin is due to the decrease in turnover and profit after tax during the financial year 2024-25.

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

For the financial year 2024-2025: 1.23%. For the financial year 2023-2024: 4.96%

The reason for decrease in Return on Net Worth is due to the decrease in profit for the financial year 2024-2025.

Cautionary Statement

The Management Discussion and Analysis Report contains forward looking statements based upon assumptions regarding global and country Rs.s economic conditions and expectation of future events, etc., The factors that might influence the operations of the Company are demand-supply conditions, prices of the finished goods, material costs & availability, change in the government rules & regulations and natural calamities / any force majure events over which the Company has no control. The Company assumes no responsibility for the accuracy of assumptions and perceived performance of the Company in future.

Place : Coimbatore	For and on behalf of the board
Date : June 06, 2025	Nethra. J.S. Kumar
	Chairperson and Managing Director
	DIN : 00217906