Lakshmi Electrical Control Systems Ltd Management Discussions

Economy Overview Global:

The global economy continues to navigate a period of mixed growth amid persistent geopolitical tensions, evolving trade dynamics, inflationary pressures, and tight financial conditions across several major economies. Western countriesRs. markets are witnessing relatively slower growth due to ongoing economic uncertainties. Asian countries markets, continue to contribute significantly to global economic activity through resilient domestic demand, infrastructure investments, and manufacturing expansion. The energy transition remains a major global investment theme, with substantial capital allocation towards renewable energy, battery energy storage systems, electrification, digital infrastructure, and sustainability initiatives. As per the International Monetary Fund (IMF), global growth is projected to be 3.1 percent in the year 2026 and 3.2 percent in the year 2027, slower than its recent pace of about 3.4 percent in the financial year 2024-2025.

India Scenario:

Indian economy continues to maintain strong growth despite global geopolitical uncertainties, inflationary pressures, and fluctuations in commodity prices. Indias macroeconomic fundamentals remain stable, supported by robust domestic demand, government infrastructure spending, and continued policy reforms. Indias power and energy sector remains a key growth driver, with increasing investments in renewable energy, transmission and distribution infrastructure, smart metering, electric mobility, and battery energy storage systems. As per the economic survey 2025-2026, the Indian rupee underperformed in 2025. India runs a trade deficit in goods. Its net trade surplus in services and remittances is not enough to offset it. India depends on foreign capital flows to maintain a healthy balance of payments.

Industry structure and developments

Power and electrical energy industry remains highly positive, driven by strong growth in electricity demand, rapid growth in the Electrical Vehicle (EV) Sector, urbanization, renewable energy expansion, and government-led infrastructure investments. India continues to witness significant opportunities across renewable energy, Battery Energy Storage Systems (BESS), transmission & distribution infrastructure, smart metering, and industrial electrification.

Opportunities

Investments in power generation, renewable energy projects, electric vehicles, BESS, data centers are creating strong demand for electrical equipment, control systems, panels, smart meters, and EV charger stations.

The Company is well positioned with its products, smart meters and EV Chargers in the market, good opportunity to create strong visibility and impact on the segment.

Threats

The impact of geopolitical developments in Middle East, Raw Material and Commodity Price Volatility is higher, currency fluctuations, government slow down on the smart grid modernization due to pollical & social reasons, higher level of competition seems to be major threats to the Company.

Segment wise performance

The Company achieved revenue from operations in the financial year 2025-2026 of Rs. 23,758.05 Lakhs (previous financial year 2024-2025 of Rs. 21,231.22 Lakhs) an increase in revenue by Rs. 2,526.83 Lakhs over the previous financial year. The profit before exceptional items and tax for the financial year 2025-2026 is Rs. 145.22 Lakhs as against Rs. 618.79 Lakhs for the previous financial year 2024-2025. The profit after exceptional items and tax is Rs. 118.70 Lakhs as against Rs. 347.23 Lakhs for the previous financial year.

The major revenue segment of the Company, Electricals achieved a turnover of Rs. 20,316.43 Lakhs (previous financial year Rs. 18,614.75 Lakhs). The Plastics segment achieved a turnover of Rs. 3,589.60 Lakhs (previous financial year Rs. 2,682.48 Lakhs). The revenue from Wind Power Generation was Rs. 81.62 Lakhs for the financial year 2025-2026.

Outlook and Risks & Concerns

The prices of raw materials are increasing due to inflation, global instability in supply chain mechanism, geo-political crisis, Retention of skilled technical persons, increase in manpower cost are concern for the operations of the Company. The Company is committed to meticulous planning for the timely procurement of raw materials and is in positive frame of mind to retain good workforce and grab the business opportunities.

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 Companys 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	Financial Year
	2025-2026	2024-2025
	(Rs. in Lakhs)	(Rs. in Lakhs)
Revenue from operations	23,758.05	21,231.22
Other Income	488.93	554.00
Profit before Interest and Depreciation and amortization expense	599.08	1,037.25
Less: Interest	84.51	53.10
Profit before Depreciation & amortization expense	514.57	984.15
Less: Depreciation & amortization expense	369.35	365.36
Profit before Tax	145.22	618.79
Less: Exceptional item	1.74	44.03
Less: Provision for Taxes	24.78	227.53
Profit after Tax	118.70	347.23

Human Resources

The organization 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 2025 - 2026	Financial Year 2024 - 2025	% of Change
1	Debtors Turnover Ratio	4.75	3.57	33.05
2	Inventory Turnover Ratio	6.52	6.87	-5.09
3	Interest Coverage Ratio	2.70	11.82	-77.16
4	Current Ratio	1.74	2.16	-19.44
5	Debt Equity Ratio	0.06	0.03	100.00
6	Operating Margin (%)	-0.70	0.81	-186.42
7	Net Profit Margin (%)	0.50	1.63	-69.33

• Debtors Turnover Ratio increased due to increase in Turnover during the year.

• Interest coverage ratio decreased due to decrease in Earnings before Tax and Interest during the year.

• Debt equity ratio increased due to increase in borrowing during the year.

• Operating profit margin decreased due to decrease in operating profit during the year.

• Net profit margin decreased due to decrease in profit after tax.

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 2025-2026: 0.47 % For the financial year 2024-2025: 1.22 %

The reason for decrease in Return on Net Worth is due to the decrease in profit for the financial year 2025-2026.

Cautionary Statement

The Management Discussion and Analysis Report contains forward looking statements based upon assumptions regarding global and countrys 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 : May 20, 2026	Nethra. J.S. Kumar
	Chairperson and Managing Director
	DIN : 00217906