LG Electronics India Ltd Management Discussions

GLOBAL ECONOMY

The global economy exhibited sustained buoyancy throughout 2025, despite an increasing complex operating environment. Economic growth was supported by resilient consumer spending, continued investment in technology and digital infrastructure, easing inflationary pressures and relatively stable labour market conditions across major economies. At the same time, geopolitical tensions, evolving tariff measures and trade policy uncertainties continued to influence global economic activity and business sentiment.

World GDP expanded by 3.5%, with advanced economies growing by 1.9%, while emerging market and developing economies outperformed with growth of 4.5%, led by India and China.

Real GDP Growth

WORLD OUTPUT (%)

P = Projections

(Source: World Economic Outlook (IMF) - July 2026)

Global inflation eased to 4.1%, reflecting the impact of restrictive monetary policies and improving supply conditions. World trade volumes grew by 5.0% during the year, supported by steady demand, technology-led exports and improving trade activity across key markets. Monetary policy across major economies remained cautious and data-dependent as central banks sought to balance growth objectives with lingering inflationary pressures.

Global geopolitical conditions remained uncertain during the year, with escalating tensions in West Asia and the prolonged Russia- Ukraine conflict continuing to influence economic activity, trade flows and energy markets. Disruptions across key shipping routes, volatility in crude oil and commodity prices, and evolving geopolitical developments contributed to heightened uncertainty across global markets. These developments affected supply chains, sourcing strategies and logistics networks across industries, resulting in higher procurement and freight costs, periodic disruptions in material availability and longer lead times in certain markets. Consequently, businesses remained cautious in their investment and operational planning amid concerns surrounding inflation, energy costs and the broader economic outlook.

Trade policy uncertainty also persisted during the year, with evolving tariff measures and geopolitical considerations continuing to influence investment activity, supply-chain strategies and cross-border trade flows. These factors reinforced a cautious global operating environment and remain important risks to global growth and trade prospects.

(Source: World Economic Outlook (IMF)- July 2026)

Outlook

The global economy is expected to remain broadly stable over the medium term, with growth projected at 3.0% in 2026 and 3.4% in 2027. Continued investment in technology, digital infrastructure and productivity-enhancing innovations, including artificial intelligence, is expected to support economic activity despite ongoing geopolitical tensions, trade policy uncertainties and evolving political developments across major markets.

Growth in advanced economies is projected at 1.7% in 2026. The United States is expected to expand by 2.3%, supported by resilient consumer spending and investment activity, while the Euro zone and Japan are projected to grow by 0.6% and 0.7%, respectively. Emerging market and developing economies are expected to grow by 3.8%, with China projected to expand by 4.5% on the back of domestic policy support and improving trade conditions. India is expected to remain among the fastest-growing major economies, supported by strong domestic demand, ongoing infrastructure investments and continued progress in manufacturing and digital transformation.

Global headline inflation is projected to moderate from 4.7% in 2026 to 3.9% in 2027 as supply conditions improve and inflationary pressures gradually ease across major economies. In response, central banks are expected to continue adopting measured monetary policy actions, balancing inflation management with growth objectives. Global trade growth is projected to moderate to 3.5% in 2026 amid tariff-related adjustments and geopolitical uncertainties, although sustained demand for technology products, digital infrastructure and advanced manufacturing solutions is expected to provide continued support to global economic activity.

(Source: World Economic Outlook (IMF) - July 2026)

INDIAN ECONOMY

The Indian economy demonstrated resilience during 2025-26 despite ongoing global trade uncertainties and market volatility. According to the Ministry of Statistics and Programme Implementation (MoSPIs) Provisional Estimates (PE), real GDP and Gross Value Added (GVA) are projected to grow by 7.7% and 7.9%, respectively, reflecting the strength of the countrys domestic demand-driven growth model.

(Source: PIB)

FRE = First Revised Estimate: PE = Provisional Estimates: P = Projections

(Source: PIB (PE, FRE), MoSPI - June 2026)

Economic activity was supported by healthy agricultural output, which strengthened rural incomes and consumption, while urban demand remained resilient on the back of stable employment conditions and easing inflationary pressures. Strong domestic consumption, sustained investment activity and continued policy support helped maintain growth momentum across key sectors of the economy.

India continued to remain among the worlds fastest-growing major economies during FY 2026, supported by resilient domestic demand, robust investment activity and ongoing structural reforms. With a nominal GDP of approximately USD 4.15 trillion in 2026, the country remains one of the largest developing economies globally. While recent estimates indicate a moderation in its global ranking from 4 th to 6 th position, Indias strong economic fundamentals, expanding domestic market, and sustained growth trajectory continue to reinforce its significance within the global economy.

Private consumption remained a key driver of growth, supported by moderating inflation and improving real incomes. Public capital expenditure of Rs 12.2 lakh crore under the Union Budget 2026-27 continued to support infrastructure development and stimulate activity across manufacturing, construction and allied sectors. Government initiatives such as Viksit Bharat 2047 further reinforced the focus on long-term economic development, self-reliance and capacity creation.

Inflation remained relatively benign during the year, supporting household purchasing power and consumer spending. Average

headline Consumer Price Index (CPI) inflation stood at 1.7% during the first nine months of FY 2026, while the Ministry of Statistics and Programme Implementation (MoSPI) estimated inflation at 3.4% as of March 2026. Fiscal discipline, stable domestic demand and continued expansion in bank credit contributed to the overall macroeconomic stability.

(Source: PIB, MoSPI)

Outlook

The outlook for the Indian economy remains favourable, with real GDP growth projected between 6.8% and 7.2% in FY 2026-27. Growth is expected to be supported by continued infrastructure spending, rising private investment, expanding manufacturing activity and sustained strength in the services sector.

Supported by a stable macroeconomic environment, improving consumer sentiment and ongoing structural reforms, India remains well-positioned to navigate external uncertainties while sustaining long-term economic growth. Continued progress in infrastructure development, industrial expansion and domestic consumption is expected to support broad-based economic activity across sectors.

Rising disposable incomes, increasing urbanisation and continued premiumisation trends are expected to support consumer demand across discretionary spending categories.

(Source: PIB - January 2026)

INDUSTRY OVERVIEW Indian Consumer Durable market

The Indian consumer durables and electronics industry continued to strengthen its position during FY 2026, supported by resilient consumer demand, rising disposable incomes, urbanisation and increasing adoption of technology-enabled products. The sector demonstrated its ability to navigate evolving macroeconomic conditions, changing consumer preferences and global supply chain challenges, reflecting a more mature and structurally resilient industry landscape. Consumer purchasing behaviour continued to evolve beyond price-led decision-making towards value-driven consumption. Increasingly, consumers are prioritising product quality, energy efficiency, performance, design and longterm reliability while making purchase decisions. This shift has accelerated premiumisation across several product categories, resulting in growing demand for technologically advanced and feature-rich products that enhance convenience, sustainability and overall user experience.

Technology remained a key catalyst for industry transformation during the year. The increasing integration of artificial intelligence (AI), Internet of Things (IoT) capabilities and smart connectivity features contributed to the growing adoption of intelligent and energy-efficient consumer products. Beyond products, digital technologies are increasingly being deployed across business operations through AI-enabled demand forecasting, predictive analytics, digitally integrated aftersales services and innovative financing solutions, enabling companies to improve operational efficiency and strengthen

Looking ahead, Indias consumer durables market is expected to reach approximately Rs 5.39 lakh crore by FY 202930, growing at a CAGR of around 14%. Rising demand for smart, connected and energy-efficient appliances, coupled with increasing urbanisation, higher disposable incomes and changing consumer preferences, is expected to support sustained growth across the sector.

The industry is also expected to benefit from evolving regulatory and sustainability frameworks. Enhanced energy-efficiency standards introduced by the Bureau of Energy Efficiency (BEE) are expected to encourage product innovation and adoption of more sustainable technologies across categories. In parallel, the implementation of Extended Producer Responsibility (EPR) regulations continues to strengthen recycling and reverse logistics ecosystems, supporting the transition towards circular economy practices. Additionally, ongoing global supply chain diversification is expected to create opportunities for India to further strengthen its position as a manufacturing and export hub for consumer durables and electronics products.

(Source: Economic Times - May 2026)

Indian Home Appliances and Electronics Market

Indias home appliances and electronics market continued to expand during 2025, supported by rising disposable incomes, urbanisation, improving living standards and growing consumer preference for convenience-oriented products. The market reached approximately USD 82.17 billion in 2025 and is projected to reach from USD 86.85 billion in 2026 to USD 143.04 billion by 2035, registering a CAGR of 5.7% during the forecast period.

COMPOUND ANNUAL GROWTH RATE 5.7% 2026-2035 Value in USD Billion

Industry estimates indicate that approximately 4% of Indian households own a microwave oven, while around 33% own a refrigerator, highlighting significant opportunities for further market expansion as appliance penetration continues to improve across urban and semi-urban markets. The market continues to benefit from favourable demographic and economic fundamentals, including a growing middle-income population, rising household formation and increasing consumer aspirations. Demand is expanding beyond metropolitan centres, with Tier- 2 and Tier-3 cities emerging as important growth markets for home appliances and consumer electronics due to increasing rural electrification. Improved retail penetration, wider product availability, consumer financing options and the rapid expansion of e-commerce platforms are enhancing accessibility across regions and income segments.

Energy efficiency and sustainability have emerged as important purchase considerations across appliance categories. Consumers are increasingly opting for products that offer lower energy consumption and reduced operating costs, while regulatory initiatives and energy-efficiency standards continue to encourage the adoption of environmentally responsible appliances. These trends are driving product innovation and supporting replacement demand for newer, technologically advanced models.

Major appliances, including refrigerators, air conditioners and washing machines, continue to account for a significant share of the market, supported by increasing household penetration and replacement demand. Demand for cooling appliances is also being supported by rising temperatures and changing climatic conditions, while growing consumer awareness regarding health, hygiene and convenience is driving adoption across several appliance categories. Industry estimates indicate that sales of refrigerators and air conditioners are expected to witness healthy growth, supported by favourable weather conditions and increasing consumer demand for comfort-oriented products.

The market is also witnessing an increasing focus on environmental responsibility and circular economy practices. As per the E-waste EPR portal developed under e-waste management rules, India generated 13.7 lakhs metric tonnes of e-waste during FY 2025, prompting greater regulatory attention towards recycling, waste management and extended producer responsibility. Evolving regulatory requirements, including minimum recycling obligations and sustainability-focused compliance frameworks, are encouraging manufacturers to adopt eco-friendly product designs, improve product durability, increase the use of recyclable components and strengthen recycling and recovery partnerships across the value chain.

The distribution landscape is undergoing a structural transformation, with e-commerce emerging as an increasingly important sales channel alongside traditional retail formats. Consumers are increasingly adopting omnichannel purchasing behaviour, supported by wider product selection, competitive pricing, improved delivery networks and enhanced after-sales service capabilities. This evolving retail ecosystem is enabling manufacturers to strengthen consumer engagement and expand market reach across both urban and semi-urban markets.

Looking ahead, the Indian home appliances and electronics market is expected to be supported by rising consumer spending, increasing adoption of smart and connected products, continued premiumisation and growing emphasis on energy-efficient technologies. Expanding digital infrastructure, favourable demographic trends and ongoing investments in manufacturing and supply chain capabilities are expected to further strengthen the long-term growth prospects of the sector.

(Source: - June 2026,

- March 2026)

Key Industry Developments

The Indian consumer durables industry witnessed a transformative year in FY 2026, characterised by a significant shift from need-based to lifestyle-based purchasing. The market for core appliance categories, including air conditioners, refrigerators and washing machines, demonstrated steady consumer behaviour despite significant macroeconomic headwinds.

- Air Conditioners: The air conditioner segment witnessed increasing consumer preference for energy-efficient 5-star inverter models. The industry also continued to advance towards AI-enabled cooling solutions capable of optimising performance based on ambient conditions and room occupancy.

- Refrigerators and Washing Machines: Consumer demand increasingly shifted towards premium product categories. Side-by-side and French-door refrigerators recorded strong growth, while fully automatic top-load and front-load washing machines equipped with advanced AI-enabled features continued to gain share over traditional semi-automatic models.

- Regulatory and Manufacturing Developments: The

industry successfully transitioned to the revised Bureau of Energy Efficiency (BEE) energy-labelling norms during the year. In addition, increasing localisation of key components such as compressors and motors, supported by the Production Linked Incentive (PLI) scheme, continued to strengthen domestic manufacturing capabilities, improve supply chain resilience and enhance export competitiveness.

Opportunities and Threats

Opportunities

- Growing Premiumisation Across Appliance Categories:

Rising consumer preference for premium and feature-rich products, including side-by-side refrigerators, French- door refrigerators, inverter air conditioners and fully automatic washing machines, is creating opportunities for higher-value sales and improved product mix.

- Increasing Adoption of Smart and Connected Appliances: Growing consumer demand for AI-enabled, IoT-connected and energy-efficient appliances is supporting the adoption of intelligent home solutions, creating opportunities for technology-led product differentiation and customer engagement.

- Expanding Demand Beyond Metropolitan Markets:

Increasing disposable incomes, urbanisation and improving retail penetration across Tier-2 and Tier-3 cities are broadening the addressable market for feature enabled consumer durables and home appliances.

- Strengthening Domestic Manufacturing Ecosystem:

Government initiatives promoting local manufacturing and component localisation, supported by the Production Linked Incentive (PLI) scheme, are enhancing supply chain resilience and creating opportunities for export-oriented growth.

- Energy Efficiency and Sustainability-Led Replacement

Demand: Evolving energy-efficiency standards and

increasing consumer awareness regarding sustainability are encouraging replacement demand for newer and more efficient appliances across key product categories.

Threats

- Intense Competitive Environment: The consumer durables market remains highly competitive, with manufacturers competing across pricing, product innovation, technology features, distribution reach and customer service, which may exert pressure on margins.

- Regulatory and Compliance Requirements: Evolving energy-efficiency standards, environmental regulations, recycling obligations and e-waste management requirements may increase compliance costs and necessitate ongoing investments in product development and operational processes.

- Supply Chain and Input Cost Volatility: Fluctuations in commodity prices, component availability, logistics costs and global supply chain disruptions may impact manufacturing costs, procurement planning and profitability.

- Changing Consumer Preferences and Technology Cycles: Rapid technological advancements and evolving consumer expectations require continuous innovation and product upgrades, increasing the risk of product obsolescence and shorter replacement cycles.

- Macroeconomic and Demand Uncertainties: Inflationary pressures, changes in consumer spending patterns and broader economic uncertainties may affect discretionary spending on consumer durables and influence market demand.

COMPANY OVERVIEW Established in 1997

LG Electronics India Limited (LGE India or the Company) is one of Indias leading consumer durables and home appliance companies. Backed by over 28 years of operations in the country, the Company has built a strong market position through continuous product innovation, manufacturing excellence, an extensive distribution network and a customercentric approach guided by its Lifes Good philosophy.

LGE India offers a diversified portfolio spanning air conditioners, refrigerators, washing machines, microwave ovens, televisions, air purifiers, commercial air-conditioning systems, Display signage, dishwasher and other consumer electronics

products The Company continues to maintain leadership

positions across several product categories, including washing machines (approximately 31.5%), refrigerators (approximately 28.8%) and microwave ovens (approximately 45%*), while further strengthening its presence in the residential air conditioning segment.

The Companys operations are supported by its integrated manufacturing ecosystem, comprising production facilities in Greater Noida and Ranjangaon, Pune, along with a new manufacturing facility being developed at Sri City, Andhra Pradesh. These facilities strengthen the Companys ability to cater to domestic demand, enhance localisation levels and support export opportunities across international markets.

LGE India continues to focus on technology-led innovation through the integration of artificial intelligence, connectivity and energy-efficient solutions across its product portfolio. The Companys Affectionate Intelligence approach seeks to deliver more intuitive, personalised and efficient consumer

experiences by combining advanced technologies with evolving consumer needs.

The Company has established one of the largest consumer durables distribution and service networks in the country, supported by 36,847 customer touchpoints and an extensive after-sales service infrastructure. This network enables LGE India to maintain strong customer engagement and service capabilities across urban, semiurban and rural markets.

* For the period April 2025 to March 2026 as per Syndicate Report Segment-wise Overview

The Company operates through two principal business divisions, namely the Home Appliances and Air Solution Division and the Home Entertainment Division. Both divisions are supported by rising consumer aspirations, increasing premiumisation, expanding digital adoption and the growing preference for technologically advanced and connected lifestyle solutions.

Home Appliances and Air Solution Segment	Home Entertainment Segment
This segment comprises:	This segment comprises:
- Refrigerators	- Televisions (including OLED, QNED and Smart TVs)
- Washing Machines	- Audio Systems
- Air Conditioners (Residential and Commercial)	- Monitors
- Microwave Ovens	- Projectors
- Water Purifiers	- Information Displays / Commercial Displays
- Air Purifier	- Related connected entertainment products
- Dishwasher
- Compressors
- Other home appliance products and solutions

Home Appliances and Air Solution Segment

The Home Appliances and Air Solution Segment constitutes ; significant part of the Companys operations and is aligned with evolving consumer preferences towards convenience, energ; efficiency and connected living. The division continues to benefir from rising urbanisation, increasing household incomes, growing penetration of premium appliances and increasing consume preference for technologically advanced products.

The Indian consumer durable market is witnessing a gradua shift towards premium and smart appliances, supporter by increasing adoption of connected devices and growing awareness regarding energy efficiency and sustainability Demand is also being driven by replacement purchases expansion of organised retail channels and increasing penetration across Tier-2 and Tier-3 markets due to continuer rural electrification, which is expanding access to modern homr appliances in underserved regions.

Further, favourable demographic trends, rising aspirations increasing electrification and improvement in residentia infrastructure continue to support long-term demand fo home appliances. The growing adoption of Al-enabled and Internet of Things (loT)-enabled appliances is expected to further strengthen the transition towards integrated smar

home ecosystems and create opportunities for value-added offerings across product categories.

Home Entertainment Segment

The Home Entertainment Segment continues to benefit from increasing digital consumption, evolving content consumption patterns and rising demand for immersive viewing experiences. Growing internet penetration, increasing adoption of connected devices and the rapid expansion of streaming platforms are driving consumer preference towards technologically advanced entertainment solutions.

The industry is witnessing increasing premiumisation, with consumers increasingly preferring larger screen sizes, enhanced display technologies and smart ecosystem integration. Rising disposable incomes, changing lifestyles and increasing demand for integrated digital experiences continue to support demand across the Home Entertainment segment.

In addition, increasing adoption of digital display solutions across commercial establishments, corporate environments and institutional applications is creating new opportunities for advanced display technologies. Continued technological advancements, including artificial intelligence-enabled functionalities and enhanced connectivity solutions, are

expected to further support the long-term growth prospects

of the segment.

Competitive Strength

- Market Leadership Across Key Product Categories:

The Company has established a leading position in Indias home appliances and consumer electronics market, holding the No. 1 market share across several key product categories. Its leadership spans washing machines, refrigerators, panel televisions, inverter air conditioners and microwave ovens, reflecting its strong brand equity and sustained consumer preference.

- Balanced Presence Across Consumer Segments: The

Company has built a well-diversified portfolio that caters to both premium and value-conscious consumers. Its ability to address evolving customer preferences across multiple price points has supported sustained market leadership across key product categories.

- Deep Understanding of Indian Consumers: A strong understanding of local consumer preferences enables the Company to develop products tailored to the needs of Indian households. This customer-centric approach continues to support product innovation, premiumisation and long-term brand loyalty.

- Integrated Manufacturing and Localisation Strategy:

The Company continues to strengthen its manufacturing capabilities in India through increased localisation and capacity expansion. Its growing domestic manufacturing footprint supports operational efficiency, supply chain agility and its ability to serve both domestic and export markets.

- Extensive Distribution and Service Network: A well- established distribution ecosystem, supported by a wide retail presence and comprehensive after-sales service network, enables the Company to reach customers across urban and emerging markets while enhancing the overall ownership experience.

- Innovation-Led Product Portfolio: Continuous

investment in technology, product innovation and smart home solutions enables the Company to address changing consumer expectations while strengthening its competitive position across multiple appliance and consumer electronics categories.

Outlook

LGE India remains focused on strengthening its leadership position in the Indian consumer durables market while expanding its role as a manufacturing and export hub within the global LG ecosystem. The Company continues to pursue its Make India Global vision through investments in manufacturing capacity, product innovation, localisation and premium product development.

Supported by growing consumer demand for smart, connected and energy-efficient appliances, increasing premiumisation trends and expanding manufacturing capabilities, the Company is well positioned to capture emerging opportunities across domestic and international markets. LGE India also aims to further expand exports of India-manufactured products, leveraging its manufacturing footprint, technology capabilities and strong brand equity to drive sustainable long-term growth.

BUSINESS PERFORMANCE Financial Performance

The Companys financial performance in FY 2026 reflects a resilient growth amidst a complex macroeconomic environment. While the first half of the year faced headwinds, including a cooler-than-expected summer affecting seasonal sales and rising global commodity costs, the Companys focus on premiumisation and operational efficiency ensured a stable bottom line.

Key Financial Highlights

The following table summarises the financial trajectory of the Company (based on trailing performance and projections):

Particulars	FY 2026	FY 2025	YoY %
Profit & Loss		i -
Revenue from operations	246,049.12	243,666.38	0.98%
Other Income	3,278.97	2,639.90	24.21%
Total Income	249,328.09	246,306.28	1.23%
Profits before interest and depreciation	27,362.02	33,741.14	-18.91%
Less: Finance cost	405.84	306.46	32.43%
Less: Depreciation and amortisation expense	3,961.07	3,803.57	4.14%
Profit before taxes	22,995.11	29,631.11	-22.40%
Tax expense	6,144.18	7,597.63	-19.13%
Profit after taxes	16,850.93	22,033.48	-23.52%
Other comprehensive income (Net of tax)	102.93	-54.24	-289.77%
Total comprehensive income for the year	16,953.86	21,979.24	-22.86%

Revenue and Market Expansion

Revenue grew by an estimated 0.98%, largely driven by the Premium Appliance Segment. Our Lifes Good campaign ant a successful transition to the new BEE energy norms in earl; 2026 allowed us to maintain a dominant market share.

- FY 2026 saw a revenue of Rs 246,049 million, a consisted performance despite a challenging demand environment.

- Volume Growth was particularly strong in Tier-2 and Tier-3 cities, where digital penetration and easy consume financing (EMI schemes) acted as catalysts.

Profitability and Margins

The EBITDA margin faced temporary pressure due to:

- Commodity Inflation: Rising prices of raw material: (steel, plastic, and semiconductors) in the global market.

- Festive Investments: Strategic incremental spending on Go-to-Market initiatives to support our distribution network during the high-volume festive and wedding seasons

- Exchange Rate Volatility: Fluctuations in the INR vs. USD

impacted the cost of imported high-tech components.

Working Capital and Cash Flow

The Company maintained a healthy liquidity position with ; cash balance exceeding Rs 44.76 billion as of March 31, 2026.

- Working Capital: There was a planned increase in inventory during Q3 FY 2026 to prepare for the expected surge in summer demand (Q1 FY 2026-27), ensuring we meet the new energy rating requirements without supply chain gaps.

Capital Expenditure (CapEx)

Investment remains a priority. We continued to ramp-up our Make-in-India capacity, specifically focusing on the localisation of Inverter Compressors and Motors. Our industryleading ROCE (Return on Capital Employed) continues to be among the highest in the consumer electronics sector, reflecting our high capital efficiency.

Outlook on Future Earnings

With the GST rate rationalisations on select energy-efficient appliances and a predicted strong summer of 2026, the Company expects a strong recovery in margins. We are strategically accelerating our B2B footprint in the hospitality and medical infrastructure sectors, which offer higher-margin opportunities compared to the traditional retail consumer market.

Other Financial Disclosures

No material changes and commitments were affecting the financial position of the Company which occurred between the end of the financial year (FY) to which this financial statement relates and as on the date of this Annual Report. During FY 2026, there was no amount proposed to be transferred to the Reserves.

Key Financial Ratios

Particulars	FY 2026	FY 2025	Explanations
Current Ratio	2.08	1.95	-
Debt-Equity Ratio	0.06	0.07	-
Inventory Turnover Ratio	8.21	8.98	-
Interest Coverage Ratio	57.66	97.69	There is a decrease in the interest coverage ratio by 40.98%, which is on account of a decrease in profit earned and an increase in interest payments on account of lease liability during the year.
Debtors turnover ratio	9.49	11.72	-
Operating Profit Margin	8.18%	11.20%	There is a decrease in Operating Profit Margin by 26.96%, which is on account of Forex and commodity head winds.
Net Profit Margin	6.76%	8.95%	-

Strategic Growth Roadmap (Outlook)

The Companys strategic priorities continue to be anchored around three key pillars - Make-in-India, Make-for-India, Make-India-Global - with a focus on strengthening domestic manufacturing capabilities, expanding export opportunities and broadening its presence across customer segments.

Under its Make-in-India strategy, the Company is scaling manufacturing operations at its Sri City facility to cater to both domestic and export demand. It also intends to deepen component localisation to reduce import dependency, strengthen supply chain resilience and support margin improvement over the long term.

Through its Make India Global initiative, the Company aims to position India as a key manufacturing and export base within

LGs global network. Leveraging Indias cost competitiveness and manufacturing scale, the Company is pursuing export opportunities across key international markets and neighbouring countries to support future growth.

The Make for India strategy remains focused on addressing evolving domestic consumer needs. The Company is expanding the reach of its Essential Series to improve accessibility to its products among first-time buyers, particularly across underpenetrated Tier-2 and Tier-3 markets. At the same time, it is scaling its B2B and Non-Hardware (AMC) businesses to diversify its revenue mix while increasing the contribution from higher-margin business segments.

HUMAN RESOURCES

The Companys people remain central to its long-term growth strategy. During FY 2026, LGE India continued to strengthen its human resource practices through a more personalised employee development approach aligned with its Affectionate Intelligence philosophy. Its people strategy was centred on three key pillars - Organisation & Capability, High-Potential Leadership and Future-Ready Culture - with a focus on building organisational capability, developing future leaders and enhancing employee experience.

Key HR Initiatives for FY 2026

- Talent Acquisition and Workforce Development:

To support the development of its new Rs 5,000 crore manufacturing facility at Sri City, the Company initiated talent acquisition activities aimed at building a skilled workforce for advanced manufacturing and automation- enabled operations. The project is also expected to generate direct and indirect employment opportunities.

- Learning and Capability Development: The Company continued to strengthen employee capabilities through structured leadership development and digital learning initiatives. During the year, specialised AI-focused technical training modules were introduced to equip factory teams with the skills required to support AI- enabled manufacturing operations.

- Diversity and Inclusion: The Company remained committed to fostering an inclusive workplace through its Growing Together mentorship programme for women in mid-management roles, supporting leadership development and career progression across the organisation.

- Employee Well-being and Experience: Employee wellbeing continued to remain a key focus, with initiatives aimed at promoting physical health, mental well-being and work-life balance. During the year, the Company further enhanced the employee experience through flexible working arrangements and expanded medical benefits for employees and their families.

Read more on page 65.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

As part of the LGE Indias ecosystem, the Company remains committed to conducting its business responsibly while creating long-term value for stakeholders. Its ESG approach is guided by environmentally responsible operations, meaningful social engagement and sound corporate governance, reflecting LGE Indias global sustainability principles.

Environmental

The Company continues to strengthen its environmental stewardship through initiatives focused on energy efficiency, sustainable manufacturing and responsible resource utilisation. As an early adopter of inverter technology in India, the Company has consistently focused on developing energy-efficient products that help reduce energy

consumption. It is also increasing the adoption of renewable energy across its manufacturing operations, including the installation of rooftop solar panels at its Greater Noida manufacturing facility.

Environmental conservation efforts extend beyond manufacturing operations through the development and maintenance of green spaces around production facilities and initiatives aimed at promoting environmental awareness and safer communities.

Social

The Companys social initiatives are guided by its Lifes Good When We Do Good philosophy and focus on improving community well-being through healthcare, nutrition, education and skill development.

Key initiatives include:

- Healthcare: Facilitating free cataract surgeries through the Karein Roshni initiative, operating community health centres and supporting local healthcare infrastructure.

- Nutrition: Supporting Government school children through the Lifes Good Nutrition programme by providing nutritious meals to underprivileged school to improve health, attendance and learning outcomes.

- Education: Providing financial assistance to deserving students through the Lifes Good Scholarship programme, with a special focus on supporting female students pursuing higher education.

- Skill Development: Expanding technical skill development through the LG Hope Technical Skill Academy initiative, which provides industry-relevant vocational training to enhance employability.

- Community Development: Supporting community

infrastructure and sanitation initiatives through collaborations with development partners.

The Company also promotes inclusivity through product innovations designed to improve accessibility, including Braille- enabled remote controls for visually impaired consumers.

Governance

The Company follows the corporate governance framework established by LGE India and remains committed to high standards of transparency, accountability and ethical business conduct. Its Board-centred governance structure is supported by an experienced and diverse Board, with independent directors contributing expertise across areas including public administration, finance, accounting and securities law. This governance framework supports effective oversight, responsible decision-making and long-term value creation for stakeholders.

Read more on page 111.

RISKS AND CONCERNS

The Company operates in a dynamic business environment where evolving market conditions, technological advancements and regulatory developments continue to shape the consumer electronics industry. The principal risks that could influence business performance are outlined below.

Risk Area	Potential Impact
Macroeconomic Conditions and Demand Volatility	Economic slowdown, inflationary pressures and weaker consumer sentiment may affect discretionary spending on consumer durables. Demand for seasonal products may also be influenced by festive cycles and weather conditions.
Competitive Intensity and Changing Consumer Preferences	Intense competition, rapid product innovation, and the growing preference for premium, energy-efficient and smart appliances require continuous product development to sustain market position.
Commodity Price and Foreign Exchange Volatility	Fluctuations in raw material prices and foreign exchange rates may increase input costs and affect profitability.
Supply Chain and Geopolitical Risks	Global supply chain disruptions, logistics challenges and geopolitical developments may affect the availability, cost and timely procurement of components and raw materials.
Technology and Innovation	Rapid technological advancements require continuous investment in research, product development and innovation to meet evolving consumer expectations and maintain competitiveness.
Regulatory and Compliance Changes	Changes in government policies, taxation, import duties, environmental regulations and product compliance requirements may influence operating costs and business operations.
Environmental and Sustainability Requirements	Increasing expectations around sustainability, resource efficiency and e-waste management may require additional investments in compliance and operational practices.
Investment and Margin Management	Continued investments in manufacturing, brand building, product innovation and distribution capabilities may place short-term pressure on margins while supporting long-term growth.

INFORMATION TECHNOLOGY AND DATA SECURITY

The Company continues to strengthen its digital capabilities through a secure and scalable information technology infrastructure that supports business operations across its manufacturing facilities, offices and sales network. Its technology ecosystem is designed to enable operational efficiency, safeguard business-critical information and support business continuity while aligning with evolving business and regulatory requirements.

Key Focus Areas

Digital Infrastructure

The Company leverages enterprise business software, office automation systems and cloud-based virtual desktop infrastructure to support seamless business operations across its offices and manufacturing facilities. Technology platforms are regularly upgraded to enhance system performance, scalability and data processing capabilities in line with evolving business requirements.

Cybersecurity

The Company has implemented multiple layers of security controls to protect its information systems and digital assets from unauthorised access and cyber threats. These include multi-level authentication, controlled system access, regular software patching, vulnerability assessments, malware protection and security reviews prior to system deployment.

Data Protection and Privacy

The Company operates its own data centre supported by physical and logical security measures to safeguard business information. Comprehensive policies govern data collection, processing, storage and disposal, while access controls and user activity monitoring help maintain data confidentiality and integrity. These policies are reviewed periodically to remain aligned with evolving regulatory requirements.

Business Continuity and Resilience

The Companys IT framework incorporates robust backup and recovery mechanisms together with defined fallback procedures for critical systems to support operational continuity and minimise disruption in the event of unforeseen incidents.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY

LGE India maintains a robust internal control framework commensurate with the size and complexity of its operations. The system is designed to ensure that all assets are safeguarded, transactions are authorised, and financial records are reliable for preparing the consolidated financial statements.

Components of Internal Control

- Financial Integrity: The Companys internal financial controls (IFC) are regularly tested by statutory auditors. For the period ending March 31, 2026, the systems were found to be effective, ensuring that the financial results are free from material misstatements.

- Audit Mechanism: The Audit Committee of the Board reviews the adequacy of internal control systems and monitors the implementation of audit recommendations.

- Digitalisation of Compliance: During FY 2026, the Company strengthened its compliance monitoring framework through the use of a compliance management

tool to track statutory and regulatory compliance across its operations. The tool facilitates timely monitoring o compliance requirements, including regulatory update: such as GST and the 2026 BEE Energy Labelling norms while improving compliance oversight and reducing the risk of manual lapses.

- Ethical Conduct: We maintain a strict Zero Tolerance policy toward unethical practices, supported by a robusi Whistleblower Policy and regular training on the LG Code of Conduct.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates expectations or predictions may constitute forward-looking statements within the meaning of applicable securities law: and regulations.

Actual results may differ materially from those expressed or implied in these forward-looking statements due to various factors, including, but not limited to:

- Economic Conditions: Changes in domestic or global economic conditions, including variations in economic growth, inflation, interest rates and consumer demand.

- Regulatory Environment: Changes in applicable laws, regulations, taxation, government policies, trade measures, environmental requirements or industry standards.

- Market Conditions: Competitive pressures, foreign exchange fluctuations, changes in raw material and component prices, technological developments and shifts in consumer preferences.

- Operational Risks: Supply chain disruptions, geopolitical developments, logistics challenges, availability of critical inputs and other operational factors that may affect the Companys business and financial performance.

The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Readers are cautioned not to place undue reliance on these statements.