Mangal Electrical Industries Ltd Management Discussions

GLOBAL ECONOMY

The global economy demonstrated resilience during FY26 despite persistent geopolitical uncertainties, evolving trade dynamics and a relatively high-interest rate environment across several advanced economies. According to the International Monetary Fund (IMF), global economic growth is estimated at approximately 3.1% in 2026, supported by moderating inflation, easing monetary conditions in select economies and resilient labour markets. While advanced economies continued to witness subdued growth amid slower industrial activity and fiscal consolidation, emerging and developing economies remained the principal drivers of global economic expansion.

Global investment priorities increasingly shifted towards long-term infrastructure development, manufacturing diversification and clean energy transition. Governments and private enterprises accelerated investments in electricity networks, renewable energy integration, industrial capacity expansion, transportation infrastructure and digital ecosystems to improve economic resilience and energy security.

The transition towards cleaner energy systems continues to reshape global power infrastructure requirements. Countries across North America, Europe, the Middle East and Asia are investing significantly in grid modernisation, renewable energy integration, transmission expansion and energy storage infrastructure. At the same time, rapid growth in data centres, electric mobility, industrial electrification and artificial intelligence-driven computing is substantially increasing electricity demand, creating sustained opportunities for transformer manufacturers and component suppliers worldwide.

INDIA ECONOMY

India continued to outperform most major economies during FY26, supported by resilient domestic demand, sustained public capital expenditure and strong macroeconomic fundamentals. According to the Ministry of Statistics and Programme Implementation, Indias real Gross Domestic Product (GDP) is estimated to have grown by 6.5% during FY26, reaffirming its position among the worlds fastest-growing major economies. The growth was primarily driven by robust performance across manufacturing, construction and services, supported by continued investments in infrastructure and industrial development.

The Governments continued emphasis on infrastructure creation, manufacturing competitiveness, energy security and power sector modernisation is strengthening Indias long-term growth trajectory. Large-scale investments in renewable energy, transmission corridors, distribution infrastructure and grid modernisation are expected to sustain demand across the electrical equipment value chain.

Indias long-term structural fundamentals remain compelling. Rapid urbanisation, industrialisation, digital transformation and rising electricity consumption continue to create sustained demand for reliable power infrastructure. Simultaneously, the Governments commitment towards renewable energy, transmission expansion and domestic manufacturing is creating significant opportunities for companies operating across the electrical equipment and power infrastructure value chain.

INDUSTRY OVERVIEW

Power Sector: Entering a Multi-Year Growth Cycle

Indias power sector is undergoing one of the most significant investment cycles in its history. Rising electricity demand, renewable energy integration, urbanisation, industrial expansion and grid modernisation are collectively driving unprecedented investments across the transmission and distribution ecosystem.

Peak power demand reached a record 256 GW during April 2026, reflecting the countrys rapidly growing energy requirements across residential, commercial and industrial consumers. Electricity demand is expected to continue growing steadily over the coming decade, supported by manufacturing expansion, increasing electrification, electric mobility and digital infrastructure.

To address this demand, the Government has outlined an ambitious roadmap under the National Electricity Plan, envisaging investments exceeding ^9 lakh crore in transmission infrastructure by 2032. These investments include development of new transmission corridors, expansion of substations, strengthening of inter-state transmission systems and integration of renewable power generation.

The countrys renewable energy ambitions further reinforce this investment cycle. India has targeted installation of 500 GW of non-fossil fuel energy capacity by 2030, requiring significant expansion of high-voltage transmission networks, substations and grid-balancing infrastructure. Every renewable energy project commissioned creates corresponding demand for transformers, transformer components, switchgear and related electrical infrastructure.

Consequently, the power equipment industry is transitioning from a replacement-driven market towards a structurally expanding market supported by sustained capacity additions.

Indian Transformer Industry

The transformer industry forms one of the most critical pillars of Indias electrical infrastructure. Transformers enable efficient transmission and distribution of electricity by regulating voltage levels across generation, transmission and consumption points.

Demand for transformers is being driven by multiple structural factors, including transmission network expansion, renewable energy integration, industrial capacity additions, urban infrastructure development and replacement of ageing electrical assets.

Industry estimates indicate that the Indian transformer market is expected to grow at a compound annual growth rate (CAGR) of approximately 8.2% between 2026 and 2031, supported by sustained investments in power infrastructure and favourable government policies.

Increasing electrification across transportation, commercial buildings, industrial facilities and data centres is creating demand for higher-capacity and technologically advanced transformers capable of supporting modern grid requirements. Simultaneously, utilities are increasingly prioritising energy-efficient transformers to minimise transmission losses and improve operational efficiency.

These trends are expected to drive demand across the entire transformer value chain, benefiting manufacturers of transformer components alongside finished transformers.

Transformer Components Industry

Transformer components represent a specialised segment of the electrical equipment industry requiring high levels of engineering precision, metallurgical expertise and manufacturing quality.

Products such as Cold Rolled Grain Oriented (CRGO) processed laminations, slit coils, amorphous cores, wound cores, toroidal cores, coil assemblies and circuit breakers directly influence transformer efficiency, reliability and operating life. As utilities increasingly focus on reducing transmission losses and improving energy efficiency, demand for precision-engineered transformer components continues to strengthen.

The industry is characterised by stringent qualification requirements, long customer approval cycles and high technical standards, creating significant entry barriers for new participants. Manufacturers possessing specialised processing capabilities, quality certifications and established customer relationships enjoy strong competitive positioning within this niche segment.

Increasing adoption of amorphous core technology, higher-efficiency transformers and premium electrical components is expected to further expand market opportunities over the coming years.

Industry Outlook

The long-term outlook for Indias transformer and power infrastructure industry remains highly favourable. Continued investments in transmission infrastructure, renewable energy integration, industrial expansion and export opportunities are expected to support sustained demand across transformer manufacturing and component processing.

For integrated players such as Mangal Electrical Industries Limited, which operate across transformer components, transformer manufacturing and EPC services, this environment presents opportunities to capture value across multiple stages of the power infrastructure value chain. The Companys specialised manufacturing capabilities, integrated operating model, technical certifications and diversified customer base position it well to participate in Indias next phase of power infrastructure growth.

BUSINESS OVERVIEW

Mangal Electrical Industries Limited is an integrated power infrastructure company with operations spanning transformer components, transformer manufacturing and EPC services. The Companys integrated business model enables it to participate across multiple stages of the transformer value chain, creating operational synergies and delivering comprehensive solutions for the power transmission and distribution sector.

The Company manufactures and processes a wide range of transformer components, including CRGO slit coils, transformer laminations, amorphous cores, coil and core assemblies, wound cores, toroidal cores, Immersed Circuit Breakers (ICBs) and Vacuum Circuit Breakers (VCBs).

Mangal manufactures transformers ranging from 5 KVA to 10 MVA and provides Engineering, Procurement and Construction (EPC) services for electrical substations and power transmission infrastructure. With a focus on quality, technical excellence and integrated manufacturing, the

Company is well positioned to support Indias growing power infrastructure requirements.

FINANCIAL PERFORMANCE SUMMARY

Particulars	FY26	FY25	Variance
Revenue (^ Crores)	579.68	549.42	5.51%
EBITDA p Crores)	68.35	81.84	-16.49%
EBITDA Margin (%)	11.79%	14.90%	-310 bps
Net Profit p Crores)	43.17	47.31	-8.74%
Net Profit Margin (%)	7.45%	8.61%	-116 bps
Net Worth p Crores)	590.37	162.16	264.06%
Debt p Crores)	45.43	149.12	-69.53%
Debt-Equity Ratio	0.08	0.92

REVENUE

Revenue from operations increased by 5.51% to ^579.68 Crores in FY26 from ^549.42 Crores in FY25. Growth was driven by higher volumes in the Transformer Components business and steady momentum in Transformer Manufacturing, partially offset by lower CRGO prices.

OPERATING PERFORMANCE

Margins were impacted by lower CRGO realizations despite healthy volume growth, along with intensified competition in the transformer business, which exerted pressure on pricing and profitability.

PROFITABILITY

Profit after tax stood at ^43.17 Crores, translating into a PAT margin of 7.45%. The Company maintained disciplined cost management while continuing to invest in capacity expansion.

ANALYSIS OF THE BALANCE SHEET Source of Funds

Net worth increased significantly to ^590.37 Crores as on March 31, 2026, primarily driven by the successful IPO and healthy internal accruals.

CAPITAL STRUCTURE

Total debt reduced from ^149.12 Crores to ^45.43 Crores, improving the debt-equity ratio from 0.92x to 0.08x, reflecting a stronger balance sheet following the IPO.

KEY BUSINESS DRIVERS

The Companys long-term growth is supported by multiple structural growth drivers:

Growth Driver	Impact
Expansion of transmission infrastructure	Sustained demand for transformers and components
Renewable energy integration	Increased requirement for substations and grid equipment
Grid modernisation	Higher demand for efficient transformers
Industrialisation & Urbanisation	Rising electricity demand
Government infrastructure spending	Long-term visibility for power equipment manufacturers
Export opportunities	Growing international demand for specialised transformer components

RISK MANAGEMENT

Operating in the power infrastructure sector presents both significant growth opportunities and evolving business risks. Mangal Electrical Industries Limited adopts a proactive approach to risk management by continuously identifying, assessing and mitigating key operational, financial and strategic risks. The Companys integrated business model, strong governance framework, diversified customer base and focus on operational excellence enhance its ability to manage uncertainties while supporting sustainable long-term growth.

The key risks and mitigation measures are outlined below.

Risk	Description	Mitigation
Raw Material Price Volatility	Fluctuations in CRGO, CRNO and other key raw material prices may impact margins and profitability.	Strategic procurement, inventory planning, diversified sourcing and operational efficiencies help manage input cost volatility.
Capacity Expansion Risk	Delays in commissioning new manufacturing facilities or scaling operations could affect future growth plans.	Structured project execution, phased capacity expansion and continuous monitoring of project milestones support timely implementation.
Customer Concentration	Revenue is dependent on continued business from key customers across the power infrastructure sector.	Long-standing customer relationships, diversified customer base and expansion into new customer segments reduce concentration risk.
Industry Competition	Increasing competition from organised and unorganised players may lead to pricing pressure and market share challenges.	Focus on quality, technical approvals, integrated manufacturing capabilities and customer service strengthens competitive positioning.
Regulatory & Policy Risk	Changes in government policies, environmental regulations or industry standards may impact business operations.	Continuous regulatory monitoring, strong compliance framework and adherence to industry standards ensure preparedness.
Foreign Exchange Risk	Imports of raw materials and export revenues expose the Company to currency fluctuations.	Foreign exchange risk is managed through prudent treasury practices, periodic review of exposures and appropriate hedging strategies, wherever considered necessary.
Execution Risk	Delays or cost overruns in EPC projects could affect operational and financial performance.	Experienced project management teams, disciplined execution and established monitoring systems support timely project delivery.
Technology & Quality Risk	Evolving industry standards require continuous investment in technology and quality systems.	Ongoing investments in manufacturing capabilities, automation, product development and quality certifications enhance operational excellence.

HUMAN RESOURCES

The Company recognizes that its human resources are a key driver of sustained growth and operational excellence. MEIL places strong emphasis on skill development, technical training, and continuous upskilling of employees to meet evolving industry requirements. Employee engagement initiatives are undertaken to foster a positive work environment and enhance productivity. MEIL believes in building an inclusive culture where trust, open communication and collaboration are encouraged, ensuring constant engagement of the employees.

During the year, the Company has implemented Greyt HR Human Resource Management System (HRMS) to digitalize and strengthen its human resource processes.

The Company is committed to maintaining high standards of safety, health, and well-being across its operations. A performance-driven culture is promoted through structured appraisal systems and recognition programs, while efforts are continuously made to retain skilled and experienced personnel.

As of March 31, 2026, the Company had 810 permanent employees on its rolls.

INTERNAL CONTROL & ITS ADEQUACY

The Company has established an adequate internal control framework commensurate with the size, scale, and complexity of its operations. The internal control systems are designed to ensure orderly and efficient conduct of business, safeguarding of assets, and compliance with applicable laws and regulations.

Key elements of the internal control system include a well-defined organizational structure, documented policies and procedures, and a comprehensive internal audit mechanism. The internal audit function regularly reviews operational and financial controls, and the findings are periodically placed before the Audit Committee for review and guidance.

These systems ensure the accuracy and reliability of financial reporting, enhance operational efficiency, and support effective risk management across the organization.

CAUTIONARY STATEMENT

The statements made in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be ‘forward-looking statements within the meaning of applicable securities laws & regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand, supply, and price conditions in the domestic & overseas markets in which the Company operates, changes in Government regulations, tax laws & other statutes, and other incidental factors. The Company assumes no responsibility in respect of forward-looking statements, which may be amended or modified in the future.