Mercury EV-Tech Ltd Management Discussions

INDUSTRY STRUCTURE & DEVELOPMENT

Mercury EV-Tech Limited is engaged in the business of Manufacturing and Trading of Electronic vehicles and other related renewable energy products.

The electric vehicle (EV) market continued to witness significant growth, fueled by rising environmental awareness, supportive government policies, rapid technological advancements, and notable improvements in battery technology. Both established automotive manufacturers and emerging players increased their investments in EV development to capitalize on the growing demand. Advances in battery technology-particularly in energy density, charging efficiency, and cost reduction-played a pivotal role in enhancing the viability and mass adoption of EVs. Additionally, the environmental advantages of electric vehicles, including lower greenhouse gas emissions and reduced urban air pollution, remained key drivers behind their increasing acceptance and deployment.

Indias Two-Wheeler Industry - FY2025 Highlights:

• Overall Growth: The 2W industry grew by approximately 7.5% YoY, supported by a strong rural recovery.

• Electric Two-Wheelers (E2W): o Volume Growth: E2W segment expanded by ~22% YoY.

o EV Penetration: Increased to 6.1% (up from 5.4% in FY2024), reflecting a steady shift towards sustainable mobility.

The central government has announced a number of promotional measures in the previous ten years, including tax incentives for electric vehicle owners, public EV charging infrastructure development, and so on

Scheme / Policy	Description & Status
FAME India (Phase II)	Purchase incentives for E2Ws; subsidy cut from Rs.15k to Rs.10k/kWh from June 2023
PM E DRIVE	National EV subsidy program; 50% target reached for E2Ws/E3Ws; extends to March 2028 but E2W/3W subsidies to end as planned
PLI for EV & Battery
Manufacturing	Production incentives to boost domestic manufacturing and job creation
GST & Tax Relief	Lower GST, road tax, registration fees; interest deductions for EV loans
Infrastructure Investment	Government support for charging stations, supply chains, addressing range anxiety

SEGEMENT WISE PERFORMANCE

Our Companys operations belong to a single segment and therefore no segment wise performance given.

OPPORTUNITIES AND THREATS

Opportunities

1. Environmental Awareness

Rising concerns over air pollution and climate change are encouraging both consumers and governments to pursue greener transportation alternatives. This shift presents a strong opportunity for EV manufacturers to position their products as sustainable solutions.

2. Technological Advancements

Rapid progress in battery technology, materials science, and electric drivetrains is enabling improvements in vehicle range, charging speed, efficiency, and overall performance-making EVs more appealing and practical.

3. Government Incentives

Central and state governments are offering a range of incentives-such as tax credits, purchase subsidies, and registration exemptions-to support EV adoption. These incentives lower the effective purchase price, helping to accelerate market penetration.

4. Charging Infrastructure Expansion

The growing focus on establishing widespread public and private charging infrastructure presents investment opportunities for charging solution providers and supports consumer confidence in EV usage.

5. Emerging Mobility Models

The integration of EVs into new-age mobility services-such as ride-hailing, subscription models, and autonomous transport-opens doors for companies to diversify and innovate in service delivery.

6. Supply Chain and Manufacturing Optimization

The growing demand for EVs creates opportunities in the upstream supply chain, including battery cell manufacturing, recycling, and raw material sourcing. Companies that enhance operational efficiency and localize supply chains can gain a competitive edge.

7. Diversified Vehicle Platforms

The adaptability of electric powertrains to a range of vehicle categories-from two-wheelers to commercial vehicles-enables manufacturers to expand their product portfolios and target multiple customer segments.

8. Growing Consumer Demand

Increasing consumer interest in sustainability, coupled with greater awareness and exposure to EV benefits, is expected to drive consistent demand growth across urban and rural markets.

Threats

1. Inadequate Charging Infrastructure

A lack of reliable and widespread charging stations, especially in tier-2 and rural areas, continues to be a major barrier to adoption, contributing to range anxiety and limiting usage confidence.

2. Competition from ICE Vehicles

Internal combustion engine (ICE) vehicles still dominate in terms of affordability, refueling convenience, and established service networks. This poses a significant competitive challenge to EVs, especially in cost-sensitive markets.

3. High Upfront Cost

Despite subsidies, the initial purchase price of EVs-particularly for models with higher range and performance-can still be a deterrent for value-conscious consumers.

4. Consumer Mindset and Behavioral Barriers

Resistance to change, concerns about charging time and vehicle performance, and limited awareness about total cost of ownership may slow consumer adoption in some segments.

5. Regulatory Uncertainty

Fluctuating government policies, potential subsidy rollbacks, and evolving safety or compliance regulations may impact long-term industry planning and investor confidence.

RISK CONCERNS

• Infrastructure Challenges: o Need for significant investment in charging infrastructure to meet growing demand o Potential for infrastructure gaps to hinder business operations and customer adoption

• Raw Materials Scarcity o Risk of raw materials shortages affecting battery production and supply chains o Environmental concerns related to mining and processing of these materials o Need for sustainable and responsible sourcing practices to mitigate risks

HUMAN RESOURCES

At Mercury EV-Tech, we recognize that our employees are the cornerstone of our success and integral to meeting our long-term business success goals. We are committed to investing in our people, providing them with the right set of skills, opportunities and an enabling environment to thrive. Company has maintained cordial and harmonious relations with employees across various locations. At the core of our success are our people and have been working towards keeping them engaged and inspired.

Internal Control System and its adequacy

The Company has adequate system of internal control commensurate with its size and operations to ensure orderly and efficient conduct of the business. These controls ensure safeguard of assets, reduction and detection of frauds and error, adequacy and completeness of the accounting record and timely preparation of reliable financial information.

FINANCIAL AND OPERATIONAL PERFORMANCE

The financial performance of the Company for the year 2024-25 is described in the Directors Report.

CAUTIONARY STATEMENT

Statement made in this report describing the Companys objectives, projection, estimates and expectations may be forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting the Markets in which company operates; changes in the Government regulations; tax laws and other statutes and incidental factors.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including: Details of significant changes in key Financial ratios is given in the Notes to financial statements attached herewith.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING:

Name of Ratio	2023-24		2024-25		% change	Reason of change
Debtors Turnover Ratio	1.92		2.87		125.14 %	The increase in Trade Payable Turnover Ratio is the combined effect of enhanced liquidity and conscious decision of the Company to expedite payments to suppliers, thereby reducing reliance on extended credit.
Inventory Turnover Ratio	3. 06		6.13		100.33%	The increase in Inventory Turnover Ratio is a result of both higher sales and improved inventory management, which has enabled faster conversion of stock into revenue and reduced holding costs.
Interest Coverage Ratio	19.24		25.75		33.81 %	The increase in Interest Coverage Ratio is on account of improved operating profitability coupled with reduction in finance cost, thereby strengthening the debt- servicing capability of the entity.
Current Ratio	5.3		16.71		215.42 %	The increase in Current Ratio is primarily on account of higher current assets during the reporting period, mainly arising from increase in trade receivables and inventory levels, coupled with higher cash and bank balances, as compared to the corresponding period.
Debt Equity Ratio	0.29		0.01		-96.95 %	The reduction in Debt-Equity Ratio is attributable to repayment of term loans and short-term borrowings as well as infusion of fresh equity capital. This combined effect has improved the capital structure and reduced the Companys dependence on external debt.
Operating Profit Margin Ratio		16.98	12.80	-24.64 %		The reduction in Operating Profit Margin is attributable to higher production and overhead costs incurred consequent to commencement of manufacturing operations, as initial stages of production generally involve higher input cost, under- utilisation of capacity and setup- related expenses.
Net Profit Margin Ratio		11.43	9.44	-17.41 %		Profit Margin in the business has increased and hence the Ratio of Net margin has been decreased

For and On Behalf of Board Of Directors
Mercury EV-Tech Limited
Sd/-
JAYESH RAICHANDBHAI THAKKAR	PLACE- VADODARA
CHAIRMAN AND MANAGING DIRECTOR
(DIN - 01631093)	DATE- 20.11.2025