MIC Electronics Ltd Management Discussions

1. Introduction

MIC Electronics Limited remains a consequential participant in the Indian electronics landscape, anchored in Railway Signalling Systems, LED Displays, and a rapidly widening footprint in EV Chargers, defence-grade power electronics, and — with the proposed acquisition of Neo Semi SG Pte. Ltd., Singapore — semiconductor IP and smart-grid technologies. Financial Year 2025-26 was a year of deliberate transformation: the Company strengthened its core railway and display businesses while laying the groundwork for a vertically integrated presence spanning India, Singapore, and the UAE. This Management Discussion and Analysis (MD&A) report sets out our performance, material developments, prevailing industry conditions, and the strategic trajectory we are charting for the years ahead.

2. Industry Overview

Indias Railway Passenger Information Systems, LED Display, EV Charger, and — increasingly — semiconductor and smart-grid segments continued their sustained expansion during FY 2025-26, propelled by infrastructure capital expenditure, digitisation mandates, and the governments thrust towards electronics and semiconductor self-reliance. MIC Electronics has calibrated its portfolio to capture this convergence of opportunity.

Railway Passenger Information Systems (PIS)

- With over 8,000 stations and 12,000-plus trains in daily operation, Indian Railways remains among the largest and most complex rail networks on earth — and the accelerating rollout of Vande Bharat and Amrit Bharat services is pushing zonal railways to modernise passenger-facing information systems faster than at any point in the last decade.

- Analysts now peg the domestic PIS opportunity at roughly Rs550-600 crores, compounding at close to 15% a year, as station-level digitisation moves from pilot projects to network-wide mandates.

- Competition remains concentrated among a handful of credible players — Indian Railways own in-house engineering teams, Siemens, and MIC Electronics — and it is against this backdrop that the Company advanced work on IPIS V2.0, its next-generation platform, through the year.

LED Display Boards

- Smart Cities Mission and Digital India remain the two policy pillars underwriting demand in this category, with municipal and transit authorities steadily converting static signage into digital, centrally-managed displays.

- The category itself has scaled to an estimated Rs2,300-2,400 crores, expanding at close to 20% CAGR, with demand pulled from transit hubs, advertising networks, public messaging systems, and broader smart-city rollouts.

- Rivalry in this space cuts across scale — Indian manufacturers such as MIC Electronics compete directly with global names like Samsung and LG, making cost discipline and speed of deployment as important as product quality.

- EV Chargers

- Policy tailwinds — subsidies, stricter emission norms, and state-level EV mandates — continue to pull this category out of its early, fragmented phase and into more structured, tender-driven demand.

- The market has grown to an estimated Rs350-400 crores in size, with a CAGR near 30%, spread across 2/3/4-wheeler charging, residential and public infrastructure, and electrification of government fleets.

- The competitive set includes established infrastructure players — Tata Power, ABB, Siemens — alongside MIC Electronics, reflecting the segments growing strategic weight for larger industrial groups.

Semiconductors and Smart-Grid Technologies (emerging vertical)

- Indias push for semiconductor self-reliance — anchored by the India Semiconductor Mission and its associated incentive architecture — is creating a genuinely new category of domestic value creation that did not exist for companies of our scale even two years ago.

- Our proposed acquisition of a controlling stake in Neo Semi SG Pte. Ltd. — a Singapore-headquartered deep-tech platform working across semiconductor IP, AI-driven energy logistics, and IoT-enabled smart-grid systems — is designed to give MIC Electronics a direct foothold in exactly this opportunity, rather than watching it develop from the sidelines.

Trends and Opportunities

- Indian Railways broader digital transformation — IoT sensors, automation, centralised monitoring — is no longer optional infrastructure; it is becoming the baseline expectation for new tenders.

- Sustainability considerations are increasingly built into public procurement itself, not treated as an add-on, which favours suppliers who can demonstrate genuinely green manufacturing.

- Government programmes ? Make in India, the semiconductor mission, and allied schemes ? are actively widening the addressable market rather than simply protecting incumbents.

- There is meaningful headroom for locally-engineered innovation across PIS, LED displays, EV charging, and now semiconductor-adjacent products, particularly for a company willing to invest ahead of the curve.

Challenges

- Both domestic rivals and larger global players continue to compress pricing and shorten delivery timelines, keeping competitive intensity high.

- The absence of common technical standards across PIS and EV charging installations continues to complicate interoperability and slows down multi-vendor deployments.

- Our revenue base remains meaningfully tied to government and public-sector project cycles, which brings inherent lumpiness to order inflow and execution timing.

- Collection cycles on government and PSU-linked billing have stretched further this year ? a trend we are addressing directly rather than treating as background noise.

3. Product Portfolio (with RDSO/RCF approval & various stages of approvals)

MIC Electronics product portfolio spans Railway Passenger Information Systems, LED Display Boards, Emergency Light Units, Passenger Announcement & Passenger Information Systems (PAPIS), Remote Monitoring Processing Units, defence-grade power electronics, and EV charging infrastructure, with several products holding or progressing through RDSO/RCF approval stages. During FY 2025-26, the Company also diversified into scientific and laboratory infrastructure — evidenced by an order for laboratory furniture from Nava Raipur — and initiated the process of acquiring semiconductor IP and smart-grid capabilities through the proposed Neo Semi SG Pte. Ltd. transaction. These offerings are engineered to meet Indian Railways exacting quality benchmarks and have been deployed across multiple railway zones and urban infrastructure projects.

4. Financial Performance

In FY 2025-26, the Company recorded standalone total income of approximately Rs8,844.02 Lakhs, an increase of around 41% over the previous years total income of Rs6,294.68 Lakhs, reflecting stronger order execution across the railway and LED display businesses, particularly in the second half of the year. Profit before tax improved to approximately Rs1,600 Lakhs from Rs1,302.66 Lakhs in the previous year, evidencing genuine operating momentum. However, the Company recorded a net loss of approximately Rs1,300 Lakhs for the year, as against a net profit of Rs978.99 Lakhs in FY 2024-25, primarily on account of a tax charge arising from the utilisation and reversal of deferred tax assets recognised in earlier years, together with higher finance costs associated with working capital and the funding of strategic initiatives. As Managing Director, I want to be candid with our stakeholders: the underlying, operating business improved meaningfully this year; the reported bottom line was shaped by a largely non-cash, accounting-driven tax movement rather than by any deterioration in our core operations.

5. Strategic Initiatives

Key initiatives undertaken during the year include:

- Inorganic Growth: We secured board and shareholder clearance to acquire an 89.65% stake in Neo Semi SG Pte. Ltd., Singapore, in a Rs357.60 crore deal structured through a mix of cash and share-swap consideration — a deliberate step to plant our flag in semiconductor IP, AI-driven energy logistics, and smart-grid technology across Singapore, the UAE, and India, rather than build these capabilities from scratch.

- Capital Strengthening: To fund that acquisition without straining the balance sheet, we approved a preferential allotment of up to 5,68,73,418 equity shares, giving the Company the headroom it needs to pursue this and future growth commitments.

- Innovation: Work on IPIS V2.0 — our next-generation integrated passenger information platform for Indian Railways — moved forward steadily, backed by continued R&D investment in LED displays and signalling technology more broadly.

- Diversification: We opened up adjacent revenue lines, notably laboratory and scientific infrastructure, as a conscious hedge against over-reliance on any one business vertical.

- Operational Excellence: Lean manufacturing practices and tighter supply-chain management remained a management priority, aimed squarely at improving cost efficiency and our ability to scale without proportionate cost increases.

6. Challenges and Mitigation Strategies

Despite our progress, we encountered several operational and external challenges during the year. These include:

- A crowded, price-sensitive competitive field

- The constant risk of being overtaken by faster-moving technology

- Shifting government policy and procurement priorities

- Volatility in raw material costs

- Slippage in timelines on government-funded projects

- Working capital getting tied up for longer as receivable cycles stretch

- Rising environmental compliance obligations

- Attracting and retaining specialised engineering talent

- Cybersecurity exposure across increasingly connected systems

- Maintaining consistent quality standards at scale

- Currency and demand volatility in export markets

- The constant pressure to keep innovating rather than standing still

- Disruptions across the supply chain

- The execution risk that comes with integrating a cross-border acquisition

Here is how we are responding to each of these:

- Pushing further into niche, higher-margin products backed by deeper R&D investment.

- Staying at the table with policymakers and industry bodies rather than reacting after the fact.

- Widening our supplier base and holding stronger inventory buffers to absorb shocks.

- Embedding sustainability into manufacturing rather than treating it as a compliance checkbox.

- Rolling out milestone-linked billing and firmer collection discipline to bring receivable days back down.

- Continuing to invest in our people — both development and retention.

- Hardening our cybersecurity posture through infrastructure upgrades and regular audits.

- Holding the line on quality management systems across every plant and project.

- Standing up a dedicated integration team specifically for the Neo Semi transaction.

- Continuing to grow our footprint across both domestic and global markets.

7. Future Outlook

MIC Electronics is strategically positioned to capture emerging opportunities across Railway Passenger Information Systems, LED Displays, EV Chargers, and following completion of the Neo Semi SG transaction semiconductor IP and smart-grid solutions. Moving forward, we plan to focus on:

- Semiconductor Integration: Bring the Neo Semi SG acquisition to completion and get it fully operational, so that our India-Singapore-UAE platform functions as one integrated business rather than three separate pieces.

- Market Expansion: Push further into new geographies and adjacent sectors, with particular emphasis on deepening our Middle East presence through our Dubai subsidiary.

- Technological Advancements: Keep pace with IoT-integrated, smart-infrastructure demand, with the IPIS V2.0 rollout as our flagship proof point for where digital infrastructure is heading.

- Margin Improvement: Turn the operating momentum built through FY 2025-26 into a bottom line that reflects it sustainable, tax-adjusted profitability, not just top-line growth.

- Sustainability: Keep pushing eco-friendly practices deeper into manufacturing and product design, rather than treating it as a one-time initiative.

8. Internal Financial Control Systems and their Adequacy

MIC Electronics maintains robust internal financial control systems covering all key operational areas, including equipment procurement, finance, marketing, human resources, and administration. Given the scale and cross-border nature of the Neo Semi SG transaction, the Company has additionally strengthened controls around acquisition due diligence, treasury, and foreign-entity reporting. These systems are continuously monitored and reviewed by the Audit Committee to ensure operational integrity, risk mitigation, and regulatory compliance.

9. Financial Review

The highlights of financial and operational performance are presented below: (in Rs. Lakhs)

Particulars	2025-26	2024-25	2023-24
Total Income	8844.02	6294.68	5656.61
Total Expenditure	7223.33	4992.03	4545.24
Profit before Tax	1620.69	1302.66	1773.34
Deferred Tax (Asset)	(2931.34)	(323.66)	4410.54
Profit after Tax	(1310.65)	978.99	6183.88
Other Comprehensive Income	(14.81)	(13.69)	0.35
Transfer to General Reserve	-	-	--
Profit available for Appropriation	(1325.46)	965.30	6184.23
Provision for Proposed Dividend	-	-	--
Provision for Corporate Tax	-	-	--

10. Conclusion

MIC Electronics enters the new financial year with a strengthened operating base and a clear inorganic growth vector through the proposed Neo Semi SG acquisition. FY 2025-26 demonstrated genuine improvement in our core railway and LED display operations, even as a non-cash tax movement weighed on reported profitability. With disciplined execution, a widening product portfolio, and an expanding geographic footprint across India, Singapore, and the UAE, the Company is well positioned to convert this years strategic groundwork into sustained value creation for all stakeholders. This MD&A outlines our key achievements, strategic focus areas, and readiness for the opportunities and challenges that lie ahead.

By order of the Board

For MIC Electronics Limited

Kaushik Yalamanchili

Managing Director

DIN: 07334243

Sivanand Swamy Mitikiri

Whole-time Director

DIN: 10166966

Date: July 31, 2026

Place: Hyderabad