Permanent Magnets Ltd Management Discussions

GLOBAL ECONOMY OVERVIEW

The global economy in 2025 is characterized by heightened uncertainty, and persistent risks stemming from trade tensions, geopolitical instability, and inflationary pressures. The IMFs April 2025 World Economic Outlook and the

World Banks Global Economic Prospects report both highlight that global GDP growth is expected to remain below historical averages. The World Bank projects a steady but modest global growth rate of 2.7% for both 2025 and 2026, while the IMFs forecasts have been revised downward to 2.8% for 2025, reflecting a 0.5% drop from earlier projections. The OECDs March 2025 Interim Economic Outlook is similarly cautious, predicting global growth of 3.1% in 2025 and 3.0% in 2026, noting that this represents a deceleration from 2024 and remains well below pre-pandemic trends.

This slowdown is broad-based, affecting both advanced and emerging economies. The United States, after a period of strong performance, is forecast to see its growth rate drop to between 1.6% and 2.2% in 2025, with concerns related to elevated tariffs, policy uncertainty, and declining consumer sentiment. Chinas growth is projected to slow further, with estimates ranging from 4.0% to 4.4% for 2025, reflecting the impact trade of disruptions and domestic challenges. The eurozone faces even weaker prospects, with growth expected to hover around 0.8% to 1.0%. In contrast, India stands out as a bright spot, maintaining its position as the fastest-growing major economy, with growth projected between 6.2% and 6.3% for 2025, driven by robust private consumption and public investment.

Indias GDP is projected to grow at 6.2% in 2025 and 6.3% in 2026, retaining its position as the fastest-growing major economy despite downward revisions from earlier forecasts.

The underlying causes of this outlook are multifaceted. Trade tensions-most notably between the US and

China-have led to a sharp escalation in tariffs, disrupting global supply chains and thereby raising production costs. Although recent developments have seen some de-escalation in tariffs and temporarily eased market fears, the economic damage from earlier disruptions is expected to linger, and business sentiment remains fragile. The IMF notes that economic uncertainty is now higher than at any point during the COVID-19 pandemic, with businesses delaying or scaling back investment decisions due to unpredictable policy environments and volatile geopolitics.

Inflation, while moderating in some regions, continues to be a concern. The OECD reports that headline inflation in G20 economies is projected at 3.8% in 2025, with underlying inflation likely to remain above central bank targets in many countries. This persistent inflation, combined with high public debt limits the capacity of policymakers to respond to new shocks and complicates the path to sustainable recovery.

Emerging market and developing economies face a particularly challenging environment. While some regions, such as South Asia and parts of Africa, are expected to see growth supported by domestic demand, the overall pace of per capita income convergence with advanced economies has slowed markedly. In many low-income countries, per capita income is projected to fall further behind, reversing decades of progress in poverty reduction.

In summary, the global economic outlook for 2025 is one of cautious stabilization at a low growth rate, overshadowed by significant downside risks. Trade policy uncertainty, geopolitical fragmentation, persistent inflation, and high debt levels are all compounding the challenges facing policymakers. Decisive action to safeguard trade, address debt vulnerabilities, and promote inclusive growth is urgently needed to prevent further deterioration and to lay the groundwork for a more resilient global economy in the years ahead.

Source: IMF, World Bank, OECD

The Indian economy in 2025 remains a global standout, navigating a complex international environment marked by trade tensions and subdued growth. According to the IMFs April 2025 World Economic Outlook, Indias GDP is projected to grow at 6.2% in 2025 and 6.3% in 2026, retaining its position as the fastest-growing major economy despite downward revisions from earlier forecasts. This resilience is attributed to robust domestic demand, stable private consumption, and strategic public investment, even as global growth slows to 2.8% amid tariff wars and policy uncertainty.

Private consumption, particularly in rural areas, continues to anchor economic expansion, supported by easing inflation and rising incomes. The services sector remains the fastest-growing segment, expanding at 7.2% in FY25, driven by IT, finance, and hospitality. Agriculture, bolstered by record Kharif production and government support, is projected to grow at 3.8%, while industry and manufacturing face headwinds from weak global demand, growing at 6.2%. Notably, Indias electronics manufacturing sector has achieved near self-sufficiency in smartphones, reducing import dependence.

Headline inflation is expected to moderate to 4.2% in FY26, within the Reserve Bank of Indias (RBI) target range, allowing for a cautious monetary easing cycle that began in February 2025. The RBIs policy rate, held steady at 6.5% since 2023, reflects a balanced approach to sustaining growth while managing price stability.

The Economic Survey 2024-25 underscores Indias focus on smart manufacturing and Industry 4.0, with initiatives like SAMARTH Udyog centres enhancing industrial competitiveness. Public investment in infrastructure and digitalization continues to drive job creation, with over 8 crore jobs generated between 2017 2022. The governments fiscal consolidation efforts, alongside reforms under IMF-supported programs, aim to stabilize debt levels while prioritizing inclusive growth.

Despite its resilience, India faces challenges from global geopolitical instability, including supply chain disruptions due to the Red Sea crisis and fluctuating commodity prices. The UNs mid-2025 report revises Indias growth to 6.3%, highlighting persistent gender disparities in employment and the need for greater workforce inclusivity. However, Indias demographic dividend, coupled with a projected 6.5% growth in FY26 (RBI estimate), positions it to overtake Japan and Germany as the third-largest economy by 2030.

In summary, Indias economy in 2025 exemplifies cautious optimism, balancing domestic strength against external volatility. While trade tensions and inflation risks persist, sustained consumption, strategic reforms, and a dynamic services sector provide a foundation for long-term growth. As the IMF notes, Indias ability to maintain momentum amid global headwinds reinforces its pivotal role in driving global economic recovery.

Source: IMF, World Bank, RBI

The global EV market presents a new portrait of the electric vehicle (EV) revolution as it enters a new phase of mainstream adoption and global impact. As per IEA, more than one in four cars sold worldwide in 2025 is expected to be electric, with global EV sales on track to surpass 20 million units - a new record and a testament to the rapid acceleration of the sector. This rise follows a year in which electric car sales stood at ~17 million in 2024, pushing the global stock of electric cars to nearly 58 million, or 4% of the total passenger car fleet by the end of that year. The momentum is not limited to passenger cars: two-wheelers and three-wheelers remain the most electrified accounting for over 9% of the global fleet, with China, India, and Southeast Asia dominating this space.

China continues to lead the global EV market, with electric cars making up nearly half of all new car sales in 2024. The countrys dominance is particularly pronounced in the two-wheeler and three-wheeler segment. Policy support such as Indias PM E-DRIVE scheme, is credited with sustaining its growth trajectory. Meanwhile, other regions are rapidly catching up: electric car sales in emerging Asian and Latin American markets jumped by over 60% in 2024, reaching almost 600,000 units-comparable to the size of the European market just five years prior.

The implications for global energy and oil demand are profound. The IEA estimates that EVs displaced over 1 million barrels per day (mb/d) of oil consumption in 2024, and projects that by 2030, EVs will displace more than 5 mb/d under current policy settings. This shift is already reshaping the oil market and strengthening energy security in major economies. In Norway, for example, the near-total electrification of new car sales has led to 12% drop in road oil demand since 2021, while Denmark saw EVs reach 56% of new car sales in 2024. The trend is underpinned by the falling cost of batteries, expanded charging infrastructure, and strong policy frameworks, even as economic headwinds and trade tensions persist.

Looking ahead, the IEA projects that under todays policies, EVs will account for more than 40% of all car sales by 2030, up from just over 25% in 2025. The continued growth of the EV market is expected to further reduce oil demand, with passenger cars and light-duty vehicles driving most of the shift, though electric trucks and buses are set to play a larger role of road transport, now as battery technology and infrastructure improve. Despite uncertainties - including the potential impact of lower oil prices and slower economic growth - the outlook is clear: the global EV transition is well underway, transforming the automotive industry, reducing emissions, and setting the stage for a more sustainable and energy-secure future.

Source: IEA

Smart meters have emerged as sophisticated electronic devices that play a critical role in recording essential data related to electricity consumption, including voltage, current, and power factor. These meters not only provide consumers with detailed insights into their energy usage patterns but also enable utility providers to monitor systems and ensure accurate billing. The global smart meter market is projected to reach approximately USD 42.17 billion by 2029, growing at a Compound Annual Growth Rate (CAGR) of over 9% from USD 29.29 billion in 2025.

The global adoption of smart meters has been on a consistent upward trajectory, with the United States leading the transition-approximately 94% of its metering systems have already shifted to smart meters. In Canada and the European Union, penetration rates stand at about

96% and 63%, respectively, while Australia has achieved around 57% adoption. In contrast, smart meters constitute only a small share of the Indian market, highlighting substantial growth potential. Worldwide, government policies are actively encouraging the implementation of Advanced Metering Infrastructure (AMI) to drive automation and technological progress, presenting significant opportunities for expansion, particularly in regions where smart meter adoption remains low.

One of the enduring challenges in the power distribution and supply sector is the effective alignment of electricity demand and supply. Smart electricity meters are poised to address this issue by significantly improving operational efficiency across the industry. These devices offer consumers benefits such as prompt fault detection, expedited service response, and precise billing. For utility companies, smart meters reduce dependence on manual meter readings, lower equipment, and maintenance costs, and facilitate faster restoration and maintenance efficiently operations. Additionally, they enable utilities to monitor and mitigate power losses and theft with greater accuracy.

Moreover, smart meters support the integration of distributed energy resources and energy storage systems, enhancing supply management for applications such as residential electric vehicle (EV) charging. This level of automation leads to increased operational efficiency, improved grid resilience, and highly accurate meter readings. Looking ahead, the expansion of the smart metering industry is expected to be driven by the development of smart grid networks and supportive regulatory frameworks. These initiatives not only promote the replacement of outdated metering infrastructure with advanced technologies but also contribute to overall improvements in energy supply and consumption efficiency. In the long term, consumers will be empowered to adjust their energy usage in response to time-based pricing, while utility providers can optimize capacity utilization, resulting in more rationalized tariffs and enhanced resource management.

The North American market is expected to experience robust growth in smart electric meter adoption, propelled by both the replacement of legacy meters and the deployment of new smart meters. Europe has also demonstrated strong growth, largely due to the rising integration of renewable energy sources. While the Middle East & Africa and Latin America currently exhibit lower levels of smart meter penetration, countries such as Brazil, Mexico, South Africa, and those in the GCC are anticipated to see significant expansion in the coming years.

Source: Straits, Brightly, Electronics media, Energy Networks, RDSS

The landscape of smart electricity metering in India is undergoing a transformative shift, driven by the Government of Indias ambitious Revamped Distribution Sector Scheme (RDSS). Launched in July 2021 with a substantial outlay of 3,03,758 crore, including 97,631 crore in government budgetary support, the RDSS is a reform-based, results-linked initiative targeting the operational efficiency and financial sustainabilityof power Indias distribution companies (DISCOMs) over a five-year period from FY2021-22 to FY2025-26. The schemes central aim is to reduce Aggregate Technical & Commercial (AT&C) losses to 12 15% and eliminate the gap between the Average Cost of Supply (ACS) and Average Revenue Realized (ARR) by 2024-25, thereby improving the quality, reliability, and affordability of electricity supply for consumers.

The RDSS is structured around two primary components: metering and distribution infrastructure. The metering component focuses on the widespread deployment of prepaid smart meters for consumers, as well as system meters at feeder and distribution transformer levels, all equipped with advanced communication features. These smart meters are to be implemented predominantly in a Public-Private Partnership (PPP) mode, leveraging the TOTEX (total expenditure) model, which ensures that a single agency is responsible for supplying, maintaining, and operating the metering infrastructure under long-term contracts. This approach not only facilitates real-time energy accounting and auditing but also enables DISCOMs to access granular, actionable data for loss reduction, demand forecasting, time-of-day tariff implementation, and renewable energy integration through advanced analytics and artificial intelligence.

The distribution infrastructure component, meanwhile, supports modernization measures such as the installation of Supervisory Control and Data Acquisition (SCADA) systems, feeder separation (especially for agricultural consumers), and the strengthening of substations and urban networks with technologies like aerial bunched cables.

Financial assistance under RDSS is strictly performance-linked, with annual appraisals based on predefined benchmarks such as AT&C loss reduction, ACS-ARR gap closure, infrastructure upgrades, and improvements in consumer services and governance. DISCOMs must achieve at least 60% on these performance metrics and meet minimum thresholds to remain eligible for funding in any given year. The scheme also includes a robust capacity-building and training component to ensure effective implementation and sustainability of reforms. The impact of RDSS on Indias smart metering landscape is significant but has faced challenges in execution. As of 1st May 2025, the government had sanctioned approximately 223 million smart meters, awarded contracts for 138 million, and successfully installed around 28 million meters - a figure that, while substantial, falls short of the original targets due to delays in tendering, testing, and consumer onboarding. The Ministry of Power has acknowledged these challenges, noting the need for a two-year extension of the scheme to FY2027-28 to ensure full realization of its objectives. Despite these hurdles, the daily installation rate has accelerated to over 80,000 meters, with expectations to reach 100,000 per day, signalling an increasing momentum in deployment.

The anticipated benefits of the RDSS and the smart metering drive are multifaceted. For consumers, smart meters offer greater empowerment through real-time monitoring and management of electricity consumption, improved billing accuracy, and enhanced service reliability. For DISCOMs, the adoption of smart metering is projected to curb power theft, reduce technical and commercial losses, and improve billing and collection efficiencies, potentially saving nearly 10,000 crore annually according to Ministry of Power estimates. The scheme also supports broader policy goals such as the integration of renewable energy, better peak load management, and the implementation of innovative tariff structures. Ultimately, RDSS is positioned as a cornerstone of Indias energy transition, aiming to create a financially robust, technologically advanced, and consumer-centric power distribution system that can support the countrys growing energy needs and sustainability ambitions.

Established in 1960, Permanent Magnets Limited (PML) brings over six decades of expertise to the field of magnets, magnetic assemblies, and shunt technologies. The Company stands as a premier provider of advanced electrical components and assemblies, leveraging core technological capabilities that serve a diverse range of industries - including automotive, energy metering, renewable energy, aerospace, and defence, as well as food and beverage.

PML has developed specialized proficiency across 5 principal product categories: magnetic sensing, current sensing, magnetic assemblies, special alloys, and multislide ZAMAK die-casting. Through these domains, the Company consistently delivers a multitude of bespoke, customer-specific solutions tailored to complex and evolving industry needs.

The Companys deep-rooted expertise spans metallurgy, mechanical and electrical engineering, and electronics, enabling PML to offer holistic and innovative solutions to its clients. Decades of industry presence have endowed PML with a nuanced understanding of stringent quality standards and customer expectations.

PMLs capabilities extend to advanced design and simulation of components and modules, including rapid prototyping for client-specific applications. The

Company excels in working with a variety of metals and metallurgical processes and employs cutting-edge manufacturing technologies such as assembly and finishing processes, hot chamber die-casting, and precision plastic moulding.

Collaborating closely with a prestigious global clientele - many of whom are leaders in their respective sectors - PML often serves as one of only two or three suppliers for specialized products and is the exclusive supplier for several key customers. PML is a preferred partner for ~50% of the worlds tier-1 automotive manufacturers, supplying components for both conventional internal combustion engine (ICE) vehicles and next-generation electric vehicles (EVs). Additionally, PML is a trusted supplier to the top 3 electricity meter manufacturers globally, maintaining robust, long-term relationships and a leading position within this segment.

PMLs total income for the year rose to 209.21 Crores, up from 205.93 Crores in the previous financial year, representing a modest 2% year-on-year increase. EBITDA (excluding other income) stood at 30.44 Crores, compared to 34.36 Crores last year, reflecting an 11% year-on-year decline. Consequently, the EBITDA margin decreased to 15% in FY25 from 17% in the previous year. Profit After Tax for the year was 15.75 Crores, down from 20.20 Crores in the previous year, marking a 22% year-on-year decrease.

FY25 was a year of consolidation and transition for PML, as the Company navigated subdued performance in several key business segments. Despite registering a modest 2% growth in revenue, profitability was impacted by margin compression, largely due to changes in product mix and an increase in operating expenses driven by developmental costs and one-off charges.

The Electric Vehicle (EV) segment, PML is actively diversifying its customer base and strengthening its presence in India, with ongoing engagements with tier-1 suppliers to leading Indian EV OEMs. Within the domestic smart meters business, PML has expanded its product portfolio with the addition of "Latching Relays" through a licensing agreement, and has initiated CAPEX to commence relay manufacturing in H2FY26. This move is expected to enhance the addressable market and provide a domestic alternative for metering companies for this crucial product category.

In the Alloys business, while commercial off-slower than anticipated, recent order inflows and the achievement of AS 9100D:2016 certification for the alloys facility have opened new opportunities in aerospace, aviation, and defence. Capacity expansion plans, including the addition of a new furnace by December, are underway to support anticipated demand.

In our subsidiary, Quantum Magnetics, the scale-up of commercial business was constrained by global supply challenges for rare-earth magnets. This has reinforced the strategic importance of domestic manufacturing and supply-chain capabilities, and PML is advancing plans to address these needs.

Looking ahead, PML believes that the strategic initiatives undertaken across its business segments — including product additions, capacity expansions, and customer diversification will position the company for a rebound and drive growth in the coming years.

RISK AND CONCERNSwas

The Companys products are integral to a range of industries, including smart metering systems, automotive, telecommunications, and gas metering, among others. Given the rapid and varied pace of change within these sectors, there is an inherent risk that certain products - whether modules or components - may enter maturity or end of life cycle phases, potentially leading to reduced revenues. It is essential for the Company to remain vigilant and proactively adapt to such industry trends, as these shifts could materially impact future performance.

Macroeconomic risks arise from adverse economic conditions that can influence market dynamics, credit availability, liquidity, and the broader financial and capital markets. Fluctuations in money and capital markets may affect interest rates and borrowing costs, thereby impacting the Companys operational activities and financial exposure

The continuous emergence of new technologies within the Companys application industries poses a risk of technological obsolescence. Evolving technological trends may render existing electrical components and modules outdated, both within the Companys own sector and in the industries it serves. Such developments could adversely affect the Companys competitive position and future performance.

Intensifying competition - particularly from companies offering superior pricing, advanced technology, quality, broader product variety, or enhanced services and facilities - may negatively influence the Companys sales revenue and profitability

With products deployed across multiple industries and jurisdictions, the Company must comply with a diverse array of product and quality standards. Any unfavourable changes in regulations or policies within the jurisdictions where the Company operates could adversely affect its business performance.

As the Company engages in both the export of finished products and the import of certain raw materials, fluctuations in foreign exchange rates may have a material impact on its financial results and overall business operations.

There are established procedures for internal control on a Company-wide basis. Policies and procedures have . been laid down to provide reasonable assurances that assets are safeguarded from risks of unauthorised use/ disposition, and transactions are recorded and reported with proprietary accuracy and speed. These aspects are regularly reviewed during internal audits and statutory audits. In addition, the Company has also laid down adequate internal controls for financial reporting. During the year, such controls were tested, and no material weakness in their operating effectiveness was observed. The Finance and Accounts function is well-staffed with experienced and qualified personnel, and this team participates in the preparation and monitoring of budgets. The Audit Committee of the Board reviews internal Audit Reports periodically.

higher The Company believes that the motivation of employees is the key to its success. It is committed to equipping them with the required training and skills, enabling them to evolve with technological advancements and achieve financial goals. The Companys HR department was consistently in touch with the employees to guide and solve their problems. The Companys permanent employee strength stood at 155 as of March 31, 2025.

Statements in the Management Discussion and Analysis describing the Companys objectives, estimates, expectations, or projections may constitute "forward looking statements" within applicable laws and regulations. However, actual results may differ materially from those either expressed or implied in the statements.

Important factors that would influence the Companys operations include raw materials prices, product and application industrys performance, tax laws, interest rates, power cost, economic developments, and other factors within the country and the global economics domain.