PG Electroplast Ltd Management Discussions

Economic Review

Global Economy¹

Overview

In fiscal year 2024, the world economy grew by 3.3%, owing to moderate inflation, technological breakthroughs, and regional structural economic transformations. This expansion occurred in a tumultuous macroeconomic environment characterized by geopolitical unrest and supply chain disruptions. However, the growth rate is still below the historical average of 3.7%. Emerging Market and Developing Economies (EMDEs) outpaced mature economies, rising by 4.3% versus 1.8% for the advanced economies. This economic stability was bolstered by proactive monetary policy measures from central banks around the world, which helped to reduce inflation and stabilize macroeconomic conditions. As a result, worldwide inflation fell from 6.6% in FY 2023 to 5.7% in FY 2024, reviving consumer confidence and propelling economic growth.²

Outlook

The Global economy is predicted to increase modestly but steadily, with 2.8% in fiscal year 2025 and 3.0% in fiscal year

2026. This anticipated expansion will be underpinned by more accommodative monetary policy aimed at maintaining price stability, while encouraging economic activity and increasing employment. However, the recent uncertainty surrounding the reciprocal tariffs placed by the United States on its imports has disrupted global trade. This could lead to higher prices, supply chain uncertainty, and increased recession risk. In reaction, businesses around the world are deferring investments and restructuring operations, while global leaders undertake diplomatic and strategic economic measures through communication, trade alliances, and strategic discussions to ease escalating tariff tensions and stabilize global commerce.

If the current uncertainty around the US tariffs subsides, inflationary pressures are expected to ease gradually, with global headline inflation projected to decline to 4.3% in CY 2025 and further to 3.6% in CY 2026. The outlook of Emerging Market and Developing Economies (EMDEs) remains robust, with projected growth of 3.7% in CY 2025 and 3.9% in CY 2026. Advanced economies are expected to grow at 1.4% in CY 2025 and 1.5% in CY 2026.

Growth in the Global GDP (in %)
Global Economy	Advanced Economies	Emerging Market & Developing Economies

Indian Economy³

Overview

India maintained its position as one of the worlds fastest-growing major economies, with a GDP growth rate of 6.5% in FY 2025. The growth was achieved amidst a disrupted global economic landscape and geopolitical tensions in Europe and the Middle East. A key driver of growth was the targeted government initiatives aimed at stimulating economic activity through infrastructure development. The government has allocated 11.11 Lakh Crore⁴ in the Union Budget for

Infrastructure creation, emphasising on rural connectivity. With such a large capital spend, India still managed to keep its fiscal deficit at 4.4% of GDP⁵, providing additional fiscal room to increase spending and stimulate demand.

Additionally, the growth was further propelled by a decline in inflation from 5.4% in FY 2024⁶ to 4.6% in FY 2025,⁷ which boosted consumer confidence and stimulated both urban and rural consumption. The easing inflation prompted the

Reserve Bank of India (RBI) to infuse 1.5 trillion into the banking system to support the demand for liquidity and propel economic activity.⁸

Outlook

The Indian economy is expected to maintain its growth trajectory, with GDP rate projected to remain at 6.5% in FY 2026. This momentum will be backed by a combination of fiscal and monetary stimulus measures, including income tax reform, exempting salaried individuals earning up to 12.75 Lakh from income tax.⁹ In accordance with the government, the RBI is also aiming to augment economic activity by implementing expansionary monetary strategies. The RBI has reduced the repo rate by 100 basis points through consecutive cuts^10,11 to further boost consumption and inject liquidity.

The US tariff imposed on India may pose as a potential headwind, given the USs importance as a trading partner. Bilateral talks between the officials of both economies are creating signs of optimism and have the potential to position India more favourably than other economies in terms of trade with the US.

Inflation is expected to moderate further to 4% in FY 2026, reinforcing growth through enhanced purchasing power and stable price levels. With strong foreign exchange reserves, disciplined fiscal management and consistent policy frameworks, India remains well-positioned to sustain its economic momentum and further strengthen its influence on the global economic stage.

GDP growth trend in India (in %)

Industry Overview

Indian EMS and Contract Manufacturing Industry¹³

In recent years, Indias electronics manufacturing sector has gathered strong momentum. This upward trajectory has been fuelled by government initiatives such as the Production Linked Incentive (PLI), Make in India and a concerted push to promote domestic manufacture of components. In 2023, the sectors output reached an estimated US$102 billion. The demand for PCB assemblies and components alone stood at US$45.5 billion. Despite this impressive scale, India continues to remain import dependent, especially for components, such as PCBs, displays and capacitors. This presents a clear opportunity and policy intent to build a stronger domestic electronics supply chain.

Contract manufacturing is gaining traction in India. It has steadily captured a substantive share of the overall electronics output and has attracted considerable foreign investment through the automatic FDI route. This model enables global brands to collaborate with Indian manufacturers without setting up their own factories, helping scale production in a prompt and cost-efficient manner.¹⁴

Looking ahead, Indias electronics manufacturing industry is positioned for strong and steady expansion, with projected annual growth of around 26% through 2030 and a target output of US$500 billion. The governments latest scheme, which allocates 40,000 crore (~US$4.7 billion) and targets another 82,000 crore in private investment, aims to promote domestic production of complex components such as PCBs and display panels. This initiative is expected to reduce import dependence and fortify the local ecosystem.

Contract manufacturing is expected to continue growing as foreign brands increasingly outsource assembly and production to Indian partners, supported by continued FDI inflows. Overall, by further strengthening its domestic supply chain, improving infrastructure and encouraging technology transfer through globally competitive partnerships, India is on track to become a major electronics manufacturing hub.¹⁵

Indian Consumer Durable Market¹⁶

Indias consumer durables market has shown strong growth, expanding at a 10% Compound Annual Growth Rate (CAGR) from FY 2019 to FY 2024, even while facing challenges such as the pandemic and supply chain disruptions. The sector currently contributes about 0.6% to Indias GDP. This growth has been supported by rising income levels, increased spending on lifestyle products and wider access to appliances in rural areas. Consumers are also replacing their appliances more frequently and opting for higher-end models, further propelling market expansion.

Looking ahead, the consumer durables market in India is expected to grow at around 11% CAGR, reaching 3 lakh crore by FY 2029. India is projected to become the fourth-largest consumer durables market in the world by FY 2027. Growth will be driven by strong demand, increasing online shopping and adoption of new technologies such as AI and IoT, which are making appliances smarter and more connected. While challenges such as evolving regulations and supply chain disruptions persist, the overall outlook remains positive supported by strong momentum from both consumers and manufacturers.

Key Growth Drivers

Category	Key Growth Drivers
Government Initiatives	- Production Linked Incentive (PLI) schemes
	- Make in India and Digital India missions
Rising Domestic Demand	- Growing middle class with increasing disposable income
	- Higher adoption of electronics and appliances
Urbanisation and Electrification	- Expanding urban centres
	- Improved access to electricity and internet in rural areas
Contract Manufacturing	- Increased outsourcing by global brands
	- 100% FDI allowed under automatic route
Component Ecosystem Development	- Focus on local sourcing of PCBs, displays, compressors, etc.
	- New incentives for component manufacturing
Technological Advancements	- Smart, connected devices
	- Integration of IoT and AI in appliances
Retail and E-commerce Growth	- Wider availability through online platforms
	- Penetration into Tier 2 and Tier 3 cities
Infrastructure and Logistics	- Development of electronics manufacturing clusters
	- Improved supply chain networks
Workforce and Skilling	- Training initiatives under Skill India
	- Availability of technical talent
Export Opportunities	- Growing global demand for low- cost, high-quality manufacturing
	- Strategic alternative to China

Company Overview

PG Electroplast Limited (PGEL), the flagship entity of the PG Group, is a leading Electronic Manufacturing Service (EMS) provider in India. With a wide-ranging product portfolio and a strong pan-India presence, PGEL operates 11 advanced manufacturing facilities across Greater Noida in Uttar Pradesh, Roorkee in Uttarakhand, Bhiwadi in Rajasthan and Ahmednagar in Maharashtra. PGEL continues to specialise in Original Design Manufacturing (ODM), Original Equipment Manufacturing (OEM) and plastic injection moulding, serving multiple segments of the consumer durables and electronics industries.

Its wholly owned subsidiary, PG Technoplast Private Limited (PGTL), focuses on the manufacturing of air conditioners, air coolers and key components for various white goods. In FY 2025, PGEL further strengthened its joint venture with Goodworth Electronics Limited, expanding its footprint in the television and hardware segment. The Company remains committed to enhancing its capabilities in product design, tooling, assembly and component manufacturing, delivering fully integrated and scalable EMS solutions that support its customers evolving needs.

Key Manufacturing Capabilities

Product	Plastic	Sheet Metal	PCB	Specialised	PU and Powder	Tool
Assemblies	Moulding	Components	Assemblies	AC Components	Paint shops	Manufacturing

Industries Served

Air	Washing	LED	Air	Automotive	Bathroom	Consumer
Conditioners	Machines	Televisions	Coolers	Components	Fittings	Electronics

Key Highlights of FY 2025

Achieved robust growth with consolidated revenues surged by 77.3%, reaching 4,869.5 crores.

The product business contributed 72.4% of total revenue, led by a 128.5% growth in the air conditioner segment.

Successfully commissioned a second RAC manufacturing unit in Bhiwadi, enhancing production capacity and operational scale.

PG Technoplast, the Companys wholly owned subsidiary, crossed 3,526 crores in revenue in just its fourth year of operations.

Improved operating margins through effective cost control measures, softer input prices and enhanced operating leverage.

Closed the year with 980 crores in cash and equivalents, while executing 488 crores in capital expenditure, ensuring a strong foundation for future expansion.

Product Wise Performance

	FY 2025
Segment	Revenue	Growth Driver
Room Air Conditioners	3,009 Cr	Capacity expansion, strong demand
Washing Machines	448 Cr	New product range, rising market demand
Air Coolers	68 Cr	Seasonal rebound, broader customer base
Electronics (Non-TV)	349 Cr	TV Transitioned to JV; non-TV focus to drive growth
Plastic Moulding	985 Cr approx.	Niche components; selective capital allocation

Room Air Conditioners (RAC)

PGELs RAC business delivered a standout performance in

FY 2025, generating revenue of 3,009 crores, representing a robust 128.5% year-on-year growth. This sharp rise was driven by increased customer demand, enhanced product portfolio and expanded production capacity. To support future scalability, the Company commissioned its second RAC manufacturing unit in Bhiwadi during the year and announced plans for additional greenfield projects in North and West India.

Washing Machines (WM)

The washing machine business recorded revenue of 448 crores in FY 2025, marking a year-on-year growth of 43.1%. PGEL retained its position as a leading contract manufacturer in this space, supported by strong market response to its new product range. To meet rising demand, the Company plans to establish a greenfield manufacturing facility in Greater Noida, aiming to double production capacity to two million units annually.

Air Coolers

The air coolers segment saw a strong rebound in FY 2025, with revenue growing by 80% year-on-year. This growth was supported by favourable seasonal conditions and increased customer engagement. The Company aims to expand its footprint in this category through new product offerings and wider customer outreach.

Electronics

The Electronics division, comprising PCB assemblies and other electronic components, underwent a structural shift in FY 2025.

While the TV assembly business contributed 306 crores in FY

2024, this operation was fully transitioned to PGELs 50:50 joint venture, Goodworth Electronics Limited, which achieved 544 crores in revenue in FY 2025. However, the Company is actively scaling its remaining electronics operations, focusing on non-TV categories, with growth expected to accelerate in FY 2026.

Tool Manufacturing

Tooling continued to play a strategic, though modest role in PGELs overall business. While its contribution to revenue remained limited, it supported in-house ODM product development by enabling faster custom tool turnaround. The Companys ongoing investments in toolroom capabilities are reinforcing vertical integration and are expected to support the rising demand driven by domestic product development.

Plastic Moulding & Other components

The plastic moulding & other components segment generated revenue of approximately 985 crores in FY 2025, reflecting moderate growth. Demand was primarily supported by specialised components for segments such as sanitary-ware and fans. While aligned with broader consumer durable industry trends, PGEL plans to maintain a limited capital allocation to this segment due to relatively lower return ratios compared to core product businesses.

Financial Overview

During FY 2024–25, PG Electroplast Limited (PGEL) recorded strong performance with consolidated revenues growing to

4,869.5 crores. The product business accounted for 72.4% of the total sales, driven by solid growth in the air conditioner and washing machine segments. Net profit increased to 291 crores, reflecting improved operational efficiency and scale.

The Company incurred a capital expenditure of approximately

488 crores during the year, which included the commissioning of its second RAC manufacturing unit in Bhiwadi to enhance production capacity. PGEL ended the year with 980 crores in cash and equivalents, further strengthening its balance sheet.

PGELs joint venture with the Jaina Group, Goodworth Electronics Limited, continued to scale operations and received approval under the IT hardware PLI scheme. The Company remains focused on long-term priorities such as product innovation, backward integration and capacity expansion to support future growth.

Key Ratios

Ratios	FY 2025	FY 2024	Change (%)
Debtors Turnover (x)	6.35	5.54	0.81
Inventory Turnover (x)	4.19	4.92	- 0.73
Interest Coverage Ratio (x)	5.10	4.41	0.69
Current Ratio (x)	1.90	1.46	0.44
Debt Equity Ratio (x)	0.01	0.35	- 0.34
Operating Profit Margin (%)	9.90%	9.53%	0.37
Net Profit Margin (%)	5.79%	4.99%	0.80
Return on Networth – RoNW (x)	15.05%	19.11%	-4.06

Debtors turnover has increased due to Sharp growth in Sales in FY2025, while the average receivable days remained declined from 65.8 days to 57.5 days.

Inventory turnover declined due to much Higher Inventory levels at end of FY2025 versus FY2024. The reason for higher inventory levels at end of FY2025 was due to expectation of compressor and Copper tubing shortage due to BIS certification being made mandatory and to mitigate the BIS impact, company had higher value of imported components inventory. Interest coverage ratio has increased due to Profit before Interest and Tax growing at 98.9% due to high sales growth and expansion in margins, while Interest cost growing at just 71.8%. This led to Interest coverage ratio improving for the year. Current ratio increased due to higher growth in Current assets verus current liabilities. Higher current assets grew largely on back of higher inventory levels at end of FY2024 and cash balances going up due to QIP money in the Balance sheet. Debt to equity ratio has declined due to QIP of INR 1500 crores, that company raised in December 2024, leading to high increase in Net worth during the FY2025.

Operating profit margin improved as Scale benefits accrued due to high growth leading to efficiency and productivity improvement across various sphere of operations.

Return on Net Worth declined as company has raised INR 1500 crores through QIP leading to in Net worth for the company increasing from INR 1038 crores to 2828 crores leading to growth of 172%, While the profit growth was 112%, leading to dilution in Return on Net worth.

Human Resource

At PG Electroplast Limited (PGEL), employees are recognised as the cornerstone of the Companys sustained success. PGEL is committed to promoting a diverse, inclusive and employee-centric workplace, guided by values that promote employee engagement and empowerment. PGEL places strong emphasis on creating a supportive and inspiring work environment. The Company has implemented a range of initiatives to enhance employee engagement, including regular feedback sessions, team-building exercises and opportunities for professional development. These efforts aim to make employees feel appreciated and inspired to perform at their best. The Company also promotes open communication and encourages a balanced work-life environment to boost satisfaction and engagement.

PGELs talent acquisition strategy focuses on recruiting individuals who resonate with the Companys vision and values. The HR team follows a rigorous selection process to ensure suitable candidates are placed in appropriate roles, thereby building a capable and high-performing workforce. Once onboarded, employees benefit from structured training programmes, continuous learning initiatives and development opportunities to enhance both technical and interpersonal skills. These programmes are designed to nurture technical proficiency, enabling employees to thrive and grow within the organisation.

To recognise employee contributions, PGEL offers attractive compensation and benefits packages that support both financial well-being and overall job satisfaction. As of FY 2025, PG Group employed over 10,000 individuals across its operations. This dynamic workforce plays a pivotal role in driving the Companys operational success. PGELs human capital strategy goes beyond recruitment— focusing equally on retention, development and leadership building to ensure a supportive and collaborative work culture.

Environment, Health and Safety (EHS)

PG Electroplast Limited (PGEL) remains committed to maintaining high standards in Environment, Health and Safety (EHS) across all its operations. The Company continues to adopt sustainable practices to minimise its carbon footprint and energy usage, while ensuring the health and safety of its employees through structured protocols and regular training.

Key EHS initiatives undertaken in FY 2025 include:

Operational Fire Control Rooms with zone-wise control panels

Permit-to-work system for high-risk machinery operations

Comprehensive accident monitoring and reporting systems

Regular management reviews of EHS performance

CO flooding systems installed at critical risk zones

Daily, weekly, monthly and quarterly safety audits

Established Disaster Management Organisation at key locations

To ensure compliance with global standards, PGEL has secured third-party certifications such as ISO 9001:2015 (Quality Management), ISO 14001:2015 (Environmental Management), ISO 45001:2018 (Occupational Health & Safety), UL E520496 and IATF 16949:2016 for its manufacturing units.

In line with its commitment to renewable energy, the Company has taken significant steps to reduce its dependence on conventional energy sources. It has entered a long-term Power Purchase Agreement (PPA) to source 3.1 MW of solar energy for its manufacturing facility at Uttar Pradesh facility and has installed 1.4 MW rooftop solar panels at its Unit 2 in Maharashtra, along with a 0.65 MW solar system at Unit 4. These efforts mark a substantial move towards PGELs commitment to expanding its sustainability footprints by exploring additional renewable energy projects and integrating green practices across its operations.

The Company has also implemented internal health and safety policies, including emergency evacuation plans, routine training and mock drills to prepare employees for critical situations.

These ongoing efforts underscore PGELs commitment to a safe, healthy and environmentally responsible workplace, aligned with its broader goals of operational efficiency and sustainable development.

Risk and Mitigation Measures

PG Electroplast Limited recognises that various risks and uncertainties can impact its business performance, financial stability and operational outcomes. To proactively address these challenges, the Executive Management Team continuously monitors a wide spectrum of risks across multiple domains, including financial, operational, industry-specific, ESG-related, information security and cyber threats.

The Company has established robust internal controls and risk identification mechanisms to detect and manage potential vulnerabilities. The Risk Management Committee regularly reviews and evaluates the effectiveness of these systems and processes, ensuring timely proactive mitigation strategies. Additionally, PGEL has implemented structured risk management frameworks, policies and tools, designed to systematically assess, monitor and manage risks associated with day-to-day operations. These measures collectively safeguard business continuity and long-term resilience.

Risk Management Committee

Mr. Vishal Gupta	Mr. Ram Dayal Modi	Ms. Mitali Chitre
(Chairman)	(Member)	(Member)

 

Risk	Description	Mitigation Strategy
Economic Risk	Fluctuations in interest rates and inflation levels can impact operational efficiency.	PGEL has diversified across multiple business segments while strategically reducing financial leverage, thereby strengthening both its balance sheet and overall business model.
Currency Fluctuation	Exposure to global markets subjects the Company to foreign exchange rate volatility, potentially impacting revenue and profitability.	The Company regularly monitors exchange rate movements and applies its risk management policy accordingly to mitigate currency risks.
Competition Risk	Operating in a highly competitive market with both domestic and global players poses challenges to market share and pricing strategies.	PGEL focuses on product quality and customer satisfaction to build brand loyalty and maintain a competitive edge.
Procurement Risk	Dependence on raw materials exposes the Company to supply chain disruptions and availability issues.	PGEL promotes backward integration and closely monitors its supply chain to reduce dependency and ensure smooth operations.
Technology Risk	Failure or delays in adopting new technologies may hinder the Companys ability to meet changing market demands.	The Company invests consistently in R&D to enhance existing offerings and develop new products using advanced technologies.
Employee Risk	Lack of skilled workforce availability can affect operational productivity and efficiency.	PGEL partners with third-party contractors to ensure timely availability of skilled labour for specialised roles and unit-specific requirements.
Regulatory Risk	Changes or non-compliance with evolving industry regulations may disrupt operations and damage brand reputation.	PGEL maintains a strong internal control framework to ensure compliance with industry regulations and sustain efficient business operations.

Outlook

PG Electroplast Limited enters FY 2026 with strong momentum following an exceptional performance in FY 2025. The Company delivered robust growth across all key product categories, especially in air conditioners, washing machines and air coolers, despite prevailing pricing pressures in the market. With an expanding customer base and diversified product portfolio, PGEL is well-positioned for continued growth.

The Company remains focused on strengthening its core businesses by launching innovative products, enhancing its Research and Development (R&D) capabilities and investing strategically in capacity expansion. Major projects, including the establishment of a new refrigerator manufacturing facility, expansion of Room Air Conditioner (RAC) production capacity are expected to significantly boost operational efficiency.

With a robust order book and positive customer response, PGEL aims to accelerate growth in its product business in FY 2026. Significant investments in new manufacturing facilities across multiple states further reflect the Companys confidence in its long-term growth prospects. Healthy cash flows and a strong balance sheet provide a strong foundation to fund these strategic expansions.

Overall, PGEL is well-positioned to capture a larger share of Indias consumer durables market, capitalising on rising outsourcing trends, scale advantages and a continued focus on quality, innovation and operational efficiency.

Internal Control Systems and Their Adequacy

The Company has established a robust internal control framework designed to support its operational structure. PGEL has put in place a comprehensive system covering governance, compliance, auditing, monitoring and reporting functions. This system ensures adherence to regulatory requirements, promotes efficient and orderly business operations, safeguards Company assets and helps in the prevention and detection of fraud and errors. It also ensures the accuracy and completeness of accounting records and supports the timely preparation of reliable financial reports. Internal auditors validate the effectiveness of the control mechanisms, which are further reviewed by the management. The Audit Committee oversees the financial reporting process, ensuring transparency, accuracy and integrity in disclosures. Additionally, the Committee regularly assesses the adequacy and efficiency of internal controls and suggests improvements wherever necessary.

Cautionary Statement

This reports Management Discussion and Analysis section, which includes the Companys objectives, projections, estimates and anticipations, may be considered forward-looking statements under applicable laws and regulations. These claims rely on certain assumptions and predictions about future events. External and internal variables outside the Companys control may cause significant deviations from indicated or implied results. The Company expressly disclaims any duty to publicly change, update, or revise any forward-looking statements in light of new developments, information or events. Individuals are advised to exercise their own discretion when considering the risks connected with the Company, since the list provided is not complete.