Rexnord Electronics & Controls Ltd Management Discussions

ECONOMIC OVERVIEW

The Indian economy continues its robust growth trajectory in FY 2024 25, bolstered by strong domestic consumption, sustained investment in infrastructure, and a conducive policy environment. The governments continued focus on capital expenditure, including significant allocations in transport, urban development, renewable energy, and digital infrastructure, is fostering an ecosystem conducive for industrial manufacturing and technology adoption.

India remains one of the fastest-growing major economies, with GDP growth at 6.5% for FY 2024 25. Factors driving this momentum include: l Resilient domestic demand, especially in urban consumption and core industrial sectors. l Improved manufacturing output, supported by Production Linked Incentive (PLI) schemes and ‘Make in India initiatives. l Moderation in inflation, allowing for relatively stable interest rate expectations, boosting private investment. l Digital infrastructure and green energy investment, further stimulating the industrial base.

On the global front, while geopolitical uncertainties and supply chain realignments continue to pose challenges, India has emerged as a key destination for diversified global manufacturing.

FY 2024 25 is witnessing increased demand for energy-efficient and smart

HVAC components, driven by: l Expansion in the data centre, commercial real estate, and cold chain logistics sectors. l Growth in smart appliances and environmentally compliant industrial equipment. l Demand for localized and customized air movement solutions in pharma, food processing, refrigeration and electronics.

Rexnord Electronics and Controls Ltd. is well-positioned to benefit from these developments through its focus on shaded pole motors and axial fans — critical components in refrigeration, ventilation, and cooling systems.

The accelerated implementation of Industry 4.0 technologies across sectors is reshaping demand. There is heightened adoption of Predictive maintenance tools reducing downtime and improving reliability and Energy-efficient fans and motors compliant with global and Indian energy standards.

Rexnords focus on innovation and R&D in compact, low-noise, and energy efficient shaded pole motors enables it to cater to OEMs and end-users with tailored solutions.

Environmental sustainability has taken centre stage in 2024 25:Increasing pressure from governments and ESG investors to adopt low-carbon manufacturing practices and stricter energy efficiency regulations for cooling and ventilation equipment. This offers Rexnord an opportunity to strengthen its eco-friendly product portfolio, reduce waste in manufacturing, and highlight its commitment to sustainability in branding and compliance.

Post-pandemic supply chain vulnerabilities have led to diversification of supplier base and offshore distribution strategies and improving Digital supply chain management adoption to improve efficiency and predictability and rising input cost volatility, particularly in raw materials such as copper and steel, prompting need for cost engineering and alternate sourcing strategies.

Rexnords continued investments in agile manufacturing, backward integration, and inventory control mechanisms enhance its ability to maintain continuity and reduce exposure to global shocks.

INDUSTRY OVERVIEW

The electronic and refrigeration industry continues to evolve rapidly, playing a vital role in enabling advancements across sectors like smart infrastructure, refrigeration, healthcare, agriculture, and hospitality. As a leading manufacturer of AC axial fans, DC brushless fans, shaded pole motors, large axial fans, and EC motors, Rexnord Electronics and Controls Ltd. operates in a dynamic landscape shaped by technological progress, global policy shifts, and growing sustainability mandates.

1. Global Economic Trends

The global economy in FY 2024 25 is witnessing a gradual stabilization after multiple years of volatility. Growth in key regions is moderate, with India standing out as a strong performer driven by infrastructure investment, supply chain localization, and green economy initiatives. l Indias GDP is expected to grow between 6.5% 7.0%, driven by rising industrial production, urban consumption, and government-led capital expenditure. l Global recovery is mixed, but emerging markets are driving demand for low-energy and smart cooling solutions. l Infrastructure push, particularly in Tier II and III cities, boosts demand for HVAC, ventilation, and refrigeration systems.

2. Technological Advancements & Industry 4.0

Digital transformation continues to shape the industrial fans and refrigeration space: l Growing demand for smart, connected devices has led to an uptick in adoption of energy efficient fans and motors. l AI and data analytics are enabling predictive maintenance, reducing downtime, and improving efficiency. l Rexnord is leveraging these trends by investing in R&D for compact, intelligent, and energy-efficient systems.

3. Sustainability & Regulatory Environment

With climate goals being fast-tracked globally, regulatory compliance has grown stricter: l Governments are encouraging the use of eco-friendly motors and fans. l Customers are prioritizing green certifications, recyclable materials, and lower carbon footprints. l Compliance with evolving CPCB standards, CE certifications, and global eco-norms is now central to product strategy.

4. Supply Chain Evolution

While some global supply chain pressures have eased compared to the pandemic years, geopolitical instability and input price volatility remain key concerns: l The industry is moving towards localized sourcing, centralized manufacturing, and digital supply chain visibility. l Companies like Rexnord are improving resilience through vendor diversification and inventory optimization.

5. Consumer Preferences & Demand Patterns l Increasing awareness of indoor air quality, energy-saving devices, and low noise motors is influencing buyer choices. l The aftermarket segment for industrial and residential fans is also expanding.

OPPORTUNITIES l Emerging Segments

Demand from Refrigeration, HVAC and data centres is growing steadily opens new application areas for Rexnords products. l Smart & Sustainable Product Lines

Rising demand for digitally integrated and green-certified solutions positions Rexnord to offer high-margin products such as EC motors, low-noise axial fans and domestic Exhaust Fans. l Government Incentives

Supportive policies under PLI schemes, FAME II, and green building codes offer an ecosystem conducive to local innovation and scale-up. l Exports & Global Reach

Demand from developing markets in Asia, Africa, and Latin America for cost-efficient cooling systems creates strong export potential. l Collaboration & R&D

Partnerships with tech firms, OEMs, and institutions can accelerate Rexnords shift toward next-gen product development in line with Industry 4.0.

RISK AND CONCERNS l Persistent Geopolitical Risks

Unrest in key shipping routes and trade zones may still impact global logistics and costs, requiring proactive risk mitigation. l Input Cost Fluctuations

Prices of key raw materials like copper, aluminium, and steel remain volatile, potentially impacting profit margins. l Intensifying Competition

Both domestic and international players are innovating rapidly in fan and motor design, pricing, and customization—heightening pressure on differentiation. l Regulatory Shifts

Fast-evolving regulatory standards across markets may require continuous redesign and testing of products, stretching resources. l Technology Disruption

New entrants using AI, advanced materials, or modular components could disrupt legacy product lines if innovation does not keep pace.

By strategically addressing these opportunities and threats, Rexnord Electronics and Controls Ltd. can navigate the complexities of the industrial fans and refrigeration industry, sustain growth, and enhance its competitive advantage in the global marketplace.

FINANCIAL OUTLOOK

Rexnord Electronics and Controls Ltd. has demonstrated a commendable growth trajectory in the fiscal year 2024-25. Despite a challenging economic environment, the company achieved a substantial increase in total revenue, reaching 11004.39 Lakhs. This reflects the effectiveness of our strategic initiatives and robust operational capabilities. The impressive EBITDA of

1685.84 Lakhs underscores our commitment to operational excellence and cost management.

Our long-term growth metrics remain strong, with a compounded sales growth of 12.67% over the past three years, highlighting our ability to capture market opportunities and expand our customer Furthermore, our steady increase in fixed assets to 6784.33 Lakhs is a testament to our continued investment in infrastructure and capacity expansion, ensuring we are well-positioned for future growth

The balance sheet remains robust, with total assets growing, reflecting our sound financial health and prudent management practices. Our strategic focus on enhancing operational efficiency and expanding market reach has positioned us well for sustained growth and profitability.

Competition Analysis and Strategy for Rexnord Electronics and Controls

Ltd.

The industrial fans and refrigeration industry in FY 2024 25 continues to witness rapid transformation and intensifying competition, driven by digitization, sustainability imperatives, and evolving customer expectations. Rexnord Electronics and Controls Ltd. operates in a market where agility, innovation, and resilience define success.

To retain competitive advantage and grow market share, Rexnord has recalibrated its strategy to align with key developments across the ecosystem.

1. Product Innovation & Technological Edge l Smart Product Ecosystems

Rexnord is focusing on developing energy efficient solutions to cater to demand in data centres, Energy efficient cooling, cold rooms, and smart homes. l Green Engineering

Rising regulatory pressure and customer awareness about environmental impact have made energy efficiency and low-noise design critical differentiators. Rexnord is investing in EC motors, recyclable materials and low-carbon manufacturing to remain future-ready. l Design Customization at Scale

Tailored engineering solutions for OEMs and industry-specific applications (refrigeration HVAC, Control panels) allow Rexnord to build deeper client engagement and reduce commoditization risk.

2. Quality Reinforcement & Reliability Enhancement l Global Certifications

Emphasis is placed on meeting BIS, CE, RoHS, and ISO standards, ensuring global compliance and trust across multiple geographies.

l Smart Testing Infrastructure

Rexnord is deploying automated QC and efficient product testing for faster iterations and consistent product performance across batches.

3. Operational Agility & Cost Leadership l Smart Manufacturing

Integration of automation, real-time data analytics, and digital dashboards across operations enhances productivity, reduces waste, and improves delivery timelines. l Multi-Tiered Sourcing Strategy

Mitigating raw material volatility through alternate sourcing, vendor diversification and localized warehousing hubs ensures cost stability and supply continuity. l Lean Initiatives

Deployment of Kaizen and Six Sigma practices across units is improving yield and reducing rework.

5. Branding & Differentiated Positioning l Sustainability Branding

Emphasizing Rexnords commitment to eco-conscious innovation in all communications builds alignment with global ESG-conscious customers and investors. l Exhibitions

Participation in exhibitions, workshops, and HVAC expos allows

Rexnord to shape narratives around future-ready ventilation and cooling.

6. Global Expansion in l Strategic Distribution Partnerships

Expanding reach in Europe, Southeast Asia, and Middle East through regional distributors and OEM bundling. our Aftermarket Network Scaling

l

Strengthening service and support in emerging markets ensures lifecycle value delivery and brand loyalty.

EXPORTS

Exports continued to play a vital role in our overall growth strategy, contributing significantly to the companys performance in FY 2024 25. We achieved export sales of 1558.20 Lakhs, marking a growth of nearly 14% over the previous years export revenue of 1356.50 Lakhs. This consistent upward trajectory reflects the strength of our global sales network, effective market penetration strategies, and our commitment to delivering high-quality products that meet the specific demands of international customers.

We have further deepened our presence across key global markets including

Europe, the Middle East, and the Asian region, while also entering promising new territories. Our customized approach, robust customer engagement, and strong after-sales support have positioned Rexnord Electronics and Controls Ltd. as a preferred partner for industrial fans, refrigeration component and motor cater solutions across borders. As we move forward, we remain focused on expanding and our global footprint and capitalizing on emerging export opportunities through innovation, adaptability, and long-term relationships.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has robust internal financial controls systems, which is noise in line with requirement of the Companies Act, 2013, which is intended to increase transparency & accountability in an organisations process of designing and implementing a system of internal control. The Company has a clearly defined Governance, Standard Operating Procedures, Financial & Operational systems. Our SAP ERP system facilitate mapping with role-based authority to business & functional team to ensure smooth conduct of their operations across the organisation. The Company has well established

Internal audit function. Regular audit is performed for all locations (Plants and Head office).

FINANCIAL PERFORMANCE

Encouraging performance across product segments led to a revenue growth of

12.67%, however Margins were under pressure due to spiralling cost inflation.

We exited the year with a positive momentum recording highest ever revenue. It has been a year of revival despite transitional impact of Covid and commodity inflation. Overheads remained almost in the same range. While the inflationary environment continues to pose a challenge, however, we maintain a positive outlook on demand growth and gradual recovery of margins.

We have developed a strong financial capital framework with adequate foresight and agility to drive effective growth. Our strong balance sheet enables us to direct our growth capital swiftly and efficiently towards emerging opportunities for long-term value creation. Armed with this prudent approach, we navigated through exceptional circumstances brought on by the pandemic, transforming into a future-ready organisation with confidence and purpose.

We continued investing in capacity expansion to fuel our next phase of growth.

Our total capital expenditure during the year was 623.86 Lakhs, which was primarily directed towards enhancing our infrastructure and capabilities.

In conclusion, Rexnord Electronics and Controls Ltd. continues to deliver value to its stakeholders through consistent revenue growth, robust operational performance, and strategic investments. We remain confident in our ability to navigate the evolving market landscape and achieve our long-term objectives.

Operational Achievements

Throughout FY 2024 25, we have continued to strengthen our manufacturing capabilities and technological edge. A key highlight has been the strategic investment in a new factory unit, which is projected to significantly enhance our production capacity and streamline operations. Coupled with our adoption of advanced automation and state-of-the-art machinery, these upgrades have not only improved throughput but also elevated our product quality and consistency. These enhancements position us strongly to cater to increasing demand across diversified sectors while maintaining our commitment to operational excellence and client satisfaction.

Product Innovation and Excellence

Rexnord Electronics and Controls Ltd. continues to build on its legacy of innovation by offering a wide-ranging portfolio tailored to the dynamic needs of industrial, commercial, and now domestic applications. Our AC axial fans remain at the forefront of airflow management, combining high energy efficiency dependable performance. Similarly, our DC brushless fans are recognized for their ultra-quiet operation and extended lifespan, while our shaded pole motors uphold industry standards for reliability, particularly in HVAC systems and household appliances.

In FY 2024 25, we have further expanded our product offerings by introducing a new range of high-performance large axial fans, designed for more demanding ventilation and cooling needs. Additionally, we have entered the domestic segment with a thoughtfully engineered line of domestic exhaust fans, enabling us to tap into new markets and strengthen our position as a comprehensive solutions provider in the air movement and motor industry.

Market Dynamics and Outlook

As we move through FY 2024 25, we see steady opportunities for growth in both domestic and international markets. With a rising focus on energy efficiency and digital integration across industries, Rexnord Electronics and Controls Ltd. is well-positioned to meet evolving customer needs. Our continued investment in technology and product development, along with a strong focus on quality and customer service, will support our efforts to grow responsibly and deliver consistent value to our stakeholders.

Corporate Social Responsibility

At Rexnord Electronics and Controls Ltd., our commitment to Corporate Social

Responsibility (CSR) goes beyond compliance. It reflects our belief in giving back to the communities we operate in. In the current year, we have continued to invest in initiatives focused on education. By aligning our CSR efforts with long-term societal goals, we strive to create meaningful and measurable impact, reinforcing our role as a responsible corporate citizen dedicated to inclusive growth.

HUMAN RESOURCES:

We differentiate ourselves through our people-centric approach and inculcate a culture of transparency, inclusion, collaboration and excellence, making Rexnord a ‘Great Place to Work. Our policies and practices are aimed at providing a conducive work environment to meet the aspirations of our people, while ensuring their safety and well-being.

We carry out continuous employee training to upgrade skills and equip our people with the latest technologies in the market. We regularly engage with our employees, with a special focus on ensuring their well-being and retention. These training sessions included trainings on functional/behavioural and technical topics, in close coordination with our in-house experts.

Rexnord believes in an equal opportunity approach. The employees within the organisation are evaluated solely on the basis of their qualification and performance. We provide equal opportunities in all aspects of employment, including retirement, training, work conditions, and career progression, among others. This reinforces our commitment that equal employment opportunities are key element of our growth and competitiveness. Further, Rexnord is also committed to maintaining a workplace where each employees privacy and personal dignity is respected and protected.

We have always strived to maintain the health and safety of our employees and contractual workers, making it an utmost priority for the organisation. We have undertaken several initiatives to prevent and reduce injuries at our plants, and ensuring safety for all. Periodical Health check-ups are done to ensure the health the wellbeing of our employees.

We at Rexnord believe in providing a homely environment for all its employees with minimal stress in these difficult times. Under this initiative the company provides Mid-day Meals to all its Employees at its cost to maintain a hygienic as well as a work friendly environment. The total number of employees at the end of the year (including executive directors) are 151.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

Ratio	2024-25	2023-24
Debtors Turnover ratio (times)	13.20	15.49
withInventory turnover (times)	2.06	2.24
Interest coverage ratio (times)	5.80	9.54
Current ratio (times)	2.17	4.01
Debt equity ratio (times)	0.38	0.22
Operating Profit Margin Ratio (%)	8.92%	12.21%
Net Profit Margin Ratio (%)	4.67%	7.80%

RETURN ON NET WORTH:

The return on net worth of the Company remained 6.16% for the year as against 11.64% in the previous year. The reduction in the return on worth are mainly on account of increase equity and also reduction in net profit due to increase in employee cost and depreciation and also effect of exceptional items.

CAUTIONARY STATEMENT:

Statement in the Management Discussion and Analysis describing the

Companys objectives, expectations, estimates or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement due to external factors. Important factors that could influence the Companys operations include global and domestic supply and demand conditions affecting selling prices of finished goods, input availability and prices, changes in Government regulations, tax laws and economic developments within the country. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis, of any subsequent developments, events or information.