RIR Power Electronics Ltd Management Discussions

INDUSTRY OVERVIEW

The global semiconductor industry continues to undergo significant transformation, driven by rapid digitalisation, electrification, automation and the transition toward sustainable energy solutions. Semiconductors have emerged as strategic and critical components across a broad range of industries, including electric mobility, renewable energy, industrial automation, power transmission, consumer electronics, defence, railways and telecommunications. Power semiconductor devices, in particular, play a pivotal role in energy conversion, control and management. The increasing adoption of electric vehicles, charging infrastructure, renewable energy systems, smart grids and energy storage solutions is expected to sustain strong demand for advanced power semiconductor technologies worldwide.

Indias semiconductor industry is gaining momentum, supported by strong domestic demand, policy backing and rising manufacturing investment. The Indian semiconductor market was about US$38 billion in 2023, is estimated at US$45-50 billion in 2024-2025, and is expected to reach US$100-110 billion by 2030.

The Government of Indias semiconductor ambitions are set for a major expansion, with budgeted proposal for Rs. 1.25 lakh crore outlay under India Semiconductor Mission (ISM) 2.0, significantly higher than the Rs. 76,000 crore allocated under the first phase of the programme. The higher allocation underscores the governments intent to attract fabrication and packaging units to building a broader semiconductor ecosystem spanning chip design, fabrication, packaging and talent development with a clear and actionable vision for the country to build a USD 120-150 billion semiconductor value chain by 2035.

Industry estimates also suggest that as new plants begin operations, Indias semiconductor production capacity could reach 75-80 million chips per day by the end of 2026 or early 2027. By 2029, India is expected to achieve the capability to design and manufacture chips required for nearly 70-75 per cent of domestic applications. Advancing on this foundation, the next phase under Semicon 2.0 will focus on advanced manufacturing, with a clearly defined roadmap to achieve 3-nanometre and 2-nanometre technology nodes.

Despite this progress, India still manufactures less than 1% of the worlds semiconductors, and imports over 90% of its chips and relies almost entirely on overseas suppliers for critical materials, so the sector remains highly dependent on imports for advanced chips and materials.

Overall, Indias semiconductor industry is moving from a demand-led market toward a more integrated manufacturing ecosystem, with opportunities in fabrication, packaging, testing, design and advanced technologies such as power semiconductors, SiC and GaN.

As management, we view this evolving landscape as a transformative opportunity·both for the sector and for Indias broader industrial growth. We remain committed to engaging with stakeholders, leveraging strategic partnerships, and aligning our efforts with the national vision to drive long-term value creation.

RIR Power Electronics Limited, with a legacy spanning over five decades, has established strong capabilities in the niche field of power electronics. The Company primarily operates in manufacturing of low and high- power semiconductor devices, including diodes, thyristor modules and bridge rectifiers, by processing semiconductor chips ranging from 28 mm to 125 mm in diameter at its state-of-the-art manufacturing facility; and manufacturing of power electronic equipment such as rectifiers, battery chargers, high-power stacks and rectifier panels, which find applications across a wide spectrum of industrial sectors.

During the year 2025-26, our Company experienced moderate demand in all the three verticals i.e. Semiconductor Devices, High Power Equipments and Exports, and registered an overall revenue growth of 5.79 %. While our performance during the year reflected temporary moderation arising from customer-led scheduling changes, implementation of new labour codes, and higher raw material consumption costs, we remain confident in the underlying strength and resilience of our business model. The positive trend experienced in the previous year is expected to continue during FY 2026-27. The Company continues to strengthen its market position through product innovation, enhanced manufacturing capabilities and expansion into emerging technologies such as Silicon Carbide-based devices and advanced power semiconductor solutions.

The company is setting up a Rs. 6,186 Million Silicon Carbide (SiC) plant in Odisha, a first of its kind in India, through the help of Odisha state government incentive scheme. The plant will create an ecosystem by leveraging vertical integration, securing the supply chain and significantly reducing the dependency of imports of SiC components in India.

The Company continues to benefit from opportunities arising out of the growing adoption of electric vehicles, expansion of renewable energy, smart grid applications, localisation initiatives and rising investments in railways, defence and industrial automation. Demand for wide bandgap technologies such as Silicon Carbide presents meaningful growth potential.

At the same time, the business faces challenges including volatility in raw material and wafer prices, intense competition, technological shifts, geopolitical uncertainties, supply chain disruptions, foreign exchange fluctuations and regulatory changes. The Company closely monitors the external environment and adopts appropriate risk mitigation measures to address emerging challenges and support long- term growth.

The Audit Committee and Board of Directors of the Company regularly review external and internal risks associated with the operations of the Company and carries out its impact assessment and effective implementation of the mitigation plans and risk reporting is conducted.

The Company operates in single reportable segment i.e. Power Electronics thus segment-wise reporting as per the requirements of Ind AS 108 is not applicable to the Company.

The Company has established internal control systems commensurate with the size, scale and complexity of its operations. These systems are designed to safeguard assets, prevent and detect fraud and errors, ensure the accuracy and completeness of accounting records, and support the reliability of financial information and compliance with applicable laws and regulations.

The internal control framework is supported by well- defined policies, standard operating procedures, authority matrix and periodic monitoring mechanisms. Internal audits are conducted regularly to review the adequacy and effectiveness of controls across various functions.

The findings and recommendations arising from internal audits are placed before the Audit Committee of the Board periodically. Corrective actions, wherever required, are initiated promptly to strengthen the control environment and improve operational efficiency.

(i) Profits and Earnings: During the year, the Companys Total Revenue increased by 5.79 % to Rs. 9,335 Lakhs as compared to Rs. 8,825 Lakhs in 2024-25. Earnings before Interest, Tax and Depreciation and Amortisation (EBITDA) for the year decreased by 10.43 % to Rs. 1,020.61 Lakhs as compared to Rs. 1,139.44 Lakhs in the previous year. Net Profits of the Company decreased by 18.81% during the year to Rs. 672 Lakhs as against Rs. 828 Lakhs last year.

(ii) Capital Expenditure: A capex of Rs. 2,567 Lakhs was incurred during the year at the new Odisha plant to manufacture SiC wafers and devices.

(iii) Finance Costs: The finance costs decreased marginally by 4.35% to Rs. 138 Lakhs for the year, as against Rs. 145 Lakhs in the previous year.

a) Current Ratio: Increase in current assets is due to increase in Bank deposits and advances given to suppliers. Decrease in Total Current Liabilities is due to reduction in Trade Payables.

b) Return on Net Worth has decreased as compared to previous year, on account of issuance of fresh equity shares to preferential warrant holders upon conversion of warrants into equity shares.

Human resources remain a key strength of the Company. The Company believes that sustained growth and business excellence are driven by the competence, commitment and dedication of its employees.

The Company maintains harmonious industrial relations and provides a conducive work environment that encouragesinnovation,collaboration,continuouslearning and high performance. Employee engagement, training and capability development initiatives are undertaken on an ongoing basis to enhance competencies and align employee skills with evolving business requirements.

The Company remains committed to fostering a culture based on integrity, inclusiveness, safety, quality and customer focus. Industrial relations remained cordial throughout the year.

Statements in this Management Discussion and Analysis relating to the Companys objectives, projections, estimates, expectations or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to changes in economic conditions, demand and supply dynamics, availability and pricing of raw materials, technological developments, foreign exchange fluctuations, government policies and regulations, geopolitical developments, competition, tax laws and other factors beyond the control of the Company.