Sedemac Mechatronics Ltd Management Discussions

1. Industry Overview

The markets relevant to the sale of your Companys products during FY 2025-26 were the Indian 2&3-wheeler market -- both internal combustion engine (ICE) powered and electric vehicles, the Indian genset market, the US/global genset market and the e-Bike market in Europe.

Indian 2&3-wheeler Market

As per data from the Society for Indian Automobile manufacturers, the number of ICE-powered 2&3-wheelers produced in India in FY 2025-26 was 26.6 Million with domestic sales of 21.2 Million units and exports of 5.6 Million units. In comparison, the corresponding numbers for FY 2024-25 were respectively 24, 19.4 and 4.5 Million units. Of relevance to us is the adoption of the Integrated Starter Generator (ISG) technology, in particular by the top-4 OEMs. Based on SIAM data and knowledge of which vehicle models have seen ISG adoption, we estimate that ~8.4 Million vehicles produced in India in FY 2025-26 incorporated ISG as compared to the figure of ~7.1 Million vehicles in FY 2024-25. In FY 2025-26, Honda Motorcycles and Scooters India and TVS Motor Company, two of the top-4 2&3-wheeler OEMs in India that have been large volume adopters of the technology, continued with or expanded the number of vehicle models that incorporated ISG. The year also saw adoption action in the other two top-4 2-wheeler OEMs as well with the introduction of ISG in a vehicle by Hero

Motocorp for the first time and further adoption by Bajaj Auto. The year ended with six of the top-10 selling 2-wheeler models in India now having incorporated ISG, five of them as default (ie more than 80% of the volume of the model across variants now has ISG). All-in-all the year saw substantial deepening of adoption of ISG.

According to the VAAHAN portal that records new vehicle registrations in India, FY 2025-26 saw an over 17% growth in the retail sales number of electric 2-wheelers compared to FY 2024-25. As a percentage of the total number 2-wheelers registered in India, the penetration of electric 2-wheelers in India rose to ~7% in FY 2025-26 vs 6.4% in FY 2024-25. The year also saw a significant change in the leaderboard for electric

2-wheelers. TVS Motor Company, Bajaj Auto and Ather Energy captured the top-3 spots by volume selling over 900,000 electric 2-wheelers amongst them. The volumes in the L5 category of electric 3-wheelers saw a massive 66.5% growth in FY 2025-26 over FY 2024-25 numbers. Electric vehicle penetration in this category rose to ~34% ie for every 2 ICE-powered L5 three-wheeler sold, there was 1 L5 electric 3-wheeler sold in India in FY 2025-26. Mahindra & Mahindra and Bajaj Auto led this category in FY 2025-26.

European Electric Bicycle Market

Electric bicycles (e-Bikes) have gained significant popularity in Europe over the last decade. However, this market had a disappointing year. As per data from ZIV & BikeEU, Germany, France, Netherlands, Belgium, Italy, Spain and Austria which constitute larger markets in EU, registered unit sales totalling ~3.9 Million eBikes – a 3.7% drop in units sold in CY2025 versus CY2024.

Power Generator Market

The genset industry has been witnessing low to mid single-digit growth over the years with global annual generator numbers around 3.1 Million as per CRISIL report incorporated into our RHP in Feb 2026. The latter part of CY2025 saw strong demands of large gensets for data centres and other industrial projects.

The India volume in FY 2025-26 was ~2.2 Lakhs as per data compiled from multiple industry sources. On the other hand, the residential generator market in the US, of interest to us, saw a decline in sales due to fewer storms / tornados / power outages in the region during CY2025 versus CY2024.

2. Our Business and Key Products

We are a supplier of control-intensive, critical-to-the-application electronic control units ("ECUs") to leading original equipment manufacturers ("OEMs") in the mobility and industrial markets in India, the United States, and Europe. The majority of our revenue from operations is attributed to products which incorporate novel control technologies that are conceived and developed entirely in-house, enabling us to offer fresh proprietary solutions that provide distinct value to end-users or our OEM customers. Several of these unique technologies have achieved widespread adoption across the sectors we serve.

Our origins, in 2007, were in a lab in Indian Institute of Technology ("IIT") Bombay led then by Prof. Shashikanth Suryanarayanan, one of our Promoters. We have built on the technical expertise of our founding team and scaled our operations, and currently sell millions of control-intensive, critical-to-application controllers for complex systems globally across diverse markets every year. The key segments include Mobility wherein in FY 2025-26, we sold products for both ICE-powered and electric 2&3-wheeler vehicles and electric bicycles, and Industrial wherein in FY 2025-26 we sold products for Power Generators. Apart from 2&3-wheelers and Power Generators, we are actively engaged in development programs in the Commercial Vehicles (Mobility) market and in the Power Tools (Industrial) market.

For the Mobility segment, our key products in FY 2025-26 included Integrated Starter Generator (ISG) ECUs, Electronic Fuel Injection (EFI) ECUs, combined ISG+EFI ECUs for

ICE-powered and motor control units (MCUs) for electric 2&3-wheelers. We are the first company to design and manufacture sensorless commutation ("SLC") based ISG ECUs with shipments of over 10 million ISG and/or ISG+EFI ECUs for use on 2&3-wheelers between FY 2018-19 through FY 2025-26.

We have operated in the generator/genset controls market since 2010. Our key products for this market include auto mains failure genset controllers (GCUs) and EFI ECUs. We are among the key global players with a global market share of 14% in FY 2024-25 through our genset controllers and EFI ECUs for this market. We are the largest supplier of genset controllers in India with a market share of approximately 75%.

Our continued ability to initiate and scale technical shifts is underpinned by a unique technical nucleus, i.e., a team led by a core of expert engineers and scientists with established credentials and who remain focused on fundamentals. This nucleus consists of our Promoters and other key engineers with academic background primarily from the IITs/NITs/BITS through whom we have accumulated over 300 man-years of contribution. Such a nucleus continually reinforces our technical advantage, allowing us to maintain a leadership position over multi-year cycles of technologies applicable to diverse markets. By enabling the introduction of multiple new-to-the-market technologies into large

OEM programs, often as the first player, we have established a reputation as a credible innovation partner. This credibility is reflected in the rapidly growing volumes of our products integrated with such technologies across OEMs.

3. Business Performance

FY 2025-26 was the best year in our history on almost every financial dimension.

Revenue from operations crossed INR 1,058 crore, up ~61% over FY 2024-25. EBITDA grew even faster, up ~78% YoY to INR 222 crore with EBITDA margin getting close to 21%. PAT more than doubled, up ~119% YoY to ~INR 104 crore. And we delivered these results while also seeing improving capital efficiency: RoCE moved from ~34% to over

~40%, a number few companies our size, in any industry, have been able to realize. Mobility remained the larger of our two business segments, at INR 911 crore of revenue in FY 2025-26 versus INR 148 crore from Industrial, but both had a substantial growth this year. Mobility grew 61% YoY while Industrial grew 57% YoY.

profitableand capital efficient growth, in markets which themselves are Suchstrong, not growing at such a pace, was due to several of our key technology propositions now scaling up after years of sustained efforts. Our unique technologies get embedded into control-intensive ECUs we ship. In FY 2025-26, we sold more than 3.9 million control-intensive ECUs, 60% more than what we sold in FY 2024-25.

Where the Growth Came From

Within Mobility, our Sensorless ISG technology continued its rapid penetration into Indias engine-powered 2&3-wheeler market. The number of 2&3-wheelers produced in India with ISG rose from ~7.1 million in FY 2024-25 to 8.4 million in FY 2025-26. We accounted for more than 80% of that incremental volume growth. FY 2025-26 also saw our ISG ECUs get adopted by the dominant leader of the engine-powered 3-wheeler market as default for the domestic 3-wheeler models along with introduction and partial ramp-up for their export 3-wheeler models. FY 2025-26 also saw significant ramp-up of our ISG+EFI product. The ISG+EFI ECU product integrates the electronics of ISG ECUs with that of EFI ECUs making it more cost-effective for OEM customers. We believe this integrated ECU will make our ISG even more compelling for OEMs to adopt.

Our ISG and ISG+EFI ECUs have now been adopted by three of the top-4 2&3-wheeler manufacturers in India, and was used on five of the top-10 selling 2W sold in India in FY 2025-26. We believe that our ISG proposition is now firmly in the "broader market adoption" phase, and on way to widespread adoption.

On the electric vehicle side, our Motor Control Unit (MCU) for electric 3-wheeler, which got into production towards the end of FY 2024-25, continued to ramp up, and our electric 2-wheeler MCU entered production with partial ramp-up during the year. The revenue from electric 2&3-wheeler MCU as a percentage of revenue from the Mobility segment was 7.4%, broadly in line with the penetration of electrification in the 2&3-wheeler market in India.

On the Industrial side, our EFI ECU for the North America genset market saw its market launch and ramp-up during the year through its adoption by the dominant market leader in that segment.

Progress on Markets Under Development

In FY 2025-26, we continued to make headway in new markets that are important for the next stage of our growth. For the Commercial Vehicles market, the development of engine and exhaust gas after-treatment controllers and motor controllers continued. We expect start of production of these controllers over FY 2026-27. In Power Tools market, which globally has sales volume of hundreds of millions of units per year, we closed our first business win with a small but established manufacturer for a MCU built on our SLC technology. Start of production of this MCU is expected over the next four to five quarters.

Expansion of Manufacturing Footprint

In FY 2025-26, our operational manufacturing facilities were MF1 (40,000 sq ft) in Chakan, India and MF2 (8,000 sq ft), Pune, India. To support current and future business growth, we have also been expanding our manufacturing footprint. FY 2025-26 saw rapid progress in the set-up of: MF3 (120,000 sq ft) for ECUs and MF4 (9,000 sq ft) for electric motors both in Chakan, India. We expect shipments to start from MF3 and MF4 during FY 2025-26-27. We have also secured ~13 acres of land at Shoolagiri (SIPCOT) in Tamil

Nadu, which will allow us to serve customers with plants in South Indiamoreefficiently in the future.

4. Key Opportunities

Our primary long-term opportunity, at this point, is to grow into a global leader in ECUs, especially for small powertrains. Small powertrains are seen in seemingly unrelated markets spanning 2&3-wheelers, both ICE-powered and electric; Power Tools; small Commercial Vehicles; small Tractors; Small Generators; Outdoor Powered Equipment etc. Small motors are also seen in passenger car subsystems. We are in unique position, today, amongst all global players, to emerge as a leader leveraging synergy across these markets. We argue that below.

We have made significant inroads into 2&3-wheeler powertrains primarily due to our offering of motor controllers with our unique SLC technology for synchronous electric machines. In FY 2025-26, we supplied 3.9 Million control-intensive ECUs with close to 80% of them being motor controllers for 2&3-wheelers. With increasing interest in the adoption of ISG for ICE-powered 2&3-wheelers and also growing electrification, we have a shot at realizing a volume of more than 10 Million motor controllers/year for the 2&3-wheeler market. Further, given our primary product today is a motor controller, our

. This aspect is playing propositiononlygetsstrengthenedwithincreasing out in the high-volume Power Tool market with a firm shift towards battery-powered tools and related rise in need for motor controllers for brushless motors – all of which can potentially benefit from our SLC technology. While it is very early days for us in the Power Tool market, given the size of the market in terms of number of units, even relatively modest success there could allow us to accumulate large volumes.

A non-obvious aspect of our play in small powertrains is genuine synergy between controllers offered in different markets. Power and voltage ratings of motor controllers across the markets mentioned are similar allowing us the opportunity to commonize components and designs, accumulate volumes and benefit from the resulting sourcing and supply chain volumes. We believe this will be a crucial aspect of our play that will emerge in the coming years which will help our customers as well as shareholders.

While motor controllers remain our biggest long-term opportunity, the role of our engine control propositions is not to be over-looked. Nowhere is the strong interplay between our motor controllers and engine controllers more visible than in the ISG+EFI proposition for the ICE-powered 2&3-wheeler market. In fact, our ability to offer this combined ECU sharply enhances the possibility of acceleration of the ICE-powered 2&3-wheeler market towards adopting ISG as a default. Further, there is strong synergy between our offering for the 2&3-wheeler market and those for spark-ignited engines used in generators as well as small tractors especially in North America.

A significant mid-long term opportunity that is emerging for us is electric machines.

We have been advising our OEM customers on electric machine design to support our ISG ECUs for long now. We are now moving to manufacturing these electric machines starting with those for 2&3-wheeler ISG systems to ease integration with our ISG ECUs thereby speeding up ISG implementation, offering improved fuel-efficiency performance etc. Further, we are also engaging with customers on our offering of an integrated rare-earth-free motor along with an MCU for electric 2&3-wheelers and also electric bicycles. If our electric machine foray works out well, it will likely have a nice complementary aspect to our main opportunity of emerging as a leader for ECUs.

5. Key Risks

Customer Concentration

TVS Motor Company is our most significant customer based ISG proposition since 2018. Rapid market expansion of innovative propositions such as our Sensorless ISG, during the initial introduction and broader market adoption phases, often relies on anchor customers who are early adopters. This often results in a situation of customer concentration. Over FY 2024-25 and FY 2025-26, our ISG proposition has seen adoption in two more of the top-4 OEMs in India including on some key models. Further, in FY 2025-26, our EFI ECU was adopted as default by the North American genset market leader in their key model. These developments have led to the revenue from our biggest customer minus the sum of revenue from the next four customers, a measure of concentration of revenue, to fall from 72% in FY 23-24 to 68% in FY 2024-25 and further to 58% in FY 2025-26. Increase in the penetration of our Sensorless ISG technology and our growth in other markets including Commercial Vehicles and Power Tools are levers that we expect will lower the customer concentration risk in the mid-term.

2&3-wheeler Electrification

Since, historically, our revenue has had a high dependence on supply of products for engine-powered 2&3-wheelers, a shift of the Indian 2&3-wheeler industry towards electrification poses a risk to our business. The primary questions are whether we have compelling propositions for electric 2&3-wheelers and whether OEM thoughts on vertical integration would reduce the size of our addressable market.

We started supplying MCUs for electric three-wheelers in FY 2024-25, which ramped up significantly in FY 2025-26. Further, our MCUs for electric 2-wheelers went into series production during FY 2025-26. As a result, our revenue products supplied to the electric 2&3-wheeler market, as a percentage of our revenue from the 2&3-wheeler market, increased from 0.3% in FY 2023-24 to 1.7% in FY 2024-25 to 7.4% in FY 2025-26. The FY 2025-26 number was broadly in line with the percentage of electric vehicles in the Indian 2-wheeler market.

Given the large scale that we now have with our ISG ECU, which is a motor controller with a product architecture nearly identical EV MCUs, we have several unique advantages in addressing the electric 2&3-wheeler market. We have an established manufacturing infrastructure and sourcing relationships for shipping millions of motor controllers, which are both relevant for the electric 2&3-wheeler market. Additionally, our SLC technology – adopted on all of our ISG ECUs – is also relevant to electric 2-wheelers. Hall sensor failures especially in hub motor driven electric 2-wheelers are not uncommon – which our SLC when adopted would eliminate. We will address the electric 2&3-wheeler market by leveraging these strengths as well as by attempting to build other compelling propositions.

Continued success in the development of substantial new propositions

Our success has historically depended on our ability to introduce innovative technology and products that unlock new markets and drive widespread adoption. We have developed and launched several such offerings for ICE 2&3-wheelers and genset markets, helping us establish leadership positions and achieve large-scale adoption in both markets. Notable examples include our smart ignition technology for carburetted engine-powered 2&3-wheeler, integration of electronic governing in genset controllers, and our SLC technology enabling motor control without position sensors.

Continued success depends on our ability to generate and commercialize differentiated solutions, for existing as well as new markets. Each new technology proposition must progress through a defined sequence of stages, i.e., from technology proposition and proof of concept demonstration, to commercial business win, initial introduction, early growth, broader market adoption and sustaining industry proposition. Each stage introduces distinct risks. Any failure at any stage, whether due to technical, commercial, operational, or market-related factors, can limit our ability to open new markets and grow our business.

While this is a structural risk that exists for any company attempting to create new technology propositions anywhere in the world, we believe that we are now in an even stronger position to address it as compared to what we were a few years back. We have a nucleus of competent, creative engineers working consistently on building new propositions, guided by an experienced leadership team who has gone through all stages of the process, and an accumulated knowhow of hundreds of person-years which expands the scope of the propositions that we can go after.

6. FY 2026-27 Outlook

We expect FY 2026-27 to continue the strong momentum we had in FY 2025-26. We expect our Sensorless ISG ECU to be introduced on variants of three top-10 2-wheeler models in India across three of the top four OEMs, apart from adoption in more 3W models. We also expect continued ramp-up of our electric 2&3-wheeler MCU business.

We see two potential dampeners in FY 2026-27. First, commodity price inflation due to geopolitical instability and tightening semiconductor supply chains could cause an increase in our raw material costs. This situation may create mild pressure on EBITDA margin in the near term. Second, forecasts of a strong El Ni?o in CY2026 raises the possibility of a weaker Indian monsoon and less active US hurricane season, which could have some negative effect on Indias 2-wheeler market and the US home-standby generator market respectively. Both are global factors that will impact the industry at large, and we dont see either as a structural threat.

7. FY 2025-26 Financial Performance

The following table sets forth the selected financial data from our audited statement of profit and loss for FY 2025-26 and FY 2024-25.

Parameters	FY 25-26 Amount (INR crores)	As a percentage of Total income (%)	FY 24-25 Amount (INR crores)	As a percentage of Total income (%)
Income
Revenue from operations	1,058.38	99.50	658.36	99.37
Other income	5.27	0.50	4.17	0.63
Total income	1,063.65	100.00	662.53	100.00
Expenses
Cost of materials consumed	662.11	62.25	414.61	62.58
Changes in inventories of finished goods and work-in-progress	(16.30)	(1.53)	(3.96)	(0.60)
Employee benefits expense	86.61	8.14	61.43	9.27
Finance costs	8.53	0.80	12.03	1.82
Depreciation and amortization expense	63.48	5.97	45.33	6.84
Other expenses	109.03	10.25	65.39	9.87
Total expenses	913.46	85.88	594.83	89.78
Profit before tax	150.19	14.12	67.70	10.22
Tax expense
Current tax	24.66	2.32	12.90	1.95
Deferred tax expense / (credit)	21.95	2.06	7.75	1.17
Total tax expense	46.61	4.38	20.65	3.12
Profit for the year	103.58	9.74	47.05	7.10
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of defined	(0.39)	-0.04	(0.70)	(0.11)
benefit liability	0.10	0.01	0.20	0.03
Income-tax related to above item
Other comprehensive expense for the year (net of tax)	(0.29)	-0.03	(0.50)	(0.07)
Total comprehensive income for the year	103.29	9.71	46.55	7.03

Also included below is a comparison of our KPIs for FY 2025-26 versus FY 2024-25.

Key Performance Indicator	FY 25-26	FY 24-25
Total income (INR crores)	1,063.65	662.53
Revenue from operations (INR crores)	1,058.38	658.36
Profit for the year (INR crores)	103.58	47.05
Basic Earnings per equity share (INR)	23.91	10.93
Total Equity (INR crores)	449.20	303.38
Total borrowings (INR crores)	50.63	49.62
Profit for the year Margin (%)	9.74	7.10
EBITDA (INR crores)	222.20	125.06
EBITDA Margin (%)	20.99	19.00
RoCE (%)	40.43	33.80
RoE (%)	27.53	22.01
Debt – Equity Ratio	0.16	0.21
Number of engineers from IITs, NITs and BITS	154	120
Number of Control-Intensive Controllers Sold (numbers)	3,901,075	2,438,518

7.1 Commentary on P&L

Total income

Total income increased by 60.54% to INR 1,063.65 crores in FY 2025-26 from INR 662.53 crores in FY 2024-25, primarily due to an increase in revenue from operations.

Revenue from operations

Revenue from operations increased by 60.76% to INR 1,058.38 crores in FY 2025-26 from INR 658.36 crores in FY 2024-25, driven by a sharp increase in the sale of control-intensive ECUs (3.9 million units during FY 2025-26 versus 2.4 million units during FY 2024-25). Some more comments are in order.

• Both business segments contributed to growth. Mobility segment revenue increased by 61.41% to INR 910.57 crores in FY 2025-26, while Industrial segment revenue increased by 56.86% to INR 147.81 crores.

• During FY 2025-26, revenue from sale of MCUs for electric 2&3-wheelers increased substantially to INR 68.28 crores which was about 7.4% of the total Mobility segment revenue during the year. The corresponding sales figure for MCUs in FY 2024-25 was 9.67 crores.

• Sale of products to customers outside India during FY 2025-26 was INR 86.03 crores representing an increase of 89.33% compared to FY 2024-25s figure of INR

45.44 crores.

Other income

Other income increased to INR 5.27 crores in FY 2025-26 from INR 4.17 crores in FY 2024-25 mainly due to realization of higher government grants.

Cost of material consumed and changes in inventories of finished goods and work-in-progress

Cost of materials consumed taken along with changes in inventories of finished goods and work in progress increased from INR 410.65 crores in FY 2024-25 to INR 645.81 crores representing a 57% growth in line with the over 60% growth in revenue from operations. However, as a percentage of total income, this clubbed expense head saw a 1.26% reduction in FY 2025-26 versus FY 2024-25. This reduction is attributed to a larger share of control-intensive ECUs in the product mix and lower material costs. Lower material costs were driven by hardware designs of our ECUs becoming more frugal and lower costs offered by our suppliers on current/alternate parts.

Employee benefits expense

	FY 25-26	FY 24-25
Parameter	Amount (INR crores)	Amount (INR crores)	Change (%)
Salaries, wages and bonus	91.84	70.37	30.51%
Gratuity expense	2.78	1.28	117.19%
Contribution to provident funds	2.01	1.63	23.31%
Expenses related to compensated absence	0.66	0.29	127.59%
Equity-settled share-based payments	1.53	1.04	47.12%
Staff welfare expenses	8.88	6.12	45.10%
	107.70	80.73	33.41%
Less : Capitalised during the year	-21.09	-19.3	9.27%
Total	86.61	61.43	40.99%

Employee benefitsexpense increased by 40.99% to INR 86.61 crores in FY 2025-26 from INR 61.43 crores in FY 2024-25. However, as a percentage of total income, this expense head saw a reduction of 1.13% in FY 2025-26 versus FY 2024-25.

• The primary driver of the increase was INR 21.47 crores increase in salaries, wages and bonus due to salary increments to eligible employees, headcount increase and one-time bonuses amounting to INR 4.5 crores.

• Staff welfare expenses increased by 45.10% to INR 8.88 crores in FY 2025-26 from

INR 6.12 crores in FY 2024-25 mainly on account of a significant increase in the count of shopfloor employees (mostly on contract), trainings imparted to various employees & additional benefits under the medical insurance policy offered.

• The implementation of the New Labour Code led to a one-time increase of INR 0.81 crores in provisions for gratuity and compensated absences. Gratuity expense increased by 117.19% to INR 2.78 crores during FY 2025-26, from INR 1.28 crores during FY 2024-25 and expenses related to compensated absence increased by 127.59% to INR 0.66 crores in FY 2025-26, from INR 0.29 crores in FY 2024-25.

• Equity-settled share-based payments increased by 47.12% to INR 1.53 crores in FY 2025-26 from INR 1.04 crores in FY 2024-25. During FY 2025-26, we granted an additional 244,500 options to 19 employees. If and when exercised, these additional options would constitute approximately 0.55% of our issued share capital as on date. We continue to identify employees with potential and/or proven ability to de-risk our long-term goals.

• Employee benefits expense capitalised during the year increased by 9.27% to INR

21.09 crores in FY 2025-26 from INR 19.30 crores in FY 2024-25.

Finance costs

Finance costs decreased by 29.09% to INR 8.53 crores in FY 2025-26 from INR 12.03 crores in FY 2024-25. Interest expense on borrowings declined by 36.09% to INR 6.89 crores from INR 10.78 crores. This was mainly due to availability of surplus funds during FY 2025-26.

Depreciation and amortization expense

	FY 25-26	FY 24-25
Parameter	Amount (INR crores)	Amount (INR crores)
Depreciation of property, plant and equipment	37.60	24.13
Amortisation of intangible asset	22.76	20.49
Depreciation of right of use assets	8.91	6.12
Sub total	69.27	50.74
Less : Capitalised during the year	-5.79	-5.41
Total	63.48	45.33

Depreciation and amortization expense increased by 40.04% to INR 63.48 crores in FY 2025-26 from INR 45.33 crores in FY 2024-25. However, as a percentage of total income, this expense head saw a reduction of 0.87% in FY 2025-26 vs FY 2024-25.

• Depreciation of property, plant and equipment increased to INR 37.60 crores in FY 2025-26 compared to INR 24.13 crores during FY 2024-25 reflecting substantial additions to property, plant and equipment of INR 89.27 crores.

• Depreciation of right-of-use assets increased by 45.59% to INR 8.91crores due mainly to additional leased property for R&D activities.

• Amortization of intangible assets rose by 11.08% to INR 22.76 crores, supported by additions of INR 18.40 crores during FY 2025-26 on account of several new products entering series production.

• Capitalization of depreciation and amortization expenses remained flat during FY 2025-26.

Other expenses

Other expenses increased by 66.74% to INR 109.03 crores in FY 2025-26 from INR 65.39 crores in FY 2024-25. The primary drivers were higher shopfloor labour charges reflecting greater production activity and increased headcount, as well as elevated consumption of stores and spares. Power and fuel expenses also increased by 52.60% to INR 8.79 crores, in line with expanded manufacturing operations. In addition, warranty expenses rose significantly to INR 4.39 crores, largely due to the introduction of new product variants and increased warranty. Our provisions for warranty expenses for new products is higher on account of higher risk of failures as compared to mature products.

Profit before tax

Parameter	FY 25-26 Amount (INR crores)	As a Percentage of Revenue from operation (%)	FY 24-25 Amount (INR crores)	As a Percentage of Revenue from operation (%)	Change (%)
Revenue from operations	1058.38	100.00%	658.36	100.00%	60.76%
Other Income	5.27	0.50%	4.17	0.63%	26.38%
Total expenses	913.46	86.31%	594.83	90.35%	53.57%
Profit before tax	150.19	14.19%	67.70	10.28%	121.85%

Profit before tax increased significantly by 121.85% to INR 150.19 crores in FY 2025-26 from INR 67.70 crores in FY 2024-25, reflecting a stronger increase in revenue relative to total expenses. While revenue from operations grew by 60.76% between Fiscals 2025 and 2026, total expenses grew by only 53.57%, resulting in a substantial improvement in profitability.

Tax expense

	FY 25-26	FY 24-25
Parameter	Amount (INR crores)	As a Percentage of Revenue from operation (%)	Amount (INR crores)	As a Percentage of Revenue from operation (%)
Profit before tax	150.19	100.00%	67.70	100.00%
Current tax	24.66	16.42%	12.90	19.05%
Deferred tax expense/(credit)	21.95	14.61%	7.75	11.45%
Total Tax expense	46.61	31.03%	20.65	30.50%

Total tax expense increased to INR 46.61 crores in FY 2025-26 from INR 20.65 crores in FY 2024-25 reflecting higher pre-tax profits and a decrease in the rate of deferred tax asset utilization. The effective tax rate during FY 2025-26 was 31.03% marginally higher than the corresponding figure of 30.50% for FY 2024-25. Further, for Fiscal 2026-

27 onwards, we have decided to opt for taxation under the new tax regime with lower expected effective tax rate of approximately 25.2%.

Profit for the year

Parameter	FY 25-26 Amount ( crores)	As a Percentage of Revenue from operation (%)	FY 24-25 Amount ( crores)	As a Percentage of Revenue from operation (%)	Change (%)
Revenue from operations 1058.38	100.00%	658.36	100.00%	60.76%
Profit before tax	103.58	9.79%	47.05	7.15%	120.15%

Profit for the year increased significantly by 120.15% to INR 103.58 crores in FY 2025-26 from INR 47.05 crores in FY 2024-25 reflective of stronger operating performance and operating leverage.

7.2 Liquidity and Capital Resources

We have historically funded our liquidity and capital requirements through funds generated from operations, indebtedness, including term loans and short-term loans from banks, and shareholder equity. Going forward foresee funds generated from operations and indebtedness sufficient for organic growth. We consider our working capital to be sufficient for our present requirements.

Cash Flows

The following table summarizes our statements of cash flows in INR crores for the Fiscals presented:

Parameter	FY 25-26	FY 24-25
Operating profit before working capitalchanges	226.41	127.87
Changes in Working Capital (Net)	-71.49	-22.94
Income Tax paid (Net)	-26.90	-14.02
Net cash from operating activities (A)	128.02	90.91
Net cash (used in) / generated from investing activities (B)	-148.28	-104.75
Net cash generated from / (used in financing activities) (C)	17.65	12.86
Net (decrease) / increase in cash and cash equivalents (D=A+B+C)	-2.61	-0.98
Cash and cash equivalents at the beginning of the period/year	2.53	3.51
Effect of exchange rate fluctuations on cash & cash equivalents held	0.31	0.00
Cash and cash equivalents at the end of the period/year	0.22	2.53

Operating Activities

working capital changes increased significantly to INR 226.41 Operatingprofit crores during the FY 2025-26 from INR 127.87 crores in FY 2024-25 representing a 77.06 % growth. Net cash generated from operating activities during FY 2025-26 was INR 128.02 crores, compared to INR 90.91crores in FY 2024-25 representing a 40.82% growth. Net cash from operating activities did not grow as sharply as operating profit before working capital changes on account ofsignificant increase in working capital requirements.

Our working capital requirement increased substantially due to higher trade receivables. Trade receivables increased by INR 90.24 crores in FY 2025-26 compared with FY 2024-25, while inventory increased by INR 55.35 crores during FY 2025-26.

Trade Receivables

Parameter	FY 25-26	FY 24-25
Revenue from Operations	1058.38	658.36
Trade receivable as on 31st March, 2026	133.72	43.95
Average Trade Receivables	88.84	35.50
AR Days	31	20

Trade Receivables as on 31^st March, 2026 were at INR 133.72 crores compared to INR 43.95 crores as on 31^st March, 2025 an increase of 204.2%. This increase in trade receivables was due in part to the significant growth in our revenue from operations but significant due to an increase in the Accounts Receivable (AR) Days from 20 in FY 2024- 25 to 31 in FY 2025-26.

The increase in AR Days reflects a change in our working capital management. Until about Sep 2025 and throughout FY 2024-25, we utilized the M1xchange Trade Receivables Discounting System ("TReDS") platform, which enabled faster cash realization (typically within 24-48 hours) but resulted in lower receivable balances. Around Sep 2025, we discontinued the use of the TReDS platform as we had outgrown its purpose and transitioned to direct invoicing and collection from customers based on our agreed payment terms with them. This decision was made to transition to direct credit relationships with OEM customers in line with industry practice for companies of our scale. The realized AR Days of 31 for FY 2025-26 remains well within typical OEM payment terms of ranging from 60 to 90 days. For FY 2026-27, since the entire fiscal will not see the use of the TReDs platform unlike FY 2025-26 where half the year or saw the use of the platform, we expect an increase in AR Days.

Trade Payables

Parameter	FY 25-26	FY 24-25
Purchase of raw materials and services	748.35	469.44
Trade Payables	226.34	85.78
Average Trade Payables	156.06	81.26
AP Days	76	63

The total trade payables as on 31^st March, 2026 were INR 226.34 crores compared to INR 85.78 crores as on 31^st March, 2025. This increase in trade payables was due in part to the significant growth in our revenue from operations and corresponding increase in purchases of raw materials required to support higher production volumes and also an increase in the Accounts Payable (AP) Days from 63 in FY 2024-25 to 76 in FY 2025-26. We continue to negotiate favourable payment terms while ensuring timely payments to our suppliers. Our payment terms with our suppliers have remained stable for the last few years.

Inventory

Parameter	FY 25-26	FY 24-25
Cost of goods sold	645.81	410.65
Inventory	188.31	135.26
Average Inventory	161.79	126.45
Inventory Days	91	112

Inventory of raw material at the end of the year increased to INR 150.54 crores in FY 2025-26 from INR 113.79 crores in FY 2024-25 representing an increase of 39.22%. This was in part due to higher procurement to support the steep revenue growth. While the Inventory Days for the year reduced, towards the end of FY 2025-26, we made the decision to increase inventory on account of heightened supply chain disruption risk caused by the US-Iran conflict. The impact of that decision will likely be seen in FY 2026-27.

Current Ratio

Parameter	FY 25-26	FY 24-25	% Change
Current assets	415.54	214.51	93.72%
Current liabilities	300.89	148.37	102.80%
Net current assets	114.65	66.14	73.34%
Current Ratio	1.38	1.45	-4.48%

Our current assets increased by 93.72% over FY 2025-26 to close on 31^st March, 2026 at INR 415.54 crores. This increase was primarily due to an increase in trade receivables and inventories. Our current liabilities increased by 102.80% to close at INR 300.89 crores on 31^st March, 2026. This increase was primarily due to an increase in trade payables. Our current ratio has deteriorated marginally FY 2025-26 compared to FY 2024-25 but continues to remain comfortable.

Investing activities

Net cash used in investing activities for FY 2025-26 was INR 148.28 crores, we invested INR 89.27 crores in property, plant and equipment and INR 63.74 crores intangible assets during FY 2025-26, primarily to support ongoing operational requirements and to capture future growth opportunities.

Financing activities

Net cash inflow from financingactivities for the FY 2025-26 was INR 17.65 crores. A significant part of the inflow of funds for financingactivities came from proceeds from the issue of share warrants of INR 22.00 crores and INR 19.00 crores from exercise of ESOPs by our employees during FY 2025-26. It should be noted that we have running credit lines with our lenders and our utilization of those credit lines depends on the difference between net cash from operating activities and net cash from investing activities.

7.3 Financial Indebtedness

Parameter	FY 25-26	FY 24-25
Total Equity ( crores)	449.2	303.38
Borrowings( crores)	50.63	49.62
Lease Liability ( crores)	21.81	14.73
Total Debt	72.44	64.35
Debt - Equity Ratio	0.16	0.21

Our total equity as at March 31, 2026 was INR 449.20 crores while our borrowings as at 31^st March, 2026 was INR 50.63 crores and total debt was INR 72.44 crores. As a result, we had a low Debt – Equity Ratio of 0.16 as at 31^st March, 2026 and have adequate margin available to obtain additional funding from the banks, if required, for upcoming expansion projects.

Debt Service Coverage Ratio (DSCR)

Parameter	FY 25-26	FY 24-25
Earnings Available for Debt Service	183.51	109.30
Total Debt Service	43.90	77.37
Debt Service Coverage Ratio	4.18	1.41

Total debt serviced during the FY 2025-26 reduced by INR 33.47 crores to INR 43.90 crores compared to FY 2024-25. This is on account of reduced repayment of long-term and short-term loans from banks. Our earnings available to serve the debt have increased by INR 74.21 crores in FY 2025-26 compared to FY 2024-25. These factors led to a substantial strengthening, over FY 2025-26 of our ability to service debt.

7.4 Key Financial Measures

Earnings Per Share (EPS)

Basic earnings per share	FY 25-26	FY 24-25	Change (%)
Net profit after tax attributable to equity share holders	103.58	47.05	120.15%
Weighted average number of equity shares for the year	43,317,505	43,050,000	0.62%
Basic earnings per equity share INR	23.91	10.93	118.79%
Net Asset Value / Book Value per Equity
Share	101.78	71.57	42.22%
EPS % over Net Asset Value / Book Value per Equity Share	23.49%	15.27%	53.84%

EPS increased by 118.80% to INR 23.91 per share during FY 2025-26 compared to

INR 10.93 per share during FY 2024-25. Net profit attributable to equity shareholders increased by 120.15% during FY 2025-26 while there was marginal increment in the number of shares. As a result, EPS increased substantially, keeping pace with the growth of profit after tax, attributable to equity shareholders.

EPS % over Net Asset Value / Book Value has gone up to 23.49% during FY 2025-26 compared to 15.27% during FY 2024-25.

Non-GAAP Measures

Certain non-GAAP financial measures and certain other industry measures relating to our operations and financial performance such as EBIT, EBITDA, EBITDA Margin (%),Tangible net worth, Total Debt, Capital Employed, RoCE(%), RoE (%), Debt-Equity Ratio, Net worth, RoNW (%) and Net Asset Value ("NAV") per Equity Share have been included in this Annual Report. We compute and disclose such Non-GAAP financial measures and such other industry related statistical information relating to our operations and financial performance as we consider such information to be useful measures of our business and financial performance, and because such analysts, investors and others to evaluate the operational performance of the industry in which we operate, many of which provide such Non-GAAP financial industry related statistical and operational information. Such supplemental financial and operational information is therefore of limited utility as an analytical tool, and investors are cautioned against considering such information either in isolation or as a substitute for an analysis of our audited financial statements as standards disclosed here or elsewhere.

EBITDA

Parameter	FY 25-26 Amount (INR crores)	As a Percentage of Revenue from operation (%)	FY 24-25 Amount (INR crores)	As a Percentage of Revenue from operation (%)	Change (%)
Revenue from operations	1,058.38	100.00%	658.36	100.00%	0.00%
Other Income	5.27	0.50%	4.17	0.63%	-0.14%
Cost of materials consumed	645.81	61.02%	410.65	62.37%	-1.36%
Employee benefits expense	86.61	8.18%	61.43	9.33%	-1.15%
Other expenses	109.03	10.30%	65.39	9.93%	0.37%
EBITDA	222.20	20.99%	125.06	19.00%	2.00%

Reduced cost of material consumed coupled with operational leverage enhanced our EBITDA to 20.99% in FY 2025-26 compared to 19.00% in FY 2024-25.

Tangible Net worth, Total Debt, Capital Employed, and RoCE (%)

The table below provides Tangible Net worth, Total Debt, Capital Employed, and RoCE (%).

	FY 25-26	FY 24-25
Parameter	(in INR crores, except as indicated otherwise)
Total equity (A)	449.20	303.38
Other intangible assets (B) arefrequentlyusedbysecurities	66.86	68.94
Intangible assets under development (C)	70.50	49.32
Deferred tax asset (net) (D) measuresand other	-	13.55
Deferred tax liabilities (net) (E)	8.30	-
Tangible net worth(1) (E= A-B-C-D+E)	320.14	171.57
underapplicableaccounting Non-current liabilities -Financial liabilities - Borrowings (F)	29.88	25.69
Current liabilities -Financial liabilities - Borrowings (G)	20.75	23.93
Non-current Liabilities - Financial liabilities - Lease liabilities(H)	15.99	8.18
Current liabilities -Financial liabilities - Lease liabilities (I)	5.82	6.55
Total Debt(2) (J=F+G+H+I)	72.44	64.35
Capital Employed(3) (K=E+J)	392.58	235.92
Profitfor the period/year (L)	103.58	47.05
Finance costs (M)	8.53	12.03
Total tax expense (N)	46.61	20.65
EBIT (O=L+M+N)	158.72	79.73
RoCE (%) (O/K) (4)	40.43%	33.80%

Notes:

(1) Tangible Net Worth is calculated as Total equity minus Other intangible assets, Intangible assets under development, Deferred tax assets (net) plus Deferred tax liabilities (net). ⁽²⁾ Total Debt is calculated as Non-current liabilities - Financial liabilities - Borrowings, Non-current liabilities - Financial liabilities - Lease liabilities, Current liabilities - Financial liabilities - Borrowings, Current liabilities - Financial liabilities - Lease liabilities.

(3) Capital employed is calculated as Tangible Net Worth plus Total Debt. ⁽⁴⁾ RoCE (%) is calculated as EBIT divided by Capital Employed.

EBIT increased to INR 158.72 crores during FY 2025-26, almost double of the figure of

INR 79.73 crores for FY 2024-25. Capital employed during FY 2025-26 was INR 392.58 crores, increasing 66.40%, compared to INR 235.92 crores during FY 2024-25. However, since the growth in EBIT was 99.07% during FY2025-26,RoCEsawsignificant expansion to 40.43% in FY 2025-26 from 33.80% in FY 2024-25.

RoE (%)

The table below provides a reconciliation of RoE (%).

	FY 25-26	FY 24-25
Parameter	(in INR crores, except as indicated otherwise)
Total equity (A)	449.20	303.38
Total equity as on opening of first day of financial year (B)	303.38	124.12
Average Equity (C) ([A+B]/2)	376.29	213.75
Profit for the year (D)	103.58	47.05
RoE (%) (D/C)(1)	27.53%	22.01%

Notes:

(1) RoE (%) calculated as profit for the period/year divided by average Total equity. Average Total equity is average of closing Total equity as on closing day of financial period/year and opening equity of opening day of financial year.

Profit for the year increased by 120.15% to INR 103.58 crores during FY 2025-26 compared to INR 47.05 crores during FY 2024-25. Driven by this profit growth, RoE% increased to 27.53% during FY 2025-26 compared to 22.01% during FY 2024-25.

Total Debt and Debt Equity Ratio

The table below provides a reconciliation of Total Debt and Debt – Equity Ratio.

	FY 25-26	FY 24-25
Parameter	(in INR crores, except as indicated otherwise)
Total equity (A)	449.20	303.38
Non-current liabilities-Financial liabilities - Borrowings (B)	29.88	25.69
Current liabilities- Financial liabilities - Borrowings (C)	20.75	23.93
Non-current Liabilities - Financial liabilities - Lease liabilities(D)	15.99	8.18
Current liabilities -Financial liabilities - Lease liabilities (E)	5.82	6.55
Total Debt(1) (F=B+C+D+E)	72.44	64.35
Debt - Equity Ratio(2)(F/A)	0.16	0.21

Notes:

(1) Total Debt is calculated as Non-current liabilities - Financial liabilities - Borrowings, Non-current liabilities - Financial liabilities - Lease liabilities, Current liabilities - Financial liabilities - Borrowings, Current liabilities - Financial liabilities - Lease liabilities.

(2) Debt – Equity ratio is calculated as Total Debt divided by Total equity.

Total equity as at 31^st March, 2026 was INR 449.20 crores while borrowings as at 31^st March, 2026 was INR 50.63 crores and total debt was INR 72.44 crores . As a result, we had a low Debt – Equity Ratio of 0.16 as at 31^st March, 2026 and have adequate margin available to obtain additional funding from the banks, if required, for upcoming expansion projects.

Net worth and RoNW(%)

The table below provides a reconciliation of Net Worth and RoNW (%).

	FY 25-26	FY 24-25
Parameter	(in INR crores, except as indicated otherwise)
Equity share capital (A)	44.16	0.03
Reserves and surplus (B)	405.04	303.35
Other comprehensive expense for the period/year (C)	(0.29)	(0.50)
Net Worth (D=A+B-C)(1)	449.49	303.88
Profit for the period/year (E)	103.58	47.05
RoNW (%) (E/D) (2)	23.04%	15.48%

Notes:

(1) Net Worth has been defined as the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the financial statement of assets and liabilities, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation. Further, net worth has been computed as a sum of equity share capital, equity component of compulsorily convertible preference shares, reserves and surplus as of the last day of relevant year minus other comprehensive expense for the year.

(2) RoNW(%) is calculated as profit for the year divided by Net Worth.

Profit for the year increased by 120.15% to INR 103.58 crores during FY 2025-26 compared to INR 47.05 crores during FY 2024-25. Our networth grew by 47.92% to reach INR 449.49 crores in FY 2025-26 compared to INR 303.88 crores in FY 2024-25. This rapid profit growth led to our RoNW% growing to 23.04% during FY 2025-26 compared to 15.48% during FY 2024-25.

Net Asset Value per Equity Share

	FY 25-26	FY 24-25
Parameter	(in INR crores, except as indicated otherwise)
Equity share capital (A)	44.16	0.03
Reserves and surplus (B)	405.04	303.35
Other comprehensive expense for the period/year (net of tax(C) (0.29)	(0.50)
Net Worth (D = A+B-C)(1)	449.49	303.88
Number of equity shares outstanding as at the end of year (E)*	44,161,500	42,460,500
Net Asset Value per Equity Share(2) (D/E) INR	101.78	71.57

Notes:

* Adjusted for the 1499:1 bonus issue in September 2025.

(1) Net Worth has been defined as the aggregate value of the paid-up share capital and all reserves created out of the profits and securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the financial statement of assets and liabilities, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation. Further, net worth has been computed as a sum of equity share capital, reserves and surplus as of the last day of relevant year minus other comprehensive expense for the year.

(2) Net Asset Value per Equity Share is calculated as Net Worth divided by total of number of equity shares outstanding as at the end of year. Denominator is adjusted for bonus issue that have changed the number of equity shares outstanding, without a corresponding change in resources.

Our networth increased by 47.92% to INR 449.49 crores as at 31^st March, 2026 compared to INR 303.88 crores at 31^st March, 2025. While the number of equity shares as at 31^st March, 2026 increased by 1,701,000 to 44,161,500 as on 31^st March, 2026. As a result, the Net Asset Value per Equity Share increased to INR 101.78 as at 31^st March, 2026 compared to INR 71.57 as at 31^st March, 2025.