Servotech Power Systems Ltd Management Discussions

<dhhead>Management Discussion and Analysis</dhhead>

Economy Overview

Global Economy¹

In CY 2024, the global economy demonstrated resilience, registering a growth of 3.3%. This was achieved despite headwinds such as geopolitical unrest, persistent supply chain disruptions and inflationary pressures. A major contributor of this performance was the robust expansion in Emerging Markets and Developing Economies (EMDEs), which grew by 4.3%, significantly outpacing the 1.8% growth recorded in developed economies. This stability can be largely attributed to proactive monetary policies implemented by central banks worldwide. These interventions yielded tangible results, with global inflation easing to 5.7% in CY 2024 from 6.7% in the previous year.²

Outlook

Lookingahead,theglobaleconomyisprojectedtomaintain its growth trajectory, with GDP growth forecast at 3.3% for both CY 2025 and CY 2026. This sustained momentum will likely be supported by accommodative monetary policies aimed at stabilising prices, stimulating economic activity and boosting employment. Inflationary pressures are anticipated to ease further, with global headline inflation projected to decline to 4.2% in CY 2025 and to 3.5% in CY 2026. Emerging Markets and Developing Economies (EMDEs) are projected to sustain their momentum with a 4.2% growth in CY 2025 and 4.3% in CY 2026. In contrast, developed economies are expected to grow at a more moderate pace, 1.9% in CY 2025 and 1.8% in CY 2026.

Indian Economy³

India retained its position as the fastest growing major economy in FY 2025, registering a GDP growth rate of 6.5% despite a volatile global environment. Strategic government led initiatives, particularly those targeting infrastructure developmentandtheexpansionofruralconnectivity,playeda pivotal role in catalysing economic momentum. These efforts stimulated activity across key sectors, with manufacturing, agriculture and technology benefitting from sustained government support. Additionally, inflation eased to 4.7% in FY 2025 from 5.4% in the previous fiscal year⁴, contributing to a recovery in both urban and rural consumption.

Outlook

The Indian economy is expected to sustain its growth momentum in FY 2026, with GDP projected to expand by 6.5%. This outlook is backed by a combination of income tax reform, targeted fiscal initiatives and a supportive monetary environment. A key growth driver is the Government of Indias combined emphasis on infrastructure development, as evidenced by the

11.21 lakh crore capital outlay announced in the Union

Budget.⁵ Complementing these efforts, the Reserve

Bank of India (RBI) has lowered the interest rates to infuse liquidity and stimulate consumption. Inflation is expected to remain stable, enhancing purchasing power and supporting overall economic momentum. At the same time, India is closely monitoring global trade developments, including new tariff impositions by the United States and is proactively formulating calibrated responses to safeguard national trade interests while maintaining long term strategic partnerships.

Source: IEA

The global Electric Vehicle (EV) charging industry is undergoing a rapid transformation, with the number of public chargers more than double since 2022, surpassing 5 million units worldwide. In 2024 alone, over 1.3 million public charging points were installed, an increase nearly equivalent to the entire global stock in 2020. China remains the powerhouse, accounting for around two-thirds of all public charger growth since 2020. The country now represents about 65% of global public charging points and 60% of the global electric light-duty vehicle fleet. Europe followed with strong momentum, growing its public charging network by over 35% in 2024 and crossing the 1 million mark. Meanwhile, the United States recorded a 20% increase in its public charging infrastructure. Ultra-fast charging infrastructure is expanding rapidly, driven by declining hardware costs and advances in battery technology that enable much faster charging times. Europe has doubled its ultra-fast installations, while China continues to build aggressively on its already substantial base. Despite this progress, global disparities persist, largely due to varying levels of market maturity, urbanisationandaccesstohomecharging.AsEVadoption spreads, the industrys focus is increasingly shifting from the mere number of chargers to increasing charging power, expanding highway coverage and enhancing interoperability to ensure a seamless user experience.

Indian

Indias EV charging sector is gaining momentum, though it faces unique challenges. In 2024, the country added around 40,000 new public chargers, bringing the national total to 75,000 by year-end. Growth is being driven by government initiatives such as the PM E-DRIVE scheme, which allocate 20 billion ($240 million) in 2024 specifically for charging infrastructure. These efforts are primarily focused on urban centres and high traffic corridors. Looking ahead, the government aims to scale to around 375,000 public charging points by 2030, which will support nearly 3 million electric light-duty vehicles. This would translate to an average ratio of 7 EVs per public charger, up from fewer than four in 2024. Rapid deployment of fast chargers by both public and private players is underway, although policy changes such as capping investment eligible for tariff relief could create strategic uncertainties. Overall, Indias EV charging industry is in a high-growth phase, supported by strong policy support. However, to achieve widespread EV adoption and meet its ambitious electrification targets, the country must continue to accelerate infrastructure development, especially the deployment of fast, accessible and reliable public chargers.

Solar Industry⁸

Indias solar industry has achieved a historic milestone by surpassing 100GW of installed solar power capacity as of early 2025, a remarkable leap from just 2.82GW in 2014. This extraordinary 3,450% growth over the past decade positions India as a global leader in renewable energy leader and highlights the nations commitment to a cleaner, more self-reliant energy future. This achievement has been fuelled by large-scale solar parks, vigorous rooftop solar initiatives such as the PM SuryaGhar Muft Bijli Yojana and major strides in domestic manufacturing. Indias module production capacity has surged from 2GW to 60GW, with a target of 100GW by 2030. Today, solar energy accounts for 47% of Indias total renewable energy portfolio, with significant outputs from states such as Rajasthan, Gujarat, Tamil Nadu, Maharashtra and Madhya Pradesh. Both utility-scale and rooftop solar segments have witnessed rapid expansion, including a record-breaking 24.5GW of new solar capacity added in 2024. This momentum highlights Indias pivotal role in shaping a sustainable, affordable energy path, empowering millions of households and reinforcing its status as a renewable energy powerhouse.

Battery Energy Storage Systems (BESS) Industry⁹

Indias Battery Energy Storage Systems (BESS) industry is rapidly emerging as a critical enabler of the nations drive toward renewable energy transition and grid resilience. With the inauguration of advanced manufacturing facilities such as the one in Bidadi, Bengaluru, featuring an annual capacity of 5GWh, India is advancing steadily toward becoming a global BESS manufacturing hub. The sector is poised for substantial growth, with investment requirements estimated at 4.79 lakh crore by 2032 and a projected storage capacity need of 411.4GWh. This growth is underpinned by supportive government initiatives, including a substantial Viability Gap Funding (VGF) of more than 9,000 crore, aimed at catalysing more than

43GWh of battery storage projects. These initiatives reflect a broader commitment to technological self-reliance and align with the Aatmanirbhar Bharat vision. As India adds 25–30GW of renewable energy capacity annually, the expansion of BESS infrastructure is vital for ensuring grid stability, peak demand management and seamless integration of intermittent renewable sources. A robust BESS ecosystem will be fundamental to securing a clean, efficient and reliable energy future for the nation.

Lighting Industry¹⁰

Indias LED lighting market is witnessing robust expansion, reaching a value of $5.0 billion in 2024 and is projected to grow at a remarkable CAGR of 19.35% to $26.7 billion by 2033. This growth is propelled by strong government mandates for energy efficiency, expanding urban infrastructure,decliningLEDpricesandrapidtechnological advancements. Government-led programmes such as the Smart Cities Mission, UJALA and the Production Linked Incentive (PLI) scheme are not only accelerating LED adoption but also boosting investment in smart lighting systems featuring sensors, wireless controls and IoT connectivity. The commercial sector leads in adoption, with widespread use in offices, retail, hospitality and public infrastructure, while panel lights dominate among product types due to their versatility in modern buildings. Despite the sectors dynamism, structural hurdles persist, including a fragmented supply chain, inconsistent product quality standards and competition from low-cost unorganised players. However, Indias emergence as a favourable manufacturing hub, combined with growing export ambitions, strategic domestic partnerships and a push for smart and sustainable lighting, positions the industry for sustained growth across residential, commercial and export-oriented segments.

Medical Devices Industry¹¹

Indias medical devices industry is undergoing a phase of rapid and dynamic expansion, with the market projected to surge from $12billion in 2023 24 to an impressive $50 billion by 2030. This remarkable growth is fuelled by multiple factors: a burgeoning population, a rising middle class with higher disposable incomes, an aging demographic and the escalating incidence of chronic diseases, all of which are boosting demand for advanced medical technologies across the country. Government initiatives such as the ‘Make in India are boosting domestic manufacturing and catalysing sectoral investment. However, these initiatives also introduce regulatory complexities that global MedTech companies must strategically navigate to succeed in the Indian market. Indias global market share in the medical devices sector is anticipated to rise dramatically from 1.65% to as much as 10–12% over the next 25 years. This expansion will be supported by the scaling up of healthcare infrastructure, rising health awareness and robust demand for technologically advanced equipment. High potential segments such as diagnostic imaging, cardiovascular devices, orthopaedic implants, medical consumables and in-vitro diagnostics are poised to lead this transformative phase. As a result, India is well on track to emerge as a significant global player in the field of medical technology.

Company Overview

Servotech Renewable Power System Limited, an NSE-listed company, is at the forefront of sustainable energy solutions and EV charging technology in India. Established in 2004, Servotech began its journey with the introduction of sine-wave inverters and rapidly diversified into innovative sectors, launching products such as LED lighting, solar street lights and solar hybrid inverters. The Company stands out for its commitment to domestic manufacturing, aligning with the ‘Make in India initiative. It produces high quality solar energy products and advanced EV chargers, including ultra-fast DC and home AC models. Servotech has successfully installed over 2400 EV chargers in collaboration with leading oil marketing companies, contributing significantly to the growth of Indias electric mobility sector.

Servotechs expansion into the Middle East and Africa, along with the introduction of innovative offerings such as the ServPort rooftop PV system and medical-grade oxygen concentrators reflect its dynamic growth and industry leadership. Guided by a mission to achieve net-zero emissions and reduce reliance on fossil fuels, Servotech integrates modern technology, ethical business practices and a strong focus on societal and environmental impact. The Company delivers reliable, energy-efficient solutions aimed at nurturing a sustainable future.

Manufacturing Excellence

Servotechs manufacturing operations are anchored by two advanced facilities, each playing a crucial role in driving innovation and supporting the transition to clean energy solutions. The Safiabad Manufacturing Facility, commissioned in 2023, is the Companys newest and most technologically advanced plant. Purpose-built to support Indias e-mobility mission, it specialises in the production of EV chargers and critical components. This facility reflects Servotechs commitment to innovation, scalability and sustainability in the clean transportation space. Complementing this is the Kundli Manufacturing Facility, which initially focused on the production of LED products, power and backup oxygen concentrators and UVC devices. As market dynamics evolved, Kundli was transformed into a strategic hub to manufacture clean energy solutions. It now produces solar inverters, battery storage systems and advanced solar technologies, reinforcing Servotechs proactive approach to sustainable growth and manufacturing excellence.

Financial Analysis

The Financial performance with respect to Operational performance of the Company is discussed in the Directors Report which forms part of the Annual Report.

Key Financial Ratios

Sl.		As at 31st	As at 31st
	Particulars			Changes
No.		March, 2025	March, 2024
1.	Current Ratio (times) = Current Assets / Current Liabilities	2.16	1.79	20.67
	Debt-Equity Ratio (times) = Total Borrowings /	0.33
2.			0.63	-47.62
	Shareholders Equity
3.	Debtor Turnover (Days)	96.05	99.13	-3.11
	Return on Equity Ratio (%) = Net Profit after taxes / Average	18.95%
4.			10.80%	75.46
	Shareholders equity
	Inventory Turnover ratio (times) = Revenue from	9.88%
5.			10.43	-5.27
	operations / Average inventory
6.	Net Profit ratio (%) = Net Profit / Revenue from operations	5.68%	3.69%	53.93
	Return on capital employed (%) = EBIT / Capital employed	17.67%
7.			8.96%	97.21
	(Average Total Equity + Debts)
8.	Return on Investment (%) = EBIT / Average Total Assets	13.78%	9.11%	51.26
	Operating Profit Ratio = Operating Profit / Revenue from	8.99%
9.			6.61	36
	Operation
10.	Interest Coverage Ratio = EBIT / Finance Cost	6.88%	5.82	18.21

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous Financial Year) in key financial ratios.

Note:

1. Debt-Equity Ratio

Due to preferential issue of equity shares and also increasing in retained earning

2. Return on Equity Ratio

Increased due to higher profit during the year as compared to previous year

3. Net Profit ratio

Increased due to higher margins in sales during the year as compared to previous year.

4. Return on capital employed

Increased due to higher profit during the year as compared to previous year

5. Return on Investment

Increased due to higher profit during the year as compared to previous year

6. Operating Profit Ratio

Increased due to higher margins in sales during the year as compared to previous year.

Disclosure of Accounting Treatment

The Company has followed all the treatments in the Financial Statements as per the prescribed Accounting Standards.

Human Resource

Servotech views its employees as essential to driving operational excellence and maintaining a competitive edge. The Company is powered by a skilled and dedicated team of professionals who manage operations with efficiency and sound judgment. With a strong emphasis on attracting, developing and retaining a diverse workforce, Servotech strives to unlock each individuals potential within a purpose-driven, inclusive and rewarding environment. The Company remains committed to nurturing continuous growth, both by strengthening employee engagement and pursuing new business opportunities that create long-term value.

To equip its workforce for future challenges and emerging opportunities, Servotech invests proactively in capability building and reskilling initiatives. These ensure that the employees remain agile, adaptable and well-prepared to navigate industry changes. The Company promotes a collaborative workplace culture grounded in participation, commitment, knowledge sharing, integrity and confidentiality. It encourages active engagement from all team members as the Company evolves and scales. With a steadfast focus on competency development, Servotech provides ample support for both personal and professional advancement, enabling employees to stay ahead in their fields and grow in tandem with the Company.

500+

Skilled Professionals

Employee Health and Safety

At Servotech, employee health and safety are paramount, forming the foundation of a productive and secure work environment. The Company is dedicated to safeguarding the well-being of its workforce by implementing comprehensive measures aligned with industry standards and regulatory requirements. Servotech has established robust health and safety policies that serve as the foundation for a safe workplace. Regular risk assessments are conducted proactively to identify and mitigate potential hazards, while continuous training ensures employees are well-versed in safe work practices, emergency procedures and the correct use of Personal Protective Equipment (PPE).

The Company prioritises emergency preparedness through detailed response plans and routine drills addressing situations such as fires and chemical spills. Servotech also supports the overall well-being of its employeeswithhealthandwellnessprogrammes,offering access to medical services and mental health support. A culture of transparency is encouraged through open incident reporting, followed by thorough investigations and corrective actions to prevent recurrence. Regular audits and reviews ensure ongoing compliance and uphold the highest safety standards. Through these initiatives, Servotech strives to nurture a safe, healthy and supportive workplace that protects employees and drives operational efficiency.

Internal Control System

Servotech has set up a strong internal control system to support its operations and maintain best practices throughout the organisation. This system is built on thorough, well-organised policies and procedures that address all key financial and operational areas. The main features include:

Reliable Financial Reporting: Carefully designed controls guarantee the accuracy and trustworthiness of financial information shared with stakeholders. Operational Supervision: The system monitors daily operations to make sure they are consistent with the Companys goals and comply with legal requirements. Asset Safeguarding: Protective measures help prevent unauthorised use or loss of assets, reducing risks and keeping Company resources secure.

Regulatory Compliance: The controls are structured to satisfy legal and industry standards, with ongoing updates to stay in line with international best practices.

PolicyandProcedureFramework:Servotech regularly reviews its comprehensive set of policies to match the Companys scale and ongoing development, ensuring they remain effective and relevant.

Employee Training: The Company invests in regular training sessions to ensure employees understand regulatory requirements and ethical standards, strengthening their commitment to compliance and the Companys code of conduct.

By implementing these controls, Servotech creates a reliable structure that supports efficient operations and ensures ongoing compliance with regulations.

Cautionary Statement

The statements in the ‘Management Discussion and Analysis regarding the Companys objectives, projections, estimates and expectations may constitute ‘forward-looking statements under relevant securities laws and regulations. Actual outcomes could vary significantly from those anticipated. Key factors that could influence the Companys performance include economic and political conditions, changes in government regulations, tax policies, economic developments and various other internal and external factors. The Company does not commit to updating any forward-looking statements to reflect future events or circumstances. Investors are encouraged to exercise caution and due diligence when interpreting these statements.