Shivalik Bimetal Controls Ltd Management Discussions

1. Global Outlook

A resilient but fragile world economy: momentum interrupted by a Middle East energy shock, with growth holding and downside risks dominating

1.1 Global Economy

The global economy entered 2026 with genuine momentum. A technology-investment boom, some easing of trade-policy tensions, accommodative financial conditions and selective fiscal support had, early in the year, put the International Monetary Fund (IMF) on course to upgrade its growth forecast. That trajectory was interrupted at the end of February 2026 by the outbreak of war in the Middle East, the closure of the Strait of Hormuz and damage to critical energy infrastructure in a region central to global hydrocarbon supply. Faced with an unusually fluid situation, the Fund set aside its traditional baseline and published a reference forecast premised on a relatively short-lived conflict whose disruptions fade by mid-2026.

On that reference basis, global growth is projected at 3.1% in 2026 and 3.2% in 2027, a downward revision of 0.2 percentage point for 2026 against the January 2026 WEO Update, slower than both the recent 2024-25 pace of about 3.4% and the 2000-19 average of 3.7% and expected to settle near that lower rate over the medium term. Absent the war, the 2026 forecast would in fact have been revised upward to 3.4%, so the downgrade is overwhelmingly a conflict effect, a cut from the 3.3% projected in January. Global headline inflation is expected to rise from 4.1% in 2025 to 4.4% in 2026, then ease to 3.7% in 2027.

The shock transmits through three channels: a textbook energy-supply shock that raises input costs and feeds headline inflation; potential second-round wage-and-price effects where inflation expectations are poorly anchored; and a financial-market risk-off response, with energy-importing and low-income economies the most exposed. The toll is unevenly distributed. Advanced-economy growth is put at 1.8% in 2026 and 1.7% in 2027, with the United States at 2.3% and the euro area easing to 1.1%; emerging market and developing economies slow to 3.9% before recovering to 4.2%, carrying the largest downward revision. Within emerging Asia (4.9% in 2026), China is projected to grow by 5.0% in 2025 and 4.4% in 2026, and India, the fastest-growing major economy, is projected at 6.5% in both 2026 and 2027.

Downside risks dominate. Under an adverse scenario of larger, more persistent energy price increases, global growth slows to 2.5% and inflation reaches 5.4%; under a severe scenario, growth falls to about 2% in 2026, with headline inflation near 6% by 2027.

By mid-2026, the picture was one of resilience rather than relief. The Fund noted in early June that oil was trading only about 3% above the US$82.22-a-barrel level that underpinned the April reference forecast, though spot prices remained volatile and reserves continued to fall. Following a US-Iran ceasefire, it cautioned that physical energy normalisation would lag the political announcement, with several Gulf exporters facing outright contractions; it judged the global economy to be weathering the shock, in its own words, "reassurance, but not complacency," with the United States and China still providing steady momentum, ahead of a fuller reassessment due in its July update.

6.5% 2.5%

India growth, 2026 Adverse-scenario growth, 2026

1.2 Global Trade Prospects

The headline trade tailwind is fading, even as AI-enabling goods and a more multipolar map redraw the sources of trade growth.

World trade defied the pessimists in 2025. Despite the steepest tariff increases in roughly a century, merchandise trade volumes recorded a growth rate of 4.6%, well above the 2.4% the WTO had pencilled in the previous autumn, and goods-and-services trade grew about 4.7%, outpacing world output. In value terms, merchandise trade reached US$26.26 trillion and goods-and-services trade US$34.65 trillion, each up about 7% on 2024; UNCTAD records the combined figure crossing US$35 trillion for the first time. The engine was artificial intelligence: trade in AI-enabling goods jumped 21.9% to US$4.18 trillion and, though only about one-sixth of world trade, delivered 42% of its 2025 growth. McKinsey attributes this to a near-40% surge in semiconductor and data-centre hardware shipments, accounting for about a third of global trade growth.

That momentum is set to cool. On the WTOs baseline, merchandise trade-volume growth slows to 1.9% in 2026 before recovering to 2.6% in 2027, while commercial-services growth eases to 4.8% then 5.1%; for the first time in the cycle, trade and output expand at roughly the same pace (about 2.7% and 2.8% at market exchange rates). The one-off lift from US import front-loading ahead of tariffs is not expected to recur, even as policy uncertainty remains historically high.

The balance of risks is firmly to the downside, and it runs through energy. Should the Middle East oil shock prove durable, the WTO estimates merchandise growth could fall to 1.4% in 2026 and services to 4.1%, as higher transport, fuel and fertiliser costs feed through. The clearest upside is the mirror image: sustained AI-related demand could add half a percentage point to merchandise growth.

Three structural shifts frame the medium term. First, fragmentation: the share of world trade conducted on most-favoured-nation terms has slipped from about 80% to 72%, with tariff actions now accounting for roughly 11% of global flows, though recent changes were largely substitutions of legal instruments rather than new barriers. McKinsey puts the average effective US tariff near 15% at end-2025, easing toward 12% by early 2026, and finds trade steadily reorienting toward geopolitically aligned partners. Second, the US-China rupture and its ripples: US imports from China fell about 29%, resulting in a decline in Chinas market share of 4.4 percentage points in 2025 alone, from 13.8% to 9.3%, while China redirected output to Europe and the Global South, cutting consumer-goods prices by an average of 8% and lifting its surplus to a record as it moved upstream to become a "factory to the factories." India and ASEAN absorbed much of the diverted demand, India meeting roughly half the US smartphone volume once supplied by China.

Third, the reweighting of demand toward developing economies and services. UNCTAD notes that South-South trade has reached US$6.8 trillion, now 57% of developing-country exports, and that services, about 27% of world trade and growing by nearly 9% in 2025, are increasingly delivered digitally. It also flags tightening rules: some 18,000 discriminatory measures since 2020, the EUs carbon border mechanism from 2026, and clean-energy technology markets potentially worth US$640 billion a year by 2030.

For an export-oriented precision manufacturer, the signal is twofold: the headline trade tailwind is fading, but the fastest-growing currents, namely AI-enabling and advanced-manufacturing goods, electrification-linked inputs, and a more multipolar customer base, align with where higher-value demand is migrating.

If the Middle East oil shock proves durable, the WTO sees 2026 merchandise trade growth slowing to 1.4% and commercial services growth to 4.1%, as higher transport, fuel, and fertiliser costs feed through.

The Middle East shock exposed deep import dependence: without structural change, Southeast Asias fossil-fuel import bill could rise from over US$80 billion in 2024 to around US$245 billion by 2035, roughly half that if announced pledges are met.

1.3 Global Energy Outlook

Into the Age of Electricity, with security back in focus: a Middle East shock testing import-dependent systems even as power, renewables and EVs reset the demand base.

In 2025, the world was confirmed to have entered what the IEA calls the Age of Electricity. Global energy demand grew by 1.3%, a slowdown from 2024, while electricity demand rose by close to 3%, more than twice as fast. For the first time on record, a modern renewable energy source led the way: solar PV accounted for over a quarter of the increase in global energy demand, and low-emissions sources together supplied nearly 60% of it. Solar generation jumped by 600 TWh, the largest single-year increase by any source outside post-crisis recoveries, and renewable capacity additions hit a record 800 GW. Battery storage was the fastest-growing power technology, with additions up about 40% to nearly 110 GW, more than the highest-ever annual additions from natural gas.

Fossil fuels still grew, but slowly. Oil demand rose just 0.65 mb/d, well below the 1.4 mb/d average of the 2010s, as electric-car sales climbed over 20% to more than 20 million units, about a quarter of all new cars. Gas demand growth eased to around 1% amid high first-half prices, and coal added only 0.4%. The decisive new load is digital: in the United States, data centres accounted for roughly half of all growth in electricity use, while energy-related CO2 emissions rose only 0.4%, with Indias flat for the first time since the 1970s.

Against this structural shift sits a sharp reminder of energys fragility. The IEA describes the Middle East conflict as a stark wake-up call, most acutely for import-dependent Asia. Before the crisis, Southeast Asia drew about 60% of its crude and a third of its gas from the Middle East, and the disruption tightened global LNG markets, raised the cost of gas-fired power and prompted some switching back to coal. Without structural change, the regions fossil-fuel import bill could nearly triple, from over US$80 billion in 2024 to around US$245 billion by 2035; meeting announced pledges would roughly halve it.

The direction of travel is nonetheless clear, and it runs through the wire. Southeast Asia, though accounting for only 4% of global GDP, is set to drive close to a fifth of global energy demand growth to 2035, with electricity already expanding twice as fast as total energy and the next decade alone adding demand equivalent to Japans entire generation capacity today. Electric-vehicle sales there more than doubled in 2025 to around half a million units, and the electric share of the regions vast two- and three-wheeler market is projected to be near 60% by 2035. Meeting this requires transmission and distribution networks to more than double by 2050, with grid-and-storage investment rising from about US$13 billion today toward US$50 billion.

Under a pledges-aligned pathway, electricity becomes the backbone of the system: low-emissions sources would supply about half of generation by 2035 and around 90% by 2050, battery storage would scale from roughly 1 GW today to over 300 GW, and smart meters, smart grids and energy-management systems become central to keeping a more variable, peakier system secure.

For a precision manufacturer of current-sensing and material-joining components, this is the defining tailwind. Every strand of the outlook, current measurement in EVs and smart meters, busbars and connections in battery and power-distribution systems, and switching and protection across an electrifying grid, points to rising demand for exactly the application-critical parts the Company makes.

Vehicle unit sales are flattening in mature markets, but the software and electronics inside each car are set to grow about 4.5% a year to US$519 billion by 2035, four to five times the roughly 1% growth of the vehicle market itself.

1.4 Global Automotive Landscape

Flat volumes, richer vehicles: as cars become software-defined and electrified, value shifts from metal to electronics, and content per vehicle rises across every powertrain.

The automotive industry enters 2026 at an inflexion point: unit growth is stalling, but the value inside each vehicle is climbing. In the United States and Europe, new-vehicle prices have risen 15 to 25% since 2020, pushing average transaction prices above US$45,000 and flattening mature-market sales through 2030 as affordability bites. The centre of gravity is shifting from sheet metal to electrons and code.

Electrification is being recalibrated rather than reversed. In the US, battery-electric vehicles still carry a 15 to 20% price premium, but cost parity with combustion cars is expected by 2028-2029, lifting US BEV penetration toward 20% by 2030; China, already at first-cost parity, is set to pass 50% of sales by 2030, while Europes trajectory has been trimmed below the 60% once expected. Hybrids have become the pragmatic bridge, their adoption doubling in three years. Underpinning Chinas lead is cost: its battery packs run roughly 30% cheaper per kWh than the US and almost 50% cheaper than Europe, and its average transaction price, near US$25,000, is about half that of Western markets, fuelling an export surge of some three million vehicles a year into Europe since 2020, Latin America and Southeast Asia.

This rivalry is reshaping where cars are built. PwC expects tariffs and supply-chain risk to pull production back to North America, where output is forecast to return to mid-2019 levels by 2030 and more than 55% of US vehicle sales are already assembled domestically. The pressure is uneven: OEM EBITDA margins slipped from about 11% in the third quarter of 2024 to below 8% in the third quarter of 2025, even as supplier distress eased from 31% in 2024 to 24% in 2025 and supplier M&A rebounded around powertrain and electronics platforms.

The decisive shift is electronic. As vehicles move to zonal and central computing architectures and become software-defined, the automotive software and electronics market is projected to grow by about 4.5% annually to reach US$519 billion by 2035, compared with roughly 1% growth for the vehicle market itself. McKinsey finds power electronics, the onboard chargers, DC-DC converters and inverters that EVs depend on, among the fastest-growing hardware segments at nearly 10% a year, while ADAS and automated-driving software compounds close to 20%. Vehicles with advanced driver assistance or autonomy are expected to make up nearly 70% of sales by 2035.

For Shivalik, this is the heart of the opportunity. The cars electrification, whether battery, hybrid or efficient combustion, multiplies exactly the content the Company supplies: current-sensing shunts for battery-management, inverter and charger systems; busbars and joined assemblies that carry high currents through the powertrain; and contacts and bimetals for switching and protection. Content per vehicle rises across every powertrain, so the diversification urged on suppliers, hedging across battery, hybrid and combustion, mirrors the Companys own balanced electrification strategy.

US$519bn +4.5%

Auto software & electronics market, 2035 Its CAGR, vs 1% for vehicles

2. Domestic / India Overview

A standout in a subdued world: resilient domestic demand, easing inflation and an accelerating electrification and manufacturing push, set against energy-import and trade headwinds.

2.1 Indian Economy

Fast but moderating: India remains the fastest-growing major economy, with growth easing from its post-rebound peak as inflation stays benign and policy turns supportive.

India retained its place as the fastest-growing major economy through FY2025-26. The Reserve Bank of India estimates real GDP growth of about 7.6% for 2025-26, following an average of 8.2% over 2021-25, supported by strong private consumption, a sustained

India is on a fiscal consolidation path, with GST and tax reforms improving buoyancy and strengthening bank, NBFC, and corporate balance sheets, giving the 7.6% economy room to absorb external shocks.

Real GDP growth, FY2025-26 (RBI est.) government capital-expenditure push that has crowded in private investment, and resilient services. Growth for 2026-27 is projected to moderate to 6.9% as the post-pandemic rebound matures.

International agencies read the same trajectory through a calendar-year lens. The United Nations places Indias growth at 6.4% in 2026 and 6.6% in 2027, down from an estimated 7.4% in 2025, citing resilient consumption, public investment and tax reform, while flagging higher US tariffs and weaker external demand as the main drag.

Inflation has stayed comfortably within target. Headline CPI ran below the 4% target for much of the year and stood at 3.5% in April 2026, driven mainly by food, while core inflation remained steady. With inflation benign and growth below aspiration, the RBI front-loaded monetary easing, cutting the policy repo rate by 100 basis points during 2025 to 5.50% and shifting its stance from accommodative to neutral; average CPI for 2026-27 is projected near 4.6%.

For a domestically anchored, export-capable manufacturer, this backdrop of durable consumption, a public capital expenditure cycle, and lower policy rates underpins demand across the Companys core electrical, automotive, and industrial end-markets.

2.2 Indias Trade & External Sector

A widening goods gap offset by a record services surplus and steady capital inflows, as India reconfigures its trade map amid the energy shock and a shifting tariff landscape.

Indias external accounts reflected both resilience and the energy shock. Merchandise exports rose 13.8% year-on-year to US$43.6 billion in April 2026, led by petroleum products, electronics, engineering goods and pharmaceuticals, while imports grew 10.0% to US$71.9 billion on higher crude oil and gold bills, widening the merchandise trade deficit to US$28.4 billion.

The services surplus did much of the heavy lifting. For 2025-26, services exports reached US$421.3 billion, up 8.7%, lifting the services trade surplus 14.7% to US$216.6 billion. Trade is also reconfiguring around the new geopolitics: exports to China rose 27% year-on-year in April 2026 even as flows through West Asia swung sharply, and the government raised customs duty on gold and silver to 15% to curb non-essential imports.

On the capital account, both gross and net FDI in 2025-26 exceeded the prior year, with gross FDI approaching US$90 billion, driven by greenfield announcements in finance and technology, even as portfolio flows remained volatile and the rupee softened amid oil and geopolitical developments. For an export-capable manufacturer, the trade-agreement pipeline and Indias deepening integration into reconfigured supply chains are the more durable signals beneath the volatility of the monthly trade balance.

2.3 Indian Energy Outlook

The worlds largest source of future energy-demand growth: India is electrifying and adding renewables at a record pace, even as oil and gas demand keep climbing.

Indias energy system showed both its scale and its swing factors in 2025. Electricity demand rose just 1.4%, after four years above 6%, as an unusually early and intense monsoon cut cooling and pumping loads; underlying demand had run at 5.8% in the first four months. Renewable capacity additions jumped almost 60%, the fastest among major markets, led by nearly 50 GW of new solar PV, and Indias energy-related CO2 emissions were flat for the first time since the 1970s. EV sales reached a record 2.3 million units.

Foreign exchange reserves cover about 11 months of imports, and the current-account deficit remains sustainable; elevated energy prices are pushing the deficit higher, but recently concluded trade agreements should offset part of the impact.

3.5 % US$ 43.6 billion

CPI inflation, April 2026 Merchandise exports, Apr 2026 (+13.8% YoY)

The long-run picture is one of unmatched scale. At India Energy Week 2026, OPECs World Oil Outlook projected India as the single largest driver of global energy-demand growth to 2050: its primary energy demand nearly doubling from about 22 to 43.6 million barrels of oil equivalent per day, its oil demand adding 8.2 million barrels a day, and its share of global GDP rising from about 8% to 17%.

For Shivalik, the Indian energy transition is a structural tailwind on home soil: record renewable and grid buildout, a fast-scaling EV market, and rising power-electronics content all expand demand for current-sensing shunts, busbars, and switching components.

Indias heavy dependence on crude imports means the same Middle East shock that widens the current-account deficit also sharpens the economic case for domestic renewables, EVs and grid investment.

2.4 Indian Automotive Landscape

The worlds third-largest auto market and a rising manufacturing hub: resilient volumes, a fast-growing EV segment and a deepening shift toward higher-value, export-oriented production.

India is the worlds third-largest automobile market and the fourth-largest vehicle producer. Vehicle production approached 33 million units during April-December 2025, while 25.6 million units were sold in FY2024-25, representing a 7% year-on-year increase. The sector contributes about 6% of GDP and employs some 4.2 million people directly. India is already the worlds largest maker of electric two- and three-wheelers, and auto exports rose 19% to over 5.3 million units in FY25.

Electrification is accelerating from a low base. EV sales reached about 2.3 million units in 2025, accounting for around 8% of new registrations, and India is projected to become the largest EV market by 2030, with investment potential exceeding US$200 billion; the EV industry alone could reach Rs.20,00,000 crore (about US$234 billion) by 2030. Policy support is substantial, from the PM E-DRIVE scheme to PLI programmes for advanced automotive technologies and battery cells.

India is increasingly a strategic manufacturing hub, not just a sales market: its auto-component sector reached US$80.2 billion in turnover in FY25 with US$22.9 billion of exports, yet it holds only about 3% of globally traded components and underperforms in high-precision systems, a gap policy aims to close by lifting Indias share to 8% by 2030.

That high-precision, electronics-rich gap is precisely where Shivalik competes. As India localises power electronics, battery systems and current-sensing for a fast-electrifying fleet, the Companys shunts, busbars and contacts sit squarely in the segment the country most wants to grow at home.

India offers 10-25% lower manufacturing costs than Europe or Latin America and already accounts for nearly 40% of global automotive engineering and R&D spending, drawing global majors to expand local production and power-electronics localisation.

US$ 234 billion 3rd

Projected EV industry size by 2030

Largest auto market in the world

3. Industry Landscape

From macro to market: the specific electrical, metering and switching markets where Shivaliks components do their work, all riding Indias electrification and grid-modernisation wave.

3.1 Electrical Equipment Market

A US$50 billion industry with a US$235 billion horizon: Indias electrical-equipment sector is scaling fast, with the steepest growth in power electronics, storage and grid management.

Indias electrical-equipment industry is entering a decade of structural growth. Domestic consumption reached about US$59 billion in FY2025, after growing at an 11% CAGR over five years, and McKinsey, with IEEMA, projects the industry could grow 11-13% a year to 2035, when domestic production could scale from roughly US$50 billion today to US$195-235 billion. Transmission and distribution already account for nearly 40% of the market, spanning cables and wires, transformers and switchgear.

The fastest-growing segments, storage, grid management and power electronics, are expanding at more than 14% a year, driven by renewables, EVs, data centres and air-conditioning. A separate Technavio estimate points the same way, with the market expanding by about US$110 billion over 2026-2030 at a 15.9% CAGR.

USD 59bn USD 195-235bn

Domestic consumption, FY2025 Production potential by 2035

Indias import dependence in electrical equipment has risen from 22% in 2020 to 33% in 2025 and could top 70% by 2035 without action; power electronics, over 90% imported today, is the single biggest localisation opportunity.

Underpinning demand is a vast grid build-out: Indias National Electricity Plan envisages around Rs.9 lakh crore (about US$97 billion) in transmission investment through 2032 to accommodate large-scale renewable capacity. For Shivalik, this is core territory: the shunts, busbars, bimetals and contacts the Company makes are embedded in exactly the power-electronics, switching and grid-management equipment set to grow fastest.

3.2 Smart Metering

One of Indias fastest-growing hardware markets: a nationwide rollout backed by sanctioned funding and a multi-hundred-million-dollar ambition.

Indias smart energy meters market is among the countrys fastest-growing segments of electrical hardware. It was valued at about US$298 million in 2025 and is projected to reach roughly US$3.6 billion by 2034, a 30.96% CAGR, driven by grid modernisation, loss reduction and advanced metering infrastructure.

The rollout is anchored by the governments Revamped Distribution Sector Scheme (RDSS). Under the scheme, smart-metering works totalling about 20.33 crore meters have been sanctioned, of which 4.69 crore have been installed, while aggregate technical and commercial losses have fallen from 21.91% in FY21 to 15.04% in FY25 and collection efficiency has risen to 97%. The scheme has sanctioned around Rs.1.31 lakh crore for smart metering alone.

Indias smart-metering programme represents a roughly US$20 billion opportunity, targeting a cut in AT&C losses toward 12-15% as advanced metering infrastructure scales nationwide.

20.33crore USD 298m

Smart meters sanctioned (RDSS) Smart-meter market size, 2025

Every smart meter contains a precision current-sensing element. As India moves from tens of millions of meters installed toward its far larger ambition, the shunts at the heart of accurate energy measurement sit squarely in Shivaliks domain.

3.3 Switchgear Market

The backbone of safe power distribution: Indias switchgear market is growing steadily on urbanisation, industrial expansion and grid modernisation.

Indias switchgear market, the protection and control backbone of every electrical network, is growing at about 5.9% a year through 2034, supported by urbanisation, industrialisation and the modernisation of power infrastructure. Low-voltage switchgear leads with about 46% of the market, air-insulated switchgear with 51%, and the industrial segment with 45%.

Growth is propelled by rising electricity demand, smart-grid investment, and renewable-energy integration, with demand for advanced switchgear strongest in residential, commercial, and industrial power distribution. Switchgear is also one of Indias larger electrical equipment export categories, reinforcing it as a market where domestic manufacturers can achieve global scale.

Switchgear is where Shivaliks heritage products converge-thermostatic bimetals for trip mechanisms, electrical contacts for making and breaking circuits, and shunts for sensing. A steadily expanding switchgear market is a steady expansion of the Companys oldest and most established end-market.

Switchgear demand is increasingly shaped by gas-free and smart switchgear and by EV and renewable integration, raising the electrical and material-joining content per unit.

4. Company Snapshot

Indias only fully integrated precision materials-to-assemblies manufacturer, four decades in the making, now pivoting from components to electrification solutions.

4.1 Identity, Vision & Material-Joining Capability

From Asias first thermostatic-bimetal line in 1984 to a dual-process material-joining fortress serving over 300 customers in 38 countries.

Established in 1984, Shivalik Bimetal Controls Limited (SBCL) is Indias only fully integrated manufacturer of precision thermostatic bimetals, low-ohmic shunt resistors, silver electrical contacts and now, busbar connectors and PCB assemblies. These are the mission-critical components that enable accurate sensing, switching and thermal control across electric vehicles, smart meters, switchgear and energy-storage systems. We are no longer simply a components company but a pioneer in electro-technical solutions, designing parts that measure, control and endure where failure is not an option.

Our competitive heart is material joining. Over four decades, we have built a proprietary dual-process platform combining Electron Beam Welding (EBW) and high-pressure diffusion bonding - the deepest such capability in India and among the few of its kind globally. We operate a large EB welded strip facility, hold 77 proprietary bimetal grades, and run in-house stamping, tooling, R&D and reliability testing across three campuses in Solan, Himachal Pradesh. The same platform yields low-resistance current-sensing shunts and high-current bus bars used in power-distribution systems and electrical equipment, including the power infrastructure supporting data centres, where the global build-out and AI-driven digitisation are catalysing demand for precision current sensing and thermal protection. This know-how, hard to replicate and carrying customer re-qualification cycles of around 24 months, is the moat beneath every product line.

4.2 FY26 KPI Strip

A record year on a consolidated basis: double-digit revenue growth, sharp margin expansion and a net-cash balance sheet.

On a consolidated basis, FY26 was a record year. Revenue from operations rose 12.3% to Rs.570.86 crore, EBITDA grew 26.0% to Rs.130.72 crore as the EBITDA margin expanded_about 250 basis points to 22.90%, and profit after tax increased 24.8% to Rs.95.84 crore. Return on capital employed stood at 25.7%, earnings per share at Rs.16.64, and the balance sheet remained net-cash positive, with around Rs.105 crore of cash against Rs.59 crore of debt and net worth of about Rs.481 crore. Growth was self-funded throughout.

The shunt and busbar capability that serves EVs and smart meters is finding a second structural pull: data-centre power infrastructure. Low-resistance current-sensing shunts and high-current bus bars sit inside the power-distribution systems and electrical equipment on which AI-era data centres depend, and the global build-out is catalysing demand for precision current sensing and thermal protection alike. The adjacency is close to what we already make and qualify; the signal to watch through FY2027 is how far it converts into programme wins.

1984 300+

Founded; Asias first bimetal line Customers including OEM & Tier-1

4.3 Segment Mix & Geographic Footprint

Two core engines of roughly equal size, a vertically integrated contacts business, and a new assemblys line, sold over a 57% export base.

On a consolidated basis, FY26 revenue divided almost evenly between the two core engines: shunt resistors at Rs.230.68 crore (40.3%) and thermostatic bimetals at Rs.231.25 crore (40.4%), with electrical contacts contributing Rs.110.94 crore (19.4%) and the new busbar and PCB assemblies line beginning to ramp.

Geographically the footprint is global: exports made up about 57% of FY26 revenue across 38 countries, with manufacturing concentrated in India and sales offices in the US, EU, Brazil, Russia, Japan, Taiwan, South Korea and China. The existing asset base can support more than Rs.1,300 crore of revenue, giving substantial headroom to grow without major greenfield investment.

Net worth rose to about Rs.481 crore and the Company ended FY26 net-cash positive, funding its forward-integration and capacity growth entirely from internal accruals.

19 % 57%

Electrical contacts Export share of revenue

5. Strategic Review every front, outward into higher-value assemblies, inward into raw-material processing, and outward again into Europe.

5.1 From Components to Integrated Solutions

Shivaliks strategy is a deliberate climb up the value chain. Having spent four decades mastering precision materials and components, the Company is now moving into integrated sub-assemblies, combining its shunts, contacts, bus bars and PCB assemblies into ready-to-use modules for OEM and Tier-1 customers. The logic is share-of-wallet and stickiness: a customer that once bought a shunt now buys a smart-shunt centre or a current-sensing sub-assembly, deepening the relationship and capturing more value per design win. Management frames this as moving from selling parts to selling solutions that measure, control and endure.

5.2 Forward-Integration Thesis & the Pune Facility

The clearest expression of this shift is the new Pune R&D and Cell Contacting System (CCS) facility, purpose-built for forward integration into higher-value automotive and electrification-led applications. It focuses on PCB assemblies and busbar connector solutions for EV battery systems, power-distribution units, inverters, converters and energy-management applications, precisely where current sensing, switching and system-level integration matter most. Sited closer to the automotive OEM ecosystem, Pune is designed to speed collaboration, qualification and delivery, and to expand Shivaliks role from supplying components to delivering ready-to-use sub-assemblies. The facility was commissioned in phases, with phase one, including the R&D centre, now complete. Having secured the permissions and consents required from the relevant government authorities, the

The Pune CCS platform targets EV-battery, power-distribution and energy-management programmes with two-wheeler EV OEMs and Tier-1 automotive customers, lifting content per vehicle and share of wallet.

facility is operational and has commenced commercial production, processing orders and supplying against our assembly commitments. It now works alongside our existing facilities at Solan, Himachal Pradesh, ensuring customer schedules continue to be met without interruption as the Pune operation scales towards full capacity.

5.3 Geographic Rebalancing

FY26 also reshaped the geographic mix. As North American demand softened with the EV slowdown, shunt revenue from the Americas fell about 23%, while India surged 27% on smart-meter and industrial demand, Europe grew double digits, and the rest of Asia expanded on regional customer wins. To anchor the European recovery, the Company established Shivalik Bimetals Europe SRL in Milan, Italy, a wholly owned subsidiary giving direct access to EU customers. The result is a more balanced, less US-dependent revenue base, with exports still around 57% of sales but spread more evenly across regions.

5.4 Capital Allocation

Capital allocation is conservative and self-funding. The Company ended FY26 net cash-positive, with cash exceeding debt, allowing it to fund forward integration, the Pune facility, and capacity additions from internal accruals while maintaining a steady dividend. Crucially, the existing asset base can support over Rs.1,300 crore of revenue, so near-term growth carries low greenfield risk and high incremental returns. Management is also pursuing selective backward integration, processing some raw materials in-house to shorten the cash cycle, and remains open to bolt-on acquisitions that add products or markets.

2015 Rs.230.68crore

Launched; fastest-growing line Shunt Resistors revenue, FY26 (+8.6% YoY)

6. Segment Performance

Two mature core engines, a vertically integrated contacts business, and a ramp-stage assembly line, each tied to the same electrification demand.

Note: The Company reports a single statutory business segment; the product-wise figures below are managements consolidated product-line indication.

6.1 Shunt Resistors

Description. Ultra-low-ohmic, current-sensing components fabricated by Electron Beam Welding, shunt resistors are precision "electrical traffic cops" that measure current flow. Launched in 2015, they are the Companys fastest-growing vertical, vital to EV battery-management systems, smart meters, energy-storage packs, and industrial drives across electric, hybrid, and combustion vehicles, charging infrastructure, and power modules. Shivalik is one of only a few global makers focused purely on high-precision EB-welded shunts.

Performance. FY26 shunt revenue grew 8.6% to Rs.230.68 crore, about 40% of consolidated sales. The mix shifted sharply by geography: India rose 27% to Rs.85.9 crore on smart-meter and industrial demand, the rest of Asia grew 26% to Rs.61.16 crore, and Europe rose 14% to Rs.28.65 crore, while the Americas fell about 23% to Rs.55.50 crore as North American EV demand slowed.

Operational highlights. Volumes were broadly stable at about 1.10 million kg. Growth was led by the domestic smart-meter rollout and industrial current-sensing, offsetting softer US automotive offtake.

Outlook. Structural demand is strong:

EV shunt content is roughly three times that of an internal-combustion vehicle, and Indias 250-million-meter smart-metering programme is a multi-year tailwind. A recovery in North American EV demand would add further upside.

Rs.110.94crore

Electrical Contacts Revenue (FY26)

6.2 Thermostatic Bimetals

Description. The Companys legacy profit engine since 1984: thermostatic bimetals are metal strips joined by high-pressure diffusion bonding that bend predictably with heat to open or close circuits, providing overheat protection and temperature control. They serve switchgear, household appliances such as irons, geysers and toasters, and automotive thermostats and sensors. Proprietary diffusion grades enable design-in with OEMs, and Shivalik is the sole component manufacturer among its peers in this line.

Performance. FY26 bimetal revenue rose 2.85% to Rs.231.25 crore, roughly 40% of consolidated sales. Europe rebounded strongly, up 47% to Rs.50.73 crore, and the rest of Asia grew 19% to Rs.19 crore, while India eased 7.7% to Rs.115 crore due to slower domestic consumption, and the Americas slipped 6.5% to Rs.46.94 crore.

Operational highlights. Volumes were essentially flat, up 0.8%, with the segment showing signs of recovery, led by the European switchgear and appliance markets.

Outlook. As a mature, high-margin business, Bimetals provides a stable cash and earnings base. Switchgear modernisation, appliance demand and the European recovery support steady growth, with the diffusion-bonding moat protecting pricing.

6.3 Electrical Contacts

Description. Silver and silver-alloy contact tips that make and break circuits with arc resistance are the "touch points" inside switches and devices. Shivalik deepened this business through the buyout of its Checon stake in 2023, thereby vertically integrating manufacturing via brazing, welding, and cladding. Applications span circuit breakers, relays and contactors, smart-meter latching relays, lighting and wiring accessories, and automotive components.

Performance. Contacts contributed Rs.110.94 crore in FY26, about 19% of consolidated revenue, and are the bridge between the Companys materials heritage and its future.

Operational highlights. The strategic differentiator is moving beyond bare contacts to ready-to-use sub-assemblies, joining contacts onto complex sheet-metal stampings to raise value per part.

Outlook. Contacts underpin the cross-selling thesis: as Shivalik offers OEMs integrated contact sub-assemblies, the business supports both margin and share-of-wallet expansion, with smart-meter latching relays a notable growth vector.

Rs.231.25crore 1984

Thermostatic Bimetal Revenue Legacy line; since inception (FY26) +2.85%

6.4 Bus Bar Connectors & PCB assemblies

Description. The newest addition to the portfolio, busbar connectors carry and distribute high current, while PCB assemblies provide the control, sensing and communication intelligence for integrated systems. Together, they target EV battery packs, Cell Contact System (CCS) assemblies, smart shunt centres, and battery management system applications, delivered as ready-to-use sub-assemblies for OEM and Tier-1 customers.

Performance. This is a ramp-stage business. A pilot PCB assembly line was kick-started in FY26, with the Pune CCS facility purpose-built to scale it. Contribution is modest today and is best read as an investment in future revenue rather than a material FY26 contributor.

Operational highlights. The near-term focus is on qualification and capacity building at Pune, moving from pilot to commercial production for automotive and electrification programmes.

Outlook. This line is the spearhead of the components-to-solutions strategy. In its ramp phase, it carries lower segment margins than the mature product lines, but it materially raises content per vehicle and customer stickiness and is the Companys principal vehicle for capturing the EV and energy-storage opportunity.

7. Financial Performance

Double-digit consolidated growth with margin expansion, a deeper standalone history, and a balance sheet that funds the pivot from cash.

7.1 Revenue, EBITDA & PAT

On a consolidated basis, FY26 revenue from operations rose 12.3% to Rs.570.86 crore, EBITDA grew 26.0% to Rs.130.72 crore (margin 22.90%, up about 250 basis points), and profit after tax increased 24.8% to Rs.95.84 crore (margin 16.79%). On a standalone basis, which excludes the contacts and assemblies businesses consolidated above, revenue rose 5.66% to Rs.461.95 crore, EBITDA rose 15.0% to Rs.112.37 crore (margin 24.32%), and PAT rose 12.94% to Rs.81.80 crore. The gap between the two bases is attributable to the consolidated contacts and new assembly operations.

7.2 Five-Year Standalone Summary (FY22 to FY26)

On a standalone basis, the only consistently available multi-year series shows that revenue grew from Rs.324 crore in FY22 to Rs.462 crore in FY26 at a compound annual growth rate of about 9%. In comparison, EBITDA expanded from Rs.74 crore to Rs.112 crore and PAT from Rs.52 crore to Rs.82 crore. The FY24-to-FY25 softening reflects the North American EV slowdown and raw-material and mix pressures; FY26 marked a return to margin expansion.

Particular (Rs. Cr)	FY22	FY23	FY24	FY25	FY26
Revenue	324	420	449	437	462
EBITDA	74	104	102	97	112
EBITDA margin	23%	25%	23%	22%	24%
PAT	52	73	81	72	82
PAT margin	16%	17%	18%	17%	18%

7.3 Standalone-to-Consolidated Bridge

The consolidated accounts add the businesses held through subsidiaries and associates, principally the electrical contacts operation following the 2023 Checon buy-out, the emerging busbar and PCB assemblies line, and the Italian and other entities. This lifts FY26 revenue from Rs.461.95 crore standalone to Rs.570.86 crore consolidated, a difference of about Rs.109 crore, and PAT from Rs.81.80 crore to Rs.95.84 crore. The consolidated figures provide the more complete picture of the groups electrification franchise and is the basis used for the headline figures throughout this report.

Rs.95.8crore Rs.130.7crore

PAT, consolidated (+24.8%) EBITDA, consolidated (+26.0%)

7.4 Margin-Quality & Mix Commentary

Margin quality improved in FY26. Consolidated gross margin widened about 212 basis points to 45.21% and the EBITDA margin about 250 basis points to 22.90%, driven by cost control, a richer product mix and the early benefit of value-added work, even as employee costs rose 25% with the scaling of new capability. On the standalone core, gross margin reached 49.39%. The principal swing factors remain raw-material prices, notably silver and nickel, and product mix. Managements strategy of moving up the value chain into sub-assemblies, where gross contribution margins on PCB Assemblies work are projected at 40 to 50 per cent, is designed to lift blended margins over time. However, near-term reported margins on ramp-stage assemblies are lower as the business scales.

Working-capital intensity rose in FY26, with net working capital at 258 days (from 218) and inventory at 204 days. The build is largely deliberate: additional raw materials and bought-out components have been held to secure input availability and to support the assembly ramp-up, rather than reflecting any slowdown in offtake. The net cash balance sheet comfortably absorbs it, and the position is expected to ease as the indigenisation of nickel alloys progresses and the new Rs.461.95crore assembly business reaches steadier volumes.

Standalone revenue

8. Operational Performance

Beneath steady revenue: stable volumes with rising realisation, a deliberate shift up the value chain, and a widening manufacturing moat.

8.1 Segment Volumes & Realisation

FY26 volumes were broadly stable while realisation improved. Bimetal volumes edged up about 0.8% to 1.29 million kg, yet revenue rose 2.85%, and shunt volumes eased 2.2% to 1.10 million kg. In comparison, revenue still grew 8.62%, implying mid-to-high single-digit gains in realisation per kilogram across both core lines. The improvement reflects a richer mix, pricing discipline and the early shift toward higher-value component and assembly work rather than bare strip.

8.2 Strip-to-Component Shift

A defining operational theme is the migration from selling semi-finished bimetal strip toward finished, stamped components and integrated assemblies, the Companys "Component to Catalyst" evolution. Where customers once bought strips by weight, they increasingly buy precision components and ready-to-use modules by the piece, thereby raising value capture per kilogram of material processed and embedding Shivalik more deeply into customer designs. The flagship is the Smart DC Current Sensor, in which proprietary EB-welded shunts are mounted on PCB assemblies to create a plug-and-play current-sensing module, simplifying customer workflows while lifting per-unit value.

8.3 Forward-Integration Ramp

The forward-integration ramp moved from opportunity to order book during the year. Busbar and PCB sub-assembly opportunities were converted into firm orders, and supply began at lower volumes, ahead of higher volumes in the new financial year. Across the four to five projects in hand, Management sizes the cumulative opportunity at approximately Rs.250-300 crore over three years, of which approximately Rs.70-80 crore is expected in FY2027; PCB assemblies, approximately Rs.50-55 crore and busbar connectors contributing the rest. The ramp builds on Electron Beam Welding capacity already in place, the incremental outlay of approximately Rs.20 crore relating largely to the assembly line and plant. Busbar assemblies are expected at approximately 12-13 per cent EBITDA, and PCB assemblies are higher, with blended Company EBITDA expected to hold at approximately 23-25 per cent. In parallel, the indigenisation of nickel alloys is progressing, with approximately 20-25 per cent of raw-material consumption expected to be sourced locally in the near term.

8.4 Capacity & the Electron Beam Welding Moat

Operationally, the Companys edge is its manufacturing fortress. Three Solan campuses house a significantly large strip Electron Beam Welding capacity (Plant 1), thermostatic bimetals (Plant 2) and electrical contacts (Plant 3), with in-house stamping, tooling, R&D and reliability testing. The installed asset base can support more than Rs.1,300 crore of revenue, so the near-term growth runway is largely in place. The dual-process platform of EBW and diffusion bonding is capital-light relative to global peers, carries 77 proprietary bimetal grades, and imposes customer re-qualification cycles of around 24 months, a combination that is difficult and slow to replicate and underpins both pricing power and the low-capex character of growth.

1.29m kg 1.10m kg

Bimetal volume (+0.8%) Shunt volume (-2.2%)

The PCB assemblies and busbar assemblies line is targeted to reach roughly Rs.70-80 crore in annual revenue by FY27; the 40 to 50 per cent figure is a gross contribution margin, not a net segment margin, which is lower during the ramp.

9. Risk Management & Internal Controls

An enterprise risk framework matched to the Companys real exposures: concentration, trade, raw materials, the new-segment ramp and cyber, overseen by board committees and external audit.

9.1 Customer & Geographic Concentration

Shivaliks largest single exposure has historically been to a small number of marquee customers and to the US market, where a key shunt account drove much of the Americas revenue. FY26 made the point: as that customer normalised inventory amid the North American EV slowdown, Americas shunt revenue fell about 23%. The Company is mitigating this by diversifying across 38 export markets and four product lines, with India, Europe and the rest of Asia now carrying more of the load, and by widening its customer base through the new assemblies and contacts businesses.

9.2 Tariff & Trade Risk

As an exporter earning over half of its revenue abroad, the Company is exposed to the shifting tariff landscape and geopolitical disruptions to trade flows. It mitigates this through geographic diversification, a local European presence in Milan for direct access to the EU, and a flexible Indian manufacturing base that benefits from the China-plus-one reorientation of global supply chains. Management monitors trade-policy developments closely and adjusts market and pricing strategies accordingly.

9.3 Raw-Material (Silver / Nickel) & Forex Risk

Production costs are sensitive to the prices of key metals, principally silver for contacts, as well as nickel and copper, which can be volatile. The Company broadens its supplier network, explores alternative sourcing, maintains inventory buffers for critical materials, and is pursuing backward integration into select bimetal inputs to reduce dependence. With more than half of its revenue in foreign currency, it is also exposed to exchange-rate movements, which it manages through forex hedging strategies to provide more predictable operational costs.

9.4 New-Segment Execution & Margin-Dilution Risk

The pivot into PCB assemblies and busbar assemblies carries execution risk: scaling a new manufacturing line, qualifying with demanding automotive OEMs, and managing a learning curve. In its ramp phase, the new line carries lower net margins than the mature portfolio, so a faster mix shift toward assemblies could dilute blended margins in the near term even as it lifts absolute value. The Company manages this by building the business on existing EBW capacity, phasing capacity in line with demand, and prioritising margin quality and disciplined capital allocation.

9.5 Technology & Cyber Risk

Product relevance depends on staying ahead of evolving customer and industry standards, which the Company addresses through continuous R&D and close market monitoring. As operations digitise, cybersecurity is a growing focus, and the Company is strengthening its resilience and cyber risk management to protect its systems and data.

9.6 Internal Control Framework

Shivalik operates a comprehensive internal financial control framework with documented protocols across its financial and operational activities. A risk-focused internal audit, conducted by an external chartered accountancy firm, looks beyond compliance to identify process improvements, and the Audit Committee reviews its findings. Oversight is carried out through a robust Enterprise Risk Management process and dedicated board committees, including the Audit Committee and the Risk Management Committee, and is underpinned by a board-approved risk management policy.

> Rs.1,300crore

Revenue, the asset base can support

FY26 crystallised the concentration risk: a single US customers destocking cut Americas shunt revenue by about 23%, validating the strategy of geographic and product diversification.

10. Human Capital

A workforce of over 1,000 scaling with the business, anchored by deep engineering and R&D talent and a strong safety culture.

10.1 Headcount & Workforce Scaling

Shivalik employs a workforce of over 1,000 people, based principally at its Himachal Pradesh campuses. Headcount and employee costs rose in FY26, up about 25% at the consolidated level, as the Company scaled capability for the new assembly line, the Pune facility and its broader electrification push. Workforce expansion is being matched to the substantial growth runway already built into the asset base.

10.2 R&D and Engineering Talent

The Companys competitive edge rests on specialised engineering and R&D talent. Its in-house R&D unit, government-recognised since 2002, develops proprietary bimetal grades, EB-welding processes and new product lines such as the Smart DC Current Sensor. R&D intensity, at around 1% of revenue, runs ahead of comparable peers, supporting a faster product cycle and the design-in relationships that lock in customers.

10.3 Capability Building & Safety

As the Company moves up the value chain into assemblies, capability building in advanced manufacturing, quality systems and customer qualification is a priority. Occupational health and safety remain paramount: Shivalik maintains environmental, health, and safety systems, conducts regular safety and emergency preparedness training, and treats the well-being of its people as foundational to a productive, engaged_workforce.

11. Sustainability & ESG

Purpose and footprint aligned: the products enable electrification, and the operations run largely on hydroelectric power.

11.1 Electrification as Purpose

Sustainability is built into Shivaliks purpose. Its products, current-sensing shunts, thermostatic bimetals, contacts and now assemblies, are the enabling components of the energy transition, embedded in electric vehicles, smart meters, renewable-heavy grids, switchgear and energy-storage systems. Every smart meter that reduces distribution losses and every EV that accurately measures current depends on components like those Shivalik makes, so the Companys growth and the decarbonisation of the grid and transport are structurally aligned.

+25% 1,000+

FY26 employee-cost growth Total workforce

Predominantly hydroelectric power keeps Shivaliks Scope-2 emissions close to nil, a genuine cost and sustainability edge versus peers reliant on fossil-fuelled grids.

11.2 The Hydro-and-Solar Energy Story

Operationally, the Companys footprint is unusually light. It sources most of its procured power from renewable sources, mainly hydroelectric, a natural advantage of its Himachal Pradesh location, which keeps its Scope-2 emissions effectively negligible. It is progressively transitioning toward renewable energy, particularly solar, reinforcing a low-carbon manufacturing base that differentiates it from global peers reliant on fossil-fuelled grids.

11.3 BRSR Linkage & Governance

The Company reports in accordance with the Business Responsibility and Sustainability Reporting (BRSR) framework and regularly reviews its ESG strategy against global standards and stakeholder expectations. Governance is anchored by a board with strong independent representation and its committees, including Audit, Nomination and Remuneration, Stakeholder Relations, CSR, and Risk Management, ensuring robust oversight of financial reporting, internal controls, and sustainability.

11.4 Community

Through a board-approved CSR policy and CSR Committee, Shivalik directs community investment toward education, health and local development around its operations, in line with the requirements of the Companies Act. As a significant employer in its region, it supports the surrounding community both directly and through the livelihoods its operations sustain.

12. Strategic Outlook & Cautionary Statement

Entering FY27 with a clear playbook: margin quality, working-capital discipline, deeper partnerships, and the twin swing factors of the assemblies ramp and the US recovery.

12.1 FY27 Priorities & Guidance

Entering FY27, managements stated priorities are margin quality, working-capital efficiency, deeper customer partnerships and careful capital allocation. The Company will keep investing where it has a clear right to win: precision components, current sensing, switching solutions, PCB and busbar assemblies, and broader electrification-led applications. Rather than issue hard numeric guidance, management frames the year as the next step in moving from individual products to integrated solutions, with India anchoring the core businesses, Europe an emerging growth engine, and Asia contributing broad-based momentum. The smart-metering opportunity is expected to remain a strong domestic driver, with management indicating scope for smart-meter-linked revenue to grow significantly again as the national rollout continues.

Rs. 70-80crore

PCB assemblies opportunity by FY27

12.2 Busbar/PCB assemblies Ramp & US_Recovery

Two specific swing factors frame FY27. First, the busbar and PCB assemblies ramp: with the Pune CCS facility scaling up the pilot line, management targets an assembly opportunity of around Rs.70-80 crore in annual revenue by FY27, a step-change in the addressable market, even if near-term net margins are lower during the ramp. Second, the US recovery: after a soft FY26, in which a key American shunt customer destocked, management reports early signs of normalisation and has begun new product programmes with that customer, expecting the Americas to recover toward and, over time, surpass prior levels across FY27 and FY28. Together with the smart-meter tailwind and the European recovery, these underpin managements confidence in the Companys direction.

12.3 Cautionary Statement on Forward-Looking Statements

This Management Discussion & Analysis contains forward-looking statements regarding the Companys objectives, projections, estimates and expectations. These statements are based on currently available information and certain assumptions. They are subject to risks and uncertainties, including changes in economic conditions, government policy, tariffs, raw material prices, exchange rates, technology, and competitive dynamics, that could cause actual results to differ materially from those expressed or implied. Readers are cautioned not to place undue reliance on these statements, which speak only as of the date of this report. The Company undertakes no obligation to update or revise any forward-looking statement publicly, whether because of new information, future events or otherwise.