Sparc Electrex Ltd Management Discussions

ANNUAL OVERVIEW, OUTLOOK:

Your Company was originally incorporated under the provisions of The Companies Act, 1956 as Sparc Systems Private Limited on September 14, 1989, with the Registrar of Companies, Maharashtra. In the Financial Year 1994, the Company was converted from Private Limited Company into a Public Limited Company vide Extra-Ordinary General Meeting held on December 03, 1994, and in pursuance of which the private word had been deleted from the name of our Company, effecting the name change to Sparc Systems Limited, and a fresh certificate of incorporation consequent upon change of name was granted by the Registrar of Companies, Maharashtra on January 18, 1994. Sparc Systems Limited was engaged in the business of Software and Hardware Electronic Security Solutions. Its Equity Shares got listed on January 22, 1996, with BSE.

During the year under review the Company has received full and final call money on 15,48,958 equity shares consequent to serving of final or third Reminder-cum-Forfeiture Notices, dated 26.03.2024 to the holders of the partly paid-up shares. Upon receipt of full and final call money on 15,48,958 equity shares, these shares were made fully paid up by the Right Issue Committee on 20.04.2024 and necessary corporate actions has been executed for crediting fully paid up shares to respective beneficiaries and all necessary approvals viz listing and trading were received by the Company from the exchange for these shares.

Moreover, during the year the Company had launched 9 new products consequent to execution of Exclusive Trademark License Agreement with Hyundai Corporation Holdings Co., Ltd, Korea dated 01st July, 2023. The details about the new products launched by the Company have been intimated to the exchange and can be accessed from the given links viz: https://www.bseindia.com/xml-data/corpfiling/AttachHis/f9ae7f71-a599-46dc-b53f-59349bfac9f1.pdf, https://www.bseindia.com/xml-data/corpfiling/AttachHis/b025f25b-d106-493a-9b7e-f1c8459e8cf6.pdf and

https://www.bseindia.com/xml-data/corpfiling/AttachHis/888204b8-b265-43a4-b8cb-cd7cee5d7032.pdf.

Further this Exclusive Trademark License Agreement with Hyundai Corporation Holdings Co., Ltd, Korea has been terminated by the Company by the Company. The details of the same has been intimated by the Company to the exchange which can be assessed from the given link: https://www.bseindia.com/xml-data/corpfiling/AttachHis/5d45f962-bd3b-4c1e-95a2-920dc0151c1d.pdf

Your Directors are pleased to present the Management Discussion and Analysis Report for the year ended 31st March, 2025.

India will need to deal with global political challenges, control rising prices at home, and encourage businesses to spend more money as the worlds fastest-growing large economy looks for more good growth in 2025, moving past the weak September quarter. Economists at the Reserve Bank of India (RBI) say that quick-moving data for the third quarter of 2024-25 shows the economy is getting better, supported by strong festival spending and steady growth in rural demand.

The Union Finance Minister Nirmala Sitharaman called the recent slowdown only a "temporary pause." Indias economic growth fell to a seven-quarter low of 5.4 percent in July-September after growing at a healthy 7-8 percent earlier. For the full year 2024-25, real GDP growth is expected to be 6.6 percent, and 6.9 percent for the first quarter of 2025-26. In the following year, the RBI expects growth in the June quarter to be 7.3 percent.

The return of Donald Trump as President and the Republican control of Congress could bring big policy changes and create uncertainty for the economy. While the exact timing and details are not yet known, tax cuts, higher tariffs, lower immigration, and fewer business rules are expected. One major risk is Trumps plan for trade. He has suggested a 10 percent tariff on all imports and a 60 percent tariff on goods from China, which could be used as a tool in trade talks. If carried out, these tariffs could push up inflation, lower demand, and lead to higher interest rates and a stronger U.S. dollar.

The financial year 2024-2025 was characterized by a global economy facing significant headwinds, primarily stemming from elevated trade tensions, geopolitical conflicts, and persistent policy uncertainty. Despite these challenges, there were pockets of resilience and notable divergences in performance across different regions and asset classes.

The power tools sector is experiencing robust growth, primarily driven by the rapid expansion of infrastructure in emerging economies like China, India, South Africa, and Brazil. India, in particular, is poised to become the worlds third-largest construction market. This development, encompassing extensive road, rail, airport, energy, and building projects, is generating significant demand for a wide range of power tools, including drills, drivers, and screwdrivers. Power tools are essential across key industries such as construction, aerospace, automotive, and shipbuilding. They are also seeing increased adoption among homeowners for various residential applications. These factors collectively contribute to a strong growth trajectory for the Indian power tools market, which is projected to reach a valuation of US$ 13,306.41 million by 2032.

INDUSTRY STRUCTURE AND DEVELOPMENT:

The power tools industry is a dynamic and evolving sector, with its structure and development shaped by a combination of global and regional trends. Here are some key details about the industrys structure and development, particularly with a focus on India:

The power tools industry is structured around different segments, counting by Mode of Operation and by Tool Type and viz: Electric (Corded) and Electric (Cordless) which includes Drilling & Fastening Tools, Sawing & Cutting Tools, Material Removal, Demolition Tools, Wrenches & Other Solution,

The global power tools market is dominated by a few major international players, such as Stanley Black & Decker, Robert Bosch GmbH, Makita Corporation, and Techtronic Industries (TTI). These companies compete on brand reputation, product innovation, and extensive distribution networks. In India, both international and domestic players are active, with global giants establishing a strong presence.

OUTLOOK ON OPPORTUNITIES AND CHALLANGES:

The Management believes that the power tool market is expected to develop due to countrys booming industrial sector. The Indian economy has expanded drastically in recent years and is projected to continue growing strongly over the next few years due to increasing FDI equity inflows in automotive, construction, medicines, pharmaceuticals and other sectors. In addition, the Government has taken several aggressive measures, such as the Make in India campaign which is likely to fuel the expansion of the power tool market in India during the coming years.

Several trends are shaping the development of the power tools industry, particularly in India:

Technological Advancements:

- Cordless Dominance: The shift towards cordless tools is a defining trend. Innovations in lithium-ion batteries and brushless motors are enhancing tool efficiency, power, and runtime, making cordless tools the preferred choice for both professionals and DIY enthusiasts.

- Smart and Connected Tools: Manufacturers are integrating IoT (Internet of Things) and Bluetooth connectivity into their tools. This enables features like tool tracking, performance diagnostics, and app-based management, improving efficiency and security for businesses.

- Ergonomics and Safety: There is a growing focus on designing lightweight, ergonomic tools to reduce user fatigue and improve safety, which is a key consideration for professional users.

Growth Drivers:

- Infrastructure Boom: Rapid infrastructure development in emerging economies like India is the most significant driver. Large-scale government projects in roads, railways, and urban development are creating a massive demand for a wide range of power tools.

- Rise of the Industrial Sector: The expansion of manufacturing, automotive, and other industrial sectors is fueling the need for high-quality power tools for assembly, production, and maintenance.

- DIY and Home Renovation: The increasing trend of home improvement projects, especially post-pandemic, has expanded the consumer base beyond professionals. This segment is particularly driving sales of compact and cordless tools.

- E-commerce Expansion: The growing reach of e-commerce platforms is making power tools more accessible to a wider customer base, including those in smaller towns and cities.

Challenges and Opportunities (with an Indian context):

- Cost Competitiveness: India faces a cost disadvantage compared to countries like China, primarily due to higher raw material costs and import duties on key components.

- Dependence on Imports: The Indian power tools market is heavily reliant on imports for high-value components, which can affect production costs and supply chain stability.

- Export Potential: Despite these challenges, reports from NITI Aayog highlight Indias immense potential to become a global leader in tools manufacturing. A strategic roadmap is being developed to address structural gaps, promote R&D, and create "plug-and-play" industrial clusters to boost exports and generate jobs.

- Sustainability: Manufacturers are increasingly focusing on sustainability by using eco-friendly materials and designing tools that are easier to repair, aligning with a growing global trend.

OUTLOOK ON THREATS. RISKS AND CONCERNS:

The power tool industry, while experiencing growth, faces a multifaceted landscape of threats, risks, and concerns that require strategic attention from manufacturers, distributors, and stakeholders. These can be broadly categorized as follows:

Economic and Market Volatility:

- Raw Material Price Fluctuations: The prices of key raw materials like steel, aluminum, copper, and rare earth metals (e.g., Neodymium for motor magnets) are subject to significant global volatility. This can directly impact production costs, squeeze profit margins, or force price increases that affect demand.

- Global Economic Slowdown/Recession: A general economic downturn can lead to reduced consumer spending on nonessential items (affecting DIY segment) and a slowdown in construction and manufacturing, thereby decreasing demand from industrial sectors.

- Geopolitical Uncertainties and Trade Policies: Geopolitical tensions, trade wars, and protectionist policies can disrupt global supply chains, increase import/export costs, and create market access challenges.

- Intensifying Competition and Pricing Pressure: The market is highly competitive with both established global players and emerging local manufacturers. This often leads to intense pricing pressure, particularly in commoditized product segments.

- Supply Chain Disruptions: Events like pandemics, natural disasters, or logistical issues can severely impact the availability of components and finished goods, leading to production delays and lost sales.

Technological and Innovation Risks:

- Pace of Technological Change: The rapid evolution of battery technology, motor efficiency, and smart features (IoT integration) means companies must continuously invest in R&D to stay competitive. Falling behind on innovation can lead to obsolescence.

- Cyber Security Threats for Smart Tools: As power tools become more connected and "smart," they become potential targets for cyber-attacks. Risks include data breaches, unauthorized access, operational disruptions, and reputational damage if connected tools are compromised.

- Obsolescence of Older Technologies: The swift shift towards cordless and battery-powered tools, alongside advancements in battery management systems, can render older corded or less efficient models obsolete, requiring strategic inventory management and phase-out plans.

Regulatory and Compliance Concerns:

- Stringent Environmental Regulations: Growing global emphasis on sustainability leads to stricter regulations on emissions (for engine-powered tools), battery disposal, recyclability, and the use of hazardous materials. Compliance can involve significant investment in new product development and waste management.

- Product Safety Standards: Power tools are subject to rigorous safety standards worldwide. Non-compliance can lead to product recalls, fines, legal liabilities, and damage to brand reputation. Manufacturers must stay abreast of evolving standards in different regions.

- Battery Regulations: New regulations concerning battery design, removability, recyclability, and chemical content (especially for Lithium-ion batteries) are emerging, which can impact product design and manufacturing processes.

- Trade Policies and Tariffs: Changes in trade policies and the imposition of tariffs on imported components or finished goods can significantly affect costs and market competitiveness.

Operational and Business Risks:

- Talent Shortage and Skills Gap: A lack of skilled labor for manufacturing, R&D, and specialized technical roles can hinder growth and innovation.

- Sustainability Challenges (ESG): Beyond regulations, theres increasing pressure from consumers and investors for sustainable practices. The disposal of Lithium-ion and Ni-Cd batteries is a major concern due to their toxic components and the need for robust recycling infrastructure.

- Quality Control and Product Defects: Ensuring consistent quality across a wide range of products is crucial. Product defects can lead to safety incidents, costly recalls, and severe reputational damage.

- Intellectual Property Protection: Protecting proprietary designs and technologies from infringement, especially in competitive global markets, is an ongoing concern.

Emerging Threats:

- AI-Driven Fraud and Counterfeiting: While not directly impacting product manufacturing, the increasing sophistication of AI can be leveraged by bad actors for sophisticated counterfeiting operations, or for bypassing quality control and safety standards in counterfeit products, posing a significant risk to consumer safety and brand integrity.

- Shifting Consumer Behavior: Rapid changes in consumer preferences, such as the demand for personalized products, subscription models, or the increased reliance on online sales channels, require businesses to be agile and adapt their sales and marketing strategies.

Addressing these threats and risks requires a proactive approach, including robust supply chain management, continuous innovation, strong R&D investment, a keen eye on regulatory developments, and a commitment to sustainability and product safety.

INTERNAL CONTROL SYSTEMS AND ADEQUACY:

The Company has an Internal Control System commensurate with the size, scale and complexity of its operations. The scope of the Internal Audit is decided by the Audit Committee and the Board. To maintain its objectivity and independence, the Board has appointed an Internal Auditor, which reports to the Audit Committee of the Board on a periodic basis.

The Internal Auditor monitors and evaluates the efficacy and adequacy of Internal control Systems in the Company, its compliance with operating systems, accounting procedures and policies for various functions of the Company. Based on the report of Internal Auditor, management undertakes corrective action wherever required and thereby strengthens the control further.

The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

SEGMENT-WISE PERFORMANCE:

The Company operates in two segments which comprises of Manufacturing of Electrical Tools & Service and Trading. During the year, the revenue from operations amounted Rs. 366.10 lakhs.

FINANCIAL PERFORMANCE:

Summary of the Companys financial performance for F.Y. 2024-25 as compared with previous financial year is given below:

(Amounts in Lakhs)

Particulars	F.Y. 2024-25	F.Y. 2023-24
Revenue from Operation	366.10	738.97
Revenue from other Income	-	1.35
Total Revenue	366.10	740.32
Profit / (Loss) before Tax	(152.04)	42.06
Less: Provision for Taxation	-	10.59
Less: Provision for Tax (deferred)	-	0.15
Less: Short / (Excess) provision for tax of earlier years	-	21.54
Profit / (Loss) after Tax	(152.04)	9.78

During the financial year the total revenue from the operation of the Company was 366.10 lakhs as compared to 738.97 lacs i n previous year, which was almost 50.56% down in comparison with previous year. The main reason for decline in revenue for the year was due to mismatch in the Products mix introduced by the Company during the year and intense competition in market the sales momentum could not be sustain. The total operating expenses for the year 518.14 lakhs in comparison to 698.25 lacs in previous year. Due to lower revenue generation the company has incurred loss of (152.04) lakhs as compared to profit of 9.78 lakhs in previous year.

The management of the Company is very optimistic regarding performance of the Company in future and are taking effective steps to improve the performance of the Company through growth in revenue, managing cost, strategic marketing, increasing brand awareness and brand equity through advertisement campaign.

PERFORMANCE OF THE BOARD AND COMMITTEES:

During the year under review, the performance of the Board & Committees and Individual Director(s) based on the below parameters was satisfactory:

a) Most of the Directors attended the Board meeting;

b) The remunerations if payable to executive Directors are strictly as per the company and industry policy.

c) The Independent Directors are entitled to receive sitting fees. However no sitting fees were paid during the year.

d) The Independent Directors contributed in the Board and committee deliberation and business and operation of the company.

e) Risk Management Policy was implemented at all critical levels and monitored by the Internal Auditor, who reports to the Board and Audit committee.

HUMAN RESOURCES:

Your Company firmly believes that its human resources are the key enablers for the growth of the Company and are an important asset. Hence, the success of the Company is closely aligned to the goals of the human resources of the Company. Employee relations during the period under review continued to be healthy, cordial and harmonious at all levels and your Company is committed to maintain good relations with the employees

KEY FINANCIAL RATIOS:

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended, the Company is required to give details of significant changes (changes of 25% or more as compared to immediately previous financial year) in financial ratios are as follows:

Sr. No.	Ratios	F.Y. 2024-25	F.Y. 2023-24	% Change	Numerator	Denominator	Remark
1	Current Ratio	4.76	6.13	-22.36%	Sum of Current Assets	Sum of Current Liabilities	Turnover Decrease
2	Debt-Equity Ratio	0.01	0.01	-31.88%	Sum of Borrowings	Sum of Shareholders Fund	Turnover Decrease
3	Debt Service Coverage Ratio	(0.00)	0.00	-664.77%	Profit after tax but before Depreciation and interest	Sum of Interest & repayment of Debt as per Cash Flow	Turnover Decrease
4	Return on Equity Ratio	(0.77)	0.05	-1654.58%	Profit after tax	Sum of Shareholders Fund	Turnover Decrease
5	Inventory Turnover Ratio	1.21	2.48	-51.04%	Turnover	Sum of Inventory	Turnover Decrease
6	Trade Receivables Turnover Ratio	0.39	0.78	-50.14%	Turnover	Sum of Trade Receivables	Turnover Decrease
7	Trade Payables Turnover Ratio	1.40	5.09	-72.52%	Purchase	Sum of Trade Payable	Turnover Decrease
8	Net Capital Turnover Ratio	0.21	0.45	-52.91%	Turnover	Sum of Shareholders Fund	Turnover Decrease
9	Net Profit Ratio	(0.42)	0.01	-3237.87%	Profit after tax	Turnover	Turnover Decrease
10	Return on Capital Employed	(0.09)	0.03	-444.40%	EBIT	Sum of Shareholders Fund and Sum of Borrowings	Turnover Decrease
11	Return on Investment	(0.09)	0.01	-1581.63%	Profit after tax	Sum of Shareholders Fund and Sum of Long Term Borrowings	Turnover Decrease

CAUTIONARY STATEMENT:

The above Management Discussion and Analysis contains certain forward-looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding a fluctuation in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update any forward-looking statements made from time to time on behalf of the Company.

REGISTERED OFFICE	For and on behalf of the Board of Sparc Electrex Ltd
Sparc Electrex Limited
CIN:L31100MH1989PLC053467	Sd/-	Sd/-
1202, Esperanza Building, 198, Linking Road,	Shobith Ganesh Hegde	Suresh Vishwanathan
Next to Bank of Baroda, Bandra West, Mumbai- 400050	(Managing Director)	(Director)
S: 9819001811W: sparcelectrex@gmail.com	DIN: 02211021	DIN: 02310679
Website: www.sparcelectrex.com	Mumbai, August 14, 2025	Mumbai, August 14, 2025