Spectrum Electrical Industries Ltd Management Discussions

01 Economic and Business Environment

Global picture:

? IMF April 2026 World Economic Outlook projects global growth of 3.1% in 2026 and 3.2% in 2027.

? Shaped by geopolitical tension, trade barriers and commodity-price pressure.

? Inflation expected to steady, though renewed energy and supply-chain disruption could complicate monetary easing.

? Environment favors manufacturers combining cost competitiveness with supply reliability, technical depth and genuine process control.

India:

? Economic Survey 2025-26 estimates real GDP growth at 7.4% and real gross value added at 7.3%.

? Manufacturing gross value-added growing 8.4% in first half of year.

? Public infrastructure spending and private capital expenditure expanding industrial base.

? Expansion of power and digital infrastructure enlarging market for electrical equipment.

? Shift towards domestic manufacturing redirecting demand towards Indian manufacturers.

? Indias installed renewable-energy capacity reached approximately 263 GW.

? Ministry of Powers transmission planning provides for substantial additions through 2031-32.

Policy environment:

? Electronics Components Manufacturing Scheme launched in 2025.

? Allocation raised materially in Union Budget 2026-27.

? Approved projects represent projected investment of approximately Rs. 69,548 crore across 106 approved projects as of August 2026.

? Directly relevant to Electronic Manufacturing Services initiative.

02 Industry Outlook - Electrical and Electronic Components

Electrical equipment market:

? McKinsey study (May 2026) with IEEMA estimates domestic consumption of approximately US$ 59 billion in 2025.

? Compound annual growth of 11% between 2020 and 2025.

? Projects further annual growth of 11% to 13% through 2035.

? Growth will favor manufacturers delivering repeatability, process control, traceability and reliable execution.

Power infrastructure and grid expansion:

? Transmission and distribution account for close to 40% of domestic consumption.

? Cables and wires, transformers, high-voltage and low-voltage switchgear, protection systems and power-distribution equipment remain central.

? Planned additions in transmission lines and transformation capacity through 2031-32 to sustain demand.

Electrification and renewable energy:

? Indias electricity demand projected to grow at average of approximately 6.4% annually through 2030.

? Rising share of variable renewable generation changing technical requirements.

? Places premium on consistent tolerances, material performance, thermal management, surface integrity and dependable assembly.

Industrial automation, electric mobility and new loads:

? Registrations under Governments electric-mobility program exceeded 21 Lakhs during year.

? Creates demand for reliable switching, control, connectivity and charging components.

? Pathway to apply capabilities in precision components, electrical assemblies, control panels, EV charging equipment and electronics-manufacturing platforms.

03 Spectrum - Business and Strategic Position

Integrated manufacturing and engineering platform spanning:

? Production engineering and design

? In-house tooling

? Precision metal stamping

? Engineering plastics injection moulding

? Metal fabrication and enclosures

? Surface finishing and electroplating

? Copper processing

? Assembly, testing and validation

Applications served during FY 2025-26:

? Low-voltage switchgear: Precision components, enclosures, current-carrying parts and assemblies

? High-voltage and power distribution: Specialized components and copper-based current-carrying parts

? Distribution boards and control panels: Complete products and assemblies

? Electric mobility infrastructure: Charging equipment developed in-house

? Renewable energy and industrial automation: Control panels and associated assemblies

? Medical electromechanical: Sub-assemblies developed under collaboration

? Own-brand electrical products: Protection devices, wiring devices and accessories through Alric Electric Private Limited

Strategic direction:

? Extending capability platform through Original Design Manufacturing (ODM) and Alric Electric Private Limited.

? Focus on deepening role in chosen parts of value chain.

? Participate earlier in customer requirements, take on greater engineering responsibility, develop specialized solutions and products, build selective market-facing platforms.

04 Product and Application-wise Performance

? Revenue predominantly from business-to-business relationships with OEMs.

? Applications reflect where customers are investing.

? Volumes allocated reflect sourcing decisions across supplier base.

? Business presented through lens of applications served and capabilities deployed.

05 Operational Review

? FY 2025-26 was principally a year of building.

? Advanced integrated smart manufacturing facility of approximately three lakhs square feet at Jalgaon.

? Commissioned new and expanded infrastructure at Nashik and Bengaluru.

? Progressed copper processing chain - forging, machining, precision brazing and welding, and silver plating - towards commissioning.

? Established high-technology critical welding capability for precision air circuit breaker mechanisms.

? Laid groundwork for Electronic Manufacturing Services and data-centre-related ODM, moving into execution in FY 2026-27.

Manufacturing performance:

? Output spans components, sub-assemblies and complete products.

? Each customer sets own qualification protocols, quality standards, delivery schedules and performance measures.

? Operational performance assessed programme by programme.

? Common discipline: qualification of each new part, process control, adherence to delivery commitments.

? Relationships close to two decades continue and have widened.

? Customers involve Company at design stage.

? New programmes awarded across applications.

Supply chain:

? Integrated model reduces dependence on external processing.

? Input materials, principally copper and copper alloys, remain bought out.

? Supplier development in this category is active area of work.

06 Human Resources

? Workforce absorbed acquisition, new facilities, new processes and materially higher activity.

? Employed 1,949 people as at March 31, 2026 (compared to 1,319 previous year).

? Continued to strengthen leadership depth, technical talent, project-execution capability and quality systems.

? Industrial relations remained cordial throughout the year.

07 Financial and Operational Performance

Standalone results:

? Revenue from operations increased 27.06% to Rs. 504.56 crore (from Rs. 397.09 crore).

? Profit before tax rose 58.13% to Rs. 55.58 crore.

? Profit after tax increased 76.28% to Rs. 42.80 crore.

? EBITDA increased to Rs. 83.15 crore from Rs. 56.91 crore.

? EBITDA margin improved from 14.33% to 16.48%.

Consolidated results:

? Consolidated revenue was Rs. 525.94 crore.

? Consolidated profit after tax Rs. 44.48 crore.

? Reflects acquisition of Alric Electric Private Limited during year.

Key financial ratios:

Sr. No. Particulars of financial ratios	Standalone 2025-26	Standalone 2024-25	Consolidated 2025-26	Consolidated 2024-25
i. Current Ratio	1.35	1.25	1.34	1.52
ii. Debt Equity Ratio	0.76	0.75	0.89	0.86
iii. Inventory Turnover	5.68	6.57	3.29	3.99
ix. Net Profit Ratio	0.08	0.06	0.08	0.06
v. Interest Coverage Ratio	4.38	3.58	4.82	3.67
vi. Operating Profit Margin (%)	12.83%	10.94%	12.85%	11.03%
vii. Net Profit Margin (%)	8.48%	6.11%	8.46%	6.32%
viii. Debtors Turnover Ratio	4.28	4.05	4.99	3.90

08 Risks and Mitigation

Principal Risk	Potential Impact	Mitigation and Management Approach
Customer concentration	Change in strategy, sourcing allocation or demand from major customer may affect revenue visibility and capacity utilisation	Long-standing customer relationships; multi-year order visibility; development of new accounts; broader application coverage; continued expansion of capability base; gradual development of Alric as complementary market-facing platform
Input-cost and currency exposure	Volatility in copper, copper-alloy and other input prices, together with foreign-exchange movements, may impact reported content, may affect margins and working capital	Procurement planning; customer-linked pass-through mechanisms where contractually available; disciplined inventory management; supplier development; process efficiency; broader sourcing; appropriate foreign-exchange risk management
Capital-programme execution	Delays in project execution, commissioning, approvals or customer ramp-up may defer utilisation and returns on capital deployed	Phased commissioning aligned with customer ramp schedules; project milestones and management review; Board oversight of significant capital projects; capital allocation linked to identified customer requirements and expected payback
Product and technology cycles	Faster product cycles, changing technical standards and rising quality expectations may affect product relevance and competitiveness	Investments in engineering, tooling, testing and quality; design and product-development capability; R&D infrastructure; customer engagement during product-development cycles; selective development of ODM and EMS capabilities
Supply continuity	Disruption in availability, logistics or quality of key materials and inputs may affect production schedules and delivery commitments	Integrated manufacturing model that reduces external processing dependence; established supplier relationships; supplier development; multi-location operating capability; procurement planning; ongoing monitoring of material availability
Funding and working capital	Expansion investment and business growth may increase borrowings, working-capital requirements and liquidity pressure	Liquidity and borrowing monitored against investment plan; emphasis on operating profitability and cash generation; working-capital discipline; phased capital deployment; periodic review of funding requirements
People, safety and compliance	Shortfall in skilled talent, safety incidents or compliance failures may affect operations, reputation and business continuity	Investment in leadership, technical talent and execution capability; quality and EHS systems; certified environmental and occupational-health-and-safety management systems; training; compliance monitoring; and management oversight across operating locations

09 Opportunities

? Growth in electrical components: Rising electrification, infrastructure investment and industrial demand across applications.

? Power transmission and distribution: Planned national additions to transmission and transformation capacity.

? Electronic Manufacturing Services: Policy support through Electronics Components Manufacturing Scheme.

? Data-centre products and solutions: Specialised, technology-intensive segment accessible through ODM route.

? Deeper customer engagement: Established relationships allowing earlier participation in customer product development.

? Product ownership through Alric: Route to participate in value created across product lifecycle.

? Continued integration: Further reduction of dependence on external processes, strengthening margin and delivery reliability.

10 Outlook

? Not a year of discovery. A year of conversion.

? Enters FY 2026-27 with capacity created, capabilities commissioned or nearing commissioning, brand launched, and new platforms under construction.

? Task ahead is therefore not discovery but conversion: filling capacity built, establishing Alric in market of established incumbents, and holding quality and margin discipline while doing both at pace.

11 Internal Control Systems and Their Adequacy

? Maintains internal control system commensurate with size, scale and complexity of operations.

? Designed to provide reasonable assurance that transactions are executed with management authorisation and recorded in all material respects.

? Internal Audit function independently reviews adequacy and effectiveness of internal controls.

? Internal Audit reports observations to Audit Committee, which reviews reports and monitors implementation of corrective actions.

? Maintains high standards of ethical conduct and expects operating culture to remain consistent with these standards.

12 FORWARD-LOOKING STATEMENTS

Statements describing objectives, projections, estimates and expectations may constitute forward-looking statements. Actual results could differ materially. Important factors include economic conditions, demand and supply conditions, price conditions, changes in Government regulations, tax laws and other statutes, and other incidental factors.