SRM Energy Ltd Management Discussions

The Management Discussion and Analysis ("MDA") highlights the developments, opportunities, threats and performance of the Company vis-a-vis the overall industry in which the Company operates. Various factors having a direct or indirect impact on the Companys operations are also discussed in this report, along with the internal control systems and their adequacy, key financial aspects, and the overall risks and concerns during the financial year and up to the date of this report.

GLOBAL ECONOMY

The global economy continued to navigate an environment characterised by geopolitical uncertainties, evolving trade policies, persistent concerns relating to energy security, financial-market volatility and varying inflationary trends across economies. While global economic activity remained resilient, the outlook continued to be influenced by geopolitical developments, fragmentation of global trade and financial conditions.

The global economic environment remains relevant to the energy sector, as fluctuations in commodity prices, particularly crude oil and other energy-related commodities, may influence inflation, interest rates, investment decisions and overall economic activity. Against this backdrop, economies continued to focus on strengthening domestic resilience, energy security and sustainable growth.

INDIAN ECONOMY

The Indian economy continued to demonstrate resilience during FY 2025-26. As per the Economic Survey 2025-26, Indias real GDP growth for FY 2025-26 was estimated at 7.4%, supported by domestic consumption and investment.

India continues to remain one of the fastest-growing major economies, supported by domestic demand, infrastructure development, public capital expenditure, improving manufacturing capabilities and continued policy focus on energy and infrastructure development.

The medium-term economic outlook remains positive, although risks arising from geopolitical tensions, global trade developments, commodity-price movements and financial-market volatility continue to require close monitoring.

COMPANYS CURRENT BUSINESS POSITION AND INDIAN POWER SECTOR OUTLOOK

During the financial year under review, the Company continued to have no active operating business.

The Company has, over the years, disclosed the status of the proposed project and the circumstances which prevented its implementation. The project remained affected by various factors including changes in Government policies, economic conditions and developments in the power sector.

During FY 2025-26, there were significant developments in the corporate affairs of the Company, including the change in the Companys promoter group pursuant to the acquisition of the controlling shareholding in the Company. The Company is evaluating its future course of action in accordance with applicable laws and regulatory requirements.

The Indian power sector, however, continues to remain an important pillar of the Indian economy. Rising electricity demand, infrastructure development, industrialisation, urbanisation and increasing adoption of digital technologies are expected to support long-term demand for electricity.

India is simultaneously pursuing energy security and energy transition objectives, with significant additions in renewable and other non-fossil-fuel capacity. During FY 2025-26, Indias total power generation was reported

at approximately 1,845.921 billion units, while non-fossil fuel sources accounted for approximately 29.2% of total generation.

The Companys future prospects will depend upon the strategic direction adopted by the management and the developments arising pursuant to the change in control and the Companys financial and operational position.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Indias power sector comprises generation, transmission and distribution and includes conventional sources such as coal, lignite, gas, hydro and nuclear as well as renewable sources such as solar, wind, biomass and small hydro.

The power sector has witnessed continued capacity expansion, particularly in renewable energy. At the same time, conventional generation continues to play an important role in meeting base-load and peak electricity requirements.

The sector is undergoing a significant transformation driven by renewable-energy additions, grid strengthening, energy storage, transmission infrastructure, increasing electrification and the Governments focus on improving the efficiency and financial sustainability of distribution utilities.

The Companys proposed Cuddalore project, however, has remained non-operational and accordingly the developments in the power industry have not translated into operating revenue for the Company during the year under review.

GENERATION, TRANSMISSION AND DISTRIBUTION

Generation

Electricity generation in India continued to increase in line with rising electricity demand. The power generation mix is undergoing gradual transformation with increasing contribution from renewable and other non-fossil sources.

During FY 2025-26, India generated approximately 1,845.921 billion units of electricity, including generation from renewable and other non-fossil sources.

Transmission

Indias transmission infrastructure continues to expand to facilitate evacuation of power from generating stations and integration of renewable-energy capacity with load centres. Strengthening of inter-regional transmission capacity remains important for ensuring reliability and flexibility of the national electricity grid.

Distribution

Distribution remains the critical interface between electricity producers and consumers. The Government continues to implement reforms aimed at improving the financial and operational efficiency of distribution companies, reducing losses and improving the quality and reliability of electricity supply.

The continued development of the transmission and distribution network is expected to support the long-term growth of Indias power sector.

OPERATIONAL PERFORMANCE AND CUDDALORE PROJECT

The Company has not been engaged in active business operations for several years. The proposed 1,980 MW (3 x 660 MW) power project at Cuddalore, Tamil Nadu, continues to remain non-operational.

During the year under review, the Company did not generate operating revenue from the proposed power project.

The Company has historically faced substantial accumulated losses and erosion of its net worth. The management has continued to focus on statutory, regulatory and administrative compliances and on meeting the Companys obligations within the resources available to it.

During FY 2025-26, the Companys corporate structure also underwent significant changes pursuant to the transaction involving acquisition of the controlling shareholding in the Company.

CHANGE IN PROMOTER GROUP AND CORPORATE DEVELOPMENTS

A significant development during FY 2025-26 was the execution of a Share Purchase Agreement dated 25 September 2025 pursuant to which the Acquirers agreed to acquire 64,50,000 equity shares of the Company, representing 71.19% of the paid-up equity share capital of the Company, from Spice Energy Private Limited, the erstwhile promoter.

Pursuant to the transaction and the applicable provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, an open offer process was initiated.

The acquisition was subsequently completed in March 2026. Upon completion of the acquisition, the Acquirers were classified as the Promoters of the Company and Spice Energy Private Limited and its wholly-owned subsidiary, Nyra Holdings, ceased to be part of the Promoter/Promoter Group, in accordance with the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The change in control represents an important development for the Company and may have a bearing on its future business strategy and operations. The management will evaluate appropriate opportunities and strategic alternatives in accordance with applicable laws and regulatory requirements.

SUBSIDIARY / INVESTMENT POSITION

During FY 2025-26, the Company ceased to have its erstwhile wholly-owned subsidiary, SRM Energy Tamilnadu Private Limited.

The Companys investment in the erstwhile subsidiary was transferred/divested during the year. Consequently, the Company does not have any subsidiary as at the end of FY 2025 -26.

FINANCIAL PERFORMANCE

The Company continued to have no operating revenue during the year under review and remained without active business operations.

The financial performance of the Company should therefore be viewed in the context of its non-operating status, accumulated losses, limited resources and absence of revenue-generating operations.

The management continues to evaluate the Companys financial position and available resources while ensuring compliance with applicable statutory and regulatory requirements.

HUMAN RESOURCES

The Company continues to maintain a lean organisational structure appropriate to its existing scale and nature of activities.

The Company remains committed to maintaining appropriate human resources necessary for meeting its statutory, regulatory, administrative and operational requirements.

INTERNAL CONTROL SYSTEMS

The internal control systems of the Company are commensurate with the size, nature and complexity of its present activities.

The management periodically reviews the internal control framework and processes to ensure that appropriate controls are maintained over the Companys financial, statutory and administrative activities.

The Company continues to focus on compliance with applicable statutory and regulatory requirements, particularly considering its status as a listed entity.

RISKS AND CONCERNS

The Company is exposed to risks arising from its limited operating activities, financial position, accumulated losses and absence of an active revenue-generating business.

The principal risks include:

1. Business Risk: The Companys proposed power project has remained non-operational and the Company presently does not have an active operating business.

2. Financial Risk: The Company has accumulated losses and an eroded net worth, resulting in significant financial constraints.

3. Liquidity Risk: The Companys ability to meet its liabilities and ongoing expenses is dependent upon availability of financial resources and support.

4. Regulatory and Compliance Risk: As a listed company, the Company remains subject to applicable requirements under the Companies Act, SEBI regulations and other applicable laws.

5. Strategic Risk: The future direction of the Company will depend upon the strategic decisions taken by the new management following the change in control.

6. Industry Risk: Any future participation in the power sector would expose the Company to regulatory, policy, financing, fuel, environmental, technological and market-related risks.

The Company continues to monitor these risks and take appropriate measures, wherever feasible, to mitigate their impact.

OUTLOOK

The Indian power sector continues to offer long-term growth opportunities due to increasing electricity demand, infrastructure development, industrialisation and the countrys transition towards a more diversified and sustainable energy mix.

However, the Companys immediate outlook needs to be assessed in the context of its present non-operational status, accumulated losses, financial position and the recent change in control.

The new management is expected to evaluate the Companys available resources, opportunities and strategic alternatives and determine the appropriate future course of action in compliance with applicable laws and regulatory requirements.

CAUTIONARY STATEMENT

Certain statements in this Management Discussion and Analysis may constitute forward-looking statements. Such statements may be identified by words or phrases such as "plans", "anticipates", "believes", "estimates", "expects", "intends", "will", "projects" and other expressions of similar nature.

These statements are based on certain assumptions and expectations concerning future events. Actual results, performance or achievements may differ materially from those expressed or implied in such forward-looking statements due to various factors, including changes in economic conditions, regulatory developments, industry conditions, business strategy, financial resources and other risks and uncertainties.

The Company assumes no obligation to publicly update, modify or revise any forward-looking statements on the basis of subsequent developments, information or events. Accordingly, undue reliance should not be placed on such statements.

The above discussion and analysis should be read in conjunction with the Companys financial statements and the notes thereto.