Sugs Lloyd Ltd Management Discussions

The Indian economy continues to demonstrate strong and broad-based growth despite global geopolitical uncertainties, elevated interest rates and commodity-price volatility. Growth remains supported by resilient domestic consumption, increasing private investment and sustained government spending on infrastructure and capital projects.

For the power and infrastructure sector, this economic momentum is particularly positive. Rising industrial activity, Urbanisation, Electrification, Digitalisation, Data Centres, Electric Mobility and increasing cooling demand are driving sustained growth in electricity consumption and infrastructure requirements.

India is therefore moving into a multi-year infrastructure investment cycle, with increasing focus not only on generation but also on Transmission, Distribution modernisation, Renewable Energy integration, Grid Automation and Energy Storage. This structural shift provides a favourable environment for companies such as SUGS Lloyd, with capabilities spanning Power T&D, Solar, Distribution Automation, Niche Electrical products and emerging Transmission and BESS opportunities.

Indias electricity demand continues to rise, with peak demand reaching an all-time high of around 256 GW in April 2026, while installed generation capacity crossed 548 GW. Continued industrialisation, urbanisation, electrification, data centres and rising cooling demand are expected to sustain this growth.

The transmission sector is consequently entering a significant investment phase. The National Electricity Plan envisages approximately Rs.9.15 lakh crore of transmission investment up to 2032, including substantial expansion of transmission lines, substations and transformation capacity to integrate renewable energy and strengthen inter-regional power transfer.

At the distribution end, the Revamped Distribution Sector Scheme (RDSS) was originally approved with an outlay of approximately Rs.3.04 lakh crore, including central government support, and has subsequently been extended up to 31 March 2028. Its objectives include reducing AT&C losses to the 12-15% range and improving the financial and operational sustainability of DISCOMs.

Indias distribution network is progressively moving towards automated and data-driven grid management. Smart metering, SCADA, DMS/ADMS, outage management and distribution automation are increasingly being deployed to improve reliability, reduce losses and enable real-time monitoring and control. This transition expands the opportunity beyond conventional EPC into technology-enabled solutions and directly complements SUGS Lloyds capabilities in SCADA and distribution automation.

Indias renewable-energy expansion continues at scale, supported by the national objective of achieving 500+ GW of non-fossil capacity by 2030 and a renewable-energy bidding trajectory of approximately 50 GW annually. This provides a sustained pipeline for utility-scale solar, hybrid and distributed renewable projects.

For SUGS Lloyd, this supports continued growth across Solar (EPC/RESCO), with increasing opportunities to combine renewable generation with storage and grid infrastructure.

Further, the rapid addition of renewable energy is creating a parallel requirement for Battery Energy Storage Systems (BESS) to manage peak demand, shift renewable generation, provide grid flexibility and improve reliability.

SUGS Lloyds entry into BESS and Solar + Storage solutions provide an opportunity to leverage its existing renewable-energy and power-infrastructure capabilities in this rapidly developing segment.

The focus of distribution utilities is increasingly shifting from only reducing AT&C losses to improving network reliability and quality of supply (SAIFI/SAIDI), driving demand for specialised products such as Fault Passage Indicators, Auto Reclosers and Sectionalisers.

SUGS Lloyd has established a strong position in the FPI segment, providing a platform to expand into a broader distribution-automation portfolio.

SUGS Lloyd Limited is a power and infrastructure solutions company with capabilities across Power Transmission & Distribution, Grid Modernisation, Renewables and Specialised distribution products.

The Companys operations span three principal business lines:

Power T&D Infrastructure: Distribution and transmission networks, substations, system strengthening, SCADA/ADMS/OMS/DAS and distribution automation, along with O&M. The portfolio also includes specialised products such as Fault Passage Indicators, Auto Reclosers and Sectionalisers.

Renewables : Solutions for rooftop and ground-mounted solar, distributed generation and O&M, with participation through both EPC and RESCO models.

Civil Construction: Civil infrastructure works supporting power and other infrastructure projects.

The Company is expanding into EHV transmission and Battery Energy Storage Systems (BESS), creating significant opportunities for growth and business diversification. This expansion is further supported by its continued focus on research and development, with the introduction of next-generation products such as Compact Fault Passage Indicators (FPIs), Vacuum Circuit Breakers and Ring Main Units, strengthening its portfolio and positioning the Company to address evolving power infrastructure requirements.

As of 31 March 2026, SUGS Lloyd operates across Delhi, Bihar, Odisha, Gujarat, Punjab, Himachal Pradesh, Maharashtra, Uttar Pradesh and Chhattisgarh, with a workforce of over 1,000 employees.

For financial reporting, the Company is classified as a single operating segment under Accounting Standard 17; the business-line figures below represents managements operational view of the Companys activities.

On managements own split, revenue for the year came from Solar EPC Solutions at Rs 156.49 crore (52.0 percent), Power T&D Infrastructure at Rs 139.18 crore (46.3 percent) and Civil Construction at Rs 4.10 crore (1.4 percent). Power T&D and Solar together made up about 99.7 percent of revenue.

Within Power T&D, the FPI and products business brought in around Rs 7 crore and stayed the leader in its category. The order book at year-end was about Rs 825 crore, split roughly Rs 708 crore of Power T&D, Rs 110 crore of Solar and Rs 8 crore of niche products. During the year, the Company secured a large SCADA-based project from Konkan Railway Corporation valued at approximately Rs 540 crore (net of GST), won in competition with established EPC players marking the Companys entry into large-format, technology-led distribution automation projects beyond its traditional EPC scope. That mix points to a gradual shift toward higher-margin transmission, smart-grid and productwork.

The figures below are on a standalone basis, in Rs crore unless stated. Consolidated results are only slightly different, because of the Companys small share of associate profit.

Results. Revenue from operations grew 71 percent to Rs 300.7 crore, from Rs 176.2 crore, on higher volumes in both power T&D and solar EPC and on geographic expansion. This performance was ahead of the Companys own guidance of approximately Rs 270 crore in revenue for FY26, issued at the start of the year. EBITDA rose 69.0 percent to Rs 43.55 crore, and the EBITDA margin held at 14.5 percent against 14.6 percent the year before, even with more work now self-executed in T&D. Most contracts carry price-variation clauses, and the product mix helped. Finance costs were Rs 7.45 crore, up from Rs 4.41 crore, as the Company used more working-capital funding during the year; interest cover stayed comfortable at about 5.79 times. Profit before tax grew 71 percent to Rs 38.68 crore and profit after tax 72 percent to Rs 28.69 crore, with the net margin steady at 9.5 percent. Diluted earnings per share were Rs 14.19, against Rs 10.29. Although not mandatorily required for companies listed on the SME platform, the Company has published quarterly financial results and held an investor earnings call every quarter since its listing, and intends to continue this practice as part of its broader commitment to regular and transparent stakeholder communication.

Financial position. The Companys shares were listed on the SME platform of BSE Limited on 5 September 2025, after a fresh issue of 69,64,000 equity shares at Rs 123 each. The successful public issue significantly strengthened the Companys capital base, with shareholders funds increasing to Rs.137.2 crore from Rs.36.7 crore. Borrowings were broadly flat at Rs 68.9 crore, so the debt-equity ratio fell from 2.0 to 0.50 times and the current ratio improved from 1.1 to 1.7 times. Trade receivables rose to Rs 159.3 crore from Rs 70.6 crore, as large RDSS and T&D orders scaled up and billing again concentrated in the fourth quarter. About 99 percent of the order book is with government and PSU customers, on projects funded by the central government or by multilateral agencies, so collection which runs at around 139 days is reasonably secure and upside of the 180 days industry norms.

Cash flow and rating. Operating cash flow was negative for the year, as the Company funded a larger working-capital book to support fast growth. Investing outflows were mostly bank and bank-guarantee margin deposits, and financing inflows were the IPO proceeds. During the year the Company received its first credit rating, CARE BBB-, and expects to seek an upgrade as it grows and its metrics improve.

As required by Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 read with Schedule III of the Companies Act, 2013, the significant changes (25 percent or more) in key financial ratios, with explanations, are set out below. Turnover and return ratios are worked out on the average of opening and closing balances. FY2025 figures are shown on the current-year basis, as the previous years figures were regrouped where needed.

Shaded rows show a change of 25 percent or more. The definitions follow the methodology the Company has used before: inventory and trade receivables turnover use revenue over average balances; trade payables turnover uses purchases over average balances; return on net worth and on capital employed use average net worth and capital employed. Return on Investment is shown as not applicable, in line with earlier disclosure, as the Company holds no material investment portfolio.

The Company starts FY2026-27 with an order book of about Rs 825 crore, which gives eighteen to twenty-four months of revenue visibility, a qualified bid pipeline of roughly Rs 1,300 crore, and a larger tender funnel across power T&D, solar and niche products. Company aims to sustain the Companys strong growth momentum through FY27 and achieve revenue of approximately Rs.1,000 crore by FY28, supported by three key priorities

Growth: Increasing participation in larger, higher-value smart-grid, SCADA, ADMS and transmission projects, while maintaining a healthy base of executable mid-sized projects.

Financial Strength: Improving receivables and supporting growth through an appropriate mix of debt, equity and working-capital instruments, including invoice discounting, TReDS and surety bonds.

Products & Technology: Scaling the FPI business, introducing next-generation compact FPIs, and developing vacuum circuit breakers and ring-main units through in-house capabilities.

While FY27 remains the Companys firm near-term growth target, achieving the FY28 revenue ambition will require continued strengthening of the order book and successful conversion of the identified pipeline.

Opportunities. Continued government spending under RDSS, transmission (TBCB), smart metering and grid modernization, creating a sustained pipeline of T&D opportunities; Expansion of SCADA, ADMS and distribution-automation solutions into Tier-2 and Tier-3 cities; Accelerating renewable-energy, supporting growth in Solar EPC, RESCO and storage solutions; and the Companys lead in an under-penetrated FPI market with a widening product range.

Threats. Long receivable cycles and the working-capital demands of distribution EPC; reliance on government and PSU order flow and the timing of scheme fund releases; strong competition in EPC bidding; Commodity-price volatility, although a significant portion of the impact is mitigated through price-variation provisions; execution and timeline risks, particularly for large and complex projects.

Working capital management and receivables continue to remain key areas of concern for the Company. The Company is addressing these through tighter collections, selective bidding based on payment terms and structured funding. Dependence on government and PSU customers is being managed by focusing on projects backed by central government funding and multilateral agencies such as the World Bank and ADB, which offer relatively better payment visibility.

Order inflow and execution depend on tender timelines and win rates; the Company mitigates this through a diversified pipeline and disciplined bidding. Commodity and LME price volatility, along with statutory changes, is largely mitigated through price-variation clauses. Competition remains strong in smart-grid and SCADA projects, while new products, such as Vacuum Circuit Breakers (VCBs) and Ring Main Units (RMUs), are currently under development. The FY28 growth plan will require higher fund-based and non-fund-based limits, which are being arranged. Management currently does not envisage an additional equity raise through FY28.

The Companys internal control systems are suited to its size and the nature of its work, and are meant to keep financial reporting reliable, protect assets, ensure compliance with the law, and keep operations orderly. Management and the Audit Committee review these controls from time to time. The statutory auditors gave an unmodified opinion on the years financial results, and the Companys accounting software keeps an audit trail.

People are at the centre of an engineering business. As at 31 March 2026, the Companys total workforce stood at 1,100, comprising 251 permanent employees and 849 personnel engaged on a contractual basis and continues to invest in project management, design and research staff, including the FPI and product-engineering team. Relations with employees stayed cordial through the year.

Statements in this Management Discussion and Analysis that describe the Companys objectives, projections, estimates and expectations may be forward-looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Factors that could cause a difference include economic conditions, government policy and the flow of scheme funds, demand, supply and pricing in the Companys markets, changes in law and regulation, and other incidental factors. The Company is under no obligation to publicly update or revise any forward-looking statement on the basis of later developments, information or events.