Synergy Green Industries Ltd Management Discussions

Global Wind Industry Overview:

The wind industry is in a pivotal moment with the adoption of COP28 target to triple renewable energy by 2030 and to accelerate the energy transition. Among policymakers and international institutions, there is a clear understanding that the world must accelerate installations of readily available technologies – namely wind and solar PV, to move to a cleaner, modern and more flexible energy system. The global wind industry achieved a record installation of 117 GW in 2024, nearly equal to the previous years high. Despite this milestone, the pace falls short of the 320 GW annual installations needed by 2030 to meet COP28s target of tripling global renewable energy capacity. Cumulative global wind capacity reached a record 1,136 GW by the end of 2024, with 109 GW from onshore and 8 GW from offshore installations. China led with 79.8 GW, followed by the U.S. (4.1 GW), Germany (4 GW), India (3.4 GW), and Brazil (3.3 GW). Other major economies also set up ambitious targets – particularly those with strong offshore resources – such as Japan, South Korea, Australia, Vietnam, the Philippines and Kenya.

Challenges such as policy instability, permitting delays, and grid infrastructure issues continue to hinder growth. The Global Wind Energy Council (GWEC) projects a compound annual growth rate (CAGR) of 8.8% through 2030, adding nearly 1 TW of capacity during this period. This alone shows the magnanimous growth runway for the industry that took 40 years to reach the first 1 TW mark in 2024 and is to achieve the same feat within an accelerated timeline of just 7 years to reach 2 TW by 2030.

FORWARD LOOKING STATEMENT

This report contains forward-looking statements, which may be identified by words such as "plans," "expects," "will," "anticipates," "believes," "intends," "projects," or "estimates." These relate to the Companys growth strategy, product development, market position, expenditures, financial performance, and other future matters. Such statements are based on assumptions and expectations of future events and are not guarantees of performance. Actual results may differ materially due to risks, uncertainties, and external factors beyond the Companys control. The Company undertakes no obligation to update or revise forward-looking statements, except as required by applicable law.

Indian Wind Industry:

India added approximately 4.15 GW of wind capacity in 2024-25, marking a 27.77% increase over the previous year. This brings the total installed wind capacity to over 50 GW, maintaining Indias position as the fourth-largest onshore wind market globally.

The governments commitment to achieving 500 GW of non-fossil fuel capacity by 2030, including 140 GW from wind, remains steadfast. In 2024, India aimed to connect a record 35 GW of solar and wind energy to the grid, supported by a $386 billion financial commitment from institutions and developers. With Indias vision to become a Developed Nation by 2047, several strategic initiatives have been introduced such as: Self-reliant India through Make-in India, reaching net-zero by 2070, and the National Green Hydrogen Mission, among others. While thermal power continues to dominate the power generation mix, India is expected to more than double its onshore wind and solar PV capacity by 2028 and achieve its milestone of 50% non-fossil fuel generation before 2030.

However, persisting land acquisition issues, greater need for grid integration, better port infrastructure, and auction delays affecting Power Purchase Agreements (PPAs) need to be addressed faster. Key policy initiatives driving wind energy growth include:

10 GW annual onshore wind bids from 2023–2027 through single-stage/e-reverse auctions

Inter-State Transmission System (ISTS) charges waiver extended up to June 2025

Implementation of wind-specific Renewable Purchase Obligations (RPOs) from 2023 to 2030

Introduction of firm and dispatchable renewable power supply tenders, enhancing the round-the-clock renewable energy framework

Mandated minimum share of renewable energy consumption for DISCOMs and provisions for consumers to purchase green electricity

Improvements in the timely disbursal of payments by DISCOMs

Transmission planning to integrate 48 GW of onshore wind capacity by 2030

A revised National Repowering & Life Extension Policy for Wind Power Projects - 2023 to facilitate the repowering of aging wind turbines The government also approved a Viability Gap Funding (VGF) scheme worth 7,453 crore ($890 million) to promote offshore wind energy projects, marking a significant step towards harnessing Indias offshore wind potential. All-in-all, as the second largest hub of onshore wind turbine assembly and key component manufacturing in the APAC region, India is well placed for capitalizing on the enormous opportunity going ahead ahead.

COMPANY & PERFORMANCE OVERVIEW:

Your Company primarily serves both domestic and international markets for wind turbine castings and has established long-term supply partnerships with leading global OEMs such as Vestas, GE, and Siemens Gamesa, as well as key Indian OEMs including Senvion and Adani. Additionally, two prominent OEMs operating in India—Nordex and Envision—are currently in the onboarding process. Demand from these OEMs spans domestic installations, turbine assembly exports, and direct casting exports.

Beyond wind OEMs, the Company has secured long-term contracts with major wind gearbox manufacturers such as Flender Drives and ZF Wind. The Company also supplies Tier-1 players across industrial segments, including Terex and Milacron, serving sectors like industrial machinery, mining, plastic injection, and pumps. In FY 2024-25, your Company achieved net revenues of 363.68 crores, compared to 328.05 crores in the previous year, marking a growth of 10.86%. Key growth drivers included OEM and direct exports as well as the gearbox segment, while the domestic wind and non-wind segments saw a slight decline due to slower-than-expected offtake. The Company reported an absolute PBDIT of 53.70 crores, up from 41.10 crores in the previous year, reflecting robust growth of 30.66%. Supported by stable raw material costs and revenue expansion, PBDIT margins improved from 12.53% to 14.77%. PATincreased 1.46 times, rising from 11.56 crores to 16.89 crores.

Expansion and CAPEX planning:

With a positive industry outlook and a strong order book, the Companys management has approved a significant expansion strategy. This includes a brownfield capacity enhancement, backward integration through partial in-house machining facilities, and additional captive renewable energy capacity. To fund these initiatives, the Company successfully completed a Rights Issue in October 2024, raising capital to support its strategic growth plans. Combined with internal accruals and debt financing, the Company plans to invest approximately 200 crores over the next 12–18 months (through Q4 FY2025-26) to execute this expansion phase.

The CAPEX program is focused across three key areas:

1. Foundry capacity expansion: With projected order growth from both existing and new customers, the current foundry capacity of 30,000 TPA, already operating at ~85–90% utilization in FY2024-25, is being expanded to 45,000 TPA through a brownfield project to support the growing demand.

2. Machining Capacity: Currently, 100% of machining is outsourced, with machined supplies accounting for ~75% of total shipments and machining costs representing ~11.4% of revenues. While most machining vendors are based in Chennai to serve southern OEMs (Vestas, Siemens Gamesa), rising demand from northern and western OEMs (Senvion, GE, Adani, Envision) and the need to handle larger turbine components (up to 5 MW) have prompted the establishment of in-house machining. The new machine shop, under construction at the recently acquired F-6 plot in Kagal Five-Star MIDC, Kolhapur, will have a capacity of ~20,000 TPA. Commissioning is planned in a phased manner between Q2 and Q4 FY2026. This investment is expected to improve PBDIT margins by 250–300 basis points.

3. Captive Renewables: The Company is advancing its sustainability agenda and realize economic benefit on energy costs by significantly expanding its captive renewable energy capacity, with a focus on solar generation. Following the successful commissioning of a 2 MW captive solar plant last year, the Company is in the process of scaling this up to 10 MW with an investment of 30 crore. This capacity will be online in May 2025 and is expected to support approximately 14,000 TPA of production. Key highlights:

Electricity costs currently account for 7.67% of revenues, even after accounting for the 2

MW solar addition, at a grid rate of 10.50/ unit. Captive solar generation is projected to contribute over 6/unit at the PBDIT level.

Under current regulations, up to 60% of electricity consumption can be met through captive renewables.

These investments provide accelerated depreciation benefits and serve as a hedge against future electricity price inflation.

They also strengthen the Companys progress toward its carbon neutrality goals and bolster its sustainability profile.

The renewable energy initiative is expected to deliver a 150–200 bps improvement in PBDIT margins.

Performance Outlook for FY 2025-26:

The executable order book for FY 2025-26 is projected to grow by ~20% over the previous year, reaching approximately 435 crore, based on management estimates at the time of this report. Export revenues accounted for a standout ~28% in FY 2024-25, driven by two key customers, and are expected to normalize to approximately 16% in FY 2025-26.

Key developments:

Major capacity expansion and capex execution will occur in Q1–Q2 FY2025-26, during which some production disruption is anticipated

Ongoing development activities for Nordex, Envision, and existing customers will continue into H1 FY2025-26

Global trade uncertainties and potential trade tensions may exert upward pressure on raw material prices; however, barring any major price shocks, PBDIT margins are expected to expand by an additional 100 bps YoY driven by revenue growth and cost efficiencies from strategic investments Looking ahead, the Company is optimistic about its growth trajectory, underpinned by a robust executable order book, focused execution of capacity enhancements, and disciplined financial management. Strategic investments in backward integration and renewable energy are positioned to further strengthen margins and reinforce the Companys competitive positioning in both domestic and export markets.

OPPORTUNITIES AND THREATS: a) Opportunities i. The Indian wind market has returned to a growth trajectory, complemented by steady global demand, presenting strong growth prospects ii. Indias emergence as a manufacturing hub for multinational OEMs is unlocking global demand for local casting manufacturers iii. Geopolitical shifts, including regional tensions and trade wars, are driving increased sourcing from India, strengthening foundry export opportunities iv. Investments in backward integration through partial in-house machining capacity are expected to enhance margins v. Significant reductions in renewable energy costs over the past year offer attractive returns on investment and margin improvement potential b) Threats i. Heavy dependence on the wind sector, which currently accounts for over 80% of revenues.

Mitigation: The Companys facilities are versatile and can pivot (with some lead time) to serve other large casting applications and industries ii. Volatile commodity prices pose risks to profitability.

Mitigation: Key commodity prices are hedged through quarterly agreements with customers

RISKS AND CONCERNS:

In accordance with the SEBI Listing Regulations, the Board of Directors of the Company is responsible for framing, implementing and monitoring the risk management plans of the Company. The Company does from time to time identify risks associated, assess its impact and take appropriate corrective steps to minimize the risks that may threaten the existence of the Company.

Annual risk assessment exercise is conducted in the line with the framework, existing risks, their mitigation plans are evaluated and new risks, if any, are identified. The Audit Committee has additional oversight over financial risks and controls. It also reviewed the mitigating factor and actions initiated by the management to minimize the impact.

Risk Mitigation

To mitigate various risks significant to its business, your Company took several strategic measures during the year, such as: i. Customer concentration risk: The Company has expanded its customer portfolio, adding major clients like Senvion India Pvt. Ltd., GE India, and Adani, with Nordex and Envision currently being onboarded. ii. Foreign exchange risk: The Company has availed Foreign Currency Term Loans (FCTL) and implemented currency swap arrangements to establish a natural hedge against export earnings. iii. Raw material supply risk: Focused efforts are underway to diversify and secure alternative sources for critical raw materials such as pig iron and CRCA scrap.

These initiatives have strengthened the Companys resilience, helping it achieve its strategic and financial objectives despite external uncertainties.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE:

The Company works only in one segment i.e. manufacturing of SG & CI Castings.

IN ACCORDANCE WITH THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS 2018) (AMENDMENT) REGULATIONS, 2018, THE COMPANY IS REQUIRED TO GIVE DETAILS OF SIGNIFICANT CHANGES (CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS:

Sr. No. Key Financial Ratios	2025	2024	Remark
1 Debtors Turnover	7.88	11.52	Receivables as on March 31, 2025 have increased, leading to a decline in the ratio.
2 Inventory Turnover	6.58	5.46	N.A.
3 Current Ratio	1.03	0.92	N.A.
4 Debt Equity Ratio	1.45	1.71	N.A.
5 Interest Coverage Ratio	3.42	3.20	N.A.
6 Operating Profit Margin (%)	14.92	9.11	Compared to the previous year, export sales have increased. Since export sales yield higher margins than domestic sales, operating profit margins have improved
7 Net Profit Margin (%)	4.69	3.55	Compared to the previous year, export sales have increased. Since export sales yield higher margins than domestic sales, net margins have improved accordingly.
8 Return on Net Worth (%)	15.68	24.76	This year, the Company has raised 4,592.25 lacs through a Rights Issue for the expansion of the Foundry, establishment of a Machine Shop & solar plant. This has resulted in an increase in capital employed. Additional funds will start generating returns once expansion is completed. This year equity increased faster than profits, Hence, this ratio has decreased this year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES, INCLUDING NUMBER OF PEOPLE EMPLOYED:

The Company believes and recognizes that its employees are important resource in its growth and to give competitive advantage in the present business scenario. Ensuring business operations, employee safety and welfare became the foremost concerns for the Company. During the year under review, the company ensured to keep the safety and the wellbeing of its employees as its topmost priorities. The Company has total 201 employees as on March 31, 2025. The company continued with its focus on an efficiently recruiting employees with the right talent and groom them to build a strong leadership pipeline. The diversity and inclusiveness in the workforce remained a strong fundamentaltothecompany,inlinewithitthecompany continued to bring in more women employees. The Company has well-thought out and employee-friendly HR policies which it has led to a positive working relationship with its employees. The Company has not had any work stoppages or cessations owing to labour disputes. The Company continues to lay great emphasis on Safety and Security. To ensure adherence to safety protocols, the company follows stringent procedures to safeguard and protect its workforce. The company also keeps prescribing policies and procedures while imparting training to its workforce. It has a system in place that promotes a positive work environment free of all forms of harassment.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place a well-framed internal control system that authorizes, records, and reports transactions to safeguard assets and protect against loss from unauthorized use or disposition. The internal controls ensure the reliability of data and financial information to maintain accountability of assets. These internal controls are supplemented by extensive internal audits, management review, and documented policies, guidelines, and procedures.

DISCLOSURE OF ACCOUNTING TREATMENT

For the first time Indian Accounting Standard was applicable from the F.Y.2021-22 due to migration from BSE-SME Exchange to the Mian Board of BSE & NSE. The Company has adopted and has followed all the treatments in the Financial Statements as per the prescribed Indian Accounting Standards.

Note: For sake of brevity the items covered in Boards Report are not repeated in the Management Discussion and Analysis Report.

Cautionary Statement:

Certain Statements in the Management Discussion and Analysis describing the companys objectives, projections, estimates and expectation or predictions may be forward looking statements within the meaning of applicable laws and regulations. It cannot be guaranteed that these assumptions and expectations are accurate or will be realized. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/ supply and price conditions in the domestic markets, changes in the Government Regulations, tax laws and other statues and incidental factors.