Techno Electric & Engineering Company Ltd Management Discussions

Management Discussion and Analysis

Indian Economic Review

The Indian economy demonstrated resilient growth amid global headwinds in FY 2024-25, Supported by easing inflation, a stable monetary policy stance and robust domestic consumption, the macroeconomic environment retained its stability, In FY 2024-25, real GDP growth touched a four year low of 6,5%, slowing down sharply from 9,2% in FY 2023-24.

The governments emphasis on infrastructure development has bolstered initiatives like the National Infrastructure Pipeline (NIP), PM Gati Shakti and National Monetisation Pipeline (NMP) for infrastructural developments across India.

The Union Budget of FY 2025-26 further reiterated the governments progressive stance through infrastructure capex allocation of Til,21 lakh crores, in line with the governments vision of Viksit Bharat 2047, Moreover, added impetus for Make in India projects through supportive policies focused on enhancing ease of doing business, promoting MSME growth, developing a future-ready workforce and encouraging clean-tech manufacturing have augured well for the country, In a significant move, budget allocation for the Production Linked Incentive (PLI) scheme increased to T16,092 crores in FY 2025-26, Private sector participation is also being encouraged, particularly through CPSE- led projects.

During the year, the Combined Index of Eight Core Industries (ICI) registered a moderate 4,5% growth, with electricity generation notably rising by 7,3%, Outlook for the Indian economy remains positive, driven by strong private consumption, monetary and financial stability, robust government expenditure and rapid digital adoption across the country, Digitalisation remained central to Indias economic transformation in FY 2024-25, enhancing service delivery, financial inclusion and governance functions. Expansion of the digital payment infrastructure, in particular, across urban and rural areas has empowered individuals and MSMEs, driving inclusive and sustainable growth

Sustained infrastructure development and continued investment in productivity-enhancing sectors remained key drivers of Indias growth in FY 2024-25, The year also witnessed notable progress in poverty alleviation, marked by a significant reduction in extreme poverty levels. Economic activity remained resilient throughout the year, supported by strong domestic demand. High-frequency indicators such as e-way bill generation, toll collections and automobile sales reflected consistent momentum in consumption and logistics,

Indias labour market strengthened in FY 2024-25, driven by sustained economic activity and infrastructure growth, Unemployment fell to 5,1% by March 2025, with increased job creation, self-employment and opening of different roles in the formal sector, Seasonal rural factors briefly raised unemployment to 5,6% in May, However, participation of the youth and women in Indias workforce increased and formalisation of jobs resulted in greater employment stability,

Industry Review

Indias power sector is among the most diversified in the world, comprising both conventional sources such as coal, lignite, natural gas, oil, hydro and nuclear and non-conventional sources like wind, solar and biomass, Over the past decade, electricity demand has grown substantially, driven by rapid industrialisation, urban expansion and sustained economic development,

The National Electricity Plan (NEP) projects an investment opportunity exceeding lakh crores in the transmission sector by 2032, Power Grid Corporation of India is poised to be the primary beneficiary, with a planned capital expenditure of Rs.1,75 lakh crores by 2030, As part of this expansion, its annual capex is expected to rise from Rs.25,000 crores to =f50,000 crores by FY 2025-26,

Generation

In FY 2024-25, electricity generation reached 1,824 billion Units (BU), including the share of renewable energy, reflecting a growth of approximately 5% over the actual generation of 1,738.10 BU in FY 2023-24.

Electricity Consumption

Electricity consumption in India has increased by 45.8%, rising from 9,48,522 GWh in FY 2014-15 to 15,43,000 GWh in FY 2023-24, at a CAGR of 5.56%. Despite a temporary decline during the pandemic, consumption rebounded strongly.

In FY 2024-25, electricity demand is estimated to have grown by approximately 5.8%, driven by urbanisation, industrial growth, increasing digitalisation and infrastructure developments across the country. Notably, electricity consumption rose by 9.94% in FY 2023-24 compared to the previous fiscal year.

Strong energy demand across sectors ranging from manufacturing and infrastructure to residential has led to rising power consumption. Government initiatives promoting renewable energy integration and grid modernisation further supported sectoral efficiency. With an increasingly diversified energy mix and a focus on clean energy, the power sector remains a critical pillar of Indias economic growth while also paving the way for a sustainable future.

Generation Growth Trend

The electricity generation target for FY 2025-26 is set at 2,000,4 Billion Units (BU), marking a 9,3% increase over the actual generation of 1,829,7 BU in FY 2024-25, This reflects a consistent upward trend in power generation.

Record Peak Demand: Indias power demand touched an all-time high of 250 GW, driven by economic expansion, rising industrial activity, and higher household consumption,

Improved Supply Reliability: Energy shortage reduced sharply to 0.1%, reflecting capacity additions and improved grid management.

Renewable and Clean Energy Push: Solar generation rose 23%, nuclear by 18%, and large hydro by 11%, strengthening the low-carbon share in the energy mix.

Environmental Compliance Progress:

Installation of Flue Gas Desulphurisation (FGD) systems advanced with 39 units (19.4 GW) commissioned, 238 units (105 GW) under implementation, and 139 units (42.8 GW) at the tendering stage,

Transmission

Indias transmission sector has evolved from a fragmented setup into one of the worlds largest synchronised and integrated power grids. Significant strides have been made in expanding and strengthening infrastructure across the country, As India targets 50% of its power generation capacity from non-fossil fuel sources by 2030, with electricity playing an increasingly vital role in the energy mix, substantial investments in both inter-state and intra-state transmission networks will be critical to support this transition.

Rising electricity demand and generation capacity create a strategic opportunity for the sector to modernise and enhance the grid, Technological transformation is underway, with deployment of supercritical power plants, 765 kV AIS and GIS systems, STATCOM, VSC, HVDC technologies, and solutions integrated with Battery Energy Storage Systems (BESS) and Distribution System Operator (DSO) facilities, The CEA estimates that achieving 500 GW of renewable capacity by 2030 will require approximately 50,000 circuit kilometres of transmission lines and over 4,5 lakh MVA of transformation capacity, With these additions and advanced solutions under the ISTS framework, the inter-regional transfer capacity is expected to rise to 150 GW,

Indias transformer market, valued at $5,1 billion in 2024, is also expanding rapidly, Rising renewable targets, thermal capacity revival, urbanisation, and industrial growth are driving demand for advanced, high-voltage transformers, prompting manufacturers to scale up and support the evolving transmission and distribution infrastructure.

Renewable Energy Integration: By 2030, renewable energy is projected to form 64% of Indias energy mix, growing at 15-20% CAGR, Achieving the 500 GW target appears attainable, However, transmission infrastructure must scale nearly 4x compared to conventional systems, driving continued growth and integration of renewables nationwide.

Regional Power Grid Development:

The National Electricity Plan has projected an investment opportunity of over lakh crores in the power sector by 2032, Power Grid Corporation is expected to be the primary beneficiary of this growth,

Development of Hydrogen Economy Infrastructure:

As hydrogen emerges as a clean, flexible energy carrier, its integration into the energy ecosystem requires substantial infrastructure investments in high-capacity pipelines, storage facilities, and transmission networks, Power transmission companies will play a crucial role in enabling the transport of electricity from renewable energy sources to hydrogen production facilities and facilitating the distribution of hydrogen across regions.

This growing need for hydrogen-ready grids, designed to handle both electricity and hydrogen- based energy, will accelerate the expansion of transmission infrastructure, creating new business opportunities in grid modernisation, connectivity, and long-distance energy transport, As nations and industries invest in hydrogen as a decarbonisation solution, the infrastructure requirements will drive demand for more resilient, flexible and technologically advanced power transmission systems,

Evolving Energy Mix: The ongoing shift toward a diversified energy mix, driven by the accelerated adoption of renewable sources such as solar, wind and hydro, has emerged as a key growth driver for the power transmission sector. As India and other emerging economies pursue ambitious decarbonisation targets, the need to integrate geographically dispersed and variable renewable energy into the grid is creating strong demand for robust, flexible and intelligent transmission infrastructure, It necessitates significant investments in high-capacity inter-regional lines, grid modernisation and digital technologies to ensure reliability, stability and efficiency in power delivery,

Distribution

Indias power distribution sector remains a pivotal component of the nations energy ecosystem, driving the delivery of electricity to millions of consumers across urban and rural areas. Despite challenges such as ageing infrastructure, financial stress in state-owned distribution companies (DISCOMs), and intermittent power demand fluctuations, the sector is undergoing significant reforms aimed at improving efficiency and reducing transmission losses.

Key initiatives such as the UDAY Scheme and the push for smart metering and privatisation are expected to enhance operational performance, reduce AT&C losses and ensure a more financially sustainable model. As India transitions toward c leaner energy sources, the demand for efficient, resilient and technology-driven distribution networks is set to grow, offering opportunities for investment in modernisation and digital transformation

Focus on Financial Viability and Sustainability:

Indias power distribution sector is undergoing a major transformation with a strong emphasis on reforms for ensuring financial stability and operational efficiency. The Revamped Distribution Sector Scheme (RDSS) is leading the transition by equipping DISCOMs with digital tools, upgraded infrastructure and performance-based incentives. Key initiatives like smart meter rollout, network modernisation and enforcement of Late Payment Surcharge Rules are already improving efficiency and revenue recovery. These reforms are paving the way for a financially viable, future- ready distribution system aligned with Indias rising power demand and clean energy ambitions.

Distribution Challenges: Indias power distribution sector faces key challenges in the form of high AT&C losses, outdated infrastructure, poor billing efficiency and financial stress on DISCOMs due to delayed payments, Limited adoption of smart metering and resistance to tariff reforms further hinder progress, These issues affect service reliability and discourage private investment, While initiatives like the RDSS aim to address these gaps, sustained efforts are needed to ensure financial viability, operations efficiency and long-term sustainability of the distribution network.

Smart Meter Rollout: Indias distribution reforms are accelerating with over 20 million smart meters installed by January 2025. Installation rates have surged to approximately 80,000 meters per day and are expected to reach 100,000 soon. The Revamped Distribution Sector Scheme (RDSS) aims to deploy 250 million smart meters by March 2026, This initiative is central to reducing AT&C losses to 12-15% and narrowing the ACS-ARR gap, thereby improving DISCOM operational and financial performance,

Fiscal Allocation: For FY 2024-25, Rs.12,585 crores has been allocated to RDSS, comprising 61% of the Ministry of Powers budget. This reflects a strong push to improve DISCOM performance, cut AT&C losses, and scale up smart metering. A proposal to extend RDSS till FY 2027-28 aims to ensure full implementation and support long-term financial and technological goals,

Electricity Amendment Bill, 2022: The proposed Electricity Amendment Bill, 2022, seeks to introduce competition and partial privatisation in the power sector by allowing consumers to choose their electricity service providers, thereby improving service quality and operational efficiency across distribution networks,

The distribution sector is expected to see accelerated digitalisation and operational strengthening over the next three to five years, driven by policy support, capital allocation and technological adoption. As of 31^st March 2025, India had installed over 25 million smart meters out of the sanctioned million, with deployment rates expected to rise sharply to meet the target. Growing integration of automation, advanced analytics and load management systems will help handle evolving challenges such as distributed renewable generation, electric vehicle charging infrastructure and demand fluctuations. Policy measures encouraging private participation and performance inked funding are expected to enhance efficiency and service quality, while grid modernisation and customer-centric reforms will support a more resilient, financially stable and future-ready distribution network.

Data Centre

Indias data centre industry is a key pillar of the countrys digital infrastructure, supporting cloud computing, Al workloads, and enterprise IT services, Data generation is doubling globally every 3-4 years, driven by rising mobile and internet penetration and increased use of data-heavy services such as OTT streaming, e-commerce, gaming, and digital payments.

Al adoption is further accelerating data creation, with more data generated over 2023-25 than in all prior years combined, Al workloads consume 3-5x more compute than traditional workloads, prompting a shift towards Al-ready data centres, India is well-positioned to capture this demand, benefiting from ultra-low mobile data costs and rising digital adoption, which now accounts for around 20% of global mobile data consumption, with average per-user usage of 25-30 GB per month, Despite this, smartphone and 5G adoption remain below 50%, indicating significant growth potential, Enterprise demand is expanding alongside Indias public cloud market, growing at over 20% CAGR and supported by subscription-based models and increasing Al deployment, Government initiatives such as the national Al mission and digitisation of public sector undertakings are further supporting infrastructure development.

India accounts for only around 3% of global data centre capacity, highlighting the gap between data consumption and domestic infrastructure. Hyperscalers and enterprises are expanding rapidly, attracted by reliable connectivity and lower capex and opex, Colocation capacity leased to hyperscalers has quadrupled over the past five years, Policy support, including RBI and SEBI data localisation requirements and the Digital Personal Data Protection Act, alongside infrastructure incentives and state- level support for land and electricity, strengthens the business case,

As of FY 2024-25, installed capacity stands at approximately 1 GW, with tight vacancy of 4%, concentrated mainly in Mumbai and Chennai, which together account for 65% of total capacity, Large-format facilities exceeding 20 MW now make up 56% of top-city capacity, up from 42% in 2020, Annual investments have grown to $1-1,5 billion, expected to reach $2-3 billion, with planned expansions likely to double capacity over the next three years and triple it to around 3 GW by 2030,

Rising Digital Adoption: Indias digital ecosystem has grown significantly, supported by 850 million broadband connections and a sharp increase in data usage, with per capita monthly mobile data consumption exceeding 20 GB, compared to the global average of around 15 GB, The country also added over 300 million internet subscribers in the past five years, creating sustained demand for storage and processing infrastructure.

Cloud Adoption and Enterprise Demand: Public cloud services in India crossed $6 billion in 2022 and are projected to grow at a CAGR of 20%+ over the medium term, Enterprises in banking, financial services, retail, and manufacturing are increasingly shifting workloads to cloud and colocation facilities, directly increasing demand for data centre capacity,

Policy Support and Regulatory Push:

Government initiatives such as classifying data centres as infrastructure, incentives under state- level policies, and data localisation requirements have boosted sectoral investments, The mandate under the Digital Personal Data Protection Act 2023 for storage and processing of sensitive data within the country has further strengthened the case for expanding local capacity.

Technology-led Demand: The proliferation of Al, loT, and 5G networks is expected to generate large-scale computing and storage requirements. Global estimates suggest Al-related workloads could increase data centre power demand by 15-20% annually. Indias large developer base and growing use of generative Al tools reinforce this trend.

Renewable Energy Integration: Data centres are highly power intensive, with Indias operations facilities consuming an estimated 5-6 TWh annually. Increasing focus on green data centres, supported by renewable energy purchase agreements and efficiency-linked designs, is shaping the next phase of industry growth.

Company Overview

Techno Electric & Engineering Co. Ltd. (hereafter referred to as the Company) has over four decades of experience in Indias power sector and has evolved into a fully integrated player delivering end-to-end solutions across Generation, Transmission, and Distribution. Guided by the philosophy of Once a customer, always a customer, the Company combines engineering excellence, operational expertise, and a customercentric approach to create long-term value and strengthen Indias power infrastructure.

The Company has built strong relationships with government entities and leading private clients, contributing to the development of 50% of Indias national grid and engaging with over half of Indias power generation projects in various capacities. Multi-year partnerships with marquee CPSUs and state utilities underline the Companys ability to execute complex, high-impact projects reliably and efficiently,

Transmission and Distribution

The Companys capabilities in transmission and distribution encompass planning, engineering, construction, and operational support across high-voltage and distribution networks. Key capabilities include:

• Engineering and construction of EEIV substations up to 765 kV

• Implementation of Distribution Management Systems for monitoring, controlling, and optimising power distribution

• Development and deployment of Advanced Metering Infrastructure (AMI) and smart prepaid metering solutions to improve operational efficiency, data accuracy and consumer experience

• Execution of both traditional transmission projects and TBCB-based assets on a BOOT model, including commissioning, monetisation, and long-term operations of order book is transmission projects, ncluding TBCB assets

Business Segments

Power Generation

The Company delivers turnkey EPC solutions for captive power plants and offsite works for powerintensive industries, offering end-to-end services from design and engineering to commissioning. Its focus on operational efficiency, technical innovation and safety ensures reliable power generation solutions while meeting client-specific requirements. The Company also specialises in Flue Gas Desulphurisation (FGD) systems and balance of plant solutions that enhance performance and sustainability.

Smart Meters

The Company implements Advanced Metering Infrastructure (AMI) or smart metering solutions across multiple states. Its capabilities include end-to-end project execution from design, supply, installation, and commissioning to operations and maintenance. The Company manages both DBFOT and TOTEX models, ensuring timely deployment, accurate data collection, and seamless integration with distribution management systems.

Data Centre

Recognising Indias growing digital economy, the Company is developing and owning hyperscale and edge data centres, Currently, 40 MW of IT load capacity is under construction across Chennai (24 MW) and Kolkata (16 MW).

In addition, the Company has secured contracts to develop edge data centres at 102 locations for RailTel nationwide, with implementation and operational management spanning longterm agreements, These initiatives position the Company as a key enabler of Indias digital infrastructure, providing reliable, scalable, and energy-efficient solutions to meet the increasing demand for connectivity and digital services of order book is data centre

Financial Performance

TEECL delivered strong financial results in FY 2024-25, recording robust growth across major financial indicators compared to the previous year, The Companys operational efficiency, project execution capability and sustained market presence has supported its steady progress.

Revenue: The Company posted revenue of Rs.24,017 million in FY 2024-25, compared to Rs.16,808 million in FY 2023-24, This represents a growth of approximately 43%, driven by successful project execution, strong order inflows and an expanding presence across key sectors,

EBITDA: In FY 2024-25, the Company reported EBITDA of Rs.3,280 million, up from Rs.2,269 million in FY 2023-24, reflecting a robust 45% growth.

This highlights the Companys effective operational management and cost optimisation strategies, which continue to enhance profitability and strengthen overall financial performance,

Profit After Tax (PAT): In FY 2024-25, the Company recorded Profit After Tax (PAT) of Rs.4,281 million, up from =t2,697 million in the previous fiscal year—an increase of approximately 59%, It reflects the Companys ability to capitalise on a robust order book, execute projects efficiently, and maintain healthy profit margins.

Operational Performance

During FY 2024-25, the Company demonstrated strong operational resilience and execution capabilities, marked by a record order book and timely completion of complex projects. Strategic investments in energy transmission and data centre infrastructure positioned the company for sustained growth, while efficiency improvements across operations enhanced delivery speed and project execution

Order Book: As of March 2025, the Company reported a record order book of approximately =fl0,951 crores, marking a significant milestone in the Companys history and providing strong revenue visibility for the coming years.

Strong Execution: The Company demonstrated its execution capabilities by completing complex projects within stipulated timelines, Notably, the 20-bay, 765/400 kV Sikar Substation was commissioned in a record time of nine months, showcasing the Companys efficiency in handling large-scale infrastructure projects.

Data Centre Initiatives: The Company made significant strides in the data centre segment, with plans to deploy 10 edge data centres in the short term and approximately 250 MW of hyperscale and edge data centres by 2030, This expansion is part of a Rs.8,000 crores investment plan, aiming to capitalise on the growing demand for data storage and processing capabilities.

Risk Management

We have implemented a comprehensive risk management framework designed to identify both short-term and long-term risks, formulate tailored mitigation strategies, and monitor their effectiveness over time.

This proactive approach ensures resilience and operational continuity. Below are the key risks associated with our operations that have been identified and assessed.

Financial Risks Delays in receivables from government or utility clients and fluctuations in commodity prices may strain cash flows and compress margins on turnkey EPC projects.	We manage these risks through active receivables management, maintaining liquidity buffers, incorporating price escalation clauses, planning bulk procurement, and using hedging strategies for key commodities.
Operational Risks Large-scale projects may face delays due to site readiness, resource mobilisation, contractor performance, or skilled labour shortages, especially in remote or difficult terrain,	We mitigate this through detailed project planning, robust project management systems, regular contractor performance monitoring and workforce training programmes to ensure timely mobilisation of skilled labour.
Foreign Exchange Volatility Exposure to imported equipment and services can lead to currency risk, particularly if not fully hedged,	This risk is managed by regularly monitoring exposures to hedge at optimal levels, sourcing hedging instruments at competitive rates, and maintaining an MIS to record and review all transactions, while the Risk Management Committee decides on hedging or keeping positions open based on prevailing market conditions,
Digital Infrastructure Risks As TEECL diversifies into data centres and smart energy systems, risks related to data privacy, system integration, and technology obsolescence need continuous monitoring,	We mitigate digital infrastructure risks through robust cybersecurity measures, regular system upgrades. Administrator is only authorised to provide any S/W to check the piracy, Continuous monitoring and technology refresh plans ensure data privacy, system reliability, and long-term scalability,
Cybersecurity Risk Increased digitisation of operations and control systems raises vulnerability to cyberattacks or data breaches,	We reduce cyber risks by using strong security measures like redundant firewalls, and multi-factor (MFA) login, We also do regular security checks, FW policy check, train our staff, and monitor systems in real time to quickly detect and stop any threats.
Environment, Social and Governance Risks Climate/environmental compliance, health and safety incidents, and community or land acquisition issues may affect project execution and reputation,	We mitigate these risks by integrating ESG compliance into project design, enforcing strict safety protocols, conducting environmental and social impact assessments, and engaging with local communities early to address concerns proactively,

Creating a Future-ready Talent Pipeline

At TEECL, we are committed to developing a future- ready workforce by prioritising our employees growth, well-being and safety.

We foster a positive work culture built on open communication, collaboration and mutual respect, Our comprehensive wellness programmes support the physical and mental well-being of our employees, empowering them to thrive personally and professionally.

Safety is a top priority, with strict adherence to protocols and regular training ensuring a secure work environment, Additionally, we invest in

a broad range of training and development initiatives to enhance core competencies, build leadership skills and provide valuable management experience, Continuous learning is central to preparing our workforce for the challenges and opportunities ahead,

Our Board of Directors, alongside a seasoned management team of industry veterans and skilled technicians, provides strategic leadership to drive our growth, These efforts ensure that our employees are well-equipped with the knowledge and skills necessary to navigate the evolving industry landscape.

Internal Controls and their Adequacy

Techno Electric & Engineering Limited has a robust internal control systems that are well-suited to the scale and nature of its operations, These controls cover key areas including inventory management, fixed assets, project execution, and the sale of products and services. The systems are regularly reviewed and updated to ensure they remain effective, compliant with statutory requirements, and capable of supporting operational efficiency Continuous monitoring, periodic audits, and systematic process checks help ensure the adequacy of these controls, enabling the Company to maintain accurate reporting, safeguard assets and respond effectively to operational and business challenges.