V-Guard Industries Ltd Management Discussions

1. Economic Review & Outlook

During the Financial Year 2025-26, the global economy transitioned from a period of fragile resilience into a landscape defined by aggressive trade protectionism and severe energy shocks. The period began with structural shifts in trade policy and was later destabilized by the outbreak of a major conflict in the Middle East.

The major global events that shaped economic dynamics during the year were:

The United States (US) implemented a minimum 10% tariff on many foreign goods, with significantly higher rates for China and India, triggering a global trade shock. While trade initially adjusted via front-loading, the average effective US tariff rate rose to 10% by April 2026, up from 2.5% at the start of 2025.

India Pakistan Relations hit a low following a militant attack in Pahalgam on April 22, 2025. India responded with "Operation Sindoor" on May 6, 2025, striking nine sites across the Line of Control and subsequently suspended the Indus Waters Treaty and downgraded diplomatic ties.

The Russia Ukraine conflict entered its fourth year, as of February 24, 2026, with Russia still occupying roughly 20% of Ukrainian territory.

The outbreak of the Middle East war has significantly disrupted global energy markets by impacting shipping routes through Strait of Hormuz and damaging critical production facilities in a region central to hydrocarbon supply. The potential closure of this key shipping route, combined with serious infrastructure losses, has created the risk of an energy crisis on an unprecedented scale by constraining both the flow and production of oil and gas. As a result, global supply chains have been strained, energy prices have surged and economic uncertainty has intensified. This shock has interrupted what had previously been a steady growth trajectory, increasing inflationary pressures and raising the likelihood of a broader economic slowdown.

Due to the aforementioned global events, economies worldwide experienced notable shifts across key global economic indicators:

Global growth for 2025 was recorded at 3.4%, but the 2026 reference forecast was revised downward to 3.1% from the earlier estimate of 3.4% reflecting the impact of evolving geopolitical uncertainties, including the Middle East conflict. A steady projection of 3.2% is indicated for 2027, assuming the war turns out to be relatively short-lived. At market exchange rates, world output is projected to grow by 2.6% in both 2026 and 2027.

Oil prices surged substantially between August 2025 and March 2026. Oil shipments through the Strait of Hormuz were disrupted, curtailing significant portion of crude exports. Under normal conditions, the strait handles around 20% of global daily consumption making the disruption a significant constraint on global energy flows. Major oil-producing facilities were also temporarily shut down as a precaution or as storage ran out or was damaged. Global strategic and commercial inventories, standing at a five-year high of 8 billion barrels, offer only a partial buffer. Prices peaked in March 2026, however retreated subsequently. On natural gas prices, Title Transfer Facility (TTF) trading hub prices in Europe spiked by 61%, and Asian liquefied natural gas (LNG) prices surged during the same period as more than three-quarters of global LNG shipments through the strait are destined for Asia. With strikes across gas and energy hubs, the situation still remains fluid.

If the Middle East conflict is short lived, global headline inflation is projected to rise from ~4.1% in 2025 to ~4.4% in 2026, marking an upward revision. However, in case of a severe scenario, it could rise to close to ~6%.

India entered this volatile period with stronger macroeconomic fundamentals than most major economies, navigating external shocks through domestic strength and strategic reforms.

India was levied an effective export tariff rate of 50% on most merchandize goods to the US (a combination of 25% reciprocal and 25% penal tariffs) on August

6, 2025. However, these were reduced to 10%, globally, on February 20, 2026. In response to tariff-related disruptions, India is strategically recalibrating its export portfolio, progressively diversifying trade flows toward alternative high-potential markets. Indias growth outlook has been revised upward. For 2025, GDP growth is now projected at 7.6%, up 1.0 percentage point from October, driven by stronger-than-expected performance in Q2-Q4. For 2026, growth is revised to 7.7%, supported by strong carryover from 2025 and lower US tariffs, despite some drag from Middle East tensions. RBI expects GDP growth for FY27 to be at 6.9%.

The provisional All India CPI for March 2026 is 104.84, with inflation at 3.40%. Inflation rose gradually in the first quarter, from 2.74% in January, 2026 to 3.21% in February, 2026. Over the past four years, retail inflation has steadily declined, falling from 6.7% in FY23 to 1.7% in FY26 (up to December, 2025).

The Reserve Bank of India kept policy repo rate unchanged at 5.25%, citing rising global uncertainties and inflation risks.

Despite global headwinds, gross FDI inflows reached ~$64.7 billion between April and November 2025, from ~$55.8 billion in the past year period. Further, new guidelines aim to improve ease of doing business in India, boost investment and FDI inflows, enable technology access, increase domestic value addition and strengthen integration with global supply chains – enhancing Indias competitiveness as a preferred investment and manufacturing hub.

Indias total exports reached $825.3 billion in FY25 with momentum continuing in FY26. Services exports grew 6.5% through December 2025, providing a buffer against merchandize trade volatility.

Key initiatives include the National Manufacturing Mission (NMM), the notification of four new Labour Codes in November 2025, and the National Critical Mineral Mission to secure high-tech supply chains and GST 2.0 introduced in September 2025.

Indias economic trajectory continues to sustain strong growth while building strategic buffers. Therefore, despite a turbulent macroeconomic environment, the outlook remains positive. Strong domestic demand, supportive policy frameworks, and sustained investment flows anchor stability. Like a well-positioned brand, the economy leverages its core strengths to absorb shocks, navigate uncertainty and reinforce long-term competitiveness.

2. Sector Overview

The Indian Consumer Durables sector is currently the fastest-growing major market globally, with projections indicating it will become the worlds fourth largest by FY27. This structural expansion is supported by a resilient domestic economy, with private final consumption expenditure rising to 61.5% of GDP in FY26, its highest level since FY12, according to the first advance estimates. Notwithstanding this, towards the close of the Financial Year, escalating geopolitical tensions generated broader macroeconomic headwinds, while demand–supply imbalances influenced key input costs. In addition, seasonal variability further shaped short-term sectoral performance dynamics.

Copper and Aluminium are critical industrial inputs with broad-based applications across sectors and form an essential component of the cost base for Consumer Durables manufacturers. Pricing dynamics for these commodities have been influenced by global supply disruptions alongside evolving demand-supply conditions, highlighting the sectors inherent exposure to external market forces. Copper prices gradually increased to record levels during the year, driven by surging demand from AI data centres and green technology. While Aluminium markets experienced a structural supply shock as disruptions, coupled with constraints at the Strait of Hormuz, compressed both primary output and alumina flows. This dual pressure propelled London Metal Exchange prices sharply higher signalling a regime of acute global scarcity. Consequently, firms across the sector implemented price increases in response to the escalation in key raw material costs.

Such dynamics underscore the significance of a stable macroeconomic architecture, within which sustained and calibrated policy interventions by the Government have helped anchor economic resilience and long-term structural stability across sectors. Against this backdrop, Government initiatives have further supported the sector through a range of targeted measures.

The electronic sector continues to benefit from policy support and localisation initiatives. Under the Production Linked Incentive scheme for white goods, 85 companies have committed investments of _ 11,198 Crore, aimed at increasing domestic value addition. This has supported localisation of key components such as compressors, BLDC motors and heat exchangers, strengthening the domestic manufacturing ecosystem. Government support for electronics manufacturing is further driving investment and capacity creation.

Complementing this, the National Mission on Manufacturing (NMM), announced in the Union Budget 2025-26, provides a foundational blueprint to double the manufacturing sectors GDP contribution by 2035 to 25% and generate 143 million jobs, along with boosting merchandize exports to $1.2 trillion by deepening integration into Global Value Chains (GVCs). Other key policies include the National Policy on Electronics 2019 and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors, notified in April 2020, providing a 25% financial incentive on capital expenditure for key electronic goods, bridging supply chain gaps by encouraging domestic production. In the high-growth electronics segment, the Electronics Components Manufacturing Scheme, notified on April 8, 2025, has emerged as a cornerstone of Indias strategy to integrate into GVCs. Given the strong industry response, the Union Budget 2026-27 increased the schemes outlay from H 22,919 Crore to H 40,000 Crore. As of December 2025, the scheme had attracted expected investment commitments of H 1.15 Lakh Crore, nearly double its original target.

The 56^th GST Council meeting marked the rollout of GST 2.0, introducing a simplified rate structure anchored by a Standard Rate of 18% and a Merit Rate of 5%, alongside a 40% demerit rate for select sin-goods (inclusive of the earlier compensation cess, with no additional tax burden). Effective September 22, 2025, this rationalisation represents the third pillar of Indias tax reform agenda, following the corporate tax cuts of 2019 and the personal income tax reforms implemented from April, 2025. The implementation of GST 2.0 across industries, provided a substantial uplift to the sector. Tax rates in the Electronic Appliances category were reduced on major appliances like air conditioners, large televisions, dishwashing machines, monitors and projectors from 28% to 18%, helping manufacturers offset the incremental costs associated with new energy efficiency norms. The Bureau of Energy Efficiency (BEE) as of January 1, 2026 revised the mandatory star labelling for a broad range of appliances – including refrigerators, televisions, LPG stoves, chillers, deep freezers, transformers and solar inverters – as part of its updated energy-efficiency regime. This shift tightened efficiency standards and expanded compulsory labelling beyond earlier voluntary categories to drive lower power consumption across key household and industrial equipment. Manufacturers noted that while the tighter standards make high-star rated products more expensive, the GST benefit kept consumer prices largely stable, supporting demand sentiment throughout FY26. Technology adoption remains a key industry driver. The use of energy-efficient technologies, including BLDC motors and inverter-based systems, is expanding across product categories. The development of a domestic semiconductor ecosystem is expected to improve component availability for smart and connected devices. Regulatory initiatives such as expanded energy labelling norms continue to support adoption of energy-efficient products.

In 2025, solar power emerged as the largest source of new electricity globally, increasing by 636 TWh, i.e., 18 times the growth of gas, the only fossil fuel to register an increase. Electricity generation from coal and other fossil sources declined, reflecting a broader structural shift toward cleaner energy. India mirrored this transition, with renewable generation rising by 98 TWh – twice the pace of demand growth. Solar also became the countrys largest source of clean electricity, surpassing hydropower for the first time, underscoring the accelerating shift toward distributed solar and battery-enabled electrification. Various Government support schemes like_ PM-KUSUM scheme (for solar pumps) and PM Surya Ghar: Muft Bijli Yojana (for solar rooftop) have contributed significantly for solar transformation in both rural and urban landscapes.

Technological developments are reshaping the industry through AI integration and smart connectivity, with smart products becoming mainstream. India shipped over 12 million smart TV units in 2024, an increase of 8.6% YoY. Across the sector, leading brands are scaling smart features. Smart technology is being integrated across all major product categories, including washing machines, water heaters, refrigerators, lighting and bulbs.

Key appliance categories also reflect strong growth momentum: the refrigerator market is expected to grow at a CAGR of ~9.01% (FY 2025-30); the electric fans market is projected to grow at a CAGR of ~12.20% over the next decade; and the washing appliances market is expected to grow at CAGR of ~4.92% over the next five years. Air conditioners remain a key growth category, making it one of the worlds fastest-growing segment.

Indias smart home market was valued at ~H 8,000 Crore in 2023 and is expected to reach ~H 36,000 Crore by 2028. The broader home category, including non-smart segments, was valued at about H 90,000 Crore in 2023 and is projected to grow to ~H 1,40,000 Crore by 2028.

This is supported by a shift from import dependence toward local manufacturing, aided by Government initiatives, alongside improving affordability driven by technological advancementandrisingcompetition.Againstthisbackdrop, rural India overtook urban markets in September, 2025 in consumption of affordable premium FMCG products, with villages accounting for 51% of total volumes. The Make in India initiative has further enabled global firms to establish manufacturing bases in India, enhancing cost efficiency and affordability. Building on this momentum, FY26 targets envisaged electronics manufacturing reaching $300 billion, with exports of $120 billion.

In alignment with these developments, the Government launched the India AI Mission to mobilzse domestic talent toward collaborative innovation and reduce dependence on foreign proprietary systems. Concurrently, the transition toward advanced manufacturing is reinforcing process discipline, ensuring that India-manufactured goods meet stringent global quality benchmarks.

The outlook for Indias Consumer Durables sector remains constructive, supported by strategic resilience and sustained domestic demand amid geopolitical uncertainties. While input costs and supply chains may remain volatile, the sector is adapting through deeper localisation and greater operational agility. Indias shift toward innovation-led, productivity-driven growth, along with stronger MSME integration into global value chains, continues to enhance structural competitiveness. Even amid currency fluctuations and elevated commodity costs, the macroeconomic environment is expected to sustain robust growth, reinforcing consumer confidence and Indias position as a resilient and trusted participant in the global landscape.

Note: Financial performance detailed above is basis consolidated financial statements.

Key ratios (%)	FY26	FY25
Gross Margin	36.3%	36.3%
EBITDA Margin (excl. other income)	8.8%	9.2%
Profit after Tax	5.2%	5.6%
Ad & Promotion Expenditure/ Revenue	2.6%	2.9%
Employee Cost/ Revenue	9.0%	9.3%
Other Expenditure/ Revenue	18.5%	17.7%
Tax rate	24.4%	24.2%
Diluted EPS (H)	7.01/-	7.14/-

Balance Sheet Snapshot (Rs cr)

	31 Mar 2026	31 Mar 2025	31 Mar 2024
Net Worth	2,373.05	2,097.83	1,814.22
Gross Debt	8.84	10.81	291.03
Current Investments	180.70	10.14	30.17
Cash and Cash Equivalents	59.30	64.50	57.37
Net Cash Position	231.16	63.83	(203.49)
Fixed Assets	1,291.46	1,169.90	1,116.81

 

Balance Sheet Snapshot	31 Mar 2026	31 Mar 2025	31 Mar 2024
Debtor (days)	33	35	44
Inventory (days)	98	102	92
Creditor (days)	71	67	62
Working Capital Turnover (days)	60	70	74
RoE (%)	13.0%	15.0%	14.2%
RoCE (%)	16.1%	19.0%	15.7%

 

Particulars	UOM	31 Mar 2026	31 Mar 2025
1 Debtors Turnover	Times	11.1	10.4
2 Inventory Turnover	Times	3.7	3.6
3 Interest Coverage Ratio	Ratio	34.0	17.9
4 Current Ratio	Ratio	1.8	1.7
5 Debt Equity Ratio	Ratio	0.0	0.0
6 Operating Margin i.e. EBITDA	%	8.8%	9.2%
7 Net Profit Margin	%	5.2%	5.6%
8 Return on Net worth	%	13.0%	15.0%

Note: Explanation if difference is more than 25% a. The variance observed in the Interest Coverage Ratio is primarily attributable to the fact that all outstanding borrowings were fully repaid during the previous Financial Year, resulting in a significant reduction in debt levels and consequently influencing the comparative ratio metrics for the current period. b. The reduction in Return on Net Worth is primarily attributable to the decline in overall profitability during the period. A significant contributing factor to this decrease in profit was the recognition of an exceptional item related to the implementation of the labour code, which adversely impacted earnings and, consequently, the Return on Net Worth for the year.

4. Dividend

The Companys Board has recommended final dividend of _ 1.5 per equity share. This translates to a payout for the Financial Year 2025-26 of ~_ 65.52 Crore (_ 65.40 Crore in 2024-25). The dividend payout, for the year under review is ~21%.

The Company believes in maintaining a fair balance between dividend distribution and cash retention that may be required for future growth, synergistic acquisitions, meeting unforeseen contingencies and maintaining a healthy balance sheet position.

5. Segment-wise Review

Products	FY26 (K Cr)	Contribution (%)	FY25 (K Cr)	Contribution (%)	YoY growth (%)
Electronics	1,639.58	27.5%	1,509.63	27.0%	8.6%
Electricals	2,461.08	41.2%	2,169.94	38.9%	13.4%
Consumer Durables	1,615.88	27.1%	1,643.87	29.5%	-1.7%
Sunflame	250.23	4.2%	254.38	4.6%	-1.6%
Less: Intersegment Revenue	(0.99)	0.0%
Grand Total	5,965.78	100.0%	5,577.82	100.0%	7.0%

Electronics

The Electronics segment comprizes Voltage Stabilizers, UPS, Digital UPS Systems (Inverter-Batteries) and Solar Power Systems.

In FY26, the Electronics segment reported revenues of _ 1,639.58 Crore, representing growth of 8.6%. Growth was primarily driven by strong performance in Inverters, Batteries and Solar Power Systems, which offset weakness in Stabilizers, particularly AC stabilizers impacted by a weak summer and a high base in the prior year. The segments mix continues to gradually shift toward higher-growth energy storage and renewable-linked categories. The segment contributed 27.5% to the Companys revenue.

Segment margins stood at 17.9% in FY26 versus 19.7% in FY25. Margins were supported by higher backward integration due to increased in-house manufacturing, improved scale in Digital UPS systems and Solar Power Systems with corresponding operating leverage benefits. However, gains were moderated by adverse product mix and lower utilisation of stabilizer manufacturing capacity due to a weak summer.

The Stabilizers business remains a market-leading category, with V-Guard holding a dominant ~40-45% market share.

Manufacturing is supported by facilities in Sikkim and Pantnagar, enabling efficient supply chain coverage. Pantnagar facility serves as the first manufacturing plant established under V-Guard Consumer Products Ltd. (VCPL), a wholly owned subsidiary of the Company, and forms a key pillar of its stabilizer business. The plant manufactures a diversified range of stabilizers catering to applications such as air conditioners, LED televisions, refrigerators, washing machines and treadmills. This product breadth enhances portfolio resilience and enables the Company to address varied consumer requirements, thereby strengthening its operational flexibility and market responsiveness.

The stabilizer category witnessed subdued demand, primarily due to weak sales of air conditioners and other cooling appliances amid an inconsistent summer. Despite near-term headwinds, the category continues to benefit from structural drivers such as rising penetration of high-value appliances and increasing need for voltage protection, supporting a gradual recovery over the medium term. Despite near-term volatility, the category has delivered steady growth over the last few years, supported by penetration in newly electrified rural and upcountry markets.

The Digital UPS Systems category, encompassing Inverters and Batteries, remained a key growth driver in FY26, supported by sustained demand arising from power reliability gaps. The category remains structurally linked to recurring electricity shortages, supporting steady demand visibility.

In line with its long-term strategy, the Company continued to scale up backward integration in battery manufacturing. This has strengthened supply chain control, improved cost efficiencies and strengthened product competitiveness, while enabling faster response to demand.Inverters and batteries have delivered consistent growth over the past 6-7 years.

In addition to the inverter manufacturing facility at VCPL Pantnagar, a battery manufacturing facility was established under VCPL on the outskirts of Hyderabad, which became operational at the end of FY24. The facility continues to deliver strong output and has significantly enhanced operational agility with in-house capacity contributing ~ 50% of total sales. The efficiencies have translated into better margins for the category.

In May 2025, the Company has initiated a strategic capacity expansion at Hyderabad battery manufacturing facility of VCPL which will more than double the existing capacity. The expansion, involving an investment of ~_ 50 Crore and targeted for completion within 18 months, is driven by anticipated growth in the domestic battery storage market. It is also expected to improve margins through enhanced in-house manufacturing efficiencies and scale benefits.

Digital UPS Systems growth in FY26 was led by targeted market expansion and extraction backed by deeper backward integration into batteries. The reduction in GST on lead-acid batteries from 28% to 18% has supported affordability thereby improving demand. The Inverter and Battery business remains one of the most structurally resilient and scalable growth engines within the Electronics portfolio.

V-Guard has augmented its technology portfolio through a calibrated investment in Gegadyne Energy Labs Pvt. Ltd. (GEL), a Mumbai-based deep-technology enterprise engaged in the development of next-generation battery systems. Incorporated in 2017, GEL is focused on advancing alternative battery technologies at both the cell and pack levels, as well as battery rack systems, with innovation directed toward enhancing lifecycle performance, charging efficiency, safety and maintenance parameters. In March 2026, the Company has further invested _ 25 Crore in GEL resulting in an increased shareholding of 30.35% on a fully diluted basis. This strategic alignment reflects a forward-looking orientation toward integrating advanced energy storage solutions into V-Guards product architecture, while simultaneously enabling GEL to strengthen its technological capabilities and operational readiness.

Gegadyne has successfully moved from prototype to pilot stage and is presently navigating the critical transition from pilot production to commercialisation, having initiated limited-scale supplies to local participants as proof of concept. The partnership offers the Company a strategic pathway into the evolving energy storage domain which can integrate with current product offerings while also providing GEL with sufficient headroom to continue with further refinement of products and scale up to commercial production stage.

The Solar Power Systems business, mainly solar rooftop inverter and panel business continues to scale up fast. It recorded strong growth in FY26, driven by rising adoption of rooftop solar solutions across residential and commercial segments. V-Guard operates in the solar space with a focused presence in rooftop solutions covering both on-grid and off-grid systems. Its integrated offering of solar rooftops with inverters and batteries is witnessing strong market acceptance, supported by favourable policy incentives and rising energy transition trends.

Affordability of Solar Power Systems has significantly improved with the reduction in GST rate from 12% to 5% supported by ongoing technological improvements. The improved affordability is expected to further improve demand and growth for the category. Overall, the Solar Power Systems remain a high-growth but price-competitive and externally influenced category.

Electricals

Electricals segment is the largest revenue contributor and comprizes Wires, Pumps, Modular Switches, Switchgears and Lighting. Its performance is closely linked to macroeconomic and external factors such as construction activity, real estate growth, seasonal weather patterns, water table levels and shifts in consumer spending. In recent periods, the segment has demonstrated healthy growth momentum, supported by a combination of pricing actions, commodity tailwinds, introduction of new products and gradual expansion into adjacent categories.

In FY26 revenue for this segment was at H 2,461.08 Crore, a growth of 13.4% from H 2,169.94 Crore in FY25. The segment contributed 41.2% to Companys revenues. Segment margins were at 11.4% vs. 10.1% last year.

Within this segment, Wires category remains the single largest contributor to revenues, with a strong presence in the domestic house wiring (B2C) market. Demand is fundamentally driven by electrification trends and real estate expansion, with approximately 90-95% of sales coming from the retail trade. The business operates on a fully integrated, 100% in-house manufacturing model, with facilities located in Coimbatore and Kashipur, enabling operationalagilityandsupplyresponsiveness.Performance in this category is closely tied to copper price movements. Pricing remains dynamic, with increases and decreases passed on to the market to offset commodity fluctuations.

The Pumps category represents another significant pillar within the Electricals segment, with demand patterns that are inherently seasonal and more skewed toward rural markets. Sales tend to rise during summer months when falling water tables increase the need for pump replacements, while periods of heavy monsoon and high water tables can dampen demand. Consumer purchase decisions in this category are often influenced by retailers and plumbers, highlighting the importance of channel relationships.

Switches and Switchgears represent a key pillar of the Companys long-term growth strategy, serving as a natural adjacency to the core Wires business and enabling deeper participation in the broader electrical ecosystem. While these categories currently contribute a relatively smaller share of overall segment revenues, they have demonstrated encouraging growth indicating improving underlying demand and execution.

A major strategic milestone in this segment has been the acquisition and integration of Simon Electric Pvt. Ltd. (SEPL) in FY23, a company affiliated with Spains Simon Group. The manufacturing unit located in Haridwar, Uttarakhand, strengthens the Companys capabilities in the modular switches category and provides a platform for scaling this business. Furthermore, through a brand license agreement and technology collaboration with Simon Global, the Company gains access to advanced design, technology and product innovation capabilities, enabling it to tap into higher-value segments of the switches market. Alongside this, the Company is actively undertaking product refresh initiatives to enhance competitiveness and drive growth.

In the Switchgear space, the Company has established itself as a preferred brand across several Indian states, supported by over a decade of sustained market development. To further strengthen its position, it acquired 100% equity in GUTS Electro-Mech Ltd. (GUTS), a company based out in Hyderabad. GUTS specializes in the manufacturing of critical electrical protection devices such as Miniature Circuit Breakers (MCBs) and Residual Current Circuit Breakers (RCCBs), enhancing the Companys backward integration and product portfolio depth in this segment.

The Company has announced its foray into the Lighting Business in FY26, a strategic move designed to diversify operations and bridge a critical white space within its Electricals portfolio. This expansion aims to complete its basket of offerings by initially targeting Consumer and Residential markets through an outsourced model. The category will initially be launched in the Companys stronger markets in South enabling steady early wins. Future investment will be scaled according to market response and operational needs.

The Electricals segment houses a strong, diversified portfolio across core and adjacent categories enabling it to be well positioned for sustained growth. This strength is reinforced by favourable industry dynamics and continued strategic investments in manufacturing capacity, acquisitions and product innovation, underscoring the segments competitive advantage and long-term growth potential.

Consumer Durables

The Consumer Durables segment comprises Fans, Water Heaters, Air Coolers and Kitchen Appliances. In FY26, the segment reported revenues of _ 1,615.88 Crore, a decline of 1.7% YoY impacted by a weak summer season which significantly dampened demand for summer-centric products like Fans and Air coolers. The segment contributes 27.1% to the Companys overall revenues.

Segment margins stood at 1.6% versus 4.2% in the previous year, impacted by operating deleverage on lower volumes as well as weak summer.

The Fans category, comprising Ceiling Fans, Table, Pedestal and Wall (TPW) and Exhaust Fans is the largest revenue contributor within the segment. The Company continues to focus on premiumisation through investments in technology, innovation and design, alongside increasing in-house manufacturing to reduce dependence on non-exclusive third-party vendors and enhance control over quality and differentiation. The Roorkee facility, focused on premium ceiling fans, is nearing full capacity for liquid-painted models. A new manufacturing facility in Hyderabad, announced in FY25 with an investment of approximately _ 100 Crore through VCPL, is under development and is expected to commence commercial production in FY27, manufacturing both ceiling and TPW fans.

Demand during FY26 remained muted due to a weak summer season. While revenue from Ceiling fans remained stable compared to last year, TPW revenue saw a decline impacted by unseasonal rains, reflecting their highly seasonal nature as secondary cooling products. This resulted in elevated inventory levels across the industry, which shall normalize gradually. The category also witnessed cost pressures due to sharp copper inflation, necessitating price revisions, along with the implementation of new BEE energy rating norms effective January 1, 2026.

These regulatory and cost shifts are accelerating a structural transition toward BLDC (Brushless Direct Current) fans, which now account for a significant portion of total fan sales. New product introductions, including a mid-premium BLDC platform, have delivered better-than-anticipated outcomes, underscoring strong market acceptance and effective positioning within the evolving product mix. However, adoption in rural and upcountry markets remains constrained due to challenges such as volatile voltage conditions, which impact the performance of electronic controllers in BLDC fans.

The Company is strategically prioritising leadership in mid-market premium and BLDC segments rather than the economy segment.

The Water Heaters category includes electric and solar water heaters along with heat pump models catering to both residential and institutional customers across a wide price spectrum. Water heaters manufacturing is supported by facilities in Kala Amb (Himachal Pradesh), Sikkim and Perundurai (Tamil Nadu), enabling efficient regional distribution, supplemented by a growing e-commerce presence.

The category demonstrated relatively resilient performance during FY26, supported by new product launches such as the Luxecube range of electric and smart water heaters, which seen strong initial traction and widespread market acceptance. Demand remains seasonally influenced, with potential upside linked to colder weather conditions. The category continues to be highly competitive, with 20-30 active brands, necessitating sustained focus on innovation, product refresh and differentiation.

The Air Coolers category includes desert, window-mounted, personal and room variants catering to residential and institutional requirements. Performance during FY26 was tempered by an early monsoon and an unusually mild summer, particularly in Southern and Eastern markets, which temporarily softened demand conditions.

While inventory levels built up temporarily across the Company and trade channels, they were progressively normalized, supported by disciplined working capital management. The Company has continued investment in advertisement expenditure for the category, which impacted profitability for the year. Looking ahead, the Company expects a strong rebound in demand, supported by a low base effect and normalisation of seasonal conditions, along with continued investments in product innovation and design upgrades.

The Kitchen Appliances portfolio includes induction cooktops, mixer grinders, gas cooktops, rice cookers, water purifiers and a range of small and large appliances such as kitchen hoods and breakfast appliances. Manufacturing capabilities have been strengthened through a dedicated facility in Vapi under VCPL, operational since the end of FY24, with a focus on mixer grinders and gas stoves. Water purifiers are currently distributed primarily through e-commerce platforms, with a phased expansion into organized retail.

The category, characterized by deep household penetration, witnessed consumption headwinds during FY26, in line with trends observed in FMCG segments, resulting in subdued growth.

The Sunflame brand remains central to the Companys kitchen appliances strategy. In July 2025, the Board accorded in-principle approval for merger of wholly owned subsidiary Sunflame Enterprises Pvt. Ltd. with the Company to accelerate synergy realisation across sourcing, R&D, product development and go-to-market (GTM) capabilities.

Operational integration, particularly in customer service, has been completed, resulting in improved service levels and faster resolution rates, while salesforce and distribution integration is nearing completion. The category continues to face demand pressure in institutional channels such as the Canteen Stores Department (CSD), while general and modern trade channels have shown relatively better traction. E-commerce business is being scaled up and continues to remain a key growth lever. With the integration nearing completion, the Company is expecting the revenue growth to pick up in the coming years.

A structured product refresh cycle is underway to address portfolio gaps and improve competitiveness. Despite near-term revenue pressures, gross margins have remained resilient due to effective price transmission. The Company expects segment margins for the Sunflame business to improve over the medium term, supported by scale efficiencies and integration synergies.

While FY26 performance was impacted by transient external factors, the Companys focused investments in premiumisation, capacity expansion and integration initiatives position the segment for recovery. With improving demand conditions and structural margin levers in place, the Consumer Durables segment is well positioned to deliver sustained and profitable growth.

6. Financial Performance

The Financial Year 2025-2026 was marked by a challenging operating environment, shaped by unfavourable seasonal patterns and broader macroeconomic volatility. Demand remained subdued across key categories, while geopolitical tensions contributed to higher input costs and increased market uncertainty.

Revenues for the year were at H 5,965.78 Crore as compared to H 5,577.82 Crore in FY25 representing a growth of 7%. The initial half of the year witnessed weak demand for categories such as fans, air coolers and stabilizers, due to an unusually mild summer and prolonged rainfall. Festive demand also remained subdued during the year. Momentum improved, driven by the Electricals segment, particularly wires, where higher commodity prices contributed to value-led growth supported by switches and switchgears which delivered good volume led growth. Overall, growth in non-seasonal categories partially mitigated the impact of weather-related disruptions in seasonal categories.

Gross margins remained unchanged at 36.3% for FY26. Margin performance remained broadly stable during the year, with margins reverting to pre-COVID levels. During the year, margins were supported by favourable inventory dynamics in the wires segment amid rising copper prices, resulting in realisation gains, along with benefits from backward integration that improved cost efficiency and reduced external dependence. However, volatility in input costs, particularly copper, necessitated calibrated pricing actions, with lag effects in price pass-through. In addition, a shift in product mix towards the Electricals segment supported revenue growth but resulted in some gross margin dilution at overall level.

EBITDA for the year stood at _ 526.76 Crore in FY26 as compared to _ 513.23 Crore in FY25, an increase of 2.6%, with EBITDA margins at 8.8% as compared to 9.2% in FY25. Profitability in the first half was impacted by operating deleverage due to muted revenue growth against a relatively fixed cost base. Margins improved in second half, supported by revenue recovery, improved operating leverage and cost optimisation measures. The Company continued to invest in brand-building initiatives. Advertising and Promotion (A&P) expenditure stood at 2.6% of sales, compared with 2.9% in FY25, reflecting the Companys continued focus on brand investment and market development.

Profit Before Tax stood at H 407.89 Crore in FY26 as compared to H 413.95 Crore in FY25. For the quarter ended December 31, 2025, the Company recognized an exceptional charge of H 22.11 Crore pertaining to the reassessment of employee benefit obligations, including gratuity and leave encashment, following notifications related to the implementation of new labour codes, a one-time impact.

The effective tax rate for the year stood at 24.4% as compared to 24.2% in FY25.

During the year, GST 2.0 rate reductions were implemented in select categories, including batteries, solar products and certain kitchen products, with the benefits fully passed on to end consumers. This has improved product affordability and supported demand over the medium term, thereby strengthening customer dynamics.

Profit After Tax stood at _ 308.34 Crore in FY26 as compared to _ 313.72 Crore in FY25, a decline of 1.7%. Excluding the exceptional charge, on an underlying basis, profitability improved by 5.34% reflecting better operating performance, improved cost absorption and disciplined expense management.

The Company reported a net cash position of H 231.16

Crore as at March 31, 2026 as compared to H 63.83 Crore as at March 31, 2025, supported by healthy cash generation and disciplined working capital management. The Company continues to deploy capital towards strategic investments, including capacity expansion and strengthening of manufacturing capabilities.

The Company has maintained operational discipline and steady execution across segments, in an environment of external and seasonal headwinds and economic reforms. The financial position remains strong, supported by consistent cash generation and a robust balance sheet.

Note: Financial performance detailed above is basis consolidated financial statements.

7. Outlook

The Financial Year 2025-26 was marked by macroeconomic headwinds that weighed on global and domestic economies, while within India, the sector was further influenced by regulatory developments including GST 2.0, albeit supportive in nature, BEE norms and uneven seasonality. Despite this, for V-Guard, the year was characterized by a steady expansion in geographic reach, diversification across segments and entry into new categories, innovation and increasing manufacturing integration across its business lines.

Towards the end of the Financial Year, macro conditions remained volatile. Copper and aluminium prices rose significantly, while steel and plastics softened partially.

Around 60% of the Companys portfolio is summer-dependent, and is prone to weather-driven cyclicality. The revised BEE norms mandate compliance with more stringent energy efficiency standards. This development presents a significant opportunity for organized players, particularly those with in-house manufacturing capabilities.

The Company is supported by a strong distribution network of ~1,00,000 retail touchpoints, strengthening year on year, enabling deeper penetration in underpenetrated markets. The Company continues to focus on building a more responsive and future ready route to market architecture which supports broader market coverage, stronger channel relevance and a seamless consumer interface across formats.

Geographic expansion remains an important lever for future growth of the Company. With a strong pan India brand presence, the Company is broadening its geographic presence in relatively newer non south markets and building a more balanced growth portfolio.

Innovation, design, technology and sustainability remain at the core of the Companys product strategy with a focus on building a competitive, future ready portfolio that is aligned to evolving marked needs. The Company continues to invest in R&D, design and technology to this effect while accelerating development cycles and improving speed to market.

A key strength of the Company lies in its capability base, including advanced manufacturing infrastructure, deep industry expertize and a skilled workforce. In-house manufacturing stands at ~65%, improving cost control, quality and responsiveness. In FY26, the Company has invested ~ 180 Crores towards capex in a new R&D and innovation centre, enhancing manufacturing capacity and development of moulds for new models, aimed at enhancing long-term capacity and capability.

The solar segment represents a large, structurally expanding opportunity supported by Government initiatives, rising electrification and increasing adoption of distributed solar solutions across residential and semi-urban markets. V-Guard is leveraging this trend through offerings such as solar rooftop inverters and panels, solar water heaters and solar pumps, aligning with its strategy of expanding into high-growth adjacent categories and strengthening its presence in future energy solutions beyond its core portfolio.

Strategically, the Company follows a disciplined and gradual category development approach. Through Sunflame integration, Sunflames margins are anticipated to improve over the next 2-3 years, while Lighting marks a new adjacency in the portfolio. Investments in retail, R&D and capacity are expected to deliver long-term operating leverage.

FY27 is expected to benefit from normalized demand conditions, and operating leverage from recent investments. However, if the middle east conflict is prolonged, it may adversely impact demand and consumption. Overall, V-Guards balanced portfolio, which has demonstrated resilience by delivering strong growth year after year, supported by strong innovation and R&D, distribution reach, disciplined category expansion, manufacturing integration and improving penetration in solar-linked opportunities, positions the Company towards sustained strong growth.

8. Strengths and Opportunities

Strengths

The Company has invested significantly in building its brand equity over the past decade, which has led to high brand recall and enabled entry into new product categories.

Consumer centric organization with emphasis on after-sales service, quality, innovation, R&D and new product development.

Strong pan-India footprint with investments in a well-entrenched distribution network spread across 100,000+ retail touch points.

Comprehensive and diversified product portfolio across fast growing categories in the consumer electricals, electronics and durables space, catering to the mass consumption market in India.

Strong execution track record and demonstrated ability to grow competitively and profitability.

Experienced management team with strong understanding of the business complexities.

Over the years, the Company has increased its in-house manufacturing and lessened its dependence on imports and outsourcing which ensures better quality and innovative products with value engineering.

Opportunities

The industry is expected to maintain a strong growth trajectory over the medium to long term, supported by favourable macroeconomic and sectoral tailwinds such as the expansion of the middle class, rising disposable incomes, and improved access to financing, which would improve adoption of electronics and consumer durables.

Additionally, premiumisation in metropolitan and urban markets, coupled with the continued expansion of distribution networks into Tier II and Tier III cities, would further drive demand.. In addition, the Governments push for housing for all, increasing availability of electricity and infrastructure development augur well for long term growth prospects of the sector.

Non-South markets account for ~48% of the Companys current revenues and hold significant scope for further expansion and market share gains.

The Company is present in key product categories having significant market sizes. Increasing formalization of the market presents an opportunity for organized players to benefit - especially market leaders, with established brands and entrenched manufacturing and distribution capabilities.

The Company continues to scale up its presence in e-commerce and modern trade outlets which are delivering steady growth.

9. Enterprise Risk Management

A strong governance structure has been put in place where the Risk & ESG Committee of the Board oversees the adequacy and effectiveness of the Risk Management Framework. It incorporates leading risk management standards and practices to identify, assess, prioritize, manage and report risks. The key risks identified and its mitigation plan are as follows:

Key risks	Risk Statement	Mitigation Plan
Emerging channels	The channel landscape is fast changing with multiple trade formats and inadequate presence in certain emerging channels; hence the need arises to focus on Go-To-Market, customer management & trade terms capabilities.	Channel-centric focused organizational structure and agile operating model.
		Robust insights mechanism and digital marketing capabilities.
		Established SCM, Service & Sell-out systems.
		DevelopedD2C,QuickCommerce&otherDigitalOperatingModels.
		Key Account Management and retail marketing capabilities.
		Differentiated GTM Model (sell-out) & exclusive products.
Impact of digitization	Advent of digitization may bring about very significant changes to business model, including disruption in sales and distribution, fundamental process changes and shift in consumer behaviour and products.	Investing in capabilities required to scale up e-commerce operations.
		Processes around digital content and digital customer acquisition.
		Smart products roadmap to drive digital product plans.
		Digitally driven Sell-out system and next-generation supply chain capabilities.
		Enterprise analytics for better visibility and collaboration.
	Cost of doing business is rising and growth is impacted due to traditional electrical players expanding focus to adjacent categories, slew of e-Com players leveraging vendor ecosystem, consolidation of companies and MNCs shifting focus on Indian FMCE market.	Adoption of digital Product Life Cycle Management for faster time to market.
		Product value chain to enhance product differentiation.
Hypercompetition in marketplace	Commodity price volatility, geopolitical risk, rising input cost and increased cost of compliance.	Consumer-centric long-term NPD pipeline.
		Building sell-out management capability.
		Velocity of pass-through of cost and timely pricing actions.
		Monitoring commodity price movements and competitors action.
Margin Protection		In-house manufacturing of established products.
	Due to the increased threat of cyber security incidents globally, IT downtime and data loss can adversely impact business operations.	Value engineering initiatives for cost reductions.
		Premiumization of product portfolio.
		Robust Information Security Management Systems in line with global standards and industry benchmarks.
		Disaster Recovery Plan for critical applications.
		Incident management response systems.
Information security		Building awareness among users.
	Impact on business continuity and reputation due to Environmental & Social incidents, Non-compliance of regulations.	Cyber threats are mitigated by deploying advanced systems, tools, and processes.
		Transitioning to low-carbon operations to address climate- related risk by: Integrating renewable energy, water conservation, circular waste management practices, and investing in responsible products.
Environment, Social and Governance		Well-established Environment, Health, and Safety compliance framework.
		Human Rights assessments for employees and value chain partners.
		Empowering communities through CSR initiatives.
		Multi-tier governance mechanism to consider the aspects beyond compliance.
		Disclosures as per standards.
	External and internal factors can lead to supply disruption, impacting availability of materials.	Reducing dependency on imports through in-house manufacturing and developing domestic alternatives.
Supply Security		With the help of R&D, continuously developing alternate make, designs and models.
		Disaster management plan for own manufacturing plants.
	Non-availability of people with appropriate skills for evolving business requirements and growth.	Strengthening organization capability and culture through
		Saksham and Tatva; focusing on Employee friendly policies.
Inadequate Talent Pipeline		Identifying and_developing internal talent with leadership leadership competencies.
		Focused employee value propositions.
		E-learning Academy for employees.

10. Human Resources

Over the last year, HR has taken various initiatives for employee benefit and retention. During the year, the Company continued with succession planning & risk mitigation programme for critical senior leadership positions and continues with strategic initiatives for career development for high potential managers and creation of a talent pool.

Continuing with retaining and attracting talent pool the Company continued with its ESOP plan and granted options as per ESOP 2013 Scheme to 16 employees during the year. Overall ~80 employees are covered under ESOP plan.

Relationship of the Company with employees has been cordial during the year.

As on March 31, 2026, the total number of employees of the Company is 3,219 against 3,133 on March 31, 2025.

11. Audit & Internal Control Systems

The Company has Internal Control Systems commensurate with the nature of its business, size and complexities which is integrated with Company policies, defined Standard Operating Procedures across processes and approved Delegation of Authority Matrix. The key objective of the internal control systems is to manage business risks, enhance shareholder value and safeguarding of the assets.

Internal audits are conducted at all major locations and across functions to ensure high standards of Internal Controls are maintained. It provides reasonable assurance on the internal control environment and against non-occurrence of material misstatement or loss. Every quarter, Audit Committee reviews the adequacy and effectiveness of internal control system and monitors the implementation of audit recommendations.

The Company has a robust Internal Financial Controls monitoring framework. The Company continuously monitors process changes and updates the Risk and Control Matrices (RCMs) along with identification of process automation opportunities and enhanced management monitoring mechanisms to strengthen the control environment. Key controls across processes were evaluated during the year to provide assurance regarding compliance with the existing policies and significant operating procedures, and no significant weaknesses/ deviations were noted in effectiveness of the controls. Further, the Statutory Auditors of the Company also conducted audit of the Internal Financial Controls Over Financial Reporting of the Company as on March 31, 2026, and issued their report which forms part of the Independent Auditors report.