Vdeal System Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS REPORT </dhhead>

Pursuant to Schedule V to the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report covering business performance and outlook (within limits set by the Companys competitive position) is given below:

A. MACROECONOMIC OVERVIEW:

The Indian economy demonstrates strong fundamentals and continued resilience. Early economic projections and policy stances issued by the Reserve Bank of India (RBI) maintain a positive outlook for the macro landscape, projecting Gross Domestic Product (GDP) growth for FY27 at 6.9%, backed by a calibrated repo rate stance of 5.25%.

Economic expansion remains predominantly underpinned by robust domestic private consumption and sustained capital investment across both public and private sectors. However, upside risks to the inflation trajectory remain a focal point, driven primarily by volatile global energy markets and potential weather-induced disturbances to food prices.

The central banks commentary underscores that while domestic demand fundamentals remain insulated and strong, external headwinds·including global trade fragmentations, heightened geopolitical uncertainties, and volatile commodity pricing·could create transient friction for Indias growth trajectory. To navigate these global uncertainties, policy emphasis remains squarely focused on maintaining macroeconomic stability, fostering fiscal discipline, and advancing structural reforms to build long-term economic capacity and resilience.

According to evaluations by the International Monetary Fund (IMF), global economic activity faces heightened headwinds amidst rising geopolitical tensions, particularly due to conflicts in the Middle East, following an extended period of trade friction and policy uncertainty. Assuming these geopolitical conflicts remain contained in duration and scope, global economic growth is projected to moderate to 3.1% in 2026 before registering a modest recovery to 3.2% in 2027. Concurrently, global headline inflation is anticipated to see a temporary uptick in 2026 before resuming a downward trajectory in 2027, with the impact of slower growth and inflationary pressures being disproportionately felt across emerging markets and developing economies.

Downside risks continue to dominate the global economic outlook. Prolonged or escalating geopolitical conflicts, deepening trade fragmentation, recalibrated market expectations regarding artificial intelligence-driven productivity gains, and renewed tariff barriers present significant risks to growth and financial market stability. These global dynamics directly influence primary input costs for manufacturing industries·such as Vdeal System Limiteds core production of Low Voltage (LV) and Medium Voltage (MV) Automation Electric Panels·owing to shifts in raw material prices and international supply chain logistics.

Energy market volatility remains a critical variable in the macro environment. Energy commodity prices are projected to rise by 19% in 2026, driven primarily by a 21.4% projected increase in crude oil prices (averaging $82 per barrel) alongside substantial disruptions in natural gas supply chains. Under an adverse downside scenario involving prolonged energy price escalation, global growth could contract further to 2.5% in 2026 with inflation climbing to 5.4%. In a more severe operational scenario involving regional infrastructure degradation, global growth could slow to approximately 2% in 2026, creating secondary cost pressures on industrial power equipment manufacturers and infrastructure project lifecycles globally.

B. INDUSTRY STRUCTURE & DEVELOPMENTS: MEDIUM VOLTAGE (MV) AND LOW VOLTAGE (LV) AUTOMATION PANEL INDUSTRY IN INDIA

Executive Summary & Market Landscape

Driven by aggressive infrastructure expansion, rapid industrialization, and an increasing mandate for energy efficient power management, the Indian Medium Voltage (MV) and Low Voltage (LV) electrical automation panel sector recorded robust growth through FY 2025-26. As critical infrastructure across the utility, commercial, and industrial sectors, MV panels (3.3 kV-36 kV; 630 A-1250 A) and LV panels (up to 1000 V; 6300 A) absorb a substantial share of capital expenditure. Anchored within the broader Indian switchgear and control gear market-valued at approximately USD 5.78 billion in 2026·the market is poised to maintain momentum with a projected CAGR of 7.35% to 9.1%.

The traditional boundary between basic power distribution panels and automated systems has largely dissolved. Modern MV (typically 3.3 kV to 36 kV) and LV (up to 1000 V) panels are now regularly equipped with embedded control technologies·such as Programmable Logic Controllers (PLCs), Variable Frequency Drives (VFDs), Supervisory Control and Data Acquisition (SCADA) interfaces, and Human-Machine Interfaces (HMIs). These integrated, "smart" panels optimize energy consumption, enable continuous remote diagnostics, and safeguard machinery against complex electrical faults.

The Medium Voltage (MV) and Low Voltage (LV) electrical panel market in India continues to experience robust, accelerated growth, driven by compounding demand for efficient, safe, and reliable power distribution infrastructure.

Accelerated Grid Modernization & Smart Utilities: Government-backed initiatives, including the Revamped Distribution Sector Scheme (RDSS) and urban Smart City projects, continue to drive procurement of IoT-enabled LV distribution boards and automated MV switchgear to manage complex, multi-directional power flows and minimize aggregate losses.

Integration of Renewable Energy Capacity: Indias rapid expansion of utility-scale and rooftop solar generation- supported by domestic solar PV manufacturing capacity surpassing 170 GW in FY26·has created demand for specialized MV/LV panels. These panels handle load intermittency, enable automatic grid synchronization, and ensure fault protection for solar and wind power plants.

Transition to Industry 4.0 & Smart Manufacturing: Manufacturing sectors (such as pharmaceuticals, automotive, heavy engineering, and metals) are actively adopting automated process control. Electric Control Panels· specifically Intelligent Motor Control Centers (iMCCs) and Power Control Centers (PCCs)-are critical for orchestrating continuous factory floors, driving demand for smart panel assemblies.

Data Center & Urban Infrastructure Build-Out: The rapid expansion of hyper-scale data centers, EV charging corridors, metro rail lines, and commercial real estate across Tier-1 and Tier-2 cities has driven requirements for high-density, modular, and fire-safe LV automation panels offering high uptime reliability.

• Shift Toward Digital & Intelligent Assemblies: Conventional analog switchboards are increasingly being replaced by digital panels equipped with smart sensors, micro-controllers, and cloud-connected edge gateways. These systems enable predictive maintenance, letting plant operators assess real-time thermal, current, and voltage anomalies before equipment failure occurs.

• Demand for Compact, Modular, and Eco-Friendly Designs: Footprint optimization has become a priority for industrial buyers. Manufacturers are focusing on compact, arc-resistant, and modular panel designs. Additionally, there is a gradual industry transition toward SF₆-free, eco-friendly insulating mediums for MV switchgear in response to corporate sustainability guidelines.

• Local Manufacturing Push (Make in India & DCR): Under the Domestic Content Requirement (DCR) and domestic manufacturing mandates, public sector utilities and large private developers are prioritizing locally assembled, lEC-compliant automation panels.

• Raw Material Volatility: Fluctuations in global commodity prices·particularly for key inputs like copper, aluminum, sheet steel, and silver-plated contact materials·continue to exert margin pressure on panel builders.

• Component Lead Times & Import Reliance: While panel fabrication and assembly are localized in India, advanced electronic components (such as specialized microchips, high-end PLCs, and semiconductor modules) remain vulnerable to international supply chain disruptions and import dependencies.

• Fragmented Market & Price Competition: The Indian market features a mix of multinational OEMs, established domestic enterprises, and unorganized regional panel fabricators, creating intense pricing competition in standard LV panels.

• Geopolitical tensions and global supply chain disruptions affecting availability and cost of raw materials, electronic components, and semiconductors.

• Manpower Dependence: Availability of skilled engineers and maintaining industrial harmony for specialized automation and EPC projects.

• Technology Risk: Failure to keep pace with rapid advancements in automation, IloT, and digital solutions could affect competitiveness.

• Regulatory challenges and compliance requirements related to safety, energy efficiency, and sustainability standards.

Through robust planning, continuous innovation, skill development, and strong compliance practices, Vdeal System Limited actively mitigates these risks while ensuring sustainable growth and long-term stakeholder value. Despite these risks, Vdeal System remains resilient through strong backward integration, diversified offerings, and a customer centric approach to mitigate uncertainties.

Looking ahead into FY 2026-27, the demand for Medium and Low Voltage automation panels in India remains strong. Companies positioned to offer end-to-end solutions·combining robust physical panel engineering with advanced

PLC/SCADA programming, loT integration, and energy auditing features·are well situated to capture market share across industrial, commercial, and utility sectors.

Vdeal System Limited (referred as the "Company" or "Vdeal") with the purpose of integrating systems by prioritizing customer Value, tailoring Designs to their needs, engineering innovative solutions, and Automating processes with a robust and Legitimate system. Hence, VDEAL Stands for "We Design Engineer Automate Legitimate System". Unveiling the meaning behind the acronym:

"Victory on creating Value for customer, Design by customer needs, Engineer to make it perfect, automate to make process reliable, thus creating a Legitimate System."

Vdeal is an ISO 9001:2015 certified company providing solutions in Smart Low Voltage (LV) panels, Smart Medium Voltage (MV) panels, Smart Variable Frequency Drive (VFD) panels, and Smart Programmable Logic Controller (PLC) panels, Air insulated & Sandwich busducts backed by in-house product design & development, manufacturing, system integration, servicing of automation solutions and smart electrical control panels that adhere to high international IEC standards of quality and safety. Vdeal has business relationships with global electrical players. Such strategic tie ups with renowned brand owners give us the competitive edge over our competitors.

Vdeal is a growing Integrated Electrical and Automation solution provider dealing in comprehensive electrical solutions across industries with significant presence in multiple Industry segments. Vdeals products are supplied to industry players through a business-to-business (B2B) model.

Vdeal has launched a new product, XLASH.IO™, designed to fuel the next wave of AI and ML-driven innovation solutions that integrate IoT, AI, and ML into a cloud-based Software as a Service (SaaS) model. By harnessing the power of IoT, which enables everyday objects like kitchen appliances, cars, and thermostats to connect to the internet via embedded devices, our Company aims to facilitate seamless communication between people, processes, and things through its cutting-edge solutions.

Vdeal is a leading provider of industrial automation, electrical panels, IIoT solutions, and power distribution systems with a strong footprint across India. Since inception, the Company has specialized in delivering end-to- end solutions that enhance operational efficiency, energy management, and digital transformation for industries.

Strategic Vision & Digital Innovation:

At Vdeal System Limited, we believe that modern industrial equipment must possess the capability to capture real-time operational data, analyze parameters dynamically, and automatically execute preventive measures with minimal human intervention. In an era defined by digital transformation, ensuring the absolute safety, reliability, and energy efficiency of Low Voltage (LV) and Medium Voltage (MV) electrical control panels is paramount. We deliver tailored, high-performance automation solutions that cater to the specialized requirements of our clientele-ranging from automated micro-electronics assembly to precision component manufacturing.

While Vdeal operates on a pan-India basis across all states, we have forged enduring partnerships with marquee public and private sector enterprises, serving as a preferred supplier to industry leaders nationwide. Our end-to- end capabilities span the complete product lifecycle: from concept design and detailed engineering to rapid prototyping, assembly, and turnkey manufacturing. By leveraging this integrated approach, we empower our customers to achieve substantial operational advantages, including reduced capital expenditure, optimized supply chain efficiency, and minimized inventory obsolescence. Moving forward, we remain dedicated to deepening our proficiency in Smart Electrical Control Panels and high-capacity Bus Conductors through continuous automation and technological innovation.

Vdeal System Limited specializes in comprehensive turnkey engineering projects, delivering end-to-end solutions that encompass the supply, installation, testing, erection, commissioning, and lifecycle maintenance of electrical infrastructure up to 33 kV. Our specialized product and service portfolio includes:

• Electrical Panel Assemblies: Low Voltage (LV) and Medium Voltage (MV) control gear and switchgear panels.

• Specialized Infrastructure: Metering cubicles, High Tension (HT) Bus Ducts, and dedicated technical support services.

• Smart Automation & IIoT: Smart automation systems, Industrial Internet of Things (IIoT)-enabled monitoring platforms, and energy-efficient distribution boards.

• Integrated Solutions: Turnkey EPC industrial projects engineered for high-availability operational environments.

Our technical expertise serves a wide spectrum of mission-critical sectors, including manufacturing, primary metals, mining, cement, power generation, oil & gas, core infrastructure, and continuous process industries.

Backed by an agile hub-and-spoke operational model, our project execution is driven by state-of-the-art manufacturing facilities, advanced CAD/CAM design capabilities, and an experienced engineering workforce. Anchored by our primary operational headquarters in Bhubaneswar, Odisha, our strategic expansions into key industrial corridors·including Mumbai, West Bengal, and Jharkhand·ensure rapid deployment and seamless localized support across Indias primary industrial hubs.

Over the years, we have solidified our market standing by collaborating closely with leading OEMs, EPC contractors, and global technology providers. Vdeals engineered solutions power modern manufacturing facilities, smart industrial plants, utility-scale power distribution networks, and key national infrastructure projects·reinforcing our reputation for technical reliability, operational safety, and continuous innovation.

Vdeals national presence is supported by a responsive nationwide service network, long-standing client relationships, and an unwavering commitment to sustainable technology integration. By embedding digital intelligence into industrial power automation, we help our clients minimize unscheduled downtime, optimize energy consumption, and build future-ready plant architectures.

With a sharp focus on engineering excellence, sustainability, and technological innovation, Vdeal System Limited continues to advance the future of industrial automation and power distribution·actively driving Indias transition toward Industry 4.0 and sustainable energy transformation.

As industrial manufacturing and infrastructure sectors across India and globally accelerate their shift toward smart digital infrastructure, the addressable market for Vdeal System Limiteds Low Voltage (LV) and Medium Voltage

(MV) Automation Panels and turnkey solutions continues to expand rapidly. Independent industry forecasts highlight significant multi-year growth across key target segments:

• Industrial Automation Software Market: The global industrial automation software segment is projected to expand at a Compound Annual Growth Rate (CAGR) of 8.4% over the next five years, driven by increasing adoption of Supervisory Control and Data Acquisition (SCADA), Programmable Logic Controllers (PLCs), and edge analytics.

• Modular Automation Market: Demand for modular, scalable control architectures is projected to reach USD 22.08 billion by 2029, reflecting a CAGR of 11.5%. This growth directly supports procurement of modular LV/MV panel designs optimized for footprint efficiency and rapid deployment.

• Assembly Automation Market: The global assembly automation market is forecasted to reach USD 64.9 billion by 2032, expanding at a CAGR of 9.1%, driven by widespread adoption of automated assembly processes in high-precision manufacturing environments.

• Building Automation Systems (BAS) Market: The building automation market is expected to demonstrate robust expansion, growing at a CAGR exceeding 12% through 2029. This trend is fueled by the rapid construction of smart commercial real estate, data centers, and modern industrial facilities requiring integrated power control and energy management systems.

These secular growth trends across software, modular hardware, assembly systems, and smart building management provide strong macro tailwinds for Vdeal System Limited, reinforcing our strategic investments in IoT-enabled panels, smart distribution assemblies, and end-to-end industrial automation projects.

Key Addressable Market Metrics

Market Segment	Forecast Period	Projected Size	CAGR (%)	Strategic Relevance
Industrial Automation Software	2025 - 2030	Multi-Billion Expansion	8.40%	Drives integration of SCADA, PLCs & Edge Analytics into LV/MV Panel Assemblies
Modular Automation Market	2024 - 2029	$22.08 Billion	11.50%	Accelerates demand for modular, footprint-optimized LV/ MV Switchgear designs
Assembly Automation Market	2024 - 2032	$64.90 Billion	9.10%	Expands scope for automated Motor Control Centers (iMCCs) & Power Control Centers
Building Automation Systems (BAS)	2024 - 2029	Smart Infra Scale	> 12.00%	Fuels procurement for IoT-enabled panels in data centers & commercial facilities

Executive Takeaway & Business Alignment

Vdeal System Limiteds core competencies in Low Voltage (LV) and Medium Voltage (MV) Automation Panels, smart IIoT integration, and turnkey EPC projects directly map onto these high-growth sectors. With double-digit market growth in Modular and Building Automation systems, Vdeal is strategically positioned to capture expanding market share across industrial manufacturing, utility power distribution, and smart infrastructure projects.

Vdeal System Limited has established a robust, comprehensive internal control framework engineered to ensure operational efficiency, absolute regulatory compliance, and financial transparency. Tailored to support our specialized operations in Low Voltage (LV) and Medium Voltage (MV) Automation Panels and turnkey electrical projects, this system safeguards corporate assets, ensures reliable financial reporting, and fosters strong corporate governance.

Key pillars of our internal control framework include:

• Well-Documented Policies & Authority Delegation: Clear operational standard operating procedures (SOPs) alongside well-defined delegation of authority (DoA) matrices across all financial, procurement, and engineering functions.

• Integrated Enterprise Resource Planning (ERP) Infrastructure: Systematized IT and ERP platforms enabling real-time accounting, project cost monitoring, inventory tracking, and consolidated reporting for informed management decision-making.

• Comprehensive Audit Mechanism: Rigorous, multi-tiered evaluation processes comprising periodic internal audits conducted by independent professional firms alongside our in-house audit division, complemented by annual statutory audits.

• Active Board & Audit Committee Oversight: Continuous review of audit findings, risk management protocols, and control adequacy by the Audit Committee and executive management to ensure strict organizational accountability.

• Regulatory & Ethical Compliance: Proactive alignment with evolving statutory mandates, corporate governance standards, and SEBI regulations, underpinned by a firm commitment to ethical business practices.

• Validated Control Effectiveness: Independent evaluations by both internal and statutory auditors have confirmed the adequacy and operating effectiveness of the companys internal financial controls for FY 2025-26.

During the year under review, the Company delivered a strong all-round financial performance, marked by robust growth in net revenue from operations alongside continued improvement in absolute profitability. This section presents a comparative analysis of the Companys financial performance vis-a-vis its operational performance for FY 2025-26, together with the corresponding figures for FY 2024-25 and FY 2023-24, to provide the readers of this report with a clear perspective on the underlying trends.

Analysis of Net Revenue from Operations

The net revenue from operations of the Company has exhibited a consistent upward trajectory over the last three financial years, reflecting sustained growth in operational scale and market demand for the Companys products/services.

• Revenue increased by Rs.735.43 Lakhs, from Rs.2,622.48 Lakhs in FY 2023-24 to Rs.3,357.91 Lakhs in FY 2024-25, representing a growth of 28.04%.

• Revenue further increased by Rs.1,170.80 Lakhs, from Rs.3,357.91 Lakhs in FY 2024-25 to Rs.4,528.71 Lakhs in FY 2025-26, representing a growth of 34.77% · an acceleration over the previous years growth rate.

• The consistent, accelerating revenue growth over two successive years underscores the strength of the Companys operating model and its ability to convert operational initiatives into top-line growth.

Period	Increase in Net Revenue (Rs. in Lakhs)	% Growth (YoY)
FY 2023-24 Rs. FY 2024-25	735.43	28.04%
FY 2024-25 Rs. FY 2025-26	1,170.80	34.77%

Profit before tax (PBT) climbed to Rs.582.25 Lakhs in FY 2025-26, compared to Rs.533.44 Lakhs in FY 2024-25, an increase of Rs.48.81 Lakhs (9.15%), demonstrating the Companys continued ability to manage costs and improve operating outcomes even as it scales its operations.

Profit after tax (PAT) saw a healthy increase to Rs.416.08 Lakhs in FY 2025-26, from Rs.399.02 Lakhs in FY 2024-25, an increase of Rs.17.06 Lakhs (4.28%), highlighting the overall financial health and continued growth of the Company.

While absolute profitability in terms of PBT and PAT has grown year-on-year, it is relevant to view this growth in the context of the Companys operational scale-up. Net revenue from operations grew at a faster pace (34.77%) than PBT (9.15%) and PAT (4.28%) in FY 2025-26, which has resulted in a moderation of profit margins as a percentage of revenue.

PBT margin moderated from 15.89% in FY 2024-25 to 12.86% in FY 2025-26, while PAT margin moderated from 11.88% to 9.19% over the same period. This margin compression, in the context of strong absolute profit growth, is reflective of the Companys ongoing investment in scaling operations · including costs associated with capacity expansion, manpower, and market development · to support the higher revenue base. Management continues to focus on operating leverage and cost efficiencies to improve margins as the incremental revenue base stabilises in subsequent years.

Conclusion

The Companys financial performance for FY 2025-26 reflects healthy and accelerating growth in operations, with net revenue growing by 34.77% over the previous year. Profitability, in absolute terms, has also improved, with PBT and PAT increasing by 9.15% and 4.28% respectively. The moderation in margins is attributable to planned investments made to support the Companys growing scale of operations, and the management remains confident of translating this operational growth into sustained and improved profitability in the years ahead.

Pursuant to Regulation 34 read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the key financial ratios of the Company for the financial year ended 31^st March 2026, as compared to the financial year ended 31^st March 2025, based on the audited standalone financial results, are set out below:

Particulars	FY: 2025-26	FY: 2024-25	Reason for Variance (where change > 25%)
Current Ratio	1.98	2.15	Not applicable · variance below the 25% threshold.
Debt Equity Ratio	0.69	0.41	Increase is mainly on account of higher long-term and short-term borrowings availed during the year (up from Rs.1,059.88 Lakhs to Rs.2,043.32 Lakhs) to fund the increased working capital requirement (inventories and trade receivables) supporting the 34.77% growth in revenue from operations.
Debt Service Coverage Ratio(DSCR)	3.85	4.28	Not applicable · variance below the 25% threshold.
Debtors Turnover Ratio	2.02	2.06	Not applicable · variance below the 25% threshold.
Net Profit Margin (%)	9.22%	11.88%	Decline is primarily due to revenue growing at a faster pace (34.77%) than net profit (4.28%), on account of higher employee benefit expenses, finance cost and other expenses incurred to support the scale-up in operations. Variance is below the 25% threshold.
Return on Equity (ROE) (%)	13.96%	15.56%	Not applicable · variance below the 25% threshold.
Payables Turnover Ratio	3.31	3.56	Not applicable · variance below the 25% threshold.
Return on Capital Employed (%)	21.64%	23.73%	Not applicable · variance below the 25% threshold.
Net Capital Turnover Ratio	1.55	1.39	Not applicable · variance below the 25% threshold.

Notes:

• All figures are extracted from the audited standalone financial results of the Company for the year ended 31^st March 2026, as reported by the statutory auditors, M/s BAPS & Associates, Chartered Accountants.

• Variance is disclosed as a reason where the change in a ratio is 25% or more, in line with the explanation requirement under Schedule V of the Listing Regulations.

Vdeal System Limited firmly believes that its employees are its most valuable assets and the driving force behind its growth. The Company strives to provide a safe, conducive, and progressive workplace, aligning with best industry standards. To ensure the right talent is acquired and retained, Vdeal continuously strengthens and upgrades its hiring processes, training, and employee engagement initiatives.

As a provider of industrial automation, electrical panels, Industrial IoT solutions, and power distribution systems, our workforce plays a pivotal role in delivering excellence to clients. The Company has adopted employee-centric practices designed to attract, develop, and retain talent in a competitive market while fostering a culture of innovation, collaboration, and continuous improvement.

As on March 31, 2026, Vdeal System Limited had a workforce of 113 employees on its rolls.

	For and on behalf of the Board of Directors
	VDEAL SYSTEM LIMITED
	Sd./-
Dated: 03.09.2026	Dhiraj Kochar
Place: Bhubaneswar	Managing Director-cum-CEO
	DIN:02721911