Vilas Transcore Ltd Management Discussions

A. ECONOMIC & INDUSTRY OVERVIEW

The global economy demonstrated resilience during FY2025–26 despite persistent geopolitical uncertainties, supply chain disruptions and inflationary pressures across several major economies. Continued investments in infrastructure, industrial development and energy security supported economic activity, while the global transition towards cleaner energy and electrification accelerated investments in renewable energy, grid modernisation and transmission infrastructure. These long term trends continue to drive sustained demand for transformers and advanced transformer components, creating favourable opportunities for manufacturers operating across the power equipment value chain.

India continued to remain one of the fastest growing major economies, supported by resilient domestic demand, sustained public capital expenditure, improving manufacturing activity and a favourable policy environment. The Governments continued focus on infrastructure development, industrial growth and strengthening the power sector is expected to support long term economic expansion. Rising electricity demand, rapid urbanisation, renewable energy integration, railway electrification and continued investments in transmission and distribution infrastructure are expected to drive sustained demand for transformers and allied components. Government initiatives focused on grid modernisation, Green Energy Corridors and expansion of the national transmission network are further strengthening the long term outlook for the sector.

Indias target of achieving 500 GW of non fossil fuel power generation capacity by 2030 is expected to accelerate investments in transmission infrastructure required for renewable energy integration. This structural shift is creating long term opportunities across the transformer industry, where reliable and energy efficient components play a critical role in ensuring efficient power transmission and distribution.

The transformer industry continues to benefit from increasing investments in utilities, industrial infrastructure, renewable energy projects and replacement demand from ageing electrical assets. As power networks become more sophisticated and efficiency standards continue to evolve, demand for high-performance transformer components is expected to remain strong. Growing emphasis on reducing transmission losses and improving energy efficiency is also driving the adoption of advanced magnetic materials such as CRGO electrical steel and Nanocrystalline Cores, which offer superior electrical performance and lower core losses. These developments are expected to support sustained growth across the transformer component industry.

Against this backdrop, Vilas Transcore Limited is well positioned to capitalise on the emerging opportunities through its expanded manufacturing capabilities, diversified product portfolio and continued focus on quality, technology and operational excellence.

The Companys growing presence across multiple transformer component segments, combined with strong customer relationships and scalable manufacturing infrastructure, provides a solid platform to support long term growth in both domestic and international markets.

B. KEY DEVELOPMENTS IN FY 2025 26

FY 2025-26 marked a defining year in the evolution of Vilas Transcore Limited.

During the year, the Company successfully completed that translation of the funds raised into its into enhanced manufacturing capabilities, expanded its product portfolio and strengthened its position across the transformer component value chain. These initiatives have established a scalable manufacturing platform and reinforced the Companys long-term growth strategy.

The Company successfully increased its CRGO processing capacity to 36,000 MTPA, established an installed capacity of 240 MTPA for Nanocrystalline Cores, and commenced commercial production of Transformer Radiators with an installed capacity of 7,200 MTPA.

The Companys operations are now supported by three manufacturing facilities in Vadodara, Gujarat, equipped with modern infrastructure, advanced processing technologies and stringent quality systems. Backed by strong engineering capabilities, operational excellence and longstanding customer relationships, Vilas Transcore continues to strengthen its presence across domestic and international markets.

Further, the Installation and commissioning of the Copper Conductors facility, with a Phase I capacity of 1,500–1,800 MTPA, progressed as planned and is expected to commence commercial production during the second half of FY27. The Company also announced its entry into the High Voltage Bushings segment with development progressing in a phased manner. Together, these initiatives significantly strengthen the Companys manufacturing capabilities and create multiple growth drivers for the future.

Today, Vilas Transcore has evolved into a diversified transformer component manufacturer with a growing portfolio comprising CRGO Transformer Components, Nanocrystalline Cores and Transformer Radiators with a further expansion into Copper Conductors on the anvil next year and also a step towards High Voltage Bushings.

With an expanded manufacturing base, diversified product portfolio and disciplined execution strategy, the Company is well positioned to capitalise on the long term opportunities emerging from increasing investments in power transmission, distribution and grid modernisation.

By expanding beyond its core business into complementary product segments, the Company is increasing value addition, broadening its addressable market and strengthening its ability to serve the evolving requirements of transformer manufacturers through a comprehensive range of solutions.

C. GROWTH STRATEGY

Vilas Transcores growth strategy is centred on building a resilient, technology driven and diversified transformer component business capable of delivering sustainable long term growth. Having completed a significant phase of capacity expansion and portfolio diversification, the Companys focus is now on enhancing operational performance, scaling its newer businesses, strengthening its competitive position across the transformer component value chain and delivering sustainable growth and value creation for all stakeholders.

Optimising Manufacturing Capabilities The Company remains focused on improving capacity utilisation across its expanded manufacturing facilities while driving higher operational efficiencies through process optimisation, quality enhancement and prudent cost management. Leveraging the expanded manufacturing infrastructure will remain a key priority in supporting future growth and improving operating leverage.

Expanding Value Added Product Portfolio

Vilas Transcore continues to strengthen its presence across high value transformer component segments by scaling its newly established businesses and developing technologically advanced products. The Company believes that expanding its portfolio beyond conventional transformer components will not only diversify revenue streams but also strengthen customer engagement and increase value addition across the business. Technology and Product Development Innovation remains integral to the Companys long term growth strategy. Continuous investments in product development, engineering capabilities and advanced manufacturing technologies are enabling the Company to address evolving customer requirements and industry standards. The Company is also committed to strengthening its presence in technologically advanced transformer components.

Customer Centric Growth

The Company continues to deepen relationships with transformer manufacturers, OEMs and EPC companies by delivering high-quality products, reliable execution and responsive customer support. A broader product portfolio enables the Company to provide multiple transformer components under one platform, strengthening long-term partnerships while creating opportunities to expand its customer base across domestic and international markets.

Discipline Operational excellence remains a core element of the Companys business philosophy. The Company continues to focus on manufacturing efficiency, supply chain optimisation, quality management and prudent capital allocation to improve productivity and support sustainable profitability.

Further, the Company continues to maintain Financial Discipline in terms of Fund Utilization and Optimization. This disciplined approach enables the Company to pursue growth while maintaining financial strength and creating long-term value for all stakeholders.

D.OPPORTUNITIES,RISKS&MITIGATION

The Company operates in an industry that is expected to benefit from sustained investments in power infrastructure, increasing electricity demand and the ongoing transition towards a more efficient and reliable power ecosystem.

While these structural trends provide significant long term opportunities, the Company remains focused on effectively managing the risks associated with a dynamic operating environment through disciplined execution, prudent financial management and robust governance practices.

Key Opportunity

• Sustained investments in power transmission and distribution infrastructure.

• Increasing demand for value added transformer components.

• Expanding domestic and export markets.

• Rising demand across transformer manufacturing.

• Technology driven industry evolution.

• Supply chain expansion.

Key Risk

• Delay in industry capex or project execution.

• Slower commercialisation of new businesses.

• Competitive pricing pressures.

• Volatility in CRGO steel and copper prices.

• Product and technology obsolescence.

• Disruptions in availability of critical raw materials.

Mitigation

• Diversified customer base and broader product portfolio reduce dependence on any single project or customer segment.

• Phasedimplementation,customerengagement and continuous product development support successful scale up.

• Focus on product quality, operational efficiency and long term customer relationships.

• Strategic sourcing, inventory optimisation and disciplined procurement practices.

• Continuous investment in engineering, innovation and product development.

• Diversified supplier network and proactive supply chain management.

Vilas Transcore recognizes that effective risk management is essential for long-term value creation and business resilience. The Company views risk management as an integral part of its business strategy. Risks are continuously monitored through structured review mechanisms, enabling timely identification, assessment and implementation of appropriate mitigation measures across its operations, supply chain, financial systems, and compliance environment.

The Company has in place adequate mitigation plans for the aforesaid risks and also takes various initiatives for the same. The concerned risks are reviewed from time-to-time alongwith the effectiveness of the mitigation strategies and their implementation process.

The Board of Directors and the Audit Committee periodically review the Companys risk management framework to ensure that emerging risks are effectively managed while supporting sustainable business growth.

E. FINANCIAL REVIEW

FY2025-26 was a year of strong operational execution for Vilas Transcore Limited, supported by higher production volumes, expanded manufacturing capabilities and sustained demand from the transformer and power equipment industry. The Companys financial performance reflects the successful execution of its growth strategy while maintaining financial discipline amid a dynamic operating environment.

Revenue

Revenue from Operations increased to 460.67 crore in FY26 from 353.05 crore in FY25, registering a growth of 30.5%. The increase was primarily driven by higher sales volumes following the expansion of manufacturing capacity and continued demand from transformer manufacturers. The Companys broader manufacturing capabilities and diversified product portfolio further strengthened its ability to address customer requirements across multiple transformer component categories.

Profitability

EBITDA stood at 51.50 crore during FY26 compared with 44.80 crore in the previous year registering nearly 15% growth though the EBITDA margin moderated to 11.2% from 12.7%. The moderation in margins was primarily attributable to volatility in CRGO steel prices during the year coupled with the initial operating costs associated with newly commissioned facilities and ramp up expenses. These factors are expected to normalise as CRGO prices stabilize and capacity utilisation improves giving the Company benefits from higher operating leverage.

The improvement in profitability despite moderation in margins demonstrates the resilience of the Companys operating model and its continued focus on operational efficiency, cost management and disciplined execution despite temporary margin pressures.

Financial Position

The Company continues to maintain a prudent financial position supported by disciplined capital allocation, efficient working capital management and a strong focus on operational cash flows. Strategic investments undertaken during the year have strengthened the Companys manufacturing platform while maintaining financial stability, positioning the business to support future growth and improve returns over the medium term.

F. INTERNAL CONTROL SYSTEMS

Vilas Transcore Limited has established a robust internal control framework that is commensurate with the size, scale and complexity of its operations. The Companys internal controls are designed to ensure the orderly and efficient conduct of business, safeguard assets, maintain the accuracy and reliability of financial reporting, ensure compliance with applicable laws and regulations, and support effective risk management.

The internal control framework encompasses all key business functions, including procurement, manufacturing, inventory management, finance, sales and statutory compliance. Standard operating procedures, defined authority levels and regular process reviews promote operational efficiency, accountability and consistency across the organisation.

The Company has an independent internal audit mechanism that also periodically reviews the adequacy and effectiveness of internal controls across business operations. The observations and recommendations of the internal auditors are reviewed by the management and the Audit Committee of the Board, and appropriate corrective actions are implemented wherever necessary.

The Audit Committee also oversees the Companys financial reporting process, compliance framework and internal control environment to ensure transparency and sound corporate governance.

The Company is also rolling out a comprehensive Enterprise Resource Planning (ERP) system in a phased manner across functions to further strengthen its internal control environment and enable a higher degree of system-based checks and controls ensuring protection of its assets and interests.

The management believes that the existing internal control systems are adequate and effective and continue to provide reasonable assurance regarding the reliability of financial reporting, operational efficiency and compliance with applicable statutory and regulatory requirements.

The statutory auditors of the Company have also confirmed the adequacy and effectiveness of internal financial controls, further reinforcing stakeholder confidence in the Companys governance practices and their effectiveness and reliability.

G. HUMAN RESOURCES & INDUSTRIAL RELATIONS

People remain at the core of Vilas Transcores growth journey. As the Company continues to expand its manufacturing capabilities and diversify its product portfolio, it remains committed to building a skilled, capable and future ready workforce that supports operational excellence, innovation and sustainable business growth.

The Company continues to invest in strengthening technical capabilities through structured training, skill development and continuous learning initiatives across its manufacturing and support functions. A performance driven work culture, supported by collaboration, accountability and continuous improvement, enables employees to contribute effectively towards achieving the Companys strategic objectives.

The Company is committed to providing a safe, healthy and inclusive work environment across all its operations. Strong emphasis is placed on workplace safety, employee well being, ethical business practices and regulatory compliance. The Company also fosters open communication and employee engagement, creating a positive work environment that encourages teamwork, innovation and professional growth.

Industrial relations remained cordial and harmonious throughout the year with zero man-days lost due to disputes. Regular engagement sessions and leadership development initiatives were conducted to maintain transparency and build trust across all levels of the organization.

The continued dedication and commitment of employees played a significant role in the successful execution of the Companys expansion initiatives and operational performance during FY26.

The Company continues to strengthened its recruitment efforts during the year, onboarding fresh talent and experienced professionals across various segments. As on March 31, 2026, the Companys total workforce (including contract and indirect personnel stood at 520 up from 322 as of 31st March, 2025, reflecting our continued focus on building organizational depth in human capital.

H. BUSINESS OUTLOOK

The outlook for the transformer and power equipment industry remains positive, supported by sustained investments in power transmission and distribution infrastructure, increasing electricity demand and the continued transition towards a more efficient and resilient power ecosystem. These structural drivers are expected to create long term opportunities for manufacturers with strong engineering capabilities, diversified product offerings and scalable manufacturing platforms.

Having completed a significant phase of manufacturing expansion and portfolio diversification, Vilas Transcore enters FY27 with enhanced operational capabilities and a stronger foundation for future growth. The Companys immediate priorities include improving capacity utilisation across its manufacturing facilities, scaling its newer product businesses, enhancing operational efficiencies and continuing to strengthen customer relationships across domestic and international markets.

The Company remains committed to investing in technology, product development and manufacturing excellence to address evolving customer requirements and industry standards. Supported by prudent capital allocation, strong governance practices and a disciplined approach to execution, management remains confident in the Companys ability to deliver sustainable growth while creating long term value for all stakeholders.

I. CAUTIONARY STATEMENT

Statements contained in this Management Discussion and Analysis describing the Companys objectives, expectations, estimates, projections or outlook may constitute forward looking statements within the meaning of applicable laws and regulations. These statements are based on assumptions and expectations that the Company believes to be reasonable at the time of preparation. However, actual results may differ materially from those expressed or implied due to various factors beyond the Companys control, including but not limited to changes in economic conditions, government policies, industry developments, raw material prices, competitive intensity, supply chain disruptions and other risks affecting the business environment.

The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events or otherwise. Readers are advised to exercise their own judgment and are advised to consider these statements in conjunction with the Companys Financial Statements, Notes thereto and other disclosures forming part of this Annual Report, for a more comprehensive view of the Companys performance and prospects.