Voltamp Transformers Ltd Management Discussions

ECONOMY / INDUSTRY OVERVIEW :

India entered FY: 27 amid a highly challenging global environment, with escalating geopolitical hostilities in West Asia driving a sharp surge in international energy prices?Brent crude rising by 55% and Liquefied Natural Gas by 90% since the onset of the conflict. Unlike the early phase of the Russia-Ukraine war, the current crisis has disrupted trade routes and triggered supply-side constraints, with several energy extraction and production facilities going offline. As a result, energy prices are expected to remain elevated even if tensions ease, reinforced by periodic restrictions on maritime passage, higher war risk insurance premium, and elevated freight costs. This volatility in global crude oil markets has created significant uncertainty, with risks leaning towards instability rather than normalization.

For energy import-dependent economies such as India, the impact is severe. Elevated and volatile oil prices raise import costs directly and indirectly through freight, insurance, and commodity channels, adversely affecting domestic inflation, external balances, and growth prospects. Rising energy and logistics costs erode household purchasing power and business profitability, slowing growth momentum. On the external side, higher import values widen the trade and current account deficits, increasing reliance on external financing and putting pressure on foreign exchange buffers. The weakness in the Indian Rupee has compounded these challenges, with the currency depreciating 11% over the past year?including 4.7% since the conflict began?driven by weak capital flows and intensified geopolitical risks.

The global backdrop remains fragile, with the IMF projecting world GDP growth to moderate to 3.1% in 2026 from 3.4% in 2025.

The Union Budget for FY27 has sought to reinforce the Governments structural vision of infrastructure-led development. Capital expenditure has been raised by 10% to 12.2 trillion, amounting to 4.4% of GDP, with a sharp focus on infrastructure creation, manufacturing competitiveness, MSME support, and deeper localization of new-age technologies. Strategic initiatives such as Semiconductor Mission 2.0 and the development of rare earth corridors aim to enhance supply chain reliability, reduce import dependence, and integrate India more deeply into global high-value technology ecosystems. Additionally, budgetary support for critical sectors including electronics manufacturing, data centres, bio-pharma, railways, and defence is expected to build long-term domestic capabilities, strengthening Indias resilience in an uncertain global landscape.

India remains among the fastest growing economies globally, backed by resilient demand, active investment and ongoing structural reforms.

OUTLOOK OF THE COMPANY:

Until recently, the Indian economy was in a Goldilocks phase, marked by strong GDP growth of 7.6% in FY26, benign inflation averaging around 2%, a manageable current account deficit of ~1% of GDP, and steady fiscal consolidation. However, the West Asia crisis has disrupted this equilibrium, triggering sharp increases in energy prices and supply chain challenges, thereby altering the near-term outlook.

Indias power transmission sector is set for significant expansion, driven by:

• Rising peak power demand, projected to grow from ~275 GW in FY25 to 458 GW by FY32.

• Accelerated deployment of renewable energy, with a target of ~500 GW by 2030.

• The National Electricity Plan (NEP) 2022-32, which outlines a 9.16 lakh crore transmission expansion plan, including 6.60 lakh crore for interstate systems and the remainder for intrastate networks.

This strong growth trajectory is underpinned by policy support and the resilience of commissioned assets.

The ongoing grid expansion and modernization initiatives are expected to boost demand for transformers and related equipment. Key trends include:

• Transformer demand rising due to electrification, industrialization, and renewable integration.

• Healthy order books maintained by major industry players, with significant capacity expansion plans.

• Supply chain resilience becoming critical, as timely procurement of raw materials and components remains a challenge.

Companies with robust vendor networks, such as Voltamp, benefit from reliable supply chains and avoid late delivery penalties. However, with planned capacity additions across the industry, margins are expected to normalize over time.

Looking ahead, the outlook for the sector remains stable:

• Anchored by steady domestic demand and continued government support for green energy and infrastructure projects.

• Supported by ongoing grid strengthening and modernization efforts.

• Voltamp, with its healthy balance sheet and strong management team in continuity, is well-positioned to sustain growth momentum and pursue profitable growth strategy, even amid execution challenges.

Financial Performance Overview:

Over the past six years, the Company has delivered a consistent upward trajectory in revenue generation and overall financial health. This sustained performance reflects the strength of its time tested business model and adaptability in a dynamic market environment.

Net Sales and Service Revenue:

• In the current fiscal year, the Company recorded net sales and service revenue growth of 11.34%, compared to previous year.

• This increase highlights a strong market presence, cost effective execution and an expanding customer base.

• The double-digit growth underscores improved product delivery, deeper market penetration, and rising demand volumes. Overall Growth Trend:

• Over the past six years, the Company has consistently strengthened its financial performance.

• The most recent year continues this momentum, with robust double-digit revenue growth signalling sustained demand and effective operational execution.

• This trend demonstrates the Companys strategic resilience, robust business model, and adaptability to evolving market conditions.

PATH AHEAD:

Maintaining this trajectory will depend on:

• Continued innovation in products and services.

• Strong customer engagement to deepen relationships and loyalty.

• Enhanced operational efficiency to protect margins.

• Prudent financial management to balance growth with sustainability.

• Retaining and attracting managerial talent.

FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS:

The Companys future results of operations will be shaped by a dynamic mix of global and domestic factors. Internationally, moderate global growth, rising protectionist trade policies, and unresolved geopolitical tensions could disrupt supply chains, elevate input costs, and create uncertainty in business continuity.

Domestically, India offers a favourable environment, supported by strong infrastructure investment, rapid digitalization, expanding manufacturing capacity, and rising demand from green energy projects and data centres. These trends provide significant growth opportunities for the Company.

At the industry level, intensifying competition from organized players with large capacity expansion plans, coupled with aggressive pricing trends, may pressure margins. Additionally, the availability of imported materials at budgeted costs, delays in customer decision-making due to commodity price volatility, and potential policy shifts in power and infrastructure sectors remain critical variables.

To mitigate these risks and sustain profitability, the Companys strategic priorities will include enhancing operational efficiency, adopting selective order booking, and strengthening agile supply chain management. These measures will be essential in navigating uncertainties while capitalizing on Indias growth momentum.

HUMAN RESOURCES/ INDUSTRIAL RELATIONS:

The Company continues to place strong emphasis on the development of its human resources, recognizing employees as its most valuable asset. It upholds respect for individual rights and dignity, fostering a workplace culture built on trust, collaboration, and mutual respect. Throughout the year, management-employee relations remained cordial and constructive, reinforcing a spirit of teamwork across the organization.

The Company has further strengthened its learning and development initiatives, aimed at enhancing individual capabilities, driving team cohesion, and creating pathways to collective success. By nurturing a positive and employee-friendly environment, the Company remains committed to empowering its workforce with career growth opportunities, encouraging innovation, and sustaining a culture where employees can thrive and contribute meaningfully to organizational goals.

INTERNAL CONTROL SYSTE MS:

The Company has established robust internal control systems commensurate with the scale and complexity of its operations. These systems are designed to safeguard the Companys interests, ensure compliance with applicable laws and regulations, and provide reasonable assurance regarding the efficiency and reliability of operations. They also secure the Companys assets and support accurate recording and reporting of financial information, thereby reinforcing the reliability of financial controls.

The Companys internal financial controls are adequate and operating effectively, with proper mechanisms in place to ensure compliance with all relevant statutory provisions. The internal audit function covers a wide range of operational areas, assessing the reliability and suitability of policies and procedures. Internal auditors, engaged through an established external audit firm, report directly to top management via the CFO and continuously monitor adherence to prescribed systems and policies. These systems are regularly reviewed and updated to reflect evolving operational and regulatory requirements.

Oversight is further strengthened by the Audit Committee, which periodically reviews the adequacy and effectiveness of internal controls and recommends improvements to enhance governance standards. This layered framework ensures that the Company maintains strong compliance discipline, operational integrity, and financial transparency.

RISKS & CONCERNS:

The Company is currently operating in a challenging environment characterized by geo-political instability, global trade disruptions, and persistent supply chain vulnerabilities. Ongoing conflicts in West Asia have triggered supply shortages and cost escalations in critical raw material such transformer oil which remain import dependent. These pressures are compounded by heightened volatility in global commodity prices, making long-term cost forecasting increasingly difficult. For a capital goods manufacturer bound by fixed-price contracts, such unpredictability places significant strain on operational margins and can impact profitability unless effectively hedged or absorbed.

Currency volatility adds another layer of complexity. Sharp fluctuations in the Indian rupee against the U.S. dollar directly inflate import costs of dollar-denominated inputs like copper and specialty steels. In competitive bidding environments, where price variation clauses are not always feasible, this currency risk further compresses margins. At the same time, intensifying domestic competition?driven by established local players and new international entrants?is expected to normalize pricing levels. Against this backdrop, the Companys emphasis on selective order booking, prudent cost control, and supply chain diversification will be critical in mitigating these risks and safeguarding long-term sustainability.

STRENGTHS:

On the operation front, the Company benefits from strong operational diversification, with a broad client base and steady order inflows across multiple industries and regions. This balanced exposure reduces reliance on any single Business group/ houses or sector or geography, shielding revenues from localized downturns and ensuring greater stability. A key intangible strength of the Company lies in the continuity of its senior leadership team, many of whom have served long tenures. Their deep institutional knowledge and proven decision-making foster operational efficiency, seamless scalability, and strict adherence to quality and compliance standards. Moreover, this experienced leadership is instrumental in managing complex projects, nurturing customer relationships, and anticipating market shifts?capabilities that position the Company to capitalize on rising demand in infrastructure, data centres, energy, and green technology.

On the financial front, the Company demonstrates exceptional resilience, anchored by a debt-free balance sheet and a carefully managed investment portfolio. Surplus funds are prudently allocated across diverse asset classes?including debt and equity mutual funds, bonds, debentures, and tax-free instruments?providing consistent non-operational income and reinforcing liquidity buffers. This disciplined capital strategy enhances financial stability even in volatile markets. Complementing this is the Companys efficient working capital management, characterized by rigorous control over receivables, inventory, and payables. Strong operational cash flows enable the Company to self-finance growth initiatives and withstand economic disruptions without external borrowings.

SEGMENT PERFORMANCE OVERVIEW

The Company has demonstrated robust growth across its key business segments, driven by strategic investments, operational efficiencies, and favourable market conditions. The companys diverse product portfolio, encompassing oil-filled power and distribution transformers, resin-impregnated dry-type transformers, and cast resin dry-type transformers, has positioned it well to capitalize on the expanding infrastructure, data centre and green energy sectors.

Looking ahead, Voltamp s order book remains robust, with a healthy mix of domestic and international projects and time bound execution clarity. This positions Voltamp to leverage upcoming business opportunities, ensuring healthy volumeand value creation for its stakeholders.

PAN INDIA PRESENCE AND CUSTOMER OUTREACH:

With a focused approach to client servicing and market development, the Company has successfully built a robust and loyal customer base across India. Our Pan India outreach enables us to deliver customized solutions, prompt after sales service, and continuous support, leading to enhanced customer satisfaction and trust. The wide presence also supports a resilient and adaptive sales strategy, making the Company well-positioned to cater to emerging market demands while sustaining long-term relationships with our clients.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios.

KEY FINANCIAL RATIOS:

Sr. No. Particulars	Numerator	Denominator	FY 2025-26	FY 2024-25	% Variance	Reasons for variance (if +/- 25%)
1 Current Ratio (in times)	Current Asset	Current Liabilities	4.16	4.44	(6.38) %	NA
2 Debt-Equity Ratio	Total Debt	Shareholders Equity	NA	NA	NA	NA
3 Debt Service Coverage Ratio	Earnings available for debt service	Debt Service	NA	NA	NA	NA
4 Return on Equity Ratio (in %)	Net Profits after taxes	Average Shareholders Equity	18.07	22.13	(18.32)%	NA
5 Inventory Turnover Ratio (in times)	Cost of Goods Sold	Average Value of Inventory	5.07	6.01	(15.66)%	NA
6 Trade Receivables turnover ratio (in times)	Revenue From Operations	Average Trade Receivable	7.63	7.28	4.78%	NA
7 Trade Payable turnover ratio (in times)	Cost of Sales+ Other expense	Average Trade Payable	266.80	236.42	12.85%	NA
8 Net capital turnover ratio (in times)	Revenue From Operations	Working Capital	3.50	3.50	(0) %	NA
9 Net profit ratio (in %)	Net profit After Tax	Total Income	13.75	16.12	(14.66)%	NA
10 Return on Capital employed (in %)	EBIT	Capital Employed	22.59	27.33	(17.35)%	NA
11 Return on Investment (in %)	Income from Investment	Average Investment	6.00	8.09	(25.84)%	Due to mark to market loss on investment

LAST 10 YEARS FINANCIAL HIGHLIGHTS:

Year ended 31 March (Rs. in crores)	FY17	FY18	FY19	FY20	FY21	FY22	FY23	FY24	FY25	FY26
Net Sales (A)	610.94	639.02	828.83	858.58	692.31	1,127.21	1,385.10	1,161.22	1,934.23	2,153.68
Expenditure (B)	550.75	573.00	735.25	744.84	614.86	988.21	1,124.23	1,293.88	1,568.01	1,798.37
EBITDA (C-A-B)	60.18	66.02	93.58	113.74	77.45	139.00	230.87	322.31	366.22	355.31
Interest & Bank Charges (D)	0.51	0.56	0.00	0.00	0.60	0.80	0.89	2.08	1.45	1.45
Depreciation (E)	5.82	5.99	7.15	8.99	8.85	7.94	9.69	11.37	13.17	14.60
Other Income (F)	38.98	40.67	36.25	8.61	72.47	42.95	40.07	88.98	84.70	66.54
PBT (G-C-D-E+F)	92.83	100.14	122.68	113.36	140.47	173.21	260.36	397.87	436.30	405.80
Tax (H)	20.62	26.66	37.84	23.98	28.24	40.37	60.42	90.51	110.89	100.41
PAT (I=G-H)	72.21	73.48	84.84	89.38	112.22	132.84	199.94	307.36	325.41	305.39
Other Comprehensive Income/(Expenses) (OCI) (J)	(0.35)	(0.11)	0.05	(0.44)	(1.00)	0.45	0.55	(0.27)	(0.35)	0.03
Total OCI (K=I+J)	71.86	73.37	84.89	88.94	111.22	133.29	200.49	307.09	325.06	305.36
Key Ratios (%)	FY17	FY18	FY19	FY20	FY21	FY22	FY23	FY24	FY25	FY26
EBITDA Margin (L=C/A*100)	9.85	10.33	11.29	13.25	11.19	12.33	16.67	19.94	18.93	16.50
Net Margin (M=K/(A+F)*100)	11.00	10.79	9.81	10.26	14.54	11.39	14.07	18.01	16.10	13.75

CAUTIONARY STATEMENT:

Statements in this report on Management Discussion and Analysis relating to the Companys objectives, projections, estimates, expectations or prediction may be forward looking within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events. By their nature, forward-looking statements require the company to make assumptions and are subject to change based on risks and uncertainties. Actual results might differ materially from those expressed or implied depending upon factors such as climatic conditions, global and domestic demand-supply conditions, finished goods prices, raw materials cost and availability, foreign exchange market movements, changes in Government regulations and tax structure, economic and political developments within India and the countries with which the Company has business and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.