Wonder Electricals Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

ECONOMIC REVIEW & OUTLOOK

The financial year 2025-26 was characterised by heightened geopolitical uncertainty, evolving trade dynamics, and a gradual moderation in inflation across several economies. Global economic activity remained resilient despite significant headwinds arising from geopolitical conflicts, elevated trade barriers, and changing monetary policy stances. The ongoing conflicts in the Middle East, the Russia- Ukraine war, and persistent global supply chain disruptions continued to weigh on business confidence and international trade.

During the year, several major economies introduced policy measures aimed at protecting domestic industries, resulting in higher tariff barriers and increased uncertainty in global trade. These developments, coupled with volatile commodity prices and tighter financial conditions, affected investment decisions and moderated global growth prospects.

According to the International Monetary Fund (IMF), the global economy is projected to grow by 3.1% in 2026, reflecting slower expansion amid geopolitical tensions and trade-related uncertainties. Global inflation is expected to remain elevated in the near term due to rising energy prices and supply-side disruptions before gradually moderating in 2027. The IMF has highlighted that downside risks continue to dominate the global outlook, with prolonged geopolitical conflicts, trade fragmentation, and financial market volatility posing significant challenges to sustainable economic growth.

Despite these global challenges, the Indian economy continued to demonstrate remarkable resilience during FY 2025-26. Strong domestic demand sustained public capital expenditure, robust services sector performance, increasing manufacturing activity, and continued digital transformation supported economic growth. Government initiatives such as the Production Linked Incentive (PLI) Scheme, PM Gati Shakti, National Infrastructure Pipeline, and continued investments in infrastructure and renewable energy strengthened Indias medium-term growth prospects.

India maintained its position among the fastest-growing major economies, supported by prudent fiscal management, resilient banking and financial sectors, healthy tax collections, and sustained private consumption. Inflation remained broadly within the Reserve Bank of Indias tolerance band for most of the year, enabling the central bank to maintain a balanced monetary policy approach focused on sustaining growth while ensuring price stability.

Looking ahead, Indias long-term economic outlook remains favourable, supported by strong demographic fundamentals, expanding manufacturing capabilities, increasing digital adoption, structural reforms, and the Governments continued focus on infrastructure development and the vision of Viksit Bharat 2047. However, global geopolitical developments, commodity price volatility, and international trade uncertainties will continue to require careful monitoring.

Source: International Monetary Fund — World Economic Outlook, April 2026.

INDUSTRY OVERVIEW

The Electrical Consumer Durables (ECD) Segment in India

The Indian Electrical Consumer Durables (ECD) industry continued to demonstrate steady growth during FY 2025-26, supported by improving consumer sentiment, rapid urbanisation, increasing household electrification, and sustained Government investments in infrastructure and manufacturing.

Rising disposable incomes, expanding residential and commercial construction activities, and greater adoption of energy-efficient appliances have continued to drive demand across the electrical appliances segment. India also strengthened its position as a preferred manufacturing destination under the Governments Make in India, Atmanirbhar Bharat, and Production Linked Incentive (PLI) initiatives, encouraging domestic production and enhancing export competitiveness.

The Indian fans industry remains one of the largest and most important segments within the Electrical Consumer Durables sector. Demand for ceiling, pedestal, exhaust, and wall-mounted fans continued to grow, driven by increasing housing demand, replacement purchases, commercial infrastructure development, and rising awareness of energy-efficient products. The implementation of stricter energy efficiency norms and the continued focus of the Bureau of Energy Efficiency (BEE) on star-rated appliances have accelerated the transition towards high-efficiency Brushless Direct Current (BLDC) fans, which offer significant energy savings compared to conventional induction motor fans.

Consumer preferences continued to evolve during the year, with increasing demand for premium products featuring smart connectivity, remote operation, decorative designs, silent operation, and enhanced durability. The rapid expansion of organised retail and e-commerce platforms has further improved product accessibility across urban as well as semi-urban markets, enabling manufacturers to reach a wider customer base.

Institutional demand from the residential, commercial, hospitality, healthcare, education, and infrastructure sectors also remained robust, supported by continued investments in real estate, industrial parks, metro rail projects, airports, data centres, and public infrastructure. Additionally, Government initiatives aimed at improving energy efficiency and sustainable development have encouraged greater adoption of technologically advanced electrical appliances across both public and private sectors.

Despite challenges arising from fluctuations in raw material prices, supply chain realignments, and global trade uncertainties, the long-term outlook for the Indian Electrical Consumer Durables industry remains highly positive. Favourable demographics, increasing electrification, rising consumer aspirations, expanding manufacturing capabilities, digital transformation, and supportive Government policies are expected to continue driving sustainable growth. The Indian fans industry, in particular, is well positioned to benefit from these structural trends, creating significant opportunities for manufacturers focused on innovation, quality, operational efficiency, and customer-centric product development.

Source: Indian Brand Equity Foundation (IBEF), Ministry of Commerce & Industry, Bureau of Energy Efficiency (BEE), and industry reports.

OPPORTUNITIES

• Growing Outsourcing by Leading Consumer Durable Brands

Leading electrical appliance brands are increasingly adopting asset-light business models by outsourcing manufacturing to experienced OEM partners. This trend presents significant opportunities for the Company to strengthen relationships with existing customers and onboard new domestic and international brands.

• Rising Demand for Energy-Efficient Fans

The increasing adoption of BEE star-rated and BLDC fans has created higher demand for technologically advanced manufacturing capabilities. The Companys expertise in manufacturing energy-efficient products positions it to benefit from this structural shift in the industry.

• Expansion in Domestic Manufacturing

Government initiatives such as Make in India, Atmanirbhar Bharat, and the focus on domestic manufacturing continue to encourage localisation of production. These initiatives provide opportunities for OEM manufacturers to expand capacities and increase supplies to established consumer brands.

• Growth in Housing and Infrastructure Development

Continued growth in residential construction, commercial real estate, hospitality, educational institutions, healthcare facilities, and infrastructure projects is expected to support sustained demand for ceiling fans and other electrical appliances, thereby increasing manufacturing opportunities for OEM suppliers.

• Backward Integration and Component Manufacturing

The Companys investment in Integrated Motion & Control LLP for manufacturing PCB assemblies and electronic components is expected to strengthen supply chain resilience, improve quality control, reduce procurement costs, and enhance manufacturing efficiency.

• Export Manufacturing Opportunities

As global companies diversify their sourcing strategies, India is emerging as a preferred manufacturing destination. The Company is well positioned to leverage its manufacturing capabilities to expand exports and develop long-term relationships with global customers.

• Operational Excellence and Capacity Expansion

Continuous investments in automation, manufacturing technology, quality systems, and production capacity provide opportunities to improve productivity, optimise costs, and cater to higher order volumes from existing and prospective customers.

THREATS

• Customer Concentration Risk

As an OEM manufacturer, the Companys business depends on purchase orders from leading consumer brands. Any reduction in orders, change in sourcing strategy, or loss of key customers may adversely impact business performance.

• Volatility in Raw Material Prices

Fluctuations in the prices of steel, aluminium, copper, plastics, electronic components, and other key raw materials may impact manufacturing costs and profitability, particularly where cost increases cannot be passed on immediately to customers.

• Intense Competition Among OEM Manufacturers

The OEM manufacturing industry remains highly competitive, with manufacturers competing on pricing, product quality, delivery timelines, manufacturing capabilities, and technological innovation, which may exert pressure on margins.

• Supply Chain Disruptions

Global geopolitical developments, logistics bottlenecks, shortages of electronic components, and disruptions in the supply chain may affect the timely availability of raw materials and components, impacting production schedules.

• Regulatory and Quality Compliance

Changes in product quality standards, environmental regulations, BEE energy efficiency norms, and customer-specific compliance requirements may necessitate continuous investments in manufacturing processes, testing facilities, and certifications.

• Technological Advancements

Rapid advancements in energy-efficient motors, smart electronics, automation, and manufacturing technologies require continuous capital investment to remain competitive and meet evolving customer requirements.

• Geopolitical and Trade Risks

Changes in international trade policies, import-export regulations, currency fluctuations, and geopolitical uncertainties may affect raw material sourcing, exports, and overall business operations.

SEGMENT-WISE OR PRODUCT WISE PERFORMANCE

As the Company has identified manufacturing/dealing/trading of ceiling, exhaust, pedestal & BLDC fans as its primary business segment, the disclosure requirements of Indian Accounting Standard 108 "Operating Segments", issued by the Institute of Chartered Accountants of India are not applicable. In the opinion of the management there does not exist separate reportable geographical segments.

OUTLOOK

The Governments continued focus on strengthening domestic manufacturing through initiatives such as Make in India, Atmanirbhar Bharat, infrastructure development, and export promotion is expected to create long-term growth opportunities for the manufacturing sector. At the same time, India continues to emerge as a preferred manufacturing destination despite global geopolitical and trade-related uncertainties.

The Company remains optimistic about the growth prospects of the electrical consumer durables industry, particularly the OEM manufacturing segment. With increasing outsourcing by leading consumer brands, the Company is well positioned to leverage its manufacturing capabilities, longstanding customer relationships, and commitment to quality and timely delivery.

Going forward, the Company will continue to focus on enhancing manufacturing capacity, improving operational efficiencies, strengthening backward integration through its PCB manufacturing venture, and adopting advanced manufacturing technologies. Supported by prudent financial management and a customer-centric approach, the Company remains confident of delivering sustainable growth while creating long-term value for its stakeholders.

RISKS & CONCERNS

Your Company has a robust internal financial control and risk management framework designed to identify, assess, monitor, and mitigate key business risks. The risk management process enables the Company to proactively address operational, financial, regulatory, and strategic risks while supporting sustainable business growth.

The key risks faced by the Company include fluctuations in raw material prices, supply chain disruptions, customer demand, technological changes, regulatory compliance, and geopolitical uncertainties. The Company continuously monitors these risks and adopts appropriate mitigation measures in line with industry best practices.

The Company remains focused on improving operational efficiency, strengthening customer relationships, enhancing manufacturing capabilities, maintaining high quality standards, and optimising costs to ensure long-term sustainable growth and create value for all stakeholders.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company implements internal controls into its daily operations as a vital part of governance. Wonder Electricals Limited has strengthened its internal control system through targeted audit plans covering several new operational areas through pre audits and interim reviews. The Company regularly fine tunes the audit processes to ensure accounting records remain reliable. This approach helps it create timely and accurate financial information that meets compliance standards. Wonder Electricals Limited risk management framework includes three key policies - Internal Financial Control, Whistle blower and Fraud Risk Framework. These tools help quickly spot various risks and bring them to senior managements attention. An independent internal auditor conducts the comprehensive audit program, presenting critical findings to the Audit Committee and Board every quarter. The Internal Audit team acts as the watchdog, making sure all control systems work properly.

Their recommendations are implemented in a timely manner by the Company. Follow up is conducted after closing each issue to maintain high standards of financial control and governance. Wonder Electricals Limited quick response approach ensures that it can address potential problems before they can grow into serious concerns.

Further, the Statutory Auditors of the Company also carried out audit of the Internal Financial Controls Over Financial Reporting of the Company as on March 31, 2026.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial performance for the year ended 31st March, 2026 is summarized below:

			(Amount: Rs. in Lakh
Particulars	Standalone		Consolidated
	2025-26	2024-25	2025-26	2024-25
Revenue from Operations	65,474.96	89,450.12	65,474.96	89,450.12
Other Income	6.04	42.72	6.04	42.72
Total Revenue	65,481.00	89,452.84	65,481.00	89,452.84
Earnings Before Interest, Taxes, Depreciation and Amortization Expense (EBITDA)	2612.75	3,919.14	2612.75	3,919.14
Finance Cost	864.24	677.90	864.24	677.90
Depreciation & Amortization Expenses	777.34	711.07	777.34	711.07
Profit before Tax	1203.83	2,530.17	1203.83	2,530.17
Tax Expenses:
a) Current year	316.75	649.57	316.75	649.57
b) Deferred Tax (Asset)/Liabilities	(24.33)	(21.12)	(24.33)	(21.12)
Profit after Tax	911.42	1,901.72	911.42	1,901.72
Basic EPS (Rs.)	0.68	1.42	0.68	1.42
Diluted EPS (Rs.)	0.68	1.42	0.68	1.42

* Previous year figures have been regrouped / re-arranged wherever necessary.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCE/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

Over the last year, HR has taken various initiatives for employee benefit and retention. Your Company recognizes the critical role of human capital in its success and is committed to investing in its workforce. The Company strives to create a welcoming, collaborative and supportive work environment that reflects its core values of integrity, collaboration, trust and care.

The industrial relations at all plants and offices remain cordial. The total number of employees on the rolls of the Company was 1090 as at the financial year ended on 31st March 2026.

Training programs are conducted depending on the needs for updating the knowledge with respect to the developments in the industry.

KEY FINANCIAL RATIOS

The Key Financial Ratios during Financial Year 2025-26 vis-a-vis Financial Year 2024-25 are as below:

Particulars	FY 2025-26	FY 2024-25	% Change
Debtors Turnover	2.50	3.61	-30.75%
Inventory Turnover (On Cost of Goods Sold)	9.13	12.78	-28.56%
Current Ratio	1.24	1.17	5.98%
Interest Coverage Ratio	2.91	8.97	-67.56%
Debt Equity Ratio	2.95	3.39	-12.98%
Operating Profit Margin	2.80	3.18	-11.95%
Net Profit Margin	1.39	2.13	-34.74%
Return on Net Worth	25.74	58.95	-56.34%

Debtor Turnover Ratio: due to the decrease in revenue from operations during the year

Inventory Turnover Ratio: The decrease is generally due to lower revenue/operating volumes during the year, resulting in comparatively lower inventory turnover.

Interest Coverage Ratio: The decrease is primarily due to lower EBITDA and profit during the year, coupled with an increase in finance costs.

Net Profit Margin: The decrease is due to the low PAT, primarily on account of lower operating profitability and higher finance costs.

Return on Net Worth: The decrease is primarily attributable to the decline in Profit After Tax.

CAUTIONARY STATEMENT

This document contains statements about expected future events, financial and operating results of your Company, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions, and other forward-looking statements may not prove to be accurate.

Readers are cautioned not to place undue reliance on forward-looking statements as several factors could cause assumptions, actual future results, and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Wonder Electricals Limiteds Annual Report, 2025-26.

	For and on behalf of the Board of Directors
	Wonder Electricals Limited
	Sd/-
	Harsh Kumar Anand
	Chairman
	DIN:00312438
Place: Delhi
Date: 12.08.2026