Wonder Electricals Ltd Management Discussions

ECONOMIC REVIEW & OUTLOOK

The year 2024 emerged as a politically significant period, marked by landmark elections in countries like India, the United States, and Indonesia, which collectively influenced the global policy landscape. In India, the ruling government secured a third consecutive term, reinforcing political stability and signalling continuity in its economic and strategic direction amid global volatility.

On the economic front, 2024 presented a mixed picture of recovery. While the services sector demonstrated resilience, the manufacturing sector continued to struggle, especially in regions such as Europe and parts of Asia, where lingering supply chain disruptions and weakened external demand weighed on growth. Additionally, geopolitical instability notably the Russia-Ukraine conflict and ongoing tensions in the Middle East added further pressure on global financial and commodity markets, amplifying uncertainty for policymakers and investors alike.

In 2024, the global economy expanded at a moderate pace of 3.3%, according to the IMF, reflecting a phase of relative stability despite continued constraints on growth. As 2025 progresses, the global environment is undergoing a period of significant transition, with countries reassessing their policy priorities in response to rising geopolitical tensions and deepening economic headwinds.

The United States has introduced a series of additional tariff measures, triggering swift and firm responses from major trading partners. This escalation has resulted in widespread tariff increases across major economies, driving effective tariff rates to historic highs and exerting considerable pressure on global GDP. The situation has been further complicated by the abrupt and unpredictable nature of these policy shifts, which has sharply increased economic uncertainty and destabilized the short-term outlook. Amid these developments, global headline inflation is now expected to ease at a slower pace than earlier projected.

According to the International Monetary Funds most recent forecasts, global inflation is projected to decline to around 4.2% in 2025 and further to approximately 3.6% in 2026, reflecting a gradual but steady easing of price pressures. This updated outlook underscores a divergent inflation trajectory advanced economies are seeing upward revisions, largely due to prolonged services inflation, while emerging markets and developing economies are registering modest downward adjustments.

Global inflation eased to 5.8% in 2024 from 6.7% in 2023, supported by moderating demand, stable crude oil prices, and the gradual resolution of earlier supply chain disruptions. According to the International Monetary Fund (IMF), the decline in inflation reflects the combined effect of tighter monetary policies across economies and improving supply-side dynamics. In response to evolving macroeconomic conditions, several governments introduced targeted initiatives such as infrastructure development programs, social welfare measures, and corporate incentive schemes aimed at stimulating domestic economic activity and cushioning the impact of ongoing geopolitical risks.

The economy of India achieved an estimated 6.5% growth in GDP during FY 2025. This robust performance was the result of a thriving services sector, expedited urbanization, clean energy transition and moderate domestic consumption. The governments strategic initiatives, particularly the Production Linked Incentive (PLI) scheme and substantial infrastructure investment budget of 10.2 trillion, continue to serve as key economic catalysts.

India demonstrated effective fiscal management by containing its deficit at 4.8% of GDP, creating additional fiscal space for the government to enhance public expenditure and stimulate economic growth. Additionally, the Reserve Bank of India shifted to an accommodative monetary stance. In February, the RBI reduced the repo rate from 6.5% to 6.25%, further reducing it to 5.5% in June, injecting liquidity, enhancing credit accessibility and augmenting consumer spending.

INDUSTRY OVERVIEW

The Electrical Consumer Durables (ECD) segment in India

The Indian Electrical Consumer Durables (ECD) industry continued to exhibit strong growth momentum in FY 2024 25, supported by a combination of sustained consumer demand, government-led infrastructure expansion, and rising disposable incomes. Within this segment, the fans industry remains one of the most significant categories, driven by widespread electrification, the growing emphasis on energy efficiency, and rapid urbanisation. Industry reports, including those from the Indian Brand Equity Foundation (IBEF), project the overall Consumer Electronics and Appliances sector to rank among the top five globally by 2025, with India emerging as a manufacturing hub under the Make in India and Atmanirbhar Bharat initiatives.

The ceiling fan market has benefited from policy-driven rural electrification programmes such as

Saubhagya Yojana and Deen Dayal Upadhyaya Gram Jyoti Yojana, which have significantly expanded electricity access in rural areas, creating vast new customer bases. Meanwhile, in urban markets, rising aspirations, the growth of the organised retail sector, and the rapid adoption of e-commerce have accelerated the shift towards branded, premium products with aesthetic appeal and advanced technology. The increasing popularity of BLDC motors, remote-controlled features, and smart connectivity has redefined consumer expectations, while the focus on energy conservation, reinforced through the Bureau of Energy Efficiencys (BEE) star labelling programmes, has driven replacement demand for older, less efficient models.

Furthermore, allied sectors such as real estate, hospitality, and infrastructure development have created sustained institutional demand for high-quality fans, exhaust systems, and ventilation solutions. The interplay of these structural factors indicates that the Indian fans industry is poised for long-term growth, with opportunities for manufacturers who can combine innovation, quality, and competitive pricing.

OPPORTUNITIES

Expansion of Energy-Efficient Product Portfolio-The growing emphasis on energy conservation offers significant scope to expand BLDC and star-rated fans. Consumers are increasingly aware of lifecycle cost savings, making efficiency a decisive purchase factor.

Premium and Designer Models-Urban households and commercial establishments are showing a preference for aesthetically appealing, technologically advanced products. Expanding premium lines with unique designs, finishes, and smart features can cater to this aspirational segment.

Rural Electrification and Penetration into Tier-II & Tier-III Markets-With government initiatives ensuring consistent electricity supply in rural and semi-urban areas, untapped geographies present substantial growth potential. Competitive pricing and durable models tailored for these markets can drive volumes.

Institutional and Project Sales-Large-scale demand from builders, hospitality chains, and government housing projects presents an opportunity for bulk supplies and long-term contracts.

Backward Integration and Component Manufacturing-Setting up in-house manufacturing of PCB boards and other components, as planned under the Companys LLP venture, will enhance quality control, reduce dependence on external suppliers, and improve cost efficiency.

E-Commerce and Omnichannel Presence-The rapid rise of online marketplaces provides a cost-effective way to reach new customers. A strong omnichannel strategy integrating physical distribution with digital platforms can increase brand visibility and market share.

THREATS

Economic Downturns:

? Consumer Spending: Economic instability can lead to reduced consumer spending on non-essential items, affecting sales.

High Competition:

? Price Wars: High competition from both domestic and international manufacturers can lead to price wars and reduced profit margins. ? Substitute Products: Competition from alternative cooling solutions like air conditioners or evaporative coolers.

Raw Material Costs:

? Fluctuating Prices: Volatility in the cost of raw materials (e.g., metals, plastics) can impact production costs and pricing strategies.

Regulatory Challenges:

? Compliance: Adhering to varying regulatory standards and certifications in different markets can increase operational complexity and costs. ? Environmental Regulations: Stricter environmental regulations may require additional investments in sustainable practices and technologies.

Supply Chain Disruptions:

? Logistics Issues: Disruptions in the supply chain, such as those caused by geopolitical tensions or pandemics, can impact production and delivery.

Power disruptions:

? Electricity: Any impact on power distribution and electricity delivery can impact the demand for electrical products. Availability of stable and quality power supply continues to be an important factor for the industrys growth prospects.

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 segment.

OUTLOOK

The government is focused on export growth through strengthening bilateral relations and is maintaining a vigilant stance on the shifting global tariff scenario to craft a calibrated response, amid growing global geo-economic fragmentation. Further, it is committed to achieving domestic manufacturing excellence through initiatives like ‘Make in India. Overall, these initiatives by the government create a balanced growth model.

The Company remains confident about the long-term growth prospects of the electrical consumer durables sector, particularly the fans segment, supported by strong fundamentals such as rising disposable incomes, continued rural electrification, urban housing growth, and increasing consumer preference for branded, energy-efficient products. In FY 2025 26, the focus will remain on strengthening the product portfolio with innovative and value-added offerings, especially in the BLDC and premium categories, while also expanding presence in untapped Tier-II, Tier-III, and rural markets. Strategic investments in technology, backward integration through in-house PCB manufacturing under the newly formed LLP, and enhancement of digital and modern trade channels are expected to improve operational efficiency and market penetration. The Company will continue to optimize its cost structure, maintain prudent financial management, and focus on quality and service excellence to strengthen brand equity. While mindful of potential challenges such as raw material price volatility and competitive pressures, management believes that the Companys diversified distribution network, robust supply chain, and ongoing R&D initiatives will position it well to deliver sustainable growth and value to shareholders in the coming years.

RISKS & CONCERNS

Your Company has a well-framed and robust internal financial control system in place which governs the risk management and governance. A structured risk management system permits the management to take calibrated risks, which provides a holistic view of the business wherein risks are identified in a structured manner from a top-down to the bottom-up approach. The twin purpose of Enterprise Risk Management is to mitigate the adverse impacts and seize the market opportunities to sustain business growth and maintain a competitive edge in the industry.

Key risks of your Company include business risk, operational risk and external risk. Your Company regularly oversees and monitors the risks in line with the industry best practices. Your Company endeavors to attain cost control, expand customer base, and produce premium and innovative products to fulfil evolving customer requirements.

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, 2025.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial performance for the year ended 31st March, 2025 is summarized below:

(Amount: Rs. in Lakhs)

Particulars	2024-25	2023-24
Revenue from Operations	89,450.12	56,999.02
Other Income	42.72	3.12
Total Revenue	89,492.84	57,002.14
Earnings Before Interest, Taxes, Depreciation and	3,919.14	2,466.17
Amortization Expense (EBITDA)
Finance Cost	677.90	433.31
Depreciation & Amortization Expenses	711.07	580.46
Profit before Tax	2,530.17	1,452.40
Tax Expenses:
a) Current year	649.57	436.14
b) Deferred Tax (Asset)/Liabilities	-21.12	0.67
Profit after Tax	1,901.72	1,015.59
Prior period expense
CSR Expenditure of previous year Incurred		-
Profit after Tax	1,901.72	1,015.59
Basic EPS (Rs.)	1.42	7.58
Diluted EPS (Rs.)	1.42	7.58

* 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 1136 as at the financial year ended on 31st March 2025.

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 2024-25 vis-?-vis Financial Year 2023-24 are as below:

Particulars	Financial Year 2024-25	Financial Year 2023-24	% Change
Debtors Turnover	3.62	3.02	19.87%
Inventory Turnover (On	12.78	10.04	27.29%
Cost of Goods Sold)
Current Ratio	1.19	1.15	3.48%
Interest Coverage Ratio	4.73	4.38	7.99%
Debt Equity Ratio	2.98	3.01	-1.00%
Operating Profit Margin	3.58%	3.30%	8.48%
Net Profit Margin	2.12%	1.78%	19.10%
Return on Net Worth	22.84%	14.95%	52.78%

Inventory Turnover ratios: As the Company has recorded higher production and has reduced its Inventory levels, hence inventory turnover ratio is increased.

Return on Net Worth: Due to increase in turnover, efficiency in administrative cost, return on Net Worth ratio has been improved

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, 2024-25.

For and on behalf of the Board of Directors

Wonder Electricals Limited

Sd/-

Harsh Kumar Anand

Chairman

DIN:00312438

Place: Delhi

Date: 12.08.2025