From The ED’s Desk About Us

Dear Shareholders,

In June 2025, the World Bank reduced its projection of growth for the Indian economy to 6.3% in FY 26. This is down 40 basis points from their estimate in January. Rising global trade barriers, weaker activity with key trading partners, strained supply chains, and worldwide policy uncertainty have contributed to this. However, India will still be the fastest growing large economy as per the World Bank’s Global Economic Prospects report. Global growth is expected to be fairly muted in the coming year. Moderated activity in India too is reflected by a slowdown in industrial production.

The Transformer division topline has grown by 6% for FY 24-25 and PBT has increased reasonably. There has been a deep focus on commercial oversight and this has contributed to the division having one of the lowest levels of working capital ever seen by us. This has resulted in significant cash generation for the company. A diversified customer base, and a targeted business development effort have been the key drivers to this improving statistic for a few years now. The unexecuted order book is at an all-time high and is up 32%. The challenge now is to increase capacity in a rapid manner to satisfy the current market demand. A large expansion is underway to cater to this. In the meantime we have been working on innovative productivity initiatives that may lead to significant increases in capacity. We are also scaling up the organization to be future ready in terms of technology and manpower. Global uncertainty has affected raw material availability and we are working to mitigate this effect.

The Motor division topline was down 4% despite an increase in sales numbers by 6%. We have been able to grow the business and protect market share despite price erosion. There has been a slowdown in industrial demand over the last couple of quarters. The reasons for this could be due a change in consumption patterns or a cut back on capital expenditure by industry. It is hard to pinpoint. Overcapacity and aggressive pricing by some players have made it more challenging. We have been taking due steps to make our product offering more competitive. The ongoing design and cost optimization exercise is testament to this and it will yield good results in due course. The introduction of new products to widen our range will enhance our offering in the market. We have made good progress to further increase our presence in targeted market segments such as HVAC, water, ethanol, and railways. As the capital expenditure cycle picks up we expect to see an improvement in price levels but this is hard to predict.

In the Projects division topline growth has been flat. There was a large order from a semi-government organization that was substantially delayed and this affected revenue growth. We have worked hard to expand our order booking capability and results are apparent from the approximately 101% rise in our unexecuted order book as of the financial year ended March 2025. We have targeted and received orders from reputable companies in oil & gas, data centers, and certain semi-government companies. Besides this we are also focusing on the renewables, steel, and cement sectors. The division has also increased its expertise in large scale projects, as has been demonstrated in the last few years. Negative working capital has been a consistently achieved target. In the coming year we will target a substantial increase in our order book and look to grow the division’s execution capability.

The topline in the Drives and Automation division has remained the same. E-mobility has been a target area for us and we have been successful in getting some prestigious orders from vehicle manufacturers. In this regard the local assembly and sourcing of certain parts will enable us to fulfill the Domestic Value Addition requirements of our customers. The plastics industry continues to be our main market segment, and we are looking to develop a larger presence in other segments like material handling, metals, packaging and printing. The recent appreciation of the Euro against the Rupee has affected us and is cause for concern. Efforts to mitigate this impact are underway.

Revenue has grown 14% in the Magnet Technology Machines division. While demand for gearless elevator machines has increased, fierce competition from Chinese and domestic players have kept margins subdued. The in-house developed servo motors have been functioning well for some time now and this has been very encouraging. The ongoing trade war has had deep ramifications on the international supply chain. China has choked the supply of rare earth magnets and this has wreaked havoc in multiple industries. These magnets are an essential component of our product. Although we have increased inventory of these parts they will only last so long. Hopefully a resolution to this issue in the not so distant future will bring relief to all concerned.

The world economy today is plagued with uncertainty and has endured a series of unprecedented shocks. Trade disputes, wars, geopolitical unrest, and demographic issues have all contributed to underwhelming growth projections for the near future. Global growth is expected to slow to 2.8% according to the World Bank. This is the lowest projected growth rate since 2008. Overdependence on China is huge risk that the world is grappling with. It would be fair to expect most countries to reduce this over-reliance and restart the manufacturing of certain critical items. However, this will take time and in the meanwhile many industries will face consequences if China does not ease up on restricted exports. World Bank Chief Economist Indermit Gill summed it up - "International discord—particularly over trade—has upended many of the policy certainties that helped shrink extreme poverty and expand prosperity after the end of World War II".

The Modi government has done well to not overreact to the recent tariff increases imposed by the Trump administration. India’s exports to the USA are not more than 2% of GDP. So, it should not impact us in a big manner. It is affecting us in different ways indirectly through the supply chain. Falling inflation has prompted the RBI to cut rates and this swift response should augur well for the economy. In order to achieve stable economic growth however, the government needs to focus on efforts that boost consumption. Policies that focus on increasing disposable income and keeping inflation in check will need to be sustained.

As always we remain positive and look to the future.