RMC Switchgears Ltd

Navigating Forward: Reflections from the Chairman

Mr. Ashok Kumar Agarwal Chairman & Managing Director

Dear Shareholders,

As we conclude another fiscal year at RMC Switchgears Limited, I am delighted to share that our journey through India's dynamic economic landscape has been characterised by strategic foresight and robust performance. Our vision to elevate RMC into a '5,000+ crore enterprise by 2030 is practicably achievable and carefully calibrated to seize the massive opportunities presented by the Indian market. India's accelerating infrastructure development, increased investments in renewable energy, and governmental push towards smart cities present significant opportunities for our tailored solutions in power technology and smart metering.

India's commitment to upgrading its ageing power infrastructure and increasing electricity penetration across its diverse regions offers us a substantial market for our advanced metering infrastructure (AMI) and distribution automation products. Moreover, the Government's initiative to reduce electricity theft and improve distribution efficiency aligns perfectly with our product offerings, allowing us to integrate our innovative solutions into the broader national agenda.

Furthermore, the rising demand for sustainable and efficient energy solutions mirrors our strategic enhancements in product development. By focusing on these areas, we align ourselves with domestic trends, such as the shift towards sustainable urban development and the Smart Cities Mission, which aims to create 100 smart cities nationwide.

Our unique position in this burgeoning market allows us to leverage these developments, ensuring that our strategic efforts not only meet the current demands but also anticipate future needs, thus securing long-term growth and sustainability. This strategic alignment with national priorities and market demands positions RMC to successfully navigate the complexities of the Indian market and tap into its full potential.

INDIA'S ECONOMIC GROWTH AND RMC'S PERFORMANCE

As the Indian economy charts a cautiously optimistic growth of 7.3%, building on the previous year's 7.2% increase, RMC Switchgears stands ready to navigate and harness the economic opportunities that arise from India's rapidly growing economy. While Moody's upgrade of India's GDP growth to 6.8% reflects a robust manufacturing sector and significant infrastructure investments, we are calibrating our business model, strategically steering our product mix toward higher-margin offerings in alignment with this growth. Our revenue ascent to '172.63 crore is a deliberate result of these strategic manoeuvres, ensuring our expansion mirrors the constructive trends within the burgeoning domestic economy.

This fiscal prudence, paired with the Government's commitment to bolstering growth through an 11.1% increase in the capital expenditure budget for FY 24-25, positions RMC to leverage the promising economic backdrop. These budgetary provisions, including the novel fifty-year interest- free loan for state capital expenditures, lend further optimism to our prospects.

Our success is inextricably linked to India's focus on strengthening its infrastructure and the impetus provided by initiatives such as 'Make in India'. These have not only fueled the manufacturing sector but have also broadened the scope for innovations and digital advancements, aligning with our growth initiatives. However, in acknowledging these opportunities, we also maintain a sense of caution, recognising the need to remain agile and responsive to the ever-evolving economic landscape.

As we harness the unfolding opportunities in the vibrant Indian market, our financial health is robust, evidenced by encouraging trends across key economic performance indicators. Our EBITDA margin stands at solid 17.98%, which speaks to our team's operational excellence and the strategic cost-saving measures we have implemented. Equally encouraging is the 26.83% increase in our Profit After Tax (PAT), a marker of our profitability and product strategy focus. This fiscal prudence has yielded fruits, with our Return on Equity (ROE) of 26.93% underscoring our commitment to delivering value to our shareholders.

STRATEGIC ORGANISATIONAL STRENGTH & DIVERSIFICATION

This year has been pivotal in making significant leadership changes to strengthen our management capacity in strategic finance, research, operations, and business development initiatives. We have appointed Anand Chaturvedi as our new CFO. With approximately 30 years of post-qualification experience in leading industries, he will bring fresh perspectives to our financial planning and strategy execution. I look forward to his expertise in refining our capital management and profitability approaches, as well as bolstering our governance frameworks.

We also welcomed Mr. Sajal Kumar Ghosh as our Chief Growth Officer, who brings over three decades of experience in the manufacturing sector to our team. His expertise is particularly relevant as we navigate India's growing economy, and his role in product development is poised to sharpen our competitive edge. Additionally, the appointment of Dr. Akhilesh Kumar Jain as Chief Mentor, now serving as Director, brings substantial knowledge in electronics and IT to our company, complementing our technology and sustainability strategies. The appointment of Mr. Manish Mantri as Chief Operating Officer further strengthens our leadership team, leveraging his extensive experience in operations management to drive efficiency, innovation, and growth across our business operations.

As we venture into new territories,

I'm excited to share that RMC is now foraying into water management.

With the inauguration of Intelligent Hydel Solutions Private Limited, a majority-owned subsidiary geared towards addressing India's pressing water management challenges, RMC is committed to deploying smart, IoT-enabled solutions to streamline water distribution, treatment, and conservation efforts. This step represents a significant diversification for RMC, emphasizing our role in providing essential services and our commitment to sustainable development initiatives across India. With the launch of Intelligent Hydel Solutions, we aim to enhance the country's water resource management and contribute to its journey towards environmental sustainability and intelligent infrastructure.

EXPANSION AND GROWTH STRATEGY

RMC Switchgears is strategically positioned for expansion, aiming to secure a significant share of the Government's extensive '11 lakh crore infrastructure budget. With a robust order book exceeding '500 crores, driven by substantial EPC contracts, we are confidently moving forward.

To meet the rising demand spurred by the Revised Distribution Sector Scheme's focus on smart meters, we are proactively increasing our annual capacity for Smart Metering Enclosures to 300,000 units. This expansion is not just a response to current demand but a forward-looking decision, supported by a '15 crore investment from our reserves and loans. It underscores our commitment to leading advancements in India's energy sector.

Moreover, we are in discussions with industry leaders to secure contracts that will further strengthen our position in the utility sector. The anticipated extension of our Cash Credit (CC) limits by an additional '25 crores highlights our commitment to managing and executing large-scale projects with exceptional efficiency. This financial strategy is designed to support our expansive projects, enabling us to maintain a sustainable and responsible growth trajectory.

GRATITUDE AND FUTURE DIRECTIONS

As we advance, our strategies aim to sustain and propel our growth forward. The unwavering trust and support from you, our esteemed shareholders, lay the groundwork for our ambitious plans. I would also like to extend my deepest gratitude to our dedicated employees, whose relentless commitment and hard work continue to drive our achievements. With the combined efforts of our exceptional team and the confidence vested in us by our shareholders, we will steer through the future, capitalising on new opportunities and surmounting any challenges that come our way.

Thank you for your steadfast support and commitment to our collective success.