Hitachi Energy India Ltd Management Discussions

Economic overview: India s energy-led growth story

India economy

This year marked a perceptible inflection point in the Indian economy - a dynamic geopolitical environment, exponential growth in the energy requirements of the country and a supportive regulatory and policy ecosystem put energy security at the heart of economic growth.

Rising manufacturing capabilities, digitalization, transportation electrification, infrastructure expansion and urbanization continue to shape investments across the power value chain. At the same time, efforts to diversify energy sources and strengthen domestic potential are supporting the country s broader objective of enhancing energy security and reducing exposure to external disruptions.

The geopolitical dimension of energy is now intersecting with another defining force of this time - technology. India s digital economy is scaling rapidly. Artificial intelligence, cloud computing and data centers are fueling electricity demand. Unlike traditional industries, these sectors require uninterrupted quality power. In this context, energy is becoming a competitive differentiator. India is clearly on route to gradually emerging as an electrostate .

The Government s continued focus on strengthening the power sector through policy support, infrastructure development initiatives and measures aimed at accelerating the energy transition, has created a conducive environment for long-term sectoral growth. Trade and economic cooperation agreements with global partners are also supporting technology access, investment flows and the development of a more integrated energy ecosystem.

India s energy transition agenda remains centered on expanding the share of cleaner energy sources while ensuring a reliable and affordable power supply. As the energy mix evolves, greater emphasis is being placed on transmission infrastructure, grid modernization, energy storage and digital technologies to support system flexibility and maintain grid stability.

With a balanced focus on economic growth, energy security and decarbonization, India continues to strengthen the foundations of a more sustainable and resilient energy ecosystem. These developments are expected to support long-term investments across the power sector and create opportunities for technologies and innovation that enable a secure, efficient and low- carbon energy future. This is a powerful contributor to the country s economic growth amongst other factors.

The outlook for the Indian economy remains positive and stable, with real GDP growth. GDP grew by 7.6% in FY 2025-26 vis-a-vis 7.1% in FY 2024-25, supported by strong domestic demand, income tax exemptions, GST rationalization and an accommodative monetary policy. In a global outlook increasingly shadowed by the conflict in West Asia, the International Monetary Fund (IMF) positions India as one of the few resilient economies.

The country s growth trajectory continues to be supported by rapid urbanization, expanding infrastructure development and increasing industrial activity. As cities expand and economic activity broadens across sectors, the need for reliable, efficient and sustainable power infrastructure has become increasingly important to support long-term economic development.

Sustained government infrastructure expenditure, alongside steadily rising private sector investments, will anchor this expansion, complemented by a strengthening manufacturing foundation. The services sector anticipates continued consistent performance, reinforcing structural economic resilience.

India s energy sector sits at the heart of its economic transformation, shaped by a powerful convergence of sustained GDP growth, structural demand expansion, progressive policy support and an accelerating sustainability agenda.

India steadily catching up with the world averages on key energy and economic indicators to 2050

Per capita energy and economy indicators in India relative to the world average (steps scenario, 2015-2050)

Indian power sector development 1 - 2 - 3 India s power sector is undergoing a once-in-a- generation transformation, driven by structural demand growth, policy acceleration and a decisive shift toward electrification and decarbonization. The sector today represents a large and expanding total addressable market (TAM), spanning generation, transmission and distribution networks, emerging technologies and end- use industries.

FY 2025-26 marked a defining year for the sector, reflecting both resilience and rapid structural progress. India successfully met a peak power demand of 242.49 GW, while energy shortages declined sharply to 0.03%, indicating strong supply reliability. Power availability has improved significantly across the country - rural supply increased from 12.5 hours in 2014 to 22.6 hours in 2025, while urban areas now enjoy over 23 hours of daily supply, highlighting near-universal access and enhanced service quality.

Two major milestones underscore the scale of this transformation:

Total installed power capacity surpassed 520

GW as of March 2026 - more than doubling from 249 GW in 2014.

Renewable energy crossed 51% of electricity demand at peak levels, marking a significant step toward a cleaner and more resilient energy system.

These achievements reflect sustained policy support, large-scale investments and coordinated execution across the power ecosystem.

India is firmly on the path to becoming a global energy leader with its groundbreaking initiatives such as universal electrification, enhanced rural power availability and the adoption of cutting-edge technologies.

Generation, including renewable energy 6

The generation segment continues to be the cornerstone of India s power sector, underpinning the country s economic growth and rising energy demand. Over the past decade, the sector has witnessed sustained capacity addition alongside a structural shift in its energy mix. While thermal power remains essential for providing baseload stability and ensuring grid reliability, the growth trajectory of the sector is increasingly being shaped by renewable energy, particularly solar and wind, driven by strong policy support, competitive auction mechanisms and improving cost economics.

India s electricity generation has expanded significantly from 1,168 billion units (BU) in FY 2015-16 to 1,845.9 BU in FY 2025-26, reflecting robust demand growth across industrial, commercial and residential segments. In parallel, the country s installed power capacity increased from 305 GW to 520 GW over the same period, highlighting the scale of infrastructure development and investment across the generation value chain. This expansion has been broad-based, with a clear increase in the contribution of non-fossil fuel sources, indicating a gradual but decisive transition toward a more diversified and sustainable energy mix.

As of FY 2025-26, India s installed capacity profile reflects this evolving structure. While coal continues to account for the largest share at 42.5%, renewable energy sources have significantly strengthened their position, with solar contributing 28.7% and wind 10.5% of the total capacity. Hydro, nuclear and other sources together provide additional diversification. This changing composition underscores the dual approach being followed by the sector - maintaining conventional capacity for stability while rapidly scaling up clean energy to meet long-term sustainability objectives.

India \u2019s total installed power capacity (GW)
305 GW	520 GW
2015-16	2025-26
Growth in Electricity Generation (BU)
1,168 BU	1,845.9 BU
2015-16	2025-26

This transition is even more evident in the generation mix. Total power generation in FY 2025-26 stood at 1,845.9 BU, with fossil fuels contributing 1,306.9 BU, or 70.8% of the total and non-fossil sources accounting for 538.9 BU, or 29.2%. Notably, while fossil fuel-based generation declined by 4.1% year-on-year, non-fossil generation grew by 15.7%, driven by strong growth across renewable segments. Solar and wind generation increased by over 20% and 27% respectively, while hydro and bioenergy also recorded steady growth. This divergence reflects a clear structural shift, with renewable energy increasingly contributing to incremental generation.

The Rising Share of Renewable Energy: India at the Forefront of the Global Transition

A new energy paradigm is unfolding globally, with renewable energy rapidly increasing its share in the power mix, driven by decarbonization imperatives, energy security concerns and technological advancements. Within this global transition, India has emerged as one of the most dynamic and influential markets, combining scale, speed and policy ambition to redefine its energy landscape.

India s renewable energy journey is gaining unprecedented momentum, supported by strong government push, rising electricity demand and a strategic focus on sustainability and energy independence. The country recorded a landmark addition of 55.29 GW of renewable capacity in FY 2025-26, underscoring the accelerating shift toward clean energy and positioning renewables at the center of its power sector transformation.

This rapid expansion has firmly established India as a global clean energy leader, ranking 3 rd in solar power capacity, 4 th in wind power and 4 th in overall renewable energy capacity globally. As of March 31, 2026, India s total installed power capacity stood at 520 GW, of which 283.46 GW was contributed by non-fossil fuel sources, including approximately 274 GW from renewable energy. The renewable portfolio is led by 150.26 GW of solar capacity, followed by 56.09 GW of wind power and over 51 GW of hydro power, along with contributions from bioenergy and small hydro.

This structural shift reflects the increasing dominance of clean energy within India s power system. Renewables are expected to overtake coal-fired generation as the leading source of electricity as early as CY 2025 or CY 2026, marking a historic inflection point in the country s energy mix. During FY 2025-26, India also achieved its highest-ever renewable share in electricity generation, with renewables meeting over 51% of total power demand at peak levels, highlighting both capacity scale and system integration capability.

At a global level, the transition is equally pronounced. Wind and solar generation surpassed 5,000 TWh in CY 2025 and is expected to exceed 6,000 TWh in CY 2026, with solar PV accounting for nearly 80% of incremental additions. The combined share of solar and wind in global electricity generation is projected to rise from around 15% in CY 2024 to 20% by CY 2026, reflecting the fastest growth in any energy segment over the past decade.

India s progress in renewable energy is not only about capacity expansion but also about achieving broader strategic objectives. The increasing share of non-fossil fuel sources signals a decisive move toward reducing fossil fuel dependency, strengthening energy security and building a more resilient energy framework. Importantly, this transition has been achieved alongside rising electricity demand, demonstrating the robustness and scalability of India s energy system.

The country s achievements are also reflected in its climate commitments. India has already met one of its key COP26 (Glasgow, 2021) Panchamrit targets - to achieve 50% of installed power capacity from non-fossil fuel sources by 2030 - five years ahead of schedule. This early milestone underscores the effectiveness of sustained policy support, strong institutional coordination and large-scale investment across the energy value chain.

In parallel, India continues to strengthen its energy resilience. As the third-largest producer and consumer of electricity globally, the country plays a central role in the global energy transition, with its share in global primary energy demand expected to rise significantly over the next decade. Improvements in power availability, reduction in shortages - from 4.2% in FY 2013-14 to near-negligible levels in recent years—and near-universal electrification have reinforced the reliability and inclusiveness of the power system.

Overall, the increasing share of renewable energy in India s power mix reflects a deeper structural transformation. It highlights the country s ability to align economic growth with sustainability imperatives, scale clean energy at an unprecedented pace and build a resilient, future-ready energy ecosystem.

India is not only participating in the global energy transition - it is actively shaping it.

Transmission: Enabling the energy transition 5 - 6 - 7

The transmission sector is emerging as a critical enabler of India s energy transition, poised for significant scale- up. This growth is underpinned by rising peak power demand, rapid renewable energy additions and the targets outlined in the National Electricity Plan (NEP) 2022-32. As renewable capacity expands - often in resource-rich yet remote locations - it is driving the need for substantial investments in high-capacity, longdistance transmission corridors.

Structural enablers such as Green Energy Corridors, stronger grid interconnections and enhanced crossregional transfer capabilities are expanding the addressable opportunity. At the same time, the sector is seeing increasing emphasis on grid reliability, efficiency and digitalization. The Tariff-Based Competitive Bidding (TBCB) framework has further transformed the sector,

Structural enablers such as Green Energy Corridors, stronger grid interconnections and enhanced cross-regional transfer capabilities are expanding the addressable opportunity.

driving competitive intensity, improving project quality and accelerating execution timelines.

The sector recorded robust growth in FY 2025-26, led by large-scale renewable energy evacuation projects and continued strengthening of both the InterState Transmission System (ISTS) and state networks. Significant commissioning of 765 kV and 400 kV corridors connected key renewable hubs such as Khavda (Gujarat) and Bhadla (Rajasthan) to major demand centers. Notably, over 2,300 km of 765 kV transmission lines were commissioned during the year, reinforcing the backbone of India s high-capacity national grid.

While government initiatives such as the Green Energy Corridor (GEC) and the General Network Access (GNA) framework have accelerated transmission buildout, there remains scope to further fast-track greenfield development through structured Public-Private Partnership (PPP) models. Such approaches can enable more effective risk-sharing and faster execution.

These efforts are aligned with the government s One Grid, One Nation vision, aimed at building a unified, resilient and seamlessly integrated national transmission network.

Distribution: Reforms and efficiency imperative

The distribution segment remains central to the sector s value chain, with ongoing reforms aimed at improving operational efficiency and financial sustainability. Smart metering, loss reduction initiatives and regulatory interventions are transforming the segment. As consumption scales and end-user expectations evolve, distribution utilities are emerging as key drivers of demand visibility and service innovation.

Energy storage: A new growth frontier

Energy storage is rapidly emerging as one of the most compelling growth segments within the power ecosystem, playing a critical role in addressing renewable energy intermittency and enhancing grid reliability. Battery Energy Storage Systems (BESS) are witnessing accelerated deployment driven by falling costs, policy support and the need for flexible, fast-response capacity.

At the same time, Pumped Storage Projects (PSPs) are gaining renewed momentum as viable large-scale, long-duration storage solutions, particularly suited for balancing peak demand and supporting high renewable penetration. In parallel, green hydrogen is evolving as a strategic pillar in the energy transition, offering significant potential for industrial decarbonization and positioning India as a future export hub.

Mobility: Rail, Metro and Electric vehicles

The electrification of mobility is emerging as a powerful structural driver of electricity demand in India. Large-scale initiatives such as Indian Railways ongoing electrification and the rapid expansion of metro rail networks across urban centers are significantly increasing the reliance on electric power for transportation.

In parallel, the accelerating adoption of electric vehicles (EVs) is creating a new and fast-growing demand segment. The build-out of EV charging infrastructure represents a scalable and distributed load category, unlocking opportunities across the entire power value chain—from generation and transmission to distribution and smart grid management.

As mobility transitions toward cleaner energy sources, it is not only driving incremental demand but also reshaping load patterns, necessitating investments in grid flexibility, storage integration and digital energy management solutions. This evolving landscape positions the power sector as a central enabler of sustainable mobility and long-term decarbonization.

Data centres: The digital demand multiplier 8 - 910

The rapid growth of data centers is introducing a structurally new and high-intensity demand segment within the power sector. Driven by accelerating digitization, cloud adoption and the rise of AI-led workloads, data centers are evolving into one of the fastest-growing electricity consumers globally and in India.

India s data center market is estimated at USD 11.76 billion, growing from USD 10.11 billion in CY2025 and is projected to expand at a CAGR of 16.3% to reach USD 25.07 billion by 2031. In parallel, IT load capacity is expected to increase sharply from ~4.5 GW in 2025 to ~12.5 GW by 2030, reflecting a robust ~22.7% CAGR over the period.

This growth is translating into substantial power demand expansion. Installed data center power capacity is expected to double from ~1 GW currently to ~2 GW by 2026 and further scale up to over 8 GW by 2030, implying a near five-fold increase. As a result, data centers are projected to account for ~3% of India s total electricity consumption by 2030, up from ~1% today underscoring their rising significance as a demand driver.

From an infrastructure perspective, India already hosts ~150 operational data centers with 1.2-1.5 GW capacity, having attracted investments of approximately USD 6.5 billion over the past decade. Policy support remains a key enabler, with the government granting infrastructure status to the sector and introducing incentives such as a 21-year tax holiday for foreign cloud service providers in Budget 2026-27, alongside favourable transfer pricing frameworks. A long-term policy roadmap extending to 2047 further reinforces India s ambition to become a global hub for AI and cloud infrastructure.

Importantly, data centers are highly energy-intensive - often consuming power comparable to large industrial facilities or up to 1,00,000 households per facility - creating localized, high-density load centers. This not only drives incremental demand but also necessitates reliable, high-quality and increasingly green power solutions.

Consequently, the sector Is opening multi-dimensional opportunities across 11 :

Renewable energy integration to meet sustainability mandates

Captive and hybrid power solutions for reliability and cost optimization

Energy storage and grid balancing for managing concentrated loads

Advanced transmission and digital grid solutions to ensure quality and uptime

Overall, the expansion of data centers is reshaping the demand profile of the power sector - combining scale, reliability requirements and sustainability imperatives - thereby positioning it as a key structural growth lever in India s energy transition.

Industry

The industrial growth in India too is a key driver of energy consumption in India. The demand is clearly rising. A report from IEA Electricity 2026, suggests that while India s electricity demand is expected to grow about 6.4% on an average every year until 2030, industry will contribute one third of this demand.

Exports: Expanding regional and global footprint

India is increasingly positioning itself as a global hub for power equipment manufacturing, engineering services and project execution. Export opportunities are expanding across key segments such as transformers, grid technologies and EPC services, supported by strong cost competitiveness, a skilled workforce and steadily improving technological capabilities.

In parallel, cross-border power trade is gaining momentum, strengthening India s role within the regional energy ecosystem. Power exports to neighboring countries are fostering energy security, enhancing grid integration and creating a more interconnected South Asian power market. Collectively, these trends are enabling India to expand its global footprint while unlocking incremental growth avenues for the sector.

Services: Lifecycle value creation

Beyond core infrastructure development, services are emerging as a critical and growing component of the power sector s value pool. Lifecycle services - including operations and maintenance (O&M), digital monitoring, predictive analytics, performance optimization and asset management - are gaining increasing traction.

As utilities and developers focus on maximizing efficiency, reliability and returns over the asset life cycle, service-led engagement models are becoming more prominent. This shift not only drives recurring revenue streams but also deepens customer relationships and improves long-term asset performance, making services a key strategic lever in the evolving power ecosystem.

Power trading: Market evolution and efficiency

Power trading is playing an increasingly important role in enhancing market efficiency and balancing supply- demand dynamics. The continued growth of power exchanges, real-time markets and ancillary service mechanisms is enabling better price discovery, improved liquidity and optimized grid operations.

With rising renewable energy penetration, the need for flexible and dynamic trading frameworks is becoming more critical. These mechanisms help manage intermittency, ensure grid stability and facilitate the efficient integration of diverse energy sources. As the market matures, power trading is set to become a central pillar in driving efficiency and resilience across the energy system.

Policy and regulatory environment: driving energy transition and sector transformation

The Indian power sector continues to witness strong policy momentum, with the Government implementing a comprehensive set of reforms and targeted initiatives in FY 2025-26 to accelerate the energy transition, strengthen infrastructure and enhance sector efficiency. These measures are collectively shaping a more resilient, sustainable and self-reliant power ecosystem.

Renewable energy and energy transition remain at the core of policy focus. Capacity additions in renewable energy have remained robust, with clean sources contributing a dominant share of incremental capacity. Key government programs such as PM Surya Ghar: Muft Bijli Yojana (for rooftop solar adoption) and the PM-KUSUM Scheme (for solarization of agriculture) are driving distributed renewable growth, while the Solar Parks Scheme continues to enable large-scale utility projects. The PLI Scheme for High Efficiency Solar PV Modules is strengthening domestic manufacturing capabilities and initiatives such as PM JANMAN are expanding solar access to underserved and remote communities, supporting inclusive energy access.

To further reinforce the ecosystem, the Government has launched the National Manufacturing Mission for Clean Technologies, aimed at building domestic capabilities across solar modules, batteries, wind equipment and electrolysers. This policy push aligns with the broader objective of reducing import dependence, strengthening supply chain resilience and supporting India s long-term clean energy ambitions.

Energy storage and supply chain strengthening represent a critical next phase in the transition. Policy measures such as the extension of Basic Customs Duty (BCD) exemptions for Battery Energy Storage Systems (BESS) are expected to reduce capital costs and accelerate deployment of grid-scale storage. This is essential to manage renewable intermittency, improve grid stability and enable higher penetration of clean energy.

Transmission and distribution reforms continue to be a key priority area. The Revamped Distribution Sector Scheme (RDSS), with enhanced allocation of approximately Rs. 18,000 Crores in FY 2025-26, is supporting:

Reduction of Aggregate Technical & Commercial (AT&C) losses

Large-scale rollout of smart metering

Financial and operational turnaround of DISCOMs

In addition, the Government is incentivizing states through reform-linked borrowing mechanisms, while significantly scaling investments in inter-state and intra-state transmission networks to facilitate renewable evacuation. These interventions are improving operational efficiency, enhancing transparency and strengthening reliability across the distribution segment.

At a structural level, reforms such as the Draft National Electricity Policy (NEP) 2026 and ongoing distribution sector reforms (including proposed amendments to the Electricity Act) are providing a long-term roadmap for the sector. These focus on resource adequacy planning, tariff rationalization, reduction of cross-subsidies and deeper integration of renewable energy and storage, while promoting competition and improving service quality.

Decarbonization and emerging technologies are being actively supported through flagship initiatives such as the National Green Hydrogen Mission, incentives for biogas and alternative fuels and an enhanced focus on nuclear energy, including the development of Small Modular Reactors (SMRs) with potential private sector participation. These initiatives aim to create clean baseload capacity and build future-ready energy systems aligned with India s long-term climate goals.

Thermal sector reforms and energy security continue to evolve under the revised SHAKTI Policy, which enhances flexibility in coal allocation and broadens eligibility for linkages. This is improving the availability of domestic coal, reducing dependence on imports and exposure to global price volatility and ensuring more stable and cost- efficient baseload generation.

Finally, foundational reforms and sector progress - including flagship programs such as DDUGJY and SAUBHAGYA - have enabled near-universal electrification, significantly improving access to power and reducing supply deficits. These efforts continue to underpin demand growth and support overall sector stability.

Overall, the policy environment remains strongly supportive, with a clear emphasis on clean energy transition, infrastructure strengthening, financial sustainability and energy security, creating a robust foundation for sustained growth in the power sector.

Opportunities and threats

The Indian power sector presents significant growth opportunities, underpinned by strong policy support, structural demand drivers and the ongoing energy transition.

Energy transition and renewable integration

India s commitment to achieving 900 GW of nonfossil capacity by 2035 and net-zero emissions by 2070 is driving large-scale investments in renewable energy. This transition is creating strong demand for advanced grid integration solutions, including HVDC, FACTS and grid automation technologies, as the share of intermittent renewable energy increases.

Expansion and modernization of transmission infrastructure

Continued investments in Green Energy Corridors, interstate transmission expansion and grid strengthening initiatives are driving sustained demand for high-voltage transmission systems. Additionally, aging infrastructure and rising peak demand are accelerating opportunities in digital substations, flexible transmission and grid upgrades.

Energy storage and grid flexibility

Increasing renewable penetration is creating a structural need for battery energy storage systems (BESS), pumped storage and grid balancing solutions. Policy support, including incentives and duty rationalization, is expected to accelerate adoption, opening new avenues in hybrid solutions and grid stabilization technologies.

Digitalization of power networks

Utilities are increasingly adopting smart grid technologies, advanced analytics and real-time monitoring systems to enhance efficiency and reduce losses. This is driving demand for software- led solutions, automation and lifecycle services, enabling long-term value creation.

Electrification, urbanization and emerging demand segments

Rapid urbanization, industrial expansion and rising per capita consumption continue to drive electricity demand. New segments such as EV stands for electric vehicle not electric mobility. Either keep electric mobility or electric vehicle, rail electrification, metro systems and data centres are creating high-growth, quality-sensitive demand for reliable power infrastructure.

Localization and manufacturing opportunities

Government initiatives such as PLI schemes and the National Manufacturing Mission for Clean Technologies are strengthening domestic manufacturing ecosystems across solar, batteries and grid equipment. This supports localization, improves cost competitiveness and enhances export potential.

New energy vectors and decarbonization technologies

Emerging areas such as green hydrogen, nuclear energy (including SMRs) and carbon markets are creating long-term growth opportunities and expanding the sector s addressable market.

Turning challenges into innovation opportunities

Sector challenges such as renewable intermittency, transmission losses and grid inefficiencies are creating opportunities for smart grid solutions, storage technologies and advanced energy management systems, enabling innovation-led growth.

Threats

Despite strong growth in drivers, the sector faces structural and emerging challenges that may impact execution and profitability:

DISCOM financial stress

Persistent issues such as high AT&C losses, delayed payments and tariff distortions continue to affect liquidity across the value chain, posing counterparty and receivables risks.

Regulatory and policy uncertainty

Evolving regulatory frameworks, tariff mechanisms and tendering processes may create uncertainty in project execution and investment planning, impacting timelines and returns.

Project execution and counterparty risks

Large infrastructure projects are exposed to land acquisition delays, permitting challenges and contractor performance risks. The financial condition of utilities may also affect project realization.

Supply chain bottlenecks

Limited availability of critical components like steel, copper, bushings, semiconductors etc can delay planned capacity additions, impacting revenue and margins

Renewable intermittency and grid stability risks

The growing share of renewable energy introduces challenges in grid balancing, forecasting and storage availability, requiring significant investments in flexibility and system resilience.

Foreign exchange and macroeconomic risks

Fluctuations in currency, interest rates and inflation may impact project economics and profitability, particularly for projects involving imported components or global contracts.

Thermal transition and energy security challenges

While coal remains critical for baseload supply, evolving environmental norms and decarbonization pressures may require additional investments and asset realignment.

Cybersecurity and digital risks

Increasing digitalization exposes grid infrastructure to cybersecurity threats and operational vulnerabilities, making system resilience a critical priority.

Talent and capability constraints

The transition toward digital and advanced technologies requires specialized skills in engineering, analytics and project execution and talent shortages may pose execution challenges.

India represents a high-growth, structurally attractive market driven by electrification, renewable integration and grid modernization. While the long-term outlook remains robust, effective management of regulatory complexity, execution challenges and financial risks will be critical to delivering sustainable and profitable growth.

Outlook 121314

Overall, the sector is well-positioned for sustained longterm growth, underpinned by a balanced focus on energy security, clean energy transition and infrastructure development, reinforcing its role as a key enabler of economic growth and sustainability

Despite economic headwinds, the electrification of transport, industry and cooling is expected to continue driving growth in electricity demand. Policymakers and energy stakeholders will address supply security, pricing volatility and grid stability to sustain the momentum towards global energy transition goals.

The World Energy Outlook 2025 (WEO-2025) warns that energy security is now inseparable from geopolitics, supply chain resilience and climate stability. It also stated that emerging economies, particularly India and Asia, will shape the next era of global demand.

Renewable sources of electricity generation continue to grow strongly, with global capacity expected to more than double by CY 2030. In 80% of the countries worldwide, renewable power capacity is set to grow faster between CY 2025 and CY 2030 than in the previous five-year period. Renewables are expected to meet over 90% of global electricity demand growth, becoming the largest source of electricity generation globally and contributing 46% of global electricity by CY 2030.

In India, the ongoing expansion of renewable energy capacity is supported by long-term policy measures and infrastructure planning initiatives. The Government s plans for a transmission network capable of supporting 900 GW of non-fossil fuel capacity by FY 2035-36 reflect the scale of the country s energy transition ambitions. As renewable energy penetration increases, maintaining grid stability, minimizing renewable energy curtailment and managing system-level challenges such as low- frequency oscillations will assume greater importance, necessitating continued investments in transmission infrastructure, grid modernization, energy storage and advanced grid management technologies.

Marked by volatile fossil fuel prices and a rapid transition in renewables, the global energy sector impacts India by straining its import-dependent economy. It is simultaneously driving an ambitious, rapid expansion of domestic renewable energy capacity. As the world s third-largest oil consumer, India continues to benefit from the shifting global clean energy investments, while facing high inflation risks from price shocks.

India is not just increasing its energy capacity, it s reshaping it, tackling climate change head-on while ensuring energy security and providing modern energy access to all. India s energy journey over the past decade reflects a strategic shift towards self-reliance, sustainability and innovation. With bold reforms, massive infrastructure expansion and a strong push for renewables, the country is not only meeting its growing energy demands but also contributing meaningfully to global climate goals.

From green hydrogen to solar rooftops, rural electrification to digital procurement, every initiative underscores India s vision of inclusive, secure and clean energy for all. As the nation moves forward, its balanced and forward-looking energy strategy continues to power economic growth and a sustainable future.

India s power sector outlook is underpinned by:

Per capita demand catch-up: At ~1.42 MWh, India s per capita consumption is well below global levels (~3.75 MWh), suggesting potential to nearly double by 2035 as demand rises.

Tech-led growth: EVs and AI/data center applications could add tens of TWh to demand by CY 2030-32.

Green energy targets: With a 500 GW renewables ambition by CY 2030, India will increasingly pivot to clean sources, improving energy security and emissions profile.

Overall, the sector is well-positioned for sustained longterm growth, underpinned by a balanced focus on energy security, clean energy transition and infrastructure development, reinforcing its role as a key enabler of economic growth and sustainability

Company overview:

Hitachi Energy India Limited (referred to as the Company) is a subsidiary of Hitachi Energy Ltd., headquartered in Switzerland, a global technology leader committed to advancing the energy transition through innovative solutions in electrification, grid infrastructure and digitalization.

The Company is among India s leading power technology players, serving utility, industry and infrastructure customers through a comprehensive portfolio of products, projects and services across the power value chain. Incorporated in 2019 and headquartered in Bengaluru, it supports the transmission, distribution and integration of electricity through technologies that enable a more sustainable, flexible and secure energy system.

Hitachi Energy is committed to making the world s energy system more sustainable, secure, resilient and affordable, enabling greater access to electricity and empowering societies to thrive. As the Company stands at the forefront of the emerging electricity era, it is aligned with the global movement The Next 25, reflecting a commitment to future generations who will inherit the energy systems being built today.

With 19 manufacturing facilities across 8 locations in India, supported by 13 sales offices and 8 additional sales touchpoints and an employee strength of 2,777 (as on March 31, 2026), the Company delivers innovative solutions across the utility, industry and infrastructure sectors.

The Company offers wide range of products and services for energy networks. Its solutions ensure reliable and high-quality power supply across transmission networks, utilities, transport systems, renewable energy, data centers and industrial applications.

In India, the Company powers 9 out of 18 HVDC links, while its transformers support 1 in 3 Indian Railways locomotives. With market-leading positions across its business units, its technologies connect over 60 GW of renewable energy and approximately 80% of metro systems in the country operate using its solutions. The Company continues to drive innovation by pioneering advanced technologies while maintaining and modernizing one of the world s largest installed bases.

The Company operates on a sustainable business model, leveraging advanced technologies and digital transformation to support customers in achieving their Net Zero targets. It plays a key role in enhancing the efficiency of India s energy value chain and improving energy accessibility, contributing to the nation s transition toward a carbon-neutral future. With a strong customercentric approach, the Company focuses on profitable growth by continuously upgrading existing offerings and introducing new products aligned with evolving market needs.

Business segments

Core segments

The Company operates through five business units: Grid Automation, Grid Integration, Transformers, High Voltage Products and Service. It serves a diverse customer base across renewables, transmission, utilities, data centers and railways. By leveraging Service, Exports and Digitalization as key growth drivers, while maintaining a strong focus on operational efficiency, the Company continues to enhance productivity, strengthen quality standards and expand its presence in high-growth segments.

Customer-centric approach

Customer centricity remains a cornerstone of the Company s strategy. Guided by collaboration and cocreation, Hitachi Energy works closely with customers and partners to advance sustainable energy solutions across the value chain.

The Company actively engages with stakeholders through customer interactions and knowledge-sharing platforms designed to strengthen relationships, gather feedback and enhance overall customer experience. Its front-end sales teams, supported by technical experts, deliver tailored solutions and project support across segments.

The Company also demonstrates its thought leadership and technological capabilities at leading industry platforms such as the India AI Impact Summit, Bharat Electricity Summit and India Energy Week. Strategic engagement is further strengthened through leadership interactions, customer workshops and on-site seminars, enabling the Company to address evolving technology needs and deliver impact , solution-oriented outcomes.

Operational performance

The Company remained focused on enhancing its overall efficiency across all spheres of work and maintained a sharp focus on improving customer experience through robust project implementation. The recently commissioned India s first HVDC city center infeed in Mumbai is a testament to the Company s strong on-time execution. A strong order backlog and longterm planning have sustained the Company s growth momentum amid the volatile geopolitical landscape. The Company effectively navigated the impact on the industry from the recent global energy price shocks.

The year witnessed a surge in total order backlog with an order book of Rs. 29,555.3 Crores as of March 31, 2026, reflecting the evolving energy landscape worldwide and providing revenue visibility for several quarters. The order book was led by orders for HVDC control system refurbishment, grid connection solutions and transformer and disconnector supply. In terms of segments, the major contributors were rail, metro and data centers. The Service segment contributed 71% to the total order book, with key service orders received from state utilities, data centers, transmission and industry for system refurbishment, SCADA upgrades and life cycle services.

Exports contributed 30.3% to the total order book (w/o HVDC), as the Company received export orders from the US, Europe and APAC. During the year, the Board approved an investment of Rs. 2,000 Crores to set up a greenfield large power transformers facility in Karjan, Vadodara, Gujarat, taking the cumulative capex to Rs. 4,000 Crores.

Below are some of the key orders received sector-wise:

¦ Industries

Won projects for the Transformer business, including multiple high-capacity 765 kV ICTs and reactors for key captive projects in western India. Won control & protection upgrade using MACH, 400/200 KV AIS in Karnataka.

Renewables

Projects won for Grid Integration business with leading renewable players, including 220/33 kV Solar and Wind PSS for customer site (Matrix-2) in Gujarat, along with 220/33 kV AIS substations in a southern state. A traditional AIS for power system stabilization at a Gujarat site, supporting grid integration for renewable energy projects for an energy company. Other projects won included 90 X 3150 kVA dry type transformer from a leading renewable company at West, India and 3 X 110 MVA, 400 kV & 1 X 85 MVA, 66 kV transformer for a Solar Park in Angola.

¦ Data Centers

Received an order for 3X 220kV AIS Transformers Bay extension for a leading data center in Hyderabad.

¦ Transport

Won projects with leading Metros for Electrical Multiple Unit (EMU) Traction Transformers. Also received an order for 70 units of traction transformers for metro rail in South and 80 transformers for metro rail in western India.

m Energy/Power

Won a project in the Grid Automation business, including CRP-SAS 400kV system for a 2x800MW thermal plant with a key power business. Also won the CRP SAS project for a 765 kV substation for a leading energy player in India. Bagged a project for a compact, mobile 400kV substation, enabling rapid deployment for reliable power quality management in Kutch, Gujarat for one of India s leading conglomerates.

¦ Utility

Received an order for 72.5 KV DS for a giant IT company in United States.

Key segments

Order growth in Industries, Data Center and Renewables fueled performance in FY 2025-26 12% de-growth in Transmission is mainly due to the difference in value of HVDC project booked in FY 2024-25 vis-a-vis FY 2025-26: Khavda Nagpur- HVDC vs Bhadla Fatehpur.

A snapshot of financial performance

All figures in Rs. Crores

	FY 2025-26	FY 2024-25
Orders	18,456.5	18,173.8
Revenue from operations	8,147.7	6,384.9
PBT (before exceptional item)	1,375.2	516.4
PBT %	16.9 %	8.1%
PAT	987.8	384.0
PAT %	12.1%	6.0%
Operating EBITDA	1,252.6	592.3
Operating EBITDA %	15.4%	9.3%

Key financial ratios

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefor, including:

Key financial ratios	FY 2025-26	FY 2024-25	Change (%)	Reason for change
Debtors turnover	4.67%	4.91%	-5%	Not applicable
Inventory turnover	4.04%	4.37%	-8%	Not applicable
Current ratio	1.55%	1.76%	-12%	Not applicable
Operating profit margin (%)	15.37%	9.28%	66%	Due to increase in profits, primarily on account of higher revenue and higher profit margins.
Net profit margin (%)	12.12%	6.01%	100%	Net profit ratio variance as compared to previous year is on account of improvement in operational profit margin.
Dividend payout ratio (%)	3.61%	6.64%	-46%	The Dividend amount increased in absolute terms from Rs. 6.00 to Rs. 8.00 compared to the previous year. However, the Dividend payout ratio declined due to stronger growth in earnings and the Company \u2019 s balanced approach to retaining earnings to support planned capital investments and future business growth.

Sustainability

Hitachi Energy India Limited is at the forefront of the clean energy tech and digital-led revolution. Your Company s focus and targeted actions towards sustainability enabled it to consolidate its position as a leader in this sector. Your Company has set specific targets on four key areas to be achieved by 2030 - Planet, People, Peace and Partnerships.

For FY 2025-26, the Company has taken definitive measures which are in line with its 2030 sustainability goals. Several initiatives have been taken on emissions reduction, energy and water conservation and waste reduction. The Company achieved a 74% reduction in CO2 emissions and an 82% reduction in waste disposed to landfill or incineration from the baseline year of 2019. Also, 99% of the waste produced has been processed for recycling in the same financial year.

The Company s Halol manufacturing facility has been certified as Water Positive following independent verification of its Water Positive Index for FY 2025-26. Additionally, the facilities at Halol and Mysore have achieved the Platinum Level certification for Zero Waste to Landfill.

The Company s sustainability strategy, which consists of three strands of action, People, Planet and Principles, provides guidance for the future years. The Company has set sustainability targets and commitments for 2030 and the roadmap for transition to Net Zero by 2050.

Industry collaborations

The Company actively participated in key industry forums, policy dialogues and sectoral summits during the year, contributing to discussions on energy transition, renewable integration, grid modernization, power transmission reforms and the growing energy requirements of emerging technologies such as artificial intelligence and data centers. Through these engagements, the Company continued to collaborate with policymakers, utilities, industry bodies and other stakeholders to support the development of a sustainable and reliable energy ecosystem.

License to operate: Safety, Integrity & Quality

At Hitachi Energy India Limited, safety remains paramount and is deeply ingrained in the organization s DNA. The Company is committed to fostering a strong safety culture across all functions and will continue to reinforce this commitment through consistent actions. Upholding the highest standards of safety, integrity and quality, Hitachi Energy actively emphasizes the importance of timely reporting of safety incidents across its work sites.

The Company has refreshed its Health, Safety and Environment (HSE) policy to further promote employee well-being, ensure safe working conditions and drive positive health outcomes. It continues to strengthen its safety practices across all its manufacturing locations and offices, achieving 100% on-time closure of high- risk hazard situations.

During the year, the Company reported a Total Recordable Injury Frequency Rate (TRIFR) of 0.11, reflecting its sustained focus and disciplined execution of safety initiatives.

Integrity remains the cornerstone of our business principles and operational excellence. The Company is committed to upholding the highest standards of ethical conduct, transparency and compliance across all areas. The Hitachi Code of Ethics and Business Conduct continue to be reinforced through onboarding programs, annual refresher trainings and engaging awareness initiatives. Integrity is consistently embedded in leadership discussions, often supported by real-life case studies to strengthen ethical decision-making and accountability. Hitachi Energy in India continues to be certified under ISO 37001 for its Anti-Bribery Management System, reflecting a robust framework to prevent, detect and address bribery risks, while safeguarding our financial and reputational integrity.

Technology development & absorption

Building on decades of expertise in power technology, your Company continues to shape the industry s future by driving innovation, anticipating growth and delivering enhanced lasting value. Through site assessments, customized solutions, proactive maintenance cycles and strategic planning, it serves as a trusted partner in its clientsRs. long-term success. Focusing on advancing key power grid technologies, the Company supports a digital-led future by enabling resilient and efficient energy systems.

The Company is widely respected for its strong pool of expert technologists, shop floor specialists, solution providers, technicians and access to R&D teams, along with its proven innovation capabilities and sustained investment in advanced technologies. Its R&D efforts are driven through research and technology centers of it parent company Hitachi Energy Ltd and are locally embedded to reflect market-specific needs - creating social, environmental and economic value worldwide.

By deepening customer engagement and expanding its installed base through localized products, features and solutions, the Company strengthens its existing revenue streams while unlocking new growth opportunities. During FY 2025-26, the Company paid total royalty expenses of Rs.241.85 Crores to Hitachi Energy Limited.

Material developments in the human resources / industrial relations front, including the number of people employed People remain at the heart of the Company s key strategies and priorities. It recognizes its employees as its core strength in sustaining quality excellence and driving growth. Committed to empowering its workforce, the Company s HR policy fosters a safe, transparent and inclusive workplace, while aligning individual aspirations with organizational goals.

By way of continuous training and engagement initiatives, the HR team strengthens employee skills and capabilities. The Company remains focused on reinforcing its safety culture, upskilling and cross-skilling talent to support an agile energy transition and building capabilities for sustainable growth. Guided by the Company s values, rooted in transparency and agility, the workforce is empowered to achieve higher performance levels.

As of March 31, 2026, the Company has a total of 2,777 employees.

Risks and Concerns

The Company executes its strategy and delivers longterm value through a robust and well-structured risk management framework that enables effective identification and evaluation of business risks and opportunities.

Your Company continued to reduce its risk exposure by strengthening its risk management practices and enhancing organizational resilience. Integrating quantitative risk analysis into daily operations and performance management guides informed corporate decision-making.

Aligned with globally recognized standards, the Company s comprehensive risk management framework enables proactive identification, prioritization and risk mitigation. This approach protects shareholder interests, supports consistent value consistently and ensures that emerging risks are promptly addressed through effective mitigation and continuous monitoring.

Internal control systems and their adequacy

The Company s internal control framework safeguards stakeholder interests and supports operations through a multi-layered structure of oversight, directives, entity- and process-level controls and management testing. This ensures robust financial reporting and effective risk management, aligned with the Company s size and complexity. An independent Internal Audit, Risk & Internal Control team provides insights on compliance, operational efficiency and key risks, with quarterly reporting to the Audit Committee to drive continuous improvement.

Cautionary statement

Certain statements in the Management Discussion and Analysis Report are forward-looking, including those relating to the Company s market position, financial performance, business strategy and future objectives. These statements - often indicated by words such as anticipates, expects, intends, may, will, believes, or estimates - reflect the Company s current expectations based on reasonable assumptions. Actual results may differ due to risks, uncertainties and other external factors.