7Seas Entertainment Ltd Management Discussions

Focused growth in an evolving market

1. Industry and operating environment

Digital gaming continues to evolve through the interaction of smartphone access, digital payments, cloud infrastructure, platform distribution, creator ecosystems and increasingly sophisticated production tools. The addressable market is significant, but commercial outcomes remain uneven. Discoverability is constrained, platform policies evolve, player- acquisition costs can be volatile and audience attention is divided across a growing volume of content.

Mobile remains an important access point because it lowers hardware barriers and supports short, repeatable play sessions. At the same time, players increasingly expect polished visual quality, reliable performance, regular content and fair monetization. Studios therefore need to improve production discipline without losing creative distinctiveness.

India offers a deep base of technology and creative talent and a growing audience for interactive entertainment. Sustainable participation nevertheless depends on product quality, intellectual-property discipline, platform compliance, data protection, payments integrity and responsible engagement. The Company accordingly evaluates market opportunity alongside execution capacity, liquidity and risk.

7Seas Entertainment Limited undertakes software development and consultancy services alongside the development and publishing of digital games and interactive content. Its gaming portfolio spans mobile, personal-computer and online environments across casual, arcade, sports, racing, shooting, action, puzzle and simulation genres. The game-development model is organised around the following product lifecycle:

The Company seeks to reuse engineering, art, quality-assurance and interface capabilities across titles, while applying title-specific creative and commercial judgement. AI-assisted tools may support selected design, testing, layout and iteration tasks; human review, confidentiality, rights provenance and management accountability remain central to their use.

The Companys portfolio approach is intended to reduce dependence on a single title or genre and to build repeatable production capability. Management continues to evaluate opportunities in sports, racing, simulation and casual gaming, together with improvements to existing titles and digital-content formats.

Distribution through digital platforms gives the Company scalable access to users and enables updates and feedback- led optimisation. This access is balanced by dependence on third-party platform rules, ranking systems, fees and technical requirements. Release decisions are therefore considered against technical readiness, audience relevance, platform compliance and expected return on development effort.

Revenue from operations increased by 23.1% to Rs. 2,011.55 lakh in FY2025-26 from Rs. 1,634.29 lakh in FY2024-25. Revenue comprised export sale of services of Rs. 2,010.86 lakh and domestic sale of services of Rs. " 0.68 lakh. Profit after tax increased by 33.9% to Rs. 222.90 lakh from Rs. 166.47 lakh. Revenue growth was therefore primarily attributable to services revenue. Management continues to focus on receivable collections, working-capital deployment and conversion of reported profits into operating cash flows.

Figures are rounded to two decimal places; consequently, the sum of individual figures may differ marginally from the reported totals.

At 31 March 2026, total assets were Rs. 3,073.35 lakh and total equity was Rs. 2,934.75 lakh. Key asset balances included trade receivables of Rs. 567.11 lakh, loans and advances of Rs. 791.69 lakh, property, plant and equipment of Rs. 300.77 lakh, intangible assets of Rs. 441.71 lakh and cash and cash equivalents of Rs. 231.60 lakh. Fixed deposits of Rs. 500.00 lakh were separately included within other non-current financial assets and were not included in cash and cash equivalents.

Trade receivables increased from Rs. 213.80 lakh to Rs. 567.11 lakh, while loans and advances increased from Rs. 624.35 lakh to Rs. 791.69 lakh. These movements highlight the importance of timely collections, monitoring of advances and disciplined working-capital management. Reported profitability should therefore be assessed alongside cash conversion. Managements priorities include receivable recovery, cash forecasting and alignment of expenditure with available funds and the approved purposes of the preferential issue.

The preferential issue approved during the year aggregated to Rs. 17.32 crore and comprised equity shares and convertible warrants issued at Rs. 80 per security. Transparent reporting distinguishes the approved issue size from cash actually received and the non-cash settlement of promoter loans.

Brickwork Ratings India Private Limited, the Monitoring Agency, reported no deviation from the objects of the issue for the quarter ended 31 March 2026. Its report separately identified the Rs. 1.52 crore non-cash conversion of promoter loans within utilisation towards general corporate purposes. Details of object-wise utilisation and deployment of unutilised cash proceeds are provided in the Monitoring Agency Report submitted to BSE Limited.

The Company is engaged in software development and consultancy services, game development and related digital- content activities. Based on the manner in which the business is managed and financial information is reviewed, the operations constitute a single reportable business segment under the applicable accounting framework. Geographic or customer-concentration information, where applicable, is presented in the notes to the financial statements.

The internal-control framework is designed around delegated authority, segregation of duties, financial-close procedures, asset safeguarding, access management, legal and regulatory review, internal audit and Audit Committee oversight. The framework is proportionate to the size and nature of the Companys operations and is expected to evolve with business scale and technology use.

Business risks and control procedures are reviewed periodically. System reviews address security, access and adequacy, and identified observations are escalated to management for corrective action. The statutory auditors reporting on internal financial controls should be read together with this management assessment.

People are central to game development. The Company continues to build capabilities across game design, software engineering, art, quality assurance, analytics and publishing. Managements focus is on role clarity, collaborative production, learning, safe working conditions and accountability for delivery and quality.

As at 31 March 2026, the Company had 35 permanent employees on its rolls and maintained cordial employee relations during the year. Recruitment and employee development remained aligned with product priorities and the need to strengthen specialist and managerial capabilities as operations scale.

The following table presents key financial ratios for FY2025-26 and FY2024-25, computed on a consistent basis using the financial statements. Percentage changes are calculated using unrounded ratios. Explanations are provided for significant changes of 25% or more in the applicable key financial ratios. The change in Return on Net Worth is explained separately, irrespective of the percentage of change, in accordance with Schedule V to the SEBI Listing Regulations.

• Current ratio: Current assets divided by current liabilities.

• Debt-equity ratio: Total borrowings divided by total equity.

• Trade receivables turnover: Revenue from operations divided by average opening and closing trade receivables. Revenue from operations is used as the numerator consistently for both years.

• Operating profit margin: Profit before tax plus finance costs, less other income, divided by revenue from operations.

• Net profit margin: Profit after tax divided by revenue from operations.

• Return on Net Worth: Profit after tax divided by closing net worth. Net worth comprises paid-up equity share capital, securities premium and retained earnings, excluding money received against unconverted share warrants.

Percentage changes are calculated before rounding the displayed ratios. “N.A.” denotes not applicable.

The financial statements have been prepared in accordance with Indian Accounting Standards notified under Section 133

of the Companies Act, 2013 and the applicable presentation requirements. Significant accounting policies and areas of judgement are described in the notes to the financial statements.

The near-term agenda is to convert capital and development effort into a stronger, more balanced portfolio. Priorities include measured expansion across genres, deeper production discipline, responsible use ofAI-assisted tools, improved cash conversion and transparent governance of preferential-issue proceeds.

The outlook remains subject to player preferences, platform policies, title-delivery schedules, competitive intensity, technology change, regulatory developments and general economic conditions. Management will continue to evaluate investment decisions against liquidity, execution capacity and evidence from the portfolio.

Statements in this Management Discussion and Analysis describing objectives, expectations, estimates or projections may be forward-looking within the meaning of applicable laws and regulations. Actual results may differ materially because of economic conditions, market dynamics, technology changes, platform policies, regulatory developments and other factors. The Company undertakes no obligation to publicly revise forward-looking statements except as required by law.