AARV Infratel Ltd Management Discussions.

Industry Structure & Development:

Macro-Economic Situation

A robust telecommunications infrastructure is now an essential service for delivering high-speed connectivity to people, homes, offices and governments. The global movement towards everything digital and proliferation of powerful mobile devices such as smart phones, tablets and IoT, rollout of new 4G and 5G networks for mobile and fixed broadband and increased penetration of highspeed, fiber-based home broadband is driving the global demand for all-pervasive, higher capacity fiber optic networks based. The telecom and internet service providers are investing significant capex to upgrade their optical networks and this presents a robust growth opportunity for our industry. A combination of factors such as, increased adoption of home broadband, high-speed mobile broadband, bandwidth intensive applications such as high-speed business Ethernet, cloud connectivity, high-capacity wireless backhaul, and data center inter-connections are resulting in an expansion of the optical network equipment market. The continuing global trend of increased data consumption by consumers, enterprises and intelligent devices is a favorable driver for our business. With internet becoming more ubiquitous and use of high-bandwidth services such as video streaming, social networking and e-commerce becoming commonplace, there is a dramatic increase in data traffic in telecom networks. The global outbreak of COVID-19 and stringent social distancing restrictions are accelerating this trend. As a result, telecom operators are increasing capital investments in optical transmission and broadband access equipment to ensure that mobile and home broadband services are delivered with requisite quality and in costeffective manner. While optical capital expenditure is growing in large parts of the globe, India and other developing countries in SAARC, South East Asia, Africa and Americas are growing faster than other geographies since developing countries have huge pent-up demand for optical fiber and fiber-based equipment in the access and backhaul to serve an exponential growth in highspeed data traffic driven by expansion of 4G networks while preparing for impending 5G rollouts, fiber-to-the-home (FTTH) and fixed wireless access (FWA) applications for broadband access, and growing bandwidth consumption by consumers and businesses due to preference for video-conferencing, video calling and virtualied events. India is expected to have one of the highest compounded annual growth rate (CAGR) of optical capex in the coming years and one of the highest proportion of optical capex to total telecom capex in the world in the next few years. The recent pandemic caused by COVID-19, has accelerated the need for high-bandwidth, reliable and secured networks, given the new trends such as work-from-home, remote learning, telemedicine, entertainment, e-commerce, e-Governance etc.

The demand for optical transmission will be driven by the following factors:

Mobile backhaul is defined as the transport of cell phone traffic between the cellular base station and the mobile switching centre. In the case of 2G and 3G networks that were dominated by voice and low-speed data services, cellular traffic was largely backhauled over microwave radio but with the arrival of 4G and 5G networks that are dominated by higher-speed data traffic, optical fiber based backhaul has become the norm. The fiberisation trend is further accelerating with the advent of 5G due to a 10x increase in backhaul capacity requirements and a 10x densification of cell towers, since 5G base-stations will be placed much more closer than the 4G basestations. In India, less than 30% of around 600,000 cell sites are currently fiberized (compared to 70-80% in developed countries) which is expected to increase to 60% by 2023. Overall, India has approximately 735 million mobile broadband subscribers today (source: TRAI statistics, March 2021) but the rural subscription base is ~30% so there continues to be a latent demand for higher speed 4G services, especially in smaller towns and rural areas.

Impact of COVID-19 pandemic:

The spread of COVID-19 has severely impacted businesses around the globe. The situation is constantly evolving and Governments in certain states have imposed various restrictions with the increase in number of COVID 19 cases during the month of March 2021. The Company has considered various internal and external information available up to the date of approval of financial statements in assessing the impact of COVID-19 pandemic on the financial statements for the year ended March 31, 2021. During the year, while we have improved on customer collections, continued uncertainties caused by the pandemic has resulted in some delays in few customer payments and new orders. Management expects potential delays in executing the orders-in-hand, due to an increase in lead-time for sourcing semiconductor components. Based on current assessment, management is of the view that some uncertainty is likely to continue for the next few quarters, till large -scale vaccination happens around the world and the demand supply situation in the semiconductor component industry stabilizes. The Company is debt-free and does not have any borrowings as at year end. In the view of the management, there would be no adverse impact on the liquidity position of the company based on the evaluation of cash flows for the next one year. As at March 31,2021, management has made an assessment of the recoverability of carrying values of Property, Plant and Equipment, Intangible assets, Inventories and Financial assets taking into account all possible impact of known events arising from COVID-19 pandemic and the same is reflected in our financials. Assessing the impact of COVID-19 is however a continuing process, given the uncertainties associated with its nature and duration and the Company will continue to closely monitor the future situation.

Outlook: Company is evaluating various opportunities and suitable business opportunities which improve the operations of the company.

Performance Review:

Discussion on Financial Performance with respect to Operational Performance:

1. Total Income: Nil

2. Share Capital:

The paid up share capital as on 31st March, 2021 is Rs. 458,92,380/-

3. Net Profit:

The Companys operating loss of Rs. (10,81,000) during the year.

4. Earnings Per Share (EPS):

The Earning Per Share for the Financial Year 2020-21 is Rs. (0.24) per share (Face Value: Rs.10/- each)

Your directors are putting continuous efforts to increase the performance of the Company and are hopeful that the performance in coming year will overcome from the present situation.

By order of the Board of Directors
For Aarv Infratel Limited
Sd/- Sd/-
Date: 04th September, 2021 Chairman & Non-Executive Director Managing Director
Place:Bangalore. (DIN: 05243450) (DIN: 00475947)