ACS Technologies Ltd Management Discussions

A company that owns the technology and the outcome. EXECUTIVE SUMMARY

FY 2025-26 was the year in which the strategic restructuring of ACS Technologies Limited into two complementary verticals, Infrastructure Technologies and Convergence Technologies, moved from design to delivery. Consolidated revenue from operations rose 108% to Rs. 264.42 crore (FY 2024-25: Rs. 126.94 crore). Consolidated profit after tax rose 71% to Rs. 8.45 crore.

Three features of the year deserve emphasis. First, growth was broad-based rather than event-driven; standalone revenue grew 53% on its own, while the subsidiary IOTIQ Innovations alone contributed 35% of group revenue. Second, the quality of the business improved with its size: consolidated receivable days fell to 105 from 136, continuing a three-year halving of the collection cycle even as government revenue scaled. Third, the balance sheet was strengthened ahead of need: a preferential warrant issue aggregating Rs. 124.03 crore was allotted, and the Company received its first-ever credit rating, BBB- from Infomerics Ratings, a milestone that widens access to bank facilities and lowers their cost.

The Companys operating thesis is simple. Government, defence and enterprise customers in India increasingly want one accountable vendor for mission-critical systems, not a collection of component suppliers. ACS Technologies combines more than four decades of work for the Ministry of Defence, its establishments and the armed forces, and an equally long record in civil infrastructure, with a portfolio of proprietary products and partnered platforms: ISR and tactical unmanned platforms fielded with defence and government customers, the Drone Arjuna ground control system, MPAS underwater mine detection, the War Gaming

Margin recovery as operating leverage builds; receivable days, which have fallen from 242 to 105 over three years and must keep falling as government revenue scales; the Defence Industrial Licence for Chegunta; and conversion of the order book into revenue at planned margins. $

STATUTORY REPORTS

HOW ACS CREATES VALUE

The Companys business model is presented below in the form recommended by the Integrated Reporting Framework: the capitals it draws on, the model that transforms them, and the outcomes delivered in the year. The purpose of the exhibit is to make explicit that ACS Technologies competitive advantage rests on the combination of inputs rather than on any single one.

exhibit 3 Value creation model

How ACS creates value INPUTS (CAPITALS) BUSINESS MODEL

Financial: Rs. 134 Cr net worth, Rs. Systems integrator that owns the Revenue Rs. 264.4Cr (+108%)

124.03 Cr warrants allotted technology and the outcome PAT Rs. 8.45 Cr (+71%)

Manufactured: Chegunta campus. Infrastructure Technologies:

6.42 acres, owned since 2022 networks, fibre, cyber, surveillance. t wor s. r (+

Intellectual: Drone Arjuna, command-and-control Receivable days 242 to 105 over

Athena, MPAS, Hive Connect, War Convergence Technologies: IoT three years

GamingSim CIOTIQ), drones, Al/analytics, First-ever credit rating: BBB-

Human: multi-domain engineering software, smart facilities, geospatial (Infomerics)

teams across group entities One accountable vendor for Middle East subsidiary set up;

Relationship: 40+ years with mission-critical deployments export pathways forUAS

defence, PSU and state customers Products sold standalone where

ISO 9001, 20000-1, 27001, 42001; integration is not required

CM MI L3; security clearances EKAM: shared growth, finance, people, procurement horizontals

The systems integrator model

ACS Technologies is a systems integrator with a growing portfolio of proprietary products and platforms. It designs, builds, deploys and maintains complete solutions for complex customer requirements and, increasingly, does so using technology it has built in-house. This distinguishes the Company from pure-play services firms that supply labour and from product companies limited to a single offering.

The positioning is well-suited to Indias current procurement environment. An armed forces command, a state department or a national infrastructure programme wants one entity accountable for making a complex system work. The ability to bring proprietary IoT, unmanned systems and analytics products to the table, while integrating third-party components where sensible, is a capability that neither a pure integrator nor a pure product company can easily replicate.

Credibility to win these mandates comes from more than forty years of work for the Ministry of Defence, the three services and the defence PSUs, alongside a matching record in civil infrastructure across data centres, networks, cybersecurity, surveillance and telecommunications. It is underwritten by ISO 9001:2015, ISO 20000-1:2018, ISO 27001:2022 and ISO 42001:2023 certifications, CMMI Level 3 appraisal and established security clearances. Product depth comes from the more recent investments in IoT (the IOTIQ platform), unmanned systems, AI/ML and geospatial analytics. Infrastructure Technologies vertical

This vertical houses IT infrastructure services, telecommunications project execution, cybersecurity, surveillance and command-and-control systems, and managed services. It is the Companys stability anchor, generating predictable revenue from long-standing government and enterprise relationships and providing the delivery platform on which convergence technologies are deployed.

Convergence Technologies vertical

This vertical houses the growth engines: IoT and industrial automation through IOTIQ Innovations, drone design and manufacturing, AI and analytics, custom software and smart facilities, and geospatial services. It targets markets where ACS can differentiate on product capability and integration depth rather than unit price.

PRODUCTS, PLATFORMS AND CAPABILITIES

The Companys offering is organised as one integration layer over two verticals. In FY 2025-26, Infrastructure Technologies contributed Rs. 238.34 crore of consolidated revenue and Convergence Technologies Rs. 26.08 crore. Vertical revenue is classified by the nature of the work rather than by entity: subsidiary revenue that is infrastructure and integration work in character, including much of IOTIQ Innovations project revenue, is reported within Infrastructure Technologies, while Convergence captures the groups product-led lines. Every line below is revenue-generating today; none is a concept. The portfolio is deliberately broad because the customers the Company serves, defence formations, state governments, PSUs and large enterprises, buy outcomes that cut across networks, security, software, sensing and unmanned systems, and they prefer a single accountable vendor.

exhibit 4 Portfolio architecture

Portfolio architecture: two verticals

Products and services are sold standalone or delivered inside integrated programmes - ISO 9001 - 20000-1 - 27001 - 42001 - CMMI L3 - security clearances INFRASTRUCTURE TECHNOLOGIES

FY26 revenue Rs. 238.34 Cr ¦ stability anchor and

delivery platform

CONVERGENCE TECHNOLOGIES

FY26 revenue Rs. 26.08 Cr- the growth engine and

investment focus Networks & data centres

Enterprise LAN/WAN, DC build,cloud, managed IT

Telecom & optical fibre

OFC survey, planning and execution for state and national networks

Cybersecurity

SOC/SIEM, ISMS, managed security, DPDP readiness Sec urlty & su rvel llance

IP video, VMS, analytics, access control, command- and-control

Managed services

Multi-year IT and security operations for critical installations

Unmanned systems

ISR platforms; FPV-class and heavy-lift airframes; GCS; power systems

Drone manufacturing

Chegunta: contract, on-demand and at-customer-site builds; exports

IoT & automation (IOTIQ)

Hi ve Connect / IOTIQ Connect; industrial, bu iIding and home automation

Defence software & AI analytics

Drone Arjuna GCS; War Gaming Simulator; M PAS; Athena; target identification

Custom software & business apps

ERP, HRMS/PMS/RMS, DMS, LMS,queue, visitor, helpdesk, hospitality Smart facilities & geospatial

Smart facilities management; GIS, drone and satellite survey, spatial analytics Infrastructure Technologies: what we build and run

The Infrastructure Technologies vertical spans IT infrastructure and data centres, telecom services and optical fibre, cybersecurity, security and surveillance, and managed services. Typical engagements include enterprise and campus networks, state fibre networks, integrated command-and-control centres, surveillance grids with AI video analytics, access control and fire safety for critical installations, and managed IT and security operations under multi-year contracts.

Convergence Technologies: the product engine Unmanned systems and drone manufacturing

The groups unmanned systems programme has fielded ISR multirotor platforms at scale with Indian defence and government customers, built to customer specification and supplied on time, at volume and with a strong field-quality record. That delivery record, rather than any single design, is the programmes core asset. During the year, working with domestic and international drone companies, it broadened from ISR platforms into a product architecture with four slots: a mid-frame ISR class, a heavy-lift class, a volume tactical FPV-class airframe, and one active R&D slot for advanced mission configurations. Proprietary frames, carrier boards and power systems (chargers and battery packs) are being brought in-house so that the group can sell at subsystem level as well as platform level.

The Chegunta campus, being developed in phases to international manufacturing standards on land the Company has owned since 2022 and funded from the warrant proceeds, turns this into a manufacturing business, not only a product business. Three service lines are offered: contract manufacturing to a customers design, with or without the groups supply chain; on-demand manufacturing for small OEMs and start-ups from batches of five to fifteen units upward; and manufacturing at the customers location, with the groups technicians travelling with tooling and know-how. For export, the group manufactures in India for international customers, and anchor programmes in Europe and Australia were initiated during the year. Supply is managed on a multi-tier basis across alternative supply chains, including fully NDAA- com pliant options, so that a customers sourcing constraints can be met without redesign.

Defence software and simulation

Three proprietary defence platforms are deployed or under deployment with the armed forces and their establishments. Drone Arjuna is the groups ground control system, giving operators a common interface across airframes. The War Gaming Simulator supports training and mission rehearsal. MPAS is an underwater mine detection and analysis system developed for naval customers. Alongside these, the Company has fielded an Al-based military target identification and classification system that uses recurrent and machine-learning models for operational target discrimination. exhibit 5 Unmanned systems operating model

Unmanned systems: from design to fielded platform

One programme, three ways to earn: own platforms, manufacturing for others, and export assem bly

- Export programmes with international partners

platforms fielded with defence and govern ment customers

Tactical FPV-class (10-inch) proprietary frames

Ground control (Drone Arjuna), power systems: chargers

and packs

1 Next advanced mission

configurations in development

Contract manufacturing to customer design, with or without supply chain

On-demand runs for small OEMs and start-ups (5-15 units upward)

¦ Manufacturing at the customers location with ACS technicians

Chegunta campus developed in phasesfrom warrant proceeds

• Anchor programmes in Europe and Australia in progress

Multi-tier sourcing, including NDAA-com pi iant supply chains IoT and automation: IOT1Q

IOTIQ Innovations, a subsidiary, is the groups IoT company and one of the two subsidiaries that together contributed 35% of consolidated revenue. Its Hive Connect and IOTIQ Connect platforms carry industrial and building automation, energy optimisation and predictive maintenance for enterprise and government facilities, and an eleven- solution B2B catalogue covers lighting, appliance, door and curtain control, remote surveillance and voice and motion control across GSM, Wi-Fi, BLE and Zigbee, with NB-IoT in development. A twenty-two SKU smart-home range serves the consumer channel. IOTIQ will also act as the showcase customer for the groups manufacturing capability: the devices it sells are to be built at Chegunta once the campus is commissioned.

AI and smart analytics

Athena Smart Analytics is the groups analytics platform for video, sensor and operational data, deployed in command- and-control and smart-city contexts. The Companys AI practice, certified to ISO 42001:2023 for AI management, delivers computer vision, natural-language and edge-AI solutions for e-governance and industrial IoT, and is the source of the target-identification system noted above.

Custom software and business applications

The Convergence vertical also carries a suite of business applications built in-house and deployed with government and enterprise customers: an ERP, HRMS, performance and recruitment management systems, the Digi Sanchika document management system, a learning management system, and queue, visitor, helpdesk and hospitality management platforms, alongside smart facilities management for campuses and installations. These are modest individually but recur, and they are frequently the entry point to a larger relationship. Geospatial

Deep expertise in mapping, survey and spatial analytics underpins GIS platforms, drone and satellite survey (optical, microwave and interferometric), utility and land-records mapping and disaster-management support for customers including ISROs Space Applications Centre and state governments.

exhibit 6 Proprietary product portfolio by maturity

Proprietary product portfolio by maturity

Where each platform sits on the path from development to repeat revenue

• IN DEVELOPMENT

• - Next-generation mission configurations - MPAS underwater mine detection - WarGamingSimulator - ISR multirotor platforms, fielded at scale

• * Extended-endurance tethered platforms - Athena Smart Analytics - Drone Arjuna ground control » H ive Con nect / IOTIQ Con nect ioT - AI target identification system

• - Prop rietary f ram es, carrier boards - Heavy-lift airframe class

• - Edge-AI analytics modules . ERP-HRMS-DMS-LMS suites - IOTIQ smart-home and B2B automation

Source: Company records; status as at 31 March 2026

Customers and credentials

The Companys customer base is the clearest evidence of its positioning. The table lists representative relationships by segment; several are multi-year and span more than one vertical.

SEGMENT	REPRESENTATIVE CUSTOMERS	TYPICAL SCOPE
Armed forces and defence PS Us	Indian Army, Indian Navy and Ship Building Centre, Indian Air Force, HAL, BEL, NSTL and DRDO-linked laboratories, DGNP, Mahindra Defence, Safran	Unmanned systems, defence software and simulation, surveillance and command-and- control, secure networks, AI target identification
Central and state government, PSUs	AP Commercial Taxes, CSPDCL, IOCL, state fibre networks (MahaNet, T-Fiber, APFiberNet), ISRO Space Applications Centre, RVNL	Fibre networks, GIS and survey, e-governance platforms, smart-city and safe-city systems, business applications
Aviation and infrastructure	Airports Authority of India (multiple airports), GMR	Airport IT and security infrastructure, surveillance and facilities management
Enterprise	SBI, ITC, Dell, UnitedHealth Group	Networks and data centres, managed services, cybersecurity, business applications, IoT automation

The Company competes as an integrator that can also supply the airframe, the ground-control software, the analytics and the network. As this portfolio commercialises, each proprietary product raises the attach rate on integration contracts and lifts the margin ceiling above what pure services can earn; the Company intends to report product revenue separately as it scales.

WHY THE PRODUCT DEPTH MATTERS

Training and skilling (planned for FY 2026-27)

During FY 2026-27 the group intends to build a training and skilling vertical that converts its manufacturing and unmanned-systems know-how into programmes for the market: vocational drone-assembly training, drone-pi lot and enterprise training for village-level entrepreneurs positioned as income generation, tiered drone-exposure programmes for schools, and build-ope rate-transfer drone laboratories for institutional customers, addressed to CSR, district administration and service-welfare channels.

Credentials are held at the level defence and government procurement demands: ISO 9001:2015 (quality), ISO 20000-1:2018 (IT service management), ISO 27001:2022 (information security), ISO 42001:2023 (AI management) and CM MI Level 3 for software development and services delivery, together with established security clearances. A Defence Industrial Licence is being pursued and is the next credential on the path.

while holding the fiscal deficit target at 4.3% of GDP. For a company that builds and integrates the nations physical and digital infrastructure, sustained public capex combined with fiscal discipline is the most favourable demand environment available.

India: an investment-led growth cycle

India remains the fastest-growing major economy, with real GDP growth estimated at 7.4% for FY 2025-26 and nominal growth projected at 10% for FY 2026-27. The Union Budget 2026-27 raised public capital expenditure to a record Rs. 12.2 lakh crore, 4.4% of GDP on an effective basis (Rs. 17.15 lakh crore including grants for capital asset creation),

ECONOMIC AND INDUSTRY OVERVIEW

exhibit 7 Union Government capital expenditure, FY22to FY27 (BE)

Union Government capital expenditure (Rs. lakh crore)

Public capex has more than doubled infive years and sits at a decade high

The Viksit Bharat 2047 vision anchors a multi-decade buildout: seven new high-speed rail corridors, twenty new national waterways, dedicated funding for Tier-II and Tier-Ill cities, City Economic Regions with Rs. 5,000 crore allocations over five years, and a proposed Infrastructure Risk Guarantee Fund to de-risk private participation. The state is spending at record levels on precisely the categories, connectivity, surveillance, digital platforms and smart infrastructure, where ACS Technologies has proven capability.

lakh crore

Record public capital expenditure, 4.4% of GDP on an effective basis

Government infrastructure and digital public services Government technology infrastructure is one of the Companys deepest and most defensible positions. ACS has delivered state fibre networks, GIS survey and mapping programmes, surveillance and comm and-and-control systems, e-governance platforms and smart city implementations for central ministries, state governments, PSUs and urban local bodies, including HAL, BEL, Indian Navy establishments, the Airports Authority of India, state power utilities and commercial tax departments.

Smart Cities Mission projects worth over Rs. 1.5 lakh crore have been completed across 100 cities, creating a large installed base of command centres, surveillance networks and civic platforms that now require maintenance, upgrades and next-generation integration. States are investing in integrated traffic management, safe city programmes and disaster management systems, and GIS- based land records, utility mapping and infrastructure survey programmes are funded at both central and state level. Each represents recurring, relationship-driven revenue for an integrator with established credentials and clearances. Defence: a structural opportunity

Indias defence budget for FY 2026-27 stands at Rs. 7.85 lakh crore, up 15.2% and the largest allocation to any central ministry at 14.7% of total expenditure. Capital outlay rose 22% to Rs. 2.19 lakh crore, with Rs. 1.85 lakh crore earmarked for capital acquisition. Critically, 75% of the acquisition budget, Rs. 1.39 lakh crore, is reserved for domestic industry. Combined with the positive indigenisation lists, this creates a structural demand floor for Indian manufacturers and integrators. The Defence Acquisition Council cleared proposals worth over Rs. 3.60 lakh crore in the twelve months to March 2026.

Domestic defence production reached a record Rs. 1.78 lakh crore in FY 2025-26, up 15.6% and more than double the FY 2020-21 level. Defence exports touched Rs. 38,424 crore across more than 80 countries. The private sectors share of production rose to an all-time high of 24%, approximately Rs. 42,000 crore, evidence of a maturing private defence industrial base. DRDOs allocation rose to Rs. 29,100 crore, with 25% of the defence R&D budget opened to industry, startups and academia. The post-Operation Sindoor procurement environment has compressed emergency and strategic acquisition timelines, creating additional demand for rap id-deployment surveillance, communication and unmanned systems, all areas where the Companys integrated capability is directly relevant. Drones and unmanned systems

Indias drone market is valued at approximately USD 1.3 billion in 2025 and is projected to grow at a CAGR above 17% through 2032. The military segment alone is valued at USD 1.95 billion. India now has over 38,500 registered drones, nearly 40,000 certified remote pilots and more than 240 approved training organisations, indicators of a market that has moved well beyond pilot projects. The Drone Shakti Mission, the Production-Linked Incentive scheme for drone components and expanding indigenisation lists provide policy support, while defence procurement of unmanned systems is accelerating across ISR, tactical strike, border surveillance and maritime patrol.

Telecommunications infrastructure

The sector continues to benefit from 5G densification, fib re-to-the-ho me expansion and sustained public investment in national and state fibre networks. ACS Technologies has a demonstrated execution record in this market, including MahaNet (11,000 km aerial), Telangana T-Fiber (6,200 km underground), APFiberNet and multiple RVNL packages, and remains a credible partner for large- scale connectivity programmes. IT services, digital transformation, IoT and cybersecurity Indias IT-BPM industry is on track for USD 315 billion in FY 2026, with domestic IT spending projected at USD 176.3 billion and the domestic IT and business services market at USD 69 billion, growing around 8%. The digital transformation market is estimated at USD 144.5 billion in 2026, compounding above 16% through 2031, and nearly 2,400 Global Capability Centres employing over 2.8 million professionals are reshaping demand for infrastructure, security and managed services.

The IoT market continues to expand on smart city, industrial automation, precision agriculture and connected healthcare demand, with IoT security alone compounding above 20%. Over 84,000 CCTV cameras and integrated command centres installed under the Smart Cities Mission create an upgrade and integration cycle to which IOTIQ and the Athena Smart Analytics platform are directly relevant. Indias cybersecurity market, approximately USD 4 billion in 2024, is being driven by the Digital Personal Data Protection Act, 5G and IoT security requirements and rising attack frequency: over 83% of Indian organisations have experienced a cyberattack while only 24% report adequate capability. exhibit ii India addressable market Landscape

India addressable market landscape (USD billion)

S144.5B

Broad enterprise markets alongside fast-growing specialist niches Digital transformation (2026)

Domestic IT & business services (FY26)

Cybersecurity (2024)

Military drones (2025)

Civil & commercial drones (202$

Source: NASSCOM, IOC. Mordor Intelligence, industry estimates

WHY THE PORTFOLIO matters

Every segment the Company serves is compounding faster than the economy, and the breadth of the portfolio lets ACS direct resources to the segments with the best near-term conversion while preserving optionality across the rest. Breadth is a strategic asset, not a dilution of focus.

Rs. 264.42 Cr

+108% - more than double

Revenue

exhibit 12 Revenue from operations, consolidated and standalone, FY23 to FY26

Revenue from operations (Rs. crore)

Consolidated revenue has grown -3.0x in three years; FY26 more than doubled

Rs. 170.75 Cr

+53%-from Rs. 111.90 Cr

FY23 FY24 FY25 FY26

Sou roe: Company audited financial results: FY23-FY24 from published annual accounts (rounded)

Consolidated revenue from operations reached Rs. 264.42 crore, more than double the Rs. 126.94 crore of FY 2024-25. Over three years consolidated revenue has grown roughly 3.8 times, a compound rate of about 56% a year. Standalone revenue grew 53% to Rs. 170.75 crore from Rs. 111.90 crore, confirming that the parents core infrastructure business expanded independently of subsidiary contributions. The balance of Rs. 93.67 crore, 35% of the group total, came from IOTTQ Innovations, underscoring the value of the group structure in aggregating diversified revenue under one technology platform.

¦ Subsidiary

Source: Company audited financial results

exhibit 13 ConsoLidated revenuecomposition, FY 2025-26

Consolidated revenue composition, FY 2025-26

IOHQInnovations alone contributes 35% of group revenue

IOTIQ Innovations Rs. 93.7 Cr 35%

platforms ahead of revenue, and accepted near-tern margin dilution to create an operating base capable of sustaining higher throughput and higher-value engagements. Absolute profit growth of 71% demonstrates that scale was not bought at the expense of bottom- line discipline.

Management expects operating leverage to improve as new capabilities mature and the pipeline converts to contracted revenue; the improvement in the standalone EBITDA margin, from 9.0% to 10.3%, is the first evidence of that leverage.

Profitability

Consolidated profit after tax rose 71% to Rs. 8.45 crore (FY 2024-25: Rs. 4.93 crore); standalone profit after tax rose 57% to Rs. 7.31 crore (Rs. 4.67 crore). Standalone profit before tax more than doubled to Rs. 11.15 crore (FY 2024- 25: Rs. 5.35 crore). Consolidated EBITDA grew 87% to Rs. 19.82 crore, a margin of 7.5% against 8.4% in the prior yean standalone EBITDA grew 74% to Rs. 17.57 crore, with the margin improving to 10.3% from 9.0%.

PAT margin moderated from approximately 3.9% to 3.2%. The moderation is a deliberate consequence of the years strategy: the Company prioritised market-share capture and capability investment, onboarding teams and building

Revenue was well distributed across government and implementations, and grew in every quarter of the year over defence contracts, telecommunications infrastructure, the corresponding quarter of FY 2024-25. enterprise IT services and emerging technology 73 crore. Total borrowings were Rs. 47 crore (FY 2024-25: Rs. 27 crore), predominantly working-capital lines supporting execution.

Balance sheet and cash

Total consolidated assets grew to Rs. 247 crore from Rs. 164 crore, growth of 51%, reflecting the expanded project portfolio. Total equity stood at Rs. 134 crore, comprising share capital of Rs. 60.74 crore and other equity of Rs.

Sou me: Com pany fi nancial results; E BITDA matgi nderivedfnompublished acco unts (i ndicative)

Working-capital efficiency improved markedly. the collection cycle even as government revenue scaled. Consolidated receivable days fell to 105 from 136 in FY 2024-25 and 242 three years earlier, a 57% shortening of

exhibit 16 Net worth, bo rro wings and receivable days, FY23 to FY26

long-term bank facilities, the first such rating in its history. An investment-grade rating from a recognised agency lowers the cost of working-capital and non-fund-based facilities, which matter in a business that carries bank guarantees and letters of credit on government contracts.

Two events strengthened the capital base. Warrants aggregating Rs. 124.03 crore were allotted on 1 December 2025, with Rs. 51.39 crore received to date including the first conversions; deployment against the objects of the issue is set out in Section 07. And the Company received its first-ever credit rating, BBB- from Infomerics Ratings for its

Net worth vs borrowings (Rs. crore) Receivable days (consolidated)

51.39 crore has been received under the programme: Rs. 31.01 crore as the 25% upfront consideration on allotment, and Rs. 20.38 crore on the first conversions of 86.95 lakh warrants into equity shares in July 2026. The balance of Rs. 72.64 crore is receivable on conversion within eighteen months of allotment.

Growth capital is finite and the Board treats it that way. Pursuant to shareholder approval at the extraordinary general meeting of 15 October 2025, the Company allotted, on 1 December 2025, 3,96,90,000 convertible warrants at Rs. 31.25 each, aggregating Rs. 124.03 crore, to promoters and non-promoter investors including body corporates. Rs.

CAPITAL ALLOCATION FRAMEWORK

exhibit 17 warrant programme: allotted, received and receivable

Preferential warrant programme (Rs. crore)

Received: Rs. 51.39 Cr

Receivable on conversion: Rs. 72.64 Cr

Rs. 124.03 Cr

WARRANTS ALLOTTED, 1 DEC 2025 - 3,96,90,000 WARRANTS @ RS. 31.25 - RS. 124.03 CR

Received = Rs. 31.01 Cr upfront (25%) + Rs. 20.38 Cr on first conversions of 86.95 lakh warrants Qul 2026). Balance due on conversion within 18 monthsof allotment.

Sou rce: EGM app noval of 15 October 2025; allotment and convers io n i ntimations fi led with the Stock exchange

Proceeds are deployed strictly against the objects approved quarter; no deviation or variation from the stated objects by shareholders, and utilisation is monitored by CARE has occurred.

Ratings Limited, which reports to the exchange each

OBJECT OF THE ISSUE	ALLOCATION (RS. CR)	i! OF TOTAL	WHAT IT FUNDS
Product development technological upgradation and	5.89 - 6.20	4.75 - 5.00%	Unmanned platforms, defence software, IoT and analytics platforms
Market expansion (domestic international) and	3.72-3.82	3.00 - 3.10%	Growth Office, account executives. Middle East subsidiary, export programmes
Recruitment and training of workforce	2.17-238	1.7S - 2.00%	Engineering, delivery and sales hires; structured training
Strategic acquisitions, alliances	18.29 -18.60	14.75-15.00%	Capability-led bolt-ons and alliances in cyber, Al and unmanned subsystems
Working capital requirements	77.50 - 80.60	6230 - 65.00%	Execution of the growing order book with less reliance on bank lines
General corporate purposes	11.16 -12.40	9.00-10.00%	Setting up the Chegunta manufacturing facility on land the Company has owned since 2022
Total (as stated in resolution, rounded) the	124.00	100%

The Chegunta manufacturing facility is being set up from these proceeds, in a phased manner. The 6.42-acre site on NH-44, near Hyderabad, has been owned by the Company since 2022, so the programme carries no land cost and requires no incremental borrowing or capital outlay beyond the warrant issue. Each phase is therefore funded from equity as it is commissioned, which is the appropriate way to finance a long-lived manufacturing asset in a business whose working capital is already tied to government payment cycles. The Company will not pursue growth at any price. Investments are released against their stated object and a return test, an 18 to 24 month payback for operating investments, and proceeds not yet deployed are held in liquid instruments. Acquisitions are evaluated only where they add a capability the Company cannot build faster or cheaper itself.

03 STRATEGY AND PROGRESS SCORECARD
The Companys strategy rests on four pillars. The scorecard below records what was achieved against each in FY 2025-26, what will be measured in FY 2026-27, and the indicator by which shareholders can judge progress.

STRATEGIC PILLAR	FY 2025-26 PROGRESS	FY 2026-27 PRIORITY	KEY INDICATOR
Scale the core through the order book	Revenue +108%; broad-based growth across defence, government and enterprise	Convert order book and active pipeline across defence, government and enterprise	Revenue growth; order book cover
Build manufacturing capability	Chegunta land owned since 2022 (6.42 acres); facility set up from warrant proceeds, no incremental debt	Commission Chegunta in phases; progress the Defence Industrial Licence application	Facility phases operational; licence progress
Integrate and go to market as one group (EKAM)	Programme launched; unified growth, finance, people, products and	Dedicated account executives, restructured bid desk, segment-	Cross-sell revenue; bid win rate
	P	pe p
Invest in frontier capability	Products deployed with defence and government customers; Middle East subsidiary incorporated	AI, autonomous systems, advanced cyber and edge computing with 12- 24 month commercial horizon	Product revenue share; R&D to revenue

Market penetration and international expansion EKAM enables coordinated go-to-market activity across business units. Innovistas Innovations Private Limited will pursue enterprise digital transformation, cybersecurity and strategic IT consulting in the Middle East, and the Convergence Technologies vertical is developing export pathways for drone platforms with international partners. SEGMENT REVIEW

Infrastructure Technologies

The vertical contributed Rs. 238.34 crore, 90% of consolidated revenue, in FY 2025-26. Key engagements during the year included optical fibre connectivity projects, enterprise network deployments and surveillance infrastructure for government and defence installations, together with managed IT and security operations under multi-year contracts.

The year also saw a comprehensive change of management in the vertical. A new leadership team, combining service backgrounds with industry and management-institute experience, took charge of delivery, bidding and account management, and set a clear aspiration: to be the preferred integration partner for national connectivity, surveillance and digital-infrastructure programmes, with a growing share of revenue from multi-year managed services. The verticals economics are those of a trusted delivery partner moderate gross margins, high repeat rates, and a working- capital profile tied to government payment cycles. Its strategic role is unchanged, to fund the present and to be the platform on which convergence products are deployed. ISO certifications and security clearances remain the entry ticket in every market it serves. Convergence Technologies

The vertical contributed Rs. 26.08 crore of revenue in FY 2025-26,10% of the consolidated total, classified by the product-led nature of the work rather than by entity, and is where the years product investment was concentrated. Its share of revenue is expected to rise steadily as the product portfolio commercialises.

The unmanned systems programme fielded ISR platforms with defence and government customers, broadened the product architecture to four classes with its partners, began bringing frames, carrier boards and power systems inhouse, and progressed the Chegunta campus toward commissioning. Its manufacturing services, contract, on- demand and at-customer-Iocation, were offered to domestic OEMs and to export partners in Europe and Australia. Revenue contribution from drones remains early relative to capability, and the next-generation mission configurations are at development stage; the segment nevertheless sits inside the fastest-expanding part of Indias manufacturing ecosystem, with 75% of defence capital acquisition reserved for domestic industry.

During the year the Company forayed into unmanned systems, drone components and allied drone products, and into IoT devices, extending its historic role as an integrator into adjacent product markets. It has made significant progress by partnering with domestic and international drone companies, technology partners for subsystems and global partners for platforms and export assembly, so that the vertical can scale without carrying every development cost alone. Management is confident of growing this vertical substantially: it addresses the fastest-compounding

markets the group serves, and the manufacturing base at Chegunta gives it a cost and lead-time advantage that pure product companies lack.

IOTIQ Innovations grew its industrial and building automation base and its consumer range, and alone contributed 35% of consolidated revenue. Defence software, Drone Arjuna, the War Gaming Simulator and MPAS, moved from pilot to deployment with naval and army establishments, and the AI practice delivered the target- identification system. The geospatial practice continued GIS, land-records and utility-map ping programmes for state customers. Business applications (ERP, HR MS, DMS, LMS and the queue, visitor and helpdesk suites) added recurring licence and support revenue and opened new accounts. Infrastructure funds the present; Convergence is the future of the Company and the focus of its capital, its product investment and its leadership attention, with defence as the sharpest edge. The two are deliberately housed in one group so that the credibility, clearances and customer access of the first accelerate the adoption of the second.

KEY DEVELOPMENTS DURING THE YEAR EKAM: group integration programme

EKAM unifies operating processes, shared services and goto-market across the ACS Technologies group. It establishes a consolidated leadership structure with horizontals covering growth, finance, people, products and solutions, and procurement, while preserving operational autonomy at entity level for specialised execution. The programme is designed to unlock cross-selling to existing customers, shared capability development and coordinated market positioning, and is being phased to minimise disruption while accelerating time-to-market for integrated solutions. Its financial purpose is predictability: as One ACS, the group intends to shift its revenue mix toward multi-year managed services, product licences and framework contracts, so that a rising share of each years revenue is visible at the start of the year rather than won within it.

Chegunta manufacturing campus

The Company has owned the 6.42-acre Chegunta site on KJH-44, near Hyderabad, since 2022; it lies within a DGCA- approved green zone. On it the group will build, in a phased manner, a manufacturing campus designed to international standards; dedicated lines for drone assembly, IoT device manufacturing and electronic systems integration, in-house test and quality infrastructure, and the ability to flight-test within the green zone. The campus is shared across the groups businesses so that one set of process equipment, one quality system and one trained workforce serve every product line, which is what makes contract manufacturing for third parties economic alongside the groups own platforms.

The facility is being set up from the warrant proceeds within the objects approved by shareholders. Because the land is already owned, no further capex or borrowing is required beyond the issue. Separately, a Defence Industrial Licence is being pursued; the licence is a group credential and is not tied to any single facility. Phased commissioning at Chegunta is the milestone by which progress will be reported in FY 2026-27. International expansion

Innovistas Innovations Private Limited was incorporated to pursue enterprise digital transformation services in the Middle East, focusing on software development, cybersecurity and strategic IT consulting. This marks the beginning of a deliberate internationalisation strategy. Separately, the Convergence Technologies vertical explored export opportunities for drone platforms with international partners in select markets. Leadership and organisation

The Company renewed its leadership during the year. A new management team took charge of the Infrastructure Technologies vertical, the Growth Office was established under a Group Chief Growth Officer, and senior positions were filled with professionals from the armed forces, industry and premier management institutions including

IIM Kozhikode. On 4 August 2026, the Board appointed Group Captain M Z A Vi nod (Retd) as Group Chief Executive Officer; he brings 38 years of Air Force service, more than 7,500 flying hours and domain expertise across defence, aviation, unmanned systems and space.

Trading on BSE

During the year, the Companys equity shares became fully available for trading on BSE, pursuant to approval dated 29 April 2025 and with effect from 7 May 2025, widening access to the stock for investors and improving liquidity in the counter.

Credit rating

The Company received a long-term credit rating of BBB- from Infomerics Ratings for its bank facilities, the first rating in its history. The rating recognises the scale the business has reached, its customer base and its capital position, and it improves the terms on which working- capital and non-fund-based facilities are available. Stock market data

Monthly high and low quotations and trading volumes of the Companys equity shares during the financial year 2025-26 on BSE are given below. Trading in the scrip was effective from 7 May 2025; there was no trading during April 2025.

MONTH	HIGH (RS.)	LOW (RS.)	VOLUME OF SHARES TRADED
April 2025
May 2025	21.85	3.28	3,77,281
June 2025	27.13	21.78	40,27,146
July 2025	25.58	20.11	34,54,348
August 2025	26.54	22.39	22,67,698
September 2025	37.81	27.07	58,11,999
October 2025	40.22	31.50	77,89,848
November 2025	40.40	35.60	36,21,797
December 2025	40.69	32.56	20,14,549
January 2026	45.80	38.99	48,32,348
February 2026	43.44	37.39	16,49,826
March 2026	40.40	34.31	13,11,412

Warrant issue

Warrants aggregating Rs. 124.03 crore were allotted on 1 December 2025, and Rs. 51.39 crore has been received to date, including Rs. 20.38 crore on the first conversions in Duly 2026. The committed capital provides flexibility for investment in manufacturing infrastructure, technology platforms, potential acquisitions and working capital, as set out in Section 07. OPPORTUNITIES AND THREATS

The table below summarises the Companys position in the form used by management for strategic review. STRENGTHS

• Four-decade delivery record with defence, PSU and state customers

• Proprietary products across UAS, defence software, IoT and analytics

. ISO 9001, 20000-1, 27001, 42001, CM MI L3 and security clearances

• Own manufactu ringatChegunta with multi -tier so U rci ng

• Groupstructurespanninginfrastructureandconverge nee

OPPORTUNITIES

• Rs. 1.39 lakh crore of capital acquisition reserved for domestic industry

• Defence exports momentum: Indian defence exports now reach 80+ countries

• Smart city upgrade cycle: 100 cities, 84,000+ cameras installed

• Drone market tripling by 2032; Middle East digital transformation

WEAKNESSES

• Margins diluted by investment ahead of revenue

• Government revenue concentration and long payment cycles

• Drone reven uesti liearly relative to capability

• S u b -scale i n i nternatio rial markets

THREATS

• Large integrators and well-funded specialists expanding in defence tech

• Semiconductor and electronic component supply dependence

• Tale nt scarcity i n AI, cyber, IoT and UAS

Evolving DPDP, DGCA and export-control regulation Competitive landscape

The Indian IT services and defence technology markets are increasingly contested by large systems integrators, global technology companies and well-funded specialists. ACS mitigates this through deep domain expertise, established relationships and clearances, and the ability to offer integrated solutions spanning infrastructure and convergence technologies, a combination that neither generalist nor specialist competitors readily replicate.

Talent, technology and supply chain

Skilled professionals in AI, cybersecurity, IoT and unmanned systems remain scarce industry-wide. ACS addresses this through structured onboarding and training, competitive compensation and the appeal of a diverse technology portfolio. Rapid technology evolution requires continuous R&D investment, and supply dependence for electronic components and semiconductor-based subsystems is mitigated through multi-tier sourcing and progressive indigenisation, with geopolitical developments actively monitored.

Regulatory complexity

Operating across defence, telecommunications and drones requires compliance with defence procurement procedures, the DPDP Act, DGCA drone regulations and export-control frameworks. The Company maintains dedicated compliance resources and treats regulatory readiness as a core operating requirement rather than an overhead.

RISK MANAGEMENT

impact after mitigation, assigned to an owner and reviewed each quarter. The heat map and register below present the principal risks as assessed for FY 2026-27.

The Board, through the Audit Committee, oversees an enterprise risk management framework under which principal risks are identified, assessed for likelihood and

exhibit 19 Principal risk heat map, residual position after mitigation

Principal risk heat map (residual, after mitigation)

Position reflects managements assessment for FY 2026-27

LOW HEDIUH HIGH

LIKELIHOOD

Ri Working capital & receivables

R2 Defence Industrial Licence timing R3 Talent in AI / cyber / UAS

R 4 Component supply chain

R 5 Regulatory (DPDP, DGCA, export control)

R f> Competitive intensity

R7 Customer concentration (Govt)

R8 Cybersecurityofown platforms

Source: Management risk assessment, reviewed by the Audit Committee STATUTOI

#	PRINCIPAL RISK	trend	MITIGATION AND CONTROLS	OWNER
R1	Working capital and receivables from government customers	Stable	Customer advances; milestone billing; bank lines; weekly receivables review; receivable days target at or below 100	CFO
R2	Timing of the Defence Industrial Licence	Rising	Dedicated regulatory workstream; parallel non-licensed production lines; phased commissioning	COO
R3	Talent In AI, cybersecurity and unmanned systems	Rising	Structured training; competitive frameworks; campus and lateral pipelines; retention plans for critical roles	CHRO
	Electronic component and semiconductor supply	Stable	Multi-tier sourcing indigenisation of components; safety stock for critical items	Head, Procurement
R5	Regulatory change: DP DP, DGCA, export control	Rising	Dedicated compliance function; regulatory readiness in bid gate; legal review of export contracts	Company Secretary
R6	Competitive Intensity from large Integrators and specialists	Rising	Integrated offering proprietary products; clearances; account- based selling under EKAM	Head, Growth
R7	Customer concentration In government and defence	Stable	Enterprise and international diversification; Middle East subsidiary; product sales	CEO
RS	Cybersecurtty of own platforms and delivered systems	Stable	ISO 27001 controls; secure development lifecycle; periodic penetration testing	Cl SO

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has internal control systems commensurate with its size and the nature of its operations, designed to provide reasonable assurance on the recording and reporting of transactions, safeguarding of assets, compliance with applicable laws and reliability of financial reporting. Controls are embedded in enterprise systems covering procurement, project execution, revenue recognition and treasury, and are supported by documented delegation of authority.

The internal audit function reviews the adequacy and effectiveness of controls across entities and reports to the Audit Committee, which reviews significant findings, management responses and the status of corrective action each quarter. The statutory auditors observations on internal financial controls are considered by the Audit Committee and the Board. EKAM extends a common control environment across group entities, and the Company continues to strengthen controls in the areas of project costing, receivables and IT general controls as the business scales. HUMAN RESOURCES

People are the Companys principal asset in a business that sells expertise and accountability.

People are the Companys principal asset in a business that sells expertise and accountability. The Company invests in structured onboarding, technical training and competitive, performance-linked compensation, and maintains a work environment designed to attract and retain talent across established and emerging technology domains. Industrial relations remained cordial throughout the year.

Under EKAM, people policies, performance frameworks and development programmes are being unified across the group, so that talent can be deployed where it creates the most value.

ENVIRONMENT, SOCIAL AND GOVERNANCE

ENVIRONMENTAL

Chegunta campus designed for energy- efficient manufacturing

SOCIAL

Drone pilot and technical training; indigenised defence and connectivity infrastructure

GOVERNANCE

Board committees under the Listing Regulations; ISO 27001-certified information security

The Companys ESG approach is proportionate to its scale and aligned with the direction of the Business Responsibility and Sustainability Reporting framework. Environmentally, the Chegunta campus is being designed for energy-efficient manufacturing, and the Companys geospatial, IoT and drone capabilities are themselves deployed in afforestation, utility mapping and disaster-management applications for public customers. Socially, the Company contributes to Indias skilled-workforce base through drone pilot and technical training and to national priorities through indigenised defence and connectivity infrastructure. On governance, the Boards committees oversee risk, audit, nomination and remuneration in accordance with the Listing Regulations, and the Company maintains ISO 27001-certified information security practices.

Quantified ESG indicators (energy intensity, workforce diversity, safety statistics and CSR expenditure) are set out elsewhere in this Annual Report.

2 Manufact u ring capab I llty. Ad vance the phased build

out of the Chegunta campus toward operation and progress the Defence industrial Licence application, giving the group dedicated, internationally benchmarked capacity for drones, IoT devices and electronic assemblies.

4 Capability Investment. Continue investing in AI, autonomous systems, advanced cybersecurity and edge computing, with R&D focused on areas that have clear commercialapplicatioh within 12 to 24 months.

3 Market penetration. Use EKAM to coordinate go-to- market with dedicated account executives, a restructured bid desk and segment-specific sales strategies, and add geographic diversification through the Middle East subsidiary and select export programmes.

1 Revenue growth and scale. Execute the existing order book, convert the active pipeline across defence, government and enterprise. The group-wide revenue ambition reflects confidence in the depth and breadth of the opportunity set.

ACS Technologies enters FY 2026-27 with its strongest-ever order book, a restructured organisation, committed growth capital and a market environment that is structurally favourable across all its segments. Four priorities define the year.

systems integrator that also builds and owns its products, is increasingly valuable where customers demand both integrated accountability and proven technology.

The tailwinds are real: record public capex, defence budgets at all-time highs with three-quarters of acquisition reserved for domestic industry, and accelerating digital infrastructure investment. The task ahead is execution, disciplined, scaled and focused, and the Company is positioned to deliver.

Conclusion

FY 2025-26, with 108% revenue growth, 71% profit growth, a first-ever credit rating and Rs. 124.03 crore of growth capital raised, establishes the Company at an inflection point. The restructuring into Infrastructure and Convergence verticals, now operationalised through EKAM, provides the organisational architecture to capture Indias defence modernisation, digital infrastructure buildout and emerging-technology adoption. The Companys identity, a

Revenue growth on a base that has already doubled; operating margin recovering toward double digits as leverage builds; receivable days held at or below 100; Chegunta commissioned and licensed; and product revenue reported as a distinct, growing line.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference include economic conditions affecting demand and supply, price conditions in domestic and overseas markets, changes in government regulations and policies, tax laws, the timing of defence and government procurement, and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of subsequent developments, information or events. Industry and market data have been obtained from sources believed to be reliable but have not been independently verified.

Date: 03/09/2026 Place: Hyderabad
By order of the Board
For ACS Technologies Limited
Ashok Kumar Buddharaju
Date: 03/09/2026 Chairman and Managing Director
Place: Hyderabad (DIN:03389822)