ADC India Communications Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Telecommunication

The telecommunications landscape in India, the worlds second-largest telecom market, is undergoing a profound transformation, where the domestic market continues to exhibit an insatiable appetite for mobile data, propelled by smartphone proliferation and data-heavy applications. Your Company expects this momentum to further intensify. To stay ahead of the curve, telecom service providers are transitioning from traditional service models to a futuristic, technology-driven ecosystem characterized by measured, high-utility growth.

Growth Engines for the Telecommunication sector being: (i) infrastructure & Next-Gen Connectivity- Service providers are aggressively deploying optical fibre across both urban residences and rural markets (including Gram Panchayats). This foundation supports expanding 5G adoption, high- bandwidth broadband and emerging Satellite Communications (SatCom) opportunities. (ii) Focus on Al and Operational Efficiency: To optimize costs and improve network resilience, by integrating Data Science, Artificial Intelligence (Al) and Generative AI. (iii) Implementing AI-based self-healing tools and smart incident resolution systems that identify and fix network disruptions autonomously.

Added to that is Sustainability, which is now embedded at the core of business operations, aligning with Indias macro-level net-zero targets.

Expansion in the sector is heavily reinforced by proactive Government policies. Initiatives such as Digital India, liberalized Foreign Direct Investment (FDI) norms and the Phased Manufacturing Program (PMP) create a highly supportive operating environment. Furthermore, Production Linked Incentive (PLI) schemes for telecom manufacturing continues to catalyze domestic production, stabilizing supply chain and maximizing economic value.

Enterprise

The global and domestic technology landscape continue to navigate a complex environment marked by elevated interest rates, persistent inflation and cautious consumer spending. These macroeconomic headwinds have triggered widespread corporate cost-optimization and workforce adjustments across the broader Enterprise IT sector.

Despite these challenges, digital transformation remains a fundamental strategic priority. Businesses are increasingly integrating Artificial Intelligence (AI), Cloud architecture, Cybersecurity, and Hyperautomation into their core processes to realize operational efficiencies. Concurrently, the fusion of 5G technologies and AI is accelerating Internet of Things (IoT) ecosystems and cyber-physical interactions, sustaining high structural demand for advanced network infrastructure.

Your Companys operations are split by distinct growth trajectories across our core operational verticals; where the Data Centre segment stands out as the primary growth engine, expanding significantly faster than initial industry forecasts. Driven by high spending on AI, Data Centre operators are rapidly upgrading physical layers to support massive computational workloads, which fuel fibre optic business and continues to outpace copper deployments. As network configurations require multifold increases in bandwidth, denser wireless arrays and deeper fibre pathways, your Company’s high-density fibre portfolio remains highly competitive.

Conversely, the traditional Office Network segment, particularly the IT consultancy firms and software enterprises, experienced moderate growth. Macroeconomic caution has caused global enterprise clients to extend project evaluation cycles, resulting in delayed decision-making, whereas public sector investments have provided a strong counterweight to enterprise volatility. Aggressive Government funding for large-scale infrastructure projects and digital connectivity frameworks has sustained stable demand. Furthermore, targeted growth across Pharma, Healthcare, BFSI, Defense, and Manufacturing verticals continue to provide resilient pipeline opportunities.

Fiscal management throughout the period focused extensively on defending gross margins against volatile commodity inflation, which comprised of:

(i) Input Cost Pressures: Crucial raw materials including copper, stainless steel and plastics experienced steep, volatile price increase and

(ii) Pricing Agility: To mitigate margin dilution, your Company systematically implemented staggered price adjustments across impacted product lines. This disciplined pricing strategy successfully offset input cost inflation, stabilizing internal profitability metrics.

Your Company maintains a strong Balance Sheet characterized by disciplined capital allocation and a healthy liquidity profile. This financial stability ensures we remain a reliable partner for large- scale infrastructure projects that carry extended implementation timelines. The medium-to-long-term outlook for your Company remains fundamentally robust. As public and private infrastructure commitments converge over the next few quarters, broader market sentiment is expected to improve. Your Company is strategically positioned to leverage its core engineering strengths across Data Centre architectures, Fibre deployments and Digital India initiatives, ensuring long-term profitable growth.

REVIEW OF OPERATING PERFORMANCE

The financial statements have been prepared in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards), Rules, 2015, as amended. The Management of the Company accepts responsibility for the integrity and objectivity of these financial statements and the basis for various estimates and judgements used in preparing the financial statements. Some ofthe key performance indicators are given below:

(Amount in INR Lakhs)

Particulars	Year ended March 31, 2026	Year ended March 31, 2025
Revenue from Operations	20,006.36	18,710.17
Operating Costs	17,943.59	15,790.79
Profit before Interest, Depreciation and Tax (EBIDT)	2,062.77	2,919.38
Depreciation	31.28	21.47
Profit before Interest and Tax (EBIT)	2,031.49	2,897.91
Other Income (net of finance cost)	430.51	379.10
Profit before Tax (PBT)	2,462.00	3,277.01
Tax Expense	569.31	831.25
Profit for the year	1,892.70	2,445.76
Other Comprehensive Income	8.87	(3.84)
Total Comprehensive Income for the year	1,901.57	2,441.92
Total Assets	13,460.47	11,438.39
Earnings per share (Basic EPS) in Rupees	41.15	53.17

During the financial year 2025-26, your Company’s overall revenue from operations was INR 20,006.36 lakhs, higher by 7% over the previous years revenue of INR 18,710.17 lakhs with relentless focus on execution. Telecommunication business declined by 15%, whereas IT-Networking (Enterprise network) business grew by 10% over that of the previous year. For the full year, the Company’s profit before tax was INR 2,462.00 lakhs as compared to INR 3,277.01 lakhs in the previous year. Profit after tax for the financial year was INR 1,892.70 lakhs as compared to INR 2,445.76 lakhs in the previous year.

The decline in revenue from the Telecommunication business was primarily due to lower exports compared to the previous financial year and growth in revenue in the IT-Networking business was on account of increase in demand with expansion of office networks across verticals in the country. Lower profits in the current financial year were mainly driven by significant spikes in raw material costs, particularly copper volatility and fibre availability. These supply chain shocks caused significant direct cost impacts. During the year, the Company generated net cash flow of INR 1,339.65 lakhs.

KEY FINANCIAL RATIOS & RETURN ON NET WORTH

As per the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the key financial ratios are given below:

Ratios	Year ended March 31, 2026	Year ended March 31, 2025	Variance (%)
Debtors Turnover Ratio	5.28	6.35	-17%
Inventory Turnover Ratio	9.69	7.51	29%
Current Ratio	2.66	2.45	8%
Operating Profit Margin	12.31	17.51	30%
Net Profit Ratio	0.09	0.13	-27%
Return on Net Worth/Capital Employed Ratio	0.28	0.43	-34%

Explanation for significant change (i.e. 25% or moreover previous year) in Key Financial Ratios Inventory Turnover Ratio

Increase in Inventory turnover ratio is on account of better Inventory management which happened mainly towards the end of the year.

Other Ratios (Operating Profit Margin, Net Profit and Return on Net Worth/Capital Employed Ratio):

Decrease in profits is on account of increase in material costs, majorly on account of increase in copper prices.

OPPORTUNITIES

Telecommunication

A robust, high-speed telecommunications infrastructure is the cornerstone of the Countrys economic progress. Your Company views a strong wireless technology ecosystem not just as a business asset, but as the primary enabler of the Governments Digital India Vision. Transforming the nation into a knowledge economy requires a robust, pan-India network that connects rural citizens and bridges the urban-rural digital divide. Our strategic focus on expanding the fibre optics network is critical to realizing this vision.

The Indian Mobile Industry is entering a high-value growth phase, driven by powerful structural tailwinds as manufacturing incentives like Production Linked Incentive (PLI) schemes for telecom and networking products are boosting domestic supply chains. Localized Production, under the Governments "Make in India" and "Phased Manufacturing Program (PMP)" continue to accelerate domestic mobile handset production. Rural Penetration is significant with optical fibre cables laid across by Gram Panchayats establish a solid foundation for widespread, high-speed rural internet adoption.

Rising mobile-phone penetration is creating massive opportunities for new business models. Your Company is strategically positioned to capture value at the convergence of the Internet of Everything (loE), Artificial Intelligence (Al), Data Science and Generative AI. Consumer appetite for data-heavy applications shows no signs of slowing down. Your Company expects this high-consumption trend to persist. With India projected to become the second- largest market for 5G services within the next few years, the next decade presents unprecedented opportunities to build new revenue streams. As an organisation our focus remains clear - providing passive products that are high-quality, reliable and affordable to meet the demand that exists within the telecom space for copper (Modules) and fibre networks (Enclosures, Cords & Cable).

Enterprise

Influx ofpublic and private capital into infrastructure is driving a powerful market recovery in India. While traditional building and campus segments are seeing moderate expansion, Data Centre connectivity sector is achieving explosive, double-digit growth.

Market acceleration is heavily concentrated across high-yield verticals, where your Company is uniquely positioned to target high-value opportunities within these sectors as project pipelines open up for Defense, Education, IT/ITES, E-commerce, Advanced Manufacturing and Digital India initiatives. Growth is also expected in Essential Services such as Healthcare, Pharmaceuticals, Banking and Finance. Your Company will be able to favourably participate in the areas of its strength within each opportunity as the market activities pick up.

Enterprise IT architecture is shifting rapidly, creating a dual-track demand for digital infrastructure where in: (i) Private Infrastructure: Large Corporations and SMBs are aggressively consolidating existing networks, storage and computing power into dedicated private clouds. (ii) Hybrid & Public Hosting: Businesses are simultaneously outsourcing workloads to third-party providers to reduce overhead. (iii) Colocation Edge: Multi-Tenant Data Centre (Colo) operators have emerged as the fastest-growing market segment. They solve critical enterprise pain points by delivering on-demand scaling, robust power reliability, maximum network availability and accelerated time-to-market.

RISKS AND CONCERNS

Your Company continues to demonstrate exceptional resilience against a complex macroeconomic backdrop marked by supply chain disruptions, rising interest rates, volatile commodity pricing and evolving regulatory policies. Guided by a conservative financial profile and a structured risk management framework, we have successfully mitigated these headwinds. Our robust two-tier distribution network remains a critical asset, enabling us to expand our market footprint, while systematically monitoring and managing localized business risks. The Company is well positioned to manage risks given its long-standing track record. With industry dynamics landscape reshaped, demanding swift adaptability, we have observed a short-term deceleration in our Enterprise network copper business, driven by widespread adoption of remote work and a moderate growth in commercial office space expansion. However, your Company’s diversified portfolio has effectively neutralized this headwind. Strong, accelerated growth in our other operating sectors has kept the organisation well-balanced, stable and firmly on the path of continued growth.

To secure long-term competitiveness, Management is continuously evaluating the mid-to-long-term implications of these shifting market dynamics. We are actively realigning our cost structures, eliminating operational redundancies and sharpening overall productivity. These strategic interventions ensure we remain an indispensable, high-value partner to our global clientele while protecting our operating margins.

Prudent governance being the cornerstone of our corporate philosophy, the Board of Directors and Risk Management Committee proactively stress-test our operations against worst-case scenarios. This disciplined approach to financial engineering ensures that your Company maintains a fortress Balance Sheet capable of delivering sustainable, consistent and predictable long-term Shareholder value.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Ethics/Governance Policies

The Company is dedicated to building enduring relationships with our Shareholders through a foundation of transparency, absolute integrity and robust corporate governance. We hold ourselves accountable for delivering sustainable long-term value while strictly safeguarding investor interests. Through equitable treatment of all Shareholders, rigorous financial discipline and proactive regulatory compliance, we ensure that our growth remains responsible, transparent and aligned with your expectations.

Management initiatives for Internal Controls

The Company has adequate internal control systems including internal financial controls with reference to financial statements, commensurate with its nature of business, which meets the following objectives:

• providing assurance regarding the effectiveness and efficiency ofoperations.

• efficient use and safeguarding of resources.

• compliance with policies, procedures and applicable laws and regulations; and

• transactions being accurately recorded and promptly reported.

Periodical internal audits by M/s Gnanoba & Bhat, Chartered Accountants are being conducted for all functions and activities to ensure that systems and processes are followed across all areas. The Audit Committee of the Board of Directors of the Company regularly reviews the adequacy of internal control systems through such audits.

The Company also has a budgetary control system to monitor expenditure against approved budgets on an ongoing basis. These provide the foundations that enable optimal use and protection of assets, facilitate accurate and timely compilation of financial statements and management reports.

With high importance of Data Security in todays digital economy as businesses advance to grow, your Company moved the Data storage to Cloud Based with redundant link established from both primary & secondary Data Centre of the service provider to avoid any risk. With this, the IT infrastructure was also strengthened against ransomware and loss of data.

MANUFACTURING OPERATIONS

The Company continued to look at ways of cost reduction and be cost competitive in this highly volatile & dynamic market, which has yielded better results and would continue the same in the years to follow with focused approach, which will help the Company to favorably participate for long-term growth and market expansion.

Our factory prioritizes human capital and risk management as core drivers of operational excellence. By fostering an inclusive culture of dignity and implementing rigorous safety protocols, including a comprehensive Emergency Response Plan, we protect our workforce while securing business continuity and Shareholder value.

During the year, major focus has been on:

(i) Development of new products where we introduced higher density swing out fibre panels in both Single mode & Multimode version, with the success of the previous version.

(ii) Developed Patch lock system for Plugs, which would help customers with physical security of connectivity and/or dis-connectivity.

(iii) Continued development of new design fibre cable based on customer applications and rugged fibre armored cable assemblies to suit certain customer requirements.

(iv) Introduced new variants of different dimensions of Wire Mesh Basket System for Data Centre requirements, based on customer feedback & best practices.

HUMAN RESOURCES

As on March 31,2026, the Company had 22 permanent employees on the rolls of the Company. As part of employees Learning and Development, training on E-waste and Hazardous Waste Management, Prevention of Electrical Short Circuit, Safe Operation of Material Handling Equipment and Fire Fighting Devices were conducted during the financial year. The Employee Engagement Committee comprising representatives from the Workmen and Management conducted several employee related programmes during the year. The industrial relations throughout the year was harmonious and cordial.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the Companys objectives, projections estimates and expectations may constitute “forward looking statements” within the meaning of applicable Laws & Regulations and which the Management believes are true to the best of its knowledge at the time of preparation. Actual results might differ materially from those either expressed or implied and hence the Company and the Management shall not be held liable for any loss which may arise because of any action taken based on the information contained herein.