Adtech Systems Ltd Management Discussions

The Management Discussion and Analysis Report (MDA) is an integral part of, and is to be read along with, the Companys financial statements and has been prepared by the Management with the purpose of providing a descriptive explanation from the managements point of view, of how the company has performed in the past, its financial condition and its future prospects. This report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this report. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (Ind. AS) complying with the requirements of the Companies Act, 2013 and the guidelines issued by the Securities and Exchange Board of India (SEBI).

Some of the information contained in this MDA may contain forward looking statements. These forwardlooking statements may include, among others, statements regarding our plans, costs, objectives or economic performance, or the assumptions underlying any of the foregoing. Forward looking statements are based on information available at the time they are made, on the date of this report, and should not be read as guarantees of future performance or results as they are subject to risks and uncertainties, many of them beyond our control. We do not undertake any obligation to publicly update or revise any forwardlooking statement except as expressly required by applicable laws.

Adtech Systems Limited is a leading solution provider in electronic security/ surveillance industry. We provide our clients with cost effective solutions for total security protection and also efficient after sales service which is difficult to match. The Company is a Public Limited Company having its registered office in Chennai, Tamil Nadu. The Company had been listed in the regional stock exchanges of Cochin, Chennai and Ahmedabad all of which had to close down following exit order by the Securities and Exchange Board of India (SEBI). The Company has subsequently listed its equity shares in Metropolitan Stock Exchange of India Limited (MSEI), Mumbai and is also listed at BSE Ltd from 19^th June 2024. Financial statements are prepared in accordance with Indian Accounting Standards (Ind. AS) as prescribed under Section 133 of the Companies Act, 2013 read with rule 7 of the Companies (Accounts) Rules, 2014 to the extent applicable. Accounting

policies have been consistently applied, except where a newly issued accounting standard is initially adopted or a change in an existing accounting standard requires a corresponding change in the accounting policy hitherto in use.

GLOBAL ECONOMY

The global economy in 2025 continues to navigate a landscape marked by geopolitical tensions, technological transformation, and climate-related disruptions. While some major economies are showing signs of recovery from the slowdowns of the early 2020s, uncertainties persist.

Key Trends:

• Moderate Global Growth: The IMF forecasts global growth around 2.8-3.0%, with developing economies growing faster than advanced economies.

• Disinflation Trend: Inflation has eased in most advanced economies due to tighter monetary policies, though energy and food prices remain volatile.

• Interest Rate Plateauing: Major central banks like the US Fed and ECB have paused rate hikes, maintaining a cautious stance.

• Supply Chain Reconfigurations: Shifts from Chinacentric supply chains to diversification across Southeast Asia, India, and Latin America are continuing.

• Green Economy Investments: Transition to clean energy is accelerating, driving growth in green tech, battery manufacturing, and EVs.

• AI and Tech Disruption: Widespread integration of AI and automation is transforming labor markets, productivity, and business models.

Key Factors Influencing Global Growth:

1. Geopolitical conflicts (e.g., Russia-Ukraine, Taiwan Strait tensions)

2. Monetary policy stance of major central banks (Fed, ECB, BoJ)

3. Oil and commodity prices

4. Chinas economic rebalancing and real estate distress

5. Global trade policies and decoupling trends

Climate events and natural disasters

• Technological innovation and adoption (especially AI)

• Debt burdens in emerging and low-income economies

Overall, while the global economic outlook for 2025 is cautiously optimistic with moderate growth expectations, it is also subject to potential risks from geopolitical tensions, inflationary pressures, and monetary policy adjustments.

INDIAN ECONOMY

India continues to remain one of the fastest-growing major economies in the world. Despite global headwinds, domestic resilience driven by consumption, infrastructure spending, and digital adoption is keeping the momentum steady.

Economic Overview:

6. GDP Growth: Estimated at 6.8-7.0% in FY25-26, driven by robust domestic demand and capital investments.

7. Inflation: Moderating, hovering around 4.5-5.0%, within RBIs comfort zone.

8. Monetary Policy: RBI is maintaining a neutral stance, balancing inflation control and growth.

9. Exports and Manufacturing: Moderately growing, aided by PLI (Production Linked Incentive) schemes and Indias integration into global value chains.

10. Private Capex Recovery: Signs of revival in private sector investments, especially in renewables, semiconductors, and real estate.

11. Digital Economy Boom: Surge in fintech, UPI transactions, and digital infrastructure continues to empower MSMEs and rural India.

Key Factors Influencing Indian Economic Growth:

1. Government capital expenditure (especially on roads, railways, defence, and housing)

2. Rural demand and monsoon patterns

3. Private sector investment momentum

4. Policy support through PLI schemes and Atmanirbhar Bharat initiatives

5. Global economic conditions and export demand

6. Foreign Direct Investment (FDI) inflows

7. Banking sector health and credit growth

8. Tech and startup ecosystem dynamics

9. Geopolitical alignment (e.g., India-Middle East- Europe corridor, G20 leadership legacy)

10. Energy transition and sustainability goals

The Indian economys growth and resilience make it a key player on the global stage. Continued reforms and investments in infrastructure and human capital are crucial for sustaining this momentum and addressing the challenges faced by the economy.

India has been one of the fastest-growing major economies, with growth rates around 6-8% in the past decade. Multifold reasons can be cited for the growth, some of which are listed herein below

Rapid digitization, driven by initiatives like Digital India, has increased internet penetration and boosted e-commerce and fintech sectors.

The Unified Payments Interface (UPI) has revolutionized digital payments.

Significant investments in infrastructure, including highways, railways, and urban development projects.

The Smart Cities Mission aims to develop sustainable and smart urban areas.

Continued economic reforms, such as the Goods and Services Tax (GST) and labor laws, aim to improve business efficiency.

India is emerging as a global innovation hub with a growing number of startups in technology and services sectors. Government initiatives like Startup India and Skill India support entrepreneurship and skill development.

OUTLOOK ON INDUSTRY

Electronic Security industry goes along with retail industry and with development of new facilities, be it in the retail malls or in software companys facilities. Considerable activity is envisaged in the Electronic Security Segment, especially in the retail market, where India is the fourth largest retail market in the world. Adtech has got a considerable presence in the retail market with its Antishoplifting and display security products. Aggressive plans for new stores are envisaged by retail chains especially in smaller cities across the country."Work from home" practiced by corporates had affected growth in the commercial industrial segment comprising of CCTV and Access Control product during the past two years. Corporates are now discontinuing with "work at home" which gives growth prospects by way of new facilities.

OUTLOOK OF ADTECH SYSTEMS LIMITED

The Company, being pioneer in electronic security integration segment, has most of the prominent

retailers PAN India in its client list. The Hitek+ range of Antishoplifting Systems (EAS) launched by your company in January 2022 has been well accepted by the retail verticals which led to reasonable growth for the retail vertical business compared to previous year. Both EAS & Display Security product businesses registered remarkable growth. The Commercial Industrial segment recorded a de-growth mainly on account of the Company not identifying viable large projects in Government Sector.

The outlook for the current year is promising since the overall economy of the country is on an upward path. The retail, commercial and industrial verticals are all showing positive outlook. Adtech has also added few more products like Tablet Business Solutions, Electronic Shelf Labels, Smart Lock solutions which are solutions catering to tomorrows customer demands. Adtech has also ventured its foray into RFID for retail inventory management applications. The RFID portfolio has a very promising future in the years to come with new tie-ups being envisaged with Industry leaders.

OPPORTUNITIES AND THREATS

The Company is engaged in providing sophisticated solutions in the electronic surveillance segment. Due to Statutory requirements, need for protection by way of electronic security solutions is increasing not only among corporates but also among individuals. The Company seeks to make full use of this growing awareness of the requirement of electronic security protection. The Company provides integrated solution and employs professional work force. We now cater to numerous corporates as their exclusive electronic security solutions provider which position is not unassailable. Tie-ups with R & D Companies coupled with strong in-house R & D team has made competitors consider Adtech Systems Limited standards and working as their bench mark for excellence. The Company is always in search of updated technology products coupled with cost effectiveness so that competition and customer support can both be managed. Identification of such products have presented the Company with immense opportunity so as to ward off competition.

Constant attempts both from the organized and unorganized sector remains a threat to our business and earnings. Predative pricing by competitors coupled with identifying and recruiting key personnel together with employee retention remains the real challenge. Retaining customers which by providing latest solution at the best price and providing timely support is a mantra of the Company. With unmatched technical

expertise and competitive pricing strategy by selecting the most suitable solution, the Company expects to remain a pioneer and a benchmark among competitors. Increase in ocean freight which has almost quadrupled on account of tensions in Asia Pacific, delay in transit time for imports and depreciation of Indian Rupee against the US Dollar take a toll on margins.

RISK FACTORS AND CONCERNS

Continued services and performance of our management, technical team and other key personnel remains our success mantra as our business is revolving around technical capabilities of our personnels which is human approach to be precise with. The loss of service of the management, our technical team and key personnel could seriously impair the ability to continue to manage and expand the business efficiently.

Company needs to constantly review its product line by comparing the same with customer needs, both in terms of latest technology and competitive price to retain its market leader position. Changing technology coupled with predatory pricing remains a challenge. With considerable increase in costs including that for employees, protecting margins vis-a-vis retaining customers needs herculean efforts.

The growth of our business depends on the operations to realize our vision of attaining size and to improve our cost competitiveness. In order to achieve such future growth, we need to effectively manage our new project, our resources and accurately assess new markets, attract new customers, obtain sufficient financing, control our input costs, maintain sufficient operational and financial controls and make additional capital investments to take advantage of anticipated market conditions and keep on learning and inventing on technology. We expect our growth to place significant demands on our management and other resources. Any inability to manage our growth could have an adverse effect on our business, financial condition and results of operations. The cost of implementing any new technologies could be significant and could adversely affect our business and financial condition. While we regularly upgrade our technology, the emergence of newer technologies could render our current technology ineffective or obsolete and may adversely affect the cost structure and competitiveness of our products and services. Changes in technology with which we are unable to keep pace, or which render our products and services less useful to customers and the market, could affect our growth, business, financial condition and results of operations. We commit resources to projects prior toreceiving advances or other payments from customers in amounts sufficient to cover expenditures on projects as they are incurred. We may be subject to working capital shortages due to delays or defaults in customer payments. If customers default in their payments on a project to which we have devoted significant resources or if a project in which we have invested significant resources is delayed, cancelled or does not proceed to completion, it could have a material adverse effect on our business, financial condition and results of operations. The input costs of the products/services of the Company may increase due to various reasons. In case the Company is not able to pass on such increase to the consumers because of competition or otherwise, it may affect the profitability of the Company.

Competition would have an adverse impact on our business and financial performance. The industry, in which we are operating, is highly and increasingly competitive and unorganized and our results of operations and financial condition are sensitive to, and may be materially adversely affected by, competitive pricing and other factors. Competition may result in pricing pressures, reduced profit margins or lost market share or a failure to grow our market share, any of which could substantially harm our business and results of operation.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The philosophy we have with regard to internal control systems and their adequacy has been formulation of effective systems and their strict implementation to ensure that assets and interests of the Company are safeguarded; checks and balances are in place to determine the accuracy and reliability of accounting data. The internal audit, an independent appraisal function to examine and evaluate the adequacy and effectiveness of the internal control system, appraises periodically about activities and audit findings to the Audit Committee. The Companys internal controls are supplemented by an extensive programme of internal audits, review by management and documented policies, guidelines and procedures. The Audit Committee also holds discussions with Statutory Auditors, Internal

Auditors and the Management on matters pertaining to internal controls, auditing and financial reporting.

FINANCIAL PERFORMANCE

Sale and Service of Electronic Surveillance Systems and accessories form major portion of income for the Company.

TOTAL INCOME: Rs.489,004.29 (in 000s) during the financial year 2024-25 as against Rs. 561,941.47 (in 000s) for the previous year.

TOTAL EXPENSES: Rs. 423,508.57 (in 000s) for the year ended 31st March 2025 which consists of Purchase Cost of Rs.272,006.48 (in 000s), Employee Benefit Expenses Rs. 78,369.15 (in 000s), Finance Charges Rs. 2,723.15 (in 000s), Other Expenses Rs. 63,073.16 (in 000s) and Depreciation Rs.7336.64 (in 000s).

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company had been operating in a single segment viz. electronic security systems. The Company operates primarily in India, hence there is no other significant geographical segment that requires disclosure.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT

There were no major developments in Human Resources or Industrial Relations Front during the year under review.

The Company has total manpower of 100 employees as on 31st March 2025. The Company had made most of its recruitments in the Marketing and Engineering divisions. Company has a reasonable salary structure and provides attractive incentives to help employees to build a career in the Company. The Company imparts proper training and development to all the new recruits and also imparts periodic training sessions so that employees are abreast with technical updates and remain competent. Your Company considers its employees to be the most valuable asset of the Company and appreciates their dedicated hard work.

Place: Trivandrum Date: 14th August 2025

For and on behalf of the Board of Directors

Sd/-

M. R. Narayanan Chairman