ASM Technologies Ltd Management Discussions

Overview

ASM Technologies, along with its subsidiaries, leverages over three decades of experience, ASM has been supporting customers in the areas of Engineering Design led Manufacturing. Our successful ORs.shore Development and Support Centers in India and Overseas for its global clientele. The Company is a public limited company incorporated in India with a registered office in Bengaluru, Karnataka, India. The Companys shares are listed with BSE Limited.

1. Industry Structure and Development

Engineering Services and Design Led Manufacturing sector in India is evolving rapidly, driven by the integration of digital technologies and increased focus on sustainability. Key areas of growth include AI-enhanced industrial analytics, predictive maintenance for heavy machinery, and the development of smart factories. The industrys structure is becoming more complex, with increased collaboration between startups, Global Capability Centers (GCCs), Engineering Service Providers (ESPs), and academia.

Digital engineering innovation hubs and sector-specific incubators, are playing a pivotal role in fostering innovation and addressing industry challenges like the talent gap and lack of advanced lab facilities as per the reports from Nasscom and BCG The global Engineering R&D (ER&D) landscape continues to expand, led by digital engineering, AI, and electrification. Indias ER&D sourcing is projected to rise from US$44–45 bn (FY23) to US$130–170 bn by 2030, with semiconductors, software and automation driving >60% of the growth. India Tech & GCC momentum, the technology industry revenue is estimated at US$282.6 bn in FY25 and is expected to cross US$300 bn in FY26; ER&D and GCCs are key engines. GCC formation and scale-up in India remain strong, with >1,620 GCCs and an accelerating trajectory through 2030CIIs Centres of Excellence continue to reinforce industry competitiveness across manufacturing excellence, sustainability, skills and innovation.

2. Opportunities and Threats

India has a diverse pool of STEM talent whose potential can be harnessed to accelerate the adoption of Generative AI, provided it is supported by a robust skill development ecosystem. At the same time, the rapid evolution of Engineering, Research & Development (ER&D), driven by advancements in digital engineering, Artificial Intelligence (AI), Internet of Things (IoT), and renewable energy, is creating significant growth opportunities for the industry.

ASM Technologies, a pioneer in Engineering Services and Design-led Manufacturing, is well positioned to leverage these global shifts through its expertise in delivering cutting-edge digital engineering solutions that enhance efficiency, foster innovation, and enable next-generation manufacturing. AI-driven predictive maintenance and intelligent automotive systems, combined with IoT-enabled connectivity and operational efficiency, are reshaping industries.

In parallel, the global thrust on sustainability and regulatory imperatives are catalysing investments in clean energy technologies, particularly solar, wind, and other renewables. This focus presents strategic opportunities for ASM Technologies to deliver design-led, innovative solutions that align with the future of sustainable engineering and manufacturing.

The Company continues to strengthen its capabilities and build on its core expertise to capture these opportunities and deliver sustainable value to all stakeholders.

3. Segment-wise or Product-wise Performance

The Companys performance continues to be driven by its focus on the Hi-Tech Equipment / Semiconductor and Transportation sectors. The semiconductor and hi-tech segment is witnessing strong momentum with increasing global investments in embedded engineering, VLSI design, and product lifecycle solutions, creating opportunities for specialized partners like ASM to deliver innovation, scalability, and cost efficiency. At the same time, the transportation sector is undergoing rapid transformation through electrification, connected mobility, and regulatory shifts towards sustainability, with AI, IoT, and digital engineering enabling predictive maintenance, autonomous systems, and enhanced operational efficiency. Leveraging its deep domain expertise across both these critical sectors, ASM Technologies remains well positioned to support customers with cutting-edge design-led engineering and manufacturing solutions, driving efficiency, safety, and innovation in next-generation products and platforms

4. Outlook

India is poised to consolidate its position as a key player in the global ESDM market over the coming decade. Rising global expenditure, supportive government policies, a highly skilled workforce, robust internal processes, and optimized operational costs are expected to drive significant growth opportunities. With global industries increasingly leaning towards outsourcing to accelerate innovation, India offers an attractive proposition for foreign clientele and collaborative partnerships.

The Company believes that Indias ER&D share will expand materially this decade, supported by scalable talent, the rapid growth of Global Capability Centers (GCCs), and strong policy support. Demand tailwinds from Generative AI, electrification, and semiconductors are expected to further accelerate opportunities. In this context, ASM Technologies will continue to strengthen its focus on design-led manufacturing, intellectual property and solution development, and value-accretive partnerships, positioning itself to capitalize on these opportunities and deliver sustainable long-term growth.

5. Risks and Concerns

The sector presents significant opportunities but is also subject to several risks that must be proactively managed. Talent shortages and skill gaps remain a pressing concern, given the rapid evolution of digital technologies. Data privacy and cybersecurity are equally critical, as increasing reliance on AI-driven solutions heightens exposure to vulnerabilities. Further, regulatory complexities and ethical considerations, including AI bias, demand robust governance to maintain stakeholder trust.

a. Competition Risk

The sector is highly competitive, and only firms that continually upgrade their capabilities and offerings in line with emerging technologies can thrive. Technologies are shifting rapidly from traditional engineering to Analytics, Big Data, AI, and Robotics. ASM addresses this risk by deepening its domain expertise, investing in technology capabilities, and strengthening customer engagement. The Company differentiates itself by delivering value-added, innovative solutions through its strong engineering culture, strategic acquisitions, and integrated design-to-manufacturing capabilities.

b. Financial Risk.

The sector would have to re-adopt technology disruptions by reshaping enterprises and focus on technology-led platforms, as the currency volatility and innovative technologies such as artificial intelligence, automation, etc have disrupted the sectors traditional products and solutions With a significant portion of the companys revenues coming from exports, volatility in exchange rates may impact Companys business adversely. The company however mitigates the risks with robust accounts receivable management, centralised framework to control expenses and currency hedging strategies by the management. The company has a defined policy for managing its foreign exchange exposure. The company tracks the foreign exchange markets closely and takes appropriate hedging decisions from time to time if need be. The risk policy of the Board covers some of this large macro level risk and the remedial measures taken by the company to face and mitigate some of these risks.

c. New Technologies and Business Models

With ESDM being one of the fastest-growing global segments, the pace of technological change remains both a challenge and an opportunity. Artificial Intelligence, Machine Learning, Automation, and Digital Engineering are disrupting traditional models. ASM, as a System Design House, is well-positioned to manage this transition, offering end-to-end capabilities across Software, Electronics, Mechanical, and Embedded systems under one roof. The Company focuses on prototyping, limited manufacturing through partners, and IP-led innovation to drive non-linear growth. Investments in R&D and innovation have enhanced ASMs ability to deliver next-generation solutions and strengthened its global positioning

d. Geography Risk

Global volatility, including geopolitical tensions, trade restrictions, and economic slowdowns, can impact business sentiment. ASM mitigates this risk by maintaining a diversified geographic footprint, with revenue streams spread across multiple markets and industries. Its strong offshore delivery model provides a healthier bottom line and cushions against downturns in any one geography.

ASM mitigates competition and pricing pressures through continuous capability upgrades, deep domain expertise, and differentiated offerings, while financial and forex exposure risks are addressed with a robust hedging framework, disciplined receivable management, and stringent cost controls. Cybersecurity, privacy, and compliance risks are managed through enhanced information security measures, regular audits, and necessary certifications. Geopolitical and macroeconomic uncertainties are countered by maintaining a diversified geographic presence, adopting flexible delivery models, and building strong client partnerships. With this balanced approach of innovation, operational discipline, and customer-centricity, ASM is well-positioned to manage risks effectively and ensure sustainable long-term growth.

6. Internal Control Systems and Their Adequacy

Effective internal control systems are crucial for the sector to manage risks and ensure operational efficiency. The integration of advanced data analytics and AI in internal controls can help detect anomalies and enhance decision-making processes. Establishing industry-specific lab facilities and innovation hubs can also provide robust testing and validation environments to ensure the quality and reliability of ER&D outputs. Regular audits and adherence to international standards are essential to maintain the integrity of internal control systems and foster a culture of continuous improvement within the sector. The Internal Control System has been designed to ensure that assets and interest of the company are protected and dependability of accounting data and its accuracy are ensured with proper checks and balances. The internal control systems adopted by the company are adequate and appropriate to its operations so as to ensure uninterrupted functioning of its business. The system has been designed to ensure that assets and interest of the company are protected and dependability of accounting data and its accuracy are ensured with proper checks and balances. The existing internal control systems and their adequacy are frequently reviewed and improved upon to meet the changing business environment.

The Company has internal audit to examine and evaluate the adequacy and effectiveness of Internal Control system. The internal audit ensures that the system designed and implemented to provide adequate internal control commensurate with the size and operations of the company. The Audit Committee of the company chaired by the independent director and consisting of other non-executive independent directors, periodically review and commend the quarterly, half yearly and annual financial statement of the company. A detailed note on the functioning of the audit committee forms part of the chapter on Corporate Governance in this Report.

The management duly considers and takes appropriate action on the recommendations made by the statutory auditors, internal auditors and independent Audit Committee of the Board of Directors.

Financial Overview

a. Share Capital

The Company has at present only one class of shares. The authorized share capital is 1,90,00,000 Equity shares of Rs.10/- each, constituting to Rs.190.00 Mn. There was increase in the issued, subscribed and paid up capital of Rs.117.74 Mn during the year under review. Company allotted the shares under conversion of warrants issued in previous year.

b. Shareholder Funds

The total shareholder funds was Rs.1738.62 Mn as at 31^st March, 2025 against Rs.1498.44 Mn as of the previous year end.

c. Fixed Assets

As on 31^st March 2025 the gross block of assets stood at Rs.350.84 Mn for the standalone and Rs.474.14 Mn for the consolidated.

d. Net Worth

The return on Net worth ( RONW) for the year ended 31^st March 2025 was 14.16% for the standalone and 15.18 % for the consolidated.

e. Earnings per share

The Earnings Per Share (EPS) for the year ended 31^st March 2025 stood at Rs.22.33 (Basic) and Rs.18.15 (Diluted) on a standalone basis, and Rs.21.28 (Basic) and Rs.17.30 (Diluted) on a consolidated basis.

f. Revenue

On the standalone front, ASM registered a total revenue of Rs.2,397.73 million for the year ended 31^st March 2025. Domestic sales contributed Rs.1,381.31 million, while export sales accounted for Rs.474.86 million. The EBITDA stood at Rs.432.39 million, representing 18.02% of total revenues, with a net profit after tax of Rs.262.95 million, representing 10.97% of total revenues.

On a consolidated basis, the Company reported total revenues of Rs.2,888.10 million for the year ended 31^st March 2025, with an EBITDA of Rs.505.42 million representing 17.50% of total revenues and a net profit after tax of Rs.250.63 million representing 8.68% of total revenues.

g. Operating Profit (EBIDTA)

The EBITDA stood at Rs.432.39 million, representing 18.02% of total revenues, with a net profit after tax of Rs.262.95 million, representing 10.97% of total revenues. On a consolidated basis, an EBITDA of Rs.505.42 million representing 17.50% of total revenues and a net profit after tax of Rs.250.63 million representing 8.68% of total revenues.

h. Net Profit after Tax/Loss

Net profit after tax was Rs.262.95 Mn on the standalone front and Profit of I250.63 Mn for the consolidated, for the year ended

31^st March, 2025 i. Developments in Human Resources/ Industrial Relations

The total employee strength of the company, as on 31^st March, 2025 was 1834 as compared to 1260 the previous year. At ASM, our employees are our most valuable asset. We are dedicated to fostering a supportive and dynamic work environment through innovative initiatives aimed at attracting, training, retaining, and motivating our team. Our endeavors are underpinned by a robust set of values and policies designed to ensure a healthy, happy, and prosperous workplace. We firmly believe that our people are the primary drivers of our success, making human resource development a core component of our mission.

In line with this belief, ASM has implemented a timely and cost-eRs.ective recruitment system to attract top-tier talent. Our compensation and benefits policies are aligned with the latest trends in the market, ensuring that we remain competitive and our employees feel valued. By continuously enhancing our work environment and focusing on employee well-being and professional growth, we fulfill not only the aspirations of our workforce but also drive the overall success and innovation of the company.

j. Ratios:

Particulars	Standalone	Consolidated
current ratio	2.74	3.81
debt equity ratio	0.41	0.42
net profit (%)	10.97%	1.57%
inventory turnover	4.38	10.38
Return on equity	15.14%	2.30%
Net capital turnover ratio	1.73	1.19

Details of the ratio forms part of financials