Avance Technologies Ltd Management Discussions

In FY26, the Indian economy demonstrated sustained resilience and accelerated its growth trajectory, with real GDP estimated to grow by 7.7 percent, compared with 7.1 percent in FY25. Growth was supported by robust domestic demand, strengthening private consumption, continued capital formation and broad-based activity across manufacturing and services. The economy remained resilient amid a complex global environment characterized by geopolitical uncertainties, evolving trade dynamics and external economic pressures. Real GVA growth also strengthened to 7.9 percent, reflecting improved activity across key sectors of the economy.

The economy maintained its momentum through the fourth quarter of FY26, with real GDP growth estimated at 7.8 percent, supported by strong performance in the secondary and tertiary sectors. Manufacturing, construction, financial and professional services, and trade-related activities remained important contributors to economic expansion. On the expenditure side, both private final consumption expenditure and gross fixed capital formation recorded growth of more than 7.5 percent during FY26, highlighting the continued strength of domestic consumption and investment. These developments, together with sustained infrastructure development and improving economic fundamentals, reinforce Indias position as one of the worlds major high-growth economies.

The Indian technology industry continued its strong growth trajectory in FY26, supported by accelerating digital transformation, increasing enterprise technology spending, and rising global demand for technology-enabled services. Indias technology industry revenue was estimated at approximately US$315.4 billion in FY26, compared with around US$283 billion in FY25, reflecting continued expansion across IT services, business process management, engineering and R&D, software products and emerging digital technologies. Technology exports also remained resilient, with IT exports estimated at US$246.4 billion during FY26 up to February 2026. The sector increasingly shifted towards higher-value services as enterprises accelerated investments in artificial intelligence, cloud modernisation, cybersecurity, data engineering and automation.

Artificial intelligence emerged as a major structural driver of the technology industry during FY26, with organisations moving beyond experimentation towards integrating AI into software development, business processes, customer operations and enterprise decision-making. Cloud adoption, cybersecurity, data centres and Global Capability Centres (GCCs) also continued to expand, creating new opportunities across the technology ecosystem. The Governments continued support through the IndiaAI Mission, with an allocation of more than 10,300 crore over five years and planned deployment of 38,000 GPUs, further strengthened Indias AI infrastructure and innovation ecosystem. At the same time, the expansion of GCCs and technology hubs beyond traditional metropolitan centres supported employment and distributed the sectors growth across emerging technology locations.

Looking ahead, the Indian technology sector is positioned for continued expansion as global enterprises increasingly prioritises productivity, automation, AI-led transformation, cloud infrastructure and cybersecurity. The Economic Survey 2025-26 identifies a structural shift in global demand towards productivity-enhancing solutions driven by Generative AI, cloud adoption, cybersecurity and data engineering, creating opportunities for Indian technology companies to move further up the value chain. The sectors large skilled workforce, expanding digital infrastructure, strong export capabilities and growing global recognition position India favorably for the next phase of technology-led growth. However, continued investment in advanced skills, reskilling and innovation will remain essential as technology and business models evolve rapidly.

In FY2026, Avance Technologies Limited reported total income of 17,309.71 lakhs, compared with 17,396.29 lakhs in FY2025, representing a marginal decline of approximately 0.5 percent. Revenue from operations stood at 15,925.61 lakhs, compared with 17,176.54 lakhs in the previous year. The moderation in operating revenue was accompanied by a significant improvement in profitability, supported by stronger overall earnings and other income during the year.

Profit after tax increased substantially to 1,323.61 lakhs in FY2026, compared with 530.24 lakhs in FY2025, representing a growth of approximately 149.6 percent. Earnings per share (EPS) similarly increased to 0.668 in FY2026 from 0.268 in FY2025, reflecting a significant improvement in earnings attributable to shareholders.

The Companys performance reflects a substantial strengthening in profitability during FY2026 despite a moderation in operating revenue. The improvement in earnings provides a stronger financial base for the Company to pursue growth opportunities, expand its technology-led offerings and strengthen its position within the evolving digital technology ecosystem.

Indias continued economic expansion and rapid digitalisation provide a favorable environment for the technology sector. Increasing enterprise adoption of artificial intelligence, generative AI, cloud computing, cybersecurity, automation and data-driven solutions is creating new opportunities for technology companies to expand their product and service portfolios. The growing adoption of digital platforms across industries, together with increasing investments in technology infrastructure and Global Capability Centres (GCCs), is expected to sustain demand for technology-enabled solutions.

The rapid evolution of AI presents an additional opportunity to develop higher-value technology offerings and improve operational efficiency through automation. Increasing demand from sectors such as financial services, healthcare, retail, manufacturing and professional services can enable technology companies to diversify their customer base and address industry-specific digital transformation requirements. Indias strong technology talent pool, expanding digital infrastructure and growing integration with global technology ecosystems further support long-term sectoral opportunities.

Despite the favorable growth outlook, the technology industry continues to face several structural and external challenges. The rapid pace of technological change, particularly in artificial intelligence and automation, is increasing the need for continuous reskilling and upskilling of employees. Shortages of specialised talent in areas such as AI, machine learning, cybersecurity, cloud computing and advanced data engineering may increase hiring and capability-development costs and could affect the timely execution of technology projects.

The sector also remains exposed to global economic uncertainties, geopolitical developments, changes in international trade policies and fluctuations in technology spending across major export markets. Increasing competition from global technology companies, specialised digital firms and emerging AI-native businesses may place pressure on pricing, margins and customer retention.

Cybersecurity threats, data privacy requirements, regulatory changes and increasing dependence on digital infrastructure represent additional operational risks. The rapid adoption of AI also introduces risks relating to data governance, intellectual property, responsible AI usage and regulatory compliance. Maintaining technological relevance while investing in innovation, cybersecurity, talent development and regulatory compliance will therefore remain critical to sustainable growth.

Avance Technologies Ltd. continues to recognise its employees as a key enabler of sustainable business growth and remains focused on building a capable, adaptable and performance-oriented workforce. During FY2025-26, the Company continued to emphasise employee engagement, professional development and skill enhancement, particularly in view of the rapidly evolving technology landscape. The Company encourages continuous learning and provides opportunities for employees to develop capabilities aligned with emerging areas such as digital technologies, artificial intelligence, automation and cybersecurity.

The Company remains committed to fostering an inclusive, collaborative and merit-based work environment built on mutual respect, transparency and accountability. With a strong emphasis on employee well-being and professional growth, Avance Technologies Ltd. seeks to create an environment where employees can contribute effectively while developing their capabilities. Industrial relations remained cordial and harmonious during the year, supporting operational continuity and the Companys focus on sustainable organisational growth.

Avance Technologies Ltd. has established an internal control framework commensurate with the nature, scale and complexity of its operations. The internal control systems are designed to safeguard the Companys assets, ensure appropriate authorisation of transactions, promote operational efficiency and maintain accurate, complete and reliable financial and operational records. The control environment also supports compliance with applicable laws, regulations, policies and internal procedures.

The Companys internal audit and monitoring mechanisms play an important role in evaluating the effectiveness of internal controls and identifying areas requiring improvement. Periodic reviews are undertaken across relevant operational and financial processes, with observations and recommendations placed before the Audit Committee for consideration. The recommendations of the statutory auditors, internal audit function and the Audit Committee are appropriately reviewed by management, and necessary corrective and preventive measures are undertaken wherever required.

During FY2025-26, the Company continued to focus on strengthening its control environment in line with the evolving nature of its technology-driven operations. Particular emphasis remains on financial reporting controls, transaction authorisation, regulatory compliance, information security and protection of business and financial information. Management believes that the internal control systems are adequate and operating effectively, commensurate with the Companys current scale and operational requirements.