Avance Technologies Ltd Management Discussions

Indian Economy Overview

In FY25, the Indian economy sustained its growth momentum, recording a GDP growth rate of 6.5 percent, thereby consolidating its position as the worlds fastest-growing major economy. This growth came against a backdrop of persistent global challenges such as geopolitical tensions, supply chain disruptions, and inflationary pressures. Strong domestic demand, steady consumer spending, and sustained government-led capital expenditure emerged as the key drivers of economic activity during the year.

The economys performance in the March quarter (Q4 FY25) was particularly encouraging, with a growth rate of 7.4 percent, supported by robust contributions from the services sector and industrial production. Furthermore, private investment showed signs of revival, aided by policy reforms and infrastructure development initiatives. These developments underscore Indias central role in the global growth story and highlight its ability to balance rising energy demand, infrastructure needs, and sustainability commitments.

Technology Industry Overview

The global technology sector, which faced turbulence in the past two years due to inflation, interest rate hikes, and reduced consumer spending, is now showing clear signs of recovery. In India, the technology industry continues to be a cornerstone of economic growth, driven by rapid digital adoption, a robust IT services base, and increasing enterprise investment in next-generation technologies. Key focus areas such as artificial intelligence (AI), cloud computing, and cybersecurity are emerging as the primary engines of growth, with businesses accelerating digital transformation strategies to enhance efficiency, security, and innovation.

Despite these positive developments, the industry faces structural challenges, the most pressing being a significant talent gap. Demand for skilled professionals in AI, machine learning, and cloud far outstrips supply, with estimates suggesting that by 2026, over half of the required workforce in these domains may remain unfulfilled. This mismatch poses both a challenge and an opportunity while it risks slowing adoption, it also creates space for targeted skilling, reskilling, and academic-industry collaborations to bridge the gap.

Looking forward, the Indian technology sector is expected to regain strong momentum as enterprises continue to prioritize digital capabilities. Supported by a young workforce, a strong export market, and global recognition of Indias IT prowess, the industry is well-placed to lead the next phase of technology-driven growth, despite short-term pressures on talent and global demand fluctuations.

Financial Performance Overview

In FY2025, Avance Technologies Ltd reported revenue of 17,396.29 lakh, representing a robust growth of 18 percent compared to 14,682.29 lakh in FY2024. This increase reflects the Companys ability to expand its operations and strengthen its position in the technology sector.

Net profit for the year stood at 530.24 lakh as against 488.20 lakh in the previous year, registering a growth of 9 percent. Correspondingly, earnings per share (EPS) improved to 0.2675 in FY2025 from 0.2463 in FY2024, also reflecting a 9 percent rise.

The performance demonstrates Avance Technologies Ltd.s consistent growth in revenue and profitability, underscoring its financial resilience and continued value creation for shareholders.

Key Ratios

Opportunities

Indias strong economic growth, coupled with rapid digital adoption, presents a favorable environment for the technology sector. Rising enterprise investments in artificial intelligence, cloud computing, and cybersecurity are opening new avenues for growth. The governments focus on Digital India, data localization, and innovation-driven policies further enhances the sectors prospects. Expanding global demand for IT services and Indias established position as a technology outsourcing hub provide significant opportunities to capture international markets. Additionally, increasing domestic demand for digital solutions across industries such as healthcare, finance, and e-commerce is creating scalable growth opportunities for technology companies.

Threats

Despite the growth potential, the sector faces notable challenges. A critical concern is the talent gap, particularly in AI and cloud technologies, where demand is far outpacing supply. Rising wage costs and intense competition for skilled professionals could impact profitability. The industry also remains exposed to global economic uncertainties, geopolitical risks, and shifts in technology spending patterns. Furthermore, evolving cybersecurity threats, regulatory changes, and reliance on global supply chains for hardware and infrastructure add to the operational risks. Sustaining growth will therefore depend on proactive risk management, talent development, and continuous innovation.

Human Resources/Industrial Relations

Avance Technologies Ltd continues to place strong emphasis on employee engagement, learning, and development to foster a workplace that is safe, inclusive, and productive. Employees are provided with diverse opportunities to enhance their skills and support long-term career growth. Recognizing human resources as its most valuable asset, Avance Technologies Ltd has cultivated an open, transparent, and meritocratic culture that nurtures talent and drives organizational success.

At the core of its people strategy, Avance Technologies Ltd firmly believes that an organization is only as strong as its employees. With "people at the heart" as its guiding principle, the Company is committed to building a culture of inclusivity, collaboration, and shared ownership. Employee relations remained harmonious throughout the year, reflecting Avance Technologies Ltds focus on mutual respect, growth, and collective progress.

Internal Control System and Adequacy

Avance Technologies Ltd has established internal control systems that are commensurate with the nature, size, and complexity of its operations. These systems are designed to safeguard and protect the Companys assets, ensure proper authorization of transactions, and maintain accurate and reliable recording and reporting.

The Companys internal audit function, staffed with well-qualified and experienced professionals, plays a key role in monitoring compliance with policies, plans, and statutory requirements. Regular audits are conducted across operations, and the findings are presented to the Audit Committee for review. Recommendations made by the statutory auditors, internal auditors, and the independent Audit Committee are duly considered by the management, and appropriate actions are taken to strengthen and enhance the control environment.