Avantel Ltd Management Discussions

[Pursuant to Regulation 34 (2) (e) of Securities Exchange Board of India

(Listing Obligations and Disclosure Requirements) Regulations, 2015]

Business Overview:

1) Review of Operations

Avantel has achieved a turnover of Rs. 248.67 Crores for the financial year 2024-25 which is the highest turnover since inception. The Company has recorded a Profit (before tax) of Rs. 8,271.56 Lakhs against Rs.7,447.31 Lakhs in the previous year with an increase in profit by (before tax) 11.07% compared to last fiscal. During the year, our company has invested in design and development of products with critical technologies such as Software Defined Radios, Ku-Band Electronic Steerable phased array Antenna (ESA) for COTM applications. Further design activities include development of Wind Profiler Radar in various frequency bands for providing complete solutions including hardware as well software. Your company also obtained authorisation from IN-SPACe for setting up GSaaS (Ground Station as a Service) for receiving data from Indian & foreign satellites.

Avantel has also obtained VSAT license to offer Voice & Data services in KU-band. Your company has successfully executed major orders of RTIS systems for Indian Railways, Xponders for fishing vessels to NSIL, Dept of Space. Avantel continues to supply various versions of Mobile Satellite Services equipment to IN, ICG and various ship building centres.

We are happy to inform you that our company has developed state of the art SDR solutions in HF and UHF bands. Avantel was awarded projects under iDEX (Innovation in Defence Excellence) scheme from Defence Innovation Organisation, MoD which include Ku band portable terminals, Ku band airborne terminals, Satphone for Indian geostationary satellites and Mobile Satellite Communication terminals for convoy management of Indian defence forces.

Avantel established facilities of about 70,000 Sq Feet in 4 acres of land in E-City Hyderabad for development of Software Defined Radios and offer GSaaS, VSAT & Satellite AIT services, This facility shall be operational by 15th June 2025.

Imeds Global Private Limited, a subsidiary of Avantel Limited has established for Design, Development and Manufacturing of medical products at AMTZ (Andhra Pradesh Medtech Zone), Visakhapatnam. This facility has built up area of 25000 Sq Feet in 2 acres of land in AMTZ. The facility includes clean room facilities, assembly & test facilities for manufacturing of medical products.

2) Outlook for the next year

The Union Budget 2025 reinforces Indias commitment to self-reliance in Defense and national security. With a budgetary allocation of INR 6,81,210 crores (~US$ 78.57 billion) for the Defense sector which marks a 9.5% increase from the previous year and a capital budget of INR1,80,000 crores (~US$ 20.76 billion). As seen in previous years, ~75% bifurcation of capital outlay budget can be envisaged for domestic industry which translates to ~INR1,35,000 crore (~US$ 15.57 billion). This aligns with the governments Atmanirbhar Bharat / self-reliance vision, reducing dependency on imports and fostering Indias position as a global Defense manufacturing hub.

The Total R&D budget for Defence Sector this year is INR 26,816.82 crore (~US$ 3.09 billion). The capital R&D budget is INR 14,923.82 crore (~US$ 1.72 billion) which has increased ~13% over FY 2024-25(BE). As announced in the past years, 25% (INR3,730 crores or ~US$ 430 million) of this is likely to be reserved for industry, startups and academia. The launch of three editions of Acing Development of Innovative Technologies with IDEX (ADITI) scheme has seen an overwhelming response from the Indian Industry. With dedicated funding towards research and development in defense technology Budget 2025 strengthens Indias security landscape while fostering a robust ecosystem for indigenous innovation and exports in the global defense market and also re-affirms Ministry of Defense commitment to observe 2025 as a Year of Reform. Source: https://www.ey.com/content/dam/ey-unified-site/ey-com/en-in/technical/alerts-hub/documents/2025/ey-union-budget-2025-alert-aerospace-and-defence.pdf

We are planning to establish a new electronics manufacturing facility for commercial applications and manufacturing of Antennas & MIL standard connectors for defence and aerospace applications. The company has acquired a land of 9.1 acres located at Kondaparva village, Vissanapet Mandal, NTR District, Andhra Pradesh and obtained conversion to commercial / industrial applications.

This facility will have built up area of about 80,000 Sq Feet. The plant & machinery required for manufacturing of Satellite Earth Station Antenna, High power HF antennas and MIL standard connectors will be provided along with SMT lines for electronics manufacturing services.

Avantel is confident of developing Software Defined Radios for airborne applications during the current financial year 2025-26 and will be one of the top five companies in the county in the area of Software Defined Radios.

3) Risks And Concerns a) Risks

Avantels business is mostly dependent on the strategic sector where long procurement cycles exist. The supply chains in the current business environment are key to success and needs to be efficiently managed specially in the case of long leads. The business environment is also witnessing huge competition with new entrants in view of the "Make in India" drive. The company is in scaling up phase, hence attracting new talent is a huge challenge and needs to be addressed in right earnest.

b) Risk Mitigation

Your company proactively engages with the customers to reduce the cycle times between enquiry, bid, contract & payment realisation. The company has in place an elaborate supply management process and is constantly refining the same for availability of materials in time. Innovation in design as well as operations is helping Avantel stay ahead in competition. The company has a clear focus on its long-term perspective plan and initiated diversification strategies to enhance / refine its product portfolio for the next few years. Various measures have been initiated to induct and retain talent as per business requirements from time to time.

4) Opportunities and Threats a) Opportunities

Avantel is well positioned in the Strategic Electronics segment for its indigenous offerings specially in the areas of Satcom, HF Systems, various types of Software Defined Radios and Wind Profiler Radars. Under its diversification initiatives, Avantel is setting up Design, Development & Manufacturing of Antennas & Connectors for Defence & Aerospace applications.

In the medical segment, in view of the emerging demand for indigenous medical devices, imeds is poised to introduce various indigenous products in the Surgical and Respiratory domain in the coming FY to enhance its product mix.

b) Threats

No major threats are envisaged, and company has visibility for the next three years. However, competition from established players as well as startups in new technologies needs to be handled with focus on innovation, design and developments of new products.

5) Internal Control Systems and their adequacy

Your Company has well defined internal control systems. The company has the following certifications:

· AS9100: 2016 and ISO 9001:2015 certified Quality Management System

· ISO/IEC 27001:2022 certified Information Security Management System.

· ISO/IEC 17025:2017 certified and NABL accredited in-house Environmental Test Laboratory.

· ISO 14001:2015 certified Environmental Management System

· ISO 45001:2018 certified Occupational Health and Safety Management System

The Company has a robust Internal & external audit mechanisms which are regularly monitored through the ERP system "Funwork".

All the internal and external audits are completed in time. There are no non-compliances in respect of the processes / systems in place and the Companies internal control systems are very well appreciated.

An effective control is exercised by the top management who monitors various key performance indicators regularly through Management reviews & other means and ensures that all the critical business functions exceed expectations with timely interventions as required.

6) Industrial Relations and Human Resources Management

Your Company enjoys an excellent rapport and standing among its Customers & Suppliers. There are no pending disputes with any of the stakeholders and the company enjoys very cordial and harmonious relations across the business environment. The companys strength lies in its Human resources and its HR policies. The employees are highly motivated and technically equipped to meet the organizational goals at all times.

During the FY 2023-24, the Company has introduced the "Avantel Employees Stock Option Plan - 2023" ("ESOP 2023" or "Scheme") not exceeding 45,00,000 equity shares of the Company to reward employees for their performance and motivate them to contribute to the overall corporate growth and profitability. Employees have overwhelmingly exercised their stock options with effect from 01st December 2024. The objective of the Scheme was to reward the Employees for association, dedication and contribution to the goals of the Company. The ESoP 2023 has helped the company to attract and retain key talents working with the Company.

Your company shall be launching the next "Avantel Employees Stock Option Plan - 2025" ("ESOP 2025" or "Scheme") not exceeding 45,00,000 equity shares of the Company. Similar to the ESoP 2023 plan, the Scheme would result in grant of options. Each option when exercised, would be converted into one equity share of Rs.2/- each (Rupees Two Only) fully paid-up. The quantum of benefits underlying the stock options issued to an eligible employee shall depend upon the number of stock options held by the employee and the market price of the equity shares as on the date of sale.

The key objectives of this scheme is

(a) to create sense of ownership amongst Employees through equity-based compensation and provide them an opportunity to partner in the success of business;

(b) to attract premium talent to join the Company;

(c) Retention of key talent within the Company;

(d) Recognizing contributions of the Employees who are crucial for the success of the Company in the long run; and

e) provide an opportunity for wealth sharing with Employees.

7) Variations in Net Worth

The Standalone Net worth of the Company for the Financial Year ended March 31, 2025, is Rs. 24,801.16 Lakhs as compared to Rs. 17,141.39 Lakhs for the previous financial year ended March 31, 2024, and the Consolidated Net worth of the Company for the Financial Year ended March 31, 2025, is Rs. 23,724.61 Lakhs as compared to Rs. 16,411.92 Lakhs for the previous Financial Year ended March 31, 2024.

8) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanation

During the year, the significant changes in the financial ratios of the Company are summarised in notes to financial statements on a standalone basis Note No.51 and on consolidation basis Note No.50.

9) Cautionary Statement

Statements in the management discussion analysis describing the Companys objectives, projections, estimates, expectations are forward looking within the meaning of applicable security-laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. Actual results may differ materially from these expressed in the statement. Important factors that could make difference to Companys operations include economic conditions, changes in the Government priorities/policies/ regulations, tax laws and other statutes and other incidental factors affecting the business environment. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements on the basis of any subsequent developments, information or events.

	By order of the Board of Directors
	For Avantel Limited
	Sd/-
	Abburi Vidyasagar
Place: Hyderabad	Chairman & Managing Director
	DIN: 00026524
Date: April 26, 2025