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 Limited recorded a turnover of Rs. 22,135.23 Lakhs for the financial year 2025-26. The Company reported a Profit Before Tax ofRs. 3,217.21 Lakhs against Rs. 8,271.56 Lakhs in the preceding financial year.

The decrease in profit is primarily due to a significant increase in Research and Development (R&D) expenditure to accelerate product development in Software Defined Radios (SDR), Wind Profiler Radar (WPR) systems as well as iDEX projects, and capital investment across various facilities resulting in a rise in depreciation. These investments are expected to enable the Company to execute a substantially larger order book, emphasising sustained revenue growth and profitability in the years ahead. Avantel is well-positioned to capture even larger opportunities in the near future as Indias defence and SATCOM sectors continue to scale under the Atmanirbhar Bharat initiative. The Company presently has an order book of approximately Rs.720 Crores to be executed across two financial years FY 2026-27 and FY 2027-28. This is in addition to the orders in pipeline and expected in the next two years.

The year has been remarkable in terms of R&D initiatives focused on developing state-of-the-art products and technologies as per global standards. Product design and development work carried out during the year will have significant impact in laying the foundation for the future growth of the Company. One of the areas where significant IP has been developed is Software Defined Radios in various frequency bands for land, maritime, and airborne applications. This would establish Avantel as one of the key players in the future in the domains of strategic applications for the Indian defence forces. Further, we have developed Radar Signal Processing capabilities along with end-to-end software and hardware solutions for Wind Profiler Radar systems. Avantel has initiated the development of technologies for radar systems in air defence applications.

The Company is executing five iDEX projects, of which three pertaining to MSS S-band Broadcast Receivers, Satphones, and Convoy Management Systems have been successfully developed and are awaiting final testing and trials by the Indian Army. Additionally, we are progressing on Ku-Band Systems, including Communication-On-The-Move (COTM) terminals, as well as shipborne and airborne applications as required by the Indian Navy.

During the year, the Company successfully secured several high-value projects such as Wind Profiler Radar Systems for the Indian Meteorological Department (IMD), Supply of Ka Band ready Full Motion Antenna (FMA) Systems to New Space India Limited (NSIL), Supply & Maintenance of RTIS Devices to Indian Railways. These major orders have collectively strengthened our order book.

In line with the companys vision to expand its infrastructure to meet the ever-increasing demands of indigenisation, the Company has established the new state-of-the-art facility (Unit No. 2), comprising a 4-acre land parcel with a built-up area of 86,271 square feet at E City, Raviryal Mandal, Tukkuguda. The facility became operational in October 2025.

Further, a new facility (Unit No. 3) for the development and manufacturing of SATCOM Ground Station Systems for both LEO and GEO satellites is being established over an area of 9 acres, with a built-up space of approximately 1,13,660 square feet at Kondaparva Village near Vijayawada. The facility is expected to be operational by Q3 of FY 2026-27, thereby strengthening the Companys manufacturing capabilities and supporting future growth.

Imeds Global Private Limited, a subsidiary of Avantel Limited, has been established to offer indigenous and innovative products in the medical devices domain for Indian markets. This year, imeds has made significant strides in both product development and regulatory compliance, reinforcing its position as a credible player in the domestic medical devices ecosystem.

Imeds Global Private Limited has established a dedicated facility for the design, development, and manufacturing of medical products at AMTZ (Andhra Pradesh MedTech Zone), Visakhapatnam. The facility is spread across 2 acres of land with a built-up area of approximately 36,000 square feet.

The division has successfully obtained manufacturing licenses for key products including CPAP, BiPAP, Endoscope and Portable Oxygen Concentrator, marking an important milestone in its journey toward selfreliant manufacturing. Additionally, certifications for Ventilators and Patient Monitoring Systems are expected to be completed by end of July 2026.

During FY 2025-26, imeds has invested significantly in R&D activities to build a robust and diversified product portfolio across respiratory care, sterilisation, and patient monitoring segments. These investments, along with the associated increase in employee costs and operational overheads required to support product development, regulatory approvals, and manufacturing readiness, have contributed to the losses incurred during the current year. However, these are planned expenditures essential for establishing a strong foundation in a highly regulated industry.

On the business front, imeds has initiated strategic collaborations for contract manufacturing of medical devices catering to both homecare and kiosk-based healthcare delivery models. With the expanding product portfolio and deepening market engagement, the division is well-positioned to achieve profitability in the coming financial year.

2) Outlook for the next year

Amid high anticipation of a significant boost to defence allocation, the Union Budget 2026-27 has delivered a strategically calibrated response to Indias evolving security landscape and national defence priorities. The Ministry of Defence (MoD) has received a significant allocation, accounting for approximately 14.67% of the Union Budget.

The capital outlay has surged by 21.83% to INR 2.19 lakh crore (US$23.9 billion), with a continued emphasis on domestic procurement i.e., nearly 75% of this outlay, amounting to INR 1.64 lakh crore (US$17.89 billion), is earmarked for the Indian defence industry. This aligns with the Governments Atmanirbhar Bharat (selfreliant India) vision and supports the growing defence industrial base.

Indias ambition to achieve INR 3 lakh crore (US$32.72 billion) in indigenous defence production and INR 50,000 crore (US$5.45 billion) in exports by 2029 is reflected in the Budgets orientation. This is expected to be achieved through greater industry participation, capacity enhancement, and capability development. These trends are underpinned by the Technology Perspective and Capability Roadmap (TPCR) 2025, which outlines a 15-year vision across land, air, maritime, cyber and space domains. With 457 products and services identified, TPCR 2025 provides a structured framework for capability development and industry alignment.

The expansion of existing industrial capacity, entry of new players and a growing pipeline of investments signal a positive trajectory for defence manufacturing. In a shifting global security environment, the 2026-27 defence budget reflects a clear and balanced strategy, advancing modernization, sustaining operations and strengthening Indias self-reliance in defence.

Source:

https://www.ev.com/content/dam/ev-unified-site/ev-com/en-in/services/tax/union-budget-2026/ev-defense- sector-highlights.pdf

The outlook in the Aerospace & Defence sector is promising and highly conducive to Avantels growth in the coming fiscal years. Avantel being a prominent indigenous solutions provider in the A&D sector, expects good business prospects for its current product offerings. Further, the current push by the incumbent government for self-reliance shall provide various opportunities for Avantel to innovate and expand its portfolio in allied domains.

Avantel has recently won a few high-value contracts, and their execution is due over the next two years. In addition, the new products of Avantel viz. SDRs, WPRs, HF systems, SATCOM Ground Stations, MSS SATCOM terminals, Network Management Software Solutions and Systems have very good business potential going forward.

3) Risks and Risk Mitigation

a) Risks

Avantel has been consistently witnessing impressive growth and enhancement of its product portfolio year on year. In view of the enhanced size of operations, coupled with the addition of multiple production sites, the Company faces various challenges in terms of complexity of operations, talent acquisition and retention, supply chain vulnerabilities, financial management and customer support.

Avantel operates predominantly in the strategic sector (Defence and other Government institutions), characterized by extended procurement timelines and complex acquisition processes thereby posing risks to timely order finalisation and execution.

The competitive landscape has witnessed a notable transformation in recent years, with an increasing number of new entrants making their foray into the sector, buoyed by the Government of Indias landmark Make in India initiative. While this policy framework presents significant opportunities for indigenous defense manufacturing, it has simultaneously intensified market competition, necessitating that Avantel continuously strengthen its technological capabilities, deepen customer relationships, and reinforce its value proposition.

Additionally, the global realignment of semiconductor manufacturing capacity toward high-performance computing and AI-driven applications has intensified supply constraints for specialized electronic components, including processors, memory modules, and programmable logic devices critical to defense- grade systems. Extended lead times and allocation-based supply for these components present a material execution risk for programs with fixed delivery schedules.

b) Risk Mitigation

To address the multifaceted risks arising from operational complexity, extended procurement cycles, and intensifying market competition, the Company has put in place a comprehensive risk mitigation framework spanning all critical business functions. On the operational front, the Company is implementing scalable process frameworks, unified ERP systems, and integrated production planning tools across its manufacturing sites, while simultaneously building structured talent pipelines through institutional partnerships, targeted lateral hiring, and performance-linked retention mechanisms to attract and nurture domain-competent professionals.

Supply chain resilience is being strengthened through a dedicated Long Lead Item monitoring system, strategic vendor diversification, and safety stock policies to ensure uninterrupted project execution. To counter the inherent uncertainty of defense procurement timelines, the Company maintains a probability-weighted business development pipeline, engages proactively with customers at the pre-RFP stage to shape technical specifications, and actively pursues Annual Maintenance Contracts and service-based engagements to sustain

recurring revenue streams alongside project-based income. In response to the heightened competitive intensity driven by new entrants under the Make in India framework, the Company continues to invest in indigenous product development and proprietary intellectual property across SATCOM, SDR, EW, and Radar segments, deepen its longstanding relationships with key defense establishments and government institutions, and expand strategic partnerships with global OEMs, thereby reinforcing its competitive position through a combination of technological differentiation, proven execution credentials, and defense-grade certifications that new entrants cannot readily replicate.

4) Opportunities and Threats

a) Opportunities

The Company made significant strides in expanding its product portfolio, initiating Design and Development activities across a diverse range of advanced technology domains, including satellite ground antennas, Software Defined Radios (SDRs) for airborne and tactical applications, and multiple variants of HF and Wind Profiler Radar (WPR) systems. This diversified product portfolio is expected to broaden the Companys customer base and serve as a key driver of accelerated revenue growth in the years ahead.

In the medical technology segment, the Companys subsidiary, imeds, is well-positioned to capitalize on the growing national demand for indigenously developed medical devices. In the forthcoming financial year, imeds plans to introduce a range of new indigenous products in the Surgical and Respiratory domains, further strengthening its product mix and reinforcing its commitment to the Atmanirbhar Bharat vision in healthcare.

b) Threats

The Company does not foresee any threats that would materially impair its current order book or near-term growth trajectory. However, evolving dynamics in the sector, including the entry of well-funded technology start-ups, potential shifts in government procurement priorities, and supply chain uncertainties in specialized electronic components, require continued strategic attention. The Company is committed to addressing this competitive dynamic through a sharp and unwavering focus on innovation, indigenous design capabilities, and the continuous development of next-generation products that reinforce its technological edge and market relevance.

Internal Control Systems and their adequacy

The Company has in place a well-defined and robust internal control framework, underpinned by a comprehensive suite of internationally recognized management system certifications that reflect its unwavering commitment to quality, safety, environmental responsibility, and information security. These include:

- 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.

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

The Company maintains a rigorous internal and external audit mechanism, with all audit activities systematically monitored and tracked through its integrated ERP platform, Funwork. All scheduled audits, both internal and external, are completed within defined timelines, with no material non-compliances reported

against any processes or systems currently in place. The Companys internal control systems have consistently received commendation from auditors and regulatory bodies alike.

Effective governance and oversight are further reinforced through active top management engagement, with Key Performance Indicators (KPIs) across all critical business functions reviewed regularly through structured Management Review Meetings and other performance monitoring mechanisms. This proactive oversight culture enables timely interventions where required, ensuring that business objectives are not only met but consistently surpassed.

5) Industrial Relations and Human Resources Management

The Company has cultivated strong and enduring relationships with its customers and suppliers, earning a reputation for reliability, integrity, and professional excellence across all segments of its business ecosystem. There are no pending disputes with any stakeholder, and the Company continues to engage with its entire business community comprising clients, vendors, partners, and regulatory bodies in a spirit of mutual trust, transparency, and collaboration.

The Company continues to maintain cordial and harmonious relations across all levels of the organization and with all stakeholders, acknowledging its workforce as the primary catalyst for its technological innovation and operational resilience. The Company believes its people are its most enduring asset and, guided by progressive, employee-centric HR practices, has cultivated an inclusive and growth-oriented work environment aligned with its strategic vision. The workforce remains motivated, skilled, and committed, consistently demonstrating the capability to achieve organizational objectives across all operating conditions.

The successful implementation of the Employee Stock Option Plan (ESOP) 2023 over the last two fiscal years has strengthened the Companys talent management framework by aligning employee interests with long-term shareholder value. The primary objective of the scheme has been to foster a sense of ownership and serve as an effective retention mechanism for key technical and leadership personnel, thereby achieving a significant reduction in attrition in a highly competitive talent market. The ESOP has also enhanced Avantels employer brand, positioning the Company as a progressive, wealth-sharing organization capable of attracting niche talent. The resulting improvement in employee ownership and morale continues to support the Companys sustained operational and financial performance.

Building on this momentum, the Company proposes to launch Avantel Employees Stock Option Plan - 2025 whose primary objective is to further deepen employee engagement, promote long-term retention, and align individual performance with the Companys strategic growth objectives through equity-based incentives. Accordingly, the Company proposes to launch ESOP 2025, covering employees across all levels, with grants not exceeding 45,00,000 equity shares. The scheme has been designed to incentivize high-impact teams engaged in advanced R&D initiatives and large-scale SATCOM projects, thereby directly linking long-term employee rewards to the successful execution of the Companys strategic roadmap. The Company is also evaluating the extension of the scheme to employees of Avantel Subsidiary imeds as well.

These initiatives reaffirm the Companys commitment to building a future-ready workforce aligned with its long-term value creation.

6) Variations in Net Worth

The Standalone Net worth of the Company for the Financial Year ended March 31, 2026, is Rs. 35,650.45 Lakhs as compared to Rs. 24,801.16 Lakhs for the previous Financial Year ended March 31, 2025, and the Consolidated Net worth of the Company for the Financial Year ended March 31, 2026, is Rs. 33,823.28 Lakhs as compared to Rs. 23,724.61 Lakhs for the previous Financial Year ended March 31, 2025.

7) Details of significant changes (i.e. change of 25% or more as compared to the 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 a consolidated basis in Note No. 50.

8) Statutory Compliance

We have robust controls and internal procedures to ensure all applicable compliances across subsidiary companies. The Company Secretary ensures compliance with the provisions of the Companies Act, 2013, the Foreign Exchange and Management Act, 1999 and SEBI rules, regulations and guidelines made thereunder.

9) Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations are forward-looking statements within the meaning of applicable securities 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 those expressed in the statement. Important factors that could make a difference to the 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/-
	Dr. Abburi Vidyasagar
Place: Hyderabad	Chairman & Managing Director
Date: April 26, 2026	DIN:00026524