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

Your Company has yet again demonstrated exceptional growth and grossed a turnover of Rs.22,391.75 lakhs for the F.Y. 2023-24 which is the highest since inception. This year was an eventful year wherein we have successfully executed few significant projects viz. 6300 RTIS systems for Indian Railways, MSS Helicopter version units to Lockheed Martin, USA and MSS M II terminals to various ships & strategic vehicles, S band Hub station & MSS terminals to ICG. Your company has designed, developed, and successfully demonstrated 1 KW HF Software Defined Radio (SDR) sets compliant to SCA 4.1 architecture to Indian Air Force. Avantel has got a supply order from NSIL, ISRO for supply of 30,000 MSS terminals for shipping boats to be supplied in FY 2024-25.Your Company this year has initiated development of 5 / 10 KW HF Systems, HF Manpacks, Ku band terminals, multi band airborne SCA compliant Software Defined Radios.

The operations of Imeds Global Private Limited, subsidiary of Avantel Limited offering innovative medical solutions are in consolidation phase while ventilators, patient monitors, CPAP, BiPAP, portable Oxygen Concentrators are under advanced stage of development, and we are confident that these products will be certified during 2024-25.

The Company has recorded a Profit (before tax) of Rs.7,447.31 Lakhs against Rs.3,992.96 Lakhs in the previous year with an increase in profit by (before tax) 86.51% compared to last fiscal.

2) Outlook for the next year

The budget estimates for the Ministry of Defence (MoD) for 2024-25 are Rs.621,540.85 crore, constituting 13.04 percent of the total Union Budget. The allocations to the MoD in BE 2024-25 are an increase of 4.71 per cent from the 2023-24 budget estimates of Rs.593,537.64 crores. The MoD notes that the interim budget of FY

2024-25 has maintained an upward trend in the capital outlay allocations to fill the critical capability gaps through the modernization of the Armed Forces. In the past 10 years, the modernization budget and the capital outlay on defence services have grown consistently. In BE 2024-25, an amount of Rs.141,160.9 crores has been allocated under the modernization heads. This represents an increase of 5.52 per cent over the BE 2023-24 allocations under the same heads, which stood at Rs.133,871.26 crores.

The governments Atmanirbhar Bharat initiative has also focused on Indias defence sector, which aims to promote indigenous production and reduce the countrys dependence on imports. The government is focusing on the defence industry as a key area to achieve self-reliance. The government has taken several policy initiatives in the past few years under Make in India programme and brought in reforms to encourage indigenous design, development and manufacture of defence equipment in the country.

During the last three financial years (2020-21 to 2022-23), for instance, 122 contracts have been signed for capital procurement of defence equipment by the MoD. Out of these, 100 contracts accounting for 87 per cent of total contracts value have been signed with Indian vendors for capital procurement of defence equipment. (Source: https://www.idsa.in/issuebrief/Defence-Budget-2024-25-SSC-Rajiv-ASingh-160224)

Avantel is in the forefront of building self-reliance in defence technologies and has been consistently offering solutions as per requirements of the strategic customers. During the FY 2024-25, the company has impressive order book and is expected to introduce few new products viz. SCA complied HF Software Defined Radios and MSS Xponders for fishermen in addition to the present product lines.

Further, your company is also establishing a facility in E City, Shamshabad, Hyderabad with built up space of about 70,000 Sq. Feet in about 4 acres of land. The facility is scheduled to be operational by October 2024 and shall house state of the art facilities and infrastructure for space technologies. In view of the recently released Indian new space policy, your company has embarked on new initiatives in line with the companys diversification plans and submitted proposals for establishment of Ground Station as a Service (GSAAS) facility & SATCOM as a Service through dedicated satellite to IN-SPACe, ISRO, GoI for consideration.

The company is also establishing a state of the art R & D and Production centre for Imeds in about 2 acres land with built space of approx. 30,000 sq feet and expected to go operational by Q3 FY 2024-25.

3) Risks And Concerns a) Risks

The supply chains have been stabilised post Covid effects despite the Geopolitical disturbances around the world. However, the challenges of procurement of semiconductors with long lead time have bearing on production cycles and must be meticulously planned. The Company has to quickly complete development of various products in communication domain to be able to sustain the growth

b) Risk Mitigation

The company has in place an elaborate supply management process and is constantly refining the same for availability of materials in time. Alternative strategies are resorted to well in time to take care of bottlenecks, if any. Your company is aware of market conditions and 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 eight years.

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, and various types of Software Defined Radios. Privatisation of Space domain itself has opened new avenues and company is seized of this significant business opportunity. The company is drawing up plans to enter into other segments of Space to be able to offer unique customised solutions to Indian Defence sector.

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 27001:2013 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 Year, the Company has introduced the "Avantel Employees Stock Option Plan - 2023" ("ESOP

2023" or "Scheme"). The scheme has been approved by the Board of Directors at their meeting held on October 9, 2023, and the Shareholders of the Company on November 11, 2023.

The objective of the Scheme is to reward the Employees for association, dedication and contribution to the goals of the Company. The Company intends to use this Scheme to attract and retain key talents working with the Company by way of rewarding their performance and motivate them to contribute to the overall corporate growth and profitability. The Company prospects that Employee Stock Options as instruments that would enable the Employees to get a share in the value, they create for the Company in the years to come.

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.

The Scheme would result in grant of options not exceeding 45,00,000 equity shares of the Company. Each option when exercised, would be converted in to 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.

7) Variations in Net Worth

The Standalone Net worth of the Company for the Financial Year ended March 31, 2024, is Rs.17,141.39 Lakhs as compared to Rs.11,188.03 Lakhs for the previous financial year ended March 31, 2023 and the Consolidated Net worth of the Company for the Financial Year ended March 31, 2024 is Rs.16,411.92 Lakhs as compared to Rs.10,748.17 Lakhs for the previous Financial year ended March 31, 2023.

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. 50 and on consolidation basis Note No. 49.

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 25, 2024