Bondada Engineering Ltd Management Discussions

Growth Prospects & Future Outlook

The Company has ample avenues to grow in its business segments.

INDIAN TELECOM INDUSTRY

The Indian telecommunications industry is one of the largest in the world and a critical enabler of the countrys digital economy. As of March 2025, India had approximately 1.21 billion telecom subscribers, with a tele-density of about 86%, making it the second largest telecom market globally. Internet penetration has also expanded rapidly, with 969 million internet users, supported by affordable data tariffs, expanding mobile broadband coverage, and increasing smartphone adoption.

The sector is undergoing a transformative phase driven by 5G deployment, fiberization of telecom infrastructure, and government-led digital initiatives. Commercial 5G services, launched in late 2022, have already reached over 99% of districts with a base of more than 250 million subscribers by March 2025. This rapid adoption is creating significant opportunities for infrastructure augmentation through small cell deployment, optical fiber cable (OFC) rollout, in-building solutions, and power systems.

Government programs such as Digital India, BharatNet Phase III, and the Production-Linked Incentive (PLI) scheme are strengthening the sector. As of March 2025, BharatNet had connected over 2.18 lakh Gram Panchayats with more than 42 lakh route km of optical fiber cable, aiming to extend affordable broadband to rural households and bridge the digital divide.

The industry structure is dominated by three private operators - Reliance Jio, Bharti Airtel, and Vodafone Idea - along with state-owned BSNL/MTNL. While competition remains intense, the sector is gradually consolidating with a focus on sustainable tariffs, operational efficiency, and technology-led service delivery.

Looking ahead, the Indian telecom industry is expected to benefit from:

• Rising demand for data consumption fueled by video streaming, cloud adoption, and loT applications.

• Network densification and fiberization to support 5G and emerging technologies.

• Growth in Fixed Wireless Access (FWA) and enterprise services.

• Expansion of rural and semi-urban connectivity through government programs and private sector investments.

At the same time, the industry faces challenges such as high capital intensity, regulatory compliance, spectrum costs, and right-of-way issues for fiber rollout. Despite these concerns, Indias telecom sector

remains a key driver of economic growth, digital transformation, and inclusive development, offering significant opportunities for infrastructure and EPC service providers.

Telecom Infrastructure:

Telecom infrastructure represents the physical hardware that enables smooth functioning of todays telecommunication services, including mobile service as well as internet & other digital services. These include telephone wires, cables (including undersea cables), satellites, telecom towers, and satellites. Based on its position within the telecom ecosystem, telecom infrastructure is broadly divided into Active, Passive and Backhaul. Based on its utility and its role in telecom ecosystem, telecom infrastructure is segmented into active and passive.

• Active: These include spectrum, switches, antenna, receivers, & microwave equipment, all of which form the front end of telecom ecosystem.

• Passive: These include:

o Telecom towers, power supply ecosystem (including battery, generators, and associated equipment), and all hardware required to maintain tower o Optical fiber cable

Expected Growth in Telecom Tower Base:

Indias telecom tower infrastructure forms the backbone of mobile connectivity, enabling network coverage, capacity, and quality of service. As of December 2024, India had approximately 8.12 lakh telecom towers supporting over 29 lakh base transceiver stations (BTSs). With the commercial deployment of 5G. increasing data traffic, and the push for deeper rural penetration, the demand for telecom towers is expected to rise steadily.

Industry estimates suggest that the tower base will grow at a CAGR of 3-4% over the next five years, with the total number of towers projected to cross 10 lakh by FY 2030. Growth is being driven by:

• 5G Rollout and Densification: 5G requires higher site density and low-latency networks, leading to the deployment of small cells and infill towers.

• Fiberization Drive: Government and operator focus on increasing tower fiberization (from -46% today to -80% by 2030) will create additional demand for tower upgradation and new site rollout.

• Rural and Semi-Urban Expansion: Programs like BharatNet and Digital India are accelerating the need for rural towers to bridge the digital divide.

• Infrastructure Sharing: Growing adoption of tower sharing models by operators and infrastructure providers enhances economics, making incremental tower additions viable.

• Emerging Technologies: Expansion of loT, Fixed Wireless Access (FWA), and private enterprise networks will require additional tower infrastructure and small cell deployments.

While the industry is witnessing healthy growth prospects, regulatory clearances, right-of-way permissions, and cost economics continue to pose challenges for large-scale expansion. Nevertheless, with strong policy

support and sustained operator investments, the Indian telecom tower base is expected to remain on a steady growth trajectory, underpinning the long-term digital transformation of the country.

Expected Growth in Telecom Fiber Base:

Optical fiber is the most critical component of modern telecom infrastructure, enabling high-speed data transfer, low latency, and reliable connectivity. India has made significant progress in expanding its fiber network over the past decade. As of March 2025, the country had laid approximately 42.1 lakh route kilometers of optical fiber cable (OFC), connecting more than 2.18 lakh Oram Panchayats under the BharatNet program.

Despite this progress, Indias fiber penetration remains relatively low compared to global benchmarks. Currently, only about 46% of telecom towers are fiberized, against the 80-90% levels seen in developed markets. To fully realize the potential of 50, FTTH (Fiber-to*the-Home), cloud services, data centers, and loT applications, India must substantially scale up its fiber base in the coming years.

Industry projections suggest that Indias fiber base will need to grow at a CAGR of 12-15% over the next 5-7 years, with cumulative fiber length expected to cross 65-70 lakh route kilometers by FY 2030. This growth will be driven by:

• 5G Rollout & Densification: 5G requires fiberized backhaul to ensure seamless connectivity and low-latency performance.

• BharatNet Expansion (Phase III): Targeting rural broadband access for ~1.5 crore households, requiring further fiber deployment in semi-urban and rural areas.

• FTTH & Enterprise Demand: Rising adoption of digital services, work-from-home models, and enterprise connectivity is accelerating fiber-to-the-home and fiber-to-the-office installations.

• Data Center Growth: Increasing investments in hyperscale and edge data centers necessitate robust fiber interconnectivity.

• Policy Push: Government and regulator focus on harmonizing right-of-way (RoW) rules and incentivizing fiber rollout.

While the growth outlook is strong, challenges such as RoW approvals, high initial capex, and execution delays need to be addressed through industry collaboration and government support. Nevertheless, fiberization remains a strategic priority for telecom operators and EPC service providers, offering significant opportunities in the medium to long term.

Technology Upgrades: Roll out of 4G and 5G:

The Indian telecom sector has witnessed significant technology-led transformation in the past decade. The large-scale rollout of 4G services enabled affordable, high-speed internet access, driving mass adoption of digital platforms, e-commerce, fintech, OTT, and cloud services. Even today, 4G remains the primary technology for voice and data, catering to the majority of Indias 1.21 billion subscribers. Operators continue to expand and upgrade 4G networks to enhance coverage and capacity, particularly in semi-urban and rural markets.

Building on this foundation, the industry entered the 5G era in late 2022. By March 2025, 5G coverage had reached 99% of Indias districts with over 250 million subscribers, making it one of the fastest 5G adoptions globally. The rapid rollout has been supported by large investments in spectrum, equipment, and fiberization, along with active government facilitation.

The transition from 4G to 5G is reshaping network architecture and infrastructure demand in several ways:

• Network Densification: 5G requires smaller cell sites, fiberized backhaul, and upgraded power systems.

• Enterprise Applications: Low-latency and high-speed 5G networks are enabling Industry 4.0 use cases in manufacturing, healthcare, logistics, and smart cities.

• Fixed Wireless Access (FWA): Telecom operators are leveraging 5G to provide last-mile broadband in areas with limited fiber reach.

• Capacity Upgrades in 4G: Even as 5G scales, operators are continuing to invest in 4G to serve legacy customers and ensure smooth technology coexistence.

Looking ahead. 4G and 5G networks will coexist for the next several years. While 5G is expected to drive new revenue streams through enterprise solutions, loT, and immersive consumer applications, 4G will remain crucial in providing affordable mass connectivity. This dual-technology landscape presents significant opportunities for EPC companies and infrastructure providers in areas such as tower construction, optical fiber deployment, small cell installation, and energy-efficient power solutions.

SOLAR EPC:

The company has delivered 114 MW solar plants during the year 2022-23 as against 40 MW during the year 2021-22. The delivery capacity has increased multifold compared to previous financial year. Based on the vast experience by the management team and successful projects completion, the company is now successful in getting further EPC contracts in this space.

The company is also pursuing orders from other Solar companies like Adani, Enrich Energy, Greenko, Hinduja Renewables etc. for their solar EPC requirements. Apart from private solar companies, the company is also participating in tenders which are getting floated by public sector undertakings like NTPC, BHEL, SECI, Damodar Valley Corporation etc.

Solar Industry in India:

India is among the fastest-growing renewable energy markets in the world, with a strong policy focus on solar power as a key enabler of sustainable growth and energy transition. As of March 2025, Indias installed solar power capacity stood at over 82 GW, contributing nearly 17% of the countrys total installed power capacity. The Government of India has set an ambitious target of achieving 500 GW of renewable energy capacity by 2030, of which solar energy is expected to contribute the largest share.

The Solar EPC (Engineering, Procurement, and Construction) segment plays a pivotal role in this growth by offering end-to-end project execution — from design and procurement of modules, inverters, and balanee-of-system components, to construction, installation, commissioning, and handover of solar plants.

Growth Drivers

• Policy Push: Initiatives such as the National Solar Mission, Renewable Energy Development Targets, and PLI scheme for solar modules are accelerating adoption.

• Rising Energy Demand: Crowing industrialization and urbanization are driving electricity demand, making solar a cost-effective alternative.

• Declining Costs: Sharp reductions in solar module and storage costs have improved project viability.

• Corporate Commitments: increasing ESC commitments and renewable purchase obligations (RPOs) from corporates are creating demand for captive solar projects.

• Hybrid & Storage Solutions: Emergence of solar + storage and hybrid renewable projects is expanding EPC opportunities.

Industry Outlook

The Solar EPC industry in India is expected to grow at a CAGR of 12-15% over the next five years, supported by large-scale utility projects, rooftop installations, and hybrid renewable systems. Upcoming opportunities include floating solar projects, green hydrogen-linked solar plants, and international expansion into emerging renewable markets in Africa, the Middle East, and Southeast Asia.

Challenges and Risks

• Volatility in Module Prices and Supply Chain: Global fluctuations in polysilicon and module costs can affect project margins.

• Land Acquisition & Regulatory Clearances: Delays in approvals can impact project timelines.

• High Capital Intensity: EPC players must manage working capital efficiently given the scale of upfront investments.

• Competitive Pressure: Intense competition from global and domestic EPC firms impacts pricing power.

Opportunities for EPC Companies

For EPC service providers, the transition towards renewable energy presents significant long-term opportunities. Companies with strong execution capabilities, backward integration (module manufacturing, trackers, or inverters), and digital project management tools are expected to be well-positioned to capture market share. The demand for operations & maintenance (O&M) services also provides a stable annuity revenue stream, complementing EPC revenues.

An in-depth assessment of current industry parameters and emerging market trends strongly suggests that the company is well-positioned to capture substantial growth opportunities in its existing areas of operation. The sectors in which the company is actively engaged are experiencing steady expansion, supported by rising demand, favorable government policies, and increasing private sector investments. These dynamics not only validate the companys present business model but also highlight its ability to leverage its core competencies and scale its operations in line with industry requirements."

"The management is of the view that such favorable conditions will persist through the year 2030, providing the company with a continued stream of business opportunities. This long-term visibility offers a strategic advantage, allowing the company to plan its investments, strengthen its execution capabilities, and diversify its portfolio in a structured and sustainable manner. By aligning with evolving market needs and technological advancements, the company aims to consolidate its market position and expand its share across key business verticals."

"With this outlook, the company is confident of building a robust foundation for sustained value creation. The emphasis on operational excellence, financial discipline, and innovation will remain central to the companys growth strategy, ensuring resilience against market fluctuations and enabling consistent performance. These factors collectively pave the way for scalable, profitable, and sustainable growth well into the next decade."

Managements Responsibility for the Standalone Financial Statements

The Companys Board of Directors is responsible for the matters stated in section 134(5) of the Companies Act,2013 with respect to the preparation of these Standalone Financial Statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Act read with the Companies (Accounting Standards) Rules. 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the Standalone Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

In preparing the Standalone Financial Statements. Board of Directors is responsible for assessing the Companys ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Companys financial reporting process.

Managements Responsibility for the Standalone Financial Statements

Our objectives are to obtain reasonable assurance about whether the Standalone Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if. individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Financial Statements.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the Standalone Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.

- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that

a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the Standalone Financial Statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the Standalone Financial Statements, including the disclosures, and whether the Standalone Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the financial statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Financial Statements for the financial year ended March 31. 2025 and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

As required by the Companies (Auditors Report) Order, 2020 ("the Order"), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Companies Act, 2013, we give in the Annexure "A", a statement on the matters specified in paragraphs 3 and 4 of the Order.

As required by Section 143(3) of the Act, we report that:

(a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our Audit of the aforesaid Standalone Financial Statements;

(b) In our opinion, proper books of account as required by Law have been kept by the Company so far as it appears from our examination of those Books;

(c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the relevant books of account maintained for the purpose of Standalone Financial Statements;

(d) In our opinion, the aforesaid Standalone Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2021, as amended;

(e) On the basis of the written representations received from the directors as on 31st March. 2025 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2025 from being appointed as a Director in terms of Section 164 (2) of the Act;

(f) With respect to the adequacy of the internal financial controls with reference to Standalone Financial Statements and the operating effectiveness of such controls, refer to our separate Report in "Annexure B" to this report;

(g) In our opinion, the managerial remuneration for the year ended March 31. 2025 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act.

(h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules. 2014. as amended in our opinion and to the best of our information and according to the explanations given to us:

i. The Company does not have any pending litigations which would impact its financial position;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company;

iv.

(a) The Management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person or entities, including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

(b) The Management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person or entities, including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries, and

(c) Based on the audit procedures adopted by us that were considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations made by the Management under sub clause (a) and (b) above, contain any material misstatement.

(d) As stated in Note 34 to the financial statements, the final dividend proposed in the previous year, declared and paid by the company during the year is in accordance with Section 123 of the Act, as applicable.

(e) Based on our examination which included test checks, the company has used an accounting software for maintaining its books of account which has a feature of recording audit trail (edit log) facility and the same has operated throughout the year for all relevant transactions recorded in the software. Further, during the course of our audit we did not come across any instance of audit trail feature being tampered with.

For Sreedar Mohan & Associates Chartered Accountants ICAI Firm Regn.No:012722S

Vidyasagar Macharla Partner

M.NO: 223056 UDIN: 25223056BMIZCZ8304

Place: Hyderabad Date.- 01st May 2025.