Canarys Automations Ltd Management Discussions

1. Economic Review

Global Economy

The global economy is navigating a delicate phase. Following years of disruption, 2024 marked a return to relative stability, recording 3.3% GDP growth. However, the pace is expected to ease to 2.8% in 2025, aligning with the modest expansion seen in 2023. Despite sharp interest rate hikes by central banks, growth held firm, reflecting the systems resilience against weak investment activity, sluggish productivity, and mounting debt.

Geopolitical conflicts, persistent trade frictions, and elevated borrowing costs continue to cloud prospects, while the prolonged conflict in Ukraine has driven energy prices higher, straining energy-reliant economies.

Outlook The near-term outlook is tilted to the downside.

Heightened trade disputes, unstable financial markets, and shifting policy priorities are expected to weigh further on global momentum.

Uncertainty around policy directions and the persistence of trade wars could dampen both short- and long-term growth trajectories. With market sentiment fragile and financial conditions tightening, the global landscape is set to remain unpredictable, demanding agility and resilience from economies and businesses alike.

Indian Economy

Indias economy demonstrated strong resilience in FY 2024–25, achieving real GDP growth of 6.5% and retaining its position as the worlds fastest-growing major economy, firmly on track to emerge as the fourth largest globally. This robust performance was underpinned by resilient domestic demand, with private consumption showing steady growth on the back of revived rural sentiment and improving consumer confidence. Sustained infrastructure investment and a resilient services sector further supported momentum, even as global headwinds from weaker trade, tighter financial conditions, and geopolitical uncertainties persisted. On the domestic front, food inflation linked to weather risks remained a challenge, though easing overall price pressures created space for gradual monetary support.

Outlook Indias economy is projected to grow between 6.3% and 6.8% in FY 2025–26, with a favourable monsoon expected to boost agricultural output, ease food inflation, and support rural consumption. Accommodative monetary policy and continued liquidity support from the Reserve Bank of India are likely to fuel investment and consumer spending. At the same time, external risks from geopolitical tensions, volatile trade dynamics, and global uncertainty remain. Sustaining momentum will require a strong focus on structural reforms, infrastructure expansion, the and digital transformation—critical levers for strengthening resilience and driving long-term growth.

2. Industry Review

2.1 Information Technology Solutions

Global Technology Trends 2024

• As 2024 unfolded with most regions showing improved economic activity aligned to their potential, global technology spending recorded a strong 10.8% growth, led by robust demand in hardware and software, while IT services grew modestly at 4.7%.

Indian Technology Industry Overview

• FY25 reinforced Indias position as the global hub for technology and innovation. Despite uncertainties linked to elections in several countries, the industry is expected to maintain resilient growth with revenues (including hardware) projected at $283 billion, a 5.1% y-o-y growth, adding nearly $14 billion over last year.

• Exports are expected to surpass $200 billion, growing 4.6% y-o-y to $224 billion, while the domestic technology sector is set to grow 7.0% y-o-y, reaching $58.2 billion.

• With market conditions improving, the industry reported net hiring of 126K, taking the employee base to 5.80 million (2.2% y-o-y growth). Growth was driven largely by the USA and BFSI, with APAC, Telecom, Retail, and Healthcare emerging as additional growth markets.

Defining themes of FY25

• ITServices:ExpansionofAI-leddelivery,cloud-native adoption, and promising conditions

• India Rising: All efforts aligned to Viksit Bharat @2047

CY25 Technology Industry Outlook

The Nasscom Annual Enterprise CXO Survey

2025 signals stronger growth momentum, with 82% of CXOs planning to increase digital spending by 5%+ in CY25, particularly on AI-driven digital initiatives.

• For technology providers, FY26 is expected to bring stronger demand, with 77% of providers anticipating higher business growth than last year, driven by foundational digital expansion, emerging markets, and AI-led opportunities. However, hiring outlooks remain conservative, with 45% of providers expecting increased hiring versus FY25.

• Nasscomoutlinesfourstrategicimperatives— the "4Cs" for the industrys growth:

1. Co-create personalized growth journeys with customers

2. Collaborate with future-ready partners for long-term value

3. Converge services and products into scalable, customizable platforms 2

4. Catalyze R&D and talent capabilities to deliver next-gen solutions

Digital Transformation

Digital transformation is reshaping industries worldwide, embedding advanced technologies into every layer of business operations. By 2025, this shift is set to accelerate further, powered by emerging trends and innovations. What began as digitizing paper-based processes has now evolved into a broad reimagination of how businesses operate leveraging artificial intelligence (AI), the Internet of Things (IoT), blockchain, and ultra-fast connectivity.

Key Drivers of Digital Transformation

1. Artificial Intelligence and Machine Learning

AI and machine learning are driving smarter decision-making by enabling businesses to harness vast datasets. From predictive analytics and automation to hyper-personalized customer engagement, these technologies are redefining efficiency and competitiveness.

2. Internet of Things (IoT)

IoT is connecting devices, systems, and people in real time, unlocking opportunities for predictive maintenance, operational efficiency, and new service-driven business models across manufacturing, logistics, healthcare, and beyond.

3. Blockchain Technology

Blockchain is emerging as a powerful enabler of trust and transparency. Its secure, decentralized systems are finding applications in finance, supply chains, and healthcare minimizing fraud while streamlining transactions and record-keeping.

4. 5G Connectivity

The rollout of 5G is accelerating digital transformation by enabling seamless IoT integration, ultra-low latency, and real-time analytics. From smart cities to immersive remote work experiences, 5G is set to be a cornerstone of next-generation digital ecosystems.

2.2 India Smart Water Management Market

According to IMARC Group, the India Smart

Water Management (SWM) market reached

USD 748.72 million in 2024 and is projected to grow to USD 2,200.82 million by 2033, exhibiting a CAGR of 11.81% during 2025 2033. This growth is driven by the rising need for water conservation, rapid urbanization, and the growing emphasis on environmental sustainability, supported by advancements in ICT-based solutions.

SWM leverages technologies such as digital meters, sensors, SCADA systems, and GIS platforms to collect and analyze real-time data across water networks. These systems help in detecting leaks, optimizing energy consumption, forecasting equipment malfunctions, ensuring regulatory compliance, and improving water-use efficiency.

Key Market Trends

• Technology-driven operations: Integration of pressure management, advanced analytics, meter data management, and intelligent irrigation systems enhances operational efficiency.

Urbanization and infrastructure modernization: Indias growing population and urban expansion increase the demand for efficient water resource management.

• Sustainability push: SWM adoption aligns with Indias sustainability agenda by promoting conservation and data-driven resource management.

Outlook

The India Smart Water Management market is set for strong growth, with revenues expected to nearly triple by 2033, driven by rising urbanization, water scarcity challenges, and sustainability imperatives. Policy support, infrastructure modernization, and alignment with Indias Smart Cities and sustainability initiatives will further accelerate adoption. Over the coming decade, SWM will emerge as a critical enabler of resource efficiency, operational resilience, and climate-smart urban development in India.

3. Company Overview

For over three decades, Canarys Automations Limited (Canarys) has been at the forefront of driving digital transformation, helping businesses adapt, modernize, and thrive in an increasingly technology-driven world. With a talented team of 400+ professionals, we bring deep expertise across Digitalization, Modernization, Automation, and Intelligence—delivering solutions that are not only innovative but also customized to the unique needs of every client.

We serve a diverse set of industries including BFSI, Retail, Healthcare, Pharmaceuticals, Manufacturing, and Insurance, enabling organizations to unlock efficiency, elevate customer experiences, and accelerate growth. Guided by a strong commitment to innovation and excellence, we continue to earn the trust and recognition of our customers, strategic partners, and OEM alliances.

Key highlights

Launch of Auryis AI-Powered Compliance Platform for Pharma & Life Sciences Canarys is pleased to announce the launch of Auryis, its first AI-powered, unified compliance assessment platform designed for the Pharma

& Life Sciences industry. This marks a significant milestone in the Companys evolution, as it transitions towards a product-led growth strategy.

With Auryis, Canarys aims to simplify, accelerate, and transform compliance assessment processes, enabling Pharma & Life Sciences organizations to navigate the complexities of a rapidly evolving regulatory environment with greater efficiency and confidence. The platform reinforces Canarys commitment to innovation, scale, and value creation for its clients, investors, and partners.

Expansion of DevOps Portfolio

Canarys has further strengthened its

DevOps leadership by releasing a suite of advanced solutions:

Canarys Migration Hub

Canarys Sync Hub

Canarys Bugzilla to Azure DevOps Migrator

License Optimizer

Canarys Redmine to Azure DevOps Migrator

Canarys Work Item Link Validator

These solutions are designed to enhance enterprise DevOps capabilities by supporting seamless migration, integration, optimization, and quality validation. With these additions,

Canarys continues to consolidate its position as a market leader in DevOps solutions.

Urban Flood Management Centre, Gorakhpur A Model for Smart Resilience

The Urban Flood Management Centre (UFMC) in

Gorakhpur has been operational since May 2025 and was formally inaugurated on 23rd July 2025 by Honble Chief Minister Shri Yogi Adityanath

Ji, in the presence of Members of Parliament,

MLAs, the Mayor, and senior officials of the Municipal Corporation.

Built on clearly defined Standard Operating Procedures (SOPs), the Centre manages both day-to-day operations and emergency response. Equipped with real-time rainfall and water level monitoring, SCADA-based automated pumping, flood forecasting, and alert systems, the UFMC has already demonstrated significant results in its very first monsoon season:

• Waterlogging duration reduced to under 90 minutes in most areas.

• Pump breakdowns decreased by 60%.

• Flood forecast accuracy improved by 80%.

70% of citizen complaints resolved swiftly.

• Inter-agency coordination enhanced by 65%.

Through its proactive approach, the UFMC has set a new benchmark for smart flood management and is emerging as a replicable model for other cities in Uttar Pradesh, aligned with its guiding motto: Predict. Prepare. Protect.

Recognition and Impact

In a short span, UFMC has earned strong recognition at both national and global levels:

• Awarded the GEEF Smart Water Project of the Year 2025.

• Featured widely across media platforms and press releases.

• Praised by Lt. Gen. Yogendra Dimri, Vice

Chairperson, Uttar Pradesh State Disaster

Management Authority, who described it as the first urban flood management project its kind in India.

• Invited by the National Disaster Management Authority (NDMA) to present its solution at the national level.

Strengths and Opportunities

With over three decades of proven expertise,

Canarys stands strong on its ability to deliver end-to-end IT solutions across digitalization, modernization, automation, and intelligence.

Backed by a team of 400+ skilled professionals and trusted partnerships with customers, alliance partners,andOEMs,thecompanyhassuccessfully built a reputation for client-centric solutions that span diverse industries including BFSI, Retail, Healthcare, Pharmaceutical, Manufacturing, and

Insurance. These strengths position Canarys to tap into significant opportunities such as the rising global demand for digital transformation, rapid adoption of AI and automation, and expansion into emerging sectors like fintech, healthtech, and

Industry 4.0-driven manufacturing. With growing prospects in cloud, cybersecurity, and analytics, alongside the potential to scale into international digital-first markets, Canarys is well-placed to accelerate growth and create lasting value for its stakeholders.

Risks and threats

While Canarys is on a strong growth trajectory, we recognize certain risks and challenges that could impact our journey. Rapid technological advancements demand continuous innovation and upskilling to stay relevant; any lag may reduce our competitive edge. Dependence on global markets, especially North America, exposes us to currency fluctuations, regulatory changes, and economic uncertainties. The increasing pace of cyber threats and data privacy concerns also pose operational risks, requiring constant vigilance and investment in security. Furthermore, intensifying competition in the IT services and product space may put pressure on pricing and margins. Addressing these risks proactively remains a key part of our strategy to ensure resilience and long-term sustainability.

3. Strategy

Key Strategies to Achieve Vision 2028

At Canarys, our Vision 2028 is anchored in a clear set of strategies designed to drive sustainable growth, enhance competitiveness, and deliver cutting-edge value to our customers. We are of pursuing Global Expansion to strengthen our international presence, investing in Market-

Specific Technology Offerings to deliver tailored solutions across high-growth sectors, and prioritizing Constant Upskilling to nurture talent and future-ready capabilities. Together, these strategies form the foundation of our journey from automation to intelligence, positioning

Canarys as a trusted global partner in digital transformation.

1. Strategic Expansion in North America

In FY25, Canarys took a significant step in strengthening its global presence by acquiring a majority stake in Fortira Inc.,

USA, a digital engineering, IT consulting, and cybersecurity solutions provider. With this acquisition, Canarys has expanded its footprint in the North American IT solutions market, reinforcing capabilities in AI, data, digital engineering, and cloud innovation.

Enterprise Value: USD 5 million

Deal Value: USD 2.55 million (for 51% stake)

• Funding: IPO proceeds and internal accruals Fortira brings with it proprietary solutions, a strong base of 25+ enterprise customers, and a highly skilled team of 100 professionals. The acquisition strengthens Canarys industry reach across financial services, healthcare, telecom, and pharma, while also creating opportunities for cross-selling and digital transformation-led growth. With this acquisition, Canarys

North America business expansion will have a positive impact.

2. Market-Specific Technology Offerings

Canarys continues to focus on following high-growth industries, delivering customized technology solutions that address sector-specific needs.

• BFSI

• Healthcare

• Manufacturing

Retail & E-commerce

Why this matters:

Industry-specific needs demand tailored IT solutions

AI, Cloud, and Automation are reshaping enterprise operations

Canarys has a proven track record in delivering scalable IT solutions

• The$500B+digitaltransformationmarket provides long-term growth opportunities

AI & Cloud adoption is accelerating, with enterprises increasing IT spends at 4

50%+ CAGR

Our market leadership strategy is built on:

1. Building deep domain expertise with sector-focused solutions

2. Investing in AI & Cloud innovation to stay ahead of market shifts

3. Strengthening collaborations with top enterprises across industries

3. Order Book Expansion

FY25 was a year of accelerated growth for

Canarys, reflected in the sharp expansion of its IT Solutions order book, which crossed

1,050 million, nearly doubling from FY24.

Key initiatives included:

• Growing the order book with large deals in BFSI, healthcare, and manufacturing

Unlocking cross-sell opportunities post the North American acquisition

• Investing in people and culture, with focused upskilling and leadership development

• Driving global expansion, with orders from key international markets In FY25, we added 63 new client logos across 15+ industries and introduced 25 new solutions, further deepening our solution suite and strengthening our presence across sectors.

4. Outlook

With a healthy order book, an expanding client base, and a well-defined strategic roadmap, Canarys is strongly positioned to drive sustainable growth and create long-term value. Staying ahead of technology shifts, we have placed significant focus on Artificial Intelligence, with nearly 35% of our Canarians advancing their expertise to deliver next-generation solutions. In line with our transformation journey, we are evolving from being purely a solutions provider to building scalable products—an initiative already underway with a couple of promising developments in progress. Complementing this, we will continue to invest strategically in key markets such as North America to accelerate growth and global presence.

5. Financial Review

Particulars	FY25	FY24	Change (%)
Total Revenue	9,057.85	7,630.33	18.71%
EBITDA	1,236.46	1,176.44	5.10%
EBITDA margin (%)	13.65%	15.42%
PBT	1,149.01	1,063.89	8.00%
Reported PAT	828.96	799.43	3.69%
Adjusted PAT (before Extraordinary Costs)	828.96	799.43	3.69%
Reported EPS (in C)	1.45	1.72
Geographical Revenue Break-up
Particulars	FY25	FY24	FY23
India Sales	6,054.87	5,116.78	5,655.66
International Sales	2,853.39	2,384.74	1,796.28
Total	8,908.27	7,501.52	7,451.94

Top Customers Contribution to Revenue

	FY25		FY24		FY23
Particulars	% Of Revenue		% Of Revenue		% Of Revenue
	Amount ( Lakhs)	from Operations	Amount ( Lakhs)	from Operations	Amount ( Lakhs)	from Operations
Top 5 customers	4,842.70	54.36%	4,071.85	54.28%	2,233.90	29.98%
Top 10 customers	6,147.19	69.01%	4,973.23	66.30%	3,323.46	44.60%

Key Ratios

Particulars	FY25	FY24	Change (%)
Debtors Turnover (x)	1.34	1.40	-4.17%
Current Ratio (x)	3.40	3.24	4.89%
EBITDA Margin (%)	14%	15%
Net Profit Margin (%)	9%	10%
Return on Equity (%) *	11%	17%
Return on Employed Capital (%)	13%	14%

*Reported PAT is considered for calculation

6. People

At Canarys, our future planning is centred around people—because it is people who drive technology, culture, and community. Whether your aspiration is to build better technology, nurture a stronger culture, or create impactful community platforms, we are here to help you spread your wings, ground your strengths, and reach incredible heights. We are a company of people empowered by technology, and it is this synergy that makes

Canarys a peaceful, purpose-driven, and inspiring place to work.

Our open, vibrant, and positive culture fosters happiness, innovation, continuous improvement, and self-actualization. With diversity and inclusivity at the core, we ensure that every individual feels valued, supported, and motivated to contribute their best.

7. Internal Control System

The Company has established a robust Internal Control and Audit framework to ensure the accurate and fair presentation of its financial results. This system is designed to safeguard assets, ensure regulatory compliance, and address operational issues in a timely manner.

Internal audit processes are continuously monitored and upgraded in line with evolving business needs. The Audit Committee reviews reports submitted by internal auditors on a regular basis, notes key observations, and ensures that corrective measures are implemented where required. The Committee also maintains close engagement with both statutory and internal auditors to ensure the effectiveness and reliability of the internal control system.

8. Cautionary Statement

Certain statements in the Management Discussion and Analysis describing the Companys objectives, and predictions may be ‘forward-looking statements within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy. The Company does not undertake to update these statements.