Capillary Technologies India Ltd Directors Report

TO THE MEMBERS

CAPILLARY TECHNOLOGIES INDIA LIMITED

Your Directors have pleasure in presenting the 13th Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st March 2025.

On a consolidated basis, your Companys revenue increased to INR 5982.59mn for the current year as against INR 4833.97mn in the previous year. Your Companys net profit is INR 132.75mn for the current year as against the net loss of INR 593.76mn in the previous year. On a standalone basis, your Companys revenue increased to INR 1740.91mn for the current year as against INR 1186.21mn in the previous year. Your Companys net profit is INR 35.06mn in the current year as against the net loss of INR 523.34mn in the previous year.

INR in Million

	Standalone		Consolidated
Particulars	2024-25	2023-24	2024-25	2023-24
Revenue from contuining operations (net revenue*)	174091	1186.21	5982.59	483397
Other Income	122.37	84.68	136.10	103.40
Finance Income	--	--	--	--
Total Expenses	1407.46	1618.32	533290	5369.31
Profit/(Loss) before Exceptional items and Tax	35.06	(523.34)	106.78	(752.58)
Exceptional items	--	--	--	--
Profit/(Loss) before tax	35.06	(523.34)	106.78	(752.59)
Profit/(Loss) after tax	35.06	(523.34)	132.75	(593.76)
Other comprehensive income	(4.24)	(4.06)	68.54	59.82
Total comprehensive income/(Loss) for the year	30.82	(527.40)	201.29	(53394)
EPS
-Basic	0.48	(9.30)	1.81	(10.55)
-Diluted	0.47	(9.30)	1.79	(10.55)

*Net revenue- refer note 21 of standalone financial statements and note 22 of consolidated financial statements

Business performance is highlighted in CEOs message, which is shared separately.

1.2 Amount, if any, which the Board proposes to carry to any reserves

Your Company does not propose to transfer any amount to the reserves for financial year 2024-25.

1.3 Dividend

Your Company does not propose to declare any dividend for financial year 2024-25.

1.4 Major events occurred during the year

a State of companys affair

Your company has not engaged in any significant developments or material affairs during the financial year 2024-25

b. Change in nature of business

Your Company has not changed nature of business during the financial year 2024-25 under review.

c. Material changes and commitments, if any, affecting the financial position of the Company, having occurred since the end of the Year and till the date of the Report

In the opinion of the Board, no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report, which would affect substantially the results, or the operations of your Company for the financial year in respect of which this report is made.

1.5 Details of revision of financial statement or the Report

Your Company has not revised its financial statement or the Report in respect of any of the three preceding financial years either voluntarily or pursuant to the order of a judicial authority.

2. GENERAL INFORMATION

People Practice

In FY 2024-25, the People Practice function at Capillary Technologies continued to evolve as a strategic corporate enabler, working collaboratively across all business units to drive organizational excellence, employee engagement, and operational effectiveness. Aligned with our long-term business objectives, the function played a pivotal role in enhancing people-centric practices, streamlining policies, building leadership capability, and nurturing a culture of continuous development.

One of the key strategic priorities during the year was the streamlining of global human resource (“HR”) policies and processes, ensuring consistency and compliance across geographies. These policies underwent a rigorous audit to align with statutory requirements and industry best practices. As part of this effort, we successfully conducted a comprehensive HR Audit across India, the United States, and the Europe.

We also transformed the mid-year review process to emphasize development, introducing the "on track / off track" framework. This simplified approach-enabled through our partnership with the xto10x platform-served as a strategic checkpoint to celebrate progress and identify areas for growth.

Significant strides were made in HR tech integration to enable seamless data flows and operational efficiency. Our core HRMS platform, Darwinbox, was successfully integrated with:

• Netsuite (Finance tool) for payroll and cost allocation

• OnGrid for automated background verification and

• Sense for a streamlined onboarding experience

Our HR Shared Services continued to ensure smooth delivery of critical services including payroll administration, benefits management, employee data governance, and resolution of employee queries, all while maintaining service quality benchmarks and compliance.

As part of our ongoing investment in talent and leadership, the year saw the expansion of coaching and development programs:

• Personalized coaching for top talent and JEDI/senior managers, helping leaders align personal growth with organizational priorities.

• First-time manager development program, designed to empower new managers with essential leadership capabilities in communication, delegation, performance management, and conflict resolution.

• Transition coaching for offshore delivery center (“ODC”) managers in mysore, following the inauguration of our mysore offshore delivery center, ensured leadership continuity and cultural integration.

Learning & Development

Capillary Academy, our dedicated Learning & Development (L&D) wing, aimed at fostering a culture of continuous learning, capability building, and career growth. It continues to serve as the central hub for learning and development through personalized and scalable programs, enabling both product and functional capability building across the organization. In FY 2024-2025, the team delivered impactful learning outcomes with 45+ courses (including 30 product certifications), 5,500+ completions, 800+ active learners, and 50+ hours of expert-led training each quarter - spanning Product Training Days, new joiner bootcamps, custom workshops, and client/partner-specific trainings.

Key Highlights-

Building Team Capabilities

Client-Readiness Workshops: Custom product workshops conducted for US-CS teams, aligned with client-specific use cases to build demo and client readiness

Onboarding Bootcamps: Trained all new joiners at the Mysore office through structured product and process bootcamps for seamless onboarding Role-Based Learning Paths: Launched for PSV, CS, Design, Product, and HR teams to streamline onboarding

Hands-On Product Learning: Introduced assignment-based and use case-led product bootcamps for deeper engagement

Manager Dashboards: Rolled out improved dashboards for tracking completion of mandatory learning modules

Content & Engagement

Podcast-Style Certifications: Transformed baseline certifications into engaging audio-based formats to enhance self-paced learning

Capillary Compass: Curated a new HR onboarding module with leader snippets & departmental walkthroughs to help new joiners understand Capillarys journey, values, and growth- now a part of India orientation.

Rewards+ Enablement: Launched an interactive walkthrough and baseline certification to enhance understanding and adoption of the new Rewards+ module

Microlearning Assets: Created 25+ bite-sized product videos to support just-in-time learning

LMS Upgrade: Launched a new Learning Management System with better usability and tracking, driving higher engagement

CapConnect Launch: Introduced a community-based platform within the Academy portal for peer-driven knowledge sharing and collaboration.

Gamified Learning: Continued motivation through badges, leaderboards, Academy Champions, and contributor rewards - further encouraging a vibrant learning culture across teams

Capillary Compass

Curated a new HR onboarding module with leader snippets & departmental walkthroughs to help new joiners understand Capillarys journey, values, and growth- now a part of India orientation. These efforts have contributed to faster onboarding, stronger product readiness, and improved client delivery - reinforcing continuous learning and strengthening capabilities across Capillary.

The New Hire Onboarding Program was revamped to provide a structured, engaging, and high-impact assimilation experience for new joiners. The integration of digital tools and curated experiences significantly improved onboarding satisfaction scores.

To foster deeper engagement, we launched a host of initiatives during our Foundation Week celebrations, which included:

YourDost mental well-being sessions

Football matches

Photography contests The FitCap Challenge

Capillary Appreciation Week and Gratitude Wall initiatives

These activities reflected our commitment to building an inclusive, appreciative, and high-performing culture.

We embedded a holistic wellness approach into our people strategy, addressing physical, mental, emotional, and social well-being. Key initiatives included:

Launch of FitCap, a monthly health and wellness newsletter

Annual health check-ups, nutrition workshops, and monthly fitness challenges ₀ Football and badminton tournaments ₀ Onsite yoga, Zumba, and fitness classes

Stress management seminars and mindfulness sessions ₀ Gut Health Session ₀ Capillary Premiere League

S pecia l wellness highlights includ ed:

• The three-day Inner Peace Workshop conducted in Bangalore (Nov 2024)

• The Warrior Quest Challenge, part of our physical wellness initiative

• Capillary X CULT Onsite Session, encouraging employees to engage with their fitness benefits through CultFit

To foster a culture of open communication, we organized regular HR Open Houses and All Hands Meetings, offering employees a platform to understand organizational updates, policy changes, and voice feedback. This helped us reinforce trust and involve employees in the companys decision-making process.

In our pursuit of continuous improvement, we actively partnered with business leaders to analyze and act on eNPS (Employee Net Promoter Score) results. Through regular pulse connects, targeted interventions, and feedback loops, we addressed key themes, strengthening engagement and employee experience.

The People Practice function continues to play a pivotal role in shaping Capillarys organizational culture, enabling business growth, and delivering employee-centric outcomes. By embedding strategic intent into every initiative and fostering cross-functional collaboration, we remain committed to building a resilient, high-performing, and people-first organization.

3. CAPITAL AND DEBT STRUCTIRE

3.1 Issue of shares or other convertible securities

During the financial year under review, following are the changes:

a. Change in the authorized, issued, subscribed and paid-up share capital

(i) Authorised Capital

The Authorised share capital of the Company is as given below:

Date of modification	Equity share Capital	Preference share Capital	Unclassified Capital	Total Authorised Capital
Original Share Capital at the time of Incorporation
	10,00,000/-	0/-	0/-	10,00,000/-
Subsequent Modifications
May 04, 2012	1,90,00,000/-	0/-	0/-	1,90,00,000/-
March 27, 2015	2,50,00,000/-	0/-	0/-	2,50,00,000/-
August 19, 2021	11,00,00,000/-	0/-	0/-	11,00,00,000/-
September 29, 2021	11,00,00,000/-	10,00,000/-	0/-	11,10,00,000/-
November 24, 2021	15,00,00,000/-	10,00,000/-	0/-	15,10,00,000/-
March 08, 2024	25,00,00,000/-	10,00,000/-	0/-	25,10,00,000/-

(ii) Issued , Subscribed and paid up share capital.

As on date of this report, the issued, subscribed and paid-up share capital of the Company has changed from INR. 14,64,68,706/- (Rupees Fourteen Crore Sixty Four Lakh Sixty Eight Thousand Seven Hundred and Six Only) to INR. 14,66,58,276/- (Rupees Fourteen Crore Sixty Six Lakh Fifty Eight Thousand Two Hundred and Seventy Six Only) details of which are given below:

Equity Share capital

Date of Allotment	Nature of Allotment	Number of equity shares allotted	Face value per share (INR)	Issue Price per equity share	Nature of consideration
18th January 2025	Preferential Allotment	94,785	2	526.70	Cash/-

b. Reclassification or Subdivision of the authorised share capital.

During the financial year under review, the Company has not undertaken any reclassification or sub-division of the authorised capital in terms of Companies Act 2013.

c. Reduction of share capital or buy back of shares

The Company has not reduced nor bought back any shares.

d. Change in capital structure resulting from restructuring

There is no change in the capital structure resulting from restructuring.

e. Change in voting rights There is no change in the voting rights.

3.2 Issue of equity shares with differential rights and sweat equity shares

During the financial year under review, the Company has neither issued equity shares with differential rights nor issued sweat equity shares in terms of Companies Act, 2013.

3.3 Details of employee stock options

The Company had adopted “Capillary Employees Stock Option Scheme- 2021” (hereinafter referred to as the “ESOP 2021”/ “Scheme”) along with its amendments from time to time. Under the scheme, your Company grants share-based benefits to the eligible employees by granting stock options (“Options”), with a view to attract and retain talent in and within the Company (including subsidiaries and holding company) encourage employees to strive to perform better, and ultimately incentivize such employees who exhibit traits appreciated by the Company.

Disclosure as required under Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 as on March 31, 2025:

(a) options granted;	57,20,889
(b) options vested;	6,09,785
(c) options exercised;	5,71,064
(d) the total number of shares arising as a result of exercise of options;	5,71,064
(e) options lapsed(due to exit of employees):	24,79,481
(f) the exercise price;	Face Value
(g) variation in terms of options;	Not applicable
(h) money realised by exercise of options;	11,42,128
(i) total number of options in force;	66,03,936
(j) employee wise details of options granted to: (i) Key Managerial Personnel;	• Aneesh Reddy Boddu - Overall Granted 9,52,309 options out of which, 3,89,214 options were exercised and balance were surrendered.
(ii) any other employee who receives a grant of options in any one year of options amounting to five percent or more of total options granted during that year;	• Anant Choubey- 2,76,644 were granted and he has surrendered all options
	• G Bhargavi Reddy - Overall Granted 3,563, out of which 758 options were surrendered against the cash settlement and 50 options were exercised in to shares.
(iii) Identified employees who were granted options, during any one year, equal to or exceeding one percent of the issued capital, excluding outstanding warrants and conversions, of the Company at the time of grant.
	a. Nil
	b. Nil

Additional disclosure: -During the year under review the company has purchased rights on 94,785 vested options from active and inactive employees of the Company.

3.4 Shares held in trust for the benefit of employees where the voting rights are not exercised directly by the employees

During the financial year under review, the Company has not held any shared in trust for the benefit of employees where the voting rights are not exercised directly by the employees.

3.5 Issue of Debentures, warrants, bonds or any non-convertible securities

During the financial year in review, the company has not issued and allotted any debentures, warrants, bonds or any non-convertible securities.

During the financial year under review, your Company has neither obtained nor revised any credit rating in respect of securities.

During the financial year under review, disclosure pursuant to Investor Education and Protection Fund under sub-section (2) of section 125 of the Act and the IEPF (Accounting, Audit, Transfer and Refund) Rules, 2016 are not applicable to your Company.

6.1 Directors and Key Managerial Personnel

As on the date of this report, the Company has Six (6) directors consisting of four (4) Independent directors and two (2) Executive directors. The composition of the Board is in conformity with Section 149 and 152 of the Act.

None of the Directors on the Board:

holds directorships in more than ten public companies;

serves as Director or as independent directors in more than seven listed entities; and who are the Executive Directors serves as independent directors in more than three listed entities.

are related to each other.

Necessary disclosures regarding Committee positions in other public companies as on March 31, 2025 have been made by the Directors.

The Key Managerial Personnels of the Company as on March 31, 2025 are:

	Name	Designation
01	Mr. Aneesh Reddy Boddu	Managing Director and CEO
02	Mr. Anant Choubey	Executive Director, Chief finance officer and Chief operating officer
03	Mrs. G Bhargavi Reddy	Company Secretary and Compliance officer

-a. Disqualification of Directors

None of the directors of the Company are disqualified pursuant to the provisions of Section 164 of Companies Act, 2013 or debarred or disqualified from being appointed or continuing as directors of companies by the Securities and Exchange Board of India or Ministry of Corporate Affairs or any such statutory authority.

mb. Appointment / Resignation from Board of Directors

Pursuant to the resignation of Mr. Sameer Garde, Mr. Aneesh Reddy Boddu, who was serving as the Managing Director of the Company, has been appointed as the Chief Executive Officer (CEO) and designated as a Key Managerial Personnel (KMP) of the Company with effect from May 14, 2024. Consequently, Mr. Aneesh Reddy Boddu has been relieved from his responsibilities as Vice Chairman of the Company with effect from the same date.

Based on the recommendation of the Nomination and Remuneration Committee, the Board of Directors at its meeting held on August 27, 2024, and with the approval of the shareholders at the Annual General Meeting held on September 27, 2024, re-appointed Mr. Aneesh Reddy Boddu as the Managing Director & Chief Executive Officer (MD & CEO) and Mr. Anant Choubey as the Executive Director, Chief Operating Officer (COO) and Chief Financial Officer (CFO) of the Company for a further term of three years, effective from November 24, 2024 to November 23, 2027.

Similarly, based on the recommendation of the Nomination and Remuneration Committee, the Board at its meeting held on August 27, 2024, and with the approval of shareholders at the AGM held on September 27, 2024, re-appointed Mr. Farid Lalji Kazani, Mrs. Neelam Dhawan, Mr. Venkat R Tadanki, and Mrs. Yamini Preethi Natti as Independent Directors of the Company for a further term of five years, effective from December 10, 2024 to December 09, 2029.

c. Directors retiring by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Section 149 of the said Act, at least 2/3rd of the total number of Directors, excluding Independent Directors, shall be liable to retire by rotation and out of the Directors liable to retire by rotation, at least 1/3rd of the Directors shall retire by rotation at every Annual General Meeting.

In view of the above, Mr. Anant Choubey (DIN-06536413), who has been longest in office since his appointment, who is liable to retire by rotation and being eligible, offers himself for re-appointment, a resolution seeking shareholders approval for his re-appointment forms part of the notice. The Board recommends his re-appointment.

d Declaration by Independent Director

The Company has received necessary declaration from each of the Independent Directors, under Section 149(7) of the Companies Act, 2013, that he / she meets the criteria of Independence laid down in Section 149(6) of the Companies Act, 2013 and Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act. Further, the Independent Directors have included their names in the data bank of Independent Directors maintained with the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014.

Further, Independent Directors have also confirmed that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence and that they are independent of the management.

The Independent Directors attend a Familiarization / Orientation Program on being inducted into the Board. Further, various other programmes are conducted for the benefit of Independent Directors to provide periodical updates on regulatory front, product, engineering, sales and marketing developments and any other significant matters of importance. The details of the Familiarization programmes provided by the Company is available on the Companys Website at https://www.capillarytech.com/investors.

Further the Company issues a formal letter of appointment to the Independent Directors, outlining their role, function, duties and responsibilities, the format of which is available on the Companys Website at https://www.capillarytech.com/investors.

During the year under review and as on date of this report

Except for payment of professional fee to M/s. Amir Advisory Services LLP (where Mr. Farid Lalji Kazani- Independent Director is a partner) for availing advisory services, the Company did not have any pecuniary relationship or transactions with any of its Directors, other than payment of sitting fees to Independent Directors and reimbursement of expenses incurred by them for the purpose of attending meetings of the Board / Committees of the Company.

The Advisory Agreement dated March 14, 2023 entered with M/s. Amir Advisory Services LLP for providing advisory services on financial related matters had expired on March 01, 2024. The Audit Committee and Board of Directors approved the fresh advisory agreement with M/s. Amir Advisory Services LLP dated May 27th, 2024 with same scope of work, for which they shall be paid INR. 1 lakh per day spent on the assignment but not exceeding total fee of INR. 9 lakh over a period of one year, which is lesser than 10% of total gross turnover/ income of the said LLP for the year 2022-23. Mr. Farid Lalji Kazani (Independent Director) and his daughter are partners of the said LLP.

In the opinion of the Board, all the independent directors appointed during the year are persons of integrity, possesses relevant expertise and experience (including the proficiency).

As required under Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, as on date of this report the details of Independent Directors, pertaining to the online proficiency Self-Assessment test conducted by IICA are as below.

s.no	Name	Designation	Date of registration	Online Status of proficiency online Self-Assessment proficiency test exemption test status
1	Mrs. Neelam Dhawan	Chairperson (Independent Director)	19th February, 2020	Exempted	NA
2	Mr. Farid Lalji Kazani	Independent Director	21st February, 2020	Exempted	NA
3	Mr. Venkat Ramana Tadanki	Independent Director	18th October, 2021	Not-Exempted	Passed
4	Mrs Yamini Preethi Natti	Independent Director	01st November, 2021	Not Exempted	Passed

e. Women Director

In terms of the provisions of Section 149 of the Companies Act, 2013, your Company has complied with the requirement of having at least one Independent Woman Director on the Board of the Company. Mrs. Neelam Dhawan (00871445) Chairperson and Independent Woman Director and Mrs. Yamini Preethi Natti (DIN 06533367) Independent Women Director of the Company.

f. Changes in KMP

During the year under review and as on date of this report, following changes have taken place in the composition of whole time key managerial personnel (‘KMP) as per provision of Section 203 of the Companies Act, 2013.

Mr. Sameer Garde resigned as Executive Director & CEO of the Company effective from March 31, 2024.

Mr. Aneesh Reddy Boddu was appointed as Chief Executive officer & KMP of the Company and was relieved from the duties of vice chairman.

6.2 Board Meetings

Nine Board Meetings were held during the year under review and the gap between two meetings did not exceed one hundred and twenty days. The said meetings were held on:

s.no	Date of meetings	No. of director are eligible to attend meeting	No. of director attended	% of Attendance
1	14th May, 2024	6	6	100
2	14th June, 2024	6	6	100
3	21st August, 2024	6	6	100
4	27th August, 2024	6	6	100
5	5th November, 2024	6	6	100
6	29th November, 2024	6	4	66
7	27th January, 2025	6	6	100
8	7th February, 2025	6	6	100
9	12th March, 2025	6	5	83

6.3 Committees and Corporate Governance

As on March 31, 2025, the Board had the following seven (7) committees

1. Audit Committee

2. Nomination & Remuneration Committee

3. Risk Management Committee

4. Stakeholders Relationship Committee

5. Corporate Social Responsibility Committee

6. Strategic and Business Development Committee and

7. Initial Public Offering (‘IPO) Committee

The details of the composition, terms of references, and number of committee meetings held during FY 2025 and the attendance of the committee members at each meeting are given in the Report on Corporate Governance adopted voluntarily which forms a part of the Annual Report.

*After 31st March, 2025, Strategic and Business Development Committee has been dissolved with effect from 20th April, 2025.

6.4 Recommendations of Audit Committee

There have been no instances during the year where recommendations of the Audit Committee were not accepted by the Board.

Composition of Audit committee

s.no	Names of Committee Members	Designation
1	Mr. Farid Lalji Kazani	Chairman of the Committee-Independent Director
2	Mr. Anant Choubey	Member of the Committee- Independent Director
3	Mrs. Neelam Dhawan	Member of the Committee- Independent Director
4	Mr. Venkat Ramana Tadanki	Member of the Committee- Independent Director

6.5 Companys Policy on Directors appointment and remuneration

In compliance with Section 178 of the Companies Act 2013 , the Board has formulated a ‘Nomination and Remuneration Policy on Directors appointment and remuneration including recommendation on remuneration of the key managerial personnel and other employees and the criteria for determining qualifications, positive attributes and independence of a director.

The Policy is available on the Investors section of the website of your Company at https://www.capillarytech.com/policies/

6.6 Board Evaluation

The provisions of section 134 (p) of the Companies Act, 2013, with respect statement indicating the manner in which formal annual evaluation of the Board, its Committees and Individual Directors are not applicable to the Company, as the paid up share capital of the Company is less than INR.25 crore as on March 31,2025. However, the Company on voluntary basis has availed services from a third party i.e Valulead Consulting to undertake the evaluation of the Board, its Committees and Individual Directors. In a separate meeting of Independent Directors held on February 8, 2025, the performance of Non-Independent Directors, the Chairperson of the Board and the Board as a whole was evaluated by the Independent Directors.

6.7 Remuneration of Directors and Employees

Rule 5 (1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable to your Company as on March 31, 2025.

Statement containing details of employees as required in terms of Section 197 of the Act read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is available for inspection at the Registered Office of the Company during working hours. A copy of the statement may be obtained by shareholders by writing to the Company Secretary at the Registered & Corporate Office of the Company or at secretarial@capillarytech.com.

6.8 Remuneration received by Managing/Whole time Director from holding or subsidiary Company

No managing or whole-time director of the Company is in receipt of any remunerations/commission from holding Company or Subsidiary Company.

6.9 Directors responsibility Statement Your Directors hereby confirm that:

a. in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b. the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period;

c. the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the directors had prepared the annual accounts on a going concern basis; and

e. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

6.10 Internal financial control and its adequacy

Your Company has an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2025, based on the criteria for internal financial control over financial reporting established by the Company. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

6.11 Quality Management System Quality Policy

At Capillary, our mission is to consistently drive customer success by delivering excellence in products and services. We are committed to continuous improvement across our systems and processes, ensuring consistent return on investment for our clients.

Our quality strategy is rooted in customer feedback, evolving business needs, emerging technologies, and performance analysis. We continually evaluate and adapt our practices to ensure relevance and excellence in a rapidly changing market landscape.

Capillarys quality framework is based on globally recognized standards and industry-leading practices. We maintain ISO 27001:2022, PCI DSS 4.0 certifications, and are annually assessed for SOC 2 Type 2 and SOC 1 Type 2 standards. These accreditations guide our policies for SaaS product security, platform integrity, and corporate information infrastructure protection.

Engineering Excellence & Product Quality

Engineering is at the core of our value creation. Our teams are structured for agility, innovation, and resilience, enabling us to solve complex problems through modern technology stacks and collaborative practices.

Core Engineering Practices

Agile and Scrum Methodologies:

Delivering high-quality features iteratively, with customer-centric alignment at every stage. Continuous Integration & Delivery:

Automation-first pipelines ensure reliable deployments and faster time-to-market with reduced human errors.

Cloud-Native Architecture:

Highly scalable and performant systems built on microservices and Kubernetes enable rapid deployment, observability, and efficient resource use.

Test-Driven Development (TDD):

Unit and integration tests are embedded into our development process, ensuring fast feedback cycles and high-quality releases.

Observability & Monitoring:

Every release includes application and infrastructure metrics, logs, and alerts to proactively detect and resolve issues.

DevOps and Site Reliability Engineering (SRE):

We integrate reliability practices such as SLIs/SLOs, chaos testing, and automated failover to ensure uptime and resilience.

Security by Design:

We embed secure coding practices, vulnerability scanning, and shift-left testing into the SDLC, ensuring product security from day one.

Automation-Driven Quality Gates:

Automated functional test suites are executed across environments, including post-release automation runs. Our sanity and smoke test suites run on production, and failures immediately trigger alerts to ensure swift issue detection. This proactive approach enables faster incident response, reinforces change management, and ensures release stability and customer confidence.

Root Cause Analysis (RCA):

Focused effort on understanding the cause of failure, identifying gaps and areas of improvement, while learning from mistakes, is part of the engineering culture. We resolve systemic issues quickly and prevent recurrences by properly planning the permanent fix.

Process Governance & Continuous Improvement

We maintain a technology-led governance framework that emphasizes:

Standardization & Automation:

All critical decisions are backed by real-time dashboards and data-driven insights. Feedback Loops:

Continuous internal and customer feedback mechanisms help evolve our products and engineering processes dynamically.

Process Audits & Certifications:

Regular third-party audits ensure compliance with international standards and reinforce our commitment to quality and security.

Customer Experience & NPS

Customer satisfaction is a board-level metric at Capillary. We run quarterly Net Promoter Score (NPS) surveys across engineering, product, and customer success functions.

NPS results are used to:

Uncover improvement areas and prioritize them in OKRs.

Enable cross-functional efforts to resolve pain points.

Track trends and drive consistent enhancements in customer experience.

A systematic approach to analyzing feedback ensures our customers consistently see value and trust in our solutions.

Delivery Methodology & Program Management

Our project delivery is anchored in Agile frameworks and mature program management practices:

Project Management:

Provide transparency to internal and external stakeholders, including real-time tracking of milestones and risk flags.

Customer-Centric Onboarding:

From kickoff, clients are integrated into the planning and execution phases to maximize value realization from Day 1.

Change Management & Risk Mitigation:

Our playbooks include proactive change control and contingency planning to manage uncertainties during implementations.

Our Quality Management System showcases:

Proven process maturity and product stability.

Robust security and compliance posture.

Scalable engineering and delivery models.

Strong customer satisfaction metrics and governance.

These form a critical part of our risk mitigation and operational excellence.

6.12 Frauds reported by auditor

During the financial year under review, pursuant to provisions of the Section 143(12) of the Companies Act, 2013, the Auditor has not reported any incident of fraud to the Audit, Risk management Committee.

Your Company has adopted Fraud Prevention Policy. The Policy is available on the Investor Relations section of the website of your Company at https://www.capillarytech.com/policies/

6.13 Adoption and review of policies

The details of the policies approved and adopted by the Board & Committees as required under the Companies Act, 2013 are provided in Annexure I to the Boards report.

6.14 Report on Corporate Governance

The Report on Corporate Governance of your Company adopted on voluntary basis forms a part of the Annual Report.

7. DISCLOSURES RELATING TO HOLDING, SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

As on March 31, 2025, our holding Company is Capillary Technologies International Pte. Ltd. (‘CTIPL) which holds 4,91,36,656 equity shares together with its nominee, representing 67.01% of the issued, subscribed and paid-up equity share capital of our Company.

As on March 31, 2025, our Company had 8(eight) wholly owned subsidiaries including 1 (one) direct and 7(seven) step down subsidiaries outside India. The Company is in the process of closing its operations in China operated through Capillary Technologies (Shanghai) Co., Ltd (step down subsidiary).

There are no associates or joint venture companies within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”).

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Companys subsidiaries in Form No. AOC-1 as provided in Annexure II is attached to this report.

Further, pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, and consolidated financial statements, are available on the Companys website at https://www.capillarytech.com/investors/annual-reports/ A copy of separate financial statements of our subsidiaries shall be provided to any member of the company who asks for it. All the documents stated under sub-section (1) of section 136 is available for inspection at the Registered Office of the Company during working hours. Further, members by writing to the Company Secretary at the Registered Office of the Company or at secretarial@capillarytech.com may obtain a copy of the same.

8. DETAILS OF DEPOSITS

During the year, your Company has neither accepted nor renewed any deposits from public within the meaning of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

9. PARTICULARS OF LOANS, GUARANTEE AND INVESTMENT

Pursuant to Section 186 of the Companies Act, 2013 disclosure on particulars relating to loans, advances, guarantees and investments (wherever applicable) are provided as part of the financial statements under note no. 05 & 08.

10. PARTICULARS OF CONTRACT AND ARRANGEMENTS OF RELATED PARTIES

All related party transactions that were entered into during the financial year under review, were on an arms length basis, and in the ordinary course of business and are in compliance with the applicable provisions of the Act.

There were no materially significant related party transactions made by the Company during the year that required shareholders approval under Companies Act 2013. All Related Party Transactions are placed before the Audit Committee for approval. Further, prior omnibus approval of the Audit Committee is obtained for the transactions which are repetitive in nature or when the need for these transactions cannot be foreseen in advance.

Accordingly, the disclosure of the particulars of the related party transactions in form AOC -2 as required under Section 134(3) (h) of the Act as provided in Annexure-III is attached to this report.

The details of related party transaction as per accounting standards is provided in Note 33 of Notes to Financial Statements (Standalone).

11. CORPORATE SOCIAL RESPONSIBILITY

As per the provisions of Companies Act, 2013, a company meeting the specified criteria shall spend at least 2% of its average net profits for three immediately preceeding financial years towards CSR activities. Accordingly, the provision of CSR is not applicable to your company for financial year 2024-25.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUT GO

Company is part of Saas (‘software as a service) industry and does not operate any machineries, production facilities etc. As a part of corporate citizen, our Companys commitment is to improve community well-being through voluntary business practices and contribution of corporate resources leading to sustainable growth. Also, our CSR policy is well aligned to our business goals and meets or exceeds, the ethical, legal, commercial and public expectations that society has of business. Some of the steps and practices followed by the Company:

a. Conservation of Energy

(i) the steps taken or impact on conservation of energy;	• Usage of Laptops instead of desktops. • Turning off lights, monitors when not in use. • Turning of ACs when not in use. • Usage of LED lights for all lighting solutions etc.
(ii) the steps taken by the Company for utilising alternate sources of energy;	As the Company does not operate any machineries, production facilities etc. the consumption of energy is very low to minimal. Hence the requirement of having alternate sources of energy is not needed.
(iii) the capital investment on energy conservation equipments.	Due to the reasons as stated above in (ii) the Company has not made any capital investment on energy conservation equipments.

b. Technology absorption

(i) the efforts made towards technology absorption;	The internally developed software and tools have helped us improve the user efficiency, and user experience and also provide various improved features and functionalities in the enterprise loyalty and engagement activities for businesses and their users. These include: • New advancements for Loyalty+ platform through addition of milestone loyalty advanced features, streaks and badge. • Further advancements in the Loyalty Promotions configuration module to setup complex promotions using completely conversational manner leveraging AI capabilities (wip) • Journeys canvas to create A/B testing scenarios. • Built multiple new data flows on connect+ • Creation ofplatform extension module extending the capabilities of changing the APIs • Addition of user onboarding Module.
(ii) the benefits derived like product improvement, cost reduction, product development or import substitution;	• Continuous improvement of the product user experience. This is measured through increased product satisfaction score which is a strong indicator of customer retention. • Improved campaign and loyalty program ROI f or the business users. • Reduced cost of technology import by developing these tools/software internally on a timely manner.
(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the year under reference) - a) details of the technology imported; b) the year of import; c) whether the technology has been fully absorbed and if not, areas where absorption has not taken place, and the reasons thereof;	Your Company has not imported any technology during the last three years.
(iv) the expenditure incurred on Research and Development.	INR 449.27(in millions) incurred towards development of the software platform including Rewards +.

e. Foreign exchange earnings and out go

Particulars	FY 2023-24(lNR in MiNion)	FY 2024-25 (INR in Million)
Inflow	656.36	1239.11
Outflow	203.36	22.601

13. RISK MANAGEMNET

Your Company has a well-defined risk management framework in place. The Board of Directors (“Board”) of the Company oversee the development of Risk Management Policy and the establishment, implementation and monitoring of the Companys risk management system, in accordance with the policy. The Risk Management Committee reviews, assess and formulate the risk management system and policy of our Company from time to time and recommend for amendment or modification thereof, which shall include among others:

A framework for identification of internal and external risks specifically faced by our Company, in particular including financial, operational, sectoral, sustainability (particularly, environment, social and governance related risks), information, cyber security risks or any other risk as may be determined by the committee;

Measures for risk mitigation including systems and processes for internal control of identified risks; and Business continuity plan;

The details of the Risk Management Committee are available on Companys website. The Risk Management Policy adopted by the Company is available at https://www.capillarytech.com/policies/

14. Cyber security

As our employees continue to work efficiently in a hybrid environment, we have remained proactive in addressing the evolving cybersecurity threat landscape. In our efforts to maintain a strong cybersecurity posture, our team has stayed informed about global cybersecurity developments, ensuring higher compliance and ongoing security. We are certified under the Information Security Management System (ISMS) Standard ISO 27001:2022 and PCI DSS 4.0. Additionally, we have completed the attestation for both SOC 2 and SOC 1 through an independent audit firm. Looking ahead, we are focused on achieving HITRUST certification next year.

Throughout the year, we prioritized cybersecurity training, reskilling, and fostering a culture of shared responsibility. We focused on encouraging a shift-left approach and empowering our developer community with specialized courses and resource kits. These efforts were aligned with our broader initiatives to enhance cybersecurity processes, technologies, and overall security posture.

15. VIGIL MECHANISM

The Company has adopted a Vigil Mechanism Policy to provide a channel to the Directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the standards, codes of conduct or policies adopted by the Company from time to time. The Company is committed to adhering to the highest standards of ethical, moral and legal conduct of business operations and in order to maintain these standards, the Company encourages its employees who have genuine concerns about suspected misconduct to come forward and express their concerns without fear of punishment or unfair treatment. The mechanism provides for adequate safeguards against victimization of Directors and employees to avail of the mechanism and also provide for direct access to the Vigilance Officer. The Whistle Blower Policy adopted by the Company is available on Website of the Company at https://www.capillarytech.com/policies/

16. MATERIAL ORDERS OF JUDICIAL BODIES /REGULATORS

There are no significant material orders passed by the Regulators, Courts or Tribunals impacting the going concern status of the Company and its operations in future.

17. AUDITORS

M/s. Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration no. 001076N/N500013), were appointed as the Statutory Auditors of the Company at the AGM held on September 29, 2022 for a term of five consecutive years from the conclusion of 10th Annual General Meeting (“AGM”) till the conclusion of 15th AGM of the Company to be held in the year 2027 in accordance with the provisions of Section 139 of the Act.

The Report given by the Statutory Auditors on the standalone financial statements of the Company and the consolidated financial statements of the Company for the financial year ended March 31, 2025 forms part of this Annual Report.

18. SECRETARIAL AUDIT

M/s. BMP & Co, LLP, firm of practicing Company Secretaries (“Secretarial Auditors”), carried out the secretarial audit for FY 2025 in compliance with the Act and the Rules made thereunder, and other applicable regulations as amended and other laws specifically applicable to your Company. The Secretarial Audit Report in form MR-3 for FY 2025 is attached to this Report as Annexure - IV. The said Report does not contain any qualification, reservation or adverse remark or disclaimer by the Secretarial Auditors.

19. COST AND INTERNAL AUDIT

Cost Auditor and Records

The provisions of appointment of Cost Auditor pursuant to section 146 read with Companies (Cost Records and Audit) Rules, 2014 are not applicable to your Company during the financial year 2024-25.

Maintenance of cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, is not required by the Company and accordingly such accounts and records are neither made and nor maintained.

Internal Audit

Protiviti India Member Private Limited (Independent Internal auditor) were appointed to carry out Internal Audit to ensure the adequacy of the internal control system and adherence to policies and practices. The audit committee regularly reviews the reports submitted by the independent internal auditor and the adequacy and effectiveness of internal controls.

20. EXPLANATION IN RESPONSE TO AUDITORS QUALIFICATION

The Reports given by the Statutory Auditors on the standalone financial statements and the consolidated financial statements of the Company for FY 2025 form part of the Annual Report. The Reports do not contain any qualification, reservation or adverse remark or disclaimer by the Statutory Auditors.

21. COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review, the Company has complied with all the applicable Secretarial Standards issued by Institute of Company Secretaries of India (‘ICSI). The Company has also voluntarily adopted & complied with SS-4 (Report on Board of Directors).

22. CORPORATE INSOLVENCY RESOLUTION PROCESS INITIATED UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC)

There are no proceedings initiated/pending against your Company under the Insolvency and Bankruptcy Code, 2016 which materially impact the business of the Company.

23. FAILURE TO IMPLEMENT ANY CORPORATE ACTION

During the year under review, there was no instances where Company has failed to complete or implement any corporate action within the specified time limit.

24. ANNUAL RETURN

Pursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013 read with the rules made thereunder, the Annual Return (Form MGT-7) of the Company has been disclosed on the website of the Company and Web Link thereto is: https://www.capiNarytech.com/investors/regulation-46-of-sebi-lodr/

25. OTHER DISCLOUSERS

a. The consolidated financial statement is also being presented in addition to the standalone financial statement of the Company.

b. The Company has not opted for any one time settlement from the Banks or Financial Institutions.

126. DISCLOSURES PERTAINING TO THE SEXUAL HARASSMENT OF WOMEN

AT THE WORK PLACE (PREVENTION, PROHIBITION, AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH) and the rules made thereunder. The Policy aims to provide protection to employees at workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has not received any complaints pertaining to sexual harassment during the financial year. Also, that no cases were filed, disposed of and pending as on date of this report.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

27. GREEN INITIATIVES

In commitment to keep in line with the Green Initiatives and going beyond it, electronic copy of the Notice of 13th Annual General Meeting of the Company including the Annual Report for FY 2024-25 are being sent to all Members whose e-mail addresses are registered with the Company / Depository Participant(s).

In terms of Environmental responsibility, the Company actively works to minimize its ecological footprint by reducing carbon emissions, conserving energy and water, and adopting environmentally friendly practices.

Capillary Technologies has a strong focus on sustainability. The company emphasizes environmentally-friendly practices such as reducing energy footprint, encouraging staff to engage in eco-friendly behaviors like using reusable utensils and avoiding plastic, planning social initiatives like tree plantation drives and e-waste reduction, and having Environment and Sustainability management plans in place.

We, as such, have a minimalistic carbon footprint/emission. Our workspace size is maintained at a requirements level and we strive to ensure optimum usage of power across our office spaces.

Our solutions are hosted on AWS and we inherit the sustainability measures and efforts undertaken by AWS.

We work with Recykle, a waste management marketplace to ensure responsible e-waste management practices and plan to be a 100% processed e-waste company by 2025.

This year, we tied up with another NGO on afforestation. Instead of trophies, we planted trees for speakers through the NGO, SankalpTaru: https://sankalptaru.org/

Our employee and customer gifting solution is also sourced through local NGOs. Recently we sourced handmade diaries from jute bags from a womens group in uttarakhand https://www.purkalstreeshakti.org/

We undertake many such initiatives with regional NGOs in every country.

We sourced tote bags from a women-run NGO called Pallaguttapalle Bags and gift hampers from Thenga.

28. ACKNOWLEDGEMENTS AND APPRECIATION

Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business partners/associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company.

Your directors sincerely appreciate all employees of the Company and its Holding and subsidiaries for their hard work and commitment.

On behalf of the Board of Directors
For Capillary Technologies India Limited
Sd/-	Sd/-
Aneesh Reddy Boddu	Anant Choubey
Managing Director and CEO	Executive Director, CFO & COO
(DIN:02214511)	(DIN:06536413)
Date: 30/04/2025	Date: 30/04/2025
Place: Bangalore	Place: Bangalore