CES Ltd Management Discussions

a) Overview of the Industry

The global Information Technology (IT) industry continues to evolve rapidly, driven by advancements in emerging technologies, increasing digital adoption, and growing demand for cloud computing, cybersecurity, artificial intelligence (AI), data analytics, and automation. The industry has demonstrated resilience and adaptability, navigating economic uncertainties and supply chain disruptions while continuing to support global digital transformation initiatives across sectors.

India remains a key player in the global IT services market, leveraging its skilled talent pool, cost competitiveness, and mature service delivery models.

Within the domestic market, the Government of India s push towards a Digital India, along with increased enterprise IT spending, has accelerated cloud adoption, e-governance initiatives, and digital infrastructure development. Key trends shaping the industry include:

Cloud Transformation : Enterprises are increasingly migrating to hybrid and multi-cloud environments for scalability, cost efficiency, and agility.

Artificial Intelligence and Automation : AI, machine learning, and robotic process automation (RPA) are transforming business processes and enabling data-driven decision-making.

Cybersecurity and Data Privacy : As digital threats become more sophisticated, there is a heightened focus on end-to-end security solutions and regulatory compliance.

Talent and Workforce Transformation : The IT sector is experiencing a shift towards upskilling and reskilling in new-age digital technologies to meet changing client expectations.

Despite strong fundamentals, the industry faces headwinds including global macroeconomic uncertainties, rising inflation, geopolitical tensions, and evolving regulatory landscapes. Currency fluctuations, talent attrition, and increased competition from global and regional players also pose challenges.

Going forward, the Indian IT industry is expected to maintain its growth trajectory, backed by its robust delivery capabilities, innovation-driven service offerings, and continued investments in technology infrastructure. b) Company overview

A leading name in the Business Process Management (BPM) and IT Services space in India, CES Ltd. (CES) specializes in providing customer-oriented solutions in Financial Services, Healthcare and e-Commerce domains. Its strengths lie in building long-term customer relationships through alignment with customer s business goals, and offering world class, flexible and cost effective solutions. The Company is headquartered in Hyderabad, with presence across the globe through its state-of-the-art delivery centers and offices. Within India, the delivery centers are located in the IT hubs of Hyderabad, Chennai and Visakhapatnam. It also has near-shore presence through facilities in Europe, North America and the Middle East. IT-enabled Services or BPM solutions is the larger segment from a revenue standpoint, with majority of the services exported to United States. The Company has mastered the onsite, offsite and offshore delivery models, and can tailor its solutions as per customers needs, and deliver to their satisfaction leveraging its proven, quality processes and skilled manpower. It has an established track record of delivering faster ROI for its customers in specific niches within various industries, such as:

Asset Management space within the Financial Services industry EHR/EMR offerings and Consulting services to the Healthcare

c) Future outlook

The outlook for the IT industry remains positive, driven by sustained demand for digital transformation, cloud services, AI, and cybersecurity solutions across global markets. As clients increasingly prioritize agility, innovation, and operational efficiency, the Company is well-positioned to leverage its technological capabilities, domain expertise, and client-centric approach to drive growth. Continued investments in emerging technologies, talent development, and strategic partnerships will enable the Company to capture new opportunities while navigating global economic uncertainties and competitive pressures.

d) Opportunities

The constant focus on process improvement by automation and continuous benchmarking of delivery to improve focus, have resulted in customer satisfaction every time. Our customers stand testimony to our track record of providing outstanding customer experience and maximizing their Return on Investment. Building Lasting Relationships has always been our culture and that focus enables us to deliver enhanced business value, a culture that inspires our actions and is a part of our DNA. We also aim to offer our services in the domestic market by positioning our services to suit the domestic business with its unique Services. e) Threats

CES Limited is in an industry where attrition is one of the major concern areas . However, your Company kept the attrition rates well within the industry averages by giving emphasis on benefits, rewards, and training.

f) Discussion on financial performance with respect to operational performance

Standalone: Our revenue for financial year 2024-25 is Rs. 28,076.59 lakhs and our profit after tax (PAT) Rs. 938.78 lakhs (Profit/(Loss) for the period from continuing operations).

Consolidated: Our revenue for financial year 2023-24 is Rs. 52,212.11 lakhs and our consolidated profit after tax (PAT) is Rs 2,952.16 lakhs (Profit/(Loss) for the period from continuing operations).

g) Segment wise or product-wise performance

Profit and Loss Statements for the year ended 31 st March	IT Services	IT Enabled Services	Total
2025
Revenues	10,888.10	17,188.49	28,076.59
Direct Expenses	5,153.19	8,135.08	13,288.28
Gross Income	5,734.91	9,053.41	14,788.31
Less: Un-allocated Expenses			13,734.41
Add: Interest & Other Income			289.06
Net Profit Before Taxes			1,342.97
Income Taxes			404.18
Net Profit After Taxes			938.78

GEOGRAPHICAL SEGMENTS: (Amount in Lakhs)

Profit and Loss Statements for the year ended 31 st March 2025	USA	DOMESTIC	Total
Revenues	27,326.96	749.63	28,076.59
Direct Expenses	12,901.76	386.52	13,288.28
Gross Income	14,425.20	363.11	14,788.31
Less: Un-allocated Expenses			13,734.41
Add: Interest & Other Income			289.06
Net Profit Before Taxes			1,342.97
Income Taxes			404.18
Net Profit After Taxes			938.78

Particulars	31-Mar-25	31-Mar-24
a) Revenue from external customers by geography
India	749.63	24.57
USA	27,326.96	22,705.59
b) Non-current assets (excluding financial instruments and deferred tax) Located
India	6,384.28	5,143.90
USA	Nil	Nil
c) Revenue from major customers ( 10% of total)
One Customer Contributed 51% (55%
for 31-03-2024)	13,936.75	12,261.02

h) Risks and concerns. i. Business risks .

An economic slowdown or other factors may affect the economic health of the United States and other parts of the world where our revenues are concentrated.

Financial stability of our clients may be affected owing to several factors such as demand and supply challenges, currency fluctuations, regulatory sanctions, geo-political conflicts and other macroeconomic conditions which may adversely impact our ability to recover fees for the services rendered to them. Intense competition in the market for technology services could affect our win rates and pricing, which could reduce our market share and decrease our revenues and our profits.

ii. Indian compliance and taxation risk

Taxes and other levies imposed by the Government of India. In particular we will be affected by the taxes and laws levied by authorities such as a) Income Tax b) GST etc. We are taking adequate efforts to comply with the entire statutory requirement on an ongoing basis and the same is subject to Internal Audit on a quarterly basis. We also take the help of external consultants to handle specific issues as and when it arises. Ministry of Corporate Affairs and Security Exchange Board of India has issue various circulars, Notification and amendments during the financial year 2024-25. Our Company has taken necessary steps to ensure Compliance of all the above.

iii. Exchange fluctuation

Movements in exchange rates continue to be a threat. There has been volatility in the exchange rate between INR and USD in the recent years and these currencies may continue to fluctuate significantly in future as well. Also the increase in share of domestic revenue will mitigate this risk to an extent. Our results of operation will be affected if the rupee- dollar rates continues to behave in a volatile manner in future or rupee appreciates significantly against dollar and other currencies.

iv. Geographical concentration of clients

Our Company has a global footprint and the revenues are dependent on clients located predominantly in US. As a strategy we continue to focus on increasing the share of our Revenues from US as the margins are better compared to Domestic business. As a result the Company is exposed to various risks typically associated with doing business in various countries, many of which are beyond the control of the management.

V. Infrastructure risks

The Company has invested substantially in the state of the art infrastructure and equipment in its centers to provide a world-class service to its customers. Service to our clients also depends on the uninterrupted functioning of these equipment, power and stability of telecom network. Any obsolescence in the infrastructure and equipment leading to incompatibility with client s systems or any disruption in the essential services may affect the business of the company. Adequate backups and redundancy measures are in place for uninterrupted functioning of IT and telecom equipment . AMC of all equipment is being monitored for timely renewals wherever needed. Insurance for fixed assets and all office locations is in force and is monitored for timely renewals and adequacy of risks covered under Office package policy. vi. Human resources risk

ITES (BPM) industry is a labor intensive industry and the Company s success depends on its ability to retain key employees. Historically employee attrition has been a common feature in this Industry. However, your Company kept the attrition rates well within the industry averages by giving emphasis on benefits, rewards, and training.

i) Internal control systems and their adequacy:

CES Limited (CES) has adequate internal controls and checks in place for its operations across all locations. The internal control systems are robustly designed keeping future requirements and needs also in focus. The management systems being followed at CES comply with international standards.

j) DETAILS OF KEY FINANCIAL RATIOS

Ratios	Numerator	Denominator	Current year	Previous year	Variance (in %)
Current ratio		Total current
(in times)	Total current assets	liabilities	1.97	2.29	(13.64)
Debt-Equity	Debt consists of
ratio (in	borrowings and lease
times)	liabilities*	Total Equity	N.A	N.A	-
	Earning for Debt
	Service = Net Profit	Debt service =
Debt service	after taxes + Non-cash	Interest and lease
coverage	operating expenses +	payments +
ratio (in	Interest + Other non-	Principal
times)	cash adjustments	repayments*	N.A	N.A	-

Return on	Profit for the year less
equity ratio	Preference dividend	Average total
(in %)	(if any)	equity	8.80%	7.58%	15.40
Trade
receivables
turnover
ratio (in	Revenue from	Average trade
times)	operations	receivables	4.99	5.44	(8.26)
Trade
payables
turnover
ratio (in	Purchase of Services	Average trade
times)**	and other expenses	payables	12.66	12.61	0.39
		Average working
Net capital		capital (i.e. Total
turnover		current assets less
ratio (in	Revenue from	Total current
times)	operations	liabilities)	4.91	3.98	23.35
Net profit		Revenue from
ratio (in %)	Profit for the year	operations	3.34%	3.31%	0.03%
		Capital employed
		= Tangible Net
Return on		worth + Lease
capital		liabilities +
employed	Profit before tax and	Deferred tax
(in %)	finance costs	liabilities	11.88%	10.22%	1.67%
Return on
investment		Average invested
(in %) -	Income generated	funds of unquoted
Unquoted	from invested funds	investments	160%	165%	-4.79%

* The company does not have any borrowings and lease liabilities

^ Current year Profit from subsidiaries is decreased for the year, hence ROI was decreased

k) Material developments in Human Resources / Industrial Relations front, including number of people employed

There were no material developments in Human Resources / Industrial Relations front. The number of people employed as on 31 st March 2025 was 906. l) Details of any change in return on net worth as compared to the immediately previous financial year along with a detailed explanation thereof

The net worth grew by Rs. 675.67 lakhs (7 %) as compared to previous financial year due to deployment of profits.

	For and on behalf of the Board of Directors of
	M/s. CES Limited
Date : 06-09-2025	Mohana Rao Kancharla	Rama Krishna Sabbineni
Place : Hyderabad	DIN: 00004288	DIN: 01825682
	Whole- Time Director	Director