CG-VAK Software & Exports Ltd Management Discussions

1. INDUSTRY STRUCTURE

The global economy continued to operate in a challenging environment during the financial year ended 31 March st 2026, characterized by moderate economic growth, persistent geopolitical conflicts, regional tensions, evolving trade policies, supply chain realignments, inflationary pressures and heightened regulatory oversight across major economies. These developments influenced business sentiment across global markets and resulted in measured enterprise spending, particularly on discretionary technology spends.

Nevertheless, organizations continued to prioritize investments in technologies that enhance operational resilience, business continuity and long-term competitiveness. Consequently, Artificial Intelligence (AI), cloud computing, cybersecurity, digital engineering, intelligent automation and data-driven decision-making emerged as the primary drivers of enterprise technology investments, with enterprises increasingly adopting outcome-oriented digital transformation initiatives to improve productivity, customer experience and operational efficiency.

Despite these global headwinds, the Indian technology industry continued to demonstrate remarkable resilience during 2025, registering an estimated growth of approximately 6.1% over the previous year. The industry is expected to surpass $ 315 billion in total revenues, with technology exports exceeding $ 246 billion, reaffirming Indias position as one of the worlds leading technology destinations. The sector remains a significant contributor to the Indian economy, accounting for about 7% of Gross Domestic Product (GDP) and remains one of the countrys largest generators of high-skilled employment, innovation and export earnings. Indias strong digital infrastructure, highly skilled talent pool, expanding Global Capability Centre (GCC) ecosystem and increasing adoption of Artificial Intelligence (AI), cloud technologies, Engineering Research & Development (ER&D), Outsourced Product Development (OPD) and cybersecurity solutions continue to strengthen its competitive advantage. As enterprises increasingly transition towards AI-enabled, cloud-native and engineering-led business models, India is expected to further consolidate its position as a trusted global technology and innovation partner.

2. OPERATIONAL PERFORMANCE

During the year under review your Company has achieved a turnover of Rs. 5809.63 lakhs as against Rs. 5,400.73 lakhs in the previous year. The profit after tax for the year is Rs. 912.19 lakhs as against Rs. 891.74 lakhs in the previous year. The company continued its focus on the offshore software services and Outsourced Product Development (OPD) market segment.

3. SEGMENT-WISE PERFORMANCE

The contributions of business from various Geographical area were: North America contributed to 85% and Rest of the world 15%.

The company has strategically increased the focus on offshore software services. The revenue Offshore Software Services is Rs. 5807.41 lakhs for the year 2025-2026 as against Rs. 5397.59 lakhs in the previous financial year.

4. OPPORTUNITIES, THREATS, RISKS AND CONCERNS

The continued adoption of Artificial Intelligence (AI), cloud computing, digital engineering, intelligent automation, data analytics and cybersecurity solutions is reshaping enterprise technology investments and creating significant opportunities for the IT services industry. Enterprises are increasingly accelerating digital transformation initiatives, modernizing legacy applications and adopting AI-enabled business processes to enhance productivity, customer experience and operational efficiency. These evolving technology trends are expected to drive sustained demand for software product engineering, Outsourced Product Development (OPD), cloud modernization, enterprise application development and digital transformation services. With its established engineering capabilities, customer-centric delivery model and long-standing relationships with clients across North America, Europe, Australia and parts of Africa, the Company is well positioned to leverage these opportunities and expand its presence across diversified industry verticals and international markets.

The industry continues to operate in an environment characterised by intense global competition, evolving customer expectations, rapid technological change and increasing cybersecurity and regulatory requirements. The rapid advancement and adoption of Artificial Intelligence (AI), including generative and agentic AI, presents significant opportunities as well as emerging risks. Risks include rapid technology obsolescence, disruption to traditional software development and service delivery models, pricing and margin pressures arising from AI-driven productivity, changing customer expectations, and the need for continuous investment in reskilling and new capabilities. Ongoing geopolitical developments, changes in international trade policies and global economic uncertainties may influence enterprise technology spending and project execution timelines. The Company also faces challenges relating to the availability and retention of skilled professionals in emerging technology domains, foreign exchange fluctuations and its continued dependence on the North American market, which contributes approximately 85% of its revenue. To address these challenges and capitalise on emerging opportunities, the Company continues to invest in AI capabilities and employee upskilling, strengthen its information security and risk management framework, adopt prudent foreign exchange risk management practices and pursue opportunities to further diversify its customer base and geographical presence across Europe, Australia, Africa and other potential growth markets.

5. OUTLOOK FOR THE FUTURE

The Indian IT-BPM industry demonstrated resilience during FY 2025-26 despite geopolitical tensions, regional conflicts, evolving trade policies and cautious enterprise spending. Demand remained focused on technologies that improve productivity, resilience and business outcomes. The industry continued to benefit from investments in Artificial Intelligence (AI), cloud modernization, cybersecurity, data and digital transformation, with AI increasingly moving from experimentation to enterprise-level deployment. Going forward, enterprise spending is expected to remain focused on AI-led transformation, cloud-native technologies, cybersecurity, data modernization and application modernization. The increasing adoption of AI-enabled software engineering and intelligent automation is expected to create opportunities across the technology value chain, while demand for specialized talent and continuous upskilling is likely to remain important as technology and delivery models evolve. Notwithstanding the evolving challenges and disruption arising from AI, the Company remains positive about the outlook for its business. CG-VAK is increasing its investments in AI technologies, tools, platforms and employee upskilling, while strengthening its capabilities in Outsourced Product Development (OPD), Product Engineering, Cloud and Data Analytics. The Company believes the growing adoption of AI, AI-enabled software engineering, cloud technologies and software modernization will create significant opportunities to deliver differentiated, technology-led solutions. Leveraging its engineering expertise and established customer relationships, the Company is well positioned to enhance productivity, expand its customer base, geographic reach and pursue sustainable and profitable growth..

6. IN ACCORDANCE WITH THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS 2018) (AMENDMENT) REGULATIONS, 2018, THE COMPANY IS REQUIRED TO GIVE DETAILS OF SIGNIFICANT CHANGES (AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS.

** Ratios are based on standalone financials. Wherever movements are not greater than 25%, they are not material

7. DETAILS OF ANY CHANGE IN NETWORTH AS COMPARED TO IMMEDIATELY PREVIOUS FINANCIAL YEAR WITH A DETAILED EXPLAINATION THEREOF

8. INTERNAL CONTROLS & THEIR ADEQUACY

We have a good control mechanism in place at all our departments. As we are an ISO 9001:2015 & 27001:2022 Certified Company, it has a well-matured development process in place where there is continuous enhancement of the processes in all our departments.

Every department has Performance Objectives fixed for each year and the same is reviewed every month. The Company has also a Risk Management plan in place where the potential risks are identified and a mitigation plan is also in place for each of the identified risks.

9. HUMAN RESOURCES

One of the top priorities for the company has been recruiting and retaining good talent. The company has made various HR initiatives to ensure that higher level of job satisfaction is attained for its engineers. Also the company adopts continuous skill enhancement practice for its engineers. As of 31 March 2026, the employee strength stood st at 282.

10. CAUTION

The views and statements expressed or implied in the Management Discussions and Analysis are based on available information, experience and our own assessments. They are subject to alterations. The Companys actual Performance may differ due to national or international ramifications, Government Regulations, Policies, Tax Laws and other unforeseen factors over which the Company does not or may not have any control.