<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>
GLOBAL ECONOMY
CALENDAR YEAR 2025 WAS
CHARACTERISED BY THE GLOBAL ECONOMY ADAPTING TO A MORE STRUCTURED FORM OF UNCERTAINTY, WHERE OVERALL GROWTH REMAINED RESILIENT, BUT UNDERLYING DYNAMICS REFLECTED GREATER COMPLEXITY THAN HEADLINE INDICATORS ALONE COULD CAPTURE. TECHNOLOGY- LED INVESTMENT BOOM IN A HANDFUL OF ADVANCED ECONOMIES RAN ALONGSIDE THE GRINDING FRICTION OF GEOPOLITICAL TRADE TENSIONS AND SUPPLY-CHAIN REWIRING ELSEWHERE.
For industries embedded in global electronics value chains, the year demanded resilience and strategic agility in equal measure. That pressure, and the opportunities it created, shaped the operating environment for Cyient DLM.
The IMFs January 2026 World Economic Outlook Update, titled Global Economy: Steady amid Divergent Forces characterised 2025 as a year of stable growth, with global real GDP expanding broadly in line with the previous year. Growth projections for 2026 and 2027 have been modestly revised upward to 3.3% and 3.2%, respectively.
Beneath that steadiness lay a sharp divergence—the United States, powered by Al-related capital expenditure and fiscal stimulus, outperformed significantly. At the same time, the Eurozone expanded modestly, and China navigated subdued domestic demand amid its own policy support. This is not a uniform global recovery; it is a world of divergent engines.
The IMFs chief economist identified three forces that prevented the tariff shock of mid-2025 from becoming a systemic contraction: the agility of the private sector in rerouting supply chains; supportive financial conditions sustained by an Al and technology investment boom; and stronger-than-expected fiscal intervention. Global inflation continued its descent below central bank targets in many economies, but no longer the dominant policy constraint it was in 2023 and 2024.
GEOPOLITICAL & TRADE RISK KEY DEVELOPMENTS (CY2025)
US tariffs on China peaked at 145% in April before settling at an effective rate of approximately 17% by Q3 2025 [6][7]. A 90-day US-China truce announced in May 2025 brought duties down to 30% and 10% respectively [8]. Concurrently, the Israel-Iran conflict led to Gulf and Iranian airspace closures, which forced airline cargo rerouting and inflated freight costs and lead times across the first half of FY26 [25]. On the European front, the EU launched its €800bn ReArm Europe initiative, with Germany, Denmark, Belgium, and Poland all raising their defence budgets sharply [11].
IMPACT ON CYIENT DLM
Need for re-evaluating supply chain strategy to ensure the Company does not face any delays and can meet customer price points effectively. Defence spend is expanding, especially across Europe and the US, and the Company is looking to expand and strengthen its focus accordingly. Efforts are also underway to strengthen US operations to better meet customer needs in the region.
TECHNOLOGY DISRUPTION KEY DEVELOPMENTS (CY2025)
Al capital expenditure emerged as a structural growth driver, with the IMF estimating that faster Al adoption could add approximately 0.3 percentage points to 2026 global GDP [1][12]. In parallel, US CHIPS Act investments of $53bn are beginning to catalyse domestic semiconductor capacity [9], while Chinas rare earth export restrictions have raised supply-chain risk across the electronics and semiconductor industries [9]. Against this backdrop, data centres, edge devices, and industrial automation platforms are all seeing sustained volume growth driven by the ongoing AI infrastructure build-out[27].
IMPACT ON CYIENT DLM
The AI infrastructure build-out is expanding the electronics content per system, creating a direct tailwind for high-complexity PCBA and Box Build demand [27]. Additionally, four anchor customers are engaged on next-generation product development across the aerospace, defence and industrial verticals with revenues expected from FY28 [27].
CURRENCY & COST PRESSURES KEY DEVELOPMENTS (CY2025)
The USD strengthened against most emerging-market currencies including the INR, reflecting elevated US interest rates [17], while Chinas rising manufacturing cost base accelerated OEM decisions to diversify away from China [10].
INR depreciation improved the competitive pricing of Indian exports denominated in USD [17]. Disrupted sea lanes and rerouted air freight drove global shipping costs higher through H1 2025, with conditions easing in H2 [10].
IMPACT ON CYIENT DLM
INR depreciation improves export competitiveness for USD- and EUR-denominated revenues, which account for the majority of the Companys consolidated top line [26] [27]. With an increasing number of OEMs looking at alternative sources to China, the Companys India-US hybrid model provides a competitive edge to support customers effectively.
SUPPLY CHAIN FRAGILITY KEY DEVELOPMENTS (CY2025)
Electronics trade contracted in H1 2025 as tariff escalation hit GVC- intensive segments hardest [7], prompting major OEMs - including technology companies - to accelerate the diversification of assembly away from China into India, Vietnam, and Mexico [10]. Indias tariff differential versus China of approximately 26pp by Q3 2025 made India a structurally attractive alternative sourcing hub [6][9], resulting in a spike in RFQs from US-based OEMs seeking dual- sourcing or primary sourcing in India [25][26].
IMPACT ON CYIENT DLM
The Company built a structured tariff migration framework for all key customers. The India-US model was widely accepted as a key strength and enabled the addition of new logos across all industries. The Company will continue to invest in its US operations.
The global economy enters 2026 with momentum, but with downside risks that are structural rather than cyclical. The IMF flags three primary concerns: the potential for a sharp repricing of AI and technology investment expectations; the fragility of trade policy dynamics, in which escalation can resurface rapidly; and sovereign debt trajectories that are converging toward levels not seen since the Second World War. These are not near-term triggers, but they are the conditions under which a demand shock would have amplified consequences.
For the EMS industry specifically, the medium-term structural case is intact and strengthening. Defence budget expansion, the electrification of transportation, AI infrastructure build-out, and healthcare digitalisation are compounding demand vectors. The competitive question is not whether volumes will grow, but which providers are positioned in the high-complexity, high-reliability, design-integrated segment that commands durable margins.
FINANCIAL YEAR 2025-26 CLOSED AS ANOTHER YEAR OF OUTPERFORMANCE FOR THE INDIAN ECONOMY - THE FOURTH CONSECUTIVE YEAR OF STRONG, DOMESTICALLY ANCHORED GROWTH IN A GLOBAL ENVIRONMENT THAT OFFERED FAR MORE FRICTION THAN TAILWINDS.
INDIAS STORY IN THIS PERIOD WAS OF SUFFICIENT INTERNAL MOMENTUM TO ABSORB THE FRICTION. THAT DISTINCTION - RESILIENCE THROUGH DOMESTIC DEPTH RATHER THAN ISOLATION - IS INCREASINGLY THE FOUNDATION ON WHICH INDIAS INVESTMENT CASE AND CYIENT DLMS OPERATIONS ARE BUILT.
MACROECONOMIC RESILIENCE FY 2025-26
Indias real GDP growth stood at advance estimate of: ~7.4% [13] [15], with full year CPI inflation at 3.7% (estimate) against an April— December 2025 average of 1.7% [13] [14]. India received three sovereign credit rating upgrades in CY2025, most notably S&P raising Indias rating to BBB in August 2025, its first such upgrade in 18 years [16]. Forex reserves maintained robust cover through year-end [13], while the RBI policy rate stood at 5.25% by December 2025.
The PLI scheme for electronic components was valued at Rs. 2,29,190 mn as of March 2025, with the Electronics Components Manufacturing Scheme (ECMS) expanded to Rs. 4,00,000 mn in Budget 2026 [18][20]. The India EMS market, estimated at approximately USD 65bn in 2025, is projected to reach USD 197.8 bn by 2032 at a CAGR of 17.5% [20]. The National Manufacturing Mission targets manufacturing at 25% of GDP by 2035 [17], while defence indigenisation through the MoD modernisation programme is targeting electronic warfare, autonomous systems, and next-generation platforms [22]. Indias growing innovation capacity was further reflected in its Global Innovation Index ranking of 38th in 2025, up from 66th in 2019 [13].
US tariff policy on India, including the issuance of tariff letters, means that the trajectory of India-US trade negotiations will be a key variable in FY27 [6]. Gulf airspace disruption directly affected the Companys logistics in Q1 FY26, with conditions normalising through H2 [25]. On the structural side, 85-90% of Indias electronics component value continues to be imported, making upstream localisation essential for full value capture [23]. While INR depreciation aids export competitiveness, INR volatility also raises input costs for USD- denominated components [17].
Indias manufacturing cost base remains 10-20% higher than China and Vietnam, making continued productivity investment essential for cost competitiveness [23]. Demand for a skilled electronics workforce is growing faster than domestic supply, intensifying talent competition across the sector [21]. The component ecosystem - spanning PCBs and passives - remains nascent, with import dependency continuing to constrain gross margin expansion [20][23]. Additionally, infrastructure lead times across land and buildings constrain the speed at which new capacity can be brought online [27].
Indias macro strength translates directly into operating advantage for Cyient DLM: lower cost of capital, growing domestic order appetite, and a deepening talent and supplier ecosystem in which the Company has invested ahead of the cycle.
Domestic order intake grew consistently through FY26, with new wins across aerospace, industrial, and medical verticals. The Company is positioned to benefit from both the India-driven demand cycle and from global OEMs routing incremental supply chain share into India as their China-plus-one strategies mature. [25] [26][27]
The Economic Survey projects Indias potential growth at 7.0%, with FY27 expected in the range of 6.8%-7.2%. This is not a cyclical bounce — it is a structurally higher growth rate supported by a decade of institutional reform, infrastructure investment, and manufacturing policy. Indias EMS exports are forecast to triple by 2030, and the countrys share of global EMS is expected to rise from approximately 4% today toward 7% or more by the end of the decade.
The defence indigenisation cycle represents an especially significant medium-term opportunity. Indias Ministry of Defence is modernising toward electronic warfare, autonomous platforms, and AI- enabled systems - all of which require sophisticated, certified electronics manufacturing partners. The Companys AS9100 certification, heritage in high-reliability assemblies, and deepening Build- to-Spec capability position it as a natural partner for this transition.
The global Electronic Manufacturing Services market, valued at approximately USD 648 billion in 2025, is projected to exceed USD 1.1 trillion by 2034. The structural drivers - OEM outsourcing acceleration, rising electronics content across every end market, and the proliferation of intelligent, connected systems - are secular rather than cyclical. Asia Pacific retains its dominant position, but North America is the fastest-growing region, and Europe is accelerating on the back of automotive electrification and defence electronics.
The more consequential structural shift is qualitative. The industry is moving from scale-driven, cost- minimised commodity assembly toward capability-led, design-integrated manufacturing. OEMs increasingly seek partners who can engage early in design cycles, manage supply chain resilience across geographies, and deliver products in high-mix, low-volume environments while meeting the quality standards demanded by aerospace and medical customers. This shift is the central commercial context for Cyient DLMs strategy.
KEY SECTOR DYNAMICS BY VERTICAL AEROSPACE & DEFENCE GLOBAL MARKET CONTEXT
The global A&D EMS market stood at USD 81.8bn in 2025, projected to grow at approximately 5% CAGR through 2033 [24], as defence budgets expand across NATO, the Indo-Pacific, and the Middle East on structural, multi-year commitments [11]. UAV proliferation, next-generation fighter programmes, and electronic warfare systems are driving avionics demand across the sector [24].
KEY TRENDS (FY26)
The EUs ReArm Europe initiative (€800bn) is driving European defence electronics procurement [11], while AI integration into mission- critical systems is accelerating demand for certified, ruggedised electronics [24]. Concurrently, Indias MoD modernisation programme is targeting electronic warfare, autonomous platforms, and next- generation combat systems [22].
RELEVANCE TO CYIENT DLM
Aerospace & Defence remains the largest revenue vertical for the Company, defensible via AS9100 certification and long-term programme relationships [25][26][27]. Geopolitical stabilisation with Israeli clients through H2 FY26 supported order flow recovery [26][27], while the BEL repeat order for the Indian Navy/ MoD reflects structural demand intact, with timing dependent on MoD release timelines [27]. New logos added include Deutsche Aircraft (B2S) and a Japanese eVTOL company on a nine-year programme, with mass production commencing from FY29 [26].
INDUSTRIAL GLOBAL MARKET CONTEXT
Industrial EMS is growing at a strong CAGR in India and accelerating globally with Industry 4.0 and automation adoption [21]. IIoT devices, smart motor controllers, and edge computing platforms are all expanding electronics content [19], with EV charging infrastructure emerging as a high-growth sub- segment [26].
KEY TRENDS (FY26)
Strong domestic industrial automation demand in India is scaling alongside manufacturing capacity [19][21], while AI-powered manufacturing and MES adoption are driving electronics upgrade cycles across industrial customers [27]. China+1 diversification is additionally bringing US industrial OEMs to India for new sourcing relationships [25][26].
RELEVANCE TO CYIENT DLM
Industrial now accounts for approximately 30% of consolidated revenue providing a more balanced portfolio compared to the prior A&D concentration [26]. Alteks US industrial operations delivered 425% YoY revenue growth, with an active synergy pipeline between India and the US [25]. A new Q3 FY26 logo in high-precision electrical motor controls was added, with the pipeline converting in Q4 FY26 [27].
GLOBAL MARKET CONTEXT
Healthcare electronics is compliance- driven and high-reliability in nature, making it structurally resistant to margin compression [24]. EMS is critical to system integration and testing across MRI scanners, ECG monitors, infusion pumps, and ventilators [24], with ageing demographics and digital health investment expanding the addressable market across geographies [24].
KEY TRENDS (FY26)
Alteks US med-tech revenue delivered 142% YoY growth, reflecting robust US healthcare electronics demand [25]. Regulatory adherence is increasingly becoming a differentiator as compliance requirements tighten globally [24], and early-cycle design engagement is increasingly preferred by med-tech OEMs, representing a Build-to-Spec opportunity for the Company [26][27].
RELEVANCE TO CYIENT DLM
Med Tech accounts for approximately 15% of consolidated revenue, with its share growing as portfolio diversification continues [26][27]. A new logo was added in Q3 FY26 in battery management systems for medical applications [27]. The high switching cost once qualified and the long qualification cycle serve as a barrier to entry, not just a constraint [27], and the Companys Build-to-Spec strategy is structurally aligned with med-tech procurement, with early design control providing a better margin floor [26][27].
AUTOMOTIVE GLOBAL MARKET CONTEXT
The automotive electronics market is expanding rapidly with electrification, advanced driver assistance systems (ADAS), and software-defined vehicles reshaping demand. Increasing semiconductor content per vehicle, power electronics adoption, and connected mobility platforms are driving sustained growth across global OEMs and Tier-1 suppliers.
KEY TRENDS (FY26)
EV adoption continues to accelerate, driving demand for battery management systems, power modules, and charging infrastructure electronics. ADAS and in-vehicle connectivity are increasing electronic complexity, while supply chain localization and regulatory compliance are pushing OEMs toward reliable, high-quality EMS partners.
RELEVANCE TO CYIENT DLM
Automotive remains a high-growth diversification segment, supported by capabilities in complex PCB assemblies, box builds, and precision manufacturing. Cyient DLMs focus on high-reliability, compliance- led manufacturing and design-led engagement positions it well to support OEMs and Tier-1s in EV, ADAS, and connected vehicle programs.
EV charging infrastructure order was won from an India-based, globally-backed client, representing a significant potential account [26].
The global EMS markets secular growth story is intact and compounding. Electrification, AI-driven automation, defence modernisation, and healthcare digitalisation are demand vectors that do not reverse in a business cycle - they are structural. The competitive question is not whether the market will grow, but which providers have built the capability architecture to operate in the high-complexity, design-integrated segment where margin is durable.
Indias EMS sector is entering what the industry broadly describes as its decisive decade. With exports projected to triple by 2030 and the countrys market share expected to grow significantly, the structural tailwind is substantial. The EMS players best positioned to capture this tailwind are those who have already built certifications, customer relationships, design capabilities, and geographic reach in high- value verticals - precisely where Cyient DLM has concentrated its investments.
Full-year FY26 revenue stood at Rs. 12,615 mn, with a reported EBITDA margin of 10.1% and a normalised EBITDA margin of 10.3% [28]. The order backlog at year- end FY26 reached Rs. 24,166 mn - the highest level in over two years - providing strong visibility into FY27 revenue [28]. A book-to-bill ratio of greater than 1 was sustained across all four consecutive quarters of FY26, with the full-year book-to-bill closing at 1.5x [25][26][27][28]. B2S revenues are scaling from FY26 levels toward double-digits in FY27 as programmes ramp [27]. Double-digit EBITDA margins have been maintained, with operating leverage expected to accelerate further as the revenue base grows [27][28].
MEDIUM-TERM: FY27-30
Four anchor customers are engaged in next-generation product development across the Aerospace and Defence, Industrial, Automotive verticals with revenue contribution expected from FY28 onward [27].
The India EMS market is expanding rapidly, with the Company positioned in the highest-margin, highest-complexity segment [19][21]. The defence indigenisation cycle and domestic A&D programme pipeline provide recurring, long-duration backlog [22][27]. The inorganic growth pipeline targets acquisitions in Europe and North America, focused on customer proximity and capability enhancement [26][27]. Manufacturing capacity utilisation stands at approximately 55-60%, providing substantial room for growth in revenue before material capital expenditure is required [27].
The Companys design-led product strategy targets a transition from pure EMS toward ESDM - Electronic System Design and Manufacturing [26] [27]. eVTOL, next-generation defence, and AI-enabled industrial systems are progressing from development into mass production phases from FY28- FY30 [26]. Design-led engagement, combined with supply chain control, is expected to drive sustained EBITDA margin expansion toward the mid-teens [27]. Indias rising share of global EMS, alongside the Companys diversified vertical and geographic positioning, provides multiple long- term growth vectors [19][23].
CYIENT DLM LIMITED IS AN INTEGRATED ELECTRONICS MANUFACTURING SERVICES (EMS) PROVIDER FOCUSED ON HIGH-RELIABILITY, SAFETY-CRITICAL SYSTEMS. THE COMPANY DELIVERS DESIGN-LED MANUFACTURING, TESTING, AND LIFECYCLE SUPPORT ACROSS AEROSPACE & DEFENCE, INDUSTRIAL, MEDICAL, AND AUTOMOTIVE SECTORS, SERVING GLOBAL OEMS WITH END-TO-END SOLUTIONS.
BUSINESS PERFORMANCE & STRATEGY
During FY 2025-26, Cyient DLM delivered a resilient business performance and continued progress towards a more balanced and focused operating model.
The order book closed the year at $262 mn, with a net addition of $55 mn, providing strong revenue visibility and a solid foundation for growth in FY 2026-27. Strategic diversification gained further momentum with the increasing focus on B2S, which commenced revenue contribution during the year and is positioned for meaningful scale up over the medium term.
The Companys operational excellence and delivery reliability were recognised through multiple customer and institutional awards during the year. Cyient DLM was named Best Performer - Electronic Hardware Exports by the Software Technology Parks of India for FY 2024-25 and received a Risk Mitigation Award from a leading aerospace customer, acknowledging consistent and dependable PCBA deliveries.
From a product perspective, the portfolio continued to be anchored by PCBA and Box Build solutions, while Machining and Cable Harness businesses demonstrated growing traction during the year. PCBA revenues were comparatively lower, primarily due to the completion of a large order in the preceding financial year.
The Aerospace & Defence, Industrial, and Medtech segments continued to demonstrate strong momentum, delivering a combined year on year growth of 43%, driven primarily by increased business from leading customers. Within the Aerospace segment, the Companys top two customers recorded a growth of 13% during FY 2025-26, underscoring the strength of long standing client relationships.
In contrast, the Defence segment witnessed a decline during the year, largely attributable to the completion of larger orders in FY 2024-25. The Other segment registered growth, supported by the addition of new customers in the Automobile sector during FY 2025-26.
PCBA, Box Build, and Mechanical assemblies continued to be the Companys key product categories during FY 2025-26. The PCBA segment witnessed a decline during the year, primarily on account of the completion of a large order in FY 2024-25. In contrast, the Box Build business increased its share of revenues, supported by new orders received from key customers.
The Mechanical & Other segment, comprising primarily Precision Machining, recorded growth during the year and was further strengthened by the addition of the B2S vertical to the Companys business portfolio.
FINANCIAL PERFORMANCE WITH KEY RATIOS
The financial performance of Cyient DLM Limited discussed below has been prepared in accordance with Indian Accounting Standards (Ind AS) and relates to the consolidated financial results of Cyient DLM Limited and its subsidiary. This discussion should be read in conjunction with the Consolidated Financial Statements and the accompanying notes forming part of this Annual Report for the financial year ended 31 March 2026.
Revenue performance during FY 2025-26 was driven primarily by growth in the Aerospace and Industrial segments, with major customers in these segments recording growth in excess of 12% year on year. The Defence segment, however, witnessed a decline in percentage growth, largely due to the completion of a large order in FY 2024-25.
Other Income for FY 2025-26 amounted to C362.63 mn, compared to C261.57 mn in FY 2024-25. The increase was primarily attributable to one-off earn out reversals aggregating C195.75 mn recognised during the year.
Direct Material Costs (Cost of Raw Materials and Change in Inventories) as a percentage of revenue stood at 59.63% in FY 2025- 26, compared to 72.9% in FY 2024- 25. The reduction was mainly driven by a favourable shift in revenue mix and the execution of strategic supply chain initiatives.
In addition, the integration of Altek Electronics, which operates with a relatively lower direct material cost structure, and the inclusion of the B2S segment during FY 2025-26 contributed to the reduction in direct material cost as a proportion of revenue in the current year.
Employee Benefit Expenses
Increased to 18.0% of revenue in FY 2025-26, compared to 12.3% in FY 2024-25, representing an increase of 5.7 percentage points. This rise is primarily attributable to the integration of Altek Electronics, which has a cost structure characterised by lower material costs and higher employee expenses.
The increase in absolute terms was mainly due to:
• Salaries and Wages (including bonus): An increase of 23% (C358.93 mn) over FY 2024-25, largely arising from the full year impact of Altek Electronics integration, in addition to normal wage inflation in the base business.
• Staff Welfare and Other Expenses: An increase of C136.93, primarily attributable to the integration of Altek Electronics Inc.
Finance Costs for the year stood at C271.69 mn, reflecting a 27.6% compared to FY 2024-25. The decline was driven by a combination of lower average borrowing levels and softer interest rates during the year.
Depreciation and Amortisation
Expenses, as a percentage of revenue, increased to 3.4% in FY 2025-26, compared to 2.2% in FY 2024-25. While depreciation and amortisation increased by 25.5% in absolute terms, the higher ratio to revenue primarily reflects lower revenue absorption during the year, despite improved efficiency in the utilisation of fixed assets.
Other Expenses comprise stores and spares, power and fuel, repairs and maintenance, travel and conveyance, and B2S segment staffing costs, among others. These expenses increased by C676.37 mn, or 76.8%, compared to FY 2024-25, primarily due to scale up of operations and the inclusion of new business segments during the year.
Taxes, The ETR for FY 2025-26 stood at 21.3%, down 450 basis points from 25.8% in FY 2024-25. The current-year rate was lowered by a non-taxable gain on the reversal of the Altek Electronics earnout, which lifted profit before tax without an equivalent tax charge. On a normalised basis excluding the earnout reversal this year and the acquisition-related items recognised last year the underlying ETR was broadly stable across the two periods.
The Company has a single class of shares comprising equity shares with a face value of C10 each. The Authorised Share Capital of the Company stands at 85,000,000 equity shares.
Total equity increased from C9,494.35 mn as at 31 March 2025 to C10121.08 mn as at 31 March 2026. The increase in equity during the year was primarily attributable to:
• Profit for the year: C732.82 mn
• Share based payments and other adjustments: (C67.54) mn
• Fair value adjustment on investments: (C207.16) mn
Borrowings, total borrowings declined significantly from C2,437.56 mn in FY 2024-25 to C1,061.25 mn in FY 2025-26. During the year, the Company reduced outstanding balances relating to inter company loans, term loans, and working capital borrowings, reflecting strengthened balance sheet position and disciplined Working Capital management.
Trade payables, primarily comprise amounts payable to suppliers for the purchase of goods and services. Trade payables stood at C2,733.14 mn as at 31 March 2026, compared to C2,498.83 mn as at 31 March 2025. The increase of C234.31mn was mainly due to extended credit terms negotiated with suppliers.
Other current liabilities stood at C994.27 mn as at 31 March 2026, as compared to C1,160.80 mn as at 31 March 2025. These primarily represent advances received from customers and unearned revenue. The reduction during the year was largely attributable to reduction of Customer Advances received.
Non Current Assets, overall, non current assets stood at C328.83 mn as on 31 March 2026, compared to C97.46 mn as of 31 March 2025, representing an increase of C231.37 mainly due to advance paid for procurement of land. Investments classified as financial assets declined by C207.16 mn, reflecting a fair value adjustment in the Companys investment in STUAM Technologies (formerly Innovation Communications Systems).
CURRENT ASSETS Inventories stood at C6,473.32 mn as of 31 March 2026, compared to C5,712.73 mn as of 31 March 2025, representing an increase of C760.59 mn. Inventory levels were elevated primarily due to advance procurement of critical raw materials, undertaken in response to global supply chain disruptions, including the geopolitical situations in West Asia and shortages of certain critical components (such as memory products).
Trade Receivables decreased from C3,473.97 mn as at 31 March 2025 to C3,073.12 mn as at 31 March 2026, representing a reduction of C400.85 mn. The decline was primarily attributable to lower revenue levels during FY 2025-26.
Cash and Bank Balances declined by C1619.82 mn during the year, mainly due to the utilisation of IPO proceeds in line with the stated objects of the issue. The composition of cash and cash equivalents is summarised below:
D mn |
As at 31 March 2026 |
As at 31 March 2025 |
Change |
Remarks |
Cash and Cash Equivalents |
800.33 |
471.17 |
329.16 |
Increase due to improved cash management |
Other Bank Balances |
457.67 |
2,406.65 |
(1,948.98) |
Utilisation of IPO proceeds from escrow accounts |
Other Financial Assets |
2.77 |
114.10 |
(111.33) |
Reduction in accrued interest on fixed deposits |
Total |
1,260.77 |
2,991.92 |
It primarily comprise advances paid to suppliers for the procurement of raw materials. The balance increased to C777.49 mn in FY 2025-26, compared to C638.05 mn in FY 2024-25, largely towards securing critical raw materials.
The Company has an organisation wide Enterprise Risk Management (ERM) framework aligned with leading industry standards. The framework provides a structured approach to identifying, assessing, and mitigating risks across the Companys operations and covers key risk categories including strategic, reputational, operational, financial, and compliance/legal risks.
The ERM framework is subject to periodic review by KPMG, the Companys Internal Auditor. Reports on risk assessment and mitigation status are presented to the Risk Committee, enabling effective oversight and monitoring.
In addition, the Company has constituted an internal Risk Committee, which periodically reviews the effectiveness of the risk management processes and ensures that appropriate mitigation measures are in place.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has established adequate internal control systems commensurate with its size, scale, and the nature of its operations. These systems are designed to provide reasonable assurance regarding the integrity and reliability of financial and operational information, compliance with applicable statutes and regulations, safeguarding of assets against unauthorised use or loss, execution of transactions with appropriate authorisation, and adherence to established corporate policies and procedures.
The Company has a well defined Delegation of Authority framework, which governs the approval of revenue and expenditure. A global SAP ERP system is deployed across operations to support accounting, consolidation, and management reporting, enabling seamless data integration and information exchange across locations.
For FY 2025-26, the Company appointed M/s KPMG as its Internal Auditors. The internal audit was conducted in accordance with a risk based audit plan, which is reviewed annually in consultation with the Statutory Auditors, M/s S.R. Batliboi & Associates LLP, and approved by the Audit Committee. The scope of internal audit covers all significant operational and financial areas, with a focus on evaluating the adequacy and effectiveness of internal control systems.
The Audit Committee of the Board, details of which are provided in the Corporate Governance Report, reviews the internal audit findings and monitors the implementation of agreed corrective actions. The Committee also engages with the Statutory Auditors to, inter alia, obtain their views on the adequacy and effectiveness of the Companys internal control systems and periodically reports significant observations to the Board of Directors.
Further, the Statutory Auditors have independently audited the internal financial controls over financial reporting as at 31 March 2026 and have issued an unmodified opinion, confirming that adequate internal financial controls were in place and that such controls were operating effectively.
Following the successful Initial Public Offering (IPO) in FY 2023-24, Cyient DLM created meaningful value for its shareholders, underpinned by sustained growth in revenues and profitability during the post listing period. The Companys operating performance and strategic execution reinforced its long-term value proposition for investors.
During the year, the market price of the Companys equity shares declined by 34.8% as of 1 April 2026 when compared to the corresponding period in the previous year. This movement largely reflects broader industry wide and market related factors, with several peer companies experiencing similar trends in their stock price performance during the same period.
The Company has fully utilised the IPO proceeds in line with the objects stated in the Red Herring Prospectus (RHP). The proceeds were applied towards repayment of borrowings, capital expenditure, and funding incremental working capital requirements, thereby strengthening the balance sheet and supporting long-term operational growth.
As of 31 March 2026, utilisation of IPO proceeds stands at 100%, and the designated monitoring account has been duly closed.
THE UTILISATION OF THE IPO PROCEEDS (NET OF SHARE
ISSUE EXPENSES) IS SUMMARIED BELOW: (C Mn)
Objects of the Issue |
Amount to be Utilized |
Revised allocation |
Utilization (Actuals) |
Utilization % |
Funding incremental working capital requirements |
2,910.90 |
3279.37 |
3279.37 |
100% |
Funding capital expenditure |
435.72 |
67.25 |
67.25 |
100% |
Repayment of borrowings |
1,609.11 |
1690.11 |
1690.11 |
100% |
Achieving inorganic growth through acquisitions |
700.00 |
700.00 |
700.00 |
100% |
General corporate purposes |
975.81 |
975.81 |
975.81 |
100% |
Total |
6,631.54 |
6,631.54 |
6,631.54 |
100% |
The Company engages with the investor community in a structured, regular, and transparent manner to communicate its business outlook, strategic priorities, and new initiatives. Cyient DLM recognises that effective and open communication with investors is integral to long-term value creation, alongside consistent financial and operational performance.
Engagement with investors is undertaken through multiple channels. During Q4 FY 2025-26, the Company participated in the Axis Investor Conference held in Mumbai, which facilitated interactions with both existing and potential investors. In addition, the Companys dedicated Investor Relations function, together with members of the Senior Management Team, engaged with investors through a combination of in person and virtual meetings, reaching over 40+ investors during the financial year.
During the period, the Company also received enhanced analyst coverage, with approximately 10 special coverage reports issued by reputed analyst firms, followed by over 16 preview reports, further strengthening market visibility and information dissemination.
INFORMATION TECHNOLOGY
As businesses navigate an era of rapid technological change,
Cyient DLM continues to invest strategically in digital infrastructure, cybersecurity, and intelligent automation building the operational foundation for scalable, resilient, and future-ready manufacturing. During the year, the Company advanced key technology initiatives across smart manufacturing, artificial intelligence, and information security, reinforcing its position as a technology-led Electronics Manufacturing Services partner of choice.
Together, these initiatives reflect Cyient DLMs unwavering focus on building secure, digital-first, and scalable operations creating an infrastructure that supports todays commitments while laying the foundation for tomorrows growth.
SMART MANUFACTURING
The Company implemented a Manufacturing Execution System (MES) to enable real-time product tracking, end-to-end traceability, and enhanced operational visibility across its manufacturing processes. The MES platform bridges the gap between shop-floor execution and enterprise-level decision- making, enabling faster response to production variances, improved quality control, and stronger on-time delivery performance, all critical to serving high-reliability customers in Aerospace & Defence, Medical Technology, and Industrial segments.
DATA ANALYTICS AND ARTIFICIAL INTELLIGENCE (AI)
The Company has initiated a range of advanced digital initiatives to embed artificial intelligence and automation across its operations.
By leveraging AI platforms, including Microsoft Copilot and Claude, alongside Robotic Process Automation (RPA), the organisation is driving measurable improvements in workforce productivity, process efficiency, and the quality of business decision-making.
More broadly, AI is being adopted across functions including engineering, supply chain, and customer support to reduce manual effort, accelerate cycle times, and surface actionable insights from data. The Company views AI not as a point solution, but as a horizontal capability that will progressively permeate all areas of the business, enhancing competitiveness and enabling teams to focus on higher- value work.
INFORMATION & CYBER SECURITY
In the Electronics Manufacturing Services industry, cybersecurity is not merely an IT concern but a business imperative. EMS companies handle sensitive customer intellectual property, proprietary design data, and classified programme information across complex, multi- site supply chains. A security breach can result in irreparable reputational damage, regulatory penalties, and loss of customer trust, particularly in high-assurance sectors such as Aerospace & Defence and Medical Technology.
Cognisant of these risks, the Company undertook a comprehensive strengthening of its security posture during the year. Key measures included the upgrade of firewalls, data encryption, and endpoint security controls to protect proprietary intellectual property, as well as the implementation of Mobile Device Management (MDM) Security to govern and secure mobile access to corporate systems.
These investments delivered a tangible and independently verified outcome: Cyient DLMs BitSight security rating improved from 740 to 780, achieving an Advanced rating. This places the Company meaningfully ahead of the 720 benchmark set for the EMS industry, a clear, external validation that the Companys security controls exceed sector norms and meet the expectations of the most demanding global customers.
INFORMATION SECURITY MANAGEMENT SYSTEM
The Company successfully achieved ISO 27001:2022 re-certification, the globally recognised standard for Information Security Management Systems. ISO 27001:2022 certification signals to customers, partners, and regulators worldwide that the Company has implemented a robust, audited, and continuously improving framework for protecting sensitive information. For customers entrusting Cyient DLM with critical programme data and intellectual property, this certification provides independent assurance that their assets are managed to the highest international standards, serving as a meaningful differentiator in competitive programme bids and customer qualification processes.
In a rapidly evolving landscape, it is a business imperative for our workforce to continually acquire new skills and seize learning opportunities. We recognize that it is the passion and dedication of our people that propels us forward, enabling us to redefine the boundaries of what is possible.
Thus, we foster a culture where continuous learning and personal growth flourish, equipping them with the tools and support needed.
In doing so, we embark on a path paved with remarkable achievements and groundbreaking discoveries.
For it is through the investment in their development, that we cultivate not only a thriving work culture but also lay the bedrock for sustainable success.
Having an inclusive culture is the cornerstone to creating a diverse, innovative environment that inspires growth and associate engagement. Cyient DLM defines its culture with the acronym AGILE (Ambition, Growth Mindset, Inclusive, Lead by Example, and Empowered).
We believe it is critical that we invest and focus on our culture to ensure that we have clear expectations of how we will lead, manage, act, and treat each other, our customers, and the community. This year we have created a focus on how we can ensure that inclusion is the key foundation for all our stakeholders to excel. This inclusive culture will ensure all of our associates have a voice and that it is heard and valued. With this the employer brand would increase and will help attract the right talent for our current and future requirements.
Resource planning is done based on anticipated future requirements. This planning takes into account specific project needs and the essential skill sets required. Understanding these factors significantly influences the talent acquisition process, aiding in the selection of suitable candidates, talent reviews, and facilitating learning and development initiatives.
With this we strive to have a process in place to ensure that the organisation has the right people in the right place at the right time aligning with our strategic goals.
Our policies provide our employees with clarity on how to conduct business ethically and responsibly. The policies of our company are reviewed periodically or on a need basis by the Board and its committees. During this assessment, the efficacy of the policies is reviewed and necessary changes to policies and procedures are implemented.
All our policies and procedural documents are available on the intranet for our associates reference.
We believe in automation of our people management tools. Our online performance management tool gives us an edge to ensure our associates stay productive and engaged by having clear goal- settings and open feedback.
A continuous process of evaluating associates will close the gaps, if any, by providing the necessary training to acquire required future skills & competencies.
We have an online tool for all learning needs that enables associates to develop the skills they need for the future. With this tool, we try to bridge the gaps between the resources we have today and those required in the near future. We understand the value of investing in our people to retain talent and provide them with opportunities to grow along with the organisation.
LEADERSHIP AND BEHAVIOURAL TRAINING
The Company invests in structured leadership and behavioural development to build a robust pipeline of capable, future-ready leaders. Key initiatives-such as the Emerging Leadership Program, Business Leadership Program, and targeted senior management development interventions-are designed to enhance strategic thinking, decision-making, communication, and accountability across leadership levels.
In addition, comprehensive soft skills training is provided to the broader workforce to strengthen communication, collaboration, and ownership. Collectively, these initiatives reinforce leadership capability across the organization while fostering a culture of accountability, teamwork, and sustained high performance.
CUSTOMER-INITIATED TRAINING
Customer-specific training programs are undertaken to align internal teams with evolving client requirements, quality standards, and program expectations. These initiatives enable enhanced domain understanding, improved execution capabilities, and adherence to customer-driven processes.
• Manufacturing Process Review
• Kaushal Skill India Program (RCR - Requirements Consumption Review, FOD - Foreign Object Debris, Problem Solving Model & Root Cause Corrective Action, Notice of Escapement (NoE), Program & Project Management Best Practices, Risk Issues & Opportunities (RIO) Management, Supply Chain Overview and GD&T Basics)
• Technical / Certification Training - Global Electronic Association (IPC), IPC 610,
IPC 620, IPC600, J Std-001,
IPC 7711/7721, International Organization for Standardization (ISO), Electrostatic Discharge (ESD), Hazardous material handling, Basic metrology and GD&T training, Catia software 2D Sketch and 3D modelling training, Certification training on Geometric Dimensioning and Tolerancing (GD&T), Training on 8D CAPA, Sheet metal handling & Acceptance Criteria, IATF 16949 core tools training.
• Non-Technical Training - Fire & safety, First Aid, Emergency Response Team (ERT), ISO 9001:2015, ISO 14001:2015 &
ISO 45001:2018, Internal Auditor Certification Training, Information Security Management System (ISMS), General Data Protection Regulation (GDPR) & Cyber Security Awareness Program (CSAP).
With this, we create a space where associates can upskill, which not only has holistic benefits but also fulfils the needs of the individual, empowering them for their future endeavours.
We believe in rewarding associates for their good work to keep them motivated and accountable for their tasks. This, in turn, helps us retain associates through our timely rewards using the Rewards & Recognition tool. The tool ensures transparency throughout our rewards process for the year.
Our rewards include not only monetary incentives but also growth and career opportunities, prominence, recognition, a positive organizational culture, and a satisfying work-life balance.
Associate wellbeing is paramount to our commitment to sustainable operations and our promise of care. We actively engage in various initiatives aimed at promoting positivity, wellness, and good health among our associates and their families. We organize various events for different groups of employees on different aspects of wellbeing.
We believe in the wellbeing of our associates by providing insurance such as Group Mediclaim insurance for employees, dependents and their parents, as well as Group Term Life insurance, Group Personal Accident insurance.
WEBINARS FOR ASSOCIATE ENRICHMENT
The Company conducts structured webinars aimed at enhancing professional capabilities and overall employee awareness. These engagements cover relevant areas such as wellbeing, workplace conduct, and financial literacy, continuous learning, supporting development of well-rounded and future ready workforce.
We believe in respecting individual rights by maintaining and cultivating relationships with our shop floor worker representatives, other collectives, and their members.
We believe in maintaining cordial relations with our work committee members to promptly identify and resolve conflicts, ensuring zero production loss.
The Company has established a structured framework to support employees across key life and career stages. This includes assistance for higher education, financial aid during critical personal situations, and defined provisions for emergency leave. These measures are designed to provide stability and reinforce employee security, enabling sustained focus, productivity, and long-term engagement.
ASSOCIATE ENGAGEMENT ACTIVITIES
Engagement at the workplace is a strategic imperative for our success and sustainability. With increased engagement, we have witnessed an increase in productivity, performance, innovation, reduced turnover, a positive organisational culture characterized by trust, the creation of an employer brand, adaptability & resilience, and a healthier work environment. We organise various activities such as:
CELEBRATING NATIONAL AND CULTURAL EVENTS
Celebrating Special Occasions and Events — Observance of key occasions is undertaken with the objective of reinforcing organisational values and fostering unity across the workforce. These engagements, including womens daya celebrations, Ayudha Pooja, Environmental Day, National Safety Day, International Safety Day, Republic Day Celebration, Independence Day Celebration, Sports Fest, Day Outing contribute to cohesive and inclusive environment.
At Cyient DLM, we believe in the power of diversity & inclusion and the strength it brings to our organization. We recognize that our success is deeply rooted in the unique perspectives, experiences, and talents of our diverse workforce. Inclusion is a fundamental part of who we are and how we operate.
Our promise to diversity extends across all aspects of our business, from our leaders to every individual. Inclusion is about creating an environment where every employee feels valued, respected, and empowered to bring their whole selves to work. We have implemented various initiatives and programs to foster inclusion at Cyient DLM including:
FOCUSED HIRING PRACTICES
We prioritize diversity and inclusion in our recruitment processes, ensuring equitable opportunities for all candidates. We also conduct special drives to provide opportunities for female associates to restart their careers after a break.
TRAINING AND DEVELOPMENT
We offer training programs to promote awareness and understanding of diversity and inclusion topics, equipping our employees with the tools to cultivate an inclusive workplace.
LEADERSHIP DEVELOPMENT
We are committed to developing a pipeline of diverse leaders through targeted development programs, mentorship opportunities, and succession planning initiatives.
CAUTIONARY STATEMENT
THIS DOCUMENT CONTAINS FORWARD-LOOKING STATEMENTS ABOUT FUTURE EVENTS AND CYIENT DLMS FINANCIALS. BY THEIR NATURE, FORWARD-LOOKING STATEMENTS REQUIRE THE COMPANY TO MAKE ASSUMPTIONS AND ARE SUBJECT TO INHERENT RISKS AND UNCERTAINTIES. THERE IS A SIGNIFICANT RISK THAT THE ASSUMPTIONS, PREDICTIONS AND OTHER FORWARD-LOOKING STATEMENTS MAY PROVE TO BE INACCURATE.
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON FORWARD-LOOKING STATEMENTS, AS SEVERAL FACTORS COULD CAUSE ASSUMPTIONS, ACTUAL FUTURE RESULTS AND EVENTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE FORWARD-LOOKING STATEMENTS. ACCORDINGLY, THIS DOCUMENT IS SUBJECT TO THE DISCLAIMER AND QUALIFIED IN ITS ENTIRETY BY THE ASSUMPTIONS, QUALIFICATIONS AND RISK FACTORS REFERRED TO IN THE MANAGEMENT DISCUSSION AND ANALYSIS SECTION OF THIS ANNUAL REPORT.
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