Cyient DLM Ltd Management Discussions

ANNEXURE - A

An Economic Overview

Global Economy

The global economy grew by 3% in 2024, showing resilience amid geopolitical tensions and inflationary pressures. Infiation eased to 5.8% from 6.8% in 2023 but remained above pre-pandemic levels. India, now the fifth-largest economy with a GDP of US$3.89 trillion, sustained strong growth, supported by domestic demand and structural reforms. Global manufacturing grew modestly at 0.6%, with mixed performance across regions. Indias manufacturing sector remained stable, backed by infrastructure investments and policy support.

The current global and Indian economic landscape faces several headwinds including supply chain disruptions, high interest rates, labour constraints, and currency volatility. In India with strong macro fundamentals, inflation and import & external dependencies may weigh on short-term momentum.

Looking ahead, global GDP is projected to grow by 2.8% in 2025, with India continuing as a key growth driver underpinned by demographic advantage, digitalisation, and increasing industrial capacity. These dynamics present a dual scenario of opportunities and risks for businesses like ours. While input cost volatility and supply-side uncertainties pose challenges, there are significant opportunities in digital supply chain transformation, AI-enabled efficiency, and the rising global demand for high-reliability, localised electronics manufacturing.

Economic headwinds could transform into sectoral tailwinds.

RECESSION FEARS AND ECONOMIC UNCERTAINTY KEY INDICATORS OF ECONOMIC SLOWDOWN (2025)	TRADE TARIFFS AND GLOBAL TRADE POLICIES KEY DEVELOPMENTS (2025)	CURRENCY FLUCTUATIONS & EXCHANGE RATE VOLATILITY KEY DEVELOPMENTS (2025)	RISING LABOUR COSTS IN KEY MANUFACTURING HUBS KEY DEVELOPMENTS (2025)
• Global manufacturing output declined for the first few quarters of 2024.	Trumps 2025 Trade Tari_s	• USD strengthened against the INR (_86 per USD on March 25) due to rising U.S. interest rates.	• Chinas manufacturing wages rose 6.6% YoY, pushing OEMs to shift production elsewhere.
	• 10% additional tari_ on all Chinese imports.
FY25 outlook is uncertain with changing geopolitics, rising costs and supply chain constraints.	• 25% tariffs on all goods from Mexico and Canada (except oil & energy at 10%).	• Euro volatility impacting EU-based EMS supply chains.	• Mexico also experienced wage growth, with the daily minimum wage increasing by 12% in 2025.
• U.S.: Manufacturing activity shrinking.	• 25% tari_ on steel, aluminium imports.	• Chinese Yuan weakening due to economic slowdown, making Chinese suppliers more competitive.	• U.S. and EU labour shortages forcing companies to increase automation investment.
• EU: Manufacturing PMI continues to remain sub 50 since 2022, though there has been a minor increase in the last few months	• 25% tari_ on foreign- made cars and auto parts.
	• Reciprocal Tari_s
• Rising Costs
• 59% of EMS firms facing labour cost hikes
• 43% dealing with increased material expenses.
Impact on Cyient DLM Growth in Cost-Competitive	Impact on Cyient DLM Competitive Advantage:	Impact on Cyient DLM Stronger Export	Impact on Cyient DLM Cost Advantage as an India-
EMS: OEMs looking to cut costs may shift to India-based EMS providers.	U.S. companies may look for non-China EMS partners (an opportunity for Cyient DLM)	Competitiveness: A weaker INR makes Cyient DLMs exports more attractive to global OEMs. Currency shifts make Indian EMS pricing more competitive.	Based EMS: Better positioned to compete with China and Mexico on labour costs.
Stable Demand from Defence	Local U.S. Presence: Altek		Automation Opportunity:
Sectors: To remain recession- proof markets.	Electronics is well-positioned to serve American clients.		Companies investing in smart factories & robotics may seek
Lower OEM Investments:	Opportunities for capturing PCBA, Cables and Sheet Metal demand	Fluctuating Pricing for	EMS partners with automation expertise.
Delays in new contracts.		Customers: Frequent exchange rate changes could impact pricing stability for long-term contracts.	Hiring Challenges in High-Skill
Supply Chain Risks: Shipping delays and raw material price volatility could impact margins.			Roles: Growing demand for electronics engineers & skilled factory workers could lead to talent shortages

Sources https://www.imf.org/en/Publications/WEO https://www2.deloitte.com/us/en/insights/industry/aerospace-defense/aerospace-and-defense-industry-outlook.html https://www.gartner.com/en/supply-chain/research/supply-chain-top-25

The Indian Economy

India remained a standout performer amid global uncertainty, with GDP growth projected at 6.5% for FY25—near its 10-year average—driven by strong domestic demand and policy support. The real Gross Value Added (GVA) growth remained steady, though slightly moderated. Industrial production slowed to 4%, impacted by weaker manufacturing and mining output, but showed signs of recovery towards the year-end.

Services exports continued to outperform, propelling India to the seventh-largest share in global services trade, while manufacturing exports softened due to weak external demand and global policy headwinds. Capital expenditure remained healthy, boosting infrastructure and capacity creation, supported by moderating inflation and improved consumer demand. India also saw an 18% rise in FDI inflows, reflecting sustained investor confidence. With ample forex reserves and macroeconomic stability, India is well positioned, though risks from global volatility and trade disruptions persist.

Looking ahead, GDP growth is forecasted between 6.3% and 6.8% for FY26, supported by rural recovery, private investment, and structural reforms aimed to enhance long-term competitiveness.

Global and Indian Electronics Industry Overview

Global Electronic Manufacturing Sector (EMS):

The global Electronic Manufacturing Services (EMS) market continued its upward trajectory in 2024, fueled by rising product complexity, growing OEM demand for cost-e_cient production, and increased outsourcing across consumer electronics, industrial, medical, and automotive sectors. Asia Pacific retained its leadership with 36% market share, backed by robust manufacturing ecosystems, while Europe is poised for accelerated growth, especially in automotive and industrial segments.

While EMS adoption enables OEMs to scale quickly, reduce costs, and focus on innovation, IP-related risks remain a key constraint. Weak enforcement, design replication, and counterfeit products challenge industry integrity and deter R&D investment. Strengthening IP frameworks will be essential for sustainable growth.

Looking ahead, the EMS market is expected to grow at a 6.9% CAGR through 2032, with Asia Pacific reaching US$412.77 billion by 2034. Europes momentum will be shaped by OEM-EMS collaboration in connected car and EV technologies, further supported by strategic EU industrial policies. Overall core electronics manufacturing services are projected to grow fastest through 2032, driven by trends such as vehicle electrification, smart technology integration, and rapid innovation cycles in IT and telecom.

Global disturbances could drum up interesting opportunities.

SEMICONDUCTOR SUPPLY CHAIN DISRUPTIONS	EUS INCREASED DEFENCE SPENDING
Key Developments (2025)	Key Developments (2025)
U.S. CHIPS Act: US$53 bn allocated to domestic semiconductor manufacturing	€800 billion "ReArm Europe" initiative launched in March 2025. €150 billion in loans for private defence investments.
Chinas export restrictions on key rare earth materials (Feb 2025) affecting semiconductor manufacturing	Major increases in defence budgets across EU nations:
Taiwan earthquake (March 25) disrupted TSMCs chip production, delaying semiconductor shipments	• Germany: €500 billion in defence spending over a decade.
	• Denmark: Raising defence budget to 3% of GDP (+€6.7B).
	• Belgium: Increasing spending by €4 B to meet NATO targets.
	• Poland: Leading with 4.7% of GDP to military.
Impact on Cyient DLM	Impact on Cyient DLM
New Supply Chain Opportunities: OEMs looking to diversify from	Increased Demand: Higher spending on defence electronics.
Taiwan & China may seek alternative EMS partners.	New Market Entry: Potential to expand partnerships with European defence contractors.
Stronger Demand for EMS with Component Sourcing	Collaborations: Opportunities to work on joint European defence projects like ReArm Europe
Expertise: Customers may prefer EMS firms with strong supplier networks.
LongerLeadTimes&HigherCosts:Shortagesinkeysemiconductors (power ICs, microcontrollers) could delay production.
Rising Material Costs: Dependence on Chinas rare earth exports may increase costs for specialised components.

Sources https://www.fortunebusinessinsights.com/electronic-manufacturing-services-ems-market-105519 https://www.precedenceresearch.com/electronic-manufacturing-services-market#:~:text=The%20global%20electronic%20manufacturing%20services%20market%20size%20 was%20estimated%20at,6.95%25%20from%202025%20to%202034.

Domestic Electronic Manufacturing Sector (EMS):

"India is recognised as the second-fastest digitising economy among the leading 17 global economies."

India has emerged as a high-potential hub for electronic manufacturing, driven by its position as the second-fastest digitising economy among the top 17 globally and one of Asia-Pacifics largest consumer electronics markets. Electronic product demand in India has surged over 1,100% between FY20 and FY25, supported by strong chip design and embedded software capabilities.

The Electronics System Design & Manufacturing (ESDM) sector is rapidly growing, covering hardware and components across IT, telecom, consumer electronics, defence, and medical segments. Electronics design—chip, VLSI, and embedded systems—is a key strength, projected to reach 27% of the total ESDM market by FY25. Fastest-growing segments include IT/OA (54% CAGR), industrial electronics (38% CAGR), and automotive electronics (10% CAGR), positioning India as a strong player across both design and manufacturing value chains. The sectors growth is further bolstered by rising local demand, internet penetration, and reduced import duties, especially in mobile phones.

Multinational interest in local manufacturing has risen sharply, with companies increasingly leveraging Indias cost advantages and expanding capacity to serve global markets. Government policies—such as Make in India, Digital India, and the Production-Linked Incentive (PLI) scheme—have catalyzed over _17,000 crore (~US$2 billion) in investment and supported over 3,600 tech startups.

Outlook:

Indias ESDM sector is central to the nations vision of a US$1 trillion digital economy by 2025. Electronics manufacturing is targeted to reach US$300 billion, with exports projected to grow nearly 700%, from US$15 billion in FY22 to US$120 billion by FY26. Electronics goods are expected to rank among Indias top three export categories, reinforcing the countrys role in global electronics value chains.

Source https://www.ibef.org/industry/electronics-system-design-manufacturing-esdm

Sectoral Overview

The global Electronic Manufacturing Services (EMS) market is witnessing robust growth as companies across sectors increasingly outsource manufacturing to sharpen their focus on innovation, marketing, and core R&D. EMS providers enable this shift by streamlining production, ensuring consistent quality, and delivering cost-e_ective, scalable manufacturing solutions.

In the Aerospace and Defence sector, EMS is pivotal in producing complex, high-reliability electronic systems for aircraft, UAVs, space programmes, and modern military applications. The demand is driven by the need for lightweight, ruggedised components that meet stringent regulatory and performance standards. Rising global defence budgets, growing geopolitical tensions, and investments in digital transformation—such as AI-enabled systems and cybersecurity—are fuelling EMS demand in this segment. EMS partnerships with technology firms are also facilitating innovation in smart sensors and avionics systems.

Adopting Industry 4.0 technologies, IoT integration, and AI-powered manufacturing in the industrial domain is accelerating EMS growth. Companies increasingly leverage EMS for advanced electronics in automation systems, smart motor controllers, and industrial IoT devices. Innovations like flexible PCB designs, cloud-based lifecycle management, 3D printing for prototyping, and big data analytics are reshaping industrial electronics, with EMS at the core of enabling this transition.

The Automotive sector presents a high-potential growth area for EMS as vehicle electrification, autonomous systems, and digital cockpit features become mainstream. EMS providers are instrumental in delivering high-quality PCB assemblies and complex electronic subassemblies for applications such as battery management, infotainment, driver assistance systems (ADAS), and EV charging. Automakers benefit from EMS firms ability to provide scalable production, prototyping expertise, and supply chain optimisation.

In Medical Technology, EMS providers support the development of precision electronics for critical diagnostic, therapeutic, and monitoring devices. EMS plays a key role in system integration, PCB fabrication, and compliance-driven testing processes for equipment like MRI scanners, ECG monitors, infusion pumps, and ventilators. With healthcare systems worldwide undergoing digital upgrades and expanding infrastructure, EMS ensures reliability and regulatory adherence in medical electronics.

Across all these verticals, EMS providers are increasingly seen as strategic partners, enabling faster innovation cycles, enhanced quality control, and competitive differentiation. As technology complexity increases, the global EMS industry stands to benefit significantly from sector-specific tailwinds.

Business Performance and Strategy

Business Performance

Cyient DLM had a strong year in FY25, showing steady growth and progress towards building a more balanced and focused business. The acquisition of Altek Electronics marked a key milestone in the strategy, expanding its footprint in North America and enabling a hybrid manufacturing model that combines fast-turnaround, onshore capabilities with cost-effective and high-quality production. This approach not only enhances responsiveness to customer needs but also strengthens its value proposition in a tari_-conscious global environment. The acquisition along with few proactive steps enabled Cyient DLM to strengthen its presence across high-growth sectors by accelerating diversification in Industrial and Medical Technology—two areas that are increasingly central to global electronics demand. With continued investments in infrastructure, particularly in Bengaluru and Mysuru, the company has strengthened its infrastructure to meet rising demand from marquee clients.

Cyient DLMs FY25 revenue distribution highlights a strategic pivot toward high-margin sectors, with Aerospace, Defence, and Medical Technology dominating. Since FY23, Aerospace rose from 20% to 25% of revenue, driven by expertise in aviation solutions. Defence, the largest contributor, grew from 37% to 48%, fueled by strong client ties and over 30% growth from top clients. Medical Technology surged from 13% to 16% , capturing healthcare electronics demand. Industrial declined from 27% to 10%, though a strong pipeline signals recovery. Overall, the Aerospace-Defence-Medical triad accounts for 89% of FY25 revenue, up from 70% in FY23, emphasizing Cyient DLMs focus on high-value sectors.

On the operational front, Cyient DLMs product portfolio is led by PCBA and Box Builds. Machining and Cable Harnesses portfolio are gaining more traction. PCBA continues to be the cornerstone of our offering, contributing 72% of revenue and growing steadily. Although Box Build revenues moderated as a proportion of the mix, they remain integral to our system integration capabilities. These shifts reflect our ability to align production with evolving customer requirements and margin profiles.

Aerospace, Defense & Med Tech continues to be our strongest segment with significant growth coming from our top clients. Our top 3 clients cumulative revenue have grown over 32% in the Financial Year 2024-25. However, Industrial, Rail and other segments have declined in terms of overall revenue share due to external macroeconomic factors and temporary client-specific slowdowns. Opportunities in the pipeline for Industrial and Medical Technology segments are healthy and there are increased conversations around adding new programs within the existing customer base.

PRODUCT CATEGORY

PCBA, Box Build and Mech continue to be the key Product categories for FY25. Significant growth in the PCBA segment is due to increased volumes from existing customers and Box Build share of business is impacted due to change in revenue mix. The mechanical segment is primarily the Precision Machining business to support our key clients. The company is also focusing deeply on growing the Cable Harness business resulting in some of the recent investments. With capacity expansion in Bengaluru and Mysuru facilities, the infrastructure for the Mechanical and Cable Harnesses business is adequately provisioned for the expected growth

Our Growth Strategy Overview

Our growth strategy is driven by a balanced approach across both organic and inorganic levers to scale into a high-growth, high-value EMS organization.

On the organic front, we are deepening our presence in core verticals—Aerospace & Defence, Medical and Industrial—by targeting large strategic deals, building long-term Build-to-Spec (B2S) partnerships, and expanding adjacent capabilities like cable harnesses, reengineering services, and precision mechanics to deliver integrated solutions. We are also intending to expand our market reach by entering new geographies and exploring high-potential verticals like automotive electronics. To future-proof our offering, we are building new business lines and exploring productised and technology-driven solutions while vertically integrating across key value chain stages.

Inorganically, we are focused on strategic acquisitions in North America and Europe to strengthen our nearshore manufacturing footprint. These acquisitions will help us access advanced technologies, specialised capabilities, and marquee customers, especially in high-value, IP-rich domains aligned with our core sectors. Together, these pillars are shaping our evolution into a global, diversified EMS leader.

Risks and Mitigation

The Company possesses an organisation-wide Enterprise Risk Management (ERM) framework that adheres to best-in-class standards. This framework encompasses various company operations and key criteria, including strategic, reputational, operational, financial, and compliance or litigation risks. The ERM framework undergoes periodic reviews by KPMG, the Companys internal auditor, and a report detailing the mitigation status of risks is presented to the Risk Committee. Additionally, the Company maintains an internal risk committee that conducts regular reviews of the risk management process.

Risk/Opportunity	Potential Impact on Business	Mitigation Measures
Operational Risk	Operational ine_ciency leads to productivity loss and severely impacts financial performance.	Substantial investments in tools, personnel, and procedures to enhance business performance. Robust internal processes and audits (internal and external) for continuous improvement. Implementation of industry-leading software like Kinaxis Rapid Response to improve on-time delivery and customer satisfaction.
Geopolitical Risk	Geopolitical tensions increase uncertainty, adversely affecting investment and economic growth, and reducing global supply capacity, potentially causing inflation.	Maintains a diversified portfolio across North America, Europe, Middle East, and India, with operations in Aerospace & Defence, Medical Technology, and Industrial segments to spread risk.
Currency Risk	Fluctuations in foreign currency can impact profitability.	Regular evaluations of hedging policy effectiveness, natural hedging by aligning inflows with outflows, and securing protection through contractual agreements.
Technology/ Obsolescence Risk	Risk of raw materials or final products becoming end-of-life/obsolete, disrupting supply continuity.	Automated tools to detect end-of-life components early, timely material procurement, early customer engagement for next- generation solutions, alternative sourcing, and last-time buys to mitigate disruptions.
Attrition Risk	Loss of talent in key areas can hinder operations and innovation.	Initiatives to enhance employee engagement and satisfaction, talent development and retention strategies, competitive compensation adjustments, and programmes like Graduate Engineering Trainees (GET) to build a skilled talent pipeline.
Competition Risk	Pricing pressures in a competitive environment may severely impact margins.	Di_erentiated offerings, Design Led Manufacturing solutions for increased customer stickiness, high focus on quality scores, and consistent output to maintain client trust and loyalty.

Internal Control

The Company has implemented a robust internal control system aligned with the scale and complexity of its operations. These controls are structured to offer reasonable assurance regarding the accuracy and reliability of financial and operational reporting, compliance with applicable laws and regulations, protection of assets from unauthorised access or loss, proper authorisation of transactions, and adherence to corporate policies. A clearly defined delegation of authority framework is in place for approving revenue and expenditure decisions. The Company utilises the SAP platform across all locations to support accounting, consolidation, and management reporting, enabling seamless data exchange and integration across geographies.

For the financial year 2024–25, the Company has adopted a co-sourced model of internal audit. Based on this model, KPMG Assurance and Consulting Services LLP (‘KPMG) acted as the co-sourced internal auditor of the Company and supported the management in performing internal audit of select areas as approved by the Audit Committee of the Board and based on the engagement letter signed with the Company. The firm conducted audits in accordance with an internal 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 internal audit framework is designed to assess the adequacy and effectiveness of internal control mechanisms and covers all key operational areas of the Company. Further details about the Audit Committee of the Board of Directors are included in the Corporate Governance Report.

The Audit Committee examines the reports submitted by the internal auditors and reviews their recommendations for improvement. It monitors the implementation of corrective measures to ensure timely resolution. Additionally, the committee engages with the Companys statutory auditors to understand their assessment of the adequacy of the internal control systems. Key observations and insights from these discussions are regularly shared with the Board of Directors. The statutory auditors have also independently audited the internal financial controls over financial reporting as of March 31, 2025. They have opined that adequate internal controls over financial reporting exist and that such controls were operating effectively.

Shareholders Value Creation

With the launch of the IPO (Initial Public Offering) in FY 2023-24, Cyient DLM created significant value to our investors driven by strong growth in revenues and profits:

However, the stock price saw a dip of 38.6% as of 2 April, 2025, compared to same period a year ago. The trend is impacted by the industry related factors with most peers also facing the similar situation with their stock prices.

The company has effectively utilized the IPO proceeds towards repayment of loans, capital investments and funding incremental working capital in line with the objects defined in the RHP.

As of 31 March, 2025, the IPO proceeds utilization stands as below:

Objects of the Issue	Amount to be Utilized	Utilization (Actuals)	Utilization %
Funding incremental working capital requirements	2,911	1,807	62.1%
Funding capital expenditure	436	29	6.7%
Repayment of borrowings	1,609	1,609	100.0%
Achieving inorganic growth through acquisitions	700	700	100.0%
General corporate purposes	976	934	95.7%
Total (_ Mn)	6,632	5,079	76.6%

The company communicates the business outlook, strategies, and new initiatives to its investors regularly and in a structured manner. We believe that communication with the investor community is as important as timely and reliable financial performance. We engage with the investors through multiple communication channels and have had as many as 34+ investor meetings covering more than 100 investors. The companys dedicated Investor Relations Department and the companys Senior Management Team participated in various roadshows and investor conferences. During the financial year, we had 11 special coverage reports from reputed analyst firms followed by 14 preview reports.

Discussion on financial performance with respect to operational performance

Revenue Growth:

During the Financial Year 2024-25, revenue has witnessed a YoY growth of 27.5% in Rupee terms. Growth is majorly driven by Aerospace and Defense segments with most of our top clients growing more than 32% YoY. Revenue CAGR over the last 4 years is at 24.7%, representing consistency in growth. Company revenues are well diversified across 3 major geographies, namely: NAM (North America), EMEA (Europe & Middle East) and APAC (Asia Pacific including India).

EBITDA:

EBITDA CAGR growth over the last 4 years was healthy at 31.5% primarily driven by revenue growth. For FY25, the EBITDA stands at _1,372 million, resulting in YoY growth of 24%. Our EBITDA growth in FY25 is inline with Revenue growth with all major investments in Selling & General administration being optimized. With further growth, absorption benefit expected to kick-in and may result in better EBITDA margins.

PAT:

PAT CAGR through FY21 – FY25 is healthy at 55%. It is primarily driven by revenue growth and operational efficiencies. FY25 PAT growth is at 11.27% YoY majorly from Revenue growth and mix impact.

Order Book

The order book growth in FY21 through FY25 is decent driven by large deal initiatives and a strategic focus on tapping growth potential with our key clients. We also have a robust order book of _19,061 million as of 31 March, 2025, as well as a healthy pipeline of prospective projects which are currently at various stages of negotiation.

NWC:

The increase in Net Working Capital is majorly contributed by the increase in Accounts Receivable days and Inventory days. Accounts receivable days increase is due to client specific delays at the end of the year. Those receivables have a good line of sight to be collected in subsequent quarter. Inventory days increased due to change in revenue mix and industry.

ROCE:

With significant investments for the growth by way of Net Working Capital and Capital expenditure, ROCE improvement is not seen in FY23 through FY25. With most investments already in place, ROCE expected to improve with efficiency in capital utilization and NWC parameters.

Financial Performance for the Year 2024-25

The financial results of Cyient DLM Limited under Ind AS discussed below are for the consolidated results of Cyient DLM Limited and its subsidiary. The discussion should be read in conjunction with the Consolidated Financial Statements and related notes to the Consolidated Accounts of Cyient DLM for the Year Ending 31 March, 2025

Consolidated Financial Results (Profit & Loss Statement):

	For the year ended 31 March, 2025		For the year ended 31 March, 2024
Particulars	_ Mn	% of Revenue	_ Mn	% of Revenue
INCOME
Revenue from operations	15,196.26	100%	11,918.71	100%
Other income	261.57	2%	278.26	2%
Total income	15,457.83		12,196.97
EXPENSES
Cost of materials consumed	10,869.40	72%	9,487.38	80%
Changes in inventories of finished goods and work-in-progress	212.54	1%	(287.78)	-2%
Employee benefits expense	1,862.18	12%	1,173.80	10%
Finance costs	375.45	2%	343.87	3%
Depreciation and amortisation expense	340.62	2%	223.12	2%
Other expenses	880.40	6%	435.19	4%
Total expenses	14,540.59	96%	11,375.58	95%
Profit before tax	917.24	6.0%	821.39	6.9%
Tax expense / (credit)
(a) Current tax	309.13	2%	212.09	2%
(b) Deferred tax	(72.65)	-0.5%	(2.66)	-0.02%
Total tax expense / (credit)	236.48	1.6%	209.43	1.8%
Profit for the year	680.76	4%	611.96	5%

Analysis:

Revenue:

Revenue YoY growth is majorly driven by Aerospace, Defense and Med tech segments with major clients growing in excess of 30% YoY. Industrial & Rail segments have declined in growth percentage due to macroeconomic reasons and client-specific issues.

Other Income:

Other income for FY25 was _261.57 million as compared to _278.26 million in FY24. The decrease is majorly due to reduction of IPO Funds utilized towards acquisition of an US based entity, Altek Electronics. The remaining impact is mainly due to forex losses.

Direct Material Costs (Cost of Raw Materials + Change in Inventory):

Direct material costs as a percentage of revenue stood at 72.9% in FY25 when compared to 77.2% in FY24. The reduction in material cost is primarily due to a change in revenue mix across multiple customers and strategic supply chain initiatives. It is also impacted by integration of Altek Electronics having a lower Direct material cost compared to rest of the business. The growth in high-margin accounts has driven the efficiency to attain improvement in direct material costs. We expect to see further improvements in this aspect.

Employee Benefit Expenses:

Employee Benefit Expenses as a percentage of revenue have gone up by 2% YoY. In FY25, it is at 12% vs 9.8% in FY24. The increase is mainly due to integration of Altek Electronics having a different cost structure with lower Direct material cost and higher employee benefit expenses. The overall increase in absolute terms is to be attributed to the following reasons:

• Salaries & Wages including Bonus: Increase of 54.6% (_558.09 million) over FY24 primarily due to integration of Altek Electronics. In addition to the normal inflation in traditional business, the employee expenses of Altek electronics has been added during the year. The impact from Altek is for 6 months and full year impact will be seen in coming financial year.

• Staff Welfare: An increase of _94.14 million over FY24 due to integration of Altek Electronic Inc.

Finance Costs:

Finance costs for the year stood at _375.45 million, an increase of 9.2% over FY24. The increase is mainly due to funding higher working capital for revenue growth. As a percentage of revenue, it stood at 2.5% as against 2.9% in FY24 with an improvement of 0.4%. As higher revenue growth demands higher working capital, we are able to offset the finance cost percentage impact to a large extent due to the utilization of IPO funds.

Depreciation and Amortization:

Due to higher efficiency of fixed assets, the depreciation and amortization cost as a ratio to revenue maintained at 2.2% in FY25 when compared to 1.9% in FY24. With an increase of 53% YoY growth in absolute terms due to acquisition of Altek Electronic Inc., the ratio to revenue remains favorable due to better absorption in FY25.

Other Expenses:

Majorly include legal and professional charges, provision for expected credit losses, stores & space, repairs & maintenance, power & fuel etc. The increase of H445.21 million or 102% over FY24 increase is primarily due to legal and professional charges on M&A services availed and ECL creation.

Taxes:

ETR is at 25.8% as against 25.5% in FY24 increase by 30bps.

Consolidated Financial Results (Balance Sheet):

Particulars	As at 31 March, 2025	As at 31 March, 2024
ASSETS
Non-current assets
Property, plant and equipment	1,795.55	1,374.45
Capital work-in-progress	55.60	9.51
Goodwill	680.64	30.30
Other intangible assets	534.38	22.45
Right of use assets	448.78	494.14
Financial assets
(a) Investments	309.49	662.12
(b) Other financial assets	68.43	53.23
Deferred tax assets (net)	132.13	58.66
Other non-current assets	97.46	68.79
Total non-current assets	4,122.46	2,773.65
Current assets
Inventories	5,712.73	4,642.19
Financial assets
(a) Trade receivables	3,473.97	2,258.69
(b) Cash and cash equivalents	471.17	416.89
(c)_Other bank balances	2,406.65	4,948.98
(d)_Other financial assets	114.10	248.93
Other current assets	638.05	743.43
Total current assets	12,816.67	13,259.11
Total assets	16,939.13	16,032.76
EQUITY AND LIABILITIES
EQUITY
Equity share capital	793.06	793.06
Other equity	8,701.29	8,296.72
Total equity	9,494.35	9,089.78
Particulars	As at 31 March, 2025	As at 31 March, 2024
LIABILITIES
Non-current liabilities
Financial liabilities
(a) Borrowings	1,480.06	746.72
(b) Lease liabilities	465.62	515.10
(c) Other financial liabilities	94.63	180.60
Provisions	66.92	79.93
Total non-current liabilities	2,107.23	1,522.35
Current liabilities
Financial liabilities
(a)_ Borrowings	957.50	588.91
(b) Lease liabilities	109.25	70.46
(c)_ Trade payables
(i) total outstanding dues of micro enterprises and small enterprises	41.63	76.80
(ii) total outstanding dues of creditors other than micro enterprises and small enterprises	2,457.20	3,011.71
(d) Other financial liabilities	410.80	328.41
Other current liabilities	1,160.80	1,280.86
Provisions	115.06	29.88
Income tax liabilities (net)	85.31	33.60
Total current liabilities	5,337.55	5,420.63
Total liabilities	7,444.78	6,942.98
Total equity and liabilities	16,939.13	16,032.76

Equity:

The Company has only one class of shares – equity shares with a par value of _10 each. The Authorized Share Capital of the Company was 85,000,000 equity shares.

On 6 June, 2023, we had undertaken a pre-IPO placement by way of private placement of 4,075,471 equity shares aggregating to _1,080 million at an issue price of _265 per equity share. We had completed an Initial Public Offer ("IPO") by way of fresh issue of 22,364,653 equity shares of face value of _10 each of the Company at an issue price of _265 per equity share aggregating to _5,920 million. The equity shares of the Company were listed on National Stock Exchange of India Limited (NSE) and the BSE Limited (BSE) on 10 July, 2023

Equity increased from _9,089.78 million as of 31 March, 2024, to _9,494.35 million as of 31 March, 2025. A significant portion of this increase is from:

• Profit for the year: _680.76 million

• Share based payments and others: _59.75 million

• Fair value adjustment on investments: (_352.62) million

Liabilities:

Borrowings:

Overall borrowings increased from _1,335.63 million in FY24 to _2,437.56 million in FY25. During the year Cyient DLM Inc. has taken additional Term loan of _1025.97 million for funding the acquisition of Altek Electronics Inc., and the remaining balances as on 31 March, 2025, represent the balance of inter-company loan and Working Capital loan.

Trade Payables:

Our trade payables consist of payables towards vendors against the purchase of goods and services. It stood at _2,498.83 million as on 31 March, 2025. (_3,088.51 million as of 31 March, 2024). The decrease of _589.69 million is due to clearance of dues to vendors.

Other Current Liabilities:

Other current liabilities stood at _1,160.80 million as of 31 March, 2025 (vs _1,280.86 million as of 31 March, 2024). It primarily represents advance from customers and unearned revenues. The reduction of _120.06 million is due to conversion of the unearned revenues to actual revenues.

Assets:

Non-Current Assets:

Overall non-current assets have gone up by _1,348.81 million caused by addition of goodwill, property, plant and equipment, and intangible assets as a result of acuisition of Altek Electronics Inc.

Investments under Financial Asset is reduced by _352.63 million due to fair value adjustment of investment in Stuam Technologies (formerly Innovation Communications Systems).

Current Assets:

Inventory:

Inventory as of 31 March, 2025, stood at _5,712.73 million as against _4,642.19 million as on 31 March, 2024. The increase of _1,070.54 million is primarily due to acquisition of Altek Electronics Inc.

Trade Receivables:

The trade receivables have increased from _2,258.69 million as of 31 March, 2024, to _3,473.97 million as of 31 March, 2025. In absolute terms, it has gone up by _1,215.28 million primarily due to higher revenues in Q4 FY25 with collections expected in the subsequent quarter and also due to acquisition of Altek Electronics Inc.

Cash & Bank Balances:

Cash and Bank Balances have gone up by _2,622.88 million mainly due to excess IPO proceeds being invested in fixed deposits. The break-up of cash and cash equivalents are provided in the table below:

Value in _ millions	As of 31 March, 2025	As of 31 March, 2024	Change	Remarks
Cash and Cash equivalents	471.17	416.89	54.28	Utilization towards business
Other Bank Balances	2,406.65	4,948.98	(2,542.33)	Decrease in Escrow Account due to utilization of IPO proceeds
Other Financial Assets	114.10	248.93	(134.83)	Reduction of Interest Accrued on FDs
Total	2991.92	5,614.80	(2,622.88)

Other Current Assets:

It mainly includes the advances paid to suppliers towards raw materials. It is marginally reduced in FY24 to _638.05 million from _743.43 million due to procurement efficiency.

Key financial ratios:

Ratios	FY25	FY24
Current Ratio	2.40	2.45
D/E Ratio	0.32	0.21
ROE %	7.3%	11.1%
ROCE %	11.4%	10.6%
DSO (Days)	69	57
DIO (Days)	171	117
DPO (Days)	92	70
Customer Advance (Days)	24	25
Fixed Assets T/O	8.5	8.6

Current Ratio:

The Current Ratio has not moved much from the previous year.

Debt-Equity Ratio:

Increased substantially to 0.32 from 0.21 mainly due to an increase in working capital borrowings to pay to supplier Advances.

ROE:

7.3% during FY25 against 11.1% in FY24, despite an improvement in Profits, this is mainly due to an increase in average equity compared to FY 24.

ROCE:

The ROCE in FY25 increased to 11.4% from 10.6% in FY24 due to an increase of EBIT by 11% YoY.

DSO:

Days Sales Outstanding of 69 days as of 31 March, 2025, is higher when compared to 57 days as of 31 March, 2024. The increase is mainly due to higher revenue in Q4 from clients having higher credit period.

DIO:

Days Inventory Outstanding is increased by 54 days due to higher revenue volume. It stands at 171 days, increased from 117 days of the previous year.

DPO:

Supplier payables at 92 days, up by 22 days from the previous year. The improvement is due to better negotiation with the vendors during the year.

Customer Advance Days:

It is reduced to 24 days down from 25 days in the previous year.

Human Resource & Industrial Relations

In an environment characterised by rapid evolution, it is imperative for our workforce to acquire new skills and pursue learning opportunities consistently. We acknowledge that it is the passion and dedication of our personnel that propels us forward, enabling us to redefine the boundaries of what is achievable.

Thus, we nurture a culture where continuous learning and personal growth thrive, providing our employees with the necessary tools and support. In so doing, we embark on a journey paved with significant achievements and pioneering discoveries. It is through our commitment to their development that we foster not only a _ourishing workplace culture but also establish the foundation for sustainable success.

Team Diversity

We value diversity in our workforce, and all efforts are made to ensure that we provide an inclusive working environment and can attract and retain diverse talent.

Permanent (male: 660, female: 198 & others: 01) Contingent (male: 616 & female: 157) Attrition Rate (Permanent) Overall: 15.3%

Culture

Fostering an inclusive culture is the cornerstone of creating a diverse, innovative environment that inspires growth and engages associates. Cyient DLM defines its culture with the acronym AGILE.

		AGILE
AMBITION	GROWTH MINDSET	INCLUSIVE	LEAD BY EXAMPLE	EMPOWERED

We must invest in and prioritise our organisational culture to establish unequivocal expectations concerning leadership, management, conduct, and interpersonal relationships among our colleagues, customers, and the community.

In FY25, we have emphasised the necessity of fostering an inclusive environment as a fundamental principle for the success of all our stakeholders. Such an inclusive culture will ensure that every associate is a_orded a voice that is both acknowledged and valued. Consequently, this enhancement of our employer brand will facilitate the attraction of suitable talent to fulfil our present and future needs.

Resource Planning

Resource planning is done based on anticipated future requirements. This planning considers specific project needs and the essential skill sets required. Understanding these factors significantly influences the talent acquisition process, aiding in selecting suitable candidates, talent reviews, and facilitating learning and development initiatives. With this, we strive to have a process to ensure that the organisation has the right people in the right place at the right time, aligning with our strategic goals.

Policies & Procedure

Our policies provide employees with clarity on conducting business ethically and responsibly. The companys policies are reviewed periodically or as needed 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.

Performance Management

We believe in automating our people management tools. Our online performance management tool gives us an edge in ensuring our associates stay productive and engaged through clear goal-setting and open feedback. A continuous process of evaluating associates will close gaps by providing the necessary training to acquire the required skills and competencies.

Learning & Development

We have an online tool for all learning needs that enables associates to develop the skills they will need for the future. With this tool, we aim to bridge the gaps between the resources we have today and those required in the near future. We recognise the value of investing in our people to retain talent and provide them with opportunities to grow alongside the organisation.

LEADERSHIP AND BEHAVIOURAL TRAINING

• Emerging Leadership Programme

• Business Leadership Programme

• Advanced Management Programme in Operations & Supply Chain

• Communication Skills Training

• Negotiation Skills Training

CUSTOMER-INITIATED TRAINING

• Skill Enhancement Training

• PRR - Project Readiness Review

• TPM - Transition Programme Management

• FAIR - First Article Inspection Report

• Digital Product Definition (DPD) Requirement

• Manufacturing Process Review

INTERNAL TRAINING

1) Technical Training

Association Connecting of Electronic Industry (IPC), International Organisation for Standardisation (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.

2) 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.

Rewards

It is our conviction that rewarding associates for their commendable performance serves to maintain their motivation and accountability regarding their responsibilities. Consequently, this approach facilitates the retention of associates through our prompt rewards system using the Rewards & Recognition tool. This tool guarantees transparency throughout the rewards process for the entire year. Our rewards encompass not solely monetary incentives but also opportunities for growth and career advancement, increased visibility, recognition, a positive organisational culture, and a commendable work-life balance.

Associate Wellbeing & Welfare

Associate wellbeing is paramount to our commitment to sustainable operations and our promise of ‘care. We actively engage in various initiatives to promote positivity, wellness, and good health among our associates and their families. We organise different events for various groups of employees focusing on different aspects of well-being.

We believe in the well-being of our associates by providing insurance such as Group Mediclaim insurance for employees, dependents, and their parents, as well as Group Term Life insurance and Group Personal Accident insurance.

WEBINARS FOR ASSOCIATE ENRICHMENT

• Supporting mental wellbeing through wellness sessions

• Employee Assistance Programme (EAP)

• POSH (Prevention of Sexual Harassment) awareness sessions

• Financial planning sessions

Health awareness sessions also facilitate annual health check-ups for their welfare, including:

• Associate health check-up

• Eye Check-up

• Audiometry examination

Industrial Relations

We believe in respecting individual rights by nurturing relationships with our shop floor worker representatives, other collectives, and their members. We also believe in fostering cordial relations with our work committee members to promptly identify and resolve conflicts, ensuring zero production loss.

EMPLOYEE SUPPORT BENEFITS

• Advancement Incentives for educational milestones (e.g., Diploma to Graduation)

• Financial assistance for critical requirements

ASSOCIATE ENGAGEMENT ACTIVITIES

Engagement at the workplace is a strategic imperative for our success and sustainability. With increased engagement, we have witnessed increased productivity, performance, innovation, reduced turnover, a positive organisational culture characterised by trust, creating an employer brand, adaptability & resilience, and a healthier work environment. We organise various activities such as:

Celebrating Diversity and Special Occasions

• Womens Day celebration

• Ayudha Pooja celebration

• National Safety Day

• Environmental Day

• International Yoga Day

Celebrating National and Cultural Events

• Republic Day Celebration

• Independence Day Celebration

• Sports Fest

• Day Outing