E2E Networks Ltd Management Discussions

Disclaimer: Certain Statements made herein describing the Companys expectations or predictions are “forward looking statements”. The Companys results, performance or achievements can significantly differ materially from those projected via such statements. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand/supply, changes in government regulations, tax regimes, economic developments and other incidental factors. The Company assumes no responsibility in respect of forward- looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Globally, the laaS public cloud market grew by 22.5% in 2024, reaching USD 171.8 billion (Gartner, 2025). The growth is supported by rising adoption of AI-driven workloads, hybrid cloud models, and data-intensive applications.

Indias Infrastructure-as-a-Service (IaaS) public cloud market continues to grow at a robust pace. According to IDC (2025), the India public cloud services market stands at $10.9 billion for 2024 and is expected to reach USD 30.4 billion by 2029, growing at a CAGR of 22.6% (2024-2029). This growth is driven by accelerated digital adoption, expanding internet penetration, and the increasing shift to cloud-native architectures.

The demand is driven by growing adoption of AI Machine Learning and data analytics across industry requiring high performance computing capabilities. The demand is further propelled by cost effective On-demand GPUaas solutions eliminating need for expensive on premise infrastructure.

OUR BUSINESS, OUTLOOK AND STRATEGY

Given the vast size and high growth rate of the Indian IaaS market, the Company intends to pursue an aggressive growth strategy, investing heavily in cloud infrastructure with increased capabilities to handle large-scale workloads.

In a competitive environment, building customer trust is paramount. The Company aims to allow customers to test workloads at production scale during the Proof-of-Concept phase, enabling them to experience the full capabilities of the E2E Cloud platform.

The market potential warrants leveraging a combination of internal accruals and debt to expand infrastructure capacity while maintaining operational stability. The Company also intends to deepen its expertise in high-performance cloud GPU clusters for AI, ML, and Generative AI workloads and delivering industry-leading performance while being more cost-effective compared to other solutions in the market.

Further as a part of its ongoing strategy to scale cloud infrastructure and meet growing demand for high-performance compute workloads, E2E Networks Limited has expanded its capacity by setting up GPU clusters at L&Ts state-of- the-art data center facility in Chennai.

This expansion aligns with the Companys broader vision to strengthen its pan-India infrastructure presence and improve regional latency, resilience, and availability for enterprise and AI workloads. The Chennai facility will support deployment of GPU-optimized clusters, high-throughput networking, and localized compliance requirements enabling the Company to serve customers with enhanced performance and reliability.

The Company views this move as a strategic step toward supporting Indias growing digital economy and AI adoption, while also reducing reliance on a single geographic zone.

OPPORTUNITIES AND THREATS

OPPORTUNITIES

• Growing Demand for Cloud Services: Indias public cloud market is on a steep growth trajectory, creating a large addressable market for IaaS providers. IDC forecasts Indias public cloud services market will reach USD 30.4 billion by 2029 at a CAGR of 22.6% (2024-2029). This sustained growth means significant demand for baseline compute, storage and network capacity across enterprises and startups · an opportunity for E2E to expand capacity, sign long-term contracts, and scale recurring revenues.

• Strong demand for AI/ML and Generative AI workloads · a high-value niche Generative AI is creating new, large-scale compute requirements (especially for GPU clusters and high-throughput networking). Bloomberg

Intelligence projects generative AI could grow into a ~USD 1.3 trillion market by 2032, and demand for cloud- based AI services is a major driver of new laaS consumption. By investing in GPU-optimized clouds, AI pipelines, and managed ML services, E2E can target a premium segment of the market that values high performance, predictable SLAs, and cost-effective alternatives to hyperscalers.

• Macro tailwinds in Indias technology sector that expand enterprise spend Indias technology industry continues to show steady expansion. NASSCOM projects sector revenues around USD 282.6 billion for FY 2024-25 and expects the industry to cross USD 300 billion in FY 2025-26. Higher enterprise IT spends, more engineering R&D centers, and increased exports translate into more customers, larger workloads, and more sophisticated cloud requirements that E2E can serve with specialised offerings (on-prem-like tenancy, data- localization, and enterprise support packages).

• Hybrid / multi-cloud & security focus create differentiation opportunities Most large enterprises prefer hybrid and multi-cloud architectures. This creates demand for providers that can offer easy interoperability, secure data flows, and edge-to-cloud integration. Coupled with rising emphasis on data security and compliance, there is a clear niche for providers offering specialized compliance, data residency, and dedicated AI racks · areas where E2E can differentiate through strong SLAs, localized compliance controls, and security services.

• Regulatory & data-sovereignty risk Evolving data-localization rules, taxation policies, and sector-specific compliance requirements present an opportunity for E2E to differentiate itself by offering highly compliant, region-specific cloud solutions. By proactively tracking regulatory developments, building modular compliance architectures, and participating in industry forums, E2E position itself as a trusted partner for enterprises navigating complex regulatory landscapes·potentially opening new markets and gaining early-mover advantage.

THREATS

• Hyperscaler dominance and pricing pressure The global laaS market is concentrated among a few hyperscalers that possess large balance sheets, deep discounts, and broad product portfolios. This creates constant price and feature pressure (bundling of platform services, marketplaces, and enterprise discounts). Smaller providers risk margin compression or losing customers if they compete only on price.

E2E has been strategically placed by emphasizing differentiated value through superior performance, compliance readiness, specialized AI offerings, and responsive customer service·allowing it to compete on capabilities rather than cost alone.

• Rapid technology churn · risk of stranded capital AI hardware and data-centre technologies evolve quickly; GPUs, interconnects and storage architectures that are state-of-the-art today may be suboptimal/partially obsolete over a period of time resulting in large capex outlays.

E2E with the strategic market outlook had phased hardware refresh cycles, adopting modular rack designs, optimising supplier terms through smart contracting, and exploring hybrid capex-opex models such as vendor financing and GPU leasing·ensuring agility while managing long-term capital efficiency.

• Supply chain & energy cost volatility Sharp increases in server prices, global supply disruptions, or spikes in energy costs·especially since power is a major component of data-center OPEX·can materially impact margins. Additionally, long lead times for specialized GPUs or networking gear can delay deployments.

E2E is well placed by diversifying supplier relationships, entering into forward supply and maintenance agreements, and proactively investing in capacity planning·helping reduce exposure to cost shocks and deployment delays.

• Talent shortages and wage inflation for cloud & AI engineers High demand for cloud, DevOps, and ML engineers has intensified hiring competition and driven up compensation levels. This creates constraints on capacity expansion and slows down product development for providers unable to scale teams quickly.

E2E had strengthened employee retention through clear career paths, skill-up programs, and flexible work models. Additionally, it is investing in training partnerships and selectively leveraging managed services or third- party specialists to maintain agility and scale without compromising on capability

• Concentration risk If a significant portion of revenue is from a small set of customers, the loss or scale-down by one major client can materially hurt financials.

E2E has diversified its customer base across industries and geographies, promoting consumption-based contract models, and expanding its presence in the SMB and mid-market segments to ensure a more balanced and resilient revenue mix.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company operates in a single primary business segment; hence separate segmental reporting under Ind AS 108 is not applicable.

RISKS AND CONCERNS

The Company understands that it operates in a competitive and challenging environment and its business and operations are subject to a variety of risks and uncertainties like operational risks, financial risks, hazard related risks, market-related risks and strategic risks amongst others.

The Company has a well-defined system in place to reduce its operational risks and has a Risk Management Policy in place that helps in the identification, assessment and monitoring of risks and also helps to mitigate and manage the identified risks.

The Company strives to promote a proactive approach in risks reporting and management. This involves reviewing operations of the organization, identifying potential threats to the organization and the likelihood of their occurrence and then taking appropriate actions to address the most likely threats.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has the internal control systems in place, adequate for the size of the Company and the nature of its business. The primary function of our internal control systems is to ensure efficiency in business operations, safeguarding of companys assets, adherence to policies and procedures, protecting and detecting errors and frauds, strict compliance with applicable laws and ensuring the reliability of financial statements and reporting.

The Company has in place the internal financial controls for the various processes of the Company such as Revenue reporting and recognition, Fixed assets, Finance and accounts, Taxation, Treasury, HR & Payroll and Procurement etc. The internal control systems adopted by the Company ensures that all transactions are executed with proper authorisation, are recorded and reported correctly, and assets are safeguarded and protected against loss from unauthorised use. In addition, the compliance of corporate policies is duly monitored.

The internal audits carried out by the Internal Auditor of the Company and management reviews supplements the process of internal financial control framework. Internal Audits are conducted at regular intervals to assure the management of fair transactions, as per set policies and processes. Efficacy of internal control systems are tested periodically by Internal Auditors and internal control over financial reporting is tested and certified by Statutory Auditors.

The Company has in place an Audit Committee, which serves as an important interface between the Statutory Auditors, Internal Auditors, and the Management, facilitating comprehensive discussions on matters within its terms of reference, including those pertaining to financial reporting, internal controls, and overall governance. Further, recognizing the importance of proactive risk oversight, the Company has also constituted a Risk Management Committee. This Committee is entrusted with the responsibility of formulating, monitoring, and reviewing the risk management framework, ensuring the identification, assessment, and effective mitigation of risks that could potentially impact the Companys strategic, operational, and financial objectives.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

At E2E Networks, we believe our people are our greatest asset and the driving force behind our success. We remain committed to creating an environment where every individual has the opportunity to realise their full potential, contribute meaningfully to organisational goals, and feel valued as part of an extended family. Our culture is rooted in mutual respect, support, and shared purpose standing by our people not only in their professional journeys but also in their hour of personal need.

Our Human Resource philosophy focuses on building a strong emotional and professional connect between employees and the Companys long-term vision of creating value for all stakeholders. Guided by the Top Management, the Human Resource team undertakes a wide range of people-centric initiatives designed to engage, empower, and inspire employees to deliver their best.

Recognition and appreciation remain integral to our employee engagement strategy. Our robust performance management framework is designed to identify, nurture, and reward exceptional talent, ensuring that high performance is acknowledged and celebrated. We also invest in structured learning and development programmes to equip employees with future-ready skills and deepen their expertise in their respective functional areas.

Throughout the year, we have continued to provide avenues for personal growth, leadership development, and cross-functional exposure, enabling employees to expand their horizons and achieve their fullest potential.

As on 31st March 2025, the Company had 183 employees on its rolls. Industrial relations remained cordial and harmonious during the year under review, reflecting the trust and collaborative spirit between the management and employees.

FINANCIAL PERFORMANCE AND HIGHLIGHTS

The financial performance during the Financial Year 2024-25 has been summarized below:

(Amount in Rs. Lakhs)

During the financial year under review, the Company delivered a strong performance, registering significant growth across key financial parameters compared to the previous financial year.

• Revenue from Operations stood at ^16,396.08 lakhs as against ^9,446.36 lakhs in the previous year, reflecting a robust growth of 73.55%, driven by increased business volumes and improved market penetration.

• Other Income recorded a substantial increase to ^3,942.68 lakhs from ?163.38 lakhs in the previous year, primarily attributable to higher returns on investments and other non-operating income streams.

• Total Expenditure (excluding finance costs and depreciation) increased to ^6,730.00 lakhs from ?4,652.33 lakhs, an increase of 44.65%, in line with the scale-up of operations. Despite the increase, cost control measures ensured operating efficiency.

• EBITDA stood at ^9,666.08 lakhs, reflecting a growth of 101.66% over ?4,794.03 lakhs in the previous year. The EBITDA margin improved significantly, highlighting the Companys enhanced operational efficiency and

• higher contribution from value-added services.

• Depreciation rose to ^6,007.61 lakhs from ?1,574.78 lakhs, mainly on account of capitalization of new assets and technology infrastructure.

• Finance Costs increased to ^1,322.01 lakhs from ^361.21 lakhs, in line with higher borrowings for business expansion and working capital requirements.

• Profit Before Tax (PBT) surged to ^6,279.14 lakhs from ?3,021.42 lakhs, marking an increase of 107.84%.

• Tax Expenses (including current, deferred, and prior period adjustments) stood at ^1,529.71 lakhs compared to ?834.73 lakhs in the previous year.

• Net Profit After Tax (PAT) grew to ?4,749.43 lakhs from ?2,186.69 lakhs, registering a growth of 117.23%. The Net Profit Margin improved to 28.96% from 23.15% in the previous year.

• Other Comprehensive Income amounted to a loss of ?85.64 lakhs as compared to a loss of ?252.55 lakhs in the previous year, resulting in a Total Comprehensive Income of ^4,663.79 lakhs, as against ?1,934.14 lakhs in the previous year.

• The Paid-up Equity Share Capital increased to ^1,996.79 lakhs from ?1,447.51 lakhs, reflecting capital infusion during the year.

• Earnings Per Share (EPS) stood at ?28.28 (Basic) and ?27.21 (Diluted) as against ?15.11 (Basic) and ?14.70 (Diluted) in the previous year, representing a substantial improvement, in line with the strong profitability growth.

The year under review was marked by a substantial increase in both revenues and profitability. The Company demonstrated strong operational performance, supported by effective cost management, enhanced productivity, and strategic investments in capacity expansion. The improved margins and strong cash flows position the Company for sustained growth in the coming years.

BASIS OF PREPARATION OF FINANCIAL STATEMENTS

The standalone financial statements have been prepared in compliance with Indian Accounting Standards (“Ind AS”), the provisions of the Companies Act, 2013 (“the Companies Act”), as applicable and guidelines issued by the Securities and Exchange Board of India (“SEBI”). The Ind AS are prescribed under Section 133 of the Companies Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and amendments issued thereafter. The Management accepts the responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgements used therein. The estimates and judgements relating to the financial statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present the state of alffairs, profit/loss and cash flows for the year.

RATIO ANALYSIS