Esconet Technologies Ltd Management Discussions

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

The Management of Esconet Technologies Limited (ETL) is pleased to present the detailed Management Discussion and Analysis Report (MDAR) for the financial year ended March 31,2025. This report aims to provide a comprehensive overview of the Companys operational performance, industry dynamics, macroeconomic environment, strategic initiatives, and outlook. It is intended to offer shareholders and stakeholders an insightful understanding of the Companys strategic direction, growth drivers, challenges, and future prospects.

In alignment with ETLs commitment to transparent governance and responsible corporate disclosure, the Company has voluntarily adopted this MDAR, while not mandated under the applicable regulations, this proactive approach underscores ETLs dedication to fostering stakeholder confidence, facilitating informed decisionmaking, and reinforcing our reputation as a responsible corporate entity.

This report aims to provide a comprehensive analysis of the companys performance, industry dynamics, operational highlights, and future outlook. The outlook is based on an assessment of the current business environment and may vary due to future economic and other developments both in India and abroad.

It contains financial highlights but does not include the complete financial statements of the Company. This report should be read in conjunction with the Companys Audited Financial Statements for the year ended March 31,2025.

The Indian Information Technology sector continues to undergo a profound transformation, driven by rapid technological innovation, increasing digital adoption, and evolving enterprise needs. Cloud computing, data proliferation, artificial intelligence, cybersecurity, and automation are now central to the digital strategies of organizations across sectors. ETL operates at the nexus of these trends, leveraging its extensive expertise to deliver integrated, scalable, and future- ready IT solutions. As organizations seek to optimize operational efficiency and secure their digital assets, ETLs role as a trusted system integrator and solution provider becomes increasingly vital. The industry is also influenced by macroeconomic factors such as geopolitical developments, regulatory changes, and global supply chain dynamics, which present both challenges and opportunities for growth.

Global Economy ¹

In Calendar Year (CY) 2024, the global economy registered a growth rate of 3.3%, indicating a steady recovery, despite persistent geopolitical uncertainties and volatility in financial markets. While shifting policies and geopolitical disruptions posed hurdles, major economies demonstrated adaptability, contributing to overall resilience and moderate growth.

Advanced economies recorded a growth rate of 1.8%, while Emerging Market and Developing Economies (EMDEs) expanded by 4.3%, driven largely by strong economic activity in Asia and Africa. The United States achieved 2.8% growth in CY 2024, primarily supported by robust domestic demand. In contrast, the Euro Area faced subdued growth, as muted domestic demand, weak consumer confidence and heightened economic uncertainty continued to dampen consumption.

Outlook ² :

The global economic outlook remains challenging, with several downside risks such as volatility in global trade, tariff impositions and policy uncertainties. Global economic growth is projected to moderate to 2.8% in CY 2025, with marginal improvement to 3% in CY 2026. EMDEs are expected to remain the primary growth drivers, with projected growth rates of 3.7% in CY 2025 and 3.9% in CY 2026, driven by domestic demand and investment momentum. In contrast, advanced economies are likely to experience slower growth of 1.4% in CY 2025 and 1.5% in CY 2026, constrained by tight monetary policies. A gradual rebalancing is anticipated in regions such as the Euro Area and the Middle East. To support sustained recovery, policymakers worldwide are placing emphasis on structural reforms, digital infrastructure and future-ready workforce development, particularly in the context of an emerging AI-led transformation.

Indian Economy ³:

India recently emerged as the worlds fourth largest economy, surpassing Japan and crossing the USD 4 trillion GDP milestone. In FY 2024-25, the economy recorded a strong growth rate of 6.5%, driven by strategic government initiatives and a sharp focus on infrastructure development. A capital expenditure allocation of H 11.21 lakh crore highlighted the Government of Indias commitment to strengthening rural connectivity and sustaining economic momentum.⁴ These efforts, guided by the Aatmanirbhar Bharat vision, have encouraged innovation, entrepreneurship and technological selfreliance. Flagship initiatives such as the Production Linked Incentive (PLI) schemes, MSME revitalisation and digital infrastructure expansion have positioned India on a high- growth trajectory, promoting the development of a digital and future-ready economy.

A structural transformation is underway, marked by enhanced transparency and improved ease of doing business. This shift is accompanied by rising long-term investment across critical sectors, including MSMEs, digital services and infrastructure. The services sector continues to be the primary driver of Gross Value Added (GVA), with its share increasing from 50.6% in FY14 to approximately 55% in FY25. It also remains to be a significant source of employment, engaging around 30% of the workforce. These developments collectively reflect Indias enduring economic resilience and highlight its accelerating progress towards global leadership.

Outlook:

Indias economy is projected to grow by 6.5% in FY 202526, driven by strong domestic demand, easing inflationary pressures and a steady employment scenario. These factors are expected to stimulate consumption, boost investment and drive activity in the services sector. Despite global headwinds including U.S. tariff uncertainties, supply chain shifts in critical sectors such as semiconductors and volatile capital flows, India remains well-positioned. Sustained policy support through tax incentives, infrastructure investment and regulatory reforms will be crucial to maintaining growth momentum. The RBIs 50 basis point repo rate cut to 5.50% aims to enhance liquidity, stimulate credit expansion and strengthen market confidence. Simultaneously, Indias continued focus on bilateral trade agreements and the implementation of the Production Linked Incentive (PLI) scheme is expected to reinforce its position in the global services economy. These efforts align with the nations long-term vision of achieving

developed country status by 2047, marking a crucial step in Indias economic evolution.⁵

Industry Overview Global IT Services Industry ⁶

The global IT services industry is experiencing strong growth, with the market size expected to reach USD 1.50 trillion in 2024. This expansion is fuelled by the widespread adoption of cloud computing, artificial intelligence, big data analytics and increased emphasis on cybersecurity and data management. North America, with its dynamic tech hubs and innovation-driven ecosystem, remains the largest market. Core service areas such as application management and operations and maintenance services are integral to ongoing digital transformation initiatives. Key sectors such as IT and telecom and retail are benefitting from advanced analytics and digital solutions to optimise business operations and enhance strategic decision-making.

The IT services industry is projected to continue its upward trajectory, with the market size anticipated to reach USD 1.61 trillion to USD 2.68 trillion in the coming years. This growth reflects ongoing demand for infrastructure modernisation, cloud-based services and advanced cybersecurity solutions.

Amid rapid technological advancements, the global IT services industry remains focused on addressing evolving customer needs and ensuring regulatory compliance. It is also prioritising the delivery of specialised, high-impact solutions tailored to specific industry requirements.

Global IT Services Marekt Size growth (In USD Trillion).

Indian IT Services Industry

India holds a prominent position in the global IT services industry, consistently contributing to export growth and employment generation. In 2024, the Indian IT services market reached an estimated value of USD 39.83 Billion and is projected to grow USD 75.3 Billion in 2032, reflecting a projected Compound Annual Growth Rate (CAGR) of 7.3% from 2024-2032. The growth is supported by strong demand across both domestic and international markets.⁷ Key segments driving this expansion include system integration, managed services, Application Development and Maintenance (ADM) and cloud services. Among these, system integration represents the largest segment due to rising adoption of hybrid IT infrastructures and the need for seamless interconnectivity across enterprise systems. Furthermore, the accelerating adoption of automation, data analytics, cybersecurity and business process transformation are fuelling demand for next- generation IT solutions.

Major growth drivers include the Government of Indias ongoing Digital India initiative, rising cloud adoption among SMEs and large enterprises and widespread deployment of AI-driven platforms across industries. Additionally, Indias strong talent pool, cost competitiveness and strategic global partnerships reinforce its position as a leading IT services

hub. However, the industry faces several challenges such as evolving cybersecurity threats, digital skill gaps and increasingly complex global regulatory requirements.

Notwithstanding these challenges, the domestic IT services sector is expected to maintain strong momentum. Major growth drivers include heightened focus on digital transformation, expansion in remote infrastructure management and platform-based services. Cloud native development, AI and ML integration and automation will also be at the forefront of service innovation. High growth verticals such as BFSI, retail, healthcare and manufacturing will continue to generate demand. Meanwhile, investments in cybersecurity, data compliance frameworks and industry- specific ERP solutions are anticipated to increase.

Company Overview

Esconet Technologies Limited is a leading Indian enterprise IT solutions provider, specialising in High-Performance Computing (HPC), cybersecurity, cloud infrastructure and data protection. The Company has steadily expandec its presence across the country and internationally including the establishment of a subsidiary in Singapore As an Original Equipment Manufacturer (OEM) listed on the Government e-Marketplace (GeM), the Company offers its proprietary HexaData product line and AI supercomputing systems tailored for complex workloads in both enterprise and public sector.

With sharper focus on innovation, Esconet is building e sovereign cloud platform, aligned with the Governmeni of Indias ‘Make in India vision. Through strategic collaborations with global technology leaders such as NVIDIA, Scality and CATO Networks, the Company delivers advanced, integrated solutions across data storage networking and cybersecurity domains.

Esconets capabilities are further strengthened through its wholly owned subsidiaries, Zeacloud Services Private Limited and Esconet Singapore Pte. Ltd. The receni majority acquisition of Fluidech IT Services Private Limited has further enhanced its expertise in cloud infrastructure and cybersecurity consulting. Backed by national-leve accreditation from NCIIPC and customised compliance offerings such as SEBIs CSCRF package, the Company continues to strengthen its position as a reliable technology partner for both enterprise and government clients.

Opportunities and Challenges:

Ijl^Opportunities^^^

Regulatory Compliance and Security Consulting ^

The acquisition of Fluidech and its SEBI focused compliance positions the Company to tap into growing enterprise demand for cybersecurity consulting and regulatory compliance.

Strategic Technology Partnerships

Collaborations with global players such as Scality and CATO Networks strengthen Esconets technology stack, enhancing product differentiation.

Rising Demand for Sovereign Cloud ^

Growing demand for sovereign cloud and indigenous infrastructure aligns with the Companys national positioning.

Government-Led Digital Transformation ^

The governments strong push for digital transformation, data localisation and public sector modernisation creates sustained demand for Esconets IT infrastructure and cybersecurity offerings.

Public Sector Engagement via GeM and HPC ^

Enhanced traction from public and enterprise clients through GeM listings and HPC super-cluster projects boosts credibility.

International Expansion

Expansion into Southeast Asia diversifies revenue streams and lays the foundation for global growth.

E challenges

Macroeconomic Uncertainties

Macroeconomic volatility, policy shifts and potential election-related delays may impact project timelines and investment execution.

Margin Pressure

Large strategic deals and ongoing investments in skilled talent and infrastructure could exert pressure on profit margins.

Pace of Technological Change

Rapid technological advancements require continuous innovation, R&D investment and constant upskilling to stay ahead of the curve.

Intense Market Competition

The enterprise IT and cybersecurity space is highly competitive, with strong players, both domestically and globally, intensifying the need for differentiation and agility.

Segment-wise Performance

The Company operates exclusively within the Information Technology Services domain, offering a comprehensive suite of solutions such as system integration, cloud computing, data centre infrastructure, cybersecurity and enterprise IT services. These interrelated offerings contribute collectively to the Companys revenue and strategic growth, thereby constituting a single reportable business segment. In view of above, primary and secondary reporting disclosures for business/ geographical segment as envisaged in AS -17 are not applicable to the Company.

Financial Overview:

The financial results for FY 2024-25 reflect significant growth and operational resilience across all key metrics:

Financial Highlights (Consolidated)

Particulars	FY 2024-25	FY 2023-24
Total Revenue	233.25	140.80
Operating Revenue	230.30	140.55
EBITDA	13.05	10.22
EBITDA Margin (%)	5.59	7.26
PBT	10.62	7.44
PAT	7.99	5.43
PAT Margin (%)	3.43	3.86
EPS (H)	6.11	5.99

These results are driven by increased sales execution, higher product sales, strategic client relationships, and an expanding market footprint. The companys focus on quality, innovation, and operational efficiency has contributed significantly to these strong financial outcomes.

Financial Ratio:

Particulars	FY 24-25	FY 23-24	Variance (%)	Analysis and Reasons for Variance
Current Ratio	2.44	2.13	+14.45%	The increase in the current ratio is primarily attributable to a significant rise in current assets, driven by proceeds from the Initial Public Offering (IPO) conducted in the previous financial year, along with funds raised through the Preferential Allotment of Equity Shares and Convertible Warrants during the current year. This enhancement in liquidity position strengthens the companys short-term financial stability.
Debt Equity Ratio (in times)	0.01	0.06	-87.40%	The substantial reduction in the debt-equity ratio reflects the companys strategic repayment of existing debts concurrent with the issuance of new equity during the year. This shift indicates a move towards a more conservative leverage structure, supported by increased retained earnings resulting from improved profitability.
Debt Service Coverage Ratio	3.59	0.98	+265.84%	The notable improvement in this ratio signifies the companys enhanced capacity to meet its debt obligations, primarily driven by a significant increase in net operating income. This improvement underscores the companys strengthened cash flow position and effective debt management.
Return on Equity (in %)	0.11	0.26	-56.12%	Despite an increase in net profit on a year-over-year basis, the decline in ROE is primarily due to the issuance of additional shares during the year, which dilutes the earnings attributable to each equity share. This reflects the impact of equity dilution on overall return metrics.
Net Working Capital Turnover Ratio	3.49	3.83	-8.95%	The reduction in this ratio is mainly caused by an increase in current assets resulting from the Initial Public Offering (IPO) conducted in the previous financial year, along with the Preferential Allotment of Equity Shares and Convertible Warrants during the current year, which have temporarily impacted the efficiency of working capital utilization. Nevertheless, the companys liquidity position remains healthy.
Return on capital Employed (in %)	16.22	23.53	-7.31%	The decrease in ROCE is attributed to an increase in capital employed driven by IPO proceeds from Previous year and Preferential Allotment during the Year, which, while expanding the companys asset base, has slightly diluted the overall return percentage. The companys operational efficiency continues to be robust, as reflected in the high ROCE figures.

Outlook:

The Company is well-positioned for sustained growth, supported by a strong foundation of financial performance, strategic partnerships and technological advancements. Strategic investments including the acquisition of Fluidech IT Services and collaborations with technology leaders such as Scality and CATO Networks are expected to accelerate the Companys expansion in cybersecurity, High- Performance Computing (HPC) and data infrastructure solutions. The Company remains focused on expanding its client base, improving margins through differentiated offerings and driving innovation aligned with national priorities such as the ‘Make in India initiative and data sovereignty. With enhanced operational capacity, a growing workforce and a strong pipeline of AI and cloud-native products, the Company is well-positioned to capitalise on emerging opportunities across both public and enterprise sectors, in India and abroad.

Risk and Concerns :

Esconet maintains a comprehensive risk management framework to safeguard its operations and ensure longterm stakeholder interests. The Company systematically identifies, assesses and mitigates risks across critical areas such as operations, finance, regulatory compliance and cybersecurity. Recognising the dynamic nature of the IT industry, Esconet remains committed to upholding the highest standards of corporate governance and ensuring full compliance with government regulation.

Human Resources

Your Company believes that a good Human Resource Policies are very effective for supporting and building the desired organisation culture and to maintain the same our company taking actions on the day-to-day problems of the organization. The Company continues to focus on creating strong and long-term relationship with all employees as employee retention and development are among the highest priorities of the Company.

Human Capital remains a core driver of Esconets strategic growth. In the past year, the Company recorded a 21% increase in headcount, reflecting expanding customer engagements and the growing demand for its specialised IT and cybersecurity services. Strategic hiring initiatives have supported technical capabilities, particularly in in AI, cloud infrastructure and cybersecurity. Workforce expansion has been closely aligned with operational growth, including

infrastructure upgrades and geographical expansion across South India and overseas. The Company remains committed to encouraging a skilled and future-ready workforce to drive innovation, ensure service excellence and sustain long-term value creation.

The employee strength as on March 31, 2025, was 50 and 10 number of the contractors/ consultants to execute the assignment of the Company.

Internal Control and System

The Company has put in place adequate systems of internal control. These have been designed to provide reasonable assurance with regard to maintaining proper accounting controls, efficiency of operations, protecting assets from unauthorised use or losses and ensuring reliability of financial and operational information. The Company continues its efforts to align all its processes and controls with best practices and is also controlling its operating processes through well-defined international standard certifications and accreditations. Some significant features of the internal control systems include the preparation and monitoring of annual budgets, internal audits and their reviews, clear delegation of authority and responsibility, corporate policies on accounting and periodic management meetings to review operations and plans in various business areas.

Cautionary Statement & Disclaimer:

• The opinions expressed by the management may contain certain forward-looking statements in the current scenario, which is extremely dynamic and increasingly fraught with risk and uncertainties. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report, consequent to new information, future events, or otherwise. Estimation and expectation made in the Report may differ from actual performance due to various Economic conditions, Government Policies and other related factors.

• The management has tried wherever possible to identify such statements by using words such as ‘anticipate, ‘estimate, ‘expects, projects, ‘intends, ‘plans, ‘believes, and words of similar substance in connection with any discussion of future performance. The management cannot guarantee that these forward-looking statements will be realised, although we believe we have been prudent in assumptions. The operations of the Company may be affected due to various reasons like changes in political and economic front of the country; fluctuations in exchange rate, tax laws, litigations, labour relations, interest costs and

overall scenario of the infrastructure sector. Hence, the achievements of results are subject to risks, uncertainties, and even inaccurate assumptions. Should know or unknown risks or uncertainties materialise, or should underlying assumptions prove inaccurate, actual results could vary materially from those anticipated, estimated, or projected. Readers should keep this in mind. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

For and on behalf of the Board
ESCONET TECHNOLOGIES LIMITED
Sd/-	Sd/-
Santosh Kumar Agrawal	Sunil Kumar Agrawal
Chairman & Managing Director	Whole time Director
(DIN: 00493749)	(DIN: 00493820)
Date: 01.08.2025
Place: New Delhi