Hiliks Technologies Ltd Management Discussions

Pursuant to Schedule V, Part B of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

Hiliks Technologies Limited ("Hiliks" or "the Company") operates at the intersection of Indias infrastructure modernisation and digital transformation agenda, delivering integrated solutions across Railway Signalling & Telecommunications (S&T), telecom networks, geospatial (GIS) systems and digital technologies for government and enterprise clients. Fiscal 2025-26 marked a structural shift in the industry landscape the Company operates in, with Indian Railways significantly accelerating its safety-led modernisation programme centred on the indigenously developed Kavach Automatic Train Protection (ATP) system.

Brief Note on Indian Railways growth opportunity:

The National Rail Plan 2030 (NRP 2030) remains the overarching framework: it targets modernising the network to handle projected demand through 2050, with a strategy emphasizing capacity enhancement via track doubling on congested routes, completing dedicated freight corridors, and full electrification by 2030.

Dedicated Freight Corridors, which relieve pressure on the trunk routes that doubling projects also target, are now largely operational: the network reached 96.4% operational status by March 2025, with 2,741 of 2,843 km commissioned by August 2025.

High-Speed Rail is a longer horizon layer on top of doubling/multi-tracking: the Mumbai-Ahmedabad corridor is advancing toward partial opening in Gujarat by 2027, with a broader goal of 7,000 km of dedicated high-speed corridors by 2047. Overall NGD (new line + gauge conversion + doubling/multi- tracking) commissioning has been running at roughly 1,500-2,000+ km/year in recent cycles.

For FY 2025-26, the doubling budget was Rs. 32,000 crore, and Economic Survey data notes the rail network expanded to 69,439 route km as of March 2025, with a targeted addition of 3,500 km in FY26,

For 2026-27, Rs. 36,722 crore has been proposed for new railway lines and Rs. 37,750 crore for doubling of railway tracks, part of an overall railway capex of Rs. 2,93,000 crore for the year.

Spending on doubling has consistently outpaced and FY27 has a larger doubling allocation (Rs. 37,750 crore) and a growing pipeline of newly sanctioned sections.

As at March 2026, Kavach had been commissioned across approximately 3,100 route kilometres of the Indian Railways network, with active deployment underway across a further c.24,000 route kilometres on high-density and high-utilisation corridors, supported by an expanding optical fibre cable and telecom-tower backbone. The rollout of Kavach 4.0 ? certified to Safety Integrity Level-4 and capable of supporting train speeds up to 160 kmph ? together with parallel investment in electronic interlocking and communication infrastructure, continues to widen the addressable opportunity for EPC contractors and system integrators such as our Company.

In parallel, government programmes such as Digital India, BharatNet and state-level land-records digitisation initiatives continue to sustain demand for geospatial data management, scanning and digitisation, and enterprise digital platforms ? the Companys traditional area of strength. The growing convergence between railway infrastructure spending and digital/GIS-enabled asset

management is creating cross-selling opportunities across the Companys business verticals, and the industry as a whole is moving towards integrated, technology-enabled infrastructure delivery rather than siloed engineering or software offerings.

The global economy during FY 2025-26 remained subject to ongoing trade and tariff-related uncertainty, financial market volatility and geopolitical tensions, even as major multilateral agencies continued to view India as the fastest-growing large economy. Against this backdrop, the Indian economy demonstrated notable resilience. The Reserve Bank of India progressively revised its FY 202526 real GDP growth forecast upward through the year, from an initial estimate of around 6.5% to 7.4% by early 2026, supported by robust domestic consumption, GST rate rationalisation, sustained government capital expenditure, softer crude oil prices and benign inflation. Indias GDP grew 7.8% in the first quarter and 8.2% in the second quarter of FY 2025-26, aided by buoyant industrial and services- sector activity.

For a company such as Hiliks, whose revenue is closely linked to government and quasi-government infrastructure spending, this macroeconomic backdrop ? characterised by continued fiscal push towards railways, telecommunications and digital infrastructure, alongside stable interest rates and low inflation ? has provided a supportive operating environment and underpinned the substantial scale-up in project execution achieved during the year.

Established in 1985 and headquartered in Hyderabad, Hiliks has evolved into a multi-domain, technology-driven solutions provider spanning engineering, system integration and consulting services. The Company follows a solutions-led business model, generating revenue from end-to-end project execution (EPC and system integration), technology deployment and infrastructure development, software and digital platform implementation, and managed services and consulting engagements.

FY 2025-26 was a transformational year for the Company. Total income grew more than four-fold to Rs. 2,960.93 lakh, compared to Rs. 697.70 lakh in FY 2024-25, driven principally by the execution of a large-scale railway EPC and system-integration project (referred to internally as the "Railone" contract). This project has, within a single year, become the Companys single largest revenue contributor, marking a decisive shift in the Companys business mix towards its Railway S&T vertical, while its established scanning, digitisation and GIS-based technology services continued to deliver steady, profitable growth.

The Company continues to build out its integrated, multi-disciplinary capability ? combining railway and telecom engineering, digital technologies (AI, cloud, GIS) and EPC/infrastructure execution ? to participate in large-scale government transformation projects and capture value across the entire project lifecycle, from design and system integration to long-term maintenance and managed services.

The Companys principal revenue streams for FY 2025-26, as disclosed in the notes to the financial statements, were as follows:

Revenue Stream	FY 2025-26	FY 2024-25	% of FY26 Revenue
Railway Signalling & Telecommunications Projects	2,189.15	0	74
Technology Services	769.64	697.70	26
Total Revenue from Operations	2,958.79	697.70	100.00%

Railway Signalling & Telecom (S&T) ? Core Revenue Vertical

The Railway S&T vertical is now the Companys primary revenue engine, contributing approximately 74% of FY26 revenue from operations through the Railone project. This vertical encompasses design, supply, installation, testing and commissioning of railway signalling systems; participation in the deployment of Kavach/TCAS train-protection systems; design and deployment of IP/MPLS-based telecom networks and optical fibre cable along railway corridors; turnkey EPC execution; and network optimisation and asset-management solutions. Revenue in this segment is project-based and milestone- linked, supported by long-term government contracts that provide strong revenue visibility, though it is also associated with high working-capital intensity given the billing cycle inherent to government infrastructure contracts.

Technology & GIS Services

The Companys established Scanning and Digitisation Services business ? including geospatial land- records digitisation of the type undertaken for state land-management programmes ? grew a steady 5.2% to Rs. 657.95 lakh, continuing to provide a stable, profitable base of recurring and project-based revenue. Data Management Services and Gross Receipts from Systems Rent, though smaller in scale, both grew during the year and provide annuity-like, recurring income streams from previously deployed infrastructure.

Subsidiaries

The Companys wholly/majority-owned subsidiaries ? Hiliks Greens Private Limited (IoT-enabled green energy optimisation solutions) and Hiliks Technologies Inc. (US-based entity building AI-led technology capabilities) ? remain at a relatively early, investment-oriented stage of their business build-out, and continue to provide the Company with platforms for longer-term diversification into IoT/green-energy and AI-enabled services in international markets.

A summary of the Companys standalone financial performance for FY 2025-26 as against FY 2024-25 is set out below (figures in Rs. lakh, unless stated otherwise):

Particulars	FY 2025-26	FY 2024-25	% Change
Revenue from Operations	2,958.79	697.70	324%
Other Income	2.13	0	100%
Total Income	2,960.92	697.70	324%
Particulars	FY 2025-26	FY 2024-25	% Change
Total Expenses	2,839.10	633.97	348%
Profit Before Tax	121.82	63.73	91%
Total Tax Expense	37.94	17.39	118%
Profit After Tax	83.89	46.34	81%
Basic & Diluted EPS (Rs. per share)	0.78	0.53	47%

Revenue from operations grew 324% year-on-year to Rs. 2,958.79 lakh, driven overwhelmingly by execution of the Railone project. Total expenses increased 347.8% to Rs. 2,839.10 lakh, reflecting the induction of Rs. 1,960.69 lakh of material procurement costs (Railone project materials) that did not exist in the prior year, together with an 80.0% increase in employee benefit expenses to Rs. 168.61 lakh on account of scaling up execution teams, and an 11.7% increase in procurement of services to Rs. 862.68 lakh. Despite the sharp increase in absolute costs associated with taking on EPC-scale project execution, profit before tax grew 91.2% to Rs. 121.83 lakh and profit after tax grew 81.0% to Rs. 83.89 lakh, with basic and diluted earnings per share rising to Rs. 0.78 from Rs. 0.53.

The Companys balance sheet strengthened materially during the year, with total assets growing 60.4% to Rs. 3,522.91 lakh. This was funded through a combination of retained earnings, fresh equity/share- warrant issuances (net proceeds of Rs. 535.58 lakh during the year) and, on the liabilities side, a significant increase in trade payables (to Rs. 788.98 lakh) linked to project procurement, without recourse to any borrowings ? the Company remained entirely debt-free as at both year-ends.

Balance Sheet Highlights

Particulars	As at 31.03.2026	As at 31.03.2025	% Change
Total Assets	3,522.91	2,195.78	60%
Equity Share Capital	1,075.00	882.00	22%
Other Equity	1,589.51	1,163.05	37%
Total Equity (Net Worth)	2,664.51	2,045.05	30%
Trade Receivables (incl. in Other Current Assets)	1,298.11	494.61	162%
Trade Payables (Creditors)	788.98	74.62	957%
Total Borrowings	Nil	Nil	Nil

Trade receivables grew 162% to Rs. 1,298.11 lakh, broadly in line with the scale-up in project execution and consistent with the milestone-billing nature of government infrastructure contracts; this, together with an increase in other current assets, resulted in cash used in operating activities of Rs. (497.01) lakh for the year, an improvement over Rs. (1,111.89) lakh used in FY25, but still reflective of the working-

capital build inherent to a project at an active execution stage. Investing outflows of Rs. 20.61 lakh (FY25: Rs. 76.00 lakh) related to capital expenditure and long-term loans/advances, while financing activities generated a net inflow of Rs. 535.58 lakh (FY25: Rs. 1,224.72 lakh) through equity and share- warrant proceeds, resulting in a net increase in cash and cash equivalents of Rs. 17.95 lakh for the year (closing cash balance of Rs. 74.55 lakh).

In terms of Schedule V of the SEBI LODR Regulations, 2015, the Companys key financial ratios for FY 2025-26 as compared to FY 2024-25, together with explanations for variations of 25% or more, are set out below:

Ratio	FY 25-26	FY 24-25	Variation	Explanation for Variation > 25%
Current Ratio (times)	4.1	14.57	71.83%	Current liabilities, mainly trade payables for materials and services procured for the Railone project, rose sharply faster than current assets; the ratio nevertheless remains healthy at above 3 times.
Debt-Equity Ratio (times)	-	-	-	The Company remains debt-free; no borrowings were outstanding as at either year-end.
Debt Service Coverage Ratio (times)	-	-	-	Improvement is on account of higher operating profit before working capital changes generated during the year.
Return on Equity (%)	0.03	0.02	39.84%	Higher net profit for the year, partly offset by the enlarged equity base following fresh equity/warrant issuances during the year.
Inventory Turnover Ratio (times)	1.51	1.06	41.88%	Closing work-in-progress relating to the Railone project remained high as at year- end, as the project was at an active execution stage.
Trade Receivable Turnover Ratio (times)	3.30	2.08	58.53%	Receivables outstanding against services rendered increased more than proportionately to revenue, consistent with milestone-based billing on project contracts.
Trade Payable Turnover Ratio (times)	3.38	3.82	-11.46%	Payables outstanding towards materials and services procured for project execution increased in line with higher procurement volumes.
Net Capital Turnover Ratio (times)	1.11	0.34	225.49%	Net sales increased sharply relative to working capital deployed, driven by the scale-up in project revenue.
Net Profit Ratio (%)	0.03	0.07	-57.31%	Margin moderation reflects the higher share of material and services procurement costs associated with EPC- style project execution in the FY26 revenue mix.
Return on Capital Employed (%)	0.05	0.03	46.72%	Driven by higher EBIT generated on the Companys capital employed during the year.
Return on LongTerm Investment (%)	-	-	-	Reflects higher income recognised during the year relative to the time-weighted average long-term investments held.

Taken together, the ratio movements during the year are largely attributable to a single underlying factor ? the Companys transition, within FY 2025-26, into large-scale EPC/system-integration project execution through the Railone contract. This increased the scale of working capital deployed, the level of material and services procurement, and consequently trade payables and receivables, while also driving strong absolute growth in profitability, debt-service coverage and return on capital employed. The Company continues to operate with a nil debt-equity ratio.

• A large, government-funded pipeline of Railway signalling, telecom and EPC works under the Kavach modernisation programme and allied network upgrades, offering long-term revenue visibility.

• Potential for repeat business and vendor empanelment arising from successful, safety-compliant execution of the Railone project and other railway contracts.

• Cross-selling opportunities between the Companys GIS/digital capabilities and its Railway S&T execution capability, particularly in asset management and monitoring.

• Continued government thrust on Digital India, BharatNet rural connectivity and land-records digitisation, sustaining demand for the Companys core technology services.

• Growing enterprise demand for cloud, AI/ML-based analytics and cybersecurity solutions, an area of increasing focus for the Companys digital technology business.

• Longer-term diversification potential through subsidiaries ? IoT-enabled green energy solutions (Hiliks Greens) and AI-led technology capabilities in the North American market (Hiliks Technologies Inc.).

• A supportive macroeconomic backdrop, with Indias GDP growth for FY 2025-26 estimated at over 7%, benign inflation and sustained government capital expenditure on infrastructure.

• Concentration risk: a substantial proportion of FY26 revenue was derived from a single project (Railone); any delay, dispute or scope change on this or future large contracts could materially affect financial performance.

• Government and railway-sector dependency, with exposure to tendering cycles, budgetary allocations and procurement policy changes.

• Execution risk on fixed-price/milestone-based EPC contracts, including potential cost overruns, delays and liquidated-damages exposure.

• Working-capital intensity and elongated receivable cycles typical of government infrastructure billing, as reflected in the growth of trade receivables during the year.

• Intense competition from larger, established railway EPC and system-integration players with greater financial and execution scale.

• Technology obsolescence and cybersecurity risk, given the Companys growing digital and IT services footprint.

• Talent-retention risk amid rapid scale-up of execution teams and the need for continuous capability upgrades in signalling, telecom and digital technologies.

The Company has a Board-monitored risk management framework aimed at the identification, evaluation and mitigation of key business, financial, operational and compliance risks, including project-execution, concentration, working-capital, cybersecurity and regulatory risks highlighted above. Risk assessment is integrated into project bidding, execution planning and milestone monitoring, with periodic reporting to the Board and its committees. Mitigation measures adopted during the year included close monitoring of project timelines and receivables, reinforcement of compliance and data-security practices, and continued investment in workforce capability to support safe and reliable execution of railway infrastructure projects.

The Company has an internal control framework commensurate with the nature, size and complexity of its operations, designed to provide reasonable assurance regarding the reliability of financial reporting, safeguarding of assets, and compliance with applicable laws and regulations. These controls are supplemented by periodic internal audit and statutory audit review. During FY 2025-26, the internal control framework was reviewed in the context of the Companys significant scale-up in project execution and working-capital deployment, and no material weakness was reported. The Board and its Audit Committee continue to periodically review the adequacy and effectiveness of internal controls, with a focus on strengthening controls over project billing, procurement and receivables management in line with the Companys growing scale.

People continue to be central to the Companys growth strategy. Employee benefit expenses grew 80.0% to Rs. 168.61 lakh during FY 2025-26, reflecting the scale-up of execution, engineering and project-management teams to support the Railone project and the Companys broader growth. The Company inducted new senior leadership during the year, including a new Chief Financial Officer (with effect from April 29, 2025) and two new Directors on the Board (with effect from August 11, 2025), reinforcing governance and leadership bandwidth alongside the operational scale-up.

The Company continues to focus on leadership development, upskilling on emerging technologies (including AI, automation, GIS and IoT), and strengthening performance management and safety culture appropriate to railway infrastructure execution. Industrial relations remained cordial

throughout the year, and the Company continues to invest in a future-ready, inclusive and engaged workforce.

Digital technology remains an integral part of the Companys service offering as well as its internal operations. The Companys Digital Technology & IT Services business continues to build capability in cloud computing and migration, AI/ML-based analytics and automation, cybersecurity solutions and enterprise software development, complementing its core engineering and infrastructure businesses. GIS-based digital platforms developed by the Company are also increasingly deployed within its own railway asset-management and monitoring solutions, reflecting the growing convergence of the Companys digital and infrastructure capabilities.

The Companys approach to sustainability is at an evolving stage, commensurate with its size and growth trajectory. Key initiatives include the development, through subsidiary Hiliks Greens Private Limited, of IoT-enabled green energy optimisation technology; a continued emphasis on safety-critical execution standards in railway signalling and train-protection work, in keeping with national rail- safety objectives; and governance strengthening during the year through the induction of additional Independent Directors, including a woman Director, enhancing Board diversity and oversight. The Company will continue to formalise its environmental, social and governance practices as it scales, in line with evolving regulatory expectations and stakeholder interests.

Having established a strong foothold in large-scale Railway S&T project execution during FY 2025-26, the Company intends to build on this platform by pursuing additional railway signalling, telecom and EPC opportunities arising from the continued national rollout of Kavach and allied modernisation programmes, while sustaining growth in its established scanning, digitisation and GIS-based technology services. The Company will continue to focus on prudent working-capital and balance- sheet management ? supported by its debt-free position ? disciplined project execution, and selective investment in its subsidiaries to build longer-term optionality in green-energy/IoT and AI-enabled services. Supported by continued government infrastructure spending and a resilient macroeconomic backdrop, the Board and management remain cautiously optimistic about the Companys growth prospects for FY 2026-27 and beyond.

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or outlook may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied due to various factors, including but not limited to changes in government policy and tendering regimes, execution and timing risk on large infrastructure projects, competitive and industry conditions, availability and cost of raw materials and services, exchange-rate movements, changes in tax laws and regulations, and general economic and business conditions in India and globally. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable law.