Ideaforge Technology Ltd Management Discussions

ECONOMIC OVERVIEW

GLOBAL ECONOMY

The global economy continued to operate in a challenging environment during CY2025. Global real GDP growth recovered to 3.4% in CY2025 after the contraction witnessed during the pandemic period, but the macroeconomic environment remained affected by high interest rates, tighter financial conditions and heightened geopolitical tensions across the Russia-Ukraine conflict, West Asia and US-China relations. Recent geopolitical developments in the Middle East have further intensified uncertainty, disrupted key energy supply routes and added to inflationary pressure and fiscal strain across several economies.

Real GDP Growth - India, China, USA, UK, Germany & World (Year-on-Year Growth %, CY20-CY30P)

Top economies	India	China	USA	UK	Germany	& World
CY20	-5.8%	2.3%	-2.1%	-10.0%	-4.1%	-2.7%
CY21	9.7%	8.6%	6.2%	8.5%	3.9%	6.7%
CY22	7.6%	3.1%	2.5%	5.1%	1.8%	3.8%
CY23	9.2%	5.4%	2.9%	0.3%	-0.9%	3.3%
CY24	7.1%	5.0%	2.8%	1.1%	-0.5%	3.4%
CY25	7.6%	5.0%	2.1%	1.3%	0.2%	3.4%
CY26E	6.5%	4.4%	2.3%	0.8%	0.8%	3.1%
CY27P	6.5%	4.0%	2.1%	1.3%	1.2%	3.2%
CY28P	6.5%	4.0%	2.1%	1.6%	1.2%	3.2%
CY29P	6.5%	3.7%	1.9%	1.6%	0.9%	3.2%
CY30P	6.5%	3.3%	1.8%	1.5%	0.7%	3.1%

Against this backdrop, global defense spending has continued to rise. Global defense expenditure reached US$ 2,741.2 billion in CY2025, driven by intensified geopolitical tensions across Europe, the Middle East and the Indo-Pacific. The USA and China remained the largest defense spenders, together accounting for approximately 50% of global defense outlays, while India ranked fifth globally with defense expenditure of US$ 92.1 billion in CY2025. This rising expenditure reflects the increasing focus of major economies on modernization, domestic manufacturing, readiness and emerging technologies.

Geopolitical conflicts have also fundamentally redefined the role of drones in modern warfare. Drones have moved beyond surveillance and are increasingly being used for real-time battlefield intelligence, precision strikes, logistics disruption, loitering munitions and force protection. The Russia-Ukraine war and conflicts in West Asia have demonstrated the strategic utility of drones at scale. Indias Operation Sindoor further highlighted the relevance of indigenous drones and counter-UAS capabilities in the domestic security context. These developments have accelerated defense procurement and strengthened the case for domestic drone manufacturing capabilities and trusted supply chains globally.

Top economies	USA	China	Russia	Germany	India	UK
CY20	778.4	258.0	61.7	53.3	72.9	58.3
CY21	806.2	285.9	65.9	56.5	76.3	65.1
CY22	860.7	292.0	102.4	56.2	80.0	64.1
CY23	916.0	296.8	109.2	67.3	82.3	75.3
CY24	997.3	313.7	149.0	88.5	86.1	81.8
CY25	954.4	335.5	190.4	113.6	92.1	89.0

INDIAN ECONOMY

India remained among the fastest-growing major economies globally. India recorded real GDP growth of 7.6% in CY2025, well above the global average, and is projected to sustain growth of around 6.5% annually through CY2030. This growth trajectory is supported by strong domestic demand, a steadily expanding working-age population, rapid infrastructure development, rising manufacturing activity, policy reforms and growing investment in technology and innovation.

Indias defense expenditure increased from US$ 72.8 billion in CY2020 to US$ 92.1 billion in CY2025, reflecting a CAGR of 4.8%. Defense spending is projected to reach US$ 135.3 billion by CY2030, growing at a CAGR of 8.0% during CY2025-30. The growth is expected to be driven

by investments in military modernization, force-readiness, advanced defense technologies, border security and indigenous defense manufacturing.

Indias total defense budget grew from approximately INR 4,530 billion in FY2020 to INR 6,812 billion in FY2026 Budget Estimate. Capital outlay stood at INR 1,686 billion in FY2026, representing approximately 26% of the total defense budget. A substantial part of the modernization budget is reserved for procurement from domestic sources, supporting the Governments Atmanirbhar Bharat push and indigenization mandates under the Defense Acquisition Procedure, 2020. This creates a durable demand environment for domestically manufactured defense platforms, including unmanned systems and drones.

DRONE INDUSTRY OVERVIEW

GLOBAL UNMANNED AERIAL VEHICLE INDUSTRY

The global drone industry is witnessing strong adoption across defense and civil applications, supported by technological advancement, defense modernization, regulatory reforms and increasing commercial use cases. The global drone industry grew from US$ 43.3 billion in CY2020 to US$ 77.4 billion in CY2025 at a CAGR of 12.3% and is expected to reach US$ 153.5 billion by CY2030 at a CAGR of 14.7%. Growth is being driven by advancements in autonomous flight systems, AI-enabled analytics, improved technologies and increasing adoption across defense, logistics, agriculture, utilities and industrial applications.

Drones serve two broad end-use categories globally: defense and civil. The defense segment includes surveillance, reconnaissance, strike, target acquisition, combat operations and battlefield logistics. The civil segment includes

enterprise, consumer, public safety, logistics and passenger applications. Enterprise applications cover GIS, construction and real estate, utilities, oil and gas, agriculture and mining, where drones enable remote inspection, geospatial data capture, asset monitoring and operational efficiency at scale.

Defense accounted for 47.4% of the global drone market in CY2025 and is projected to hold 52.3% by CY2030, reflecting rising investments in surveillance, reconnaissance, border security, autonomous systems and combat applications. The global defense drone market increased from US$ 18.9 billion in CY2020 to US$ 36.7 billion in CY2025 and is projected to reach US$ 80.3 billion by CY2030, growing at a CAGR of 17.0% during CY2025-30. The increasing emphasis on network-centric warfare, force multiplication and reduced personnel exposure in contested environments is driving greater procurement of unmanned systems across defense forces globally.

Source: ILattice Drone industry Report, 2026

The global civil drone market grew from US$ 24.4 billion in CY2020 to US$ 40.7 billion in CY2025 and is projected to reach US$ 73.2 billion by CY2030. Enterprise applications remain the dominant civil segment, supported by use

cases across precision agriculture, infrastructure inspection, geospatial mapping, energy and utilities monitoring, disaster response and industrial operations. Public safety, logistics and passenger mobility are expected to gain relevance as regulatory frameworks for BVLOS operations, urban air mobility and drone delivery infrastructure mature.

GEOGRAPHY-WISE DRONE INDUSTRY OVERVIEW

The global drone industry is benefiting from progressive regulatory reforms that are facilitating broader adoption across defense, agriculture, industrial inspection, infrastructure monitoring, logistics, and commercial operations. Developed markets such as Australia, the USA, the UK, and China have established mature regulatory ecosystems with streamlined licensing processes, BVLOS permissions, and sector-specific deployment frameworks, while emerging markets including India and the UAE are rapidly strengthening policy support through dedicated drone regulations, digital approval mechanisms, and innovation-focused initiatives. Collectively, these regulatory developments are reducing operational barriers, enabling greater commercial scalability, and supporting the expansion of drone-based services across industries.

Country	Drone Operations		Sector-specific Enablement				Support for Growth & Innovation		Market : avorability
	Licensing & Registration	BVLOS Permissions	Defense Framework	Agriculture Deployment	Industrial Usage	Commercial Operations	Government Support & Vision	Innovation Support
Australi<	-	0	0	0	0	0	0	0	0
m China	o	0	0	0	0	0	0	-	0
t^wm, UK	0	0	0	0	0	0	0	0	0
USA	0	0	0	0	0	0	0	0	0
India	o	0	0	0	0	0	0	0	0
UAE	0	0	0	0	0	0	0	0	0
-n - Kenya	0	0	0	0	0	0	0	0	0
no Sri Lank	0	0	0	0	0	0	0	0	0

Regionally, North America led the global drone market in CY2025 with a 38.7% share, supported by high defense expenditure, mature commercial adoption and early deployment across infrastructure inspection, logistics and public safety. APAC accounted for 26.9% of the market in CY2025 and is expected to gain share by CY2030, supported by investments in drone manufacturing, agriculture, surveillance and industrial applications across key markets. Europe accounted for 26.5% of the market in CY2025, supported by regulatory maturity and institutional adoption. By CY2030, North America is expected to retain leadership with a 39.0% share, while APAC is projected to increase its share to 28.6%.

INDIA

Indias drone industry has transitioned from a tightly regulated and import-dependent market to a more enabling ecosystem supported by Drone Rules, 2021, production-linked incentives, certification frameworks, export liberalization measures, Draft Civil Drone (Promotion and Regulation) Bill, 2025 and GST rationalization measures.

The Indian drone market potential is estimated at US$

4.365.8 million in FY2026 and is projected to reach US$

7.595.9 million by FY2031, reflecting a CAGR of 11.7%. Defense is expected to remain the largest end-use segment, accounting for 47.2% of the market potential in FY2026 and projected to hold 48.1% by FY2031. The civil segment accounted for 52.8% in FY2026 and is projected to moderate to 51.9% by FY2031 as defense procurement scales at a faster pace, though civil applications are expected to continue expanding in absolute terms.

Indias drone industry has transitioned from a tightly regulated and import-dependent market to a more enabling ecosystem supported by Drone Rules, 2021, production-linked incentives, certification frameworks, export liberalization measures,

Draft Civil Drone (Promotion and Regulation) Bill, 2025 and GST rationalization measures.

RECENT TRENDS IN THE UAV INDUSTRY

The UAV industry is moving toward more affordable and scalable unmanned systems, especially in defense, where recent conflict scenarios have reinforced the importance of large drone fleets for surveillance, reconnaissance and strike missions. Demand for ISR capabilities is also rising, with greater emphasis on long-endurance drones equipped with advanced electro-optical, infrared and radar payloads.

Autonomous and AI-enabled operations are becoming increasingly important. Advancements in AI, autonomous navigation, sensor fusion and swarm technologies are enabling drones to perform more complex missions with lower human intervention. Loitering munitions and armed drones are also gaining adoption, while governments are strengthening domestic drone ecosystems through localization mandates, domestic procurement programs and strategic investments.

In India, the sector is evolving through indigenization, deep-tech innovation, RPTO-led skill development, stronger industry-academia collaboration and defense and surveillance modernization. Enterprise and government adoption is also moving from pilot deployments to institutionalized use cases across infrastructure, mining, oil and gas, utilities, smart cities, telecom, renewable energy, disaster response, land records modernization and law enforcement.

GOVERNMENT INITIATIVES

Indias drone ecosystem is being supported by a combination of liberalized regulation, domestic manufacturing incentives, defense procurement reforms, innovation funding and public-sector adoption. The Government has introduced several measures aimed at accelerating adoption, strengthening domestic manufacturing and reducing dependence on imported drone systems.

The Drone Rules, 2021 introduced a digital-first and business-friendly regulatory framework through simplified approvals, risk-based airspace classification and streamlined pilot certification. The framework shifted the default from restriction to permission in green zones and materially reduced compliance requirements for routine commercial operations.

The Production Linked Incentive (PLI) Scheme for drones and drone components, notified in 2021, provided incentives to promote domestic manufacturing. The scheme had a financial outlay of INR 1,200 million over FY2022 to FY2024. The Government is also planning Drone PLI 2.0, with a proposed outlay of approximately INR 10 billion.

Drone import restrictions introduced in February 2022 prohibited import of drones in assembled or easily assembled forms, with limited exceptions for R&D, defense and security purposes. Import of drone components remains unrestricted, allowing domestic manufacturers to retain supply-chain flexibility while encouraging domestic assembly and value addition.

The Defense Acquisition Procedure (DAP), 2020 prioritizes indigenous design, development and manufacturing in defense procurement. It mandates indigenous content, promotes local manufacturing, and reinforces Indias push toward self-reliant defense production. Government-backed programs like iDEX and ADITI, supports startups and MSMEs developing advanced defense and drone technologies.

The Research, Development and Innovation (RDI) Scheme, approved in July 2025, carries a total outlay of INR 1 trillion over six years, with INR 200 billion allocated for FY2026. It provides long-tenure financing at low or nil interest rates to support high-technology research and establishes a dedicated Deep-Tech Fund of Funds, with priority domains including robotics, artificial intelligence and space.

State-level drone and defense policies are also contributing to ecosystem development. Defense industrial corridors and manufacturing-linked incentives in states such as Uttar Pradesh and Tamil Nadu are helping localize supply chains, attract investment and support drone and electronic warfare manufacturing.

Drones are also being embedded into Indias public infrastructure and digital governance architecture. Under the Smart Cities Mission, Integrated Command and Control Centres across 100 smart cities can use aerial data for asset monitoring, crowd management, disaster response and urban planning. Indias digital infrastructure enables drone-generated data to be collected, transmitted and analysed across land surveys, utility inspection, traffic optimization and public safety. The National Highways Authority of India has mandated monthly drone video recording of National Highway projects across construction, operation and maintenance, strengthening digital oversight and transparency in infrastructure delivery.

Several flagship public-service programs are accelerating practical drone adoption in India. Under the SVAMITVA Scheme, drones are used for village surveys and property card preparation. The Namo Drone Didi initiative supports women Self Help Groups through drone deployment for precision agriculture and livelihood generation. Drones are also being used for disaster management and railway infrastructure inspection, improving progress tracking, rescue coordination,

maintenance efficiency and safety. The NAKSHA Project uses drones, satellite imagery and GIS technology to digitize urban land records, while Operation Dronagiri demonstrates the application of geospatial technologies and drones across agriculture, livelihoods and transport/logistics.

OPPORTUNITIES AND THREATS

OPPORTUNITIES

The drone industry is positioned to benefit from strong demand tailwinds across defense, governance, enterprise and logistics applications. In defense, increasing requirements for ISR, border surveillance, force protection, target acquisition, tactical logistics, loitering munitions and counter-UAS capabilities are expected to support sustained demand for indigenous drone platforms.

Civil and enterprise adoption is also expanding across agriculture, infrastructure, mining, energy, utilities, oil and gas, construction, industrial inspection and disaster response. Drones enable remote access, real-time data collection, faster survey cycles, safer inspection of hazardous areas and improved operational efficiency.

Drone-as-a-Service models can improve accessibility for customers that do not wish to own hardware, build in-house operating teams or manage regulatory and maintenance complexity. As services, data analytics, fleet management and MRO gain relevance, the industry can unlock recurring revenue opportunities beyond one-time hardware sales.

Progress in BVLOS operations, vertiport infrastructure and drone delivery frameworks can unlock logistics, medical delivery, infrastructure monitoring and urban air mobility use cases. Trusted supply chains and domestic manufacturing are also becoming strategic differentiators as customers increasingly evaluate country-of-origin, cybersecurity, data security and supply-chain resilience.

THREATS

The drone sector continues to operate within an evolving regulatory environment. Type certification, remote pilot licensing, export authorization, BVLOS permissions and airspace integration processes remain subject to change, and delays in regulatory clarity can slow adoption and commercial scale-up.

Supply chain vulnerability remains a key risk for many players. Dependence on imported electronics, sensors, batteries and other critical components can expose manufacturers to production delays, cost volatility and trade-policy disruption. Limited domestic manufacturing depth in certain high-value components can affect scalability.

Technology obsolescence is another key risk. The industry requires sustained investment in autonomy, AI-enabled analytics, payload integration, propulsion, resilient communication, navigation systems and software platforms. Companies unable to keep pace with evolving customer requirements may face competitive pressure.

Cybersecurity and data security are becoming critical concerns as drone operations involve collection, transmission and storage of aerial data through digital networks and satellite navigation systems. Signal jamming, GPS spoofing, cyber intrusion and data breach risks can affect mission effectiveness and regulatory compliance.

Airspace integration and UTM-readiness remain important constraints. Delays in remote identification, geo-fencing, communication infrastructure and unified traffic management systems can restrict BVLOS operations and large-scale commercial deployment.

COMPANY OVERVIEW

ideaForge Technology Ltd. (hereafter referred to as ideaForge or Our Company) is the pioneer and one of the pre-eminent market leaders in the Indian unmanned aircraft systems (UAS) market. We develop drones that are resilient, reliable, high-performing, and capable of autonomous and collaborative operations. These drones serve applications such as surveillance & security, survey & mapping, asset inspection, and disaster response for both military and commercial users.

For nearly two decades, our UAV platforms are architected with a mission first approach i.e., to deliver UAVs which meet the requirements of our customers and which can reliably sustain a large number of flights and are capable of being autonomously operated without special skills or training. We have an early mover distinction of being the first company in India to indigenously develop and manufacture vertical take-off and landing (VTOL) UAVs in India. Our products such as Q4i, NETRA V3+, Q6 V2 GEO, Q6 V2, Q6 and SWITCH have received Type Certification from the Director General of Civil Aviation (DGCA), and SWITCH and Q6 have received NATO stock number. Further, our SWITCH UAV has received Fit for Indian Military Use certification from Directorate General of Quality Assurance (DGQA). We were ranked 3 rd on a global ranking by Drone Industry Insights (DII) for dual use drone manufacturers. Built with the philosophy of Performance, Reliability, Autonomy, and Resilience, we have one of the largest operational deployments of indigenous UAVs across India, and our UAVs have completed over 1,000,000 (one million) customer missions cumulatively (as on date of publication of this report), including 250,000 flights in FY 2025-26, with one of our drones taking off on average less than every three minutes. We continue investing in technology and product development and have a strong intellectual property portfolio of 112 patents (61 patents granted and 51 pending) as of June 30, 2026.

Our indigenous design and technological capabilities coupled with our ability to invent, design and deliver customer centric offerings (i.e., hardware, software and solutions) and our vertically integrated operations allow us to design, develop, engineer and manufacture our UAVs in-house with a control on performance, resilience, reliability and autonomy. Our major facilities include two product development centers and a manufacturing plant in Navi Mumbai, Maharashtra, and two product development centers in Bangalore, Karnataka. We are AS9100D, ISO 9001:2015, and ISO 27001:2022 certified organization.

Our achievements have been recognized across leading national and global platforms. ideaForge was among the select companies at Bharat Innovates 2026 in Nice, France, showcasing Indias technology and innovation prowess on a global stage as one of only two listed companies in the showcase. During the year, we won the Wings India Award in the Drone Category, instituted by the Ministry of Civil Aviation, the Airports Authority of India and FICCI, and received the FICCI Urban Innovation Award. At the ET NOW Machinist Super Shopfloor Awards 2025, we were named Winner in the Innovation (Product/Process), MSME category, and we were further recognized as an AI-First Organization by LinkedIn and an Innovative Future-Ready Organization by the India HR Community.

Products and Solutions

UAV Hardware Platforms - Zolt, Switch, Quadcopter

We have a broad range of products in that are useful for several portability classes, such as backpack portable (micro category) like Q4i, rucksack portable (mini category) like Q6, Q6 V2, Q6 V2 GEO, NETRA V4 PRO, NETRA 5, SWITCH, SWITCH V2, and small vehicle portable (small category) like ZOLT and we are also under the process of developing a container portable (for mid-mile and high altitude logistics)

UAV platform YETI. These platforms have capabilities in their respective categories such as endurance range (from 40 to 240 minutes of flying time), takeoff altitude range (up to 6,000 meters) and communication range (approximately 2-50 kilometers). Along with our UAVs, we provide a range of payloads, including daylight cameras, thermal sensors and integrated day-and-night imaging systems. We also offer advanced solutions including LiDAR, hyperspectral and multispectral sensors, and delivery systems.

These UAVs are fundamentally vertical integration of underlying technologies and subsystems which inter alia include aerodynamic airframe, resilient communication, resilient navigation systems and propulsion systems (battery pack, battery management, propellers, motors, electronic speed controllers), and mission-specific payloads. These subsystems are indigenously designed and developed by us. Vertical integration is important because every item in a UAV system is complex or needs to be built in-house for the specific airframe or use case. However, several parts of the UAV ecosystem like structural components, autopilot, propulsion, etc., are becoming increasingly commoditized, and we remain pragmatic in how we source and integrate them. The real advantage lies in owning the technically complex and mission-critical layers where differentiation matters: resilient navigation in GNSS-denied environments, resilient communication through network of radios and data links, payloads, and system-level design. Designing and building these layers in-house gives us cost competitiveness, technology sovereignty, faster customization, and stronger control over performance, security, and reliability. It also allows us to respond quickly when customer requirements evolve, as was seen during the EP6 cycle, instead of being constrained by off-the-shelf product roadmaps or external technology dependencies.

We have also started extending our technology base through active development of combat drone capabilities, including loitering munitions, long-range strike platforms, and kamikaze systems. We have developed many of the necessary building blocks over the years, and with customers increasingly demanding such capabilities due to recent geopolitical developments, we are now driving their development through in-house efforts and strategic partnerships.

Unmanned Aerial Systems (UAS), Software-as-a-Service (SaaS), and Drone as a Service (DaaS)

FLYGHT CLOUD, launched in 2024, has strengthened ideaForges capabilities by enabling users to turn drone data into actionable insights for applications such as surveillance,

The core of our growth strategy revolves around diversification across multiple vectors: product portfolio, business models, use cases and applications, and geographies. mapping and inspection. Its marketplace model allows easy access to third-party analytics plugins without separate subscriptions, improving convenience and usability. We are focused on democratising drone technology by reducing the need for upfront investment, specialized expertise and continuous fleet maintenance. This is achieved through drone-based, on-demand services designed for diverse use cases across industries. We continue to invest in technology development, explore new applications and conduct proof-of-concept pilots across sectors. Our Drone as a Service (DaaS) solution, FLYGHT CLOUD, is currently in early commercialization and, upon maturity, is expected to be deployed and operationalized through franchisee partners. In addition, we develop advanced software and embedded sub-systems to support our UAV ecosystem. Our solutions include BlueFire Touch for ground control and UAV management, BlueFire Live! for live streaming and payload control, autopilot systems and artificial intelligence capabilities. We have built a strong global distribution network with over 200+ distributors and channel partners, serving both defense and civil sectors. This enables us to reach customers efficiently and support a wide range of applications.

KEY BUSINESS STRATEGIES

The core of our growth strategy revolves around diversification across multiple vectors: product portfolio, business models, use cases and applications, and geographies. Along with this diversification, we continue to build competitive edge through deep technology innovation, indigenous and secure offerings, end-to-end solutions, scalable operational capabilities, manufacturing-readiness and after-sales support.

Built Different to Achieve Vision 2030

In our journey, instead of focusing on assembling drone hardware with limited control over core technologies and short-term product cycles, we chose a different path by building deep in-house capabilities across critical technology layers, enabling us to design and develop differentiated, high-performance UAV systems with strong control over quality, security, reliability, autonomy and resilience.

This foundation enables us to address the industrys evolving requirements: electronic warfare resilience, GNSS-denied operations, secure communication, autonomy, payload flexibility, data intelligence, and trusted supply chains. As customers move from evaluating drones as products to deploying them as mission-critical systems, the ability to combine technology ownership, field reliability, customer-specific integration and lifecycle support becomes a strategic advantage.

The shift from basic hardware to integrated mission systems, software-led workflows, secure supply chains and service-led outcomes help companies that have invested early in deep technology, operational reliability and customer trust.

Built for - Persistence and Perseverance

a. Technology-first UAV platforms and solutions company An R&D-led engine that repeatedly turns deep-technology capabilities into deployable products, differentiated solutions and scalable revenue. Our approach is to invest ahead of visible demand, stay close to evolving customer requirements, and build for long-term mission relevance rather than short-term product cycles.

b. Compounding economics from Technology re-use, fleet expansion & recurring and repeat revenue opportunities from software, lifecycle support, upgrades and services.

c. Early platform building and patient innovation Platform development, compliance, certification, supply-chain readiness, field validation and customer integration require upfront investment. The payoff is typically back-loaded through orders, fleet expansion, upgrades, services, and deeper customer integration.

Strategic Diversification Vectors Product and technology diversification

We will continue to invest in product innovation, engineering and design to strengthen our technology stack and align our offerings with evolving mission requirements. The focus is on improving performance, reliability, autonomy, resilience, payload flexibility and customer-specific outcomes, while also building

capabilities for emerging defense and logistics opportunities.

Geographical diversification

While India remains our core market, we are building the foundation for selective international expansion. Our focus is on markets where trusted supply chains, indigenous technology depth, mission reliability and security considerations are becoming increasingly important. We intend to approach global markets through disciplined market selection, local presence where relevant, partnerships, regulatory-readiness and customer-specific product-market fit.

Use-case and application diversification

UAV adoption is expanding beyond traditional surveillance and mapping into inspection, logistics and mobility, public safety, infrastructure monitoring, disaster response, agriculture, mining, utilities and emerging defense applications like combat capabilities. Our strategy is to expand into use cases where our technology foundation, field experience and ability to deliver integrated outcomes provide a credible right to compete.

Secure and indigenous technology stack Security, technology sovereignty and supply-chain resilience are becoming central to UAV procurement. We continue to focus on secure and indigenous technology development, especially in mission-critical layers where differentiation matters: resilient

navigation, resilient communication, mission payloads, system-level design, secure software and data integrity. This approach not only brings cost competitiveness but also helps reduce dependency, improve responsiveness, strengthen control over performance and support customer confidence in sensitive operating environments.

Business model diversification

The industry is steadily moving from one-time product sales toward integrated solutions, lifecycle support, upgrades, services, software-enabled workflows, components/subsystems and outcome-led engagement models. Our strategy is to participate in this shift while remaining disciplined about customer-readiness, operational maturity and scalable execution. The objective is to create more repeatable revenue streams and reduce dependence on any single segment, customer type or procurement cycle in the long term.

Built for - Inevitable Consolidation in the UAV Market

The drone industry is changing rapidly. Customer demand is moving away from low-technology assembled drones toward sophisticated UAV systems that can support mission-critical requirements such as EW resilience, autonomy, secure supply chains, advanced payloads, AI-enabled analytics, network-centric operations and reliable lifecycle support.

A. Integration and certification barriers: In defense and government contracts, many players may bid, but only a few can offer integrated solutions that meet performance, reliability, security and compliance requirements.

B. Hardware commoditization shifts value upward: Further, UAV hardware assembly is becoming more commoditized. Differentiation is moving toward mission-critical layers such as resilient navigation, secure communication, mission payloads, autonomy, software, analytics and system-level design.

C. Enterprise and civil users are moving toward outcomes: Customers increasingly want outcomes from drone operations rather than managing the full complexity of ownership, compliance, piloting, maintenance and data workflows themselves.

D. Form factors and categories will crystallize: As the industry matures, standard platforms, software ecosystems, support models and customer workflows are likely to separate long-term players from short-cycle assemblers.

E. Consolidation creates opportunity: As the industry consolidates, opportunities may emerge to absorb talent, technologies, partners and differentiated capabilities that strengthen a platform-led strategy.

Built for - Capturing Exponential Demand 1. The global drone market is transitioning from hardware-led experimentation to platform-led deployment. Platforms compound: every deployment increases reliability data, reuse, and attach opportunities.

3. Defense remains foundational, but civil & enterprise markets are expected to become increasingly significant over time.

4. Market dynamic: Just like the end of the assembled PC market, long-term players will compete while offering better support, specialize in certain categories of systems, and serve customers with their software ecosystem.

OPERATIONAL HIGHLIGHTS FY 2025-26

Technology and Product Development

® Strengthened resilient navigation and communication systems through in-house development of Controlled Reception Pattern Antenna (CRPA), Visual Positioning System (VPS) and secure communication modules, along with demonstrated EW-resistant capabilities in field conditions

® Introduced Electronic Warfare (EW) capabilities across Intelligence, Surveillance and Reconnaissance (ISR) platforms to enhance mission effectiveness, with EW variants of our UAV platforms advancing toward series production

® Strengthened our innovation pipeline with the launch of our next-generation geospatial intelligence stack, comprising the Q6 V2 GEO mapping UAV, SHODHAM payloads and FLYGHT CLOUD 2.0 platform. This integrated ecosystem enables seamless data capture, processing and analytics, allowing users to convert aerial data into actionable insights across mapping, surveillance and inspection use cases

® Developed multi-UAV swarming capabilities, enabling coordinated and autonomous drone operations

® Progressed development of ZOLT tactical UAV, including successful field evaluations and builds for Prototype Readiness Review

® Continued development of YETI logistics UAV, with integration and testing of the first technology demonstrator and design improvements incorporated into the second

® Enhanced AI capabilities through improved target tracking, object detection and deployment of automated AI tools for ISR data

® Developed a Large Language Model (LLM)-based in context help to support SaaS and DaaS applications, improving user interaction and operational efficiency

® Upgraded FLYGHT Cloud with advanced video analytics, annotation features and real-time insights, along with integration of customer-to-pilot communication for DaaS operations

Orders Received

® Secured order inflow of INR 530 crores. Maintained consistent order inflow from Command Level Emergency Procurement programs and run-rate business, ensuring revenue visibility and continuity

® Successfully passed stringent country of origin checks and electronic warfare (EW) resilience testing and secured INR 137 crores Emergency Procurement (EP) order from the Indian Army for mini-UAVs, along with additional INR 100 crores EP orders for ZOLT and SWITCH V2, contributing to a strong order book

Business Expansion

® Strengthened international presence through participation in global events such as DSEI Japan, Xponential 2025 (USA), Paris Air Show and International Defense and Security Technologies Fair (IDET) (Czech Republic)

® Secured our first order in the U.S. from the Lamar Police Department in Texas to support student safety and trained NATO forces at the U.S. National Test Pilot School

® Demonstrated our products to the U.S. Department of Defense customers in extreme cold weather in Alaska

® Laid the foundation for entry into the Japanese market through a strategic MoU with Digital Media Professionals (DMP) Inc. to develop next-generation AI drones and go-to-market for Japan

® Entered into a strategic collaboration with Himachal Futuristic Communications Limited (HFCL) to expand global reach for advanced UAV solutions

® Partnered with Defense Public Sector Undertakings (DPSUs), govt. labs and private sector players to co-develop advanced combat capabilities and access broader opportunities

® Signed a Memorandum of Understanding (MoU) with Centre for Development of Advanced Computing (CDAC) to integrate UAVs into Indias Emergency Response Network, expanding civil and emergency applications

® Successfully conducted the PRAGYA customer event with focus on geospatial solutions, including the launch of the Q6 V2 GEO platform

2. Key demand drivers:
Area	Capability/ Unlocking Factor
National security modernization initiatives globally.	EW resilience, Swarming, Flocking, Self-healing Manned-unmanned teaming, Secure Supply Chains
Infrastructure monitoring, inspection & automation.	AI & Autonomy On-board compute Diverse Payloads
Urban air mobility and logistics - Low Altitude Economy	Beyond Visual Line of Sight (BVLOS) operations Unmanned Traffic Management (UTM)
Increased use of drones in the non-defense sectors across energy, mining, agriculture, and smart cities.	Increased Customer Awareness & Adoption Technology driving new features and benefits

Operational Implementation and Use Cases

® Deployment of ideaForge UAVs by Indian Army during Operation Sindoor, demonstrating operational-readiness and mission effectiveness in live scenarios

® Deployed UAVs across multiple states for disaster response during recent calamities, supporting real-time monitoring and relief efforts

® Showcased ZOLT and SWITCH UAVs at the Republic Day Parade, reinforcing confidence in indigenous and secure technologies

Certifications, Recognition and Achievements

® SWITCH and Q6 platforms received NATO Stock Numbers (NSN), enabling wider global defense acceptance and interoperability

® Recognized at the ET NOW Machinist Super Shopfloor Awards for excellence in Process Innovation and ESG categories ® Won the Drones Category Award at Wings India 2026

® Recognized as an AI-First Organization at the LinkedIn Learning Talent Awards India 2025

® Awarded AI Pioneer: Learning Champion (Corporate Sector, <1,000 employees) for strong focus on AI-driven learning and capability building

FINANCIAL OVERVIEW

Given the importance of financial metrics in business and overall strategy, this approach further underscores their significance as indicators of our Companys past performance and future growth potential.

FY 2025-26 Consolidated

(INR Million)

Particulars	FY 2025-26	FY 2024-25
Total Revenue	2,261	1,824
EBITDA	271	-315
EBITDA Margin (%)	12%	-20%
Profit Before Tax (PBT)	-199	-624
Tax	-29	-1
Profit After Tax (PAT)	-170	-623
PAT Margin (%)	-8%	-39%
Total Comprehensive Income	-158	-625
Standalone		(INR Million)
Particulars	FY 2025-26	FY 2024-25
Total Revenue	2,268	1,872
EBITDA	373	-216
EBITDA Margin (%)	16%	-13%
Profit Before Tax (PBT)	-97	-524
Tax	-19	-11
Profit After Tax (PAT)	-78	-513
PAT Margin (%)	-3%	-31%
Total Comprehensive Income	-77	-517

Consolidated Performance

During FY 2025-26, our Company reported total revenue of INR 2,261 Million, compared to INR 1,824 Million in FY 2024-25. EBITDA stood at INR 271 against a loss of INR 315 Million in the previous year, with the EBITDA margin at 12% as compared to a contraction of 20% in FY 2024-25. PBT was reported at - INR 199 Million, compared to a loss of INR 624 Million in the previous year, while PAT stood at -170 Million, compared to a loss of INR 623 Million in FY 2024-25. The PAT margin was -8% as against (39%) last year.

Standalone Performance

On a standalone basis, our Company reported total revenue of INR 2,268 Million in FY 2025-26, compared to INR 1,872 Million in FY 2024-25. EBITDA was reported at INR 373 against a loss of INR 216 Million in the previous year, with the EBITDA margin at 16% in FY 2025-26. PBT stood at INR -97 Million, compared to a loss of INR 524 Million last year, while PAT was reported at INR -78 Million, compared to a loss of INR 513 Million in FY 2024-25.

Key Financial Ratios (On Standalone Basis)

Particulars	FY 2025-26	FY 2024-25	% Change	Explanation
Operating Profit Margin (%)	58%	33%	74.34%	Largely due to Product Mix
Net Profit Margin (%)	-3%	-31%	-88.93%	Margins improved which is reflected in net margins, as expenses remained flat
Debtors Turnover Ratio	2.43	3.10	-21.62%	Receivables increased because most sales were recognized in Q4
Current Ratio	2.56	8.59	-70.20%	Short term borrowing increased in Current FY
Inventory Turnover Ratio	0.82	1.18	-29.90%	Inventory increased as of the balance sheet date
Interest Coverage Ratio	-1.21	-21.28	-94.31%	EBIT was improved significantly in current FY, thereby improvement in ICR
Debt Equity Ratio	0.12	-	-	Short term borrowings in the current financial year

BUSINESS OUTLOOK

We at ideaForge are entering an exciting phase of growth and global expansion. Over the past year, we have strengthened our technology, expanded our product portfolio and deepened our partnerships, both in India and internationally. We are confident that our indigenous UAV platforms, such as SWITCH V2, NETRA 5, ZOLT and YETI, will continue to meet the evolving needs of defense, civil and industrial customers. Looking ahead, we plan to execute our open order book, leverage new government initiatives and R&D investments to scale operations and enhance our service offerings, including DaaS and SaaS solutions. Our focus remains on building end-to-end capabilities, from design and manufacturing to deployment, while ensuring security, reliability and performance in diverse terrains and environments. We remain focused on strengthening our position as a leading Indian dual-use UAV company with growing international reach, while delivering long-term value to stakeholders through timely execution, innovation and customer trust.

RISK MANAGEMENT

ideaForge recognizes the importance of effective risk management for maintaining stable, sustainable business operations. Our Company has established a structured framework to systematically identify, assess and manage key business and operational risks in a timely manner. This approach enables the organization to proactively address potential challenges and ensure continuity of its activities. The key risks faced by our Company, along with the corresponding mitigation measures, are outlined below.

RISK	DETAILS	MITIGATION MEASURES
Technology Risk	Our Companys operations rely on sensitive data and advanced technologies for UAV design and product development. Unauthorized access, emerging vulnerabilities, or inability to adapt to evolving technology could compromise our intellectual property and affect competitiveness.	Our Company implements strong identity and access controls, including Privileged Access Management (PAM), Single Sign-On (SSO), Multi-Factor Authentication (MFA) and Role-Based Access Control (RBAC), while enforcing least-privilege access. We continuously invest in Endpoint Detection and Response (EDR), Extended Detection and Response (XDR), Unified Threat Management (UTM), encryption and endpoint hardening and integrate Development, Security and Operations (DevSecOps) practices to ensure security throughout our software development lifecycle.
Data Security Risk	Breach or leakage of sensitive data could damage our reputation, client trust and regulatory compliance.	We classify and label data, encrypt it at rest and in transit and strictly restrict access to authorized personnel.
Vendor/ Third-Party Risk	Dependence on vendors and third- party suppliers for components or services could disrupt production or impact service quality.	We actively monitor vendor assessments, manage contracts, track remediation actions and maintain a strong third-party risk management program to ensure supply chain reliability.
Regulatory/ Compliance Risk	Non-compliance with laws, ISO standards, or Indian regulatory frameworks could lead to legal or financial penalties.	Our Company maintains a comprehensive Information Security Management System (ISMS) aligned with ISO 27001:2022 Annex A controls and Indian regulations, conducts periodic audits and ensures strict adherence to regulatory requirements.
Business Continuity Risk	Disruptions in operations due to system failure, natural events, or unforeseen incidents could impact service delivery and product availability. Gaps in skills or operational awareness could increase security vulnerabilities or operational inefficiencies. Phishing, social engineering, or inadvertent human error could compromise internal security and operations.	We maintain regular data backups, robust disaster recovery (DR) plans and conduct periodic DR drills to validate resilience and operational continuity. Our Company strengthens team capabilities through continuous training, harmonized (ISMS) policies and clearly defined operational standards. We conduct ongoing security awareness programs, phishing simulations and training initiatives to reduce human-factor risks.
Foreign Currency Fluctuation Risk	Importing components and exporting products exposes us to currency exchange risks that could affect cost structure and profitability.	We closely monitor currency movements, utilize hedging strategies when needed, work with banks for competitive rates and use Exchange Earners Foreign Currency (EEFC) accounts to minimize exchange risk.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

At ideaForge, we believe a strong internal control system is key to keeping our financial and operational activities accurate, reliable and compliant. We have put in place a comprehensive framework that aligns with the scale and nature of our operations, supported by clear policies and procedures. This system helps us manage our business smoothly while staying aligned with our strategic goals. Our internal controls cover governance, compliance, audits, reporting and risk management. They help us meet regulatory requirements, reduce the risk of errors or fraud, protect our assets and ensure our financial records are trustworthy. Our internal audit committee regularly reviews these controls and shares any important findings with management, who take corrective action when needed. By continuously monitoring and improving these processes, we maintain transparency, operational discipline and a strong foundation for our long-term growth.

HUMAN RESOURCES

We continue to strengthen our human resource capabilities by focusing on building a strong, future-ready talent base supported by robust learning, engagement and well-being initiatives. During the year, we adopted a targeted talent acquisition approach, hiring specialized professionals in UAV design, embedded systems, avionics and autonomous technologies. We also built a strong talent pipeline through partnerships with leading engineering institutes and by attracting industry experts from the aerospace, robotics and defense sectors. We invested significantly in learning and development through structured technical, behavioral and leadership programs, achieving high participation and enabling continuous upskilling through digital platforms. At the same time, we introduced initiatives such as Individual

Development Plans to support career growth and leadership development for high-potential employees. We remained committed to employee well-being by strengthening health, safety and workplace practices, while promoting an inclusive and engaging work environment through structured engagement programs, recognition initiatives and continuous feedback mechanisms. Our performance management framework ensures alignment of individual goals with organizational priorities, driving accountability, productivity and innovation across our Company. As of March 31, 2026, ideaForge had a workforce of 536 employees.

CAUTIONARY STATEMENT

The Management Discussion and Analysis may include certain statements regarding our Companys objectives, plans, projections, estimates and expectations that may be considered forward-looking statements under applicable laws and regulations. These statements are based on informed judgments and assumptions. However, actual results may differ materially from those expressed or implied due to various risks and uncertainties. These factors include political, technological and economic conditions that influence demand, supply and pricing in both domestic and international markets. They also include changes in government regulations, policies and tax laws. In addition, the availability and pricing of key components, competitive pressures, foreign exchange fluctuations and other related factors may also influence our Companys actual performance and outcomes.