Infonative Solutions Ltd Management Discussions

[Pursuant to Schedule V (B) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015]

The Management Discussion and Analysis Report has been prepared in accordance with the provisions of Regulation 34(2)(e) of the LODR Regulations, read with Schedule V(B) thereto, with a view to provide an analysis of the business and Financial Statements of the Company for F.Y. 2025-26 and should be read in conjunction with Companys financial statements, the Directors report and other information included elsewhere in the Annual Report.

1. forward looking statement:

The report contains forward looking statements, identified by words like plans, will expect, will anticipate, intends, estimates, projects and so on. All statements that address expectations or projections about the future, but not limited to the companys strategy for growth, product development, market position, expenditure and financial results are forward looking statements. They are based on certain assumption and expectation of future events, the company cannot guarantee that these are accurate or will be realized. The companys actual results, performance or achievement could thus differ from those projected in any forward looking statements. The company assumes no responsibility to publicly amend, modify or revise any such statement on the basis of subsequent development, information or events.

2. INDIAN ECONOMY

Indias growth momentum remained resilient through FY 2025-26 despite a turbulent global backdrop marked by geopolitical tensions and evolving trade dynamics. India retained its position as the fastest-growing major economy and, during the year, was confirmed as the worlds fourth-largest economy, having surpassed Japan with nominal GDP crossing the USD 4 trillion mark — placing it behind only the United States, China and Germany.

As per the provisional estimates released by the Ministry of Statistics and Programme Implementation, Indias real GDP grew by 7.7% in FY 2025-26, up from 7.1% in FY 2024-25 (under the revised national accounts series with 2022-23 as the base year). Growth was broad-based — the manufacturing sector expanded in double digits, the services sector (trade, hotels, transport and communication) recorded robust growth, and gross fixed capital formation strengthened, reflecting sustained investment activity and capacity creation.

Monetary policy turned decisively supportive of growth. The Reserve Bank of India reduced the policy repo rate by a cumulative 100 basis points during FY 2025-26 — from 6.25% to 5.25% — as part of a broader easing cycle of 125 basis points that commenced in February 2025, signalling the central banks clear intent to lower borrowing costs, stimulate credit demand and revive economic activity. With headline inflation easing to multi-year lows, the RBI subsequently adopted a neutral stance and held the repo rate steady at 5.25%.

Infrastructure and capital expenditure remained a cornerstone of the Union Governments economic strategy, underpinned by policies aimed at boosting capex, improving logistics and strengthening public infrastructure. Key indicators — including core sector output, bank credit and industrial production — registered healthy expansion through the year.

Outlook: For FY 2026-27, the RBI has projected real GDP growth to moderate to around 6.6%, factoring in global headwinds and monsoon-related uncertainties, even as India is expected to retain its position as the fastest-growing major economy and to remain firmly on its trajectory towards the "Viksit Bharat" vision.

3. sectoral overview

The Indian economy continued to demonstrate resilience during FY 2025-26, recording real GDP growth of 7.7% (as per provisional estimates), supported by robust domestic demand, government-led infrastructure and capital-expenditure initiatives, and the steady adoption of digital technologies across industries. The Governments sustained emphasis on "Digital India," ease of doing business and the "Atmanirbhar Bharat" vision has provided a strong foundation for growth in the technology-enabled services sector.

The Information Technology (IT) and Business Solutions sector, in which Infonative Solutions Limited operates, remains one of the fastest-growing segments of the Indian economy. As per NASSCOMs Annual Strategic Review 2026, Indias technology industry revenue is estimated at approximately USD 315 billion in FY 2026, reflecting a growth of about 6.1% year-on-year, with exports of around USD 246 billion. FY 2026 marked a decisive inflection point for the industry, with Artificial Intelligence (AI) moving from experimentation to function-specific, enterprise-scale deployment — reshaping operating models and accelerating productivity across the sector.

Global clients continue to outsource critical IT and business functions to India, drawn by cost advantages, a deep and skilled talent pool, and an innovation-driven ecosystem. The rapid adoption of Software-as-a-Service (SaaS) platforms, accelerating digital transformation among SMEs, the expanding role of Global Capability Centres (GCCs), and the Governments strong digital infrastructure push continue to create fresh opportunities for solution providers.

Despite these strong drivers, the sector faces challenges in the form of global macroeconomic uncertainty, currency volatility, evolving data-protection and compliance requirements, and a shortage of advanced technology talent. Nevertheless, the medium-to-long-term outlook remains robust, with emerging opportunities in AI-led services, cybersecurity, fintech, e- governance and digital agriculture opening up new verticals.

4. global sectoral overview

The global economy navigated a phase of moderated growth during the year, with the International Monetary Fund (IMF) projecting world GDP growth of around 3.0% in 2026.

Growth has been uneven — geopolitical conflict and trade-related uncertainties have weighed on activity, even as demand-driven momentum in the global technology cycle, led by advances in Artificial Intelligence, has provided a significant offset. The technology and business solutions sector remains at the heart of this transformation, as enterprises worldwide accelerate their digital adoption journeys to improve efficiency, resilience and competitiveness.

Key global trends shaping the sector include:

• Digital Transformation at Scale: Organisations across industries continue to prioritise investments in cloud computing, AI, machine learning, big data and automation. Global spending on digital transformation is expected to exceed USD 3 trillion by 2030, sustaining strong demand for IT and business solutions.

• Rise of SaaS and Platform-based Models: The SaaS ecosystem continues to expand rapidly, providing scalable, subscription-based solutions to enterprises of all sizes, particularly SMEs and mid-market businesses.

• Cybersecurity and Data Protection: With deepening reliance on digital platforms, global end-user spending on information security is projected at around USD 240 billion in 2026, making it one of the most critical sub-sectors within IT.

• Sustainability and Green Tech: Technology companies worldwide are increasingly aligning their strategies with sustainability goals, embedding energy-efficient solutions and green-IT practices into their offerings.

• Talent Dynamics and Outsourcing: Despite economic uncertainty, outsourcing of IT and business processes continues to grow, with India and other emerging markets retaining a competitive advantage through the availability of skilled manpower and cost efficiency.

While opportunities remain abundant, the sector continues to face challenges from inflationary pressures, geopolitical tensions, evolving data-protection regulation and supply-chain disruptions. Global enterprises are therefore adopting a cautious-yet-investment-focused approach to technology spending.

5. review of operations

During the financial year under review, the Company recorded steady growth in its top line, even as profitability moderated on account of higher operating costs. Revenue from operations stood at Rs.2,301.94 Lakhs, registering a growth of 6.21% over the previous years revenue of Rs.2,167.35 Lakhs. Total income, including other income of Rs.161.43 Lakhs, rose to Rs.2,463.36 Lakhs as against Rs.2,218.88 Lakhs in the previous year, reflecting a growth of 11.02%.

Profit after Tax (PAT) for the year stood at Rs.285.49 Lakhs, as against Rs.594.69 Lakhs in the previous financial year, registering a decline of approximately 52.00% year-on-year. The decline in profitability was primarily attributable to a significant increase in employee benefits expenses ( Rs.1,516.85 Lakhs, up from Rs.1,112.86 Lakhs) and other expenses ( Rs.446.96 Lakhs, up from Rs.202.92 Lakhs), together with higher finance costs ( Rs.55.57 Lakhs, up from Rs.32.21 Lakhs) and a prior-period charge of Rs.5.89 Lakhs, partly offset by higher other income and

lower depreciation. Earnings per share (basic and diluted) for the year stood at Rs.2.41, as compared to Rs.6.82 in the previous year.

The consistent growth in revenue reflects the Companys ability to adapt to evolving market dynamics while maintaining a strong customer base and expanding into new opportunities. Your Directors remain optimistic about the Companys long-term prospects and continue to explore avenues for sustainable growth, diversification and value creation for stakeholders. The focus continues to be on strengthening operational capabilities, enhancing customer relationships, leveraging emerging technologies to drive competitive advantage, and pursuing improved cost efficiencies to restore margins.

6. details of significant changes in key financial ratios

In accordance with Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the details of significant changes (i.e. a change of 25% or more as compared to the immediately preceding financial year) in the key financial ratios, along with explanations therefor, are set out below:

Explanations for ratios that changed by 25% or more:

• Debt-Equity Ratio (-50%): The ratio declined primarily on account of a substantial increase in shareholders funds following the issue of fresh equity share capital during the year, which expanded the equity base and more than offset the increase in shortterm borrowings during the year.

• Debt Service Coverage Ratio (-57%): The decline was on account of lower earnings available for debt service, arising from a reduction in profit before interest and taxes owing to higher operating costs during the year.

• Return on Equity / Net Worth (-77%)i The decline resulted from the reduction in profit after tax combined with a significant increase in the average shareholders equity, consequent to the issue of fresh shares during the year.

• Net Capital Turnover Ratio (-138%): The movement is on account of current liabilities exceeding current assets during the year, resulting in negative working capital.

• Net Profit Ratio (-55%): While revenue from operations remained broadly consistent with the previous year, profitability declined owing to a significant increase in operating expenses — primarily employee benefits expenses and other expenses — during the year.

• Return on Capital Employed (-78%): The decline was due to the reduction in operating profit, combined with an increase in capital employed arising from the higher share capital and reserves during the year.

• Return on Investment (-75%): The decline was attributable to the reduction in profit after tax coupled with an increase in the total asset base during the year.

7. internal control systems and their adequacy

Management has put in place effective Internal Control Systems to provide reasonable assurance for

• Safeguarding Assets and their usage.

• Maintenance of Proper Accounting Records, and

• Adequacy and Reliability of the information used for carrying on Business Operations.

Key elements of the Internal Control Systems are as follows:

(I) Existence of Authority Manuals and periodical updating of the same for all Functions.

(ii) Existence of clearly defined organizational structure and authority.

(iii) Existence of corporate policies for Financial Reporting and Accounting.

(v) Existence of Annual Budgets and Long Term Business Plans.

(vi) Existence of Internal Audit System.

(vii) Periodical review of opportunities and risk factors depending on the Global / Domestic Scenario and to undertake measures as may be necessary.

The Company has appointed an Internal Auditor to ensure effective internal controls and better compliance.

Additionally the Audit Committee approves all the audit plans and reports for significant issues raised by the External Auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors.

8. human resource development and industrial relations

Human Resource Development (HRD) is the framework for helping employees develop their personal and organizational skills, knowledge, and abilities. To enrich the skills of employees and enrich their experience, the Company arranges, Practical Training Courses by Internal and External Faculty. The Industrial Relations encompasses the relationship between the management and workmen. IR plays a significant role in todays working scenario where the harmonious relationship between the employers and employees is needed to have an uninterrupted production.

9. CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis and Directors Report describing the Companys strengths, strategies, projections and estimates, are forward-looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Stakeholders are cautioned not to place undue reliance on the forward looking statements.