Infronics Systems Ltd Management Discussions

(Pursuant to Regulation 34(2)(e) read with para B of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

1. Industry structure and developments

The Company operated in the information technology and software services industry, principally in the provision of SMS-based messaging services to banks through its customer contracts with Bharat Sanchar Nigam Limited (BSNL). Those contracts were concluded during the previous financial year and have not been renewed. The Indian enterprise software and services industry continues to be driven by the growing volume of enterprise data and the increasing automation of business processes across end-use sectors such as banking and financial services, retail, manufacturing, healthcare and transportation. The management believes that these developments continue to present opportunities for a technology services provider, and it is against this background that the management is exploring and researching the development of a technological product with a view to the revival of the Companys business operations.

2. Opportunities and threats

Opportunities: the continuing digitization of enterprise processes; and the opportunity to develop a technology product of the Companys own.

Threats: the absence, at present, of any committed revenue-generating contract; intense local, national and international competition in the technology services segment; adverse changes in Government policy affecting the technology and financial services sectors; general economic slowdown; and the constraints on the Companys operations arising from the matters described under "Risks and concerns" below.

3. Segment-wise or product-wise performance

The Company operated in a single business segment. During the financial year 2025-26, the Company did not record any revenue from operations (previous year: Rs. 228.58 lakhs), the customer contracts with BSNL having been concluded in the previous financial year and not renewed thereafter. Total income for the year comprised other income of Rs. 3.10 lakhs (previous year: Rs. 237.42 lakhs including revenue from operations).

4. Outlook

The management is exploring and researching the development of a technology product, and continues to monitor and evaluate opportunities for the revival or commencement of business operations. The rapid increase in the volume of enterprise data and the growing automation of business processes across several end-use industries are expected to drive demand for business software and services. The Companys outlook for the near term is, however, subject to the resolution of the matters described under "Risks and concerns" below.

5. Risks and concerns

The following are the principal risks and concerns as at the date of this report:

(a) Absence of active operations: the Company has had no active revenue-generating business operations since the conclusion of the BSNL contracts, and consequently no committed revenue stream.

(b) Restrictions on bank accounts: three of the Companys bank accounts are subject to debit restrictions/freeze in connection with ongoing legal proceedings involving the Directors, the Chief Financial Officer and the Promoters of the Company, which constrains the Companys ability to operate its accounts in the ordinary course.

(c) Disputed claim and related criminal proceedings: the Company received a demand notice dated July 11, 2025 from M/s. Mudunuru Limited claimed Rs. 1,205.24 lakhs, comprising principal of Rs. 860.30 lakhs and interest of Rs. 344.94 lakhs, purportedly towards alleged services. The Company disputed the claim by its response dated July 21, 2025, and on the basis of a legal opinion dated August 13, 2025, has not recognised any provision in respect thereof; the matter has been disclosed as a contingent liability. Criminal proceedings connected with the said commercial dispute have also been initiated, against the Promoter, Directors and CFO in respect of which the Honble Principal Sessions Court, Visakhapatnam, granted anticipatory bail by its orders dated February 09, 2026. These matters are more particularly described in Item No. 44 of the Boards Report.

(d) Disclaimer of Opinion: The Statutory Auditors have issued a Disclaimer of Opinion on the financial statements for the financial year ended March 31, 2026 considering the matter in (a) to (c).

(e) The Boards response to above risk and concern forming the basis of that Disclaimer is set out in Item No. 23 of the Boards Report, and the Boards assessment of the going concern basis is set out in Item No. 46 thereof.

(f) Policy and economic risk: any adverse change in the policies of the Government, or a general economic slowdown, may further adversely affect the Companys prospects.

6. Internal control systems and their adequacy

The Company has an internal control system commensurate with the size and nature of its present operations, designed to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition and that all transactions are authorised, recorded and reported correctly. M/s. N R G and Co., Chartered Accountants, are the Internal Auditors of the Company. The Audit Committee reviews the adequacy of the internal control system and the internal audit findings at its meetings.

7. Risk management system

The Company manages its business risks through compliance and internal control systems commensurate with the size and nature of its operations. The Board periodically reviews the risks to which the Company is exposed, including those set out under "Risks and concerns" above, and the steps taken or proposed to be taken to address them. The Company is not required to constitute a Risk Management Committee under Regulation 21 of the Listing Regulations.

8. Discussion on financial performance with respect to operational performance

(Rs. in lakhs)

9. Details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios, with explanations

10. Details of any change in return on net worth as compared to the immediately previous financial year

The net worth of the Company as at March 31, 2026 stood at Rs. 260.14 lakhs as against Rs. 334.70 lakhs as at March 31, 2025, a decrease of Rs. 74.56 lakhs, i.e. approximately 22.27%. The decrease is attributable entirely to the loss after tax of Rs. 74.56 lakhs incurred during the financial year 2025-26. The Return on Equity for the financial year 2025-26 was (28.66%) as against 33.58% for the financial year 2024-25, for the reasons explained in the table above.

11. Material developments in human resources / industrial relations, including number of people employed

The Company considers the quality of its human resources to be among its most important assets and endeavours to attract and retain the best available talent. The total number of employees on the rolls of the Company as at March 31, 2026 was 2 (two); 3 (three) persons were on the rolls of the Company at various times during the financial year 2025-26.

12. Accounting treatment

The financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013, and there has been no deviation from the treatment prescribed therein. The significant accounting policies adopted by the Company, which have been applied consistently, are set out in the notes to the financial statements, and are annexed to this Annual Report.

13. Cautionary statement

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be "forward-looking statements" within the meaning of applicable laws and regulations. They reflect the present intention of the management and do not constitute any commitment, assurance or representation as to the outcome or the timing thereof. Actual results may differ materially from those expressed or implied, depending on economic conditions, Government policies and other incidental factors which are beyond the control of the Company.