Innovana Thinklabs Ltd Management Discussions

The Management Discussion and Analysis Report (MDAR) serves as a direct communication from the management of Innovana Thinklabs Limited to its esteemed shareholders, providing valuable insights into the prevailing business environment and the future prospects of the Company. This Report presents a comprehensive overview of the Companys objectives, strategies, industry outlook, predictions, and forward-looking statements, thereby enabling stakeholders to understand the overall direction and performance of the business. Being an integral part of the Boards Report, the MDAR covers aspects relating to industry structure and developments, opportunities and threats, outlook, risks and concerns, internal control systems and their adequacy, as well as material developments in human resources and industrial relations.

The financial statements of Innovana Thinklabs Limited are prepared in accordance with the Indian Accounting Standards (Ind AS), notified under Section 133 of the Companies Act, 2013 ("the Act"), read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and the relevant amendment rules issued thereafter. The financial statements have been prepared under the historical cost convention on an accrual basis, except for certain financial instruments that are measured at fair value, and are also in compliance with the guidelines issued by the Securities and Exchange Board of India (SEBI).

The vision of Innovana Thinklabs Limited is to be the preferred technology partner across the globe, delivering innovative digital solutions and software products that enhance customer experiences and create long-term value for all stakeholders. The Companys values and guiding principles are deeply embedded in its culture and are reflected in all activities undertaken. These principles revolve around seven key aspects - Customer Satisfaction, Innovation, Quality Products and Services, Employee Growth, Culture, Responsibility towards Society, and Environmental Protection. Together, they form the foundation of the organizations growth, ensuring excellence in offerings, fostering a collaborative work environment, empowering employees, contributing to community development, and committing to sustainability. These guiding principles have evolved into the culture of the Company, ensuring that both internal and external stakeholders remain satisfied while the business continues its journey of sustainable growth.

The global economy in the financial year 2025-26 witnessed a blend of cautious optimism and continued resilience despite persistent trade-related uncertainty. A notable development has been the gradual moderation of inflation across major economies, providing relief after a prolonged period of elevated price pressures. This easing trend, aided by stabilizing commodity prices and improved supply chain efficiencies, enabled several central banks in advanced economies to begin easing monetary policy during the year. The more predictable inflation trajectory contributed to stabilizing financial markets and laid a steady foundation for gradual and sustainable economic recovery.

However, the progress of the global economy during the year was overshadowed by renewed geopolitical and trade tensions, particularly between the United States and China, along with sharply higher U.S. tariffs

imposed during 2025 that reset several global trade relationships. Monetary policy, with a continued focus on interest rate adjustments in advanced economies, remained a key determinant of financial conditions. Emerging markets reflected a mixed performance, influenced by commodity price movements and debt-related vulnerabilities. Persistent trade tensions and supply chain disruptions strained global commerce and investment flows, while a rapid surge in artificial intelligence-related investment provided an offsetting tailwind to global growth.

For the global technology sector, including Innovana Thinklabs Limited, these macroeconomic challenges coincided with transformative opportunities in Artificial Intelligence (AI), renewable energy adoption, and digital innovation. While these trends offer significant productivity gains and new business avenues, they also bring challenges in terms of workforce readiness, cybersecurity concerns, and the need for accelerated innovation cycles. According to the International Monetary Funds WORLD ECONOMIC OUTLOOK (October 2025), global GDP growth was projected to slow from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026, with advanced economies growing around 1.5% and emerging market and developing economies just above 4%, reflecting the continuing impact of elevated trade tensions (IMF WEO, April 2025) .

Additionally, elevated U.S. tariff rates through 2025 reset several global trade relationships and created uncertainty for cross-border operations, weighing on business confidence in certain sectors even as overall global activity proved more resilient than initially feared. The World Bank estimates that global growth averaged 2.7% in 2025, supported by front-loaded trade, easier financial conditions and a surge in AI-related investment, and projects growth to ease to 2.6% in 2026 as these supportive factors fade, with downside risks continuing to weigh on the outlook (World Bank Global Economic Prospects, 2025) .

India remained the worlds fastest-growing major economy in FY 2025-26, demonstrating strong resilience amidst global uncertainties. According to provisional estimates released by the Ministry of Statistics and Programme Implementation (MoSPI), Indias real GDP growth for FY 2025-26 is estimated at approximately 7.7%, well above the Reserve Bank of Indias initial projection of 6.5%, driven by robust manufacturing and services sector expansion, resilient private consumption, and continued government capital expenditure (RBI Monetary Policy Report, April 2025, Union Budget 2025-26, Ministry of Finance). Headline inflation remained benign through the year, aided by stable food and energy prices and a normal monsoon, though supply-side risks such as climate variability and global commodity volatility remain a concern (IMF WEO, April 2025) .

The global IT industry also witnessed significant developments in FY 2025-26. While geopolitical uncertainties and trade restrictions weighed on business confidence at times during the year, enterprises worldwide continued to accelerate digital transformation and AI adoption to enhance efficiency, resilience, and competitiveness. According to Gartner, worldwide IT spending is expected to reach USD 6.31 trillion in 2026, up 13.5% from 2025, driven by sustained investment in AI infrastructure, cloud-based solutions, software and data-centre systems (Gartner, April 2026).

The global Information Technology (IT) and Software industry continues to demonstrate robust growth despite prevailing global uncertainties. According to Gartner, worldwide IT spending is projected to reach USD 6.31 trillion in 2026, up 13.5% year-on-year, driven by accelerating investments in Artificial Intelligence (AI) infrastructure, Cloud Computing, Cybersecurity, and Software-as-a-Service (SaaS) models (Gartner IT Spending Forecast, April 2026). The Asia-Pacific region remains among the fastest-growing markets, supported by rising internet penetration, increasing enterprise digital adoption, and government-led digital transformation initiatives.

India has reinforced its position as a global technology hub. According to NASSCOM Strategic Review 2026, the Indian technology industry crossed USD 300 billion in revenues in FY 2025-26 and is estimated to reach USD 315 billion, up from a revised USD 297 billion in FY 2024-25, with the sectors workforce continuing to expand past 5.8 million professionals (NASSCOM Strategic Review, 2026). The industrys growth is being fuelled by the rapid adoption of Agentic AI platforms, data analytics, cybersecurity solutions, and cloud technologies, as well as strong demand from e-commerce, fintech, , and edtech sectors.

Domestically, the governments initiatives such as Digital India, Startup India, and the Production Linked Incentive (PLI) scheme for IT hardware continue to create an enabling ecosystem for technology companies. Indias real GDP is estimated to have grown at approximately 7.7% in FY 2025-26, among the highest for major economies globally, providing a strong backdrop for the continued expansion of the IT industry (MoSPI Provisional Estimates, June 2026).

For Innovana Thinklabs Limited, this environment presents significant opportunities. The global demand for system optimization tools, user-friendly software, and subscription-based digital solutions aligns with the Companys product portfolio and strategic direction. With innovation at its core, Innovana is focusing on expanding its global footprint, strengthening its suite of software and digital advertising solutions, and leveraging opportunities in AI-driven applications and cloud-enabled platforms.

Looking ahead, the Company remains confident of sustaining growth momentum by capitalizing on digital adoption trends, strengthening customer-centric innovations, and mitigating risks arising from cybersecurity threats, regulatory changes, and global trade uncertainties. With its strong technological capabilities, focus on quality, and expanding international presence, Innovana Thinklabs Limited is well- positioned to deliver long-term sustainable value to all stakeholders.

The global IT and software industry is undergoing rapid transformation, driven by accelerating digital adoption, advancements in Artificial Intelligence (AI), Cybersecurity, Cloud Computing, and Data Analytics. India, as one of the leading IT hubs, is strategically positioned to benefit from these developments. According to NASSCOM, Indias IT-BPM industry revenues are projected to cross USD 270 billion in FY 2024-25, supported by strong export demand, rising domestic digital consumption, and government-backed initiatives such as Digital India and Startup India. This favorable landscape presents significant opportunities for software product and digital solution providers like Innovana Thinklabs Limited.

At the same time, the sector faces challenges stemming from global macroeconomic volatility, foreign exchange fluctuations, regulatory changes in international markets, cybersecurity risks, and intensifying competition. Companies must continue to innovate, optimize costs, and diversify their portfolios to maintain competitiveness in this dynamic environment.

Opportunities

• Rapid digital transformation across industries

• Expansion of cloud computing services

• Growth in artificial intelligence and machine learning

• Increasing integration of IoT (Internet of Things)

• Rising demand for cybersecurity solutions

• Global expansion and outsourcing opportunities

• Growth of e-commerce and fintech industries Threats

• Rapid technological advancements leading to obsolescence

• Intense competition in the global market

• Cybersecurity threats and data breaches

• Regulatory changes and compliance requirements

• Shortage of skilled IT professionals

• Fluctuations in foreign exchange rates affecting global operations

• Intellectual property theft and piracy risks

Pursuant to Schedule V(B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, set out below are the Companys key financial ratios for FY 2025-26, together with the immediately preceding years figures. Any change of 25% or more, including in Return on Net Worth, is explained below.

Debt Service Coverage Ratio: 7.25 times (FY 2025-26: 7.50 times) — decreased by 3.32%.

Current Ratio: 4.69 times (FY 2024-25: 3.17 times) — increased by 48.05%, primarily due to an increase in current assets, particularly trade receivables, loans and other financial assets, while current liabilities remained relatively stable.

Debt-Equity Ratio: 0.03 times (FY 2024-25: 0.03 times).

Return on Equity / Return on Net Worth: 20.49% (FY 2024-25: 25.04%) — decreased by 18.16%. Net Profit Margin: 69.75% (FY 2024-25: 68.35%) — increased by 2.06%.

Return on Capital Employed: 24.30% (FY 2024-25: 29.67%) — decreased by 18.12%.

The Company operates in a dynamic and continuously evolving business environment, both within India and globally, which necessitates ongoing identification, assessment and monitoring of risk. In an increasingly competitive and interconnected global economy, no enterprise can operate entirely free of risk; the Companys approach is therefore to identify emerging risks early and build resilience into its operations and strategy.

The Company proactively identifies and monitors risks and takes steps to mitigate those that could materially affect its operations. The Board of Directors and Senior Management continuously and carefully monitor risks and concerns relevant to the business, including macroeconomic factors, foreign exchange fluctuations, geographical concentration of revenues, changes in Government policies and legislation, cybersecurity threats, and wage inflation and attrition of skilled talent. The Company has also taken appropriate insurance cover to mitigate other operational risks.

The Company maintains a robust internal control system, supported by properly documented policies, procedures, and controls, to ensure consistency, clarity, and visibility of controls to relevant personnel and external stakeholders. These controls are designed to provide reasonable assurance with regard to the recording and reporting of reliable financial and operational information, compliance with applicable statutes, safeguarding of assets against unauthorized use, execution of transactions with proper authorization, and adherence to corporate policies. The Company adopts a comprehensive approach covering segregation of duties, authorization processes, physical safeguards, IT controls, risk management, documentation, and compliance, all of which are crucial to the effective implementation of internal controls across the organization.

The Companys outlook remains positive as it strives to lead in software and application development in the years ahead. Innovana Thinklabs Limited is committed to staying at the forefront of technological advancement and to creating unique solutions for its customers. The Company anticipates a significant rise in the adoption of emerging technologies such as artificial intelligence, presenting opportunities to develop highly customized and transformative software solutions for its customers.

Apart from economic fluctuations, rising demand for IT personnel leading to higher recruitment costs, and growing competition, the Company does not foresee any major risks or concerns. With appropriate risk-mitigation strategies and measures in place, supported by robust business plans and review mechanisms, the Company expects to maintain a stable standing in the market.

The Company places great importance on the development of its human resources, recognizing that continuous learning and growth are crucial for both individual employees and the organizations overall success. It offers a wide range of training programs to enhance employees technical skills, leadership abilities, and professional development, designed to address both immediate and future needs and updated regularly to keep pace with evolving industry trends. Employees also have access to learning resources such as online courses, webinars, and conferences, and are encouraged to stay abreast of the latest industry trends and technologies to excel in their respective roles. A robust performance management system, comprising regular feedback, goal setting, and performance evaluations, helps employees identify areas for growth and provides them with the support and resources needed to reach their full potential.

Statements in this Management Discussion and Analysis and the Directors Report describing the Companys strengths, objectives, strategies, projections and estimates are forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied, depending on various factors such as government policies, changes in laws and regulations, economic conditions, and other incidental factors. Important factors that could affect the Companys operations include cyclical demand and pricing in its principal markets, changes in government regulations and tax regimes, wage and talent cost inflation, cybersecurity risks, economic developments within India and in the other countries in which the Company operates, and other incidental factors. Management shall not be held responsible for any action taken based on such statements.