ITI Ltd Management Discussions

i. Telecom and Electronic Industry Stru cture

As of early 2026, the Indian telecom industry maintains its position as the second-largest globally, with a total subscriber base exceeding 1.32 billion and an overall tele-density of approximately 92.66%. The sectors growth is sustained by a robust digital ecosystem, where over 1.05 billion broadband subscribers are driving average monthly data consumption to new heights. While urban tele-density has surged past 150%, the focus remains on closing the connectivity gap in rural regions, where tele-density stands at approximately 60%. This expansion is bolstered by a conducive regulatory environment and aggressive capital infusion into public sector networks, ensuring that India remains at the center of global digital transformation. ITI Limited is deeply embedded in these national efforts, serving as a primary execution partner for critical infrastructure. Under the Amended BharatNet Programme, we are actively delivering high-speed, fiber-to-the-home (FTTH) connectivity across diverse terrains in Himachal Pradesh, West Bengal, the Andaman & Nicobar Islands, and the North Eastern states. Our commitment to national security and self-reliance is further reflected in our large-scale production of indigenous 4G radio access network (RAN) equipment. With over 96,000 home-grown 4G sites already operational nationwide, ITI is at the heart of the BSNL network modernization, leveraging technology transfers from C-DOT to scale indigenous hardware deployment while actively exploring export prospects for our developed telecom stack. Beyond traditional telecom, we are playing a vital role in enhancing national safety infrastructure, specifically through our involvement in the Indian Railways "Kavach" (Automatic Train Protection System) rollout. As the deployment of Kavach 4.0 accelerates across high-density corridors, ITI is providing essential in-house manufactured infrastructure, including 4G LTE and advanced optical fiber systems, to support the vision of a collision-free rail network. To meet the high demand for fiber optics generated by these rail, defence, and BharatNet projects, we are currently in the process of upgrading our Optical Fiber Cable (OFC) manufacturing capabilities to ensure we remain a competitive and reliable supplier in this high-growth segment. Simultaneously, we are executing a major strategic pivot into renewable energy to support Indias target of 280 GW of installed solar capacity by 2030. Our Naini facility is undergoing a significant transformation; we have initiated a tender to establish an automated solar photovoltaic (PV) module manufacturing line, with options to scale capacity from 100 MW up to 500 MW, including a buy-back provision for our legacy 18 MW line. This transition not only diversifies our revenue streams but also helps build a localized, high-efficiency solar supply chain, contributing directly to domestic job creation and the broader national energy transition. We acknowledge that the rapid pace of digital deployment presents operational hurdles, particularly in the sourcing of semiconductor ICs and critical electronic components. To manage these logistical complexities, ITI has adopted a proactive, multi-layered approach. We are intensifying government-level engagement to resolve supply chain bottlenecks, while simultaneously collaborating with technology partners like C-DOT on product redesigns and diversified sourcing strategies to shorten procurement cycles. We are also advocating for policy support to ensure that our secure, locally-encapsulated hardware solutions are fully recognized under national incentive schemes, thereby strengthening the resilience and sovereignty of Indias digital infrastructure.

In spite of best efforts, ITI faced difficulties in delivering some of the products and systems, as per timelines, due to non-receipt of components, modules, assemblies etc, involving Semiconductor ICs both from Indian and foreign sources, as per the committed delivery timelines. Meetings at Govt level are being planned with these chip manufacturers to shorten these logistic delays.

However, ITI is taking necessary actions like alternate sourcing/ redesign co-ordination with Technology partner like C-DOT and proactive sourcing to shorten the procurement cycle time to manage the semiconductor shortage/delays.

ii. Opportunities and Threats

Opportunities:

The Indian market is undergoing a structural shift, evolving into a premier R&D and manufacturing hub for global enterprises. The emergence of disruptive technologies—including 5G/6G, Satellite Broadband, Drones, IoT, and Medical Electronics—coupled with the nations drive toward an innovation-led economy, provides a robust landscape for growth.

• Policy Support & Indigenization: The AatmaNirbhar Bharat Abhiyan playing a pivotal in driving local production. Government allocations for Electronic Components Manufacturing Schemes (ECMS), including significant funding for semiconductor assembly, testing, and packaging (ATP), provide a strategic entry point for ITI into the chip ecosystem.

• Design-Led Manufacturing: The Governments Production Linked Incentive (PLI) schemes and strict Public Procurement policies favouring "Make in India" continue to provide a sustainable competitive advantage in the telecom product and services domain.

• Infrastructure Modernization: Large-scale national projects such as the implementation of BharatNet Phase-III, the modernization of Defence (ASCON Phase-IV), Railway networks, and the expansion of BSNLs 4G/5G RAN footprint remain core pillars for growth.

• Emerging Market Verticals: With the global 5G market projected to reach record valuations by 2026, the demand for High-Capacity Backhauls, E/V Band radios, and indigenous power solutions (Home-grown power supplies and inverters) is accelerating. Furthermore, the space electronics market and the push for green energy—specifically solar-based power for RAN sites and EV infrastructure—offer significant diversification opportunities.

• Strategic Execution Model: Our proactive approach of executing Proof of Concept (PoC) followed by Technology Transfer (ToT) is proving successful in rapid product acquisition and market entry.

• Addressing the Import Gap: The significant disparity between local demand and supply represents a massive opportunity to enhance the manufacturing index within Indias electronics hardware and software divisions.

Current specific opportunities for ITI include:

1. Expansion of manufacturing under Make-In-India and Atmanirbhar Bharat initiatives.

2. Execution of BharatNet Phase-III for nation-wide rural high-speed broadband.

3. Meeting the escalating security and connectivity needs of the Defence and Telecom sectors.

4. Implementation of the ASCON Phase-IV project.

5. Strategic pivot toward alternate energy, including Solar and EV-related electronics.

6. Capitalizing on the opening of the Space Electronics market.

7. Modernization of critical communication networks for BSNL, Railways, and Defence.

8. Targeting growth in Smart City, Data Centre, Cybersecurity, and Energy Storage sectors.

9. Maximizing benefits from the PLI scheme and national indigenization mandates.

Threats:

The Indian electronics and telecommunications industry is characterized by a hyper-competitive environment where rapid technological shifts, supply chain volatility, and evolving regulatory landscapes present continuous challenges. The Company identifies the following primary threats to its business environment:

1. The rapid pace of innovation—particularly in 5G, AI-integrated edge computing, and semiconductor architecture—shortens product lifecycles significantly. This creates a risk where current network elements and infrastructure investments may become obsolete faster than their planned depreciation cycle, requiring continuous and costly R&D reinvestment.

2. The domestic market is experiencing a surge in competition from aggressive private players, global OEMs, and their local joint ventures. This exerts downward pressure on project margins and challenges the Companys market share in traditional telecom and electronics segments.

3. Structural risks in the sourcing of critical high-tech components, such as advanced logic and memory chips. Compressed component lifecycles, combined with global geopolitical uncertainties and "hidden" obsolescence (where parts are discontinued without adequate notice), can cause production delays and impact long-term maintenance commitments.

4. The evolving policy landscape, while supportive of Make-in-India, also introduces dynamic changes to market access, tariff structures, and incentive programs (such as PLI). Any policy pivot that disproportionately favours private-sector participation in strategic national projects could alter our competitive standing.

5. Obsolescence of existing network elements and rapid changing technology.

6. Policy interventions favouring Private Sector

7. Stringent public sector procedural requirements that may impact speed-to-market compared to private sector counterparts.

8. Global Supply Chain Volatility: Risks associated with the sourcing of critical semiconductors and high-tech components.

9. Policy Shifts: Sensitivity to evolving government policy interventions that may favour private-sector participation in strategic segments.

iii. Strengths and Weaknesses Strengths:

• Legacy and National Footprint: Over seven decades of expertise in electronic manufacturing and turnkey solution delivery for critical national networks.

• Infrastructure Excellence: State-of-the-art manufacturing facilities across five locations (Bengaluru, Palakkad, Raebareli, Mankapur and Naini) supported by a robust Pan-India marketing and service network.

• Proven Execution Capabilities: Unmatched experience in end-to-end execution of mega-scale projects (e.g., BharatNet, ASCON, Defence strategic networks) even in the most challenging terrains.

• Advanced R&D and Domain Expertise: Strong in-house R&D capabilities focused on secure communication and encryption technologies, complemented by a highly skilled workforce.

• Quality & Compliance Hub: NABL-accredited EMI/EMC testing labs and Tier-III Data Center infrastructure providing comprehensive security, cloud, and compliance services.

• Customer Trust: A loyal, long-standing client base, particularly within the Defence, Railway, and Government sectors.

Weakness:

• Vulnerabilities in the global supply chain, specifically extended lead times for critical semiconductors and high-tech components, which hinder rapid deployment.

• Tight project margins resulting from intense market competition.

• Increased difficulty in price competitiveness for commoditized electronic products due to the scale-based cost advantages of global private players.

• Fewer Intellectual Property (IP), acts as a barrier to the growth.

• High working capital requirement due to change in Business Model to DBOM (Design, Build, Operate and Maintain) / Deferred payment

iv. Future Outlook

The Order Book of the Company stands at approximately Rs. 18,637 Cr, including Advance Purchase Orders, as on 31.03.2026. The Company is strongly focusing on manufacturing as its core strength and plans to undertake turnkey projects as a System Integrator (SI) to enhance value addition and margins. On the defence front, the Company is successfully executing the prestigious Phase-IV of the Army Static Switched Communication Network (ASCON) project. As part of nation-building initiatives, the Company has completed the BSNL order for Planning, Engineering, Supply, Installation & Commissioning and AMC of 4G Mobile Network for 23,633 sites in the West Zone. Further, the Company has received an additional order 5314 sites and 2299 DBN site in the west zone from BSNL for 4G RAN Execution.

The Company will continue to work closely with C-DOT, premier academic & research institutions and progressive technology partners for development of new products and systems in emerging technologies. During FY 2025-26, the Company has manufactured new telecom and allied products like 4G RAN, G-PON, OFC, HDPE Duct, Laptops, Personal Computers and Solar panel products. The Company is working on development of new products such as Electronic Voting Machine (EVM) & Voter Verifiable Paper Audit Trail (VVPAT), Digital Mobile Radio (DMR), Compact TESD (Terminal End Secrecy Device) and Software Defined Radios. The Company has executing BharatNet Phase-III projects for Himachal Pradesh, West Bengal & Andaman & Nicobar Islands, Arunachal Pradesh, Nagaland and Manipur. Major thrust has been given for manufacturing of encrypted telecommunication equipment for the defence sector. Products like Smart Energy Meters, Unlicensed Band Radio (UBR), High Capacity Radio Relay (HCRR), Captive 4G/5G Network Systems, Solar Products including Solar Street Lights, Solar Power Plants with Solar Inverters & Smart Poles, and Leak Testers are being considered for manufacturing during FY 2026-27. The Company plans to enter into manufacturing of new products like Mono-crystalline Solar Cells, SD-WAN, EVMs and will continue to focus on Contract Manufacturing as a key growth area. The Company is continuously pursuing opportunities to expand business by acquiring new customers in existing and new geographies. Business models like OPEX, Service Model and Government Owned Company Operated (GOCO) will be pursued to improve revenue margins. Currently, the international presence is limited; however, the Company has strategized to set up marketing offices and collaborate with other Indian companies and local partners to increase business opportunities in South East Asia, Middle East and Africa. While opportunities are abundant, we also anticipate challenges due to intense competition, geopolitical situations, changing policy & regulatory landscapes, emerging technologies and evolving customer expectations. The Company remains focused on increasing business volume and is geared up to accept new challenging assignments in the future.

Risk Management:

The Enterprise Risk Management (ERM) framework implemented as part of Governance, Risk Management and Compliance (GRC) in the Company is based on global best practices in Risk Management as covered by ISO 31000:2018 and IEC 31010:2019 and has enabled the Company to fully integrate the risk management into its normal business operations.

The Companys ERM policy framework is a structured process that involves:

• Identifying all external and internal risk-factors.

• Assessing the impact of these risks on the organizations business and financial targets.

• Prioritizing the identified risk-factors.

• Exploring various alternatives for treating these risks.

• Implementing controls and monitoring mechanisms for managing the risks.

ERM is an ongoing and dynamic process that requires iteration and adaptation to changing circumstances. The Companys ERM Manual is a well-structured framework having four layers of governance structure namely :

• Level-1: URMC (Unit Level Risk Management Committee)

• Level-2: ERMSC (ERM Steering Committee)

• Level-3: ERMGC (Enterprise Risk Management Governing Committee) or RMC (Risk Management Committee)

• Level-4: Risk Management Committee at Board Level.

These Committees are responsible for monitoring the policy implementation across all the Units by following approved ERM Process, ERM Governance Structure, Roles and Responsibilities of the relevant stakeholders, formation of Risk Registers, and providing their continuous contribution to the operation of ERM in all the Units of Company.

The establishment and maintenance of the ERM framework is facilitating effective decision making process at different levels of the Company. The Risk Register maintained by the Company includes standalone risks identified for the Corporate as well as any significant risks from the Units that merit attention of the Corporate, which will regularly be presented and reviewed by the Task Force Committee.

All the Units submit and update ERM Risk Register to the ERM Steering Committee (ERMSC). As part of the policy operation ERMSC has conducted monthly risk management review meetings on 29th April 2025, 20th May 2025, 24th June 2025, 22nd July 2025, 26th August 2025, 30th September 2025, 28th October 2025, 25th November 2025, 30th December 2025, 29th January 2026, 24th February 2026 and 26th March 2026 with all the Units (URMC). Also the Risk Management Committee meeting was held on 18th March 2026 to approve cyber security policy of the company.

As framed in the ERM Manual, Risk Management activities will be carried out on an ongoing basis as part of the routine business operations.

Internal Control Measures

The Company has put in place an internal control framework commensurate with the nature, size and complexity of its business operations. The internal control systems are designed to support effective and efficient operations, ensure adherence to the Companys established policies and procedures, and provide reasonable assurance regarding the adequacy of internal financial controls with reference to the Financial Statements.

The Internal Audit Department, functioning at the Corporate Office and various Units of the Company, carries out reviews of compliance with the Companys policies, procedures and prescribed internal controls. The Department, in coordination with the concerned Units and Divisions, ensures appropriate coverage of significant areas of operations through its internal audit activities.

Based on the reviews undertaken, the Companys internal financial controls with reference to the Financial Statements are considered adequate and commensurate with the nature and scale of its operations.

	For & on Behalf of Board
	Rajesh Rai
Place: Bengaluru	Chairman & Managing Director
Date : 09th October 2026	DIN: 10052045