Magellanic Cloud Ltd Management Discussions

The global economy entered FY2025-26 against a backdrop of persistent geopolitical tensions, evolving trade policies, elevated policy uncertainty and uneven economic recovery across major markets. Following global growth of 3.3% in 2024, the International Monetary Fund (IMF), in its April 2025 World Economic Outlook, projected global growth to moderate to 2.8% in 2025 and 3.0% in 2026, reflecting the anticipated impact of rising trade barriers and heightened uncertainty. The July 2025 update subsequently revised the outlook upward to 3.0% for 2025 and 3.1% for 2026, although downside risks from tariffs, geopolitical tensions and policy uncertainty continued to weigh on the global outlook.

Against this backdrop, technology remained a critical enabler of productivity resilience and long-term competitiveness. Artificial Intelligence (AI) moved beyond experimentation towards broader enterprise adoption, with organizations increasingly integrating AI into core business processes, software development, analytics, automation and customer engagement. At the same time, investments in cloud infrastructure, cybersecurity data platforms, digital engineering and intelligent automation continued to gain strategic importance as enterprises sought to modernize legacy environments, address technology debt and derive greater value from their digital investments. The growing convergence of AI, cloud, data and automation is consequently reshaping technology spending priorities across industries.

India continued to demonstrate strong economic resilience and remained among the worlds fastest-growing major economies. Indias real GDP is estimated to have grown by 7.6% in FY2025-26, compared with 7.1% in FY2024-25, while nominal GDP is estimated to have expanded by 8.6%. Real GVA is estimated to have grown by 7.7% supported by broad-based expansion across the economy. The services sector remained a key contributor to growth, while manufacturing and investment activity continued to strengthen the foundations for sustained economic expansion.

Indias technology ecosystem continued to benefit from this underlying economic momentum and the countrys accelerating digital transformation. Investments in Artificial Intelligence, digital public infrastructure, cloud computing, cybersecurity intelligent surveillance, defence technology, unmanned systems and automation gained increasing strategic relevance. The governments continued emphasis on digitalization, indigenous technology development and defence modernization further expanded the addressable opportunity for domestic technology enterprises. Indias services exports reached a record US421.3billioninFY2025-26comparedwithUS421.3billioninFY2025-26comparedwithUS 387.5 billion in FY2024-25, registering an increase of approximately 8.7%. Telecommunications, computer and information services emerged as the largest contributor, accounting for US$ 206.6 billion, or nearly half of Indias total services exports.

This convergence of macroeconomic resilience, digital transformation and technology-led national priorities created a favorable environment for companies with capabilities spanning emerging and mission-critical technologies. Enterprises and government institutions increasingly sought technology partners capable of delivering not only individual digital solutions, but integrated platforms that enhance operational efficiency, security intelligence and resilience.

Celebrating over 41 years of innovation, Magellanic Cloud is a purpose-driven, publicly listed, global technology services firm. We employ over 1200 experts across the globe to provide services and solutions to our customers, colleagues and communities, enabling them to thrive and prosper in a rapidly evolving world.

The company delivers solutions across intelligent surveillance, digital engineering, drone technology, cloud services, fintech automation, and enterprise IT. Through its subsidiaries - Motivity Labs, Provigil Surveillance, Scandron, IVIS, JNIT Technologies, and Finoux, the Company serves Government organization projects, PSUs, enterprises, and critical infrastructure projects across domestic and international markets.

At Magellanic, we believe AI is a transformative force that will augment human capabilities and pave the way forward for AI-first business models, improve business productivity and enhance operational efficiency. Our 360-degree strategy for AI is focused on three dimensions: operate better by leveraging AI in all internal functions, deliver better with AI-infused managed services for our clients, and change the game by reimagining business with AI-powered industry and cross-industry solutions.

During FY2025-26, the Company strengthened its portfolio by expanding into AI-powered e-surveillance, enterprise AI, digital transformation, Drone ecosystem UCAV technologies, and financial automation. With increasing participation in government infrastructure programs, defence opportunities, and international technology engagements, Magellanic Cloud continues to reinforce its position as a trusted technology partner delivering intelligent, future-ready solutions.

Magellanic Cloud has successfully navigated through multiple technology cycles since its inception, transforming and adapting each time to build relevant new capabilities and helping its clients realize the benefits of that innovative technology. MClouds responsiveness, agility and adaptability to change have been core to its longevity.

The Companys strategy is centered on building AI-first platforms, strengthening proprietary technologies, expanding global operations, and diversifying revenue streams. Magellanic has been broadening and deepening customer relationships by continuously looking for new opportunities and newer areas in their businesses to add value, proactively investing in building capabilities, reskilling its workforce, and launching innovative services, solutions, products, and platforms to address those opportunities.

In the last few years, the Company has been using its investments in research and innovation, emerging technologies, its intellectual property and deep contextual knowledge of the customers business and technology landscape to proactively pitch ideas and solutions designed to improve the clients topline and help drive competitive differentiation.

FY2025-26 presented a favourable yet increasingly competitive environment for Magellanic Cloud, driven by the convergence of Artificial Intelligence, intelligent surveillance, autonomous systems, digital transformation and the growing adoption of technology across critical infrastructure. The Companys diversified presence across these segments provides multiple avenues for growth, while also exposing it to evolving technology cycles, competitive intensity and execution requirements.

AI-powered E-surveillance and security represent a significant opportunity as enterprises, financial institutions, public infrastructure and government organisations increasingly transition from conventional surveillance to AI-enabled monitoring, video analytics and real-time threat detection. Growing requirements for asset protection, perimeter security, theft prevention and operational visibility are creating demand for integrated surveillance solutions. The opportunity is supported by the increasing scale and complexity of physical infrastructure, while the ability to integrate AI, analytics, storage, monitoring and command-and-control capabilities can enable higher-value engagements.

The drone and autonomous systems business offers another structural growth opportunity, particularly with the increasing adoption of unmanned systems across defence, surveillance, logistics, industrial inspection and other mission-critical applications. Indias focus on defence modernisation, indigenous manufacturing and technological self-reliance is creating a favourable environment for domestic drone and autonomous technology providers. The opportunity extends beyond hardware to include autonomy, payloads, command-and-control systems and mission-specific solutions, enabling greater participation across the emerging autonomous technology value chain.

The continued digitisation of enterprises and financial institutions also creates opportunities across enterprise IT, digital engineering and fintech automation. Demand for application modernisation, cloud adoption, cybersecurity, data and analytics, automation and technology-enabled financial processes is expected to remain resilient as organisations seek to improve productivity while modernising legacy technology environments. MClouds presence across multiple technology domains enables it to address these requirements through a broader portfolio rather than dependence on a single technology segment.

At the same time, the Companys businesses operate in rapidly evolving and highly competitive markets. The accelerated pace of AI innovation, shorter technology lifecycles and emergence of new platforms require continuous investment in talent, intellectual property infrastructure and product development.

In surveillance and autonomous systems, competition from established global players as well as emerging domestic technology companies could exert pressure on pricing, product differentiation and market share. In enterprise IT and fintech, changing client requirements, longer sales cycles and increasing expectations around cybersecurity, integration and measurable return on technology investments could influence growth and margins.

The Companys growing exposure to connected digital and physical infrastructure also increases the importance of cybersecurity, data protection, system reliability and regulatory compliance. Any disruption to critical systems, data-security incident or failure to meet evolving regulatory requirements could affect customer trust and business performance. Similarly, drone and defence-related businesses remain subject to regulatory approvals, procurement cycles and evolving government policies, which may influence the timing and scale of opportunities.

Magellanic Clouds diversified business model provides a degree of resilience against volatility in any individual technology segment. Going forward, the Companys ability to convert emerging technology opportunities into scalable offerings, deepen customer relationships, maintain execution discipline and continuously strengthen its technology and talent base will remain critical to sustaining growth and creating long-term value.

Magellanic Cloud responded to the evolving technology landscape by strengthening its diversified technology portfolio, deepening its presence in high-growth and mission-critical segments, and maintaining disciplined execution across business verticals. The Company focused on converting growing demand for AI-led security, intelligent infrastructure and technology-enabled operations into scalable, long-term engagements.

During the year, the Company secured significant AI-powered e-surveillance mandates across Railways valued at ?132.35 crore, Highways valued at ?32 crore, and other critical infrastructure projects aggregating ?70.9 crore. These wins strengthened the Companys order book and expanded its presence across critical infrastructure, while reinforcing the confidence placed by Government organisations and PSUs in its technology and execution capabilities.

The Company also continued to strengthen its capabilities across drone and autonomous systems, enterprise IT, digital engineering and fintech, enabling greater diversification and reducing dependence on any single technology segment. Through strategic partnerships, capability enhancement and investments in emerging technologies, Magellanic Cloud continued to position its businesses to capture opportunities arising from Indias accelerating adoption of AI, automation, intelligent surveillance and indigenous technology.

Pursuant to Regulation 34(3) read with Schedule V (Part B) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, details of significant changes in key financial ratios during FY2025-26 are provided below:

Previous years figures have been regrouped/reclassified wherever necessary.

Operating in a rapidly evolving technology landscape, Magellanic Cloud faces risks arising from technological disruption, cybersecurity threats, evolving regulatory requirements, changing customer expectations, and global macroeconomic uncertainties. The accelerated adoption of AI has transformed the competitive landscape, requiring continuous innovation, investment in emerging technologies, and agile execution.

The Company mitigates these risks through a diversified portfolio spanning AI-powered e-surveillance, digital engineering, drone technologies, fintech automation, and enterprise IT services.

During the year, Magellanic Cloud strengthened its enterprise capabilities through ERP improvements, 24x7 Security Operations Centre (SOC) monitoring, internal audit digitisation, and workforce automation initiatives, enhancing governance, operational efficiency, business continuity, and risk management.

Strong internal controls, cybersecurity frameworks, quality assurance processes, and regulatory compliance continue to support the Companys ability to deliver reliable, secure, and scalable technology solutions while safeguarding stakeholder interests.

The detailed financial performance of the Company for FY2025-26 forms part of the Audited Financial Statements included in this Annual Report.

During FY2025-26, Magellanic Cloud continued to strengthen its operating performance through strategic order wins, expansion across high-growth technology segments and the integration of its diversified subsidiary portfolio. The Companys business momentum was supported by strong traction in e-surveillance, digital engineering and IT services, drone and autonomous systems, and fintech, with key engagements across government, PSU, enterprise and international markets.

The Group also strengthened the technology and governance foundations supporting these verticals during the year. Scanalitix, the Groups unified AI-powered e-surveillance platform, received STQC certification and successfully cleared the OWASP Top 10 assessment, supporting its positioning for government-grade and secure deployments.

On a standalone basis, the Company reported a Total Income of ?10,643.44 lakhs as against INR 8,476.32 lakhs in the previous financial year.

The Total Comprehensive Income for the year stood at ?2,087.86 lakhs as compared to INR 1,350.56 lakhs in FY2024-25.

Supported by a healthy order book, increasing trust from Government organizations and PSUs, expanding international operations, and continued investments in proprietary technology platforms, the management remains confident of sustaining long-term value creation and delivering consistent financial performance.

Magellanic Cloud recognizes its employees as the cornerstone of its growth and innovation. The Company continues to foster a collaborative, inclusive, and performance-driven work environment that promotes continuous learning, leadership development, and employee well-being.

During FY2025-26, the Company strengthened its talent base across AI, digital engineering, cybersecurity cloud technologies, AI-powered e-surveillance, drone technologies, and fintech. Investments in technical upskilling, leadership development, and workforce automation initiatives have enhanced productivity operational agility, and organizational effectiveness.

Industrial relations remained cordial throughout the year, with no material disruptions to business operations. As on March 31, 2026, the Company had 1400+ permanent employees on its rolls.

The Company has established a robust internal control framework commensurate with the size and complexity of its operations to safeguard assets, ensure reliable financial reporting, maintain regulatory compliance, and improve operational efficiency.

During FY2025-26, Magellanic Cloud further strengthened its governance framework through ERP improvements, digitisation of internal audit processes, enhanced Security Operations Centre (SOC) monitoring, and technology-enabled control mechanisms. These initiatives have improved process standardization, risk monitoring, cybersecurity preparedness, compliance oversight, and enterprise-wide decision-making.

The Audit Committee periodically reviews the adequacy and effectiveness of the Companys internal financial controls, risk management systems, and governance practices to ensure continued operational resilience and adherence to the highest standards of corporate governance.

Statements made in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, or predictions may constitute forward-looking statements within the meaning of applicable securities laws and regulations.

Actual results may differ materially from those expressed or implied due to various factors including, but not limited to, changes in economic conditions, government policies, regulatory developments, competitive pressures, technological advancements, geopolitical events, demand fluctuations, and other risks beyond the Companys control.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are advised to exercise due caution while relying on such statements.