Melstar Information Technologies Ltd Management Discussions

The Management Discussion and Analysis ("MD&A") Report provides an overview of the business environment, industry developments, operational and financial performance, opportunities, risks, and future outlook of Melstar Information Technologies Limited ("Melstar" or "the Company") for the financial year ended March 31, 2026. The report should be read in conjunction with the Companys Audited Financial Statements and the Notes thereto forming part of the Annual Report.

The statements contained in this report describe the Companys objectives, projections, estimates, expectations and predictions, which 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 changes in economic conditions, government policies, regulatory developments, competitive environment, technological advancements, business risks and other factors beyond the control of the Company.

1. Company Overview

Melstar Information Technologies Limited (Melstarr) is a Mumbai-based public IT services company, founded in 1986. Initially focused on hardware trading, the company transitioned to software development in 1998 and was listed on the Bombay Stock Exchange in 2000. The Company has a blue-chip customer base across the world including major global retail brands, importers, private labels and a large domestic clientele.

In accordance with an application made by Nityo Infotech Services Pvt Ltd, th e Honble National Company Law Tribunal, Mumbai bench (“Adjudicating Authority”), vide its order dated 03.10.2019 had ordered the commencement of the Corporate Insolvency Resolution (“CIR”) process in respect of the corporate debtor, i.e., Melstar Informat ion Technologies Limited (“Melstarr”) under the provisions of the Insolvency and Bankruptcy Code, 2016 (the “Code”). An Interim Resolution Professional (“IRP”) was appointed to manage the affairs of the Company who was later confirmed to be the Resolution Professional (“RP”). Upon appointment of the IRP / RP, the powers of the Board of Directors stood suspended.

Pursuant to its order dated November 01, 2023 (“NCLT Order”), the Adjudicating Authority approved the Resolution Plan (“Approved Resolution Plan”) submitted by Shivasons Solutions India Pvt Ltd (“Resolution Applicants”) for the Company under Section 31 (1) of the Code. In accordance with the provisions of the Code and the NCLT order, the Approved Resolution Plan is binding on the corporate debtor and its employees, members, creditors, guarantors and other stakeholders involved in the resolution plan.

As per the Approved Resolution Plan, during the period between the NCLT Approval Date (as defined in the Approved Resolution Plan) and the Closing Date (as defined in the Approved Resolution Plan) (“Interim Period”), a monitoring committee was constituted (“Monitoring Committee”) managed the affairs of the Company as a going concern and supervised the implementation of the Resolution Plan. The powers of the Board of Directors continued to remain suspended as per the terms of the Approved Resolution Plan.

Following the Closing Meeting of the Monitoring Committee held on July 3, 2024, the Board of Directors was reconstituted and assumed control over the management and affairs of the Company.

The Financial Year 2025-26 marked a significant transition phase for the Company. While commercial operations remained limited during the year, the Company focused on rebuilding its governance framework, strengthening operational capabilities, identifying new business opportunities and laying a robust foundation for sustainable long-term growth.

The Company is strategically positioning itself to diversify into high-growth sectors including aviation training, artificial intelligence, digital transformation solutions, Internet of Things (IoT), enterprise software development and emerging technology services. These initiatives are expected to support the Companys long-term value creation strategy and establish diversified revenue streams in the coming years.

The Reconstituted Board is submitting this Report in compliance with the provisions of the Companies Act, 2013, the rules and regulations framed thereunder (“Act") and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (“Listing Regulations").

2. Economic Overview

2.1. Global Economic Overview

The global economy during the financial year 2025-26 continued to demonstrate resilience amid significant geopolitical, economic and policy uncertainties. Global growth remained moderate and uneven across regions, with economic activity influenced by evolving trade policies, geopolitical tensions, inflationary trends, monetary policy adjustments and technological transformation.

Geopolitical conflicts and regional tensions continued to affect global trade routes, energy markets and supply chains. Increased policy uncertainty, including changes in trade and tariff policies among major economies, contributed to volatility in financial markets and created challenges for cross-border trade and investment. These developments also resulted in businesses adopting more cautious approaches towards capital expenditure and expansion.

Inflationary pressures generally moderated across several major economies during the period; however, inflation in certain sectors, particularly services, remained relatively persistent. Central banks across different jurisdictions adopted varied approaches towards monetary policy, with some economies beginning or continuing monetary easing measures, while others maintained a cautious stance in view of inflation and growth considerations. Divergent monetary policies and movements in interest rates continued to influence currency markets and global capital flows.

The services sector remained an important contributor to global economic activity, while manufacturing and merchandise trade experienced varying levels of growth across regions. Supply- chain realignment, increased protectionist measures and changing global trade relationships continued to reshape international business and investment patterns.

Technology continued to emerge as a significant driver of global economic transformation. Increased adoption of artificial intelligence, cloud computing, automation, cybersecurity, digital platforms and Internet of Things (“IoT") solutions created new opportunities for businesses across industries. At the same time, rapid technological advancements increased the need for organisations to strengthen their digital infrastructure, cybersecurity capabilities and technology- driven business models.

The global economic environment continues to be characterised by both opportunities and challenges. While moderating inflation, technological innovation and the continued expansion of digital services provide opportunities for growth, geopolitical tensions, trade disruptions, financial market volatility, cybersecurity risks and policy uncertainties remain key factors that may influence global economic performance in the future.

For companies operating in the information technology and emerging technology sectors, the evolving global environment presents significant opportunities to support businesses in their digital transformation initiatives, automation requirements and adoption of advanced technologies. The Company remains attentive to these developments as it evaluates opportunities in technology- led and emerging business segments.

2.2. Indian Economy Overview

India continued to remain among the fastest-growing major economies during the Financial Year 2025-26, supported by strong domestic demand, sustained government capital expenditure, a stable financial system, moderating inflationary pressures and continued focus on structural reforms.

The Indian economy demonstrated resilience despite an evolving global environment marked by geopolitical tensions, trade uncertainties and volatility in international financial markets. Domestic consumption, infrastructure development, growth in the services sector and continued public and private investment remained important drivers of economic activity.

The Governments continued emphasis on infrastructure development and capital expenditure has strengthened the countrys long-term growth prospects. Significant investments and policy initiatives across transportation, logistics, railways, roads, renewable energy, manufacturing, defence, aviation and urban infrastructure are expected to create opportunities across various sectors of the economy.

Government initiatives such as Digital India, Make in India, Startup India, Skill India and the development of Digital Public Infrastructure continue to support innovation, entrepreneurship, manufacturing and technology adoption. Indias growing digital ecosystem, expanding internet connectivity and increasing adoption of cloud computing, Artificial Intelligence ("AI"), automation and Internet of Things ("IoT") technologies are expected to further accelerate the transformation of businesses and public services.

Indias favourable demographic profile, expanding middle class and increasing digital adoption continue to provide a strong foundation for long-term economic growth. The countrys growing startup ecosystem and increasing focus on innovation and technology-driven businesses are also contributing to the development of new industries and employment opportunities.

The Governments continued focus on strategic sectors such as aviation, defence, semiconductor manufacturing, renewable energy, digital infrastructure and advanced technologies is expected to generate significant opportunities over the medium to long term. Further, policy initiatives aimed at strengthening domestic manufacturing, improving ease of doing business and attracting foreign investment are expected to support Indias position as an important global investment and manufacturing destination.

Going forward, while global economic uncertainty, geopolitical developments, inflationary pressures and volatility in commodity and financial markets may pose challenges, Indias strong domestic fundamentals, policy support, infrastructure development and rapidly expanding digital economy are expected to support sustained economic growth.

For the Company, the continued expansion of Indias digital and technology ecosystem, coupled with increasing opportunities in areas such as Artificial Intelligence, digital transformation, enterprise technology solutions, Internet of Things and aviation-related services, provides a favourable environment for evaluating and developing new business opportunities aligned with its long-term growth strategy.

3. Indian Aviation Industry Outlook:

The Indian aviation industry continued to demonstrate strong growth during the Financial Year 2025-26, supported by rising domestic and international passenger traffic, increasing disposable incomes, growing connectivity, expansion of airport infrastructure and favourable demographic trends. India continues to be among the fastest-growing aviation markets globally, with increasing demand for both business and leisure travel.

The expansion of airline fleets and route networks has remained a significant driver of growth in the aviation sector. Major Indian airlines have continued to expand their operations and have placed substantial aircraft orders to meet the anticipated increase in passenger demand over the coming years. The continued induction of new aircraft is expected to increase demand not only for pilots but also for aviation professionals across technical, operational and allied services.

The Governments continued focus on strengthening aviation infrastructure and improving regional connectivity is expected to support the long-term growth of the sector. The expansion and modernisation of airports, development of new greenfield airports and implementation of regional connectivity initiatives, including the Regional Connectivity Scheme - UDAN, are expected to improve access to air travel and expand aviation connectivity to Tier-II and Tier-III cities.

One of the key opportunities emerging from the growth of the Indian aviation industry is the increasing demand for qualified and trained aviation professionals. With airlines expanding their fleets and operations, India is expected to require a significant number of additional pilots and other skilled aviation personnel over the coming decade. This is expected to create substantial opportunities for Flight Training Organisations ("FTOs"), aviation academies and other institutions engaged in professional aviation training.

The aviation training ecosystem in India is also expected to witness continued investment and capacity expansion. The establishment and expansion of FTOs, adoption of advanced simulation and training technologies, and increasing participation of private players are expected to strengthen domestic pilot training capabilities. Regulatory initiatives aimed at improving and standardising training requirements and enhancing the efficiency of approvals may further support the development of the aviation training ecosystem.

The increasing adoption of advanced technologies, including flight simulators, digital learning platforms, Artificial Intelligence and data-driven training solutions, is also expected to transform aviation education and training. These developments may enable training providers to improve operational efficiency, enhance training quality and cater to the growing requirements of the aviation industry.

While the industry continues to face challenges including high operating costs, aviation fuel price volatility, infrastructure constraints, shortage of skilled manpower and global economic and geopolitical uncertainties, the long-term outlook for the Indian aviation sector remains positive.

The Companys proposed strategic focus on aviation training is aligned with the growing requirements of the Indian aviation ecosystem. The anticipated increase in demand for trained pilots and aviation professionals, coupled with the expansion of airline fleets and aviation infrastructure, presents potential opportunities for the Company to evaluate and develop aviation training and allied business activities as part of its long-term growth strategy.

4. Business Environment

The Financial Year 2025-26 represented an important phase of transition, consolidation and strategic rebuilding for the Company following the implementation of the Resolution Plan approved by the Honble National Company Law Tribunal ("NCLT").

During the year under review, the Company continued its efforts towards strengthening its institutional and operational framework and laying the foundation for the commencement and expansion of sustainable business operations. The Company primarily focused on:

• strengthening its corporate governance and internal control framework;

• enhancing management and operational capabilities;

• strengthening systems and processes for regulatory and statutory compliance;

• evaluating new business opportunities and potential growth sectors;

• exploring strategic investments and collaborations;

• establishing appropriate operational processes and infrastructure for future expansion;

• identifying opportunities in technology-driven and emerging sectors; and

• formulating long-term strategies for sustainable growth and value creation.

During the Financial Year 2025-26, the Company remained focused on rebuilding its business and operational capabilities following the resolution process. While commercial operations remained limited during the year, the Company continued to make progress towards establishing the necessary governance, management and operational framework required to support its future business plans.

The Company also evaluated opportunities in emerging and high-growth sectors, including aviation training, artificial intelligence, digital transformation, Internet of Things ("IoT"), enterprise software development and other technology-driven businesses. These initiatives are intended to support the Companys strategy of creating diversified and sustainable revenue streams over the medium to long term.

The Board and management remain focused on establishing a robust institutional framework, strengthening operational readiness and pursuing business opportunities that are aligned with the Companys long-term growth strategy. The initiatives undertaken during the Financial Year 202526 are expected to provide a foundation for the Companys future expansion and sustainable value creation for its stakeholders.

5. Forward-Looking Statements

This report may contain forward-looking statements that involve risks and uncertainties. These statements are based on current expectations, estimates, and projections about future developments and the industry in which the Company operates, and managements beliefs and assumptions. Such statements include, but are not limited to, financial performance, business strategy, expansion plans, and technological initiatives. Actual results could differ materially due to various risks, uncertainties, and other factors including but not limited to regulatory changes, economic conditions, and market dynamics. The Company assumes no obligation to publicly revise or update these statements.

The financial statements are prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the Act) and comply with the Accounting Standards notified under Section 133 of the Act. The management of Melstar Information Technologies Limited has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect, in a true and fair manner.

The following discussions on our financial conditions and results of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the Annual Report. Unless otherwise specified or the context otherwise requires, all references herein to “we”, “us”, “our”, “the Company” or “Melstar”, are to Melstar Information Technologies Limited.

Overview

Melstar Information Technologies Limited (“Melstar” or “the Company”) is undergoing a strategic transformation. Following a period of inactivity due to financial constraints and insolvency proceedings, the Company has commenced a new business direction aimed at capitalizing on high- growth sectors?aviation training and next-generation technology services.

6. Strategic Transformation

The successful implementation of the Resolution Plan approved by the Honble National Company Law Tribunal marked a significant milestone in the Companys revival journey. Following the reconstitution of the Board of Directors, the Company has embarked upon a comprehensive strategic transformation with a renewed vision to establish itself as a diversified technology-driven enterprise.

The Companys transformation strategy is focused on building sustainable businesses in sectors with significant long-term growth potential. While preserving its legacy in information technology services, the Company intends to expand into emerging business segments that offer scalable opportunities and align with evolving market demands.

The transformation is guided by the following strategic objectives:

• Diversification into high-growth and technology-driven sectors.

• Development of sustainable and recurring revenue streams.

• Adoption of advanced technologies to deliver innovative business solutions.

• Strengthening governance, compliance and risk management practices.

• Building strategic alliances and partnerships to accelerate business growth.

• Enhancing shareholder value through disciplined capital allocation and operational excellence.

The Company believes that these initiatives will position it to capitalize on emerging opportunities while creating long-term value for all stakeholders.

Business Strategy and Transformation

The Company is pursuing a multi-pronged growth strategy aimed at establishing a strong presence across technology and aviation-related businesses.

A. Flight Training Institute Setup

Indias aviation sector is witnessing unprecedented expansion driven by increasing passenger traffic, fleet additions and regional connectivity initiatives. This has resulted in a growing demand for qualified commercial pilots and aviation professionals.

Recognising this opportunity, the Company has initiated plans to establish state-of-the-art Flight Training Institutes (FTIs). The proposed facilities are intended to provide high-quality pilot training in accordance with applicable regulatory requirements and international standards. Key developments include:

• Signing of Memoranda of Understanding (MoUs) with the Governments of Rajasthan and Karnataka to establish state-of-the-art Flight Training Institutes (FTIs).

• Initial steps including infrastructure planning, regulatory compliance, and curriculum development are underway.

• Recruitment of a core team for FTI development has commenced, including professionals with aviation, instructional design, and technical expertise.

This strategic pivot aligns with Indias surging demand for commercial pilots, driven by an expanding aviation market and record aircraft orders.

B. Artificial Intelligence and Digital Solutions

Artificial Intelligence has emerged as one of the most transformative technologies globally. Businesses across industries are increasingly adopting AI-powered solutions to improve operational efficiency, automate business processes and enhance customer experiences.

The Company intends to develop technology solutions in areas including:

Artificial Intelligence (AI) and Machine Learning (ML)

• Development of AI automation solutions for enterprises.

• Predictive analytics platforms to forecast future trends and improve decision-making.

• Conversational AI and chatbot systems for customer service and operational efficiency. Internet of Things (IoT)

• Design and deployment of smart devices and sensors for various applications.

• Industrial IoT solutions aimed at enhancing automation and real-time monitoring capabilities in manufacturing, logistics, and utilities.

Mobile Application Development

• End-to-end mobile app solutions (iOS and Android) for clients across industries.

• Focus on intuitive user interfaces, scalable architecture, and cross-platform integration.

This technological expansion supports the Companys long-term vision of becoming a multidisciplinary service provider, leveraging synergies across aviation and digital innovation.

7. Opportunities

The Company believes that several macroeconomic and industry-specific factors present significant growth opportunities.

Key opportunities include:

• Rapid growth of Indias digital economy.

• Increasing enterprise spending on digital transformation.

• Rising adoption of Artificial Intelligence and automation technologies.

• Expansion of cloud computing and data analytics solutions.

• Growing demand for cybersecurity and enterprise software services.

• Significant shortage of trained commercial pilots in India.

• Government initiatives supporting aviation infrastructure and regional connectivity.

• Growing investments in technology-enabled education and skill development.

• Potential strategic collaborations with domestic and international partners.

The Company intends to leverage these opportunities by developing innovative business models supported by technology, operational excellence and strong governance.

8. SWOT Analysis Strengths

• Experienced leadership and professionally reconstituted Board.

• Clean slate following implementation of the Resolution Plan.

• Diversified growth strategy.

• Focus on high-growth technology sectors.

• Strong governance framework.

• Scalable business model.

• Ability to leverage strategic partnerships.

Weaknesses

• Limited commercial operations during the financial year.

• Requirement for capital investment in new businesses.

• Initial market penetration challenges.

• Brand rebuilding following CIRP.

Opportunities

• Digital transformation across industries.

• Artificial Intelligence revolution.

• Growing aviation sector.

• Expanding pilot training ecosystem.

• Increasing government support for infrastructure development.

• Demand for innovative technology solutions.

Threats

• Rapid technological changes.

• Regulatory changes.

• Competition from established industry participants.

• Cybersecurity risks.

• Talent acquisition and retention challenges.

• Economic slowdown affecting capital expenditure by customers.

Financial Performance and Operational Review

During the year under review, the Company has been in a preparatory phase. Revenue from operations was NIL due to the non-operational status post CIRP. However, strategic investments have been initiated to build capability in the new business areas.

Capital expenditures were primarily allocated to infrastructure planning, hiring, and technological development frameworks. The Company expects gradual ramp-up in operations over the next financial year.

9. Risks and Concerns

The Companys business is exposed to various risks that could impact its operations, financial performance and future growth.

Key risks include:

Business Risk

The successful execution of the Companys strategic initiatives depends upon timely implementation of business plans, availability of resources and market acceptance.

Regulatory Risk

The aviation and technology sectors operate in a highly regulated environment. Changes in laws, regulations or government policies could impact the Companys proposed business activities.

Technology Risk

Rapid technological advancements require continuous innovation and investment to remain competitive.

Financial Risk

The expansion into new business segments requires significant capital expenditure and efficient financial management.

Cybersecurity Risk

Increasing dependence on digital technologies exposes businesses to cybersecurity threats, data breaches and operational disruptions.

Human Resource Risk

Availability and retention of skilled professionals remains critical to the successful execution of the Companys business strategy.

Market Risk

Economic uncertainty, inflationary pressures and changes in customer spending patterns may affect demand for technology services and aviation training.

The Company has implemented appropriate governance mechanisms, internal controls and risk management processes to identify, assess and mitigate these risks.

10. Internal Controls and Systems

The Company has established an internal control framework designed to ensure the orderly and efficient conduct of its business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable financial information.

The internal control systems are commensurate with the size, scale and nature of the Companys operations. Appropriate policies, procedures and authority matrices have been established to ensure compliance with applicable laws, regulations and internal guidelines.

The Audit Committee periodically reviews the adequacy and effectiveness of the internal control systems and recommends improvements wherever necessary. The management continuously monitors the effectiveness of these controls and undertakes corrective actions to strengthen the overall control environment.

The Company also places significant emphasis on ethical conduct, regulatory compliance, information security and enterprise risk management to ensure sustainable business operations.

11. Financial Performance and Operational Review

The financial year under review primarily represented a transition and rebuilding phase following the implementation of the approved Resolution Plan.

During the year, the Company focused on rebuilding its governance framework, evaluating strategic business opportunities, strengthening compliance systems and laying the foundation for future operations.

The Company did not undertake significant commercial operations during the financial year, and accordingly, revenue from operations remained limited. Management efforts were primarily directed towards business restructuring, strategic planning, regulatory compliance and identification of new growth opportunities.

The Companys financial position continues to be monitored closely, with emphasis on prudent financial management, cost optimization and efficient allocation of resources to support future expansion.

The management remains committed to strengthening the Companys financial position while pursuing sustainable growth opportunities.

12. Human Resources and Industrial Relations

The Company recognizes that its employees are its most valuable asset and the foundation of its future growth.

During the year, the Company focused on strengthening its organizational capabilities by identifying key talent requirements aligned with its proposed business strategy. The Company intends to build a professional workforce with expertise in technology, aviation, digital transformation and business management.

The Company is committed to fostering a work environment that promotes integrity, diversity, continuous learning, innovation and employee engagement.

Industrial relations remained cordial throughout the year.

13. Sustainability, ESG and Corporate Governance

The Company is committed to conducting its business in a responsible, transparent and ethical manner while creating sustainable value for all stakeholders.

As the Company progresses with its business transformation, it intends to integrate Environmental, Social and Governance (ESG) principles into its business strategy and decisionmaking processes.

The Company remains committed to maintaining high standards of corporate governance, regulatory compliance, transparency and accountability, which form the cornerstone of its longterm growth strategy.

14. Outlook

The Company enters the new financial year with renewed optimism following the successful implementation of the Resolution Plan and reconstitution of the Board of Directors.

The management remains focused on executing its long-term strategic vision through disciplined investments, operational excellence and technology-led innovation. The Companys proposed diversification into aviation training and advanced technology solutions is expected to create new avenues of growth while strengthening its competitive positioning.

Although the Company continues to be in the rebuilding phase, management believes that the strategic initiatives undertaken during the year have laid a strong foundation for sustainable longterm growth.

With a clear strategic direction, robust governance framework and focus on innovation, the Company is well-positioned to capitalize on emerging market opportunities and create enduring value for shareholders and other stakeholders.

15. Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, plans 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 in such statements due to various factors including changes in economic conditions, government policies, regulatory developments, technological advancements, market dynamics, competitive pressures, availability of financial resources and other risks and uncertainties 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, except as required under applicable laws and regulations.