Micropro Software Solutions Ltd Management Discussions

The Management of the Company is pleased to present the Management Discussion and Analysis Report (MDAR) for the financial year 2025-26. This Report provides a comprehensive review of the Companys business performance, operating environment, financial performance, opportunities, risks, outlook, and other significant developments during the year under review.

In accordance with the requirements of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report, including a detailed analysis of the Companys operations, financial performance, segment-wise performance, and other prescribed disclosures, is presented below and forms an integral part of this Annual Report.

OUTLOOK

With a distinguished legacy spanning more than three decades, MICROPRO has consistently delivered innovative and successful IT solutions to medium and large enterprises. Supported by a highly skilled team of IT professionals, the Company serves a strong and diverse customer base of over 4,500 clients across India and the UAE. Leveraging deep domain expertise and a customercentric approach, MICROPRO enables organizations to design, implement, and accelerate their digital transformation journeys, driving operational excellence and sustainable business growth.

Our vision is to emerge as a globally respected organization, delivering world-class business solutions through cutting-edge technology and the expertise of highly competent professionals. We are committed to creating sustainable value for all stakeholders by fostering innovation, operational excellence, and customer-centricity. Our business is guided by a strong foundation of core values—Client Value, Leadership by Example, Integrity and Transparency, Fairness, and Excellence—which shape our culture, drive our decisions, and define the way we conduct our business.

Our strategic objective is to build a resilient, sustainable, and future-ready enterprise that consistently aligns with the evolving needs of our customers, provides meaningful career opportunities for our employees, delivers sustainable value to shareholders, and contributes positively to the communities in which we operate.

As we look ahead, the Company remains focused on leveraging its deep domain expertise, technological capabilities, and innovation-driven approach to strengthen its position in the healthcare IT sector while expanding its presence across other high-growth industries. Through our flagship solutions, HospyCare— our next-generation Hospital Information Management System (HIMS)—and PharmaZip, together with the successful execution of strategic digital transformation projects, we aim to enhance our market presence, broaden our customer base, and build a stable and recurring revenue stream.

To achieve these objectives, the Company will continue to focus on the following strategic priorities:

Accelerating product innovation and continuous technology modernization.

Expanding our footprint across domestic and international markets.

Strengthening engagement with Government organizations and Public Sector Undertakings (PSUs) through mission-critical digital transformation initiatives.

Embedding emerging technologies, including Artificial Intelligence (AI) and Machine Learning (ML), into our products and solutions to deliver enhanced customer value.

Developing secure, scalable, and cloud-enabled solutions that address the evolving requirements of enterprises and public institutions.

Strengthening operational excellence, enhancing organizational capabilities, and investing in talent development to support sustainable long-term growth.

GLOBAL ECONOMIC TRAJECTORY:

The global economy demonstrated resilience during 2025 despite an external environment characterized by geopolitical tensions, policy uncertainty, evolving trade dynamics, and periodic supply chain disruptions. Economic activity remained supported by resilient household consumption, sustained investment in technology and digital infrastructure, and relatively stable labour market conditions. While businesses continued to navigate changing tariff regimes and cautious investment sentiment, the global economy maintained a steady growth trajectory.

Global inflation moderated during the year, aided by easing supply-side pressures and softer commodity prices across several major economies. This enabled many central banks to gradually shift towards a more accommodative monetary policy stance, supporting economic activity while maintaining financial stability. According to international estimates, the global economy expanded by 3.4% in 2025, with advanced economies growing by 1.9% and emerging market and developing economies by 4.4%. Consumer demand remained a key pillar of global growth, supported by wage gains, improving financial conditions, and continued investment in digital technologies and artificial intelligence (AI). Labour markets also remained relatively resilient, particularly across the technology and services sectors, helping sustain income growth and domestic demand even as manufacturing activity remained uneven in certain regions.

Nevertheless, the global macroeconomic environment continued to face significant challenges. Escalating geopolitical tensions in the Middle East and the prolonged Russia-Ukraine conflict disrupted trade routes, contributed to volatility in energy and commodity prices, and placed additional pressure on global logistics and supply chains. These developments resulted in higher procurement and transportation costs, delayed deliveries, and increased uncertainty regarding the availability of critical raw materials and components, prompting businesses worldwide to adopt a more cautious approach toward capital expenditure and investment decisions. Global trade activity improved during the year, supported by easing trade restrictions, gradual normalization of supply chains, and improved availability of key electronic components and critical minerals. Financial markets remained broadly stable despite intermittent volatility, while several major central banks initiated measured reductions in policy interest rates, contributing to improved liquidity conditions and supporting business confidence.

Looking ahead, the global economy is expected to witness moderate growth, with global GDP projected to expand by approximately 3.1% in 2026 and 3.2% in 2027. The outlook is expected to be supported by continued productivity gains arising from Artificial Intelligence, digital transformation, automation, and innovation across industries. However, the pace of growth is likely to remain constrained by persistent geopolitical uncertainties, evolving trade policies, inflationary risks, and climate-related challenges.

Despite these near-term uncertainties, the long-term fundamentals of the global economy remain favourable. Continued investments in digital technologies, cloud computing, AI, cybersecurity, smart infrastructure, and sustainability initiatives are expected to create significant opportunities for businesses worldwide. Going forward, policy coordination, resilient supply chains, technological innovation, and structural reforms will remain critical in supporting sustainable global growth and enhancing economic resilience.

OVERVIEW OF INDIAS ECONOMIC TRAJECTORY AND GROWTH PILLARS:

India continues to reinforce its position as one of the worlds fastest-growing major economies, demonstrating resilience amid an increasingly uncertain global environment marked by geopolitical tensions, trade disruptions, volatile commodity prices, and evolving monetary policies. Supported by prudent macroeconomic management, strong domestic demand, sustained public investment, and structural reforms, the Indian economy remains well-positioned to sustain long-term growth despite near-term external challenges.

According to the International Monetary Fund (IMF), Indias economy is projected to grow by approximately 6.4% in FY 2026-27, continuing to outperform most major global economies. While elevated crude oil prices and weather-related uncertainties may pose short-term risks, Indias strong domestic fundamentals, healthy financial sector, and ongoing reform initiatives are expected to support medium- to long-term economic expansion.

The Governments continued emphasis on infrastructure development, digital transformation, manufacturing competitiveness, ease of doing business, and fiscal discipline has strengthened Indias growth outlook. Investments under initiatives such as Digital India, Make in India, the Production Linked Incentive (PLI) Scheme, PM Gati Shakti, and the National Logistics Policy continue to enhance productivity, improve connectivity, and attract both domestic and foreign investments. Simultaneously, rapid adoption of digital public infrastructure and technology-driven governance has accelerated the countrys digital economy and expanded opportunities across industries.

Indias technology sector continues to play a pivotal role in economic development, driven by increasing enterprise digitization, cloud adoption, cybersecurity investments, Artificial Intelligence (AI), Machine Learning (ML), automation, and data analytics. Government agencies, healthcare institutions, educational organizations, and enterprises are increasingly investing in digital platforms to improve operational efficiency, service delivery, and citizen engagement, creating significant opportunities for technology solution providers.

The countrys expanding digital ecosystem, supported by a young and skilled workforce, growing internet penetration, robust startup ecosystem, and rising technology adoption across sectors, is expected to remain a key driver of sustainable economic growth. Furthermore, the continued modernization of healthcare, education, urban governance, and public service delivery is expected to generate substantial demand for integrated software solutions and digital transformation services.

Despite the positive outlook, certain external risks warrant close monitoring, including geopolitical uncertainties, fluctuations in global energy prices, inflationary pressures, supply chain disruptions, and climate-related challenges. Nevertheless, Indias resilient domestic consumption, improving external sector, strengthening financial system, and sustained policy support are expected to provide a strong foundation for long-term economic growth.

Overall, Indias growth trajectory continues to present significant opportunities for technology- driven enterprises. The increasing focus on digital governance, healthcare technology, cloud computing, AI-enabled solutions, and enterprise automation aligns well with the Companys strategic priorities and positions it to capitalize on emerging opportunities in both domestic and international markets.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

FY 2025-26 was marked by a challenging global economic environment characterized by heightened uncertainty arising from geopolitical conflicts, evolving trade policies, fluctuating interest rates, and persistent inflationary pressures. These factors, coupled with structural shifts across the global technology services industry, influenced business sentiment and investment decisions worldwide. Increasing protectionist measures disrupted global trade dynamics, while elevated borrowing costs and inflation moderated discretionary spending and delayed enterprise technology investments across several sectors.

Despite these global headwinds, India continued to strengthen its position as one of the worlds fastest- growing major economies, supported by resilient domestic demand, sustained public investment, rapid digital transformation, and progressive policy reforms. The Indian Information Technology (IT) industry remained a key driver of economic growth, innovation, and digital enablement across industries, reinforcing its leadership in delivering technology-led business solutions to both domestic and international markets.

Among the various IT segments, healthcare and pharmaceutical technology have emerged as high-growth verticals, driven by the increasing adoption of digital healthcare, stringent regulatory requirements, and the growing demand for integrated, scalable, and cloud-enabled software solutions. Globally, healthcare providers and pharmaceutical enterprises are increasingly investing in interoperable digital platforms that facilitate seamless data exchange, enhance patient engagement, improve clinical outcomes, and reduce operational costs. Emerging markets, particularly the United Arab Emirates, Africa, and Southeast Asia, continue to witness significant investments in healthcare digitization, creating substantial opportunities for Indian technology companies possessing deep domain expertise and proven implementation capabilities.

Against this backdrop, the Company is strategically well positioned to capitalize on the expanding opportunities within the healthcare and pharmaceutical technology ecosystem. Backed by more than three decades of experience in developing and implementing specialized software solutions, the Company has established a strong presence in pharmacy distribution management, Hospital Information Management Systems (HospyCare), enterprise resource planning solutions, and mission-critical public sector digital transformation projects.

The Company is also strengthening its portfolio through cloud-based platforms, Artificial Intelligence (AI)- enabled technologies, and advanced digital applications designed to address the evolving needs of healthcare institutions, pharmaceutical enterprises, and government organizations. Furthermore, the Companys growing international presence through its wholly owned subsidiary in the United Arab Emirates provides a strategic platform to expand its footprint across the Middle East and other emerging global markets.

OPPORTUNITIES AND THREATS:

OPPORTUNITIES:

The Government of Indias continued emphasis on Digital India, Smart Cities, e-Governance, healthcare digitization, education technology, and infrastructure development presents substantial opportunities for the Company to expand its portfolio of technology solutions. Increased public expenditure on digital infrastructure and modernization of government services is expected to generate sustained demand for software development, system integration, and IT consulting services.

The Companys established expertise in healthcare information systems, pharmaceutical distribution software, capitalize on these emerging opportunities. The successful launch and continued enhancement of its cloud-based products, including PharmaZip and the next-generation HospyCare platform, are expected to strengthen the Companys recurring revenue streams and improve customer retention.

The Companys wholly-owned subsidiary in the United Arab Emirates provides a strategic platform for expanding operations across the Middle East and other international markets. The increasing demand for digital healthcare, enterprise software, and smart technology solutions in these regions offers significant potential for business growth and diversification.

THREATS:

The information technology industry remains highly competitive, with intense competition from both established multinational corporations and emerging technology companies. Rapid technological advancements require continuous investment in research and development, product innovation, and skill enhancement to remain competitive. The Companys business is also exposed to risks associated with changing government policies, delays in public sector procurement processes, budgetary constraints, and extended payment cycles.

Increasing cybersecurity threats, data privacy regulations, and evolving compliance requirements necessitate continuous strengthening of information security infrastructure and governance frameworks. Failure to effectively manage these risks could adversely affect business operations and customer confidence. The availability and retention of skilled professionals continue to be a challenge for the IT industry. Intense competition for qualified talent may increase employee costs and impact project delivery if not effectively managed.

Global economic uncertainties, geopolitical developments, inflationary pressures, fluctuations in foreign exchange rates, and changes in technology spending patterns by customers may also influence business performance. However, the Companys diversified service offerings, strong customer relationships, continued focus on innovation, and prudent risk management practices provide resilience against these challenges and support its long-term growth objectives.

RISKS AND CONCERNS

The Company has established a robust and integrated framework designed to identify, assess, mitigate, monitor, and manage risks while maximising long-term stakeholder value. This structured approach enables the Company to proactively evaluate potential risks and opportunities across its business operations, ensuring timely and informed decision-making.

The risk management process encompasses systematic risk identification, assessment, prioritisation, mitigation, continuous monitoring, and periodic review. By embedding risk management into its strategic planning and operational processes, the Company enhances its ability to anticipate emerging challenges, capitalise on growth opportunities, maintain business resilience, and achieve its strategic objectives. This comprehensive framework strengthens governance, supports sustainable business growth, and reinforces stakeholder confidence in the Companys ability to create long-term value.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established a comprehensive internal control framework designed to safeguard its assets, ensure the accuracy and reliability of financial and operational reporting, promote operational efficiency, and ensure compliance with applicable laws, regulations, and internal policies. The framework is periodically reviewed and strengthened to address evolving business requirements and regulatory expectations.

The Company continuously monitors and evaluates the effectiveness of its internal controls and compliance mechanisms to ensure adherence to all applicable statutory and regulatory requirements. Appropriate corrective and preventive measures are implemented wherever necessary to enhance the effectiveness of the control environment and mitigate identified risks. While no system of internal control can provide absolute assurance against all risks or deficiencies, the Company remains committed to continually improving its governance and control processes in line with best practices.

The Company has implemented well-defined policies, standard operating procedures, and approval mechanisms that are commensurate with the nature, size, and complexity of its operations, while also supporting its future growth plans. These policies and procedures form the foundation of the Companys internal control system and are regularly reviewed and updated to ensure their continued relevance, effectiveness, and comprehensiveness. Compliance with these policies is embedded in the Management review process, fostering a strong culture of accountability, transparency, and regulatory compliance across the organization.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year under review the Company has earned standalone total revenue (including other income) of Rs. 1,762.61 lakhs for the year 2026 as compared to Rs. 2,208.83 lakhs for the financial year 2025. loss after Tax at Rs. 232.41 lakhs in the financial year 2026 as compared to loss of Rs. 104.69 lakhs for the financial year 2025.

The consolidated total revenue (including other income) of Rs. 1,995.47 lakhs for the year 2026 as compared to Rs. 2,488.16 lakhs for the financial year 2025. loss after Tax at Rs. 129.05 lakhs in the financial year 2025 as compared to loss of Rs. 184.74 lakhs for the financial year 2025.

(Amount in Rs. Lakhs except EPS)

Description	Standalone 31.03.2026	Standalone 31.03.2025	Consolidated 31.03.2026	Consolidated 31.03.2025
Revenue from operations	1,651.91	2,032.58	1,884.77	2,311.91
Other Income	110.70	176.25	110.70	176.25
Total Income	1,762.61	2,208.83	1,995.47	2,488.16
Purchase of Stock- in- trade	344.65	377.92	344.65	641.33
Purchases of Services	258.50	519.77	258.49	519.77
Changes in Inventories of Stock-intrade	30.07	39.07	30.07	39.07
Employee benefits expense	840.26	926.22	902.09	943.32
Finance costs	05.86	30.27	07.00	30.45
Depreciation and amortisation expense	262.42	204.71	265.53	206.12
Other expenses	195.66	228.65	259.90	305.93
Profit before tax	(174.81)	(117.78)	(72.26)	(197.83)
Less: Tax Expenses	(57.60)	(13.09)	(57.79)	(13.09)
Profit / (Loss) for the year ended	(232.41)	(104.69)	(129.05)	(184.74)
Earning per equity share (Basic and Diluted)	(1.63)	(0.73)	(0.90)	(1.29)

SEGMENT-WISE PERFORMANCE:

IT Services: The total revenue from IT Services during the year is Rs. 1252.98 Lacs as compared to Rs. 1580.63 Lacs of the previous year.

Trading: The total revenue from Trading during the year is Rs. 398.93 Lacs as compared to Rs. 451.95 Lacs of the previous year.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING:

S. No. Ratio	Numerator	Denominator	FY 2025-26	FY 2024-25	Variance in %	Reason for Variance if more than 25%
1 Current Ratio	Current Assets	Current Liabilities	5.13	6.22	-17.47%
2 Debt-Equity Ratio	Total Debt	Shareholders Funds	0.08	0.00	8.10%
3 Debt Service Coverage Ratio	Earnings for debt service = Profit after tax + Depreciation + Interest	Debt Service = Interest + Principal repayments of term loans	NA	4.30	NA	-
4 Return on Equity Ratio	Profit after tax	Average Shareholders Funds	-0.05	-0.04	41.14%	-
5 Inventory Turnover Ratio	Net Sales (excl. commission and support services)	Average Inventory	27.70	20.71	33.72%	Net Sales (excl. commission and support services) has decreased as compared to previous year.
6 Trade Receivables Turnover Ratio	Net Sales	Average Trade Receivables	1.21	1.44	-15.59%	Average trade receivables have increased significantly as compared to previous year.
7 Trade Payables Turnover Ratio	Net Purchases	Average Trade Payables	3.18	4.43	-28.12%	-
8 Net Capital Turnover Ratio	Net Sales	Working Capital = Current Assets - Current Liabilities (excl. current maturities of long term debt)	0.67	0.73	-8.92%	Current assets have increased significantly thus increasing the working capital significantly compared to previous year.
S. No. Ratio	Numerator	Denominator	FY 2025-26	FY 2024-25	Variance in %	Reason for Variance if more than 25%
9 Net Profit Ratio	Profit before tax	Net Sales	-0.11	-0.06	82.62%	Profit before tax has decreased as compared to previous year.
10 Return on Capital Employed	Earning before interest and tax	Capital Employed = Net worth + Total debt	-0.04	-0.02	88.01%	EBIT has decreased and Capital Employed has increased significantly (due to IPO) as compared to previous year.
11 Return on Investment	Profit before tax	Average Total Assets	-0.03	-0.02	124.25%	Profit before tax has decreased and Average Total Assets have increased significantly (due to IPO) as compared to previous year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS, INCLUDING NUMBER OF PEOPLE EMPLOYED:

The Company continues to foster a committed, skilled, and motivated workforce that remains integral to its sustained growth and success. Throughout the year, cordial and harmonious industrial relations were maintained across the organization. The Company conducted various employee engagement initiatives, learning and development programs, and skill enhancement activities to improve employee capabilities, productivity, and overall workplace satisfaction.

As on March 31, 2026, the Company had a total workforce of 136 employees. The Company remains committed to attracting, developing, and retaining talented professionals while promoting an inclusive, collaborative, and performance-driven work culture that supports its long-term strategic objectives.