Mindteck (India) Ltd Management Discussions

In addition to historical information, this Annual Report contains certain forward-looking statements which are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. Factors that might cause the difference include, but are not limited to, those discussed in the Management Discussion and Analysis of financial performance and elsewhere in this report. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect managements analysis as of the date hereof.

MACROECONOMIC OUTLOOK

After a succession of adverse shocks in recent years, the global economy is facing another substantial headwind, with increased trade tension and heightened policy uncertainty. This is contributing to a deterioration in prospects across most of the worlds economies. For emerging market and developing economies (EMDEs), the ability to narrow per capita income gaps with richer countries, boost job creation, and reduce extreme poverty remains insufficient. Downside risks to the outlook predominate, including an escalation of trade barriers, persistent policy uncertainty, rising geopolitical tensions, and an increased incidence of extreme climate events. Conversely, policy uncertainty and trade tensions may ease if major economies succeed in reaching lasting agreements that address ongoing trade disputes. The challenging global context faced by EMDEs is compounded by the fact that foreign direct investment inflows into these economies have fallen to less than half of their peak level in 2008 and are likely to remain subdued. Global cooperation is needed to restore a more stable and transparent global trade environment and scale up support for vulnerable countries grappling with conflict, debt burdens, and climate change. Across EMDEs, domestic policy action is also critical to contain inflation risks, strengthen fiscal resilience through improved revenue mobilisation, and reprioritise spending. To unlock job creation and long-term growth, structural reforms must focus on raising institutional quality, attracting private investment, and strengthening human capital and labor markets. In particular, countries in fragile and conflict situations (FCS) face daunting development challenges that will require tailored domestic policy reforms, underpinned by well-coordinated multilateral support.

Global growth is slowing due to a substantial rise in trade barriers and the pervasive effects of an uncertain global policy environment. Growth is expected to weaken to 2.3 percent in 2025, with deceleration in most economies relative to last year. This would mark the slowest rate of global growth since 2008, aside from outright global recessions. In 2026-27, a tepid recovery is expected, leaving global output materially below January projections. Progress by emerging market and developing economies (EMDEs) in closing per capita income gaps with advanced economies and reducing extreme poverty is anticipated to remain insufficient. The outlook largely hinges on the evolution of trade policy globally. Growth could turn out to be lower if trade restrictions escalate or if policy uncertainty persists, which could also result in a build-up of financial stress. Other downside risks include weaker-than-expected growth in major economies with adverse global spillovers, worsening conflicts, and extreme weather events. On the upside, uncertainty and trade barriers could diminish if major economies reach lasting agreements that address trade tensions. The ongoing global headwinds underscore the need for determined multilateral policy efforts to foster a more predictable and transparent environment for resolving trade tensions, some of which stem from macroeconomic imbalances. Global policy efforts are also needed to confront the deteriorating circumstances of vulnerable EMDEs amid prevalent conflict and debt distress, while addressing long-standing challenges, including the effects of climate change. National policy makers need to contain risks related to inflation as well as strengthen their fiscal positions by raising additional domestic revenues and reprioritising spending. To facilitate job creation and boost long-term growth prospects in EMDEs, reforms are essential to enhance institutional quality, stimulate private investment growth, develop human capital, and improve labor market functioning.

INDUSTRY OUTLOOK

• The technology industry navigated headwinds from 2022 to 2023, including high inflation, elevated interest rates, and considerable macroeconomic and global uncertainties. These contributed to softened consumer spending, lower product demand, falling market capitalisations, and workforce reductions.

• At mid-decade, the tech sector appears positioned for growth. Some analysts project that global IT spending will grow by 9.3% in 2025, with data center and software segments expected to grow at double-digit rates. Worldwide spending on AI is anticipated to grow at a compound annual growth rate of 29% from 2024 to 2028. Although the tech layoff trend persisted in

2024, reductions appeared to slow compared to 2023.

• A year ago, Deloitte proposed that tech companies refocus their sights on innovation and growth. We suggested that tech leaders consider shifting or augmenting their offerings to meet the growing demand for cloud, AI, and cybersecurity solutions. We anticipated that 2024 would be a transitional year for generative AI, as tech companies experimented with applications and determined how to best deliver and monetise gen AI capabilities. As geopolitical unrest and supply chain volatility continued, we noted that tech leaders may want to work toward a balance between globalisation and self-reliance, and to consider how to diversify their supply chains and operations among trusted regions for redundancy. Finally, we discussed upcoming regulations and their potential impact on the tech industry.

• These recommendations remain as relevant as ever. As generative AI moves from pilots to production deployments and global developments reveal new areas of risk and opportunity, we have updated our suggestions for 2025.

Some of the themes we expect to play a significant role in the coming year and beyond include:

• Protecting the future by elevating risk management: The technology industry continues to navigate an increasingly complex risk landscape shaped by cybersecurity threats, geopolitical tensions, and climate-related challenges. With vast amounts of valuable intellectual property and customer data, tech firms can be prime targets for cybercriminals. The rapid adoption of gen AI also introduces new vulnerabilities, especially since less than one-quarter of AI initiatives are thought to be adequately secured. Geopolitical dynamics may drive some tech companies to diversify their supply chains to other countries. Tech firms are also likely to assess their suppliers locations to help manage climate-related risks.

• Tackling trust to boost gen AI adoption and benefits: Gen AI is fueling transformative changes for businesses, in back- and front-office operations, product development and engineering, and product and service offerings. According to recent Deloitte surveys, business and IT leaders are getting pragmatic about deriving real business value, and workers are beginning to report productivity gains. At the same time, trust issues—relating to data privacy and security, data quality, bias, and accuracy—pose a barrier for both enterprise and consumer gen AI adoption. Tech leaders should be mindful of these potential challenges and consider ways to shore up trust and boost adoption.

• Transforming software through the use of gen AI: Tech leaders surveyed are more optimistic about the transformative potential of gen AI tools than leaders in other industries. One reason may be that tech companies outpace others in their use of gen AI assistants to help human developers write and test code—which could be worth billions of dollars in productivity gains in the United States. The next advance in software development may involve "agentic AI"—autonomous gen AI agents that are able to complete complex tasks with minimal human oversight. Gen AI isnt just transforming software creation; its poised to revamp the nature of software user interfaces from forms and fields and point-and-click to conversational experiences.

• Reigniting interest in private cloud: As businesses implement data-intensive gen AI initiatives, better management of cloud spending is likely to become critical. At the same time, it will be important to ensure data security and comply with regulations—particularly as gen AI models may train on confidential or proprietary data. These are two reasons we believe companies may renew their interest in private cloud over the next year. As businesses reevaluate their public-private cloud mix, tech providers should respond with easy-to-implement solutions for hybrid environments.

• Adapting to enterprise customer needs with mergers and acquisitions (M&A) and partnerships: Enterprises increasingly require end-to-end solutions that address their multi-faceted business priorities. Challenges include the need to integrate across complex, multicloud infrastructures and to support specialised business processes with custom-tailored apps. As tech leaders aim to meet these fast-evolving customer needs, many have indicated theyre anticipating an increase in higher-value deals (such as acquisitions) in the coming year. Some are also turning to alternatives to traditional M&A, such as joint ventures and strategic partnerships—combining forces to offer more comprehensive solutions.

• Addressing new tax and regulatory changes: In 2025, the tech industry will likely face several challenges as new global tax regulations take effect. Global minimum tax requirements, country-by-country reporting, and e-invoicing regulations are designed to increase transparency and combat tax evasion. These regulations will compel many multinational tech companies to adapt their transaction recording and reporting practices, primarily by upgrading and enhancing their enterprise resource planning (ERP) solutions. Companies that report sales in a country should also demonstrate compliance with that jurisdictions privacy and content regulations, necessitating an increased focus on data governance and resilience.

The tech industry is innovating and evolving rapidly. By prioritising security, reliability, and trust—both internally and for customer-facing solutions—tech companies have an opportunity to improve their own operations and drive growth throughout the coming year.

According to International Data corporation (IDC), This years predictions are centered around the emergence of AI as a groundbreaking inflection point in the technology domain. While AI is not a new concept, the release of the GPT-3.5 series from OpenAI in late 2022 acted as a catalyst, capturing global attention and leading to a surge in investments in generative AI. In light of this, IDC foresees global spending on AI solutions surging to over $500 billion by 2027. This, in turn, will usher in a remarkable shift in the allocation of technology investments toward AI implementation and the adoption of AI-enhanced products and services.

TOP OUTSOURCING TRENDS

Technology outsourcing in 2025 is rapidly evolving from a cost-cutting measure to a strategic lever for innovation, risk management, and business value. Key trends reflect the sectors response to new technologies, changing risk profiles, and shifting business priorities.

Key trends in outsourcing industry

The key trends in the outsourcing industry for 2025 include:

1. AI and Automation Integration

• The adoption of artificial intelligence (AI), generative AI, robotic process automation (RPA), and hyperautomation is transforming outsourcing. Providers are now expected to deliver AI-driven solutions, automate routine tasks, and accelerate software development, testing, and documentation.

• Low-code/no-code platforms and automated workflows are allowing business units to co-create applications, further enhancing scalability and efficiency.

2. Strategic Partnerships Over Transactional Models

• Outsourcing is shifting from short-term, transactional contracts to long-term, strategic partnerships. Companies expect outsourcers to share responsibility for outcomes, contribute domain expertise, and participate in joint product roadmaps.

• Managed services and outcome-based pricing models are replacing traditional hourly contracts, increasing vendor accountability for business results.

3. Nearshoring, Friendshoring, and Multisourcing

• Geopolitical risks and the need for better time zone alignment are driving a move toward nearshoring (outsourcing to nearby countries) and friendshoring (outsourcing to politically stable, allied nations).

• Multisourcing and co-sourcing models are gaining ground, with companies building flexible networks of external specialists integrated with internal teams.

4. Cybersecurity and Data Privacy

• As digital threats intensify, cybersecurity is a top outsourcing priority. Over 80% of companies now outsource security functions, seeking partners with advanced capabilities in data protection, compliance, and risk management.

• Data privacy, regulatory compliance, and secure cloud adoption are central to outsourcing decisions

5. Demand for Hyperspecialists and Advanced Skills

• There is a growing need for hyperspecialists in AI, machine learning, data analytics, DevOps, blockchain, and cybersecurity. Outsourcing partners are increasingly valued for their ability to provide niche expertise that cannot be quickly developed in-house.

6. Managed Outsourcing Models

• The trend is moving away from freelancers and contractors toward managed outsourcing providers who offer talent, management, training, and resources as a package. This model reduces management overhead and ensures business continuity.

7. Quality and Strategic Value Over Cost

• Companies are prioritising quality, innovation, and strategic value over pure cost savings. Outsourcing is now seen as a way to access specialised talent and drive transformation, not just as a way to reduce expenses.

8. Enhanced Customer Experience

• Outsourcing is increasingly focused on improving end-customer experience, with providers expected to deliver not just technical solutions but also measurable business outcomes.

9. ESG and Regulatory Considerations

• Environmental, Social, and Governance (ESG) criteria, as well as regulatory compliance (e.g., GDPR, data localisation), are influencing outsourcing decisions. Companies are seeking partners aligned with their values and regulatory requirements.

MARKET OUTLOOK BY INDUSTRY Data Storage

Market Size and Growth

• The global data storage market is projected to reach between $250.77 billion and $255.29 billion in 2025, with forecasts indicating strong growth to as much as $774 billion by 2032. This expansion represents a robust compound annual growth rate (CAGR) ranging from 14.05% to 17.2% over the next several years.

• North America currently holds the largest market share, but the

Asia region is expected to be the fastest-growing due to rapid digital transformation and increased technology adoption.

Key Growth Drivers

• Explosion of Data Generation: The proliferation of big data, IoT, AI, and digital services across industries is fueling demand for scalable and efficient storage solutions.

• Cloud Storage Adoption: Organisations are increasingly shifting to cloud-based storage for its scalability, accessibility, and cost-effectiveness, accelerating market growth.

• Advanced Technologies: Growth is driven by the adoption of software-defined storage (SDS), virtualisation, solid-state drives

(SSD), and high-capacity hard disk drives.

• Industry Demand: Sectors such as IT & telecommunications, BFSI, manufacturing, media & entertainment, and government are major contributors to market expansion.

Trends and Innovations

• Hybrid and Multi-Cloud Solutions: Companies are adopting hybrid and multi-cloud storage strategies to balance cost, performance, and data sovereignty requirements.

• AI and Automation: Artificial intelligence is increasingly integrated into storage management for optimisation, predictive maintenance, and security enhancements.

• Sustainability: There is a growing emphasis on energy-efficient and environmentally friendly storage technologies, especially in next-generation data storage solutions.

• Security and Compliance: Heightened focus on data privacy, regulatory compliance, and advanced security features is shaping product development and purchasing decisions.

The data storage industry is poised for sustained double-digit growth through 2030 and beyond, driven by relentless data creation, cloud migration, and technological innovation. While North America leads in market share, Asia Pacific is set for the fastest growth. The sector will continue to evolve rapidly, with hybrid cloud, AI-driven management, and sustainability at the forefront of industry trends.

Analytical Instrument

Market Size and Growth

• The global analytical instrument market is forecasted to grow from approximately $55.96 billion in 2024 to $60.07 billion in 2025, with a compound annual growth rate (CAGR) ranging from 4% to

7% depending on the source, reaching between $76 billion and $84 billion by 2030.

• North America holds the largest market share, while Asia Pacific is expected to be the fastest-growing region through 2030.

Key Growth Drivers

• Technological Advancements: Integration of automation, artificial intelligence, and digital analytics is revolutionising instrument design, enabling real-time data analysis, predictive maintenance, and remote monitoring.

• Miniaturisation and Portability: Compact, field-deployable instruments are expanding access for on-site research and industrial applications.

• Regulatory and Environmental Pressures: Increasingly stringent regulations and a focus on sustainability are driving demand for energy-efficient and environmentally responsible instruments.

• Industry Demand: Pharmaceuticals, biotechnology, environmental testing, food and beverage, and water/wastewater treatment are major sectors fueling growth due to heightened R&D activity and quality control needs.

Market Segmentation and Trends

Product Segmentation: Chromatography (gas, ion, liquid) remains a dominant technology, with continued innovation in mass spectrometry, spectroscopy, and molecular analysis.

Software and Services: Software is the fastest-growing segment, reflecting the sectors digital transformation, while instruments remain the largest revenue contributor.

Application Trends: Precision medicine, clinical diagnostics, and personalised treatments are driving increased adoption in healthcare and life sciences.

Regional Insights: While North America leads in market share,

Asia Pacifics rapid industrialisation and investment in research infrastructure are accelerating its market expansion.

The analytical instrument industry is set for steady, innovation-driven growth through 2030. Key trends include digital integration, sustainability, and increased demand from pharmaceuticals, biotechnology, and environmental sectors. Asia Pacific is poised for the fastest expansion, while North America remains the largest market. Companies that leverage automation, AI, and sustainable practices are expected to outperform as the industry evolves.

Medical Device

Market Size and Growth

The global medical device industry is projected to continue its robust expansion, with market analysts forecasting a compound annual growth rate (CAGR) between 5.68% and 9.8% through 2029.

The global market volume is expected to reach approximately $669.7 billion by 2029, while some estimates forecast the industrys value could hit $1.3 trillion by 2029.

In the United States, the medical device manufacturers market is estimated at $256.2 billion in 2024 and is expected to grow to $270.1 billion in 2025, reaching $360.1 billion by 2030 at a CAGR of 5.9%.

North America remains the largest market, but emerging economies in Asia, Latin America, and Africa are expected to drive significant future growth as healthcare infrastructure expands and demand for innovative devices rises.

Key Growth Drivers

Aging Global Population: Increased life expectancy and a growing elderly demographic are fueling demand for medical devices, especially those related to chronic disease management and mobility assistance.

Rise in Chronic Diseases: The global prevalence of cardiovascular, neurological, and metabolic disorders is boosting demand for diagnostic, monitoring, and therapeutic devices.

Technological Advancements: Rapid innovation in areas such as artificial intelligence (AI), robotics, 3D printing, and the Internet of Medical Things (IoMT) is transforming device capabilities and enabling personalised, efficient care.

Shift to Value-Based and Remote Care: Healthcare systems are moving toward value-based models, emphasising preventive care, remote monitoring, and patient engagement, all of which drive demand for advanced and connected devices.

Regulatory Evolution: Regulatory agencies are adapting to new technologies, with a particular focus on cybersecurity and data privacy for connected devices.

Major Industry Trends

AI and Machine Learning: AI is increasingly embedded in diagnostic imaging, clinical decision support, and robotic surgery, enabling more accurate and efficient care delivery.

IoMT and Connected Devices: The proliferation of smart, connected devices is enabling continuous patient monitoring, remote management, and integration with electronic health records.

3D Printing and Personalisation: 3D printing is revolutionising the production of patient-specific implants, prosthetics, and surgical tools, improving outcomes and reducing costs.

Wearable Devices: Wearable healthcare devices are accelerating globally, supporting preventive care, chronic disease management, and patient engagement.

Emergence of Innovative Devices: Breakthroughs such as pain-free urological adapters, advanced anesthesia monitors, and minimally invasive surgical tools are transforming patient care and hospital efficiency.

Rise of Emerging Market Players: While established companies (e.g., Abbott, Johnson & Johnson, Medtronic) lead the industry, innovative firms from China and other emerging markets are gaining prominence with competitive pricing and novel products.

The medical device industry is set for sustained, innovation-driven growth through 2030 and beyond. Key trends include the integration of AI, IoMT, and robotics, the expansion of wearable and personalised devices, and the rise of emerging market players. Companies that embrace digital transformation, prioritise cybersecurity, and adapt to evolving regulatory landscapes will be best positioned to capitalise on the expanding global demand for advanced medical technologies.

Semiconductor

Growth Projections and Market Size

• The global semiconductor market is set for robust expansion, with 2025 sales projected to reach $700.9 billion, an 11.2% increase over 2024, and further growth to $760.7 billion expected in 2026.

• Analysts anticipate the industry could reach $1 trillion in annual sales by 2030, requiring a CAGR of about 7.5% from 2025 onward.

• The Americas and Asia Pacific are forecast to lead regional growth, with the Americas expected to grow by 18% and Asia Pacific by 9.8% in 2025.

Key Growth Drivers

Artificial Intelligence (AI): AI is now the primary application driving semiconductor revenue, especially with the proliferation of generative AI and machine learning across industries. High-performance chips for AI training and inference are in high demand, particularly for data centers and enterprise edge devices.

Cloud Computing and Data Centers: The rapid expansion of cloud infrastructure and data center build-outs is fueling demand for advanced logic and memory chips.

Automotive and Electric Vehicles (EVs): The automotive sector, especially EVs, is a major source of chip demand, with modern vehicles requiring two to three times more semiconductors than traditional cars. Applications include battery management, autonomous driving, and connectivity.

Consumer Electronics Recovery: A rebound in consumer electronics, including PCs and smartphones, is supporting growth in mature node ICs and driving volume demand.

5G and IoT Expansion: Ongoing deployment of 5G networks and the proliferation of IoT devices are creating new markets for sensors, analog chips, and microcontrollers.

Technology and Investment Trends

Memory Segment Surge: The memory market, particularly high-bandwidth memory (HBM) for AI accelerators, is expected to grow by over 24% in 2025, outpacing the broader market.

R&D and Capital Spending: A significant majority of semiconductor companies plan to increase R&D (72%) and capital spending (63%) in

2025, reflecting a commitment to innovation and capacity expansion.

Supply Chain Diversification : Companies are prioritising geographic

to enhance supply chain resilience amid ongoing geopolitical tensions and trade restrictions.

Talent and Competition: The entry of non-traditional players (tech giants, automotive firms) into chip development is intensifying competition for talent and driving innovation.

Energy and Utilities

Surging Demand and Infrastructure Investment

Theenergyandutilitiessectorin2025isexperiencingunprecedented load growth, primarily driven by the rapid expansion of AI, data centers, and widespread electrification Utilities are responding with record capital expenditures, modernising transmission and distribution systems, and investing in new generation capacity.

Aggregate utility investments are projected to surpass $1 trillion between 2025 and 2029, with annual U.S. energy utility capex expected to reach $222 billion in 2026. Water utility capex is also set for double-digit growth, reflecting broad infrastructure renewal needs

Transition to Clean Energy

Renewables, especially solar and wind, are the fastest-growing sources of new power generation. U.S. utility-scale solar output is expected to grow by up to 34% in 2025, while renewables investment is projected to exceed $25 billion in 2025 and rise further in subsequent years.

The push for decarbonisation is supported by federal and state-level incentives, such as the Inflation Reduction Act, which are largely expected to remain robust despite potential regulatory shifts.

Permitting and interconnection reforms are accelerating renewable project deployment, with some regions (e.g., y Germany) demonstrating dramatic improvements in project approvals.

Technology and Digital Transformation

Utilities are increasingly integrating artificial intelligence and advanced analytics to optimise grid management, improve efficiency, and control costs during the clean energy transition.

The adoption of smart meters, grid automation, and digital platforms is enabling two-way communication, predictive maintenance, and enhanced customer experiences.

Resilience, Reliability, and Cybersecurity

The sector is prioritising grid resilience and reliability in the face of aging infrastructure, rising demand, and more frequent extreme weather events.

Cybersecurity investments are ramping up to protect increasingly interconnected and digitalised utility systems from evolving threats.

Affordability and Regulatory Challenges

Balancing the need for massive grid and generation investments with energy affordability is a major concern, as rising wholesale and distribution costs are likely to increase consumer bills.

Regulatory uncertainty, supply chain disruptions, and workforce development remain ongoing challenges for utilities striving to meet sustainability and reliability goals.

Key Trends for 2025

Record capital investment in grid modernisation, renewables, and digital infrastructure.

Accelerated renewables growth driven by policy support and permitting reforms.

AI and analytics integration for operational and customer engagement.

Focus on resilience and cybersecurity amid rising physical and digital threats.

Affordability pressures as utilities balance investment needs with consumer costs.

Regulatory and supply chain uncertainties shaping strategic planning.

The energy and utilities industry in 2025 is defined by surging demand, rapid digital transformation, and an accelerated transition to cleaner energy sources. Utilities are investing heavily in infrastructure and technology to meet these challenges, while navigating regulatory, affordability, and resilience concerns. The sectors outlook is robust, underpinned by strong investment, innovation, and a clear focus on sustainability and reliability for the future.

OPPORTUNITIES AND THREATS

Opportunities

Expansion in Emerging Technologies

Mindtecks expertise in AI/ML, cloud computing, cybersecurity, IoT, wearables, and remote monitoring positions it to capture growing demand from clients seeking digital transformation and advanced solutions.

The companys focus on point-of-care devices, asset tracking, and real-time data solutions aligns with rising needs in healthcare, logistics, and smart infrastructure.

DeepDomainandEngineering

Mindtecks seasoned engineering teams and history of delivering customised, innovative solutions provide a competitive edge in complex, high-value projects.

Its ability to conceptualise, develop, and execute ground-breaking solutions tailored to client needs enhances its value proposition, especially for clients requiring specialised domain expertise.

Established, Diverse Client Base

Long-standing relationships with top-tier clients across data storage, medical device, semiconductor, and analytical instrument sectors provide stability and recurring business opportunities.

Collaboration with industry leaders and geographic diversity enables Mindteck to leverage cross-industry insights and expand into new markets or verticals.

Strategic Focus on Process Optimisation

Mindtecks solutions are engineered to streamline processes, minimise costs, and mitigate risks—capabilities highly valued by enterprises seeking operational efficiency and resilience in uncertain economic conditions.

Threats

Intensifying Competition and Rapid Technological Change

The market for advanced engineering and digital transformation services is highly competitive, with both established players and agile start-ups vying for similar opportunities.

Rapid evolution in technologies such as AI, cybersecurity, and IoT requires continuous upskilling and investment; falling behind could erode Mindtecks competitive advantage.

Talent Acquisition and Retention

Maintaining a team of highly skilled engineers is critical to Mindtecks value proposition. The global shortage of talent in AI, cloud, and cybersecurity poses a risk to growth and project delivery.

Client Concentration Risk

While Mindteck has a robust client base, significant reliance on a few large clients or sectors (e.g., top 5 data storage firms, top 3 medical device enterprises) could expose the company to revenue volatility if major clients reduce spending or switch vendors.

Cybersecurity and Compliance Risks

As Mindteck delivers solutions in sensitive areas like healthcare and critical infrastructure, the risk of cyber threats and the need for compliance with evolving regulations (data privacy, medical device standards, etc.) are heightened.

Economic and Geopolitical Uncertainty

Global economic slowdowns, supply chain disruptions, or geopolitical tensions could impact client budgets, delay projects, or create barriers to market entry in certain regions.

Mindtecks strong foundation in engineering, domain expertise, and established client relationships create significant opportunities for growth in 2025, particularly in emerging technology areas. However, the company must proactively address competitive pressures, talent challenges, and evolving risks to sustain its market position and capitalise on new opportunities.

RISKS AND CONCERNS

Key Risks

Macroeconomic Volatility

Ongoing economic uncertainty, inflationary pressures, and fluctuating interest rates present significant risks for IT companies like Mindteck. These factors can impact client budgets, delay projects, and reduce discretionary spending, directly affecting revenue and growth prospects.

Global IT Skills Shortage and Talent Retention

The global shortage of skilled IT professionals is intensifying, with over 90% of organisations expected to feel its effects by 2026. High attrition rates, competition for top talent, and the rise of remote work and freelancing further complicate talent retention and recruitment for Mindteck. This could lead to project delays, increased costs, and operational challenges.

Cybersecurity and Digital Risks

The threat landscape is evolving rapidly, with AI-powered cyber-attacks, malware, deepfakes, and sophisticated network attacks becoming more prevalent. Mindteck, operating in sensitive sectors like healthcare and infrastructure, faces heightened risks of data breaches, ransomware, and compliance failures. Cloud security, remote work vulnerabilities, and legacy system risks also require constant vigilance and investment.

Market Demand and Revenue Concentration

The IT services sector is experiencing a decline in demand, with a notable drop in active talent demand and project deferments in 2025. Mindtecks reliance on a few large clients or sectors increases exposure to revenue volatility if major clients reduce spending or switch vendors.

Reputation Management

In the era of rapid information exchange and social media, any negative incidents—such as data breaches, project failures, or compliance lapses—can quickly damage Mindtecks reputation, affecting client trust and future business opportunities.

Operational and Cost Pressures

Mindteck is under pressure to contain selling, general, and administrative (SG&A) costs while maintaining productivity and efficiency. This is especially challenging in a competitive landscape where clients demand cost-effective, high-quality solutions.

Geopolitical and Supply Chain Risks

Global events such as wars, pandemics, and supply chain disruptions can impact Mindtecks operations, project timelines, and market access. The company must remain agile and proactive in managing these external risks.

Key Concerns

Enormous Uncertainty and Competition

The IT industry faces fierce competition and constant change, with new entrants and technological disruptions challenging established players like Mindteck. The need to continuously innovate and upskill is critical to remain relevant.

AI and Cloud Implementation Risks

Rapid adoption of AI and cloud technologies brings risks related to ethical use, compliance, algorithmic bias, and cloud urations. misconfig Without robust governance and regular audits, these risks can lead to regulatory penalties and reputational harm.

Reduced Demand and Hiring Freeze

The sectors decline in demand has led to a significant reduction in hiring, impacting Mindtecks ability to scale and respond to new opportunities.

Attrition and Employee Well-being

High attrition rates, driven by market demand for skilled professionals, can disrupt projects and erode organisational knowledge. Mindtecks focus on employee well-being, learning and development, and a positive work culture is crucial for mitigating this risk.

Mindtecks risk landscape in 2025 is shaped by macroeconomic instability, cybersecurity threats, talent shortages, and market uncertainties. Addressing these risks requires ongoing investment in talent, technology, cybersecurity, and operational resilience to sustain growth and maintain client trust.

Attrition Rate:

Dynamic Talent Market Impact:

The ongoing surge in digital transformation across industries continues to drive high demand for niche IT skills. This competitive talent landscape has impacted attrition rates across the industry, including at Mindteck.

Employee-Centric Retention Strategy:

Mindteck has sustained its "Employees-First" philosophy, focusing on holistic employee engagement, a flexible work environment, and wellness initiatives. These efforts aim to foster belonging and reduce voluntary attrition, especially in critical technology functions.

Upskilling and Career Pathing:

In 2025, Mindteck expanded its Learning & Development programs to include AI, cybersecurity, and cloud technology training. Personalised career progression plans were introduced, contributing to higher engagement and improved retention outcomes.

Reputation Management

Real-Time Reputation Monitoring:

With the rising influence of online platforms, Mindteck reinforced its social and digital listening capabilities to monitor potential reputational risks proactively.

Transparent Communication:

Mindteck embraced a culture of transparent and timely communication with stakeholders, reinforcing trust and alignment during organisational changes or industry disruptions.

Governance and Brand Protection:

A cross-functional team continues to oversee brand management, employee advocacy, and stakeholder perception to maintain Mindtecks integrity and reputation as a responsible employer and industry partner.

By prioritising employee engagement, professional development, and proactive reputation management, Mindteck remains committed to addressing attrition challenges and sustaining its employer brand in a dynamic, fast-evolving IT landscape.

DISCUSSION ON FINANCIAL PERFORMANCE Business

During the year under review, your Company recorded Consolidated

Revenue of Rs. 4244.2 million as against Rs. 3855.3 million in the previous year. Of the revenues that were recorded, 45.1% is attributed to the US and the rest to Europe and Asia.

Mindtecks Consolidated Net Profit for the year stood at Rs. 286.8 million, as against Rs. 273.1 million in the corresponding previous year. On an operating margin level, Mindteck recorded Consolidated EBITDA (including other income and excluding exceptional items) of Rs. 428.0 million this fiscal year as against of Rs. 388.9 million last year.

Share Capital

As on March 31, 2025, Mindteck has an issued share capital base of 3,19,12,221 equity shares of Rs. 10/- each at face value. All shares are fully paid up. In addition, 38,579 equity shares are reserved for allotment to certain allottees as on March 31, 2025, in relation to discharge of consideration for the acquisition of Chendle Holdings Limited, one of the Companys wholly owned subsidiaries. The allotment has been pending owing to the non-availability of Permanent Account Number (PAN) for these shareholders.

The Company has implemented a Scheme named as Mindteck Employees Stock Option Scheme 2020 in lieu of earlier Companys

Share Incentive Scheme which was wound-up on March 06, 2024, by the Board of Directors. MEWT has not transferred any shares to the employees of the Company under the said scheme. The shares held by Mindteck Employees Welfare Trust (MEWT) will be sold in the secondary market as permitted under Securities and Exchange

Board of India (Share Based Employee Benefits and Sweat Equity)

Regulations, 2021.

During the year ended March 31, 2025, the Trust sold 2,24,449 (March 31, 2024: 191,551 shares) shares held by it at an average price of Rs. 280.30 per share. The shares had a face value of Rs. 2.3 million, and an aggregate purchase value of Rs. 21.8 million. Net profit of Rs. 37.1 million, post tax, generated from the sale of shares has been credited to MEWT reserves. As a result of disposal of shares by the Trust, consolidated Equity Share Capital has increased by Rs. 2.3 million, consolidated Securities Premium account by Rs. 19.5 million. As on March 31, 2025, the MEWT holds Nil shares of the Company.

Reserves and Surplus

Mindteck has retained earnings of Rs. 912.5 million in the Consolidated Balance Sheet as on March 31, 2025. Shareholders Funds, excluding capital reserves and capital redemption reserve, increased from Rs. 2,124.2 million in FY 2024 to Rs. 2,519.1 million in FY 2025, other than profit for the period majorly on account of sale of shares by MEWT amounting to Rs. 58.9 million (profit on sale of shares owned by MEWT

Rs. 37.1 million, addition to share capital Rs. 2.3 million, addition to securities premium Rs. 19.5 million), reduction in reserves on account of dividend paid during the year amounting to Rs. 25.5 million.

Non-Current Liabilities

Non-Current Liabilities in the Consolidated Balance Sheet include rental deposit, non-current portion of lease liabilities and provision for gratuity. Non-Current Liabilities increased from Rs. 48.1 million in FY 2023-24 to Rs. 87.7 million in FY 2024-25. The increase is mainly due to lease liability recognised during the year assuming continued use of property following expiry of the lock-in period and increase in provision for gratuity.

Current Liabilities

Current Liabilities in the Consolidated Balance Sheet includes trade payables, current portion of lease liabilities, provision for employee benefits, provision for tax, and other current liabilities. Current Liabilities increased from Rs. 498.1 million in FY 2023-24 to Rs. 530.1 million in FY 2024-25.

Trade payables increased from Rs. 164.1 million in FY 2023-24 to

Rs 175.0 million in FY 2024-25. Other current liabilities comprise unearned income, statutory liabilities such as PF, TDS, etc., Provisions under Current Liabilities stood at Rs. 41.9 million as on March 31, 2025 compared to Rs. 40.5 million as on March 31, 2024.

Non-Current Assets

Consolidated Non-Current Assets include Property, Plant and

Equipment, Right-of-use asset, Intangible assets, Investment property, Deferred Tax Asset (net), long-term loans and advances and other non-current assets.

Mindteck invested Rs. 8.0 million in Property, Plant and Equipment during the fiscal year, which relates majorly to Computer Equipment.

During the year recognised Rs. 90.9 million addition to Right of use asset assuming continued use of property following expiry of the lock-in period.

Other financial assets comprise of security deposits and Fixed deposits with bank with remaining maturity of more than 12 months totalling to Rs. 251.4 million as on March 31, 2025, compared to Rs.

1.0 million as on March 31, 2024, increase in fixed deposits maturing more than 12 months and re-classification of security deposit from current to non-current

Other Non-Current Assets consist of prepaid expense amounting to Rs. 1.5 million as on March 31, 2025.

Current Assets

Consolidated Current Assets include trade receivables, cash and bank balances, short-term loans and advances, and other current assets.

Mindtecks accounts receivables as on March 31, 2025, amounts to

Rs. 1,013.4 million, representing about 86 days of sales. All debts financial doubtful of recovery have been provided for the statements.

Cash and Bank balances amounted to Rs. 1,342.1 million compared to

Rs. 1,249.6 million in the previous year which includes both rupee and foreign currency accounts.

Other financial assets under Current Assets include claimable expenses, accrued expenses, employee advances and security deposits. The balance as on March 31, 2025, stood at Rs. 33.3 million compared to Rs. 47.8 million as on March 31, 2024. Decrease in other reclassification financial assets is majorly account of of Security deposits from current to non-current.

Other current assets include prepaid expenses, advances recoverable and balances with government authorities and unbilled revenue-contract assets. The balance as on March 31, 2025, stood at Rs. 94.7 million.

Investments

Mindteck (India) Limited has six wholly owned subsidiaries and two step-down subsidiaries as on March 31, 2025. The nature of operations of these subsidiaries is as follows:

Mindteck, Inc. - Operating company

Mindteck Singapore Pte. Limited - Operating company

Mindteck (UK) Limited - Operating company

Mindteck Middle East Limited WLL - Operating company

Mindteck Software Malaysia SDN. BHD. - Operating company

Chendle Holdings Limited - Investment arm, holding stock in Mindteck, Inc., US

Mindteck Germany GmbH - Selling and marketing company (stepdown subsidiary)

Mindteck Canada, Inc.- Selling and marketing company (stepdown subsidiary) Note: Mindteck Solutions Philippines Inc. is under closure.

Internal Control Systems and their adequacy

The CEO and CFO provided in the annual report discusses the adequacy of our internal control systems and procedures.

RESULTS OF OPERATION Income

The Company recorded consolidated revenue from operations of Rs.

4,244.2 million in FY 2024-25 as against Rs. 3,855.3 million in FY

2023-24. The company recorded other income of Rs. 75.4 million in

FY 2024-25 as against Rs. 64.6 million in FY 2023-24.

Expenses

Employee benefit expenses and cost of technical sub-contractors for the FY 2024-25 stood at Rs. 3,377.3 million as against Rs. 3,234.3 million in FY 2023-24. Percentage of Manpower expense to revenue stood at 79.6% compared to 83.9% during FY 2023-24.

Finance cost in FY 2024-25 was Rs. 11.0 million as compared to Rs.

8.9 million in FY 2023-24.

Other expenses of FY 2024-25 amounted to Rs. 514.3 million compared to Rs. 296.7 million last year, increase in project supply and services by Rs 195.5 million. Mindteck will continue to focus on cost-effective measures to further improve productivity and increase efficiency in the operations. Tax expense for the year amounting to Rs. 66.1 million (net) is the aggregate of current tax liability in all tax jurisdictions in which the Company operates, and deferred tax. Tax provision in India is based on the normal tax computation in accordance with the prevailing tax laws.

Operating Profit and Net Profit

Consolidated EBITDA (including other income and excluding exceptional items) for the year amounted to Rs. 428.0 million as against Rs. 388.9 million in the previous year. Net profit is Rs. 286.8 million in FY 2024-25, as against Rs. 273.1 million in FY 2023-24.

or more as compared to the immediately previous financialyear) in key Detailsofsignificant financial ratios, along with detailed explanations for Standalone Financial Statements:

Sl. No. Description	As at March 31, 2025	As at March 31, 2024	Reasons for variance
i Debtors Turnover	4.44	4.35	-
ii Inventory Turnover	NA	NA	-
iii Interest Coverage Ratio	NA	NA	-
iv Current Ratio	5.01	5.43	-
v Debt Equity Ratio	NA	NA	-
vi Operating Profit Margin (%)	12.9	12.6	-
vii Net Profit Margin (%)	12.1	13.1	-
Details of any change in Return on Net Worth as viii compared to the immediately previous financial year along with a detailed explanation thereof (%)	-0.98	1.51	Decreased due to no significant change in net profit for the year as compared to previous year.

Human Resources Initiatives

Employee Engagement and Wellbeing

During the year, a variety of employee engagement initiatives were launched to foster a positive and inclusive workplace culture.

Through our structured Employee Recognition Programs, we acknowledged high performers with monthly Spot Awards and quarterly performance recognitions.

Fun@Work Initiatives such as festival celebrations, themed events, and wellness weeks were conducted to enhance workplace vibrancy and employee morale.

Mental Health & Wellness Support included partnerships with external counselors, offering webinars and one-on-one sessions focused on emotional and mental well-being.

We also continued to support Hybrid Work Models, ensuring flexibility through digital collaboration tools and adaptive work policies.

Talent Acquisition & Employer Branding

We strengthened our Campus Hiring Program, expanding outreach across India to onboard fresh engineering graduates. These new hires undergo a six-month training program to build capabilities and prepare them for project deployment, thus creating a future-ready talent pipeline.

Our efforts in Employer Branding were further enhanced through increased visibility on LinkedIn and other social platforms, attracting top-tier talent.

Mindtecks annualised attrition rate during the FY 2024-25 was 19.1% compared to 12.7% of previous year.

Year	Permanent	Contractual	Total
2024-25	686	46	732
2023-24	760	40	800

Learning & Development

Focused on continuous learning, the following initiatives were implemented:

Skill Enhancement Programs for technical and soft skills development through internal and external experts.

Leadership Development through mentoring and coaching, targeting high-potential employees and emerging leaders.

E-Learning Implementation, with the rollout of a Learning Management System (LMS) offering curated, self-paced training content.

HR Operations and Compliance

To streamline processes and improve efficiency, we initiated the implementation of PocketHRMS, a comprehensive digital platform aimed at automating end-to-end HR operations.

Headcount & Attrition

Headcount Details: