OSEL Devices Ltd Management Discussions

Pursuant to Regulation 34(3) read with Schedule V, Part B of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. This discussion should be read in conjunction with the audited financial statements and the notes thereto for the year ended 31st March 2026. The analysis below is Company and market specific; it does not identify or rely on information relating to individual customers.

1. Industry Structure and Developments

The Company operates across three technology verticals: hearing and medical devices, LED display systems, and mobile handsets, each shaped by distinct structural forces and all three benefiting from a common policy environment that favours domestic manufacturing.: the Make in India programme, the Production Linked Incentive (PLI) Scheme, dedicated Medical Device Parks, and Indias rapidly expanding free-trade-agreement network, with agreements signed with more than 17 countries opening preferential tariff access for Indian electronics exports. The market size, projected trajectory and demand drivers of each category are set out below; source references appear beneath each panel.

Hearing care and medical devices — market trends and growth drivers.

The structural driver is underpenetration: an estimated 63 million Indians live with significant hearing impairment, while device adoption remains low relative to the potential need. Government programmes such as the National Programme for Prevention and Control of Deafness (NPPCD) and Rashtriya Vayoshri Yojana support access to hearing care and assistive devices. Demand is also shifting towards digital signal processing, wireless/Bluetooth connectivity, rechargeability and over-the-counter (OTC) formats — areas in which the Companys own-manufactured ranges are positioned.

Indias medical devices sector — supported by domestic manufacturing and policy initiatives.

Indias broader medical devices market, the Companys regulated-manufacturing home market, is projected to more than triple by 2030, supported by rising domestic demand, increased healthcare spending and the Governments local-manufacturing push through the PLI Scheme and Medical Devices Parks.

LED displays — demand supported by digital adoption and infrastructure growth.

Demand is being driven by increasing adoption of digital signage across retail, enterprise, infrastructure and public- sector applications, supported by the growth of digital out-of-home (DOOH) advertising and Smart Cities initiatives. Technology developments are enabling higher-resolution, energy-efficient and increasingly interactive display solutions, while demand for dynamic visual communication continues to expand across commercial and institutional applications. These trends provide a favourable backdrop for the Companys display product portfolio.

Mobile handsets — how the market is evolving.

India remains one of the worlds largest mobile markets. The demand structure a very large feature-phone installed base transacted predominantly offline, and an entry-level smartphone tier that is the only handset segment still growing favours distribution-led, brand-anchored strategies of the kind the Company operates under its exclusive Philips brand licence.

2. Opportunities and Threats

Opportunities are presented category-wise, anchored to the market sizing above; they are framed at the level of the overall market and the Companys capabilities, not with reference to any individual customer.

Opportunities — Hearing & Medical Devices (global market USD 15.1 Bn USD 37.8 Bn by 2034, CAGR 11%; India USD 15.2 Bn* USD 50.1 Mn by 2030)

• Integrated hearing-care platform in an underpenetrated market. With demand for hearing care far exceeding device adoption in India, the Companys move from device manufacturing into an integrated platform — own-manufactured Syno Stat (BTE) and Syno Smart (RIC) ranges combined with a clinical and audiology network following the Sound For Life acquisition positions it across the full value chain of the fastest-growing category it serves.

• Regulated-manufacturing advantage. A CDSCO/BIS-certified, FDA-registered manufacturing base in a medical-devices market projected to grow 15% annually to 2030 with the PLI Scheme and Medical Device Parks lowering the cost of domestic scale-up.

• OTC and technology shift. The industrys move toward OTC formats, rechargeability and Bluetooth connectivity matches the specification set of the Companys own ranges.

Opportunities — LED Displays (India market USD 848.1 Mn * USD 1,315.6 Mn by 2034, CAGR 5.0%)

• Public digital-infrastructure demand. Rising institutional and public-sector adoption of large-format display infrastructure smart cities, transport hubs, public information systems expands the addressable market for the Companys integrated display, control and content capabilities.

• DOOH and premiumisation. The shift of advertising spend to digital out-of-home formats and demand for finer pitch, COB, interactive and transparent formats favour manufacturers with in-house control-layer technology over commodity assemblers.

• Vertical integration. An own product stack display, player and signage CMS differentiates the Company in a market where imports compete mainly on hardware price.

Opportunities — Mobile Handsets (350 Mn+ Estimated feature-phone users; entry-level smartphone tier growing

+18% YoY)

• Scale of the value-conscious segment. Indias entry-level tier is the only handset segment still growing; the Companys brand-licence model pairs a globally recognised consumer brand with local manufacturing, distribution and after-sales capability.

• Offline distribution economics. The Companys distribution-led approach addresses the channel where the demand actually sits.

Opportunities — Platform-wide

• Policy tailwinds. Make in India, the PLI Scheme and Indias FTA network (17+ countries) directly support domestic manufacturing and export competitiveness.

• Export headroom. The JNPA SEZ project a proposed 5.01-acre industrial and technology campus for which the Companys wholly-owned subsidiary received a Letter of Intent for Co-Developer status creates a scalable re-export platform toward the Middle East, Europe and beyond, adjacent to one of Indias major ports.

• Vertical diversification. Three distinct verticals reduce single-category dependence and allow manufacturing, technology, distribution and brand investments to compound across the platform.

Threats and Challenges

• Competitive intensity in commodity LED segments, including pricing pressure from larger and import- driven players and the risk of component dumping from neighbouring countries amid tightening trade regulations.

• Regulatory compliance obligations in medical devices. Compliance with the Medical Device Rules, 2017 adds cost and time to product launches and requires sustained quality-system investment.

• Licence concentration in the mobile vertical. The mobile business operates under an exclusive brand licence; any adverse change in that relationship would affect the entire vertical.

• Unified brand architecture concentration. A quality or safety issue in any one vertical — particularly in regulated medical devices — could affect the reputation of the others.

• Geopolitical and supply-chain risk. Tensions affecting transshipment hubs, freight lanes and input costs; the Companys mitigation is diversification of suppliers, shipping lanes and re-export destinations.

• Working-capital intensity of rapid scale-up, with the associated finance-cost impact discussed in Sections 7 and 9 below.

3. Segment-Wise / Product-Wise Performance

The Companys revenue of Rs292.67 Crore in FY2025-26 was distributed across its three product verticals as follows (revenue share as reported by management; segment-wise profit is not separately reported):

Product Vertical	Share of FY26 Revenue	Approximate Value
Hearing Aids (MedTech)	42%	TI22.9 Cr
LED Displays & Digital Signage	41%	TI20.0 Cr
Mobile Handsets (Philips licence)	17%	Rs49.8 Cr
Total	100%	Rs292.67 Cr

The near-even balance between the hearing and LED verticals — with the mobile vertical contributing meaningfully in its first full year of commercial operations — reflects the diversification objective of the Companys three-vertical strategy.

4. Outlook

The Company enters FY2026-27 with a stronger and more diversified platform than at any point in its history. Managements priorities are: deepening institutional and infrastructure presence in the LED vertical; building on manufacturing and clinical capabilities in Hearing Technology following the Sound For Life acquisition, including pan- India expansion of the hearing-care network; expanding the Philips Mobile portfolio and its distribution network; advancing the JNPA SEZ campus project; and growing export markets, which management expects to become an increasingly meaningful contributor to revenue in the years ahead. The Companys objective is a business that is larger, stronger, more technologically capable and increasingly relevant to the markets it serves.

5. Risks and Concerns

Risk management is an integral part of the Companys business strategy. The Company operates as a manufacturer of electronic and regulated medical devices and as a licensee brand in consumer electronics, and is therefore exposed to the categories of risk that are inherent to those businesses. The principal risks identified by the Board, together with the measures adopted to mitigate them, are set out below. Market-level opportunities and threats are discussed separately in Section 2.

• Operational Risk

The Companys operations depend on the effectiveness of its people, manufacturing processes, plant and equipment, and internal systems. Any interruption to production, equipment failure, quality deviation or process inefficiency could adversely affect delivery commitments, business performance and financial position.

To mitigate such risks, the Company maintains defined manufacturing processes and quality-management systems at its facility, supported by preventive maintenance, in-process and final inspection, and periodic internal audits and process reviews. Operations are led by experienced personnel with domain expertise across electronics manufacturing, medical devices and distribution, which supports sound execution and oversight of business activities.

• Industry and Competition Risk

The Company operates in competitive segments in which pricing pressure from larger or import-driven participants, and the risk of low-priced imports in commodity product categories, can affect volumes and margins. To mitigate such risks, the Company competes on the basis of in-house design and manufacturing capability, an owned technology and software layer, product certification, and service and after-sales support, rather than on price alone. Operating across three distinct verticals also reduces dependence on the performance of any single product category.

• Regulatory and Compliance Risk

The Company operates in a regulated environment. Its medical device products are subject to product registration, licensing and quality-system requirements, and the Company is additionally subject to company-law, listing and other applicable regulations. Changes in laws, rules or regulatory interpretations, delays in implementation, or differing interpretations between the Company and the authorities may have a material impact.

To mitigate such risks, the Company maintains a compliance framework supported by internal teams and, where appropriate, external legal and professional advisers. Regulatory developments are tracked on an ongoing basis, statutory and regulatory compliance is periodically reviewed, and quality systems are maintained to the standards applicable to each product category.

• Technology and Product Obsolescence Risk

The markets in which the Company operates are subject to continuing technological change. A failure to anticipate shifts in technology, product specification or customer expectation could render existing products less competitive. To mitigate such risks, the Company invests in in-house research and product development, maintains its own control and content-management technology, and refreshes its product ranges in line with prevailing industry direction.

• Supply Chain and Input Cost Risk

The Company depends on the availability of electronic components and other inputs, a portion of which is imported. Component shortages, logistics disruption, freight and input-cost volatility, and geopolitical developments affecting trade routes may affect cost structures and production schedules.

To mitigate such risks, the Company works towards diversification of its supplier base, shipping routes and export destinations rather than concentration through any single corridor, and plans inventory levels to support committed order execution.

• Financial Risk

The Company is exposed, in the ordinary course of business, to liquidity risk, credit risk in respect of receivables, interest-rate risk on borrowings and foreign-exchange risk on import and export transactions. A growing scale of operations increases working-capital requirements and the associated cost of funding.

To mitigate such risks, the Company monitors cash flows, working-capital cycles and funding requirements on an ongoing basis, evaluates customer credit before extending terms, and periodically reviews its borrowing profile and foreign-currency exposures. Financial performance and the movement in key financial ratios are discussed in Sections 7, 9 and 10.

• Brand and Reputation Risk

Reputation is a significant asset for the Company and influences customer confidence, institutional relationships and long-term sustainability. The Company operates a single unified brand across its verticals; consequently, a quality, safety or service issue in one vertical — particularly in a regulated product category — could affect perception of the others. In the consumer electronics vertical the Company operates under a brand licence, and any adverse change in that arrangement would affect the vertical.

To mitigate such risks, the Company places continuing emphasis on product quality, certification and after-sales service, on compliance with the terms of its licensing arrangements, and on a culture of accountability across its operations.

• Human Resource Risk

The Companys growth depends on its ability to attract, develop and retain qualified technical, manufacturing, clinical and commercial personnel. The loss of key personnel or an inability to scale the workforce in line with growth could affect operations.

To mitigate such risks, the Company focuses on structured recruitment, training and skill development, and on maintaining cordial employee relations across its locations.

6. Internal Control Systems and Their Adequacy

Internal Control Systems Adequacy Narrative

"The Companys internal control systems are commensurate with the nature of its business, the size and complexity of its operations and such internal financial controls with reference to the Financial Statements are adequate."

The internal control framework is supported by the Audit Committee of the Board, the Companys internal auditor, and the statutory auditors separate report on internal financial controls over financial reporting, which appears with the Independent Auditors Report in Part 3 of this Annual Report.

7. Discussion on Financial Performance with Respect to Operational Performance

	Standalone	Consolidated
Financial Indicator	FY26	FY25	FY26	FY25
Revenue from Operations	29,266.81	18,646.87	29,266.81	18,646.87
Other Income	190.37	13.20	190.37	13.20
Total Income	29,457.18	18,660.07	29,457.18	18,660.07
Total Expenses	25,031.41	15,763.77	25,034.77	15,763.77
Profit Before Tax (PBT)	4,425.77	2,896.30	4,422.41	2,896.30
Tax Expense	1,501.27	891.03	1,501.22	891.03
Profit After Tax (PAT)	2,924.50	2,005.27	2,921.19	2,005.27
Basic EPS p)	17.16	14.31	17.16	14.31
Diluted EPS p)	17.01	14.31	17.01	14.31

Key performance indicators (Standalone):

Metric	FY 2025-26	FY 2024-25	YoY Growth
Revenue from Operations	Rs292.67 Cr (Rs29,266.81 Lakhs)	TI86.47 Cr (TI8,646.87 Lakhs)	+56.95%
EBITDA	Rs55.26 Cr (Rs5,526.07 Lakhs)	Rs33.40 Cr (Rs3,339.62 Lakhs)	+65.45%
Metric	FY 2025-26	FY 2024-25	YoY Growth
Profit After Tax (PAT)	Rs29.25 Cr (Rs2,924.50 Lakhs)	Rs20.05 Cr (Rs2,005.27 Lakhs)	+45.84%
Basic EPS	TI7.16	TI4.31	+I9.92%
Diluted EPS	TI7.01	TI4.31	+I8.87%

Revenue growth of 56.95% was delivered alongside EBITDA growth of 65.45%, indicating operating leverage in the core business. Profit After Tax grew 45.84% in absolute terms. Total equity grew 77% to TI9,H7.2I Lakhs through fresh share and warrant issuance, strengthening the balance sheet for the Companys next phase.

8. Material Developments in Human Resources / Industrial Relations

The Companys workforce during the year 59 employees as on 31st March 2026, against 52 a year earlier reflecting the scale-up across all three verticals and the formation of the Group. Industrial relations remained cordial throughout the year; no material disputes were reported.

9. Details of significant changes in key financial ratios, along with detailed explanations therefor:

Ratios	FY 2025-26	FY 2024-25	Variance	Reason for Variance
Debtors (Trade Receivables) Turnover Ratio (in Times)	3.39	4.05	-16.31	-
Inventory Turnover Ratio (in Times)	5.93	5.64	5.2	-
Interest Coverage Ratio (in Times)	0.39	0.47	-16.28	-
Current Ratio (in Times)	1.94	1.91	I.38	-
Debt-Equity Ratio (in Times)	0.49	0.46	7.11	-
Operating Profit Margin (in %)	15.12%	15.53%	-2.64	-
Net Profit Margin (in %)	9.99%	10.75%	-7.08	-
Return on Investment (in %)	0.16%	0.16%	-2.46	-
Return on Equity (in %)	20%	30%	-35.0I	Due to increase in Average equity
Trade Payables Turnover ratio (in Times)	7.5I%	4.77%	57.37	Increase in on account of higher purchases/lower average trade payables during the year
Net Capital Turnover Ratio (in Times)	2.I6	2.34	-7.6	-
Return on Capital Employed (in %)	0.28	0.29	-4.89	-

10. Change in Return on Net Worth

Return on Net Worth was 20% in FY2025-26 against 30% in FY2024-25, a relative change of (35.01%), below the 25% threshold requiring mandatory explanation, but disclosed here for completeness: total equity grew 77% (to 19,117.21 Lakhs) through fresh share and warrant issuance, outpacing PAT growth of 45.84% and diluting the return on the enlarged equity base. Management regards this as capital raised ahead of deployment rather than a deterioration in underlying profitability.

11. Disclosure of Accounting Treatment

Accounting Treatment Disclosure Statement

• Accounting Standards Divergence: None. "The company prepares its financial statements in compliance with the Accounting Standards prescribed under Section 133 of the Companies Act, 2013."

• Accounting Policy Consistency: Confirmed — no change in accounting policies during FY 2025-26.

12. Other Disclosures

The following additional disclosures are made for the year under review:

• Foreign exchange earnings and outgo (FY2025-26): Earnings — Rs2,246.77 Lakhs; Outgo — Rs9,761.18 Lakhs.

• IPO proceeds utilisation: A minor balance of Rs2.75 Lakhs of IPO proceeds remained unutilised as at the reporting date.

• MSMED dues: Outstanding dues to Micro and Small Enterprises stood at Rs31.19 Lakhs as of 31st March 2026, down from T154.97 Lakhs a year earlier.

Cautionary Statement

Statements in this report describing the Companys objectives, projections, estimates and expectations may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply, government regulations, tax regimes, natural calamities, and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of subsequent developments, information or events.