Railtel Corporation of India Ltd Management Discussions

xii. Central Vigilance Commission (CVC) Guidelines and the Integrity Pact framework.

RailTel was incorporated in 2000 as a Government of India enterprise under the Ministry of Railways to create a nationwide broadband telecom and multimedia network and to modernise the train control, operation and safety systems of Indian Railways. The Company achieved Mini-Ratna status in 2012 Schedule ‘A status thereafter, and was conferred Navratna status by the Department of Public Enterprises in Aug, 2024. The Companys shares are listed on BSE Limited and the National Stock Exchange of India Limited.

The Companys capability portfolio spans across full digital infrastructure value chain:

i. Optical Fibre Backbone: Pan-India OFC network covering railway stations and intra-city access networks, providing the foundational layer for the Companys services.

ii. National Long Distance and IP-MPLS Infrastructure: Carrier-grade NLD, IP-MPLS, MPLS-VPN and Ethernet services for Government, PSU, BFSI and enterprise customers.

iii. Data Centres and Hybrid Cloud: Tier-III standard Data Centres, co-location, managed hosting, MeghRaj-aligned Government

Community Cloud and hybrid cloud offerings.

iv. RailWire Broadband: Retail and institutional broadband and public Wi-Fi at railway stations.

v. Cybersecurity Services: Managed Security Operations Centre, vulnerability assessment and penetration testing, security consulting and integrated security solutions.

vi. Railway ICT and Mission-Critical Communications: Including KAVACH Automatic Train Protection, tunnel communication, signalling and telecom works, station modernisation, passenger information systems and Video Surveillance – detailed in Section 8.

vii. Enterprise ICT and System Integration: End-to-end ICT solutions for large Government and

PSU customers, including network integration, application hosting and managed services.

viii. e-Governance Platforms: Implementation partner for Central and State Government digital initiatives across education, health, transport, agriculture, public safety and smart governance.

ix. BharatNet: Long-standing participation as a

CPSE implementing partner under BharatNet

(DoT-led) and the National Knowledge Network, a separate national programme connecting research and academic institutions.

RailTel has been appointed by BSNL as the Independent Engineer (IE) for Phase 3 package

4. RailTel as IE is responsible for monitoring project implementation by 3 different PIAs of each State and checking the quality of work, ensuring compliance with technical and contractual requirements of RFP, witnessing Acceptance Tests, certifying PIAs Project Milestones, and submitting independent reports to BSNL.

x. International ICT Opportunities: Selective, disciplined initial pursuit of overseas ICT and railway-technology opportunities.

RailTels competitive position is anchored on a set of differentiators that are difficult to

i. National Reach: Pan-India presence extending into Tier-II, Tier-III and rural locations through the railway network footprint.

ii. Trusted CPSE Credentials: Strong governance posture, alignment with national digital sovereignty objectives, and preferred-partner status with Government and CPSE customers.

iii. Execution Capability: Demonstrated ability to deliver large, complex, multi-location ICT and telecom projects under stringent Government procurement frameworks.

iv. Integration Expertise: End-to-end capability to integrate connectivity, Data Centre, cloud, cybersecurity and application layers into outcome-oriented solutions.

Long-standing partnership with Indian

Railways across mission-critical safety and communication systems.

vi. Financial Strength: Robust balance sheet and debt-free status providing capacity for forward investments without recourse to external borrowing.

vii. Human Resources and Organisational Capability: RailTels operational resilience is anchored in a highly skilled workforce managing mission-critical functions, including NOC, C-NOC and Data Centres, supported by continuous technical, managerial and leadership development. This, together with succession planning and expert advisory support, strengthens the Companys long-term organisational capability.

Building on the structural ICT trends discussed earlier in Section 3, the Company has framed Data Centre, cloud and AI capability development as a strategic growth axis for the medium term.

This section sets out the management strategy and positioning, without restating the underlying sectoral data or fiscal incentive framework already covered.

During FY 2025-26, the company achieved operating income of 4277.48 Crore as compared to 3477.50 Cr in the previous year. The Telecom segment contributed 1500.69 Cr. as against 1362.53 Cr during the previous financial year. The Project segment contributed 2776.79 Cr. as against 2114.97 Cr. during previous financial year. Profit before tax during FY 2025-26 stood at

469.58 Cr. as against 401.78 Cr. during FY 2024-25. Profit after Tax of the Company during FY 2025-26 was 346.32 Cr. as compare to 299.81

Cr. during FY 2024-25.

The Company remain Debt free entity with Net worth of 2261.61 Cr. as on 31.03.2026. The details of significant changes (i.e. change of 25% or more) as compared to FY 2024-25 in key financial ratios forms part of the financial statements.

The details of the significant

Financial Ratios as compared to FY 2024-25 with detailed explanation for significant changes for 25% or more is given hereunder:

* Interest Coverage Ratio is not applicable as the company does not have any debt.

The Company has an effective internal control and audit system for maintaining efficiency operations and compliance of relevant Laws and

Regulations. The Companys Internal Financial Control is designed to provide reasonable assurance regarding the reliability of Financial Reporting in accordance with Generally Accepted Accounting Principles. These controls are structured to facilitate accurate maintenance of accounting records, safeguarding of assets, prevention and detection of fraud and error and ensuring the reliability of Financial and Operational information. The Internal

Financial Control Framework undergoes periodic evaluation to ensure its alignment with the dynamic business needs. The Company engages experienced professional firms to conduct Internal audit of its operations on quarterly basis. The Company has well defined policies, guidelines and Schedule of Powers. The companys internal financial controls are reviewed regularly to assess their adequacy.

The convergence of sovereign hosting demand, data-localisation imperatives, expanding regulated workloads, and the rising criticality of trusted-PSU positioning makes Data Centre and digital infrastructure a defining opportunity for RailTel over the medium term. The Companys integrated capabilities across connectivity, hosting, security and managed services position it to participate meaningfully in this opportunity, with disciplined capital allocation and partnership-led capability development.

7.1 Four-Pillar Data Centre Strategy i. Capacity Expansion: Augmentation of existing

Tier-III Data Centre capacities and addition of new Data Centres in strategic locations to address growing co-location and managed-hosting demand.

ii. Sovereign and Government Cloud: Continued positioning as a trusted hosting partner for

Central and State Government workloads, leveraging MeghRaj-aligned credentials and CPSE governance posture.

Expansion of managed cloud, managed security and managed application hosting offerings on outcome-based commercial models.

iv. Edge Data Centre Programme: Phased rollout of edge facilities anchored on the Companys widely distributed presence at railway stations and along the OFC backbone, addressing low-latency use cases in video analytics, smart cities, content distribution and railway operations.

In line with the application-led, bottom-up policy directionsetbytheIndiaAIMissionandtheEconomic Survey 2025-26, the Companys AI strategy is anchored on long-term capability building rather than near-term revenue projection. AI is positioned as a strategic capability area for the medium term, with the focus on enabling future opportunities and embedding AI into the Companys digital infrastructure and operations. Three layers of AI engagement are being progressively developed: i. AI-Ready Infrastructure: Preparing the

Data Centre estate for higher-density, GPU-enabled, liquid-cooling-capable workloads as customer demand for AI training and inference infrastructure scales.

ii. AI-Enabled Operations: Adoption of AI-driven tools in network operations, predictive maintenance, security operations and customer service, to improve efficiency and resilience.

iii. AI-Enabled Customer Solutions: Selective integration of AI capabilities into video analytics, e-Governance, cybersecurity and railway operations solutions, in partnership with specialised technology providers.

Against the integrated compliance landscape outlined in Section 4, the Company is progressively scaling its cybersecurity capability – covering

24x7 SOC operations, managed detection and response, integrated security consulting and assurance services. Cybersecurity is positioned both as a standalone service line and as a value-added capability bundled with hosting and managed services for Government and enterprise customers.

Indian Railways multi-year modernisation programme represents a structurally important opportunity area for the Company. This section presents the Government-disclosed status, fiscal commitment, and forward roadmap for the relevant programmes. off

The Union Budget 2026-27 has provided 2,93,030 crore as capital expenditure for the Ministry of Railways for FY 2026-27, with strong emphasis on safety, capacity expansion, station modernisation and rolling stock. The net Railway Budget after recoveries and receipts has been pegged at

2,81,377.32 crore. The Budget has also announced the development of seven new high-speed rail corridors – Mumbai–Pune, Pune–Hyderabad, Hyderabad–Bengaluru, Hyderabad–Chennai, Chennai–Bengaluru, Delhi–Varanasi and Varanasi–

Siliguri. [Source: Union Budget 2026-27 – Railway Budget Statement, Ministry of Finance, 1 February 2026.]

KAVACH, the indigenously developed Automatic Train Protection system adopted as the National

ATP system in July 2020, has progressed significantly during FY 2025-26. As informed by the Honble

Union Minister of Railways in Parliament: i. KAVACH 4.0 has been commissioned on 1,452 route kilometres on the high-density Delhi Mumbai and Delhi Howrah corridors (Lok

Sabha statement, 11 March 2026). ii. Cumulative expenditure on KAVACH implementation stood at 2,763.9 crore up to February 2026, with FY 2025-26 allocation of

1,673 crore. iii. Supporting infrastructure deployed: 8,921 km of Optical Fibre Cable laid, 1,183 telecom towers installed, 767 station Data Centres set up, and 4,277 locomotives equipped with KAVACH; trackside installations underway on 7,100 route kilometres.

[Source: PIB PRID 2245720, March 2026; PIB PRID 2221011,

January 2026; DD News Lok Sabha statement of Honble Minister of Railways, 11 March 2026.]

As of Railways, Indian Railways plans to expand the KAVACH network by 9,000 route kilometres over the next two years, and thereafter expects growth of up to 10,000 route kilometres per year.

A centralised monitoring platform, SURAKSHA, is under development as a unified Operations

Management System to enable real-time monitoring and predictive maintenance of KAVACH installations. Enhancements including the Universal Braking Algorithm, AI-driven design automation and integration interfaces for locomotives, interlocking systems and track machines are being progressively

rolled out. [Source: PIB PRID 2245720, March 2026.]

Beyond KAVACH, the railway modernisation programme encompasses tunnel communication systems, station redevelopment with integrated ICT and Video Surveillance, signalling modernisation, and passenger information and announcement systems. These elements collectively constitute a multi-year, mission-critical opportunity pool for the Company, anchored on its long-standing partnership with Indian Railways.

Against the fiscalcommitment and forward roadmap above, the Companys integration expertise, partnership ecosystem and technical certifications place it in a strong position to participate meaningfully in the railway modernisation programme over FY 2026-27 and beyond. The strategic linkage between railway ICT, Data

Centre capability and cybersecurity is becoming progressively tighter, creating opportunities for integrated bundled offerings.

The transformation of the Company into an integrated digital infrastructure enterprise rests fundamentally on the depth, capability and motivation of its workforce. Human capital is therefore positioned as a strategic asset rather than an operational input, with structured investments in capability development, leadership pipeline, and culture.

The Companys workforce comprises a mix of permanent employees drawn from technical and managerial cadres, officers on deputation from

Indian Railways and other Government entities, and contractual professionals deployed at project sites. Workforce diversity is being progressively strengthened through targeted recruitment and inclusive policies aligned with DPE guidelines and the National Guidelines on Responsible Business Conduct.

i. Technical Skilling: Structured upskilling programmes in Data Centre operations, cybersecurity, cloud-native engineering, AI and data engineering, KAVACH and railway signalling, and project management.

ii. Certifications: Sponsorship for industry-recognised certifications across cloud, security, networking and project management disciplines.

iii. Institutional Partnerships: Engagement with IITs, IIITs, IIMs, NITIE and other reputed institutions for leadership development (e.g SCOPE etc), research collaboration and recruitment. iv. Knowledge Management: Internal communities of practice and structured knowledge transfer mechanisms to retain learning from large multi-state engagements.

Leadership development is anchored on a structured framework covering Functional Directors, Executive Directors, Group General Managers and other senior management. Succession planning, role rotation, exposure assignments and external development programmes are deployed to build a robust leadership pipeline. The Companys Navratna status has enabled more flexible engagement with external talent for specialised emerging-technology roles.

The intensity of competition for talent in cybersecurity, cloud, AI and Data Centre operations remains a key human-capital challenge. The

Company addresses this through a combination of competitive compensation aligned with DPE guidelines, structured career pathways, exposure to high-impact national programmes, employee well-being initiatives, and a strong sense of mission anchored in nation-building. The Company also leverages its participation in flagship national programmes – including railway modernisation and Government digital initiatives – as a distinctive component of its employee value proposition.

The Company maintains an Enterprise Risk Management framework approved by the Board of Directors, with structured risk identification, assessment, monitoring and mitigation. The framework is overseen by the Risk Management

Committee constituted in accordance with the SEBI

LODR Regulations. The principal risks relevant to the Companys business during FY 2025-26 and their mitigation approaches are summarised below.

The macroeconomic environment as described by the Reserve Bank of India and the Economic Survey is expected to remain supportive over FY

2026-27 and the medium term. The combination of sustained domestic demand, benign inflation, consistent Government capital expenditure, and reform momentum is expected to translate into a stable demand environment for the Companys core service lines. The progressive recognition of digital infrastructure as core economic infrastructure represents a structural elevation that the Company expects to benefit from over multiple budget cycles.

As discussed in Section 2, the telecom sectors transition from network deployment to monetisation, the sustained Government commitment to rural connectivity through BharatNet and the National Broadband Mission, and the modernisation of the spectrum framework collectively support sustained demand for the Companys OFC backbone, NLD and enterprise connectivity offerings. The Companys long-standing role as a CPSE implementing partner for national connectivity programmes positions it to participate meaningfully in upcoming phases and adjacent service opportunities.

The structural shift towards sovereign hosting, the maturing cloud and managed-services model, and the deepening cybersecurity compliance landscape are expected to drive sustained demand for the Companys Data Centre, cloud and security offerings. Edge Data Centres are expected to emerge as a meaningful incremental opportunity over the medium term, leveraging the Companys distinctive distributed footprint. The Companys AI positioning, anchored on the application-led national framework, is expected to mature progressively over the next two to three years.

The fiscal commitment and forward roadmap for railway modernisation, particularly KAVACH and adjacent ICT programmes, provide a multi-year demand visibility that is unusual in scale and clarity.

The strategic linkage between railway ICT, Data Centre and cybersecurity offerings is expected to deepen, enabling the Company to position integrated bundles for the Indian Railways customer.

11.5 Strategic Direction – Three-Horizon View Horizon 1 – FY 2026-27: Consolidate i. Operationalise existing Data Centre capacity expansion and initial edge deployments. ii. Execute committed railway modernisation milestones, including KAVACH and station projects. iii. Achieve baseline DPDP and telecom cyber-security compliance maturity. iv. Strengthen managed-services revenue mix and tail revenue from completed projects.

Horizon 2 – FY 2027-29: Expand i. Scale Data Centre and edge footprint in alignment with sovereign hosting demand. ii. Mature cybersecurity-as-a-service and managed-cloud propositions. iii. Deepen AI-enabled operations and customer solutions in selected verticals. iv. Expand engagement with State Governments,

BFSI and defence.

Horizon 3 – FY 2029-31: Lead i. Position as a leading domestic sovereign-cloud and edge-infrastructure operator. ii. Establish credible international ICT presence in selected geographies. iii. Embed AI-readiness across the network, Data

Centre estate and customer-facing solutions. iv. Continue to anchor Indian Railways digital transformation as the lead ICT integration partner.

The outlook above is subject to typical execution, regulatory and market risks discussed in Section 10. The Company does not project specific numerical financial outcomes in this section. All sectoral and macroeconomic projections referenced in this report reproduce Indian Government projections without independent revision by the Company, and are subject to the cautionary statement at the end of this report.

The Companys ESG framework is anchored on the

Business Responsibility and Sustainability Reporting (BRSR) disclosure regime mandated by SEBI under the SEBI (Listing Obligations and Disclosure

Requirements) Regulations, 2015, the National Guidelines on Responsible Business Conduct (NGRBC), and Indias national priorities on clean-energy transition, digital inclusion and responsible

governance. [Source: SEBI LODR Regulations; Ministry of

12.2 Environment i. Energy Efficiency: Ongoing monitoring and optimisation of Power Usage Effectiveness (PUE) across Data Centre operations. Implementation of energy-efficient cooling systems, LED lighting and smart monitoring solutions to improve operational efficiency. Upgradation and modernisation of legacy infrastructure with high-efficiency equipment to minimise energy consumption.

ii. Green Data Centres: Incorporation of sustainable and green design principles in new Data Centre developments as well as refurbishment initiatives. Adoption of water-efficient cooling technologies environmentally responsible construction practices. Emphasis on lifecycle environmental performance, resource optimisation, waste reduction and sustainable operations. iii. Renewable Energy: Gradual integration of renewable energy through rooftop solar installations, green tariff mechanisms and open-access renewable energy sourcing. Assessment and implementation of long-term renewable energy procurement strategies aligned with national net-zero commitments. Continuous efforts to enhance the share of renewable energy in overall power consumption.

iv. Responsible E-Waste Handling: Compliance with the E-Waste (Management) Rules, 2022, structured disposal through authorised recyclers.

i. Digital Inclusion: Contribution to BharatNet, RailWire and Railway-Station Wi-Fi

ii. Public Digital Access: Enablement of e-Governance, education, healthcare and citizen-service delivery platforms supporting national development priorities.

iii. Employee Well-being: Detailed coverage in Section 9 (Human Capital) and Section 13 (Employee Health and Safety).

iv. CSR Programmes: Implementation of CSR initiatives in accordance with Section 135 of the Companies Act, 2013.The details CSR undertaken during FY 25-26 is given in CSR

Report which is forming part of Annual Report

v. Diversity and Inclusion: Ongoing initiatives to enhance gender diversity(including organizing workshops/seminars on POSH, Providing maternity benefits and promotion of women employees in Leadership Role) support for differently-abled employees, and inclusive work practices.

The Board composition consists of Functional Directors, Nominee Directors and Independent Directors. The Board of Directors of the

Company consists of experienced professionals who ensures the Companys prosperity by collectively directing towards the Companys Mission and Vision and functions in accordance with the provisions of the Companies Act, 2013,

Listing Regulations , Articles of Association,

Corporate Governance Guidelines issued by Department of Public Enterprises (DPE) and other directions/ guidelines issued by the

Government of India, from time to time, as applicable to the Company, whilst meeting the appropriate interests of its shareholders and stakeholders.

ii. Ethical Operations: Adherence to the Code of Business Conduct and Ethics, Whistle-Blower Policy, CVC guidelines, and the Integrity Pact for major procurements.

iii. Stakeholder Communication: Transparent communication through Annual Reports, BRSR disclosures, investor presentations, regulatory filings and earnings communications.

The Company recognises the health, safety and well-being of employees, contract workers and personnel at project sites as a core responsibility. This is supported through structured policies, training, periodic health check-ups, mental health awareness, and emergency response preparedness. During FY 2025–26, RailTel strengthened its preventive healthcare and wellness initiatives through multidisciplinary health camps, specialised eye-screening camps, awareness sessions and blood donation drives organised in association with reputed healthcare institutions for employees and eligible family members. Key initiatives included a Cancer and Health Screening Camp on World

Environment Day, a Health Talk on World Hepatitis

Day, nationwide sessions for women employees on cancer prevention and menopause, a follow-up womens health session, and an Eye Check-up Camp at the Gurgaon office for employees and office helpers. The Gurgaon Data Centre & CNOC team also organised a team-building programme to promote collaboration and workplace engagement.

At railway sites, tunnels and remote locations, field operations demand strict adherence to safety protocols, working-near-track procedures, electrical safety norms and PPE use. Site-level Safety Officers, safety audits, toolbox talks and incident-reporting mechanisms anchor this safety culture, with the same standards extended to contractors through contractual clauses, induction training and regular oversight.

These occupational health and safety efforts tie into broader initiatives on ergonomics, work-life balance and emotional well-being, forming part of the Companys wider human capital approach discussed in Section 9.

The Enterprise Risk Management framework is governed by a Risk Management Policy approved by the Board, with a Risk Management

Committee constituted in accordance with the

SEBI LODR Regulations. The framework provides for structured risk identification, mitigation, monitoring and reporting across strategic, operational, financial, regulatory, cyber and reputational risk categories. Risks are reviewed periodically by management and by the Risk

Management Committee, with material matters escalated to the Board.

Cybersecurity governance is anchored on an Information Security Management System aligned with leading standards. A 24x7 Security Operations

Centre provides continuous threat monitoring, detection and response. Controls include perimeter security, network segmentation, endpoint detection, identity and access management, encryption, vulnerability management, secure configuration baselines and incident-response procedures. The framework is being progressively aligned with the regulatory architecture summarised in Section 4.

The Company has a multi-layered audit architecture comprising Internal Audit, Statutory Audit, the Comptroller and Auditor General of Indias supplementary audit and propriety reviews, Information Systems Audit, Secretarial Audit, Cost

Records / Cost Audit as applicable, and specialised audits including GST, internal financial controls and project audits. The Audit Committee of the Board oversees the audit function, including approval of the internal audit plan, review of audit findings and monitoring of action-taken reports.

Internal control and compliance frameworks are progressively being digitised through integrated systems for compliance tracking, project monitoring, finance and HR operations, secretarial workflows and statutory filings, enabling real-time visibility into compliance status and risk indicators.

Project governance is anchored on project management processes covering planning, scheduling, milestone tracking, financial monitoring, vendor governance, quality assurance and risk reviews. Procurement transactions are conducted in accordance with the public-procurement framework referenced in Section 4.

The Internal Financial Controls framework, as required under Section 134(5)(e) of the Companies Act, 2013, is documented, periodically tested by management, reviewed by internal and statutory auditors, and reported in the Directors Report.

There is no material weaknesses identified that would adversely affect the reliability of financial reporting.

Business Continuity and Disaster Recovery arrangements cover critical Data Centres, network nodes,key ^{off and core IT systems. Information} security controls span technological, procedural and human-element domains, with role-based access, periodic access reviews, third-party security assessments, and structured controls for the lifecycle of customer and personal data consistent with the data protection framework.

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, plans, intentions, or predictions may constitute

"forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results, performance, or achievements could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand and supply, price conditions in domestic and international markets, changes in Government regulations and policies, tax laws, statutes and other incidental factors, project execution timelines, technology evolution, cyber-incidents, geopolitical developments, and other risks discussed in this report and elsewhere in the Annual Report.

All sectoral and macroeconomic data and projections in this report are drawn exclusively fromIndianGovernmentpublicationsandauthorities, as cited inline in the relevant sections. Where forward-looking projections of macroeconomic, sectoral or policy variables are made, these reproduce the projections of the originating Indian Government source without independent revision by the Company. The Company assumes no responsibility to publicly amend, modify, or revise any forward-looking statements based on any subsequent developments, information or events.