RNIT AI Solutions Ltd Management Discussions

? INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian technology sector continues to witness significant growth driven by increasing adoption of Artificial Intelligence (AI), Machine Learning (ML), Internet of Things (IoT), cloud computing, data analytics and digital transformation initiatives. Government-led digitization programmes, citizen-centric service delivery models, intelligent automation and data-driven decision-making are creating substantial opportunities for technology solution providers.

RNIT AI Solutions Limited operates in the technology and digital solutions sector, offering AI-driven solutions, digital transformation platforms, facial recognition technologies, IoT-enabled applications, enterprise software solutions and e-Governance services. The Company continues to focus on delivering innovative and scalable technology solutions to Government and enterprise customers.

? OPPORTUNITIES AND THREATS

Opportunities

AI-Driven Digital Transformation

The increasing adoption of Artificial Intelligence (AI), Machine Learning (ML), intelligent automation and data analytics across Government and enterprise sectors presents significant opportunities for technology solution providers offering innovative and scalable solutions.

Government and Public Sector Digitization

Continued emphasis on digital governance, citizen-centric service delivery, digital public infrastructure and data-driven administration is expected to create opportunities for deployment of technology-enabled platforms and services.

Growing Demand for Integrated Technology Solutions

Organizations are increasingly seeking integrated technology solutions encompassing software development, digital platforms, analytics, automation and IoT-enabled applications to improve operational efficiency and service delivery.

Expansion of Emerging Technologies

Growing adoption of cloud computing, open-source technologies, Internet of Things (IoT) solutions and intelligent digital ecosystems is expected to support demand for innovative technology products and services.

Threats

Rapid Technological Evolution

The technology sector is characterized by continuous innovation and evolving customer requirements, necessitating sustained investment in technology, product enhancement and skill development.

Increasing dependence on digital platforms and data-driven solutions exposes businesses to cybersecurity threats, information security risks and evolving data protection requirements.

Intense Market Competition

The Company operates in a highly competitive environment comprising established technology companies, niche solution providers and emerging start-ups, which may impact market opportunities and pricing dynamics.

Regulatory and Compliance Requirements

Changes in laws, regulations and compliance frameworks relating to technology, artificial intelligence, data privacy and information security may result in additional operational and compliance obligations.

? SEGMENT-WISE PERFORMANCE

The Company operates in a single reportable segment comprising Artificial Intelligence solutions, software development, digital platforms, technology consulting and related support services. Accordingly, separate segment-wise reporting is not applicable.

? OUTLOOK

The technology sector continues to offer significant growth opportunities supported by increasing digital adoption, automation initiatives and investments in emerging technologies. Advancements in Artificial Intelligence, data analytics, cloud computing and digital infrastructure are expected to further accelerate technology adoption across Government and enterprise sectors.

The Company intends to continue focusing on AI-driven solutions, digital transformation platforms, facial recognition technologies, IoT-enabled applications, enterprise software solutions and e-Governance initiatives. The Company also intends to strengthen its technology capabilities, expand its solution portfolio and enhance its presence across Government and enterprise segments.

The outlook for the Companys business remains positive, supported by the growing demand for technology-enabled solutions and digital transformation initiatives across sectors.

? RISKS AND CONCERNS

The Company is exposed to risks associated with rapid technological changes, cybersecurity threats, evolving regulatory requirements, project execution, market competition and talent retention. To address these risks, the Company continues to strengthen its risk management framework, internal control systems, technology capabilities and operational processes.

? INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established adequate internal control systems commensurate with the nature, size and complexity of its business operations. The internal control framework is designed to ensure the orderly and efficient conduct of business, safeguarding of assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records, and timely preparation of reliable financial information.

responsibilities and reporting lines, supported by documented policies and standard operating procedures governing its key business processes.

The internal control systems are periodically reviewed and monitored to ensure their effectiveness and continual improvement. The Statutory Auditors of the Company have audited the Internal Financial Controls Over Financial Reporting as of March 31, 2026 and have expressed an unmodified opinion on the adequacy and operating effectiveness of such controls.

? DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the Company for the Financial Year 2025-26 as compared with the previous financial year is summarized below:

Particulars	FY 2025\u2013 26 ( Rs. in Lakhs)	FY 2024\u2013 25 ( Rs. in Lakhs)
Revenue from Operations	5,149.88	3,222.59
Other Income	78.03	5.68
Total Income	5,227.90	3,228.26
Total Expenses	3,566.88	2,497.74
Profit before Interest, Depreciation and Tax (PBIDT)	2,146.13	1,028.12
Depreciation	400.16	275.63
Finance Costs	84.95	21.97
Profit Before Tax (PBT)	1,661.02	730.52
Current Tax	418.04	-
Deferred Tax	41.25	9.58
Profit After Tax (PAT)	1,201.73	720.94
Earnings Per Share (Basic & Diluted) ( Rs.)	1.57	1.00

During the Financial Year 2025-26, the Company recorded Revenue from Operations of

Rs.5,149.88 lakhs as compared to Rs.3,222.59 lakhs in the previous year, reflecting continued growth in business operations. Total Income increased to Rs.5,227.90 lakhs from Rs.3,228.26 lakhs in FY 2024-25.

The Company reported a Profit Before Tax of Rs.1,661.02 lakhs as against Rs.730.52 lakhs in the previous year, while Profit After Tax increased to Rs.1,201.73 lakhs from Rs.720.94 lakhs. The improved financial performance was driven by growth in revenues and efficient management of operating costs.

Basic and Diluted Earnings Per Share increased from Rs.1.00 in FY 2024-25 to Rs.1.57 in FY 2025-26, reflecting the Companys improved profitability and enhanced shareholder value.

FRONT

The Company recognizes its human resources as a key contributor to its growth and success and remains committed to fostering a professional, inclusive and performance-driven work environment.

There were no material adverse developments in human resources or industrial relations during the Financial Year 2025-26. Employee relations remained cordial and the Company continued to maintain a stable and harmonious work environment.

The Company continues to focus on employee engagement, capability development and talent retention to support its business objectives and operational requirements.

As on March 31, 2026, the Company had 76 employees.

? KEY FINANCIAL RATIOS

Particulars	FY 2025\u2013 26	FY 2024\u2013 25	Variance (%)
(a) Current Ratio	3.56	3.77	(5.57%)
(b) Debt-Equity Ratio	0.13	0.19	(31.58%)
(c) Debt Service Coverage Ratio	3.91	0.63	520.63%
(d) Return on Equity Ratio	0.11	0.25	(56.00%)
(e) Inventory Turnover Ratio	-	-	-
(f) Trade Receivables Turnover Ratio	2.94	2.86	2.80%
(g) Trade Payables Turnover Ratio	5.92	1.96	202.04%
(h) Net Capital Turnover Ratio	0.92	1.05	(12.38%)
(i) Net Profit Ratio	0.23	0.22	4.55%
(j) Return on Capital Employed	0.13	0.09	44.44%
(k) Interest Coverage Ratio	20.55	34.25	(40.00%)
(l) Operating Profit Margin (%)	42%	32%	30.62%

Explanations for significant changes (i.e., change of 25% or more) in key financial ratios as compared to the previous financial year are as under:

? Debt-Equity Ratio decreased from 0.19 in FY 2024-25 to 0.13 in FY 2025-26 primarily due to the allotment of equity shares to strategic investors pursuant to the Resolution Plan approved by the Honble National Company Law Tribunal, Jaipur Bench.

? Debt Service Coverage Ratio increased from 0.63 in FY 2024-25 to 3.91 in FY 2025-26 primarily on account of improved profitability and enhanced debt servicing capacity during the year.

? Return on Equity Ratio decreased from 0.25 in FY 2024-25 to 0.11 in FY 2025-26 primarily due to the increase in equity capital pursuant to the allotment of equity shares to strategic investors under the approved Resolution Plan, which was proportionately higher than the increase in profit after tax during the year.

? Trade Payables Turnover Ratio increased from 1.96 in FY 2024-25 to 5.92 in FY 2025-26 primarily due to higher operating expenses and increased business activity during the year.

? Return on Capital Employed increased from 0.09 in FY 2024-25 to 0.13 in FY 2025-26 primarily due to improved operating profitability during the year.

2025-26 primarily due to an increase in finance costs during the year.

? Operating Profit Margin increased from 32% in FY 2024-25 to 42% in FY 2025-26 primarily due to growth in revenue and improved operating performance during the year.

? RETURN ON NET WORTH

Particulars	FY 2025\u2013 26	FY 2024\u2013 25
Return on Net Worth (%)	11%	25%

The Return on Net Worth decreased from 25% in FY 2024-25 to 11% in FY 2025-26 primarily due to a significant increase in the Companys net worth on account of capital infusion pursuant to the preferential allotment of equity shares to strategic investors in accordance with the Resolution Plan approved by the Honble National Company Law Tribunal, Jaipur Bench, vide its order dated September 23, 2024. The increase in net worth was proportionately higher than the growth in profit after tax during the year.

? DISCLOSURE OF ACCOUNTING TREATMENT

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time. No treatment different from that prescribed under the applicable Accounting Standards has been followed in the preparation of the financial statements.

On behalf of the Board of Directors For RNIT AI SOLUTIONS LIMITED

Date: 03.07.2026

Place: Hyderabad

Sd/- Pramod Reddy Mallaiahgari

Chairman DIN: 02329517

Sd/- Raja Srinivas Nandigam Managing Director

DIN: 08430111