SGN Telecoms Ltd Management Discussions

The telecommunication industry is undergoing a significant transformation driven by advancements in technology and evolving market demand. Initially the focus was on Communication Technology marking the first wave of the information era. The second phase, beginning around the 2000, saw the rise of the internet, realigning the industry around horizontal solutions, e-commerce, and portals. The third phase started post-2006 with the advent of cloud computing. As of 2024, the industry is deeply embedded in the cloud era with new opportunities continuously emerging for carriers. This era is characterized by the proliferation of 5G, artificial intelligence (AI) and the internet of Things(IoT) indicating an unstoppable trend. The outlook for the optical fibre cable industry looks promising in the near future because it is witnessing strong momentum across data centres, mobile networks, fixed wireless access, and fixed broadband access as data consumption continues to grow globally.

As India accelerates its journey towards achieving its Viksit Bharat 2047 vision, digital infrastructure will play an increasingly foundational role in driving economic growth, innovation inclusion and global competitiveness. The next phase of digitalization will require networks that are not only faster but also programmable, resilient, secure and intelligent. The next generation networks will utilise technologies like 6G, satellite terrestrial hybrid connectivity, cloud native core network and ultra-high- capacity optical fibre. AI infrastructure is, therefore, expected to account for the largest share of the growth. In line with global expansion of data centres, as per an industry estimate, Indias operational data centre capacity could rise to nearly 9 GW by 2030 from around 1.5 to 1.7 GW in 2025, up sharply from 375 MW in 2020, if current expansion plans materialise. Policy support and data localisation are further strengthening the investment case. Data localisation creates a structural non-negotiable floor for domestic demand. The Governments decision to grant infrastructure states to Data Centres has improved financing access, while states are increasingly competing to attract investments through incentives, land allocation and lower power tariffs. Simultaneously, the ongoing evolution of 5G networks is expected to materially increase fibre intensity across telecom infrastructure.

The Government of India has extended Jal Jeevan Mission (JJM) till 2028 with an enhanced total outlay of approximately 8.69 lakh crore, including Central assistance of 3.59 lakh crore, as against 2.08 lakh crore approved at the time of launch in 201920. In addition, the Union Budget 2026 continued its strong focus on infrastructure development, with overall infrastructure capital expenditure reportedly increasing to approximately 12.21 lakh crore. Similarly, Indias clean energy transition and electrification goals are accelerating investments in power transmission and distribution infrastructure. Government initiatives such as the Green Energy Corridor (GEC) and Revamped Distribution Sector Scheme (RDSS) are driving modernization of transmission networks, grid strengthening, renewable energy integration, smart metering, and reduction in distribution losses. These initiatives are expected to significantly enhance the resilience, efficiency, and sustainability of Indias power infrastructure ecosystem.

Opportunities, threats and risks:

We operate in a competitive environment as our principal products, wires and cables are produced by a large number of other manufacturers in India and abroad. Players in this market generally compete with each other on key attributes such as technical competence, quality of products and services, pricing and track record. Looking ahead the industry will be increasingly defined by Artificial Intelligence (AI) driven networks automation and expansion of AI Data Centres alongside transport infrastructure to support cloud and edge workloads. Globally, the AI related infrastructure investment is projected to exceed $ 3 trillion over the next five years according to Moodys Ratings as developers pour eye watering sums into data centres. The surge in spending has triggered a shortage of special optical fibre, a critical ecosystem in advanced AI computing connectivity resulting in steep increase in prices. AI infrastructure projects are, therefore, expected to drive fibre deployment over the next few years, and the optical fibre cable industry value pool is increasingly shifting towards high density connectivity solutions. Additionally, optical fibre cables are now also being widely used in industry as a continuous sensor capable of monitoring conditions in real time. The fixed broadband also represents long term digital formation in order to achieve rebalancing of infrastructure priorities. This calls for expansion of fibre-to-the-home and fibre-to-enterprise networks, increasing fiberisation of mobile towers, strengthening public wi-fi ecosystem, enabling infrastructure sharing to reduce deployment costs, and integrating satellite broadband to improve connectivity in remote areas.

In regards to threats- Cost & Execution Risks: Fluctuations in raw material prices due to ongoing west Asia disturbances pose risk of abnormal increase in costs of the EPC projects. Execution delays due to land acquisition, Right of Way (ROW) constraints, and local clearances impact project timelines. Further, weaker than expected government capex trends and thrust on key policy areas on fiscal constraints may adversely impact timely realisation of receivables, execution and working capital trends.

Market Competition: The entry of large, well-capitalized players and aggressive bidding practices may create pricing pressure, impacting profitability.

Internal Control System:

The Companys system of financial, operational and compliance control and risk management is embedded in the business process by which the Company pursues its objectives. The Company is also required to comply with the provisions of the Companies Act, 2013 as regards to maintaining adequate internal financial controls over financial reporting. The management

is committed to ensuring an effective internal control environment, commensurate with the size and complexity of the business, which provides assurance on the efficacy of the Companys operations and safety/security of its assets besides orderly and legitimate conduct of Companys business in the circumstances, which may reasonably be foreseen. The Company has a defined organization structure, authority levels, delegated powers, internal procedures/SOPs, rules and guidelines, code of conduct, etc. for conducting business transactions, ensuring reliability of financial controls and compliance with applicable laws and regulations. To manage the risks profile of the Company, proper organization structures, EHS/other compliances, whistle blower mechanism, compliance management, performance reviews are conducted at regular intervals. The Company considers governance as its core institutional value with clear protocol for communications between management and the Board of Directors with transparency.

Human Resources and Industrial relation:

The Company sees its relationship with its employees as critical to the future and its employee relations agenda focuses on ensuring that employees feel valued, on managing change constructively, and on creating an environment and culture within which every employee can maximize his contribution. The Company follows the core values of be thorough on safety first and compliance and takes great pride in being compliant to all laws and regulations governing labour and employees and continues to exercise strong governance over all established procedures and practices. The human ingenuity has always been one of the Companys greatest assets. Accordingly, your Company believes that the competence and commitment of the people are the principle drivers of competitive advantage which enhances competitive strength by differentiating it from competitors.

Our Company strives to retain talent by facilitating career growth through job enrichment and empowerment, as it believes that the pool of the human resource is the biggest asset of the organization. Your Company maintains a cordial relationship with its employees through a constructive work environment in support of productive gains.

Responsibility for the management discussion and analysis report

The Board of Directors have reviewed the Management Discussion and Analysis prepared by the Management. Statement in this report of the Companys objective, projections, estimates, exceptions, and predictions are forward looking statements subject to the applicable laws and regulations. The statements may be subjected to certain risks and uncertainties. The Company assumes no responsibility in respect of forward looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

OTHER KEY INDICATORS

Ratios	2025-26	2024-25	Reason for change
DEBTORS TURNOVER RATIO	NA	NA	No Sale during the reporting year
INVENTORY TURNOVER RATIO	NA	NA	No Sale during the reporting year
INTEREST COVERAGE RATIO	NA	NA	No Sale during the reporting year
CURRENT RATIO	0	0	Due to reduction in current liabilities
DEBT EQUITY RATIO	0	0	Repayment of debt
OPREATING PROFIT MARGIN	0	0	No Sale during the reporting year
NET PROFIT RATIO	0	0	No Sale during the reporting year

CAUTIONARY STATEMENT

The statement in the Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations are forward-looking statements within the meaning of applicable laws and regulations and which the management believes are true to the best of its knowledge at the time of preparation. Actual results may differ substantially or materially from such expectations whether expressed or implied and hence, the Company and the management shall not be held liable for any loss, which may arise as a result of any action taken based on the information contained herein. Several factors could make significant difference to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, natural calamities over which the Company does not have any direct control. Market data and product analysis contained in this report has been taken from internal company reports, industry & research publications, but their accuracy and completeness are not guaranteed and their reliability cannot be assured.

Place: Mohali	By order of the Board of Directors
Date: 05.09.2026	For SGN Telecoms Limited
	Sd/-
	Surinder Singh
	Managing Director