Shyam Telecom Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Regulation 34 read with Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

INDUSTRY AND INDIAN TELECOM SECTOR

The telecom industry in 2025 stands at an exciting juncture, characterised by rapid technological evolution and an expanding role in the global digital ecosystem. By embracing AI and automation, diversifying into new markets, transforming core technologies, advancing 5G and 6G, and prioritising ethical AI practices, telecom operators are setting the stage for long-term growth and resilience. As these trends unfold, the sector will not only enhance connectivity but also create new possibilities for businesses, governments, and individuals, reinforcing its position as a cornerstone of the digital future.

As we step into 2025, the telecom sector stands on the brink of significant transformation. Fuelled by rapid technological advancements, shifting customer expectations, and a growing emphasis on societal responsibility, the industry is poised to play a pivotal role in shaping the global digital economy. As new technologies like 6G and AI take center stage, telecom companies should navigate this dual responsibility of advancing technological progress while remaining committed to social and environmental goals. Going forward, telecom sector will not only redefine its own future but also play a critical role in shaping a more connected, efficient, and equitable world.

One of the most significant catalysts for this change is the growing role of AI. This transformative force is now embedded across telecom, media, and technology sectors, altering how businesses operate and deliver value. While challenges like talent shortages and high costs remain, the potential of AI to provide a competitive edge is undeniable. In fact, 65% of Indian CXOs believe that generative AI will be a key driver of long-term growth. In addition to, Satellite Communications is also likely to gain traction with expectations in amendments to policy and regulations to promote this on the larger scale.

As we look to 2025, its clear that the telecom industry is poised for profound transformation. From harnessing the power of AI to diversifying revenue streams and advancing next-gen networks, these trends will not only reshape the sector but also lay the foundation for a future that is more connected, efficient, and equitable.

GOVERNMENT INITIATIVES

Indias telecom sector continues to be a cornerstone of digital transformation, with significant strides in connectivity, infrastructure, and innovation. The record-breaking 5G rollout and expansion of BharatNet underscore the Governments commitment to bridging the digital divide, particularly in rural and remote areas.

Budget 2025 reinforces this vision with a total outlay of INR81,005 crores, prioritizing BharatNet expansion and domestic telecom manufacturing. The reduction in Basic Customs Duty on Carrier Grade Ethernet Switches from 20% to 10%, along with duty exemptions on inputs, parts/sub-parts used in the manufacture of cellular mobile phones and on-ground installations for satellite, launch vehicles, is expected to boost local manufacturing and enhance new technology in communication.

With Indias data center market poised for exponential growth, telecom remains the backbone for emerging technologies such as AI, IoT, and cloud computing. Domestic Incentivation scheme and duty rationalization measures further incentivize domestic production, supporting Indias ambition to become a global telecom manufacturing hub.

The Union Budget 2025-26 presents a pivotal opportunity for Indias telecommunications sector, which is the backbone of transformative digital growth for India. According to the Economic Survey 2024-25, India ranks as the second-largest telecommunications market, boasting over 1.8 billion telephone subscribers and a tele-density of 84%. The countrys record-breaking 5G rollout, the fastest globally, underscores its technological leadership in the sector.

Though the budgeted receipt of Government in FY26 is 33% lesser as compared to FY25 potentially indicating lower collection of SUC and one-time spectrum fees, nonetheless the continued north trend in allocation towards BharatNet, aimed at connecting Government-run schools and healthcare centers in rural India, will help bridge the digital divide and create inclusive digital growth. The reduction of customs duty on carrier-grade Ethernet switches from existing 20% to 10% will lower costs and accelerate the deployment of high-speed networks. In addition to the same, custom duty rationalisation measures introduced in the Budget shall provide impetus to domestic manufacturing of mobile phones and satellite-based services.

PERFORMANCE

The Company is strategically pursuing high-potential business avenues and is engaged in focused negotiations with key vendors to drive expansion and long-term value creation.

OPPORTUNITIES AND THREATS

The telecom sector in India is poised for continued growth in FY 2025-26, driven by rapid technological advancements, increased digital adoption, and sustained policy support. The accelerated deployment of 5G, progress in 6G research, expansion of satellite-based connectivity, and rising demand for enterprise-grade solutions present significant avenues for expansion. At the same time, the industry continues to navigate high capital requirements, regulatory complexities, intense competition, and evolving cyber security risks.

Opportunities:

• 5G Expansion & Emerging Technologies - Nationwide 5G rollout, advancements in 6G research, and integration of IoT, AI, and edge computing unlocking new business models and services.

• Enterprise & Private Networks - Increasing adoption of private 5G and captive networks for secure, high- performance connectivity in industrial and commercial operations.

• Satellite & Rural Connectivity - Growing deployment of LEO satellite and space-based communication systems enabling last-mile connectivity in under served regions.

• Digital Infrastructure Investments - Government and private sector initiatives to expand broadband and fiber networks, especially in rural areas, enhancing market reach.

• Sustain ability Initiatives - Focus on energy-efficient network infrastructure, renewable energy integration, and green telecom practices.

Threats:

• High Capital Requirements - Significant investments required for next-generation networks and infrastructure, impacting return on investment.

• Regulatory & Geopolitical Risks - Complex compliance landscape, spectrum allocation challenges, and global trade/geopolitical uncertainties affecting supply chains.

• Cyber security Concerns - Increasing vulnerability to cyber-attacks, data breaches, and telecom fraud in an interconnected digital environment.

• Intensifying Competition - Disruption from OTT players, hyper scalers, and alternative connectivity providers impacting traditional revenue streams.

• Talent & Operational Challenges - Limited availability of skilled resources in advanced telecom technologies alongside operational cost pressures.

ROAD AHEAD/OUTLOOK

The telecom sector is expected to maintain its growth momentum in FY 2025-26, supported by rapid digitalisation, increased data consumption, and strong policy impetus. The ongoing 5G rollout across urban and rural areas will enable advanced applications in IoT, AI, AR/VR, autonomous systems, and Industry 4.0. Progressive developments in 6G research, network slicing, and edge computing are likely to redefine service delivery models and open new revenue streams.

Government-led infrastructure initiatives, coupled with private sector investments in fiber networks and satellite-based communication, will enhance connectivity in remote regions, fostering greater digital inclusion. Rising demand for enterprise-grade and captive networks will create opportunities in manufacturing, logistics, healthcare, and smart city projects.

However, operators will need to address key challenges, including substantial capital expenditure requirements, competitive pricing pressures, evolving regulatory frameworks, and heightened cyber security risks. Strategic focus on technology innovation, network efficiency, sustain ability, and customer-centric offerings will be critical for long-term competitiveness.

Overall, the sectors outlook remains positive, with strong growth prospects driven by convergence of next-generation technologies, expanding rural reach, and an increasingly digital economy.

RISKS AND CONCERNS

The primary risks and concerns for the telecom sector in 2025 centre on cyber security, AI-driven change, business transformation missteps, evolving regulation, high costs, talent shortages, and sustain ability pressures.

Key risks include:

• Cyber security and Data Privacy: Security is identified as the top risk, exacerbated by generative AI (GenAI) adoption and increasing cyber attacks, particularly DDoS attacks and data breaches. Customer concerns about how AI is used and data is governed are high.

• Ineffective Transformation and AI Challenges: The push for digital transformation through new technologies-especially AI, automation, and software-based networks—creates risks if telcos fail to implement them effectively or choose the wrong strategies and partners.

• Talent Shortages and Culture Management: Finding and keeping skilled talent, particularly with AI and advanced network expertise, is increasingly difficult. Issues with organizational culture and inadequate up skilling also hamper transformation.

• Financial Strain and High Debt: High costs for spectrum licenses and network investments, combined with low average revenue per user (ARPU), limit telcos ability to invest in next-generation infrastructure, raising sustain ability concerns.

• Regulatory Complexity and Policy Shifts: Telcos face stricter, rapidly evolving regulations on data protection, AI, and competition (e.g., GDPR, EU AI Act). The need to adapt quickly to new compliance requirements is a growing burden. ^•

• Network Strain and Infrastructure Scaling: AI-powered applications are increasing data traffic, potentially outpacing the ability of 5G and new other networks to scale reliably, risking service disruptions and outages.

• Business Model Disruption: Pressure to adopt asset-light strategies, split retail and wholesale operations, and adapt to new competition, including hyper scalers, satellite companies, and MVNOs, threaten traditional telco roles.

• Sustainability Pressures: The industry must transition to renewable energy, lower emissions, and manage climate- related risks to infrastructure, as shareholders and regulators increase their focus on ESG (Environmental, Social, Governance) concerns.

• Customer Trust: Declining consumer trust, if privacy, transparency, and responsible AI usage are not clearly addressed, could lead to reputational harm and regulatory penalties

HUMAN RESOURCES

The Company values and acknowledges the contributions of all employees as a driving force behind its growth and success. We are committed to attracting, developing, and retaining talent by offering career development opportunities, job enrichment, and empowering our people to take ownership of their roles. Recognizing that our workforce is our greatest asset, we nurture a positive and inclusive work environment that encourages collaboration, innovation, and continuous improvement, thereby enhancing both employee satisfaction and organizational productivity.

INTERNAL FINANCIAL CONTROLS

The Company maintains a robust framework of internal financial controls, designed to ensure the orderly and efficient conduct of its business, safeguard its assets, prevent and detect frauds and errors, ensure the accuracy and completeness of accounting records, and facilitate the timely preparation of reliable financial information — in full compliance with applicable laws and regulations.

Our system is underpinned by documented policies, standard operating procedures, and a defined delegation of authority that enables swift yet responsible decision-making while maintaining accountability at all levels. The Internal Audit function, operating independently of management, systematically reviews the adequacy and effectiveness of these controls and recommends improvements where necessary.

M/s. D R & Associates, Chartered Accountants, served as the Companys Internal Auditors for the financial year 202425 and have been re-appointed for the financial year 2025-26 to conduct independent audits of the Companys functions and activities. Their reviews ensure continued adherence to established controls, alignment with regulatory requirements, and reinforcement of governance best practices.

The Company remains committed to strengthening its internal financial control framework through continuous monitoring, periodic assessments, and timely enhancements to address evolving business risks and compliance obligations.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the Company for the financial year ended 31^st March, 2025, as compared to the previous year, is presented below. Detailed information is provided in the Balance Sheet, Statement of Profit and Loss, and other accompanying financial statements forming part of this Annual Report:

		(Rupees in Lacs)
PARTICULARS	Financial Year 2024-25*	Financial Year 2023-24*
A. Revenue from Operations	-	-
B. Other Income	13.86	1 5.80
C. Total (A + B)	13.86	15.80
D. Total Expenses	187.73	299.92
E. Profit/(Loss) before Exceptional Items and Tax	(173.87)	(284.12)
F. Exceptional Items/Loss-Discontinuing Operations	-	6.76
G. Profit/(Loss) Before Tax	(173.87)	(290.88)
H. Less: Tax	9.88	2 1.67
I. Net Profit (F - G)	(183.75)	(312.55)
J. Other Comprehensive Income/(Loss)	(1.06)	(7.91)
K. Total Comprehensive Income (H + I)	(184.81)	(320.46)

*Figures are as per IndAS

During the financial year under review, the Company did not generate any revenue from operations, which remained consistent with the previous financial year. Other income amounted to 13.86 Lakhs as compared to Rs. 15.80 Lakhs in the previous year, reflecting a marginal decline primarily attributable to lower interest income and reduced miscellaneous receipts.

The total expenditure for FY 2024-25 stood at Rs. 187.73 Lakhs, as against Rs.299.92 Lakhs in FY 2023-24, indicating a notable reduction of approximately 37%, primarily due to effective control over finance costs and administrative overheads.

Consequently, the loss before exceptional items and tax was Rs. 173.87 Lakhs during FY 2024-25, as compared to a loss of Rs. 284.12 Lakhs in FY 2023-24. No exceptional items were recorded in FY 2024-25, whereas FY 2023-24 included an exceptional loss of Rs.6.76 Lakhs relating to discontinuance of certain operations.

After accounting for tax expenses, including deferred tax, the Company incurred a net loss of Rs. 183.75 Lakhs during FY 2024-25, as against a net loss of Rs.312.55 Lakhs during FY 2023-24. Other Comprehensive Loss amounted to Rs.1.06 Lakhs (Previous Year: Rs.7.91 Lakhs), resulting in a Total Comprehensive Loss of ^ 184.81 Lakhs as against Rs.320.46 Lakhs in the preceding year.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AS COMPARED TO THE PREVIOUS YEAR

Ratios	2024-25	2023-24	Reason for Significant (25%) Change
Debtors Turnover	NA	NA	No Sale during the reporting year
Inventory Turnover	NA	NA	No Sale during the reporting year
Interest Coverage Ratio	NA	NA	NA
Current Ratio	0.34	0.38	No Sale during the reporting year
Debt-Equity Ratio	(1.63)	(1.75)	NA
Operating Profit Margin (%)	NA	NA	No Sale during the reporting year
Net profit Margin (%)	NA	NA	No Sale during the reporting year

DISCLOSURE OF ACCOUNTING TREATMENT

The Companys Financial Statements have been prepared in strict accordance with the Indian Accounting Standards ("Ind AS") as prescribed under Section 133 of the Companies Act, 2013, read with the Companies (Indian Accounting Standards) Rules, 2015, and all other applicable provisions of the Act. The preparation is in full compliance with the prescribed framework and reflects the highest standards of financial reporting integrity.

The Financial Statements are presented on a going concern basis, applying the historical cost convention and the accrual method of accounting, thereby ensuring accurate recognition of income and expenses in the appropriate reporting periods.

In line with Section 2(41) of the Companies Act, 2013, the Company consistently follows the financial year commencing on 1st April and ending on 31^st March, 2025 for the purposes of statutory reporting and compliance.

CAUTIONARY STATEMENT

This Management Discussion and Analysis may contain certain statements about the Companys objectives, expectations, projections, and future plans that are "forward-looking statements" within the scope of applicable laws and regulations. These statements are based on the Companys current assumptions, assessments, and beliefs, which the management considers reasonable at the time of preparation. However, actual results, performance, or achievements could differ materially from those expressed or implied, due to known and unknown risks, uncertainties, and external factors.

Such factors may include, among others, changes in economic and business conditions, fluctuations in demand and supply, climatic variations, natural disasters, changes in government policies or regulations, taxation matters, and other circumstances beyond the Companys direct control. The Company undertakes no obligation to update, revise, or publicly release any forward-looking statements, and neither the Company nor its management accepts any responsibility or liability for any loss, damage, or consequences arising from reliance on such statements.

For and on Behalf of the Board of Directors
Shyam Telecom Limited
Sd/-	Sd/-
Ajay Khanna	Sunil Rai
Director	Director
DIN: 00027549	DIN: 01568405
Place: New Delhi
Date: 11th August, 2025