Smartlink Holdings Ltd Management Discussions

Annexure-A

ECONOMIC OVERVIEW

The global economic outlook for 2025 continues to face challenges amid persistent geopolitical uncertainties and protectionist trade measures. According to the International Monetary Fund (IMF), global growth is forecasted at 2.8% in 2025, down from 3.3% in 2024, reflecting slower expansion in both advanced and emerging markets. This deceleration stems largely from rising trade tensions and fiscal tightening in major economies.

Global inflation, although easing, remains a concern. Headline inflation is expected to decline to 4.2% in 2025, with core inflation reducing more gradually. Advanced economies are projected to normalize inflation rates sooner than developing economies, allowing for more accommodative monetary policies.

Despite global headwinds, the resilience of domestic consumption and investment in several economies, including India, has cushioned the overall slowdown.

Source: IMF World Economic Outlook (April 2025)

India remains a bright spot in the global economic landscape. In FY 2024-25, the Indian economy expanded by a robust 6.8%, as per IMF projections, reaffirming its position as the fastest-growing major economy. This growth was fuelled by:

• Strong domestic consumption, driven by rising disposable income and favourable demographic dynamics.

• Increased capital expenditure, particularly in infrastructure and digital public infrastructure.

• Export resilience, despite subdued global demand.

Nominal GDP in FY 2024-25 is estimated to have crossed INR 320 lakh crores (~US$ 3.84 trillion), continuing Indias trajectory toward becoming a US$5 trillion economy in the coming years. Source: IMF World Economic Outlook (April 2025), Ministry of Finance (India), Reserve Bank of India (RBI)

The Indian Networking Industry

Indias IT & Business Services sector continues to demonstrate robust growth. According to IDC, the market is projected to expand at a Compound Annual Growth Rate (CAGR) of 7.2% from 2022 to 2027, reaching US$19.59 billion by 2027. This growth is driven by increased adoption of cloud services, cybersecurity solutions, and emerging technologies such as Generative AI and 5G.

The networking segment, encompassing Ethernet switches, routers, and WLAN, is poised for significant expansion due to rising demand for digital infrastructure and connectivity solutions.

The enterprise networking market in India is expected to grow at a CAGR of 5.2% over the next five years. This growth is fueled by enterprises transitioning to cloud-based operations and hybrid work models, necessitating investments in networking solutions and services that support these strategies. (GlobalData)

In FY 2024-25, the Indian telecom sector witnessed substantial investments, with capital expenditure reaching approximately INR 70,000 crore, primarily directed towards 5G rollouts and network densification. The sectors revenue grew by 7-9%, driven by increased data consumption and enterprise demand for advanced connectivity solutions. (The Hindu, The Economic Times)

Looking ahead to FY 2025-26, the networking industry is expected to maintain its growth trajectory. Key factors contributing to this outlook include: (Telecom India, GlobalData)

5G Expansion: India has rapidly expanded its 5G infrastructure, with over 3.94 lakh 5G base stations established across all states as of December 2023. (theoutpost.ai, The Times of India)

Data Centre Growth: The Indian data centre market is projected to grow from USD 4.5 billion in 2023 to USD 11.6 billion by 2032, indicating a strong demand for networking infrastructure to support data storage and processing needs. (Zee Biz)

Government Initiatives: Programs like the Production Linked Incentive (PLI) scheme for telecom and networking equipment have bolstered domestic manufacturing, enhancing the local value chain and promoting self-reliance in the industry. (Indian Infrastructure)

These developments underscore a positive outlook for the Indian networking industry in FY 2025-26, with sustained investments and technological advancements driving growth.

SMARTLINK HOLDINGS LIMITED

Smartlink Holdings Ltd. has been in the Networking Products business for more than three decades and involved in sourcing, manufacturing, sales, marketing, and support along with in-house R&D facilities to enhance the businesses in a focused manner using its expertise of over three decades. The Company has an independent subsidiary, namely, Digisol Systems Limited.

Digisol Systems Ltd. is the First Indian Brand in IT Networking that is taking India forward with its top-notch Product offerings in various verticals like Smart Cities, Manufacturing, Real Estate, Healthcare, Telecom, Hospitality, Education, Surveillance, Data Centres, IT and Retail.

Digisol Systems is a brand product company with Sales, Marketing and all India Service Support.

Digisol offers an extensive range of IT networking products, including Structured Cabling systems (copper and Fiber), FTTH, Switching, and Wireless solutions.

The FTTH products range includes - XPON, GEPON, GPON, ONU, OLTs, Splitters, Fiber Distribution Box, and Fiber cables.

Switching solutions range includes a wide range of Managed, Unmanaged, fully managed, Lite/Smart managed, Chassis Switch, Industrial Switch, Transceiver, Media converters, Multigig Switches.

Wireless solutions range includes Wifi-6 Indoor / Outdoor / Enterprise Access Points, Controllers and Range Extender.

The Structured Cabling product range includes Solid Cable, Keystones, Patch Panels, Copper Patch Cord, Faceplates, RJ45 Connectors, Fiber Patch Cords, Pigtail, Fiber LIUs, Splitters, etc.

The IT networking industry grows by leaps and bounds every year; however, the one thing that stays comparatively constant is the brand. Due to the technology industrys accelerated evolution, brands take on increased importance by providing an effective counterbalance to what buyers perceive as constant change, clutter, and confusion. While we strive to push the boundaries with our marketing activities, we accord great importance to brand building, which will ensure our long-term success.

DIGISOL has established its brand positioning as a ‘1st Indian Brand in IT Networking Solutions that offers products of global standards, credibility and delivers a fantastic user experience.

DIGISOL has carried out various initiatives like DIGISOL Cash Karo loyalty program to enhance the relationship with existing electricians, technicians and partners by giving them a chance to earn more loyalty points on their purchase of DIGISOL products.

We have in place DIGISOL Premium Partners Program to build relationships with the partners by rolling out various Sales Scheme for both Active and Passive range of products.

FINANCIAL PERFORMANCE

i) Standalone Financials In the financial year 2024-25, the Company achieved a Revenue from operations of I NR 9,696.51 lakhs as compared to INR 8,845.45 lakhs in the previous year. The Companys Profit after Tax for the year ending March 31,2025 was INR 253.68 lakhs as compared to profit after tax of INR 615.87 lakhs in the previous year.

Key Financials Ratios:

ii) Consolidated Financials

In the financial year 2024-25, the group achieved a Revenue from operations of INR 21,452.63 lakhs as compared to INR 19,817.24 lakhs in the previous year. The consolidated profit after tax for the year ending March 31, 2025 was INR 660.51 lakhs as compared to profit after tax of INR 705.95 lakhs in the previous year.

Smartlink and its subsidiary, Digisol Systems Limited are striving to build and maintain a positive employee experience with high satisfaction and quality of life, so that employees can contribute their best efforts to their work. We as a progressive organization are conscious of our societal, organizational, and human goals and our human values form the backbone of our organization.

Our Values:

• Ethical and Integrity based approach in everything we do

• Value and develop employees for Talent, Initiative and Leadership

• Employee motivation through ownership and empowerment

• Performance and collaboration

• Customer Orientation and delight

Our vision has been to create a committed workforce through Shaping talent management around skills, knowledge sharing practices based upon our value system. The key element of our Human Resource strategy is to Drive HR innovations, to create people culture, and productivity accelerators through a hybrid work culture embedded with employee experience and wellness.

As on March 31,2025, the Smartlink Group has 200+ employees. Smartlink s future success evolves around our ability to attract top talent, retain, and motivate highly qualified technical and management personnel, to approach the VUCA world.

Smartlink invests its surplus in various financial instruments like mutual fund, bonds, non-convertible debentures and other securities and thus Smartlink is exposed to credit risk, market risk and interest rate risk.

The risk of technological obsolescence is very high in the segments where the Group operate. Moreover, the technological advancements are dictated by the large OEM players. On the other hand, we need to continuously invest to keep launching new products to enhance reach and reputation amongst customers and channel partners.

The Group is exposed to fluctuations in foreign exchange rate, in particular the movement of US dollar vis-a-vis the Indian Rupee as the Group import substantial amount components where the payment is in US Dollars. The fluctuation in interest rates and foreign exchange rates pose a risk to the competitiveness and pricing ability of the company. In todays constantly changing markets, companies may opt to maintain and grow sales by selling at competitive prices. Products have become commoditized over time as alternative products become available or the number of suppliers offering the same product increases.

Smartlink has aligned its current systems of internal financial control with the requirement of the Companies Act, 2013. The Internal Control framework is intended to increase transparency and accountability in an organisations process of designing and implementing a system of internal control. The framework requires the Company to identify and analyse risks and manage appropriate responses. The Company has successfully laid down the framework and ensured its effectiveness. Smartlinks internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorization and ensuring compliance of corporate policies.

Our management assessed the effectiveness of the Companys internal control over financial reporting (as defined in Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“LODR Regulations”) as of March 31,2025. Based on its evaluation (as defined in section 177 of Companies Act, 2013 and Regulation 18 of LODR Regulations, our audit committee has concluded that, as of March 31,2025, our internal financial controls were adequate and operating effectively.

Certain statements made in this report relating to the Companys objectives, projections, outlook, estimates, etc. may constitute ‘forward looking statements within the meaning of applicable laws and regulations. Actual results may differ from such estimates or projections etc., whether expressed or implied. Several factors including but not limited to economic conditions affecting demand and supply, government regulations and taxation, input prices, exchange rate fluctuation, etc. over which the Company does not have any direct control, can make a significant difference to the Companys operations. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on any forward-looking statements. The MD&A should be read in conjunction with the Companys financial statements included herein and the notes thereto.