Updater Services Ltd Management Discussions

*Note these estimates are on Current Year Basis and not Financial Year basis.

Outlook

The global economic outlook remains challenging, with medium-term growth expected to stay modest due to rising geopolitical tensions and increasing fragmentation across countries. In the absence of strong policy support or major technological breakthroughs, global GDP is projected to grow at around 3.1% over the medium term, below the pre-pandemic average of 3.7%, led by slower growth in China and moderation across other key regions including Asia, the Middle East, Africa, North America, and Europe.

A gradual slowdown in globalization is likely to impact growth through several channels. Lower trade may reduce income growth and poverty reduction in developing economies. Tighter migration could affect remittance flows, while higher uncertainty may limit investment and capital flows. Overall, reduced movement of goods, capital, and people may slow innovation and productivity, leading to a structurally weaker global growth outlook.

Sources: IMF

India remained the fastest-growing major economy in FY26, with GDP accelerating to 7.6% (up from 7.1% in FY25) despite elevated global trade policy uncertainty and the impact of U.S. tariffs on merchandise exports. Domestic demand was the primary engine - private consumption grew 7.7% y-o-y, supported by low inflation, income tax cuts in the Union Budget, and GST rationalisation that lowered effective indirect tax rates. On the supply side, manufacturing and services were the key contributors, with traditional services (retail, hospitality, real estate, financial services) remaining buoyant. Agricultural activity moderated due to slower food-grain growth and a high base. Net exports were a drag, as import growth outpaced export growth.

Inflation & Monetary Policy: Headline inflation averaged 1.9% in Apr 2025-Feb 2026, well below the RBIs 4% target, driven primarily by falling food prices aided by strong agricultural output and reduced import duties on pulses and edible oils. Core inflation, however, edged up to 4.1% - largely due to a surge in gold and silver prices. The RBI responded with a cumulative 125 bps rate cut, reducing the repo rate to 5.25%.

Employment & Poverty: Labour market indicators were broadly stable. Formal job creation strengthened, with net new EPF subscribers growing

14% y-o-y in Apr-Jul FY26, up from 12% a year earlier. On poverty, the LMIC poverty rate ($4.20/ day, 2021 PPP) fell sharply from 57.7% in 2011-12

to 16.1% in 2023-24, lifting 496 million people out of poverty.

Fiscal Position: The government maintained its fiscal consolidation path, narrowing the general government deficit from 7.7% of GDP in FY25 to 7.4% in FY26. Revenue remained strong - a sharp rise in non-tax revenues offset the impact of income tax cuts and GST rationalisation. Spending growth was modest in both current and capital expenditure. However, the public debt-to-GDP ratio edged up marginally from 84.1% to 84.5% due to weak nominal GDP growth, compounded by a downward revision of nominal GDP following Indias base-year rebasing (2011-12 2022-23 in February

Outlook on the Indian Economy

Indias growth outlook remains strong, supported by reforms, improving formal employment, and a stable fiscal position. However, rising Middle East tensions pose near-term risks. GDP growth is now expected at 6.6% in FY27 (vs. 7.2% earlier), as higher energy prices and global uncertainty impact consumption, investment, and exports.

Inflation is likely to rise by 90 bps, while higher subsidy spending may slow government consumption. The current account deficit is projected at 1.8% of GDP due to higher energy imports, and the fiscal deficit may increase to 7.6% before gradually improving. Growth is expected to recover to 7.2% in FY28, supported by easing energy conditions.

Indias strong macro fundamentals-healthy forex reserves, a credible central bank, and continued reforms-provide resilience. Key priorities remain energy diversification, renewable expansion, stronger trade ties, and fiscal discipline.

Source: World Bank

India enters FY27 as the fastest-growing major economy globally, with GDP growth expected to sustain at 6.5% over the medium term, supported by resilient domestic demand, a revival in private capex, and continued public infrastructure spending. The Government of India has budgeted capital expenditure at over 11 lakh crore ( 3.4% of GDP)

in FY26, reflecting a sustained infrastructure-led growth strategy. Additionally, Production Linked Incentive (PLI) schemes across 14 sectors, the National Logistics Policy, and the PM Gati Shakti master plan are accelerating industrialisation, logistics efficiency, and supply chain integration. Against this backdrop, the Integrated Facilities Management ("IFM") and Business Support Services ("BSS") industry is expected to benefit from multiple structural tailwinds:

India now hosts 1,600+ Global Capability Centres, with continued expansion across BFSI, technology, and engineering sectors. This is driving demand for integrated workplace management, sustainability-led operations, and digitally enabled IFM solutions.

• Sectoral Growth Tailwinds : Expansion in healthcare, aviation, hospitality, and organised retail is driving demand for specialised, compliance-intensive services such as infection control, passenger handling, and high-frequency maintenance.

Strong ROCE focus, coupled with Great Place to Work certifications and low senior attrition, reflects disciplined capital allocation and a purpose-driven culture aligned with our values: happy people, clear purpose, better everyday, do good, balance all.

Co m pa n ie s a r e in cr e a sin gly se e k in g

comprehensive, integrated solutions for facility management, security, cleaning, and other business services, creating opportunities for providers to bundle and deliver end-to-end services.

expected nil impact) and evolving labour laws pose compliance burdens; exogenous shocks like pandemics amplify cyclicality.

The company believes that the following factors have significantly affected its results of operations and financial condition during the periods under review and may continue to affect our results of operations and financial condition in the future:

Margin Stability amid Prudent Provisioning and Operational Efficiencies: We have demonstrated resilience in maintaining EBITDA margins, despite a one-time provision of approximately 230 million related to Avons logistics receivables, reflecting our conservative and prudent approach to risk management. Concurrently, our focus on client-level profitability, technology-led manpower optimization, and margin-accretive specialized services has supported steady performance.

Market Leadership in Industrial IFM: Industrial FM, which includes managing customer manufacturing plants, warehouses, and other industrial-related facilities, continues to be a significant revenue driver for us. The IFM segment as a whole is highly diversified across various customer sectors, which reduces concentration risk. This strong focus on Industrial FM sets us apart from other players in the market, acting as a key differentiator. We expect this contribution to remain robust and continue to be a competitive advantage in the years ahead.

BSS Transition to AI-Enabled Outcome-Based Services: Our BSS subsidiaries (Denave, Athena, Matrix) advanced significantly in technology adoption, with agentic AI pilots, IntelliBank enhancements, and voice bot POCs yielding early traction. Despite near-term mix pressures and forex impacts, Denave onboarded 48 new logos, Athena diversified beyond BFSI, and Matrixs Audit & Assurance scaled via marquee wins (e.g., FMCG nationwide verifications). This positions BSS for resilient growth, with technology as a key differentiator enhancing client ROI and our profitability in a rapidly evolving market.

Athenas Resilient Diversification and AI Integration: Athena sustained healthy margins despite an evolving technology landscape and AI impacts on select BFSI clients, proactively diversifying into high-potential sectors like education, retail, and real estate to mitigate concentration risks (BFSI

70%). Successful completion of AI-powered voice bot POCs with marquee clients (including a large NBFC) marks progress in digital transformation, improving efficiency and cost competitiveness.

Airports Business Delivers Record Profitability with Network Expansion: Global Flight Handling achieved its strongest performance, driven by high-margin non-scheduled operations (e.g., Patna elections), seasonal traffic, and new wins (Khajuraho, Vizag, Tirupati). Operating across 22 airports (37.61% EBITDA-positive), we secured BCAS/MoCA approvals for ASTI security training and expanded our Global School of Aviation. With ramp-ups complete and training demand rising, the segment is poised for sustained profitability and market leadership.

Avon Core Stabilization with Strategic Logistics Pause: Avons mailroom management (core business) performed steadily with stable client retention, insulated from logistics irregularities (fully provisioned; operations halted). Enhanced due diligence and vendor controls now safeguard future expansion. Focusing on premium mailroom/niche logistics positions Avon for consistent contributions amid e-commerce tailwinds.

Improved Working Capital Efficiency: Focused efforts on better receivables management, optimized billing cycles, and disciplined cost control have led to improved working capital efficiency, strengthening our overall liquidity and supporting sustainable business growth.

The India facility management market size is expected to increase from USD 87.21 billion in 2026 to reach USD 123.98 billion by 2031, growing at a CAGR of 7.29% over 2026-2031.

The market size reflects the revenue generated by market vendors offering Integrated facility management services such as (Hard Services including Asset Management, MEP and HVAC Services, Fire Systems and Safety, Other Hard Facility Management Services; Soft Services including Office Support and Security, Cleaning Services, Catering Services, Other Soft Facility Management Services), Offering Type (In-house, Outsourced including Single Facility Management, Bundled Facility Management, Integrated Facility Management), End-User Industry (Commercial, Hospitality, Institutional and Public Infrastructure, Healthcare, Industrial and Process, Other End-User Industries), and Geography.

Source: Mordor Intelligence

• Companies are adopting predictive maintenance and integrated service contracts, which is leading to larger deal sizes for service providers.

• High occupancy in premium office spaces (Grade A offices) is increasing demand for 24/7 maintenance services (electrical, plumbing, HVAC).

• Growth in electronics and semiconductor manufacturing is creating demand for specialised services like cleanroom maintenance and uninterrupted power support.

• Clients are increasingly linking contracts to energy efficiency and sustainability targets, favouring players with technology (IoT, data analytics) capabilities.

• Government initiatives like the Production Linked Incentive scheme are driving strong industrial project pipelines, expanding opportunities for technical and hard services.

Hard services (33.5% Market Share) have been growing faster than the overall India facility management market, with strong momentum driven by regulatory compliance requirements and energy-efficiency upgrades. The National Building Code 2016 mandates fire detection and suppression systems in high-rise buildings, leading to increased retrofit activity in older properties. At the same time, energy-efficiency norms from the Bureau of Energy Efficiency (BEE) are encouraging the adoption of technologies such as efficient chillers and variable-frequency drives, significantly reducing energy consumption. As a result, large property owners are increasingly adopting condition-based monitoring systems, creating more stable and recurring revenue streams.

Soft services (66.5% Market Share) continue to account for the majority of industry revenues,

supported by essential services such as cleaning, security, and office support. However, traditional manpower-intensive services are gradually evolving. The use of access control systems and video analytics is reducing dependence on physical security personnel, particularly in premium office spaces. Cleaning services are shifting toward specialised, higher-value offerings such as façade maintenance and post-construction deep cleaning. Similarly, catering services are becoming more technology-driven, with a focus on efficiency and waste reduction to meet evolving workplace standards. While the industry remains fragmented, specialised players are finding opportunities in niche segments such as disinfection and sterilisation services.

Source: Mordor Intelligence Report

Healthcare is the fastest-growing segment, expanding at around 9.4% CAGR, driven by the rollout of health centres and hospitals that require strong infection control and specialised facility management. Private hospitals are also increasingly outsourcing non-core operations to improve efficiency and compliance, while pharmaceutical facilities are driving demand for high-value services like cleanroom maintenance.

Industrial and process facilities account for the largest share of the market (around 34%), supported by growth in sectors like electronics, semiconductors, and automotive, which require reliable power and strict safety standards. Commercial real estate, especially GCC-led offices, continues to see strong demand, while hospitality has recovered with occupancy levels reaching 68-70%, increasing the need for housekeeping services. Institutional spaces and transport hubs offer large volumes but typically operate at lower margins due to competitive pricing.

Source: Mordor Intelligence Report

The Indian warehousing sector continues its remarkable upward trajectory, consolidating the transformation that began with GST-led supply chain restructuring. Indias total warehousing stock reached 610 million sq. ft. in 2025, with premium Grade A assets now comprising over half of the quality space - and the sector is projected to race toward 850 million sq. ft. by 2030. This growth is not just about scale, but a decisive shift in quality and geography. Institutionally-backed Grade A assets now account for 38% of quality stock,

bringing standardised development and enhanced specifications that are attracting global occupiers, while the top eight Tier I cities remained dominant, controlling 82% of total stock at 498 million sq. ft., with 14 emerging Tier II cities hosting 112 million sq. ft. of stock. Since 2019, Grade A warehousing stock across Indias major cities has expanded dramatically - growing 2.5 times from 88 million sq. ft. to 238 million sq. ft. by 2024 - reflecting the increasing demand for high-quality storage and distribution facilities as Indias economy modernises and e-commerce expands. Technology is rapidly becoming central to warehousing operations: warehouses are becoming smart, with automation projected to grow from barely 10% to three-quarters of facilities by 2030, transforming basic storage into technology-driven fulfilment ecosystems. Sustainability, too, is no longer optional - Indias green warehousing stock is projected to quadruple to 270 million sq. ft. by 2030, with institutional investors driving this transition as over 45% of their portfolio is already certified and another 20% under certification.

Source - JLL India - India Warehousing Annual Review 2025 (February 2026): jll.com/en-in JLL India - Indias Sustainable Warehousing Landscape: A Green Print (July 2025): jll.com/en-in

Indias institutional catering industry is at a strong growth stage, driven by increasing formalisation across corporate, healthcare, education, and industrial segments. The market was valued at

USD 5.3 billion in 2025 and is expected to reach

USD 7.7 billion by 2034, growing at a CAGR of

4.3%, with contractual catering contributing over 60% of the market. Growth is supported by rising office occupancy, return-to-office trends, and greater focus on employee well-being. At the same time, technology adoption and sustainability initiatives are reshaping operations, while challenges such as rising food costs, labour shortages, and stricter compliance norms are favouring organised, large-scale players.

Source - https://www.imarcgroup.com/india-catering-services-market

The Indian sales enablement platform market generated revenue of USD 236.6 million in 2024 and is projected to grow significantly, reaching USD

762.7 million by 2030. Within this market, platform-based offerings currently contribute the largest

share of revenue, while services are emerging as the fastest-growing segment, reflecting increasing demand for value-added support. In 2024, India accounted for approximately 4.5% of the global market, and is expected to lead the Asia Pacific region in terms of revenue contribution by 2030. This strong growth outlook underscores Indias strategic position in the global sales enablement ecosystem and signals continued opportunities for technology-driven solutions.

Source: Grand View Research

The Global Business Assurance Market size was valued at US$ 217.65 Billion in 2026 and is expected to reach US$ 382.78 Billion in 2033, a Compound Annual Growth Rate (CAGR) of 8.4% from 2026 to 2033. Business assurance enables the organizations to address various challenges that include overall risk management, audit management, compliance maintenance and effective governance of an organization. This allows the businesses to maintain effective control over various functional departments within an organization.

Source - Coherence Market Insights

The global background screening market is estimated at USD 16.35 billion in 2026, up from

USD 14.72 billion in 2025, and is expected to grow at a 11.08% CAGR to USD 27.66 billion by 2031. This growth is driven by stricter regulatory requirements, increasing cross-border hiring, and greater adoption of cloud-based screening solutions. Employment verification remains the largest segment with 62.18% market share (2025), while criminal background checks are the fastest-growing, expanding at 11.78% CAGR.

From an industry perspective, IT & telecom accounts for 27.45% of global revenue (2025), supported by strong cybersecurity and compliance needs. Meanwhile, gig economy platforms are the fastest-growing segment at 12.05% CAGR, as continuous verification becomes standard for delivery and mobility workers. BFSI and healthcare are also witnessing rising adoption due to tighter compliance and risk management requirements,

with the BFSI segment reporting a 18.1% year-on-year increase in discrepancies, further driving demand for background screening services.

Source: Mordor Intelligence

Airport Ground and Cargo Handling Services Market size was valued at USD 38.08 Billion in 2024 and is poised to grow from USD 42.01 Billion in 2025 to USD 92.18 Billion by 2033, growing at a CAGR of 10.32% during the forecast period (2026-2033). The passenger handling services segment currently dominates the global airport ground and cargo handling services market, in terms of market share. The segment is expected to keep growing since there is a greater emphasis on passenger comfort and security issues.

Source: https://www.skyquestt.com/report/airport-ground-and-cargo-handling-services-market

While the Company has continued to grow steadily through organic initiatives-driven by operational excellence, client retention, and service innovation-it has also achieved significant progress through inorganic growth. Strategic acquisitions have played a key role in expanding our operational scope, service capabilities, and geographic presence. These acquisitions have added high-margin services such as employee background verification, audit and assurance, feminine hygiene care, sales enablement, and airport ground handling to our portfolio. Funded primarily through internal accruals, they have helped diversify revenue streams, enhance competitiveness, and attract specialized talent. As the Indian IFM and BSS market continues to

consolidate with increasing demand for organized and professional service providers, the company remains focused on selectively pursuing value-accretive acquisitions to strengthen its market position and extend its value chain presence.

We will look to do acquisitions only if:

1. The business is managed by experienced promoters who continue to work with the company both to build their original business and add value to the overall organization.

2. We will look to acquire businesses which will add capabilities and are complementary to the entire group company as a whole.

3. The business we acquire will be margin accretive in nature and improve the profitability of the consolidated company.

4. They should be asset light and offer opportunity for cross sales or cost synergies which will help further unlock company value.

Acquisitions bring with them a set of multifaceted challenges. These include financial implications arising from the historical liabilities and obligations of acquired entities, as well as the complexities of integrating business operations, management teams, and organizational cultures. Ensuring continuity in leadership, aligning technology systems, and harmonizing internal processes can be resource-intensive and time-consuming. Retaining key personnel and ensuring a smooth transition for existing customers of the acquired business also pose considerable risks. Additionally, there are legal, regulatory, and compliance considerations-particularly during operational restructuring or cross-border transactions-that require careful navigation. While the Company remains confident that the integration of acquisitions and the consolidation of their performance will strengthen overall financial outcomes, it is mindful of the possibility that the realization of anticipated benefits may be delayed or not fully materialize as planned.

such as commercial real estate and industrial facilities, leveraging a customer-centric approach to account mining and business development. Our dedicated 70 member sales and marketing team plays a pivotal role in driving new customer acquisitions while deepening existing client relationships.

• Our Company maintains all records and processes all approvals through a robust Enterprise Resource Planning (ERP) system, ensuring centralized control and operational efficiency.

• Adequate systems and well-defined procedures have been established to ensure effective internal financial controls. An external audit firm has been appointed to periodically assess and monitor these control mechanisms. Internal audit findings are presented and discussed at Audit Committee meetings, which also include management responses and the final observations of the internal auditors.

• The Board of Directors has adopted a range of policies and implemented controls and monitoring mechanisms to ensure the orderly and efficient conduct of the Companys operations. These measures are aimed at safeguarding assets, preventing and detecting fraud and errors, ensuring the accuracy and completeness of accounting records, and facilitating the timely preparation of reliable financial information.

• The Company has engaged an external firm of Chartered Accountants to evaluate the adequacy and effectiveness of the internal financial control systems. The external evaluators have expressed satisfaction with the current systems in place.

• The statutory auditors, in their report to the shareholders, have also expressed satisfaction with the Companys internal financial controls.

In compliance with the Companies (Accounts) Rules, 2014 (as amended), the Company and the components have used accounting software for maintaining its books of account which have the feature of recording audit trail (edit log) facility and the same has operated throughout the year for all the relevant transactions recorded in the accounting software except mentioned below:

• The feature of audit trail (edit log) was not enabled at the database layer of the accounting software for the entire audit period

• The feature of audit trail (edit log) was not enabled at the application layer for the period

1 April 2025 to 18 November 2025. For the

period 19 November 2025 to 31 March 2026, the feature of audit trail (edit log) was not enabled for certain fields of tables for payroll, procurement, revenue, property, plant and equipment and financial reporting processes.

• The feature of audit trail (edit log) was not enabled for certain changes which were

performed by users having privilege access rights related to debug access, for the accounting software used for maintaining the books of accounts.

Further, where audit trail (edit log) facility was enabled and operated at any point during the year, we did not come across any instance of the audit trail feature being tampered with during the course of our audit. Additionally, except where audit trail (edit log) facility was not enabled, the audit trail has been preserved by the Company as per the statutory requirements for record retention.

Additionally, the Company has implemented a comprehensive daily data backup process, with backups stored securely in remote locations to ensure data integrity and disaster recovery preparedness.

The relationship between the management and employees remained cordial and constructive throughout the year under review. As of the reporting date, the Company employs a total of 56,252 individuals across various levels and functions.