Valiant Communications Ltd Management Discussions

Overview

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013 and the Indian Accounting Standards (Ind AS) issued by the Ministry of Corporate Affairs (MCA) notified under the Companies (Indian Accounting Standards) Rules, 2015. The management accepts responsibility for the integrity and objectivity of these financial statements. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner the form and substance of transaction and reasonably present our Companys state-of-affairs and profits for the year.

Industrial Structure and Development

Our Company designs and manufactures communication, transmission, protection, synchronization, and data storage solutions – which include NAS (Network-attached storage), SAN (Storage Area Network) Data Storage Servers with multiple layers of cybersecurity.

Valiant has also designed cybersecurity equipment for a wide range of sectors including Power Sector Infrastructure -Sub-stations, SCADA applications, Utilities – Water, Oil and Gas, Renewable Energy sector, Railways, Airport Communication Networks, Corporate Networks, Financial

Institutions, Defense Networks and other emerging sectors and technologies.

We whole-heartedly applaud the policy and the exceptional work by the Government of India on implementation of Atmanirbhar Bharat, which is pathbreaking. This policy has helped our Company grow vastly. Our Company is in its best position since its inception to benefit from the policies of the Government of India – especially in light of the companys continued innovation, technology investments and development of state-of-the-art product portfolio and solutions, for the domestic and international markets.

It is important to note that the global investments in technology and specifically in real and tangible "product" development have continued to decline in the past few years while focus and investments "App" based applications have continued to grow. At the same time, our Company has continued to innovate and invest its resources in core product technologies and the development of real and tangible hardware products, that are essential for and required and used by various critical infrastructure sectors. Our Company is starting to realize the immense benefits from the aforesaid investments that it has continued to make over in that area over the past years.

Business Operation

Being an indigenous manufacturer, Valiant is apparently a beneficiary of all business opportunities that are notably arising in the Indian Public Sector out of the Make in India and Atmanirbhar Bharat initiatives of our Honble Prime Minister of India.

Our Company is focused on providing a mix of products, advance technologies and services for domestic and international market. Various initiatives taken by the Government of India, under the leadership of our Honble Prime Minister, such as "Atamnirbhar Bharat", "Make in India", "Digital India" and "PMA Policy", the Indian business scenario is vibrant and promising. All the initiatives taken by the Government of India are helping domestic indigenous manufacturers of electronics, telecom, communications, transmission, synchronization and cybersecurity equipment in India.

Various products of our Company are approved and used by major corporations such as PGCIL (Power Grid), most State Electricity Boards (SEBs) in India, various National Electricity Companies in various countries, defense organizations (including NATO, Lockheed Martin, Northrop Grumman), financial institutions, and critical infrastructure industries, worldwide.

Our Company is working on various opportunities to scale its products and technologies across various such customers for their applications. Each of its technologies has the potential to have a significant positive impact on the financials of our Company.

Being the only Indian manufacturer for various products in select domains, our Company has a distinctive advantage over its multi-national competitors. All the initiatives taken by the Government of India are helping our Company (being a manufacturer of communications, transmission, synchronization, MPLS routing, data storage servers and cybersecurity equipment) to capitalize its position in India and internationally.

For the global market, our Company continues to expand its customer base, footprint, distributor and re-seller relationships, and participate in exhibitions to provide the necessary exposure to our Companys products and technologies.

Opportunities

Our Company is focusing on its marketing efforts to promote its wide range of products and technologies, its MPLS Routers, Synchronization, NAS and SAN Data Storage Servers, Cyber and Network Security and Data Diode equipment and other innovative technology products which are expected to have a substantially positive impact on our Companys financial performance. Our unique range of Synchronization products and solutions, tailored for international customers, which have been well received and recognized for their quality, reliability, and performance.

Our Company continues to add features and models to its range of Frequency, Phase and the Time Synchronization range of products with its GPS/GNSS and now adding NavIC based Primary Reference Clocks with NTP Time Server, along with integrated IEEE-1588v2 PTP Grandmaster, PTP 1588v2 Slave, PTP 1588v2 Switch & Transparent Clocks for use in various sectors including the Power, Railways and Defense sectors.

Valiant has added GPS plus NavIC to its Synchronization portfolio.

Using both GPS and NavIC (Indian Regional Navigation Satellite System [IRNSS], with an operational name of NavIC) is better than GPS alone for several critical reasons, especially in terms of accuracy, availability, reliability, and regional resilience, and further provides precise Time Synchronization for Grid Stability for Phasor Measurement Units (PMUs) applications, Wide Area Monitoring Systems (WAMS) and SCADA, which rely on sub-microsecond time accuracy. And NavIC adds a sovereign layer of redundancy, vital for critical infrastructure, defense, and national security in India.

Valiant has also added GPS anti-jamming and anti-spoofing feature to its entire portfolio of Synchronization equipment. Key use cases include banking and critical infrastructure because precise timing and synchronization, which GPS provides, are foundational to their secure and stable operation. GPS jamming can severely disrupt these systems, leading to data loss, operational failure, and security vulnerabilities. Important applications include:

• Synchronize stock trades, interbank transfers, and payment gateways.

• Synchronization in Critical Infrastructure - Power grids, telecommunications, and data centers rely on GPS-disciplined clocks for Grid stability (e.g., PMUs in smart grids) and Call/data handoffs in telecom networks.

Signal Jamming continues to remain a low-cost, high-impact threat – available through off-the-shelf devices. Anti-jamming GPS is essential for banking and critical infrastructure to maintain precise timing, secure operations, and resilience against both accidental interference and deliberate attacks. Its absence can compromise data integrity, operational stability, and national security.

New product development and technological innovations are Valiants assets. With the introduction of new products, designs, solutions and applications, our Company looks forward to growth in sales and profits.

New Products and Technologies

Our Company continues to innovate.

VCL Made in India ransomware resistant, On-Site, Off-Site and Off-Line NAS (Network-attached storage), SAN (Storage Area Network) Data Storage Servers with multiple layers of cybersecurity are a key addition to its product portfolio that promises to bring high growth prospects to its future revenue in the coming years.

VCL NAS/SAN Data Storage Servers are offered with multiple layers of cybersecurity. These solutions include:

• With Network Isolation equipment,

• With Quantum-Safe Encryption,

• With Vaulted Data Storage through Data Diode,

• With EMP (electromagnetic pulse) data storage protection.

Valiants VCL-NAS/SAN is an essential component of the modern networked computing environment including data center applications. VCL-NAS and SAN comes equipped with incremental upgrades using AES 256 encryption and upgrading to Quantum-Safe technology. It allows the protection of stored data against natural disasters, man-made disasters and acts of war – including EMP (electromagnetic pulse).

Valiant has also added its latest EMP (Electromagnetic Pulse) protected data storage solution - VCL-9000. The VCL-9000-EMP is an environmentally hardened data storage system that is specifically engineered to protect the stored data from the effects of an Intentional Electromagnetic Pulse (IEMP) attacks as well as survive high altitude (HEMP), attacks as well as from naturally occurring EMP events, such as solar storms etc. VCL-9000-EMP is suitable for deployment by Defense, Banking, Financial Services and Insurance (BFSI) companies, power substations and other critical infrastructure sectors to protect critical data from all types of EMP events.

Grid Automation and Grid Islanding solution is another unique, cutting-edge and innovative addition to Valiants technology basket. The VCL Grid Islanding solution is being actively marketed globally, and especially in light of the recent country-wide grid black-outs in Spain and Portugal in Europe. Valiants Grid Islanding solution addresses the anomalies that may be created due to intermittent renewable power, shifts in frequency, rate-of-change-infrequency, phase angle, atmospheric disturbances or cybersecurity threats that would destabilize the electrical grid in a state, region or country. Further, we are actively working with National, State Electricity Boards and global Power Utilities to offer this solution to identify the trouble-spots and isolate downstream feeders so that strategic areas, critical services and essential consumers remain in healthy condition. The additional objective of the solution is also to create islands within Power Utilitys micro-grid, by isolating any area or zone that is threatening to destabilize Power Utilitys power distribution network.

This technology also holds good promise for future growth of the company.

Cybersecurity:

The Government has a heightened focus on Cybersecurity for all its departments and with a view to protecting its Critical Information Infrastructure (CII). This opportunity is translating into induction of our Cybersecurity products in the Government Critical Infrastructure sectors under the Make in India initiatives taken by the Government of India a n d a l s o h o l d i n g e n o r m o u s r e v e n u e p o t e n t i a l internationally.

The successful deployment of VCL Cybersecurity equipment for early detection and warning systems of cyber-attacks, ransomware attacks, unauthorized network intrusion, detection of trojans within a network, to safeguard their communication systems, is starting to generate business revenue. These on-premises hardware technologies along with sophisticated software solutions automatically detect and intelligently mitigate cyber-attacks, ransomware-attacks, unauthorized network intrusions and other cybersecurity threats.

With additional focus of exports of cybersecurity products and solutions, our European, Asian and South American channel partners and distributors are being provided in-person and online training programs on cybersecurity products to add customers in their respective regions.

Cybersecurity in Data Storage is essential for data confidentiality, maintaining data integrity, safe-keeping of financial records and protection from unauthorized access of intellectual property using advanced encryption algorithms and Quantum-safe technology. As data storage increasingly moves to digital formats and cloud-based solutions, the risks of data breaches, ransomware attacks, and other cyber threats grow. Cybersecurity in data storage helps ensure the integrity, confidentiality, and availability of data, which are critical to organizational security.

Cybersecurity in Data Storage safeguards data storage systems against disruptions from threats like DDoS attacks and malware, which can make data unavailable to users. It is imperative to protect against such attacks and ensure continuity of access for users, supporting operations and business resilience.

Cybersecurity in Data Storage helps prevent data leaks, which can impact on customer trust and incur serious legal and reputational consequences.

Cybersecurity in Data Storage solutions help protect stored data, prevent data breaches, and maintain user trust in systems that handle their sensitive information. In an era where data is increasingly valuable, comprehensive cybersecurity in Data Storage is crucial to safeguard it.

VCL Data Diode – Secure One-Way Data Transmission Solution:

VCL has added Data Diode devices as another layer of cybersecurity to its product portfolio. These ensure secure, one-way data transfer between segmented networks, such as between the NAS Server and a Vaulted (Secured and Physically Isolated) NAS Server. The VCL Data Diode maintains physical and electrical separation between the source and destination networks. This equipment is by design eliminates the exposure of the receiving system to external entry points, preventing intruders and malicious elements from infiltrating the receiving network.

The VCL Data Diode, used together with a VCL Vaulted (Physically Isolated) NAS/SAN Servers mitigates the possibility of the occurrence of potentially devastating losses due to data theft, data destruction, data tampering, or human error. The most important application includes physical isolation of critical data. VCL Data Diodes helps to maintain a clear, physical separation between a critical network segment and other non-critical network segments of an organization, or between the critical data stored in a Vaulted (Physically Isolated) NAS/SAN and the Operational NAS/SAN, thereby enhancing overall network security and reducing the risk of cross-contamination of data.

Future Prospects

Our Company is clearly focused on the design and d e v e l o p m e n t o f c o m m u n i c a t i o n , t ra n s m i s s i o n , synchronization, network reliability, NAS, SAN Data Storage Servers and cybersecurity equipment and solutions, for the national and international communication marketplace. With the continuous introduction of new products and technologies, our Company is focused on marketing, distribution and support of its product range.

Additionally, a series of new products based on advanced technologies including products that are Quantum-Safe ready are being introduced to secure high-speed Ethernet / IP data communication links.

The above-mentioned technologies will hold a key to future growth of our Company.

Valiant is successfully partnering in the Indian and international markets with Tejas Networks Limited [NSE: TEJASNET], a Tata Group company for offering end-to-end IT and OT power utility solutions. Further, our natural partnership is a winning combination in all business opportunities falling under Make-in-India wherein, Tejas and Valiant compete against foreign multi-national corporations.

Both the Companies are focusing on replicating their business synergies in the power sector at the international level also. Given the global reach of the Tata Group, the management is optimistic about the outcome about such opportunities.

Valiant and Tejas have partnered for the forthcoming large-scale business opportunities for their products supplies at the State Electricity Boards (SEBs) of Maharashtra, Kerela, Telangana, Tamil Nadu, Assam and Uttar Pradesh. These business opportunities are valued at over 75+ crores for Valiant.

The management is optimistic regarding the scale and scope of these opportunities.

Cybersecurity business:

The Company has successfully executed orders from the Grid Controller of India (formerly known as POSOCO), a Government of India Enterprise, ONGC and OVL (ONGC Videsh Limited) for its Cybersecurity equipment for deployment in utility network in India.

Further participation in new tenders for government organizations are underway in other Power, Oil & Gas, Defense and IT/OT sector companies.

The Government has a heightened focus on Cybersecurity for all its departments and with a view of protecting its Critical Information Infrastructure (CII). This opportunity will translate into induction of our Cybersecurity products in the Government Critical Infrastructure sectors under the Make in India and the Atmanirbhar Bharat, path-breaking initiatives taken by the Government of India.

The successful deployment of Cybersecurity equipment for early detection and warning systems of cyber-attacks, ransomware attacks, unauthorized network intrusion, detection of trojans within a network, to safeguard their communication systems, is starting to generate business revenue. These on-premises hardware technologies along with sophisticated software solutions automatically detect and intelligently mitigate cyber-attacks, ransomware, unauthorized network intrusion attacks and other Cybersecurity threats.

With additional focus of exports of Cybersecurity products and solutions, our European, Asian and South American channel partners and distributors are being provided in-person and online training programs on Cybersecurity products to add customers in their respective regions.

Marketing

Our Company is focused on expanding its global marketing network and building a larger base of associates / distributors and re-sellers, through which it can sell its products, on a worldwide basis. Our Company has its equipment successfully installed in over 110 countries now.

Our Company has successful installations, worldwide, of its various equipment in over 6000+ power sub-stations of 765kV, 440kV, 400kV, 384kV, 220kV, 132kV, 110kV, 66kV and 33kV capacities.

Our Company is expanding its marketing network in Europe and South America. Our Company has appointed new distributors in Australia, Brazil, Peru, Chile, Spain, South Korea, Vietnam, the Philippines, Thailand for its Cybersecurity and Power Utility products.

Our Company is delighted to see our innovation, research and development efforts are being recognized by some of the most prestigious customers worldwide, and that our products and solutions are being used in some of the most c r i t i c a l p ro j e c t s a n d a p p l i c a t i o n s . Ea c h o f o u r communication, transmission, protection, synchronization, NAS and data storage servers and cybersecurity verticals have the technological depth and the opportunity to scale. We are very happy regarding these encouraging developments and that our Company is on a strong path to growth.

Quality Initiatives

Valiant believes in sustained commitment to highest levels of quality, best-in-class product offerings and robust and fair business practices to help our Company to attain its objectives.

Our Company has successfully achieved the yardsticks to meet that standards ISO 9001:2015 (Quality Management), ISO 14001:2015 (Environmental Management), ISO 10001:2018 (Customer Satisfaction) and ISO 45001:2018 (Occupational Health & Safety).

The management believes that all these quality initiatives will further strengthen our Companys product line in the global market.

Threats

The communication sector, being a high technology-intensive business is prone to rapid technological obsolescence. To cope with an ever changing dynamic and highly competitive communications business environment, our Company is innovating and evolving rapidly; offering technically advanced and competitively priced products, solutions and applications to the demanding international customers, while competing with some of the best businesses in the communication field, in the world.

Outlook

Our Company continues to design, develop and introduce new products and technologies and strengthen its marketing network, worldwide. The introduction of new products and technologies are expected to help to increase domestic and international sales growth in the current year.

With the focus on developing new solutions for the fast-growing Utilities and Defense sectors, our Company continues to make rapid advancements both in technology upgradation and expanding its marketing footprint so that it can have a higher value share in both of these sectors.

Presently, the revenue of the Company is broadly driven by the power utility sector; however, the management also sees some exciting opportunities in Defense, IT/OT applications, Critical Infrastructure Industries (CII), and BFSI sectors both domestically and internationally.

Segment- wise Performance

Our net revenues (net of taxes and component sales) from operations on a standalone basis grew by 10.25% to

5,03,975 thousand in the reporting year. Domestic and export revenues constituted 80.33% and 19.67% of our total revenues respectively.

At the consolidated level, our net revenues (net of taxes and component sales) from operations on a consolidated basis grew by 9.76% to 5,08,511 thousand in the reporting year. Domestic and export revenues constituted 79.61% and 20.39% of our total revenues respectively.

Risk and Concerns

Risk is an inherent aspect of every business. The communication sector being part of a rapidly changing technology orbit, the level of risk increases due to high te c h n o l o g y o b s o l e s c e n c e . H o we ve r, co nt i n u o u s technological innovation, product development, value additions by research and development can minimize this class of business risk. Effective reporting and control mechanisms ensure timely information availability and facilitate proactive risk management.

The business in Indian environment has long gestation period and inherited execution delays, consequently, causes volatility in revenue recognition and profit figures in financial statements.

Further, in view of Industrial trend in India, our Company may face the delay in debtor realizations, which may have an adverse impact on cash position of our Company in the short-term. Consequently, our Company may face challenges maintaining the working capital requirements in view of upcoming larger opportunities.

Our Company may also face challenges meeting the requisite financial criteria of tender-based business, for which the Company has to rely on other larger business entities, which may have an adverse impact on margins.

The Board of Directors is responsible for monitoring risk levels on various parameters and their implementation to ensure the de-risking of the business at various levels. Further, the Audit Committee provides directions on risk management.

Internal Control System

Our Company has an adequate system of internal controls, implemented by the management to achieve efficiency in operations, optimum utilization of resources, effective monitoring of systems and compliance with applicable laws.

A qualified and independent Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy of internal controls.

Exchange Rate Fluctuation

The functional currency of your Company is the Indian rupee, whereas substantial business receipts and payments are in foreign currencies. The exchange rate between the rupee and foreign currencies have been changing substantially, and your Company faces the risks associated with exchange rate fluctuation and translation effect, wherein the appreciation of the rupee against foreign currencies, adversely impacts its profitability and operating results.

Human Resources

Human resources are most precious asset of our Company, and our Company seeks to attract and retain the best talent available. Our Company provides an environment which encourages initiatives, innovative thinking and recognizes and rewards performance. Since our Company operates in state-of-the-art technologies, necessary training and development of its personnel are conducted on a continuous basis. Industrial relations with all employees are cordial. The Directors Report may be referred for any further details.

Financial and Operational Performance

Our Company has achieved its all-time high revenue figures for both at standalone and group level in the reporting year, which have a positive impact on profitability and thereby; margins have also been improved as provided below:

	At Standalone Level (in Lacs)
Annual basis:	CY2024-25	PY2023-24
Revenue	5,040	4,571
EBITDA$	1,566	1,119
PBT#	1,283	878
Operating EBITDA margin (%)	31.08%	24.48%
EPS^ (in )	12.47	9.08

 

	At Group Level (in Lacs)
Annual basis:	CY2024-25	PY2023-24
Revenue	5,085	4,633
EBITDA$	1,559	1,071
PBT#	1,276	830
Operating EBITDA margin (%)	30.66%	23.13%
EPS^ (in )	12.60	8.56

$EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization ^#PBT stands for Profit before Tax.

^EPS stands for Earnings Per Share

Shareholders Fund

A statement of Shareholders Fund based on consolidated financial statements as on 31 March 2025 along with the comparison with the previous two years is given below:

Particulars	Year ended on 31 March 2025	Year ended on 31 March 2024	Year ended on 31 March 2023
	(Audited)	(Audited)	(Audited)
Equity Paid-up Capital	76,281	76,281	72,235
Other Equity	5,39,216	4,42,120	2,57,173
Shareholders Fund / Equity	6,15,497	5,18,401	3,29,408
Book Value (per equity share)	80.75/-	67.96/-	45.60/-

Significant Change in Financial Ratios

Particulars	Current year	Previous year	% Variance
Current ratio (in times)	6.44	8.86	-27.33%
Inventory Turnover (in times)	3.09	2.90	7%
Debt-Equity ratio (in times)	0.04	0.04	NIL
Debt service coverage ratio (in times)	18.35	19.71	-7%
Return on equity ratio (in %)	17.71	16.70	6%
Trade receivables turnover ratio	3.31	6.43	-48%
(in times)
Trade payables turnover ratio	8.96	10.22	-12%
(in times)
Net capital turnover ratio (in times)	1.19	1.59	-25.33%
Net profit ratio (in %)	18.88	14.39	31%
Return on Net-worth (in %)	16.28	13.42	21%
Operating profit margin (in %)	31.08	24.48	27%
Interest coverage ratio (in times)	62.73	60.14	4%
Return on capital employed (in %)	22.14	18.19	22%
Return on investment (in %)	Not applicable

The variations in turnover ratios are because of the efficiency recorded in the working capital management which grew 22% on a year-on-year basis, however; the variance in the current ratio is mainly because of the increase in current liabilities along with the increase in non-current assets. The reported variance in trade receivables turnover ratio is because of the increase in debtors for the sales recorded at the fag-end of the year. The variation in net capital turnover ratio is because of the efficiency recorded in the working capital management led by an increase in revenue.

The increase in above reported margin and return ratios are primarily because of the reported increase in revenue, which has a further positive impact on profitability.

Particulars	Current year	Previous year	% Variance
Current ratio (in times)	6.87	9.49	-28%
Inventory Turnover (in times)	3.12	2.94	6%
Debt-Equity ratio (in times)	0.03	0.04	-6%
Debt service coverage ratio (in times)	18.50	18.89	-2%
Return on equity ratio (in %)	16.94	14.62	16%
Trade receivables turnover ratio	3.33	6.38	-48%
(in times)
Trade payables turnover ratio	8.46	8.77	-4%
(in times)
Net capital turnover ratio (in times)	1.08	1.38	-22%
Net profit ratio (in %)	18.90	13.39	41%
Return on Net-worth (in %)	15.61	11.96	31%
Operating profit margin (in %)	30.65	23.13	33%
Interest Coverage Ratio (in times)	62.35	56.92	10%
Return on capital employed (in %)	20.89	16.26	28%
Return on investment (in %)	32.54	12.05	170%

The variations in turnover ratios are because of the efficiency recorded in the working capital management which grew 19% on year-on-year basis, however; the variance in current ratio is mainly because of increase in current liabilities and increase in non-current assets. The reported variance in trade receivables turnover ratio is because of the increase in debtors for the sales recorded at the fag-end of the year.

The increase in above reported margin and return ratios are primarily because of the reported increase in revenue which has further positive impact on profitability. Whereas, the return of investment is improved because of the appreciation of investment value during the year.

For formula methodology adopted and other details, please refer to the standalone financial statements and the consolidated financial statements.

Cautionary Statement

Statements and Management Discussion and Analysis describing our Companys objectives and expectations may be forward-looking, but within the meaning of applicable laws and regulations. Actual results may differ from those expressed in the statement.