Virtual Galaxy Infotech Ltd Management Discussions

1. Industry Structure and Developments

The Indian Information Technology industry continues to be a key enabler of economic growth, business transformation, and digital inclusion. The sector has witnessed sustained expansion, supported by the accelerated adoption of emerging technologies such as Artificial Intelligence, Machine Learning, cloud computing, data analytics, cybersecurity solutions, and automation across business functions and industry verticals. Government-led initiatives, particularly Digital India, have further strengthened the digital ecosystem by promoting e-governance, digital infrastructure, financial inclusion, and technology-driven public service delivery.

The demand for Enterprise Resource Planning and Banking, Financial Services and Insurance software solutions continues to remain robust, driven by the increasing need for secure, scalable, cloud-enabled, and compliance-oriented digital platforms. Enterprises are increasingly investing in integrated technology solutions to improve operational efficiency, enhance decision-making capabilities, strengthen cybersecurity frameworks, and enrich customer experience. In addition, the growing digital adoption by Micro, Small and Medium Enterprises has created further opportunities for technology companies offering customized, cost- effective, and industry-specific software solutions.

In this evolving business environment, the Company, with nearly three decades of experience in delivering technology-driven solutions, remains well positioned to capitalize on emerging opportunities. The Companys established presence in BFSI software, ERP solutions, and e-governance applications, coupled with its domain expertise, customer-centric approach, and continued emphasis on innovation, provides a strong foundation to address changing market requirements. The Company remains committed to product enhancement, technological advancement, and expansion of its digital offerings with a view to strengthening its competitive position and generating sustainable value for stakeholders.

2. Company Overview

Virtual Galaxy Infotech Limited ("VGIL"), incorporated in 1997 and headquartered in Nagpur, Maharashtra, is a technology-driven company engaged in providing comprehensive information technology solutions and services. The Companys offerings include software development, IT consulting, enterprise solutions, cloud computing, IT infrastructure management, and digital transformation services, catering to the evolving requirements of clients across diverse industry segments.

VGIL has established a strong presence in the Banking and Financial Services and Enterprise Resource Planning domains through its proprietary software products and technology platforms. Its flagship Core Banking Solution, "e-Banker", has been successfully implemented across a large number of cooperative banks, societies, non-banking financial companies, rural financial institutions, and other organizations, thereby enabling improved operational efficiency, regulatory compliance, and customer service delivery.

The Company remains committed to maintaining high standards of quality, information security, and service excellence. This commitment is supported by internationally recognized certifications, including ISO/IEC 20000-1:2018 for IT Service Management and ISO/IEC 27001:2022 for Information Security Management, reflecting the Companys continued emphasis on governance, security, and operational discipline.

As on March 31, 2026, VGIL had a workforce of approximately 429 employees and had successfully executed more than 100 active projects across 15 States in India, as well as in international markets including Tanzania, Malawi, Botswana, and Zimbabwe. Leveraging its domain expertise, customer-centric approach, and commitment to continuous innovation, the Company remains focused on strengthening its market position and creating sustainable value for its customers and stakeholders.

3. Financial Performance Overview

During the financial year under review, Virtual Galaxy Infotech Limited delivered a strong financial performance, reflecting sustained business growth, improved operational efficiencies, and effective project execution. The Companys revenue from operations increased significantly from Rs.12,014.35 lakhs in FY 202425 to Rs.18,205.64 lakhs in FY 2025-26, demonstrating healthy business expansion and increased customer engagement. Profit After Tax also recorded substantial growth, increasing from Rs.3,211.83 lakhs in FY 202425 to Rs.4,609.30 lakhs in FY 2025-26. The improvement in profitability was driven by higher revenues, better operational efficiencies, improved project execution, and a favourable business mix.

The Companys financial position continued to strengthen during the year, with net worth increasing from Rs.9,319.13 lakhs as at March 31, 2025, to Rs.21,845.47 lakhs as at March 31, 2026. The increase in net worth was primarily attributable to profits earned during the year and the capital raised through the Initial Public Offering. In addition, the Company continued to reduce its borrowings through timely repayments, resulting in a stronger balance sheet and an improved debt-equity profile. Overall, the Companys financial performance reflects its resilient business model, disciplined execution capabilities, and continued focus on creating long-term value for its stakeholders.

4. Key Financial Ratios:

During FY 2025-26, the Company witnessed improvement in several key financial parameters, supported by strong revenue growth, improved profitability, and efficient cost management. The key financial ratios for FY 2025-26 are presented herein below table. These ratios reflect the Companys strengthened financial position, improved liquidity, and better operational performance during the year.

Key Financial Performance	March 31, 2026	March 31, 2025
Revenue from Operations	18,205.64	12,014.35
EBITDA	8,546.79	5,555.29
EBITDA Margin (%)	46.95%	46.24%
PAT	4,609.30	3,211.83
PAT Margin (%)	25.32	26.73
Return on equity (%)	29.58	46.97
Return on capital employed (%)	26.51	39.35
Debt-Equity Ratio (times)	0.22	0.43
Net fixed asset turnover ratio	1.11	1.03
Current Ratio (times)	2.17	1.23

5. Segment-wise or product-wise performance.

During the year under review, the Companys activities were concentrated in its principal line of business. Accordingly, the Company operated in a single business segment and no separate reportable segment is identifiable. Hence, segment-wise or product-wise performance disclosure is not applicable.

6. Business Strategy and Outlook

The Companys long-term growth strategy is centered on expanding its market presence, strengthening its product portfolio, and deepening customer relationships across domestic and international markets. The Company intends to continue investing in business development and marketing activities to support future growth. Its go-to-market strategy is based on a combination of direct sales and channel partnerships, enabling it to address customers effectively across different geographies and market segments.

In India, the Company continues to leverage its in-house sales capabilities, while its overseas business is supported through channel partners and dedicated business development teams. The Company has identified Africa as an important growth market for its banking and fintech solutions and has already established a presence in markets such as Tanzania, Malawi, Botswana, and Zimbabwe. In parallel, the Company intends to explore opportunities in the Asia Pacific region, particularly in markets with growing demand for digital financial solutions. This strategy is expected to enable the Company to capitalize on emerging opportunities and strengthen its international footprint.

Opportunities and Threats

The Company operates in a rapidly evolving technology environment that presents significant growth opportunities while also exposing it to certain business risks. The increasing pace of digital transformation across the banking, financial services, government, and enterprise sectors, supported by initiatives such as Digital India, financial inclusion programmes, and the growing adoption of cloud computing, artificial intelligence, cybersecurity, and digital payment solutions, is expected to drive sustained demand for the Companys products and services.

Virtual Galaxy Infotech Limited is well-positioned to leverage these opportunities through its strong domain expertise in Core Banking Solutions (CBS), Enterprise Resource Planning (ERP), digital banking applications, managed IT services, and e-Governance solutions. The Company continues to strengthen its presence in the cooperative banking sector while expanding its customer base across public sector undertakings, state government organisations, small and medium enterprises (SMEs), manufacturing Industry and international markets. The ongoing development of the Companys SEZ infrastructure is expected to further enhance operational capabilities, support innovation, and enable long-term business growth.

At the same time, the Company operates in a highly competitive industry characterised by rapid technological advancements, evolving customer expectations, and continuous innovation. Competition from established domestic and global IT companies, as well as emerging technology firms offering cloud-native and AI-enabled solutions, may impact market share and pricing. The business is also exposed to risks relating to cybersecurity, changing regulatory requirements, execution of infrastructure projects, and the availability and retention of skilled technology professionals. Additionally, concentration of business in specific industry segments or geographical regions may pose operational and revenue-related risks.

To effectively address these challenges, the Company remains focused on continuous investment in research and development, product innovation, cybersecurity, employee capability enhancement, and operational excellence. Management is committed to diversifying its customer base, expanding into new domestic and international markets, and strengthening its technology offerings to mitigate risks while capitalising on emerging business opportunities and creating sustainable value for all stakeholders.

7. Internal Control Systems and Their Adequacy

The Company has established adequate internal control systems commensurate with the size, scale, and nature of its operations. These controls are designed to ensure the safeguarding of assets, accuracy and reliability of financial reporting, compliance with applicable laws and regulations, efficient utilisation of resources, and prevention and detection of fraud and errors.

The internal audit function operates independently and periodically reviews operational, financial, and compliance controls. Audit findings and recommendations are regularly placed before the Audit Committee of the Board, which continuously monitors the effectiveness of the Companys internal control environment.

8. Human Resources

Human capital continues to be one of the Companys most valuable assets and, being an information technology company, the Company recognises its workforce as the principal driver of growth, innovation, and operational excellence. In a rapidly evolving technological environment, the Companys ability to remain competitive and technologically abreast depends significantly on the quality, capability, and commitment of its human resources.

Accordingly, the Company continues to invest in skill upgradation, training, capability building, retention initiatives, and new recruitments, as may be required from time to time, in order to strengthen its talent base and support its long-term business objectives. These efforts are also aimed at mitigating business and operational risks, ensuring continuity of service delivery, and enabling the Company to respond effectively to changing customer needs and technological developments. The Company also promotes a culture of innovation, collaboration, accountability, diversity, integrity, and continuous improvement.

The Companys employee tenure profile also reflects a stable and experienced workforce. As on March 31, 2026, 134 employees, representing more than 30.00 % of the total workforce, had completed more than five years of service with the Company, indicating healthy employee retention and organisational continuity.

Till date, the Company has consistently maintained cordial and harmonious relations with its employees, reflecting its emphasis on a stable and positive work environment.

9. Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may constitute "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied due to various factors including economic conditions, government policies, changes in regulations, technological developments, competitive pressures, demand and supply conditions, and other risks beyond the Companys control. The Company undertakes no obligation to publicly update any forward-looking statements to reflect subsequent events or circumstances.

DECLARATION REGARDING COMPLIANCE WITH THE COMPANYS CODE OF CONDUCT

Pursuant to Regulation 34(3) read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, I hereby confirm that the Company has adopted a Code of Conduct for its Board of Directors and Senior Management Personnel along with additional Code of Conduct for its Independent Directors. The adopted Code of Conduct for Board Members and Senior Managerial Personnel is available on the Companys website at https://www.vgipl.com/investors info/corporate- governance.

I further confirm that, for the financial year ended March 31, 2026, the Company has received affirmations of compliance with the applicable Code(s) of Conduct from all its Board of Directors and the Senior Management Personnel of the Company.

For the purpose of this declaration, "Senior Management Personnel" is inclusive of Chief Financial Officer, Managing Directors and the Company Secretary and Compliance Officer, and such other senior management personnel as on March 31, 2026.

For Virtual Galaxy Infotech Limited

Sd/-

Sachin Pande

Managing Director

DIN:02181154

Date: August 31st, 2026

Place: Nagpur