Your Directors have pleasure in presenting the 14^th Annual Report of the Company together with the Audited
Statement of Accounts for the year ended March 31, 2026.

1. FINANCIAL PERFORMANCE

On a consolidated basis, your Company’s revenue increased to H 7,345.99 mn for the current year as against
H 5,982.59 mn in the previous year. Your Company’s net profit is H 523.88 mn for the current year as against
the net profit of H 132.80 mn in the previous year. On a standalone basis, your Company’s revenue increased to
H 2,118.90 mn for the current year as against H 1,740.91 mn in the previous year. Your Company’s net profit is
H 28.90 mn in the current year as against the net profit of H 35.06 mn in the previous year.

The operating and financial performance of your Company has been covered in the Management Discussion
and Analysis Report and the MD & CEO Message which forms part of the Annual Report.

1.2 Dividend

Your Company does not propose to declare any dividend for financial year 2025-26. The Dividend Distribution
Policy is available on the Company’s website athttps://www.capillarytech.com/wp-content/uploads/2026/04/02.-
Dividend-Distribution-Policy.pdf

1.3 Transfer to Reserves

During the year under review, the Company has not transferred any amount to reserves.

1.4 State of company’s affairs

During FY 2025-26, the Company successfully
completed its Initial Public Offering ("IPO") and
its Equity Shares were listed on the National Stock
Exchange of India Limited ("NSE") and BSE Limited
("BSE") on November 21, 2025.

The IPO comprised a fresh issue of Equity Shares
aggregating to ^3,450.00 million and an offer for
sale aggregating to ^5,325.01 million, with a total
issue size of ^8,775.01 million. The proceeds from
the Fresh Issue are being utilised in accordance
with the objects stated in the Prospectus. As on
March 31, 2026, unutilised IPO proceeds amounted
to ^3,228.95 million.

Pursuant to Regulation 41(2) of the SEBI (Issue of
Capital and Disclosure Requirements) Regulations,
2018, Crisil Ratings Limited was appointed as the
Monitoring Agency to monitor the utilisation of
the IPO proceeds. The Company has submitted
the requisite quarterly monitoring reports and
statements of deviation/variation to the Stock
Exchanges in accordance with the SEBI (Listing
Obligations and Disclosure Requirements)
Regulations, 2015. There has been no deviation
or variation in the utilisation of the IPO proceeds
during the year.

1.5 Change in nature of business

Your Company has not commenced any new
business or discontinued/sold or disposed of any
of its existing businesses or hived off any segment
or division during the financial year 2025¬
26 under review.

1.6 Material changes and commitments, if any,
affecting the financial position of the Company,
having occurred since the end of the Year and
till the date of the Report

In the opinion of the Board, except Session M
acquisiton as mentioned in MD&A, their is no
transaction or event of a material and unusual
nature has arisen in the interval between the end
of the financial year and the date of this report,
which would affect substantially the results, or the
operations of your Company for the financial year
in respect of which this report is made.

1.7 Details of revision of financial statement or
the Report

There were no revisions to the financial statements
and the Board’s Report of the Company during the
year under review.

2. GENERAL INFORMATION

People Practice

In FY 2025-26, the People Practice function
at Capillary Technologies continued to evolve
as a strategic corporate enabler, working
collaboratively across all business units to drive
organizational excellence, employee engagement,
and operational effectiveness. Aligned with our
long-term business objectives, the function
played a pivotal role in enhancing people¬
centric practices, streamlining policies, building
leadership capability, and nurturing a culture of
continuous development.

One of the key strategic priorities during the
year was the streamlining of global human
resource ("HR") policies and processes, ensuring
consistency and compliance across geographies.
These policies underwent a rigorous audit to align
with statutory requirements and industry best
practices. As part of this effort, we successfully
conducted a comprehensive HR Audit across
India, the United States, and Europe.

We also transformed the mid-year review process
to emphasize development, introducing the
"on track / off track" framework. This simplified
approach-enabled through our partnership
with the xto10x platform-served as a strategic
checkpoint to celebrate progress and identify
areas for growth.

Significant strides were made in HR tech
integration to enable seamless data flows and
operational efficiency. Our core HRMS platform,
Darwinbox, was successfully integrated with:

• Netsuite (Finance tool) for payroll and
cost allocation

• OnGrid for automated background
verification and

• Sense for a streamlined onboarding experience

Our HR Shared Services continued to ensure
smooth delivery of critical services including
payroll administration, benefits management,
employee data governance, and resolution of
employee queries, all while maintaining service
quality benchmarks and compliance.

As part of our ongoing investment in talent and
leadership, the year saw the expansion of coaching
and development programs:

• Personalized coaching for top talent and
JEDI/senior managers, helping leaders align
personal growth with organizational priorities.

• First-time manager development program,
designed to empower new managers
with essential leadership capabilities in
communication, delegation, performance
management, and conflict resolution.

• Transition coaching for offshore delivery
center (“ODC”) managers in mysore, following
the inauguration of our mysore offshore
delivery center, ensured leadership continuity
and cultural integration.

Learning & Development

Capillary Academy

Capillary Academy, the Company’s dedicated
Learning & Development function, continued
to serve as the central platform for continuous
learning, capability building, and career
progression. During FY 2025-26, the Academy
significantly scaled both in reach and depth,
expanding to 51 structured courses (33 Product,
8 Onboarding, 7 Functional, and 4 Compliance)
across product, functional, compliance, and
onboarding tracks, with 5,800 course completions
and 800 active learners across the organization.

Building Capability Through Structured
Learning

Product Training:

A key focus during the year was strengthening
organizational capability through structured
learning pathways. The Academy delivered 100
hours of expert-led product training sessions,
including quarterly Product Training Days
covering new product releases, platform upgrades,
and evolving use cases. These programs enabled
customer-facing and cross-functional teams-
including Product Support, Customer Success,
Sales, and Presales-to remain current on the
Company’s evolving product suite.

In addition, monthly Product Bootcamps were
conducted to accelerate onboarding and
capability building for new employees and teams
integrated through acquisitions, ensuring faster
readiness through orientation and deep-dive
product use-case training.

The Academy also delivered client-specific
product training programs for the CS teams and
our customers, particularly for key brands in the
US, to strengthen customer understanding of
the product and enhance self-serve capabilities,
thereby improving adoption and ease of use.

To support continuous product evolution and just¬
in-time learning, the team also developed new
micro-modules and bite-sized product feature
videos, enabling faster knowledge dissemination
and easier access to feature-level training across
teams and clients.

aiRA Adoption & Enablement

A strategic priority during the year was driving
adoption of the Company’s AI capabilities,
particularly aiRA. Dedicated enablement programs
for aiRA were delivered, especially for the US
teams, to embed AI-assisted workflows into daily
operations and customer support processes.

Functional Capability Development

Role-based capability development was further
strengthened through the launch of the
Configuration Specialist Certification (Level 1)
program, which achieved 100% completion for
relevant new joiners and served as a formal
readiness framework for project deployment,
supported by managerial certification. Role-
specific learning pathways were also progressively
extended to the CS-Hub and IM teams.

The new joiner orientation program was
further streamlined to include a structured
first 30-day learning pathway for employees in
the Mysore office.

The Security Awareness Module was updated
in line with Hi-Trust audit standards, and new
POSH modules were curated and launched for
employees in India.

In addition, a Train-the-Trainer (TTT) facilitation
skills workshop was introduced for interns
within the team to strengthen internal
training capabilities.

CapTube & Content Innovation

The Academy continued to strengthen its learning
delivery ecosystem through CapTube, its internal
video learning platform, which expanded to 10
channels and 100 content uploads. Additional

initiatives such as AI voice cloning for scalable
content production and Doc-Bot integration
for improved knowledge discoverability further
enhanced just-in-time learning access.

Global Culture Connect Program - Key Highlight of
FY 2025-26

A major highlight of the year was the launch of the
Company’s first Global Culture Connect Program,
a cross-cultural capability-building initiative
designed to strengthen collaboration across
geographies by building awareness of differences
in communication styles, decision-making
approaches, and workplace expectations.

In the last 2 quarters, the program trained 20-25%
of employees across India and the US covering

8 teams, and delivered strong outcomes with an
overall satisfaction score of 4.59/5, confidence uplift
of 16.4%, and an NPS score of 82.05, reflecting global
participant advocacy. The EU rollout is planned as
the next phase of the program.

In addition, Kannada Kalisona, an in-house Kannada
speaking workshop for non-Kannada speakers,
was launched to support workplace inclusion and
cultural integration across teams both in Bengaluru
and Mysore offices.

3. CAPITAL AND DEBT STRUCTURE3.1 Issue of shares or other convertible securities

During the financial year under review, following
are the changes:

a. Change in the authorized, issued, subscribed and paid-up share capital
(i) Authorised Capital (J millions)

During the year under review, there is no change in the Authorised Capital of the Company. The
Authorised share capital of the Company is as given below:

(ii) Issued, Subscribed and paid up share capital.

During the financial year, the issued, subscribed and paid-up share capital of the Company has
changed from H 146.65 to H 158.81 details of which are given below:

Equity Share capital

b. Reclassification or Subdivision of the authorised share capital.

During the financial year under review,
the Company has not undertaken
any reclassification or sub-division
of the authorised capital in terms of
Companies Act, 2013.

c. Reduction of share capital or buy back of shares

The Company has not reduced nor bought
back any shares.

d. Change in capital structure resulting from
restructuring

There is no change in the capital structure
resulting from restructuring.

e. Change in voting rights

There is no change in the voting rights.

3.2 Issue of equity shares with differential voting
rights and sweat equity shares

During the financial year under review, the
Company has neither issued equity shares with
differential voting rights nor issued sweat equity
shares in terms of Companies Act, 2013.

3.3 Details of employee stock options

The NRC administers and monitors the Company’s
ESOP in accordance with Securities and Exchange
Board of India (Share Based Employee Benefits and
Sweat Equity) Regulations, 2021. During the year,
18,86,372 stock options were granted to eligible
employees under the said ESOP. Disclosures
as required under Rule 12 of Companies (Share
Capital and Debentures) Rules, 2014, Securities and
Exchange Board of India (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021, read
with SEBI Circular CIR/CFD/POLICY CELL/2/2015
dated June 16, 2015 is available on the website of
the Company athttps://www.capillarytech.com/
wp-content/uploads/2026/07/ESOP-Disclosure.pdf

The certificate from the Secretarial Auditors that
the ESOP has been implemented in accordance
with Securities and Exchange Board of India (Share
Based Employee Benefits and Sweat Equity)
Regulations, 2021 and the resolutions passed by the
shareholders shall be available at the Annual General
Meeting for inspection by the members.

3.4 Shares held in trust for the benefit of
employees where the voting rights are not
exercised directly by the employees

During the financial year under review, the
Company has not held any shares in trust for the
benefit of employees where the voting rights are
not exercised directly by the employees

3.5 Issue of Debentures, warrants, bonds or any
non-convertible securities

During the financial year under review , the
company has not issued and allotted any
debentures, warrants, bonds or any non¬
convertible securities.

4. CREDIT RATING OF SECURITIES

During the financial year under review, your
Company has neither obtained nor revised any
credit rating in respect of securities.

5. INVESTOR EDUCATION AND PROTECTION
FUND (IEPF)

During the financial year under review, disclosure
pursuant to Investor Education and Protection
Fund under sub-section (2) of section 125 of the
Act and the IEPF (Accounting, Audit, Transfer
and Refund) Rules, 2016 are not applicable
to your Company.

6. MANAGEMENT

6.1 Directors and Key Managerial Personnel

As on the date of this report, the Company has Six
(6) directors consisting of four (4) Independent
directors and two (2) Executive directors. The
composition of the Board is in conformity with
Section 149 and 152 of the Act.

None of the Directors on the Board:

• holds directorships in more than ten
public companies;

• serves as Director or as independent directors
in more than seven listed entities; and

• who are the Executive Directors serves as
independent directors in more than three
listed entities.

• are related to each other.

Necessary disclosures regarding Committee
positions in other public companies as on March 31,
2026 have been made by the Directors.

The Key Managerial Personnel of the Company as
on March 31, 2026 are:

a. Disqualification of Directors

None of the directors of the Company are
disqualified pursuant to the provisions of
Section 164 of Companies Act, 2013 or debarred
or disqualified from being appointed or
continuing as directors of companies by
the Securities and Exchange Board of India
or Ministry of Corporate Affairs or any such
statutory authority.

b. Appointment / Resignation from Board of
Directors

During the financial year under review,
the following changes took place in the
composition of the Board of Directors
of the Company:

Mrs. Yamini Preethi Natti ( DIN: 06533367 )
resigned from the position of Independent
Director of the Company with effect
from May 07, 2025.

Mr. Peeyush Ranjan ( DIN: 11069839 ) was
appointed as an Independent Director of the
Company with effect from May 07, 2025.

Due to the changes in the composition
of the Board of Directors, the Nomination
and Remuneration Committee, Corporate
Social Responsibility Committee, and Risk
Management Committee were reconstituted
with effect from May 23, 2025, as follows:

a. Nomination and Remuneration Committee:

• Mr. Venkat Ramana Tadanki - Chairman

• Mrs. Neelam Dhawan - Member

• Mr. Farid Lalji Kazani - Member

b. Corporate Social Responsibility Committee:

• Mr. Peeyush Ranjan - Chairman

• Mr. Anant Choubey - Member

• Mr. Venkat Ramana Tadanki - Member

c. Risk Management Committee:

• Mrs. Neelam Dhawan - Chairperson

• Mr. Anant Choubey - Member

• Mr. Peeyush Ranjan - Member

The details with respect to the composition,
numbers of meetings, attendance, powers, roles,
terms of reference, etc. of the aforesaid committees
are given in detail in the "Report on Corporate
Governance” of the Company which forms part
of this Report.

c. Directors retiring by rotation

In accordance with the provisions of Section
152 of the Companies Act, 2013 read with
Section 149 of the said Act, at least 2/3^rd of
the total number of Directors, excluding
Independent Directors, shall be liable to retire
by rotation and out of the Directors liable to
retire by rotation, at least 1/3^rd of the Directors
shall retire by rotation at every Annual
General Meeting.

In view of the above, Mr. Aneesh Reddy
Boddu (DIN-02214511), who has been longest
in office since his appointment, who is liable
to retire by rotation and being eligible, offers
himself for re-appointment, a resolution
seeking shareholders’ approval for his re¬
appointment forms part of the notice. The
Board recommends his re-appointment to
the shareholders of the Company.

d. Declaration by Independent Director.

The Company has received necessary
declaration from each of the Independent
Directors, under Section 149(7) of the
Companies Act, 2013, that he / she meets
the criteria of Independence laid down in
Section 149(6) of the Companies Act, 2013
and Independent Directors have complied
with the Code for Independent Directors

prescribed in Schedule IV to the Act. Further,
the Independent Directors have included
their names in the data bank of Independent
Directors maintained with the Indian
Institute of Corporate Affairs in terms of
Section 150 of the Act read with Rule 6 of the
Companies (Appointment and Qualification
of Directors) Rules, 2014.

• Further, Independent Directors have also
confirmed that they are not aware of any
circumstance or situation, which exists
or may be reasonably anticipated, that
could impair or impact their ability to
discharge their duties with an objective
independent judgment and without
any external influence and that they are
independent of the management.

• The Independent Directors attend a
Familiarization / Orientation Program on
being inducted into the Board. Further,
various other programmes are conducted
for the benefit of Independent Directors to
provide periodical updates on regulatory
front, product, engineering, sales and
marketing developments and any other
significant matters of importance.
The details of the Familiarization
programmes provided by the Company
is available on the Company’s Website
athttps://www.capillarvtech.com/wp-
content/uploads/2026/03/Policy-on-
Familiarisation-Programmes-for-IDs.pdf

Further the Company issues a formal
letter of appointment to the Independent
Directors, outlining their role, function, duties
and responsibilities, the format of which
is available on the Company’s Website at
https://www.capillarytech.com/wp-content/
uploads/2026/02/Terms-and-Conditions-for-
appointment-of-ID.pdf

• During the year under review and as on
date of this report

Except for payment of professional fee to
M/s. Amir Advisory Services LLP (where
Mr. Farid Lalji Kazani- Independent Director
and his daughter are partners of the said LLP)
for availing advisory services, the Company
did not have any pecuniary relationship or
transactions with any of its Directors, other
payment of sitting fees to Independent
Directors and reimbursement of expenses
incurred by them for the purpose of attending
meetings of the Board / Committees
of the Company.

With the approval of the Audit Committee
and Board of Directors the said advisory
agreement was executed on May 27, 2025
with one year tenure for providing advisory
services on financial related matters and the
same expired on May 26, 2026.

• In the opinion of the Board, all the
independent directors appointed during
the year are persons of integrity, possess
relevant expertise and experience
(including the proficiency).

• As required under Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014,
as on date of this report the details of Independent Directors, pertaining to the online proficiency Self¬
Assessment test conducted by IICA are as below.

e. Women Director

In terms of the provisions of Section 149 of the Companies Act, 2013, your Company has complied with
the requirement of having at least one Independent Woman Director on the Board of the Company.
Mrs. Neelam Dhawan (00871445) is serving as a Chairperson and Independent Woman Director.

f. Changes in KMP

During the year under review and as on date of this report, there was no change in KMPs.

6.2 Board Meetings and attendance

Fifteen Board Meetings were held during the year under review and the gap between two meetings did not exceed
one hundred and twenty days. Please refer to Corporate Governance Report for the details of Board Meetings.

6.3 Corporate Governance

A separate Report on Corporate Governance, together with a Certificate from the Secretarial Auditor confirming
compliance with the Corporate Governance requirements under the Listing Regulations, forms part of this
Integrated Annual Report. A Certificate from the CEO and CFO, issued in accordance with the Listing Regulations
and confirming, inter alia, the accuracy of the financial statements and cash flow statements, adequacy of
internal controls and the reporting of significant matters to the Audit Committee, is also annexed.

6.4 Non-acceptance of any recommendation of any Committee of the Board which is mandatorily required

The Board of Directors have taken all the recommendations of the various Committees of the Board as
statutorily prescribed.

6.5 Company's Policy on Directors' appointment and remuneration

In compliance with Section 178 of the Companies Act 2013 , the Board has formulated a ‘Nomination and
Remuneration Policy’ on Directors’ appointment and remuneration including recommendation on remuneration
of the key managerial personnel and other employees and the criteria for determining qualifications, positive
attributes and independence of a director.

The Policy is available on the Investors section of the website of your Company athttps://www.capillarvtech.
com/wp-content/uploads/2025/11/Nomination-and-Remuneration-Policy Updated 16.10.2025.pdf

6.6 Board Evaluation

In compliance with the provisions of Section 178 read with Section 134(3)(p) of the Act and Regulation 19 read
with Schedule II, Part D of the SEBI Listing Regulations, the NRC has formulated a detailed criteria for evaluation
of performance of the Directors including Independent Directors, the Board and its Committees, as part of the
Governance Policies for the Board of Directors, the NRC, KMP & Senior Management appointments, remuneration
& evaluation ("Governance Policy”) adopted by the Board.

The annual performance evaluation is initiated by the NRC chairperson by way of deployment of a structured
questionnaire covering various aspects of the Board’s and its Committees’ functioning and effectiveness and
individual members contributions including knowledge of business, contribution to discussion and strategy,
concern for stakeholders, quantity and timeliness of the information flow between the Board Members and
the Management, Board composition and Member participation, quality and transparency of discussions, time
devoted by the Board to strategy, Board Culture, Execution and Performance of Specific Duties, Obligations
and Governance etc. based on the criteria approved by the NRC. The evaluators are also encouraged to provide
qualitative feedback and comments as part of the evaluation.

Outcome and results of evaluation for all Directors of the Company as on March 31, 2026 participated in the
evaluation process. The Directors expressed their satisfaction on the parameters of evaluation, the implementation
and compliance of the evaluation exercise and the outcome of the evaluation process. The outcome of the
evaluation was presented to the Board, the Committees, at their respective meetings held on 06^th February, 2026
for assessment and development of plans/ suggestive measures to address action points that arise from the
outcome of the evaluation. The overall feedback and outcome of the evaluation was positive from all the Members.
Suggestions provided to enhance the Board’s effectiveness have been noted and taken up for implementation.

6.7 Remuneration of Directors and Key Managerial Personnel

The information required pursuant to provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given below:

A. The percentage increase in the remuneration of Directors, Key Managerial Personnel

(“KMP”) during the financial year 2025-26 and ratio of the remuneration of each Director to the median
remuneration of the employees of the Company for the financial year 2025-26 are as under:

*Notes:

i. The remuneration of Independent Directors comprises of commission paid for the financial year 2025-26;

ii. Mr. Peeyush Ranjan was associated for part of the financial year 2025-26, i.e. from May 07, 2025 to March
31, 2026. Hence, the percentage increase in remuneration is not comparable/reported. Since associated
for a part of the financial year 2025-26, the percentage increase in remuneration is not comparable and
hence not reported.

B. The ratio of the remuneration of each Director to the median remuneration of the employees of the Company
for the financial year 2025-26:

The median remuneration of permanent employees of the Company during the financial year under review
was H1.566526 million, and the ratio of remuneration of each Director to the median remuneration of the
employees of the Company is provided in the table above.

C. The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer,
Company Secretary or Manager, if any, in the financial year 2025-26:

As provided in the table above.

D. Percentage increase in the median remuneration of employees in the financial year 2025-26:

There was an increase of 12.461 % in the median remuneration of employees in the financial year 2025-26.

E. Number of permanent employees on the rolls of the Company:

There were 689 permanent employees on the rolls of the Company as on March 31, 2026.

F. Average percentile increase already made in the salaries of employees other than the managerial personnel
in the last financial year, and its comparison with the percentile increase in the managerial remuneration
and justification thereof, and point out if there are any exceptional circumstances for an increase in the
managerial remuneration:

The average increase in the salaries of employees other than Key Managerial Personnel (KMP) during the
financial year was 10.19%.

The average increase in the remuneration of Key Managerial Personnel (KMP) during the same period was 11.67%.

The increase in KMP remuneration was marginally higher than the average increase in employee salaries.
There were no exceptional circumstances warranting the increase in managerial remuneration during the
financial year.

G. Key parameters for any variable component of
remuneration availed by the directors;

The key parameters for the variable component
of remuneration availed by the directors and Key
Managerial Personnel are considered by the Board
of Directors based on the recommendations of
the Nomination and Remuneration Committee
as per the Nomination and Remuneration Policy
for Directors, Key Managerial Personnel and other
employees. It is based on entity’s performance as
well as individual performance.

H. Affirmation that the remuneration is as per the
remuneration policy of the Company:

It is hereby affirmed that the remuneration paid for
the financial year 2025-26 is as per the Company’s
Governance Policy for remuneration of Directors,
Key Managerial Personnel and other employees.

6.8 Remuneration received by Managing/Whole
time Director from holding or Subsidiary
Company

No managing or whole-time director of the Company
is in receipt of any remunerations/commission from
holding Company or its subsidiaries.

6.9 Particulars of Employees and Related
Disclosures

Disclosures with respect to the remuneration of
Directors and employees as required under Section
197(12) of the Act and Rule 5(1) of the Companies
(Appointment and Remuneration of Managerial
Personnel) Rules, 2014 (Rules) have been disclosed
under point 6.7 Remuneration of Directors and Key
Managerial Personnel.

The Particulars of top ten employees in terms
of remuneration drawn as required under Rule
5(2) and (3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014
shall be provided to the shareholders on request.

Having regard to the provisions of the second
proviso to Section 136(1) of the Act and as advised,
the Annual Report excluding the aforesaid
information is being sent to the members of the
Company. Any member interested in obtaining
such information may address their email to
secretarial@capillarytech.com

6.10 Director’s Responsibility Statement

Pursuant to the provisions of Section 134(5) of the
Companies Act, 2013, the Board of Directors, to the
best of their knowledge and belief, confirm that:

A. in the preparation of the annual accounts
for the financial year ended March 31, 2026,
the applicable accounting standards have
been followed along with proper explanation
relating to material departures, if any;

B. the Directors have selected such accounting
policies and applied them consistently and

made judgments and estimates that are
reasonable and prudent so as to give a true
and fair view of the state of affairs of the
Company as at March 31, 2026 and of the profit
of the Company for that period;

C. the Directors have taken proper and sufficient
care for the maintenance of adequate
accounting records in accordance with the
provisions of the Act, for safeguarding the
assets of the Company and for preventing and
detecting fraud and other irregularities;

D. the Directors have prepared the annual
accounts on a going concern basis;

E. the Directors have laid down internal financial
controls to be followed by the Company and
such internal financial controls are adequate
and were operating effectively; and

F. the Directors have devised proper systems to
ensure compliance with the provisions of all
applicable laws and that such systems were
adequate and operating effectively.

6.11 Internal financial controls and its adequacy:

The Company’s internal financial control systems
are commensurate with its size and nature of its
operations and such internal financial controls
are adequate and are operating effectively. The
Company has adopted policies and procedures
for ensuring orderly and efficient conduct of the
business. These controls have been designed to
provide reasonable assurance regarding recording
and providing reliable financial and operational
information, adherence to the Company’s policies,
safeguarding of assets from unauthorized use
& prevention and detection of frauds & errors,
the accuracy & completeness of the accounting
records, and the timely preparation of reliable
financial disclosures.

6.12 Quality Management System

Quality Policy

At Capillary, our mission is to consistently drive
customer success by delivering excellence in
products and services. We are committed to
continuous improvement across our systems
and processes, ensuring consistent return on
investment for our clients.

Our quality strategy is rooted in customer
feedback, evolving business needs, emerging
technologies, and performance analysis. We
continually evaluate and adapt our practices
to ensure relevance and excellence in a rapidly
changing market landscape.

Capillary's quality framework is based on globally
recognized standards and industry-leading
practices. We maintain ISO 27001:2022, PCI DSS
4.0.1 certifications, and are annually assessed
for SOC 2 Type 2 and SOC 1 Type 2 standards.

These accreditations guide our policies for SaaS
product security, platform integrity, and corporate
information infrastructure protection.

Engineering Excellence & Product Quality

Engineering is at the core of our value creation.
Our teams are structured for agility, innovation,
and resilience, enabling us to solve complex
problems through modern technology stacks and
collaborative practices.

Core Engineering Practices

• Agile and Scrum Methodologies:

Delivering high-quality features iteratively,
with customer-centric alignment

at every stage.

• Continuous Integration & Delivery:

Automation-first pipelines ensure reliable
deployments and faster time-to-market with
reduced human errors.

• Cloud-Native Architecture:

Highly scalable and performant systems
built on microservices and Kubernetes
enable rapid deployment, observability, and
efficient resource use.

• Test-Driven Development (TDD):

Unit and integration tests are embedded
into our development process, ensuring fast
feedback cycles and high-quality releases.

• Observability & Monitoring:

Every release includes application and
infrastructure metrics, logs, and alerts to
proactively detect and resolve issues.

• DevOps and Site Reliability Engineering (SRE):
We integrate reliability practices such as SLIs/
SLOs, chaos testing, and automated failover
to ensure uptime and resilience.

• Security by Design:

We adopt shift-left secure SDLC practises that
ensures secure coding practises, vulnerability
scanning, and rigorous testing to deliver a
secure product from Day One.

• Automation-Driven Quality Gates:

Automated functional test suites are
executed across environments, including
post-release automation runs. Our sanity and
smoke test suites run on production, and
failures immediately trigger alerts to ensure
swift issue detection. This proactive approach
enables faster incident response, reinforces
change management, and ensures release
stability and customer confidence.

• Root Cause Analysis (RCA):

Focused effort on understanding the
cause of failure, identifying gaps and areas
of improvement, while learning from

mistakes, is part of the engineering culture.
We resolve systemic issues quickly and
prevent recurrences by properly planning
the permanent fix.

Process Governance & Continuous Improvement

We maintain a technology-led governance
framework that emphasizes:

• Standardization & Automation:

All critical decisions are backed by real-time
dashboards and data-driven insights.

• Feedback Loops:

Continuous internal and customer feedback
mechanisms help evolve our products and
engineering processes dynamically.

• Process Audits & Certifications:

Regular third-party audits ensure compliance
with international standards and reinforce
our commitment to quality and security.
Customer Experience & NPS

Customer satisfaction is a board-level metric at
Capillary. We run quarterly Net Promoter Score
(NPS) surveys across engineering, product, and
customer success functions.

NPS results are used to:

• Uncover improvement areas and prioritize
them in OKRs.

• Enable cross-functional efforts to resolve
pain points.

• Track trends and drive consistent

enhancements in customer experience.

A systematic approach to analyzing feedback
ensures our customers consistently see value and
trust in our solutions.

Delivery Methodology & Program Management

Our project delivery is anchored in Agile frameworks
and mature program management practices:

• Project Management:

Provide transparency to internal and external
stakeholders, including real-time tracking of
milestones and risk flags.

• Customer-Centric Onboarding:

From kickoff, clients are integrated into the
planning and execution phases to maximize
value realization from Day 1.

• Change Management & Risk Mitigation:

Our playbooks include proactive change
control and contingency planning to manage
uncertainties during implementations.

• Our Quality Management System showcases:
• Proven process maturity and

product stability.

* Robust security and compliance posture.

* Scalable engineering and delivery models.

* Strong customer satisfaction metrics
and governance.

These form a critical part of our risk mitigation
and operational excellence.

6.13 Frauds reported by auditor

During the financial year under review, pursuant to
provisions of the Section 143(12) of the Companies
Act, 2013, the Auditor has not reported any incident
of fraud to the Audit, Risk Management Committee.
Your Company has adopted Fraud Prevention
Policy. The Policy is available on the Investor
Relations section of the website of your Company
athttps://www.capillarytech.com/wp-content/
uploads/2022/11/Fraud-Prevention-Policy.pdf

6.14 Adoption and review of policies

The Company has adopted the policies and
codes required under the applicable provisions
of the Companies Act, 2013 and the SEBI (Listing
Obligations and Disclosure Requirements)
Regulations, 2015.

These policies are reviewed periodically by the
Board and/or the respective Committees and are
available on the Company’s website.

6.15 Report on Corporate Governance

The Report on Corporate Governance of your
Company forms a part of the Annual Report.

7. DISCLOSURES RELATING TO HOLDING,
SUBSIDIARIES, ASSOCIATES AND JOINT
VENTURES

As on March 31, 2026, Capillary Technologies
International Pte. Ltd. (‘CTIPL’) which holds
39.47 million equity shares together with its
nominee, representing 49.70% of the issued,
subscribed and paid-up equity share capital of our
Company, ceased to be a holding company but
continues as a promoter

As on March 31, 2026, our Company has 10 (ten)
wholly owned subsidiaries including 1 (one) direct
and 9 (nine) step down subsidiaries outside India.

There are no associates or joint venture companies
within the meaning of Section 2(6) of the Companies
Act, 2013 (“Act”).

Pursuant to the provisions of Section 129(3) of the
Act, a statement containing the salient features of
financial statements of the Company’s subsidiaries
in Form No. AOC-1 as provided in Annexure I is
attached to this report.

Further, pursuant to the provisions of Section 136 of
the Act, the financial statements of the Company,
and consolidated financial statements, are
available on the Company’s website athttps://www.
capillarvtec h.com/investors/finan ces-and-reports/
annual-reports/. The financial statements, together

with related information and other reports of each
of the subsidiary companies are available on the
Company’s website athttps://www.capillarytech.
com/investors/finances-and-reports/annual-
account-of-subsidiaries/

8. DETAILS OF DEPOSITS

During the year, your Company has neither accepted
nor renewed any deposits from public within the
meaning of Section 73 of the Companies Act, 2013 read
with Companies (Acceptance of Deposits) Rules, 2014.

9. PARTICULARS OF LOANS, GUARANTEE
AND INVESTMENT

Pursuant to Section 186 of the Companies Act,
2013 disclosure on particulars relating to loans,
advances, guarantees and investments (wherever
applicable) are provided as part of the financial
statements under note no. 05 .

10. PARTICULARS OF CONTRACT AND
ARRANGEMENTS OF RELATED PARTIES

All related party transactions that were entered
into during the financial year under review, were on
an arm’s length basis, and in the ordinary course of
business and are in compliance with the applicable
provisions of the Act.

There were no materially significant related party
transactions made by the Company during the
year that required shareholders’ approval under
Companies Act 2013. All Related Party Transactions
are placed before the Audit Committee for
approval. Further, prior omnibus approval of the
Audit Committee is obtained for the transactions
which are repetitive in nature or when the need for
these transactions cannot be foreseen in advance.

Accordingly, the disclosure of the particulars of
the related party transactions in form AOC -2 as
required under Section 134(3) (h) of the Act as
provided in Annexure-II is attached to this report.

The details of related party transactions as per
accounting standards are provided in Note 35 of
Notes to Financial Statements (Standalone).

11. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) is an
integral part of the Company’s commitment
towards creating sustainable value for society. The
Company believes in actively contributing to the
social, economic and environmental development
of the communities in which it operates, while
ensuring responsible business practices and
creating long-term value for all stakeholders.
Although the Company has constituted a
Corporate Social Responsibility Committee and
adopted a CSR Policy, the provisions relating to
mandatory CSR expenditure under Section 135
of the Companies Act, 2013 are not applicable to
the Company for the financial year under review.

Nevertheless, the Company remains committed to
building a sustainable ecosystem and continues
to undertake initiatives that positively impact
society and the environment. The Company has
formulated a CSR Policy in accordance with the
provisions of Section 135 of the Companies Act,
2013. The CSR Policy is available on the Company’s
website athttps://www.capillarytech.com/wp-
content/uploads/2026/04/13.-Corporate-Social-
Responsibilitv-Policv.pdf

12. CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION, FOREIGN
EXCHANGE EARNINGS AND OUT GO

The details of the conservation of energy,
technology absorption, foreign exchange earnings
and outgo, information required to be disclosed
under Section 134(3)(m) of the Companies Act, 2013
read with rule 8(3)of the Companies (Accounts)
Rules, 2014 are as follows:

C. Foreign exchange earnings and Outgo
in millions)

13. RISK MANAGEMENT

Your Company has a well-defined risk management
f ramework in place. The Board of Directors (“Board”)
of the Company oversees the development of
Risk Management Policy and the establishment,
implementation and monitoring of the Company’s
risk management system, in accordance with the
policy. The Risk Management Committee reviews,
assesses and formulates the risk management
system and policy of our Company from time to time
and recommend for amendment or modification
thereof, which shall include among others:

• A framework for identification of internal
and external risks specifically faced by our
Company, in particular including financial,
operational, sectorial, sustainability

(particularly, environment, social and

governance related risks), information, cyber

security risks or any other risk as may be
determined by the committee;

• Measures for risk mitigation including
systems and processes for internal control of
identified risks; and

• Business continuity plan;

The details of the Risk Management Committee are
available on Company’s website. The Risk Management
Policy adopted by the Company is available at
https://www.capillarytech.com/wp-content/
uploads/2022/H/Risk-Manaqement-Policv.pdf

13.1 Cyber security

As our employees continue to work efficiently in a
hybrid environment, we have remained proactive
in addressing the evolving cybersecurity threat
landscape. In our efforts to maintain a strong
cybersecurity posture, our team has stayed
informed about global cybersecurity developments,
ensuring higher compliance and ongoing security.
We are certified under the Information Security
Management System (ISMS) Standard ISO
27001:2022 and PCI DSS 4.0.1. Additionally, we have
completed the attestation for both SOC 2 and SOC 1
Type 2 through an independent audit firm. Looking
ahead, we are focused on achieving HITRUST
certification this year.

Throughout the year, we prioritized cybersecurity
training, reskilling, and fostering a culture of shared
responsibility. We focused on encouraging a shift-
left approach and empowering our developer
community with specialized courses and resource
kits. These efforts were aligned with our broader
initiatives to enhance cybersecurity processes,
technologies, and overall security posture.

We also enhanced the awareness of our employees
through quizzes, privacy day activities, role plays etc.

No reported incident is underway with Regulators.

14. VIGIL MECHANISM

The Company has adopted a Vigil Mechanism Policy
to provide a channel to the Directors and employees
to report genuine concerns about unethical
behaviour, actual or suspected fraud or violation
of the standards, codes of conduct or policies
adopted by the Company from time to time. The
Company is committed to adhering to the highest
standards of ethical, moral and legal conduct of
business operations and in order to maintain these
standards, the Company encourages its employees
who have genuine concerns about suspected
misconduct to come forward and express their
concerns without fear of punishment or unfair
treatment. The mechanism provides for adequate
safeguards against victimization of Directors
and employees to avail of the mechanism and
also provide for direct access to the Vigilance
Officer. The Whistle Blower Policy adopted by the
Company is available on Website of the Company at
https://www.capillarytech.com/wp-content/
uploads/2022/11/Vigil-Mechanism-policv.pdf

15. MATERIAL ORDERS OF JUDICIAL BODIES /
REGULATORS

There are no significant material orders passed
by the Regulators, Courts or Tribunals impacting
the going concern status of the Company and its
operations in future.

16. AUDITORS

M/s. Walker Chandiok & Co LLP, Chartered
Accountants (Firm Registration no. 001076N/
N500013), were appointed as the Statutory Auditors
of the Company at the AGM held on September 29,
2022 for a term of five consecutive years from the
conclusion of 10^th Annual General Meeting (“AGM”)
till the conclusion of 15^th AGM of the Company to
be held in the year 2027 in accordance with the
provisions of Section 139 of the Act.

The Reports given by the Statutory Auditors on
the standalone financial statements and the
consolidated financial statements of the Company
for FY 2025-26 form part of the Annual Report.
The Reports do not contain any qualification,
reservation or adverse remark or disclaimer by the
Statutory Auditors.

17. SECRETARIAL AUDIT

M/s. BMP & Co, LLP, a firm of practicing Company
Secretaries (“Secretarial Auditors”), carried out the
secretarial audit for FY 2025 in compliance with
the Act and the Rules made thereunder, and other
applicable regulations as amended and other
laws specifically applicable to your Company. The
Secretarial Audit Report in form MR-3 for FY 2025¬
26 is attached to this Report as Annexure - III. The
said Report does not contain any qualification,
reservation or adverse remark or disclaimer by the
Secretarial Auditors.

18. COST AND INTERNAL AUDITCost Auditor and Records

The provisions of appointment of Cost Auditor
pursuant to section 146 read with Companies (Cost
Records and Audit) Rules, 2014 are not applicable
to your Company during the financial year 2025-26.

Maintenance of cost records as specified by the
Central Government under sub-section (1) of section
148 of the Companies Act, 2013, is not required by
the Company and accordingly such accounts and
records are neither made and nor maintained.

Internal Audit

M/s. Protiviti India Member Private Limited
(Independent Internal auditor) was appointed to
carry out Internal Audit to ensure the adequacy
of the internal control system and adherence
to policies and practices. The audit committee
regularly reviews the reports submitted by the
independent internal auditor and the adequacy
and effectiveness of internal controls.

19. COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review, the Company
has complied with all the applicable Secretarial
Standards issued by Institute of Company
Secretaries of India (‘ICSI’). The Company has also
voluntarily adopted & complied with SS-4 (Report
on Board of Directors).

20. CORPORATE INSOLVENCY RESOLUTION
PROCESS INITIATED UNDER THE
INSOLVENCY AND BANKRUPTCY CODE,
2016 (IBC)

There are no proceedings initiated/pending
against your Company under the Insolvency and
Bankruptcy Code, 2016 which materially impact the
business of the Company.

21. FAILURE TO IMPLEMENT ANY CORPORATE
ACTION

During the year under review, there were no
instances where Company has failed to complete
or implement any corporate action within the
specified time limit.

22. ANNUAL RETURN

Pursuant to the provisions of Section 134 (3) (a) of
the Companies Act, 2013 read with the rules made
thereunder, the Annual Return (Form MGT-7) of the
Company has been disclosed on the website of the
Company and Web Link thereto is:https://www.
capillarvtech.com/investors/finances-and-reports/
annual-returns/

23. OTHER DISCLOSURES

During the year under review:

a. the consolidated financial statement is also
being presented in addition to the standalone
financial statement of the Company.

b. the requirement to disclose the details of the
difference between the amount of the valuation
done at the time of one-time settlement and
the valuation done while taking a loan from
the Banks or Financial Institutions along with
the reasons thereof, is not applicable;

c. there has been no change in the nature of
business of the Company

d. the Company has not opted for any
one-time settlement from the Banks or
Financial Institutions.

e. the Company has been compliant with
the provisions relating to the Maternity
Benefits Act, 1961.

24. DISCLOSURES PERTAINING TO THE
SEXUAL HARASSMENT OF WOMEN
AT THE WORK PLACE (PREVENTION,
PROHIBITION, AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual
harassment at workplace and has adopted a
Policy on Prevention, Prohibition and Redressal of
Sexual Harassment at workplace in line with the
provisions of the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal)
Act, 2013 (POSH) and the rules made thereunder.
The Policy aims to provide protection to employees
at workplace and prevent and redress complaints
of sexual harassment and for matters connected or
incidental thereto, with the objective of providing
a safe working environment, where employees
feel secure. The Company has not received any
complaints pertaining to sexual harassment during
the financial year. Also, that no cases were filed,
disposed of and pending as on date of this report.

The Company has complied with provisions relating
to the constitution of Internal Complaints Committee
under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013.

25. GREEN INITIATIVES

In commitment to keep in line with the Green Initiatives
and going beyond it, electronic copy of the Notice of
14^th Annual General Meeting of the Company including
the Annual Report for FY 2025-26 are being sent to all
Members whose e-mail addresses are registered with
the Registrar and Share Transfer Agent.

In terms of Environmental responsibility, the Company
actively works to minimize its ecological footprint by
reducing carbon emissions, conserving energy and
water, and adopting environmentally friendly practices.

• Capillary Technologies has a strong focus
on sustainability. The company emphasizes
environmentally-friendly practices such
as reducing energy footprint, encouraging
staff to engage in eco-friendly behaviors like
using reusable utensils and avoiding plastic,
planning social initiatives like tree plantation
drives and e-waste reduction, and having
Environment and Sustainability management
plans in place.

• We, as such, have a minimalistic carbon
footprint/emission. Our workspace size is
maintained at a requirements level and we
strive to ensure optimum usage of power
across our office spaces.

• Our solutions are hosted on AWS and we
inherit the sustainability measures and efforts
undertaken by AWS.

• We work with Recykle, a waste management
marketplace to ensure responsible e-waste
management practices and plan to be a 100%
processed e-waste company by 2025.

• This year, we tied up with another NGO
on afforestation. Instead of trophies, we
planted trees for speakers through the NGO,
SankalpTaru:https://sankalptaru.org/

• Our employee and customer gifting solution is
also sourced through local NGOs. Recently we
sourced handmade diaries and jute bags from
a woman’s group in Uttarakhandhttps://www.
purkalstreeshakti.org/

• We undertake many such initiatives with
regional NGOs in every country.

We sourced tote bags from a women-run
NGO called Pallaguttapalle Bags and gift
hampers from Thenga.

26. ACKNOWLEDGEMENTS AND APPRECIATION

Your Directors take this opportunity to thank
the customers, shareholders, suppliers,
bankers, business partners/associates, financial
institutions and Central and State Governments
for their consistent support and encouragement
to the Company.

Your directors sincerely appreciate all employees
of the Company and its subsidiaries for their hard
work and commitment.

On behalf of the Board of Directors
For Capillary Technologies India Limited

Sd/- Sd/-

Aneesh Reddy Boddu Anant Choubey

Managing Director and CEO Whole time Director, CFO & COO

(DIN: 02214511) (DIN: 06536413)

Date: 29.05.2026 Date: 29.05.2026

Place: Bengaluru Place: Bengaluru