Credit Rating

August 03, 2026 To To Listing Department Dept. of Corp. Services National Stock Exchange of India Limited BSE Limited Exchange Plaza, C-1, Block G, Phiroze Jeejeebhoy Towers Bandra Kurla Complex, Dalal Street Bandra (E), Mumbai – 400051 Mumbai- 400001 Symbol: ZENTEC Scrip Code: 533339 Dear Sir/Madam, Sub: Intimation regarding Credit Rating under Regulation 30 of SEBI Listing Regulations. Pursuant to Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), please note that CRISIL Ratings (“CRISIL”) has upgraded / reaffirmed the credit ratings on bank facilities of the Company. In this regard, please find below the reaffirmed ratings outstanding for debt instruments/ facilities of the Company, and the rating actions by CRISIL on the ratings as on date- Total Bank Loan Facilities Rated Rs. 386 Crore (Enhanced from Rs.256 Crore) Long Term Rating CRISIL A/Positive (Reaffirmed) Short Term Rating CRISIL A1 (Reaffirmed) The rating letter received from CRISIL is attached herewith. This is for your kind information and records. Thanking you Yours faithfully, For Zen Technologies Limited Sourav Dhar Company Secretary & Compliance Officer Encl: As above 03/08/2026, 22:19 Rating Rationale Rating Rationale August 03, 2026 | Mumbai Zen Technologies Limited Ratings reaffirmed at 'Crisil A / Positive / Crisil A1 '; Rated amount enhanced for Bank Debt Rating Action Regulator Of Total Bank Loan Facilities Rated Rs.386 Crore (Enhanced from Rs.256 Crore) Instrument Long Term Rating Crisil A/Positive (Reaffirmed) RBI Short Term Rating Crisil A1 (Reaffirmed) RBI Note: None of the Directors on Crisil Ratings Limited’s Board are members of rating committee and thus do not participate in discussion or assignment of any ratings. The Board of Directors also does not discuss any ratings at its meetings. 1 crore = 10 million Refer to Annexure for Details of Instruments & Bank Facilities Detailed Rationale Crisil Ratings has reaffirmed its ‘Crisil A/Positive/Crisil A1’ ratings on the bank facilities of Zen Technologies Limited (ZTL; a part of the Zen group). The ratings continue to reflect the group’s established market position in design, development and supply of training simulators, expected recovery in the business performance backed by improved order book position and strong financial risk profile. These strengths are partially offset by exposure to risks inherent in tender-based business and regulatory scenarios and large working capital requirement. Analytical Approach Crisil Ratings has combined the business and financial risk profiles of ZTL, Zen Technologies USA Inc, Zen Medical Technologies Pvt Ltd, Zen Defence Technologies LLC, UAE, Applied Research International Pvt Ltd, Vector Technics Pvt Ltd, ARI Labs Pvt Ltd, TISA Aerospace Pvt Ltd, Anawave Systems and Solutions Pvt Ltd and Unistring Tech Solutions Pvt Ltd. This is because all these entities, collectively referred to as the Zen group, have the same promoters and strong business and financial linkages. Goodwill from acquisitions has been amortised over five years. Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. Key Rating Drivers - Strengths Established market position in design, development and supply of training simulators The Zen group has emerged as India's leading provider of simulation training equipment and anti-drone systems, driven by its commitment to continuous research and development (R&D). The company's market position has been significantly https://www.crisilratings.com/mnt/winshare/Ratings/RatingList/RatingDocs/ZenTechnologiesLimited_August 03_ 2026_RR_396510.html 1/11 03/08/2026, 22:19 Rating Rationale bolstered by the Defence Production and Export Promotion Policy and the framework introduced by the Ministry of Defence in September 2021, which led to a surge in demand for simulators for armed forces training. Consequently, the company experienced remarkable growth, with its revenue scaling up to Rs 687.69 crore in fiscal 2026, from Rs 70 crore in fiscal 2022. The group's promoters, with their extensive experience, are expected to continue playing a key role in driving the company's success. Expected recovery in business performance backed by improved order book position Revenue experienced a significant decline to Rs 687.69 crore in fiscal 2026, from Rs 973.64 crore in fiscal 2025, due to a lower order backlog. However, the company secured substantial new orders in the fourth quarter of fiscal 2026 and the first quarter of fiscal 2027, notably improving its order book position. The order book stood at Rs 1,400 crore as of July 2026, up from Rs 692 crore as of March 31, 2025, with products alone accounting for nearly Rs 1,200 crore. This strong order book is expected to drive a recovery in the company's business performance, with revenue exceeding Rs 1,200 crore in fiscal 2027. Additionally, the company is expected to maintain robust operating margin of 30–35% over the medium term. Strong financial risk profile The financial risk profile is expected to remain robust, driven minimal debt and a substantial networth, bolstered by an equity infusion of Rs 980 crore in fiscal 2025 and a healthy free cash balance of over Rs 900 crore for working capital requirement and inorganic expansion initiatives. With no debt-funded capital expenditure (capex) in the pipeline, the capital structure is likely to remain strong over the medium term. Steady profitability and minimal debt levels will also contribute to robust debt protection metrics, providing a stable financial foundation for the company. Key Rating Drivers - Weaknesses Exposure to risks inherent in tender-based business and regulatory scenarios Revenue is contingent upon the ability of the company to successfully bid for orders and execute them in a timely manner. Although this poses a risk, it is partially mitigated by favourable government regulations and the group's well-established market presence. However, any adverse changes in government regulations will require close monitoring. Additionally, defence operations are inherently exposed to regulatory risks and project delays, which can impact the company's performance. Large working capital requirement Gross current assets have consistently remained high at 450–550 days over the three fiscal ended March 31, 2025, driven by sizeable receivables of 154 days and inventory of 81 days. Although the collection cycle improved in fiscal 2026, higher inventory days offset these gains. Nevertheless, compared to peers in the defense segment, the company's working capital cycle remains relatively more efficient. Given the nature of its business, the working capital cycle is expected remained stretched and will be closely monitored. Liquidity Strong The company has not utilised its bank limit over the 12 months through March 2026, indicating a comfortable liquidity position. In the absence of any yearly maturing debt over the medium term—cash accrual is expected at over Rs 250 crore —will aid financial flexibility. Cash and bank balances stood at about Rs 1,000 crore. Outlook Positive The Zen group’s business performance will strengthen further, driven by the improved order book. https://www.crisilratings.com/mnt/winshare/Ratings/RatingList/RatingDocs/ZenTechnologiesLimited_August 03_ 2026_RR_396510.html 2/11 03/08/2026, 22:19 Rating Rationale Rating sensitivity factors Upward factors Improvement in business risk profile with revenue of Rs 1,100–1,200 crore while maintaining order book position at healthy levels, which provides adequate visibility Sustenance of strong financial risk profile and liquidity Downward factors Revenue declining to less than Rs 750 crore or operating margin dropping to less than 20%, leading to lower-than- expected net cash accrual Any large, debt-funded capex or stretch in the working capital cycle, impacting the f [Showing first 8,000 characters — download PDF for full document]