Credit Rating- Revision

August 26, 2026 BSE Limited National Stock Exchange of India Limited Corporate Relationship Dept 5th floor, Exchange Plaza, Plot No.C-1 1st Floor, New Trading Ring, Block “G” Bandra Kurla Complex Rotunda Building, Bandra (East) P.J. Towers, Fort, Mumbai – 400 051 Mumbai – 400 001 BSE Code: 504112 NSE Code: Nelco EQ Dear Sirs, Sub: Disclosure under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI LODR Regulations”) – Intimation of Credit Rating. Pursuant to Regulation 30 read with Part A of Schedule III of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended, we wish to inform you that CRISIL Ratings vide its letter dated August 26 2026 has revised its outlook on Nelco Limited (the Company) as under: Total Bank Loan Facilities Rated Rs.218.3 Crore Long Term Rating CRISIL A/ Watch Developing (Placed on ‘Rating Watch with Developing Implications’) (Outlook revised from 'Stable') Short Term Rating Crisil A1/Watch Developing (Placed on ‘Rating Watch with Developing Implications’) Thanking you, Yours faithfully, NELCO Limited Ritesh N. Kamdar Company Secretary ACS 20154 Rating Rationale August 26, 2026 | Mumbai NELCO Limited Ratings placed on 'Watch Developing' Rating Action Regulator Of Total Bank Loan Facilities Rated Rs.218.3 Crore Instrument Crisil A/Watch Developing (Placed on ‘Rating Long Term Rating RBI Watch with Developing Implications’) Crisil A1/Watch Developing (Placed on ‘Rating Short Term Rating RBI Watch with Developing Implications’) 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 placed its ratings on the bank facilities of NELCO Limited (Nelco) on 'Rating Watch with Developing Implications'. The rating action follows Nelco’s announcement on August 17, 2026, regarding its investment of $20 million (around Rs 191 crore) in Lunar Holdco (Lunar) through subscription of compulsorily convertible debentures (CCDs) carrying a 7% annual compounded return, convertible into equity shares of Lunar in accordance with the terms of the CCDs. The shareholding percentage will depend upon the occurrence of conversion events and other terms specified in the CCD documentation. Crisil Ratings understands that the investment has been funded through additional debt of Rs 191 crore raised by Nelco with a tenure of eight years and accrued interest and principal payable from the 5th year onwards over balance 4 years. Crisil Ratings understands that Lunar is developing a global satellite communications platform aimed at providing direct-to- device (D2D), Internet of Things (IoT) and other satellite-enabled connectivity services to standard mobile devices worldwide. As part of the transaction, Nelco is likely to receive rights for distribution and commercialisation of Lunar's satellite-based communication services in India and South Asia, subject to receipt of the requisite regulatory approvals. The ratings have been placed on 'Watch with Developing Implications' as Crisil Ratings is evaluating the potential impact of the transaction on Nelco's business and financial risk profiles. The assessment will depend on factors including the commercial benefits from the proposed partnership and the timing and likelihood of obtaining the necessary regulatory approvals. In addition, Crisil Ratings is assessing the implications of the debt contracted to fund the investment on Nelco’s debt protection metrics, liquidity and financial flexibility. Resolution of the watch will depend on receipt of the required information along with awaited management clarifications, as well as greater visibility on the commercial and financial implications of the transaction. The ratings continue to reflect the sustained market position of Nelco in the niche VSAT (very small aperture terminal) service industry, healthy revenue visibility over the next few fiscals and sustenance of healthy operational and financial risk profiles. The ratings also factor in support from the Tata group, from which Nelco derives financial flexibility. During fiscal 2026, Nelco’s operating revenue remained largely stable at Rs 307 crore (Rs 305 crore in fiscal 2025). The revenue is expected to grow at a healthy rate over the medium term, supporting the company’s market position and operating profitability on a sustained basis. This will be driven by the recurring nature of its service business, increasing revenue from the government segment, expected increase in bandwidth revenue and increasing adoption of VSAT technology. Crisil Ratings believes Nelco will utilise operating cash accrual towards its business requirement, which should support sustenance of healthy capital structure. The expected growth in the scale of operations and operating profitability will be a key rating sensitivity factor. These strengths are partially offset by the inherent regulatory and technological risks as well as large working capital requirement in the business. Analytical Approach Crisil Ratings has combined the business risk profile of Nelco and its wholly owned subsidiary, Nelco Network Products Ltd (NNPL). Crisil Ratings has also applied its group notch-up framework to factor in the extent of support available from the Tata group. Please refer Annexure - List of Entities Consolidated, which captures the list of entities considered and their analytical treatment of consolidation. Key Rating Drivers - Strengths Strong market position in the satcom industry Nelco is one of the leading players in the niche satellite communication (satcom) industry with about 40% revenue share in fiscal 2026. The company has the VSAT license, offered in India under license from the Department of Telecommunications (DoT), Government of India. Once the VSAT license is obtained, operators require satellite transponder space, which is provided by New Space India Ltd (NSIL), a part of Indian Space Research Organisation (ISRO; a Government of India company under the Department of Space) and foreign satellite operators. VSAT scores over terrestrial telecom in applications where connectivity needs to be more reliable and in remote locations. Nelco provides business to business (B2B) VSAT services in banking, oil and gas exploration, renewable energy, mining, construction and rural education. It enjoys strong market share, especially in the oil and gas, and banking (automated teller machine [ATM]) segments. Other segments include maritime and aero. Nelco has now made a strategic investment in the D2D sector through its investment in a global company. Healthy revenue visibility Nelco has two key revenue streams: (a) VSAT hardware sales, which pertain to one-time hardware installations, and (b) bandwidth and service usage, which is largely recurring revenue. The company derives 65–70% of its revenue from bandwidth and service usage with repeat customers (churn rate of 3–5%), which ensures high revenue visibility. The terms with customers are largely contractual, with contract of 1–3 years. With evolution in technology, bandwidth fees are expected to reduce, which may make VSAT technology more competitive and could support expansion of the consumer base. Also, the existing pipeline of projects across varied segments is expected to contribute to revenue growth over the next few fiscals. Healthy financial risk profile, despite moderation in operating profitability Nelco’s earnings before interest, tax, depreciation and amortisation (Ebitda) margin has been moderating because of increasing share of relatively low-margin equipment in the overall sales mix, along with increasing operating and employee- related expenses. The company reported [Showing first 8,000 characters — download PDF for full document]