Managements discussion and analysis of the financial condition
and results of operations include forward- looking statements based on certain assumptions
and expectations of future events. The Company cannot assure that these assumptions and
expectations are accurate. Although the Management has considered future risks as part of
the discussions, future uncertainties are not limited to Management perceptions.
Overview
The following discussion and analysis should be read in conjunction
with the Companys financial statements included herein and the notes hitherto. The
financial statements have been prepared in accordance with the Generally Accepted
Accounting Principles in India (GAAP) to comply with the Accounting Standards specified
under Section 133 of and other relevant provisions of the Companies Act, 2013 as
applicable. The Companys management accepts responsibility for the integrity and
objectivity of these financial statements, as well as for various estimates and judgments
used therein. 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 manner the form and substance of transactions and reasonably present the
Companys state of affairs and profits for the year. Investors are cautioned that
this discussion contains forward-looking statements that involve risks and uncertainties.
The Company undertakes no obligations to publicly update or revise any
forward- looking statements, whether as a result of new information, future events, or
otherwise. Actual results, performances, or achievements could differ materially from
those expressed or implied in such statements. Readers are cautioned not to place undue
reliance on the forward-looking statements as they speak only as on their date of
statement. Information provided in this Management Discussion and Analysis (MD&A)
pertains to Softsol India Limited (the Company) and its subsidiary on a consolidated
basis, unless otherwise stated. Global Economic Scenario and Industry Overview
The global economy is still recovering from the challenges caused by
the COVID-19 pandemic. Though the larger population is now vaccinated, travel restrictions
have eased, and businesses are returning to normalcy, the risks loom large for another
wave with new variants emerging and governments imposing restrictions like
partial/complete lockdown and renewed travel restrictions. The emergence of new COVID-19
variants could prolong the pandemic and induce renewed economic disruptions. The Ukraine
– Russia war makes the economic recovery even more challenging.
The global economy is forecasted to grow at around 4.7% this year. The
post-Covid-19 pandemic recovery is hit by potentially huge global supply chain disruption
leading to slow growth and pushing up inflation. High energy prices are likely to add to
industry costs. With most countries lifting policy rates, risks to financial stability,
emerging market and developing economies capital flows, currencies, and fiscal
positions, especially with debt levels increased significantly in the past two years, may
emerge.
Overview of Indian economy and IT Industry
While the global economy and majority of the industries grappled with
the challenges posed by the extended pandemic, the Indian IT industry grew at a breakneck
pace in FY2022. This was mainly due to the fact that technology became the fulcrum via
which businesses were able to not only keep the lights on but also speed their journey
towards becoming future-ready, resilient, and agile. The winning formula for the industry
was a mix of digital and innovation with platforms and XaaS playing a key role in
accelerating tech adoption. To address margin pressures, the industry increased its focus
on operational efficiency. Among other sectors, eCommerce gained a deeper penetration of
the O+O model (Offline + Online).
Another significant achievement for the industry was to cross the 5
million mark in total direct employees, the highest-ever net addition of 445,000. The
industrys "people first employee-centric" approach saw tech firms quickly
adapt to Hybrid work models and scale up the industrys digital capacity/capability
building programs.
According to a recent Gartners report, the IT spending in India
is estimated to reach USD 105.2 billion in 2022, an increase of 5.5% from 2021 mainly
driven by increased demand for digital transformation from the traditional legacy business
model. The key pillars that enabled technology firms to respond proactively to emerging
customer demand throughout the pandemic were an obsession with customer-centricity, domain
specific solutioning, agility to respond quickly to customer needs, a digital-first talent
pool, and a laser-sharp focus on creating future-ready solutions.
OUR STRATEGY
Our employees are key to successful implementation of our strategy. We
are convinced of the value of excellent employees, leaders and working conditions, and
strive to give our employees the tools and skills necessary to be able to innovate and
create products and platforms.
With this aim in our mind, we have adopted the following principles:
Opportunities for all, with flexibility to opt in/out, Dedicated
physical space to foster collaboration, networking and learning ,adult learning principles
leveraging field & forum approach and Leaders build leaders.
We want to further strengthen our innovative power with attractive
working conditions and are making investments in this direction. We have partnered with
leading global experts across domain to facilitate immersive sessions to build thought
leadership and cascade learnings across team.
Outlook
The company is attempting to transform the IT business and take a
product centric approach with an internet to optimize the shareholder value. We hope to do
this, while staying profitable . We will continue to make investments in our internal
products, as well as other strategic external opportunities.
Risks and Concerns:
In pursuant to the provisions of the Section 134 (3)(n) of the
Companies Act 2013, the Company as formulated risk management policy to mitigate and
manage the risk including identification therein of elements of risk, if any, which in the
opinion of the Board may threaten the existence of the company.
Internal Control Systems and their adequacies
The Company has set up a proper and adequate and sound internal control
system to safeguard the Groups assets and to enhance shareholders investment,
as well as reviewing its adequacy and effectiveness of the said system. The duty of
reviewing the adequacy and effectiveness of the internal control system has been assigned
to the Audit Committee ("AC"), to seek assurance on the adequacy and
effectiveness of the internal control system through reports it receives from independent
reviews conducted by the Internal Auditor.
The Company constantly reviews its processes and the systems with an
aim to remain competitive and address the changing regulatory and business environment.
The Control Systems provide a reasonable assurance of recording the transactions of its
operations in all material aspects and of providing protection against misuse or loss of
Companys assets. The external auditors as well as the internal auditors periodically
review the internal control systems, policies and procedures for their adequacy,
effectiveness, and continuous operation for addressing risk management and mitigation
strategies.
Financial Performance of the company
Equity & Liabilities:
a. Equity Share capital: During the year, there was no change in
Equity share capital compared previous year and stand at D17.23 Crores.
b. Other Equity: The Other Equity of the Company has gone up
from D 138.43 crores to D 163.06 crores in 2021-22 and increase primarily on account of
profit earned in 2021-22.
c. Net worth: The Companys net worth increased from D
155.66 crores to D 180.29 crores. The increase ofRs is primarily on account of internal
generation of profits.
Assets:
a. Investments: The investments increased by D 43.92 crores,
from D 109.67 crores to D 153.59 crores during the year 2021-22.
b. Trade Receivables: The Companys trade receivables
increased by D 1.51 crores in 2021-22 from D 8.78 crores to D 10.29 crores.
c. Other Financial Assets (Current & Non-Current): Loans and
Other financial assets decreased from D
5.57 crores to D 5.04 crores during the year under review.
d. Other Current Assets: Other Current increased by D 0.21
crores from D 0.83 crores to D 1.04 crores during the year under review.
Operational Performance
a. Revenue from Operations: The Company has reported a Revenue
from Operations of D 74.26 crores during the year 2021-22 as against D 39.76 crores in the
previous year, resulting in a increase of 87%
b. Other Income: The other income of the company for the year is
D 7.77 crores as against D 9.98 crores of previous year.
c. Direct cost: The direct cost for the year under review works
out to 53.41% of the turnover as against 58.99% last year.
d. Overheads: Overheads, administrative expenses, is D 26.56
crores for the year under review as against D 7.32 crores in the previous year.
e. Finance cost: The Finance cost during the year increased to D
1.03 crores from D 0.33 crores.
f. Depreciation & Amortization: The Companys
depreciation for the year has increased from D 2.48 crores from D 2.59 crores.
g. Tax Expense: The tax expense of the company for the year
2021-22 is D 2.88 crores as against D 2.30 crores of previous year.
h. Net profit: The Company has reported a Net Profit ofRs D
16.72 crores as against D 13.82 crores in the previous year.
Human Resources
Your company continues to enjoy cordial relationship with its personnel
at all levels and focusing on attracting and retaining competent personnel and providing a
holistic environment where they get opportunities to grow and realise their full
potential. Your company is committed to providing all its employees with a healthy and
safe work environment.
Your company is organizing online training programs wherever required
for the employees concerned to improve their skill. Employees are also encouraged to
participate in the seminars organized by the external agencies related to the areas of
their operations.
Sexual Harassment
Regarding the Sexual Harassment of Women at the work place (Prevention,
Prohibition & Redressal) Act, 2013, the company has an Internal Complaints Committee.
No complaints were received or disposed off during the year under the above Act and no
complaints were pending either at the beginning or at the end of the year..
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