3i Infotech Ltd Management Discussions.

The management discussion and financial analysis is based on the consolidated financial statements prepared in accordance with the Generally Accepted Accounting Principles (GAAP) and in compliance with the Indian Accounting Standards (Ind AS).

Global Information Technology Industry

As per Forrester, global IT spend could yet rise by over 2% in 2020 despite the COVID-19 pandemic. However, Forrester also estimates a 50% probability that US and global tech markets will decline by 2% or more in 2020 if a full-fledged recession sets in. Forresters earlier forecast for the global tech market showed slow growth at around 3% in 2020 and 2021, despite the excitement around leading-edge technologies such as AI and big data and the tremendous success of cloud vendors. Forrester had previously projected worldwide IT spending to reach $3.59 trillion in 2020, an increase of 2.6% from 2019. The investments that firms were to make to replace on-premises software with cloud alternatives is a factor driving the growth in software. As a result, global software purchases could have risen by 4.8% in 2020 to touch $901 billion. Cloud will keep tech consulting and tech outsourcing services on a weak growth path. While spending on tech and systems integration services will slow in 2020 to $681 billion, rising demand for cloud solutions will help support growth. Computer equipment, communications equipment and telecom services will sag to $416 billion, $386 billion, $691 billion respectively.

In light of COVID-19 and the uncertain and declining economic outlook, Forrester revised its tech market forecast downward. Computer and communications equipment spending will be weakest, with potential declines of 5% to 10%. Tech consulting and systems integration services spending will be flat in a temporary slowdown and could be down by up to 5% if firms really cut back on new tech projects. Software spending growth will slow to the 2% to 4% range in the best case and will post no growth in the worst case of a recession. Tech outsourcing and telecom services will hold up better, though contract revisions could cause spending to go down as well. Cloud infrastructure services will see continued growth in demand along with potential increases in spending on specialized software, communications equipment, and telecom services for remote work and education as firms encourage workers to work from home and schools move to online courses.

Overview

3i Infotech is a global Information Technology company headquartered in Mumbai, India. A comprehensive set of 20+ IP based software solutions, coupled with a wide range of IT services, uniquely positions the Company to address the dynamic requirements of a variety of industry verticals, predominantly Banking, Financial Services, Insurance, Capital Markets and Asset & Wealth Management (BFSI). The Company also provides solutions for other verticals such as Government, Manufacturing, Distribution, Telecom, Healthcare and Retail. The Company has over 1200 customers, in more than 50 countries across 4 continents.

The Companys quality certifications include ISO 9001:2015 for Business Process Outsourcing, Application Development & Maintenance Services, e-Governance, Business Intelligence & Infrastructure Management Services, ISO/IEC 27001:2013 for Data Centre Operations for Mumbai, Chennai, Bengaluru & Hyderabad locations & ISO 20000:2018 for our IT Services management process. We have initiated our process of upgrading our CMMi certification from version 1.3 to 2.0 at maturity level 3 and the recertification for Development and Services across Mumbai, Chennai, Bengaluru & Hyderabad will be completed by January 2021.

The Companys Global Delivery Model provides for optimal resources, to be drawn from its vast talent pool across the globe, to offer best fit solutions to customers. By integrating products and services, the model facilitates customized solutions to enable customers to undertake technology-based business transformation and reorganize in line with todays dynamic digital business environment. The Company, which has won many awards and recognitions globally, operates in two main business lines namely, IT Solutions and Transaction Services. Its IT Solutions business comprises of Software Products and IT Services contributing 95% and Transaction Services contributing 5% of the total operating revenue.

IT Products & Services

IT Solutions segment includes sale of IT products developed by the Company and providing IT services to varied companies on an outsourcing business model. IT product business includes packaged applications for the BFSI space and an ERP suite. Through IT service offerings, the Company provides clients with application development and maintenance, IT infrastructure services, e-governance services, retail, business intelligence, document management service, business process management and data warehousing. Our services are being strengthened with digital transformation offerings including Consulting, recommending appropriate solutions and partnering with the customers in building, testing and maintaining them.

Transaction Services segment covers management of back office operations. Through Transaction Service offerings, the Company provides clients with services such as remittance, cheque processing, human resources, account origination, printing and mail room services, collection services, record management, registrar and transfer agent services, securitization and contact center services. The Transaction Service offerings cover the banking, insurance, capital markets, healthcare, energy, utilities and telecommunications industries. The Companys major thrust in the Transaction Services space is in the activities of Digitization, Customer On- boarding, Credentials Validation and Payment Management.

Over 25 years of experience across the Banking & Financial Services, Insurance & Healthcare and Government spectrum gives our domain expertise an exceptional edge and puts us in a leadership position. Our long standing understanding of industry practices across these sectors, and across the globe, helps us understand customers needs and pain points, tailor our solutions to suit their specific needs and add value to their services to their customers. In addition to this, our ongoing investment in our products and services ensures that our products retain their cutting edge. The domain expertise combined with investment ensures that we identify and facilitate our customers digital transformation journey with maximum impact benefiting their business. Our engagement with industry experts and regulators keeps us abreast of market developments which reflect in our product enhancements.

FY2020 saw a substantial increase in the number of new orders for the Companys products across various geographies. The upgraded version of AMLOCK™ continued to show traction, with the Company winning back a key customer who had opted for an alternate solution earlier, as well as making an entry into the US market. The Companys new General Insurance solution, Premia Astra™ was also well received by the market consequent to which there was a sizeable increase in the number of orders won for all versions of Premia™. Kastle continued its foray in the current geographies and the Company expects that with the ongoing investments in the suite of products, the trend is expected to sustain the increase in the coming years. During the year, the Company was able to reap the benefits of the spadework done during the previous years, which resulted in a sizeable increase in both Revenue and Operating Profits. The impact of COVID-19 and the resultant lockdowns were not felt significantly by the Company due to the fact that, in the Geographies which constitute the prime markets for the Companys products, the announcements were made towards the end of March 2020. The Company does expect that the adverse impact of COVID-19 would get reflected in the performance for the year FY2021.

The pandemic has accelerated our initiatives to enable our banking clients to enhance their outreach to their customers. In the current situation, our solutions need to support the all-pervasive need of contact less practices. To this end, banks need nuanced digital practices and our banking solutions portfolio, Kastle is geared to help banks adapt rapidly to this need. Voice enabled solutions are at the forefront. Our digital banking product, Kastle Digital Banking helps banks to innovatively deliver on customer on-boarding, customer servicing and experience and be more responsive with an omni-channel presence.

Today, guarding liquidity and cash flows is clearly one of the foremost requirement of banks. Recognising this need, we released Liquidity Stress Testing (LST) as a part of the Analytics offering of Kastle Integrated Risk Management (IRM). The model forecasts cash flows in various stress scenarios, thereby projecting a survival horizon for the entity in the near future. It helps banks understand the impact of their decisions and reprioritise operations. Banks need to continuously define and refine their risk strategies to proactively address operational issues. The COVID pandemic has increased the probability of financial crime and fraud. AMLOCK™, our Financial Crime Detection and Management Solution provides Analytics with Artificial Intelligence (AI) in the Anti-Money Laundering space for specific use cases on behavioral analysis.

In Orion™, product enhancements done during the year include Finance, Warehouse Management System (WMS),, Fleet, Manufacturing, Fleet and Supply Chain Management (SCM) along with advancements in technology and framework to ensure enriched support to the industry verticals from OrionTM11j.

Premia™, our Insurance product, introduced new features during the year, such as integration with WhatsApp and Chatbot. With the use of technologies such as AI, Business Analytics and Natural Language Processing, the product can handle customer queries, run campaigns, product promotions and lead generation, e-Commerce, IT infrastructure support and Human Resource activities such as staff on boarding, 24x7 HR support, surveys, queries and document management.

Key features were also added to our Investment Management Solution, MFund Plus. In-built Business Intelligence and advanced analytics were introduced to enhance decision making. Machine Learning and Artificial Intelligence powered digital tools like Hybrid Robo Advisors, Remote RMs and Chatbots were integrated with MFund Plus. APIs with market data providers, global banking/ insurance systems and payment technology providers were also integrated to enable faster time-to-market.

On the services front, the Companys focus has been to increase its presence in the value added segment, such as Application Development and Maintenance and Testing. In all the existing geographies, the Companys engagement with prospective customers has increased and the Company expects conversions, and more importantly in the Advanced Markets, in FY2021. The Company has also initiated steps to tap its existing customer base for rendering value added services, thereby improving the margins of the IT Services business. Some solutions have seen a boost in these COVID times. With the need for remote working, virtual solutions and contactless technologies have received a shot in the arm. Automation, cloud solutions, end point security solutions, virtual healthcare, virtual reality, voice based technologies are driving value across all industries. We have solutions for each of the above and the Company truly believes that they will be the drivers of success.

Business & Company Overview

The extensive use of technology to render services to end customers is becoming more prevalent across all industries and more so, in the BFSI segment, which has the Companys major clientele. With new solutions and niche offerings entering the market with increased frequency, the importance of investment in IT Products and Services has become more urgent. The Company is accelerating its investment in its Products and Services in terms of technology upgrades, features and functionalities enrichment as well as imbibing AI and Machine Learning (ML) capabilities. The investments done in FY2020 have already been mentioned above. The advent of COVID-19 has significantly changed the market dynamics which was already in a state of extreme flux. Customers are not only looking for solutions that will empower their businesses, but more importantly solutions which can be used to render service to their end customers without physical contact. This is the new normal and it is here to stay. It is heartening to submit that the Companys bouquet of Products wrapped with the Companys Digital capabilities is serving customers to reach out to their end customers seamlessly in this age of social distancing where physical contact is seen as extremely avoidable. The Company sees substantial possibilities in terms of upgrades and upselling to its existing customers in addition to prospective customers who are seeking cutting edge technology solutions.

The trend of high value deals continued in FY2020. The Company continues to be a high profile player in its existing markets and has further consolidated its position. The improved financial performance of the Company over the past few years has increased the comfort of prospective customers and the Companys meeting of eligibility criteria for participating in deals has increased the number of deals where the Company gets invited. The resource deployment in Advance Markets such as Europe has been initiated and the Company is taking a prudent and balanced drive for Products and Services in these markets, as against the dedicated products and services teams in its current markets. The build-up of prospective engagements has taken a setback due to the pandemic, but the Company expects that with the easing of restrictions, combined with increased reliance on technology the Company will begin to gain traction towards the end of FY2021.

The trajectory the Company has now achieved would have been impossible without its most important asset, a strength of over 5,600 employees. The Company continues to invest in its human resources by motivating them with enhanced roles, higher responsibilities, exposure to newer technologies, ongoing training and freedom to innovate. Empowering employees and nurturing their talent and ambitions and thereby capitalizing on this for a win-win situation continues to drive the Companys human resources initiatives. With the increased need to induct talent with exposure to new technologies, the program of up-skilling existing resources continues to be a two-pronged initiative to reduce attrition and get the required talent. We continue to hire fresh graduates for different roles and technologies and customize training programs depending on the role selected for. As in earlier years, a substantial portion of our needs are managed by internal initiatives, with the balance being managed by lateral hiring of multi-skilled resources. Being a product and services company focused on BFSI, we stress on technical talent. Our extensive market presence and brand helps attract knowledge seekers and the challenge of ongoing product enhancement ensures retention. Opportunity to work on multiple projects and clients, across the globe, increasing their domain knowledge and familiarity with best practices help them grow professionally. Over a period of time, it is observed that resources feel very passionate about the Product on which they are working and identify with its growth and success. Matured HR processes make us a preferred employer.

The Companys secret sauce is - Keep Learning. We don an active learning hat when we partner our clients in their projects. The learning go to our Innovation and Research labs, which are part of each business unit. Our labs then consistently introduce solution frameworks using the next-gen applicable technologies, be it AI, ML, Internet of Things (loT), Augmented Reality/Virtual Reality (AR/VR) or Blockchain. At this juncture, there lies an opportunity for us to innovate processes for our clients and help them stay ahead of the curve. The frameworks are easily adaptable across various business scenarios and help clients stay abreast of digital disruptions that presently infiltrate organisations at every level. The practice is working well for us and helps us keep pace with challenges from the market and from competition.

The Company continues its run of winning awards for its products and services. The Company has won awards which enhance its brand image and perception in the market. The appreciation received for its products and services endorse the capability and recognition of the Companys solutions. The Company has won various awards under The Star of Industry Awards for Excellence in Information Technology. The Company was also ranked among the worlds 100 major players in Risk and Compliance technology. The specific awards won by the Company have been detailed in the initial pages of the Annual Report.

The Organization has marked its presence in Asia Pacific, South Asia, Middle East and Africa, Kingdom of Saudi Arabia, Europe and North America, providing a platter of end-to-end solutions that offer product innovation, faster time to market, efficient business processes, productivity and cost savings, enhanced customer service and comprehensive risk management.

As we move further into the COVID-19 situation, all our plans are continuously measured against a single prime objective to reduce the impact of business disruption and consequently, the impact on liquidity. Towards this, our foremost focus is on accelerating completion of current projects to maintain liquidity. We have strengthened our delivery operations. There is also a strong delivery management process in place to ensure delivery timelines do not slip. Our IT deployment model works on the offshore delivery premise. One major learning has been that processes which we had earlier thought unlikely for offshore delivery are now prime candidates for offshore deployment. There has been a paradigm shift in our thinking and more importantly, client acceptance, which will help us upgrade and innovate our delivery processes. Cloud deployments are gathering stronger acceptance and we see this as a platform that will see a significant surge.

Further, the new situation changes customers business models since their problems and priorities have now changed. Digitalization and virtualization is seeing a paradigm shift. We see this as an area of immense business opportunity to help our customers build value added processes in this new scenario and to help them defend profitability and optimize costs. Strong communication lines with various stakeholders are in place to explore opportunities. Our consulting experience, domain expertise and the repository of best practices remain our asset in these challenging times. All of the above, presupposes a strong action-oriented HR function that ensures the well-being of the employees. Keeping the workforce solid and motivated remains at the grassroots of our strategy. We see our people as the foremost weapon to emerge stronger from this crisis.

Strategic changes are inevitable for the simple reason that constant disruption will be the new normal for the foreseeable future. Our strategic objective now is to further enhance malleability within the Company to ensure agility to adapt to continuous change. There is a relook at fixed and variable costs to ensure the business model strikes the right balance between efficiency and cost effectiveness. For example, we are further strengthening our offshore delivery model to ensure that customer service remains seamless in these times of restricted travel. We are also building partner led ecosystems to enter new markets as well as to strengthen our presence in existing markets. Also, advanced markets will be our new focus. This is the right time for the same because we believe we can deliver distinct value at the right price point.

The one important aspect we have stressed on in the circumstances is communication. Continuous dialogue and engagement with all stakeholders - Customers, Employees, Investors, Lenders, Creditors - is the need of the hour.

Technology Overview

The pace and scale at which technology is growing and enabling business transformation is incredible. The term "Customer satisfaction" has ceased to be an appropriate measure of customer service. "Customer Delight", to exceed client expectations, is the norm across all industries. Technology is now rewriting business at every stage.

Our solutions focus on three distinct areas - Co-innovation, Customer centric/Modular frameworks & Quantifiable outcomes. Integrated frameworks and accelerators, ably supported by a strong partner ecosystem puts 3i Infotech in an affirmative position to provide customized solutions that meet the end to end expectations of modern day businesses. The Companys robust Global Delivery Model provides access to a vast talent pool to offer optimal resources to customers.

With technological advancements raising the bar higher, business models in the BFSI sector will inevitably change, mandating Enterprises to reinvent processes and create a productive ecosystem. Cost efficiencies, ability to adapt to customer needs and niche offerings, will shape business. 3i Infotechs products address the entire spectrum of knowledge intensive industries. The products reflect 3i Infotechs proficiency in understanding industry trends across various sectors. Its flagship products include AMLOCK™ Financial Crime Detection and Management Solution, Kastle Universal Banking Solution, MFundTM Asset Management Solution, Orion™ Enterprise Resource Planning Solution and Premia™ Core Insurance Solution. A robust capability in the services domain is evident through consulting services, business optimization services and an extensive expertise in mobility, data analytics, big data, testing and application development services, all of which come under the umbrella brand - Altiray. The biggest advantage inherent in 3i Infotechs offerings is the knowledge capital and expertise from across industries.

3i Infotech has now consolidated its position and continues to carry out significant investments to realize its growth goals. The future needs to be powered by product upgrades and innovative services that will provide distinct advantages to customers. To enable its customers to leverage the latest technology solutions, the Company is investing in emerging technologies, be it AI, IoT, Cloud Computing or ML. Further, each of its business units has instituted Innovation and Research Labs where customer feedbacks and requirements are mined to build leading edge, sustainable solutions. The Companys delivery mechanism is now strengthened to ensure on time results. On the operational front, the Company has successfully made inroads into developed markets with strategic engagements.

Vision and Strategies

The Companys position in its existing markets continues to get strengthened, both from the Products as well as the Services perspective. A concerted drive has been initiated to tap our existing customer base to capitalize on cross-selling and upselling opportunities. Enhancing revenue without proportionate increase in costs will result in better margins.

The Company is now firmly on the Growth path of the Protect-Consolidate-Grow strategy that was charted earlier. The Company continues its efforts to penetrate Advanced Markets through Partners. This continues to give the Company the advantage of gaining knowledge of the market, its nuances and its requirements, through the partners, while at the same time keeping the Companys costs largely success based. The traction observed in AMLOCK™ is encouraging.

The Companys objective of revitalizing itself as a future-ready IT enterprise by remaining focused on People, Business Verticals, New Products and Solutions and Growth Markets remains strong as ever. While working towards increasing wallet share from its existing customers with its range of products and services, the Company is exploring the possibility of creating, as a service, composite offerings of its products and services which will obviate the requirement of capital expenditure by its customers, as is expected to be the need of the market, in addition to enhancing longevity of engagements and increase in annuity revenues.

Technologies that are disrupting the industry today and niche solutions addressing specific customer needs offered by start-ups continue to be challenges that the Company faces in the dynamic market landscape. According to industry studies, only about 1% of the data is currently being used effectively, and this lacuna is what these technologies are expected to fill. Going forward, the encryption method offered by Block chain technologies will be crucial for companies in sectors as varied as financial, medical or transportation. Cloud computing is another disruptive technology which is becoming essential as enterprises strive to transform their business models and processes. The IoT is set to make a major impact in the society as this technology will see widespread usage in smart home gadgets, and mobile payment Apps, among others. The Company is alert to these risks and is committed to invest constantly in upcoming technologies. This is in line with the strategy crystallized over the past few years. Another key challenge is that, with flattening of the world, the market terminology and workflows adopted by businesses in even our existing geographies are becoming similar to advanced markets, thereby necessitating changes to our Products and Services to not only penetrate advanced markets but to also sustain and grow in our current markets. In the light of the growth plans of the Company the need for quality resources is crucial. The Company depends on upskilling of its resources in addition to lateral hiring to fulfill this need. To summarise, the focus of the Company continues to be on increasing our investments in our people, processes, products and services to meet the challenges facing the Company.

Operations during the year

The table below shows the Profit and Loss account of the Group for the year ended March 31, 2020:

Rs in Crores

Particulars 2019-20 2018-19
REVENUE
I. Revenue from operations (net) 1,141.32 1,121.75
II. Other Income 19.54 21.05
III. Total Revenue (I + II) 1,160.86 1,142.80
IV. EXPENSES
Employee Benefit Expenses 658.09 604.35
Cost of third Party Products and Services 172.07 236.06
Finance Costs 90.40 84.23
Depreciation and amortization Expense 19.08 2.11
Other expenses 139.76 136.94
Total Expenses 1,079.40 1,063.69
V. Profit/(loss) before exceptional items and tax (III - IV) 81.46 79.11
VI. Exceptional items - Income/(Expenses) - -
VII. Profit /(loss) before tax (V+VI) 81.46 79.11
VIII. Tax expense 13.43 10.96
IX. Profit/ (loss) for the Year (VII - VIII) 68.03 68.15
OTHER COMPREHENSIVE INCOME
A. Other Comprehensive income not to be reclassified to profit and Loss in subsequent periods :
Remeasurement of gains (losses) on defined benefit plans 3.05 1.85
Income Tax effect (0.07) 0.02
Other Comprehensive income for the year, net of tax 2.98 1.87
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX 71.01 70.02

The Company made a profit of Rs 71.01 Crores for the year ending March 31, 2020 as against a profit of Rs 70.02 Crores for the year ending March 31, 2019.

Revenue from Operations, Employee Benefit expenses and Cost of Third Party

The revenue from Operations for the year FY2020 stands at Rs 1,141.32 Crores compared to Rs 1,121.75 Crores in FY 2019. The increase is mainly due to increase in new business.

The increase in employee benefit expenses pertains to increased headcount and reduction in cost of third party products and services pertains to efficiency of cost management and sale of subsidiary during the current year.

Other Income

The decrease in Other Income from Rs 21.05 Crores in FY2019 to Rs 19.54 Crores in FY2020 is mainly due to reduction in interest income.

Finance Cost

The increase in finance cost from Rs 84.23 Crores in FY 2019 to Rs 90.40 Crores in FY2020 is mainly on account of notional interest expense as per new IndAS 116 on Leases.

Depreciation and amortization expense

These expenses stand increased from Rs 2.11 Crores in FY2019 to Rs 19.08 Crores in FY2020. The increase in depreciation is mainly on account of depreciation as per new Ind AS 116 on Leases and on account of adjustment in FY2019 pertaining to reinstatement of earlier impaired intangible assets in Malaysia.

Other Costs

There has been an overall increase in cost from Rs 136.94 Crores in FY2019 to Rs 139.76 Crores in FY2020. This is mainly because of increased Legal & Professional fees.

Analysis of Balance Sheet

Rs in Crores

Particulars As at March 31,2020 As at March 31,2019
I. EQUITY AND LIABILITIES
Shareholders Funds
Equity Share Capital 1,616.65 1,616.64
Non-Controlling Interest - 4.40
Other Equity (1,225.18) (1,293.43)
Borrowings 765.91 845.40
Lease liabilities 49.51 -
Trade payables and other Liabilities 321.77 318.65
1,528.66 1,491.66
II. ASSETS
Goodwill arising on consolidation 435.06 435.06
Non-current investments 0.16 0.16
Property, Plant and Equipment and intangible Assets 369.54 371.27
Right-Of-Use Assets 46.15 -
Deferred tax asset 3.87 3.66
Long-term loans and advances and other non-current assets 155.04 153.21
Cash and bank balances 91.00 104.72
Inventories - 0.60
Trade receivables and other Assets 427.84 422.98
1,528.66 1,491.66

Equities and Liabilities

1. Equity Share Capital

The Authorized capital of the Company is Rs 2,200 Crores divided into 2,200,000,000 Equity shares of Rs 10 each, 200,000,000 Non-Convertible Cumulative Redeemable Preference shares (Class A Preference Shares) of Rs 5 each, 1,500,000,000 Non-Convertible Cumulative Redeemable Preference shares (Class B Preference Shares) of Rs 5 each, 1,050,000,000 Non-Convertible Cumulative Redeemable Preference shares (Class C Preference Shares) of Rs 1 each

The issued, subscribed and paid-up capital stood at Rs 1,616.65 Crores as at March 31, 2020 compared to Rs 1,616.64 Crores as at March 31, 2019.

2. Other Equity

The Other Equity increase to Rs (1,225.18) Crores as at March 31, 2020 from Rs (1,293.43) Crores as at March 31, 2019, The increase of Rs 68.25 Crores is on account of profit for the current year of Rs 71.01 Crores.

3. Borrowings

There has been a decrease of Rs 79.49 Crores in FY2020 from Rs 845.40 Crores as at March 31, 2019 to Rs 765.91 Crores as at March 31, 2020. This is primarily on account of Principal Repayment and Unwinding of discount under Ind AS 109 of Fair Value of certain Financial instruments.

4. Trade payables and other liabilities

Trade payables and other current liabilities consist of trade liabilities, short term provisions for employee benefits and other liabilities.

Assets

1. Goodwill on consolidation

Goodwill acquired through business combinations has been allocated to various products/services which are considered as cash generating units (CGUs). The Group tests whether goodwill has been impaired periodically. The recoverable amount of a CGU is determined based on value in use calculations which require the use of assumptions. The calculations use cash flow projections based on financial budgets approved by management covering a five-year period.

2. Non-Current Investments

Non-current investments consist of unquoted/non-trade long term investments.

3. Property, Plant and Equipment and Intangible Assets

As at March 31, 2020, the Property, Plant and Equipment and Intangible Assets of the Company stood at Rs 369.54 Crores as compared to Rs 371.27 Crores in FY2019.

4. Deferred Tax Asset/Liability

Deferred Tax Asset of company primarily comprises of benefits available to the company in the form of reduction in tax liability by setting off of brought forward losses and unabsorbed depreciation. The likelihood that the deferred tax asset will be recovered from the future taxable income is assessed annually.

5. Loans & Advances and other Non-current assets

There is a increase in long term loans & advances and other non-current assets, the amount increased from Rs 153.21 Crores as at March 31, 2019 to Rs 155.04 Crores as at March 31, 2020.

6. Cash and Bank balance

The Bank Balances includes Current Accounts, Fixed Deposits & Margin Money maintained in India and abroad.

7. Inventories

Inventories consist of hardware and supplies and are stated at cost or net realizable value, whichever is lower.

8. Trade receivables and Other assets

assets include unbilled revenue, other financials assets and current assets.

Internal Control Systems

The Company exercises internal controls through a formalized process of an authorization matrix approved by the Board. The adherence to these controls is periodically reviewed by the internal audit process. The Companys budgeting process at various levels monitors performance by business, delivery and support groups.

Enterprise Risk Management

The Enterprise Risk Management (ERM) at 3i Infotech encompasses practices relating to identification, assessment, monitoring and mitigation of various risks to our business. Our ERM seeks to facilitate mitigation of risks that may affect the achievement of our business objectives and impact stakeholder value. Risk management is an integral part of our business model. The business practices at 3i Infotech are oriented to leverage the risk management to generate maximum reward while keeping risks below a defined level.

Major risks identified include geographic and client concentration, attrition, managing of contractual obligations, etc. To address these risks, the Company has increased its diversification across geographies, enlarged the basket of offerings and is considering various steps for employee retention.

Safe Harbour

Certain statements made in the Management Discussion and Analysis report relating to the Companys objectives, projections, outlook, expectations, estimates, etc. may constitute "forward-looking-statements" within the meaning of applicable laws and regulations. Actual results may differ from such expectations, projections, etc. whether expressed or implied. Several factors could make a significant difference to the Companys operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, natural calamities, etc. over which the Company does not have any direct control.