AAA Technologies Ltd Management Discussions

1. Overview

Incorporated in October 2000 as "AAA Technologies Private Limited" under the Companies Act, 1956 in Maharashtra, our company was later converted into a Public Limited Company on August 3, 2020. AAA Technologies is an Information Technology and Information Security Auditing & Consulting firm, enabling organizations to strengthen corporate governance in a digital environment. We help clients identify risks within their information systems and implement controls to secure critical assets. Our core services include Information Systems Audit, Cyber Security, IT Assurance & Compliance, Information Security, and IT Governance.

We cater to a wide client base across the BFSI sector, Government bodies, Regulatory Agencies, Public Sector Units, and private enterprises. The company is led by seasoned professionals like Mr. Anjay Agarwal (39+ years of experience) and Mr. Venugopal Dhoot (32+ years of experience). These experts bring strategic direction and deep industry insight. To procure business from government and public sector organizations, we actively participate in tenders floated firms and are empanelled with NICSI under the Ministry of Electronics and Information Technology (MeitY). We are also listed with multiple government entities, PSUs, and banks, enabling direct procurement of services. Staying focused on Information Security Auditing & Consulting, AAA Technologies has developed capabilities across a wide range of audit domains, such as operating systems, network infrastructure, intrusion detection systems, web applications, ERP, ATM systems, core banking, digital forensics, and cybercrime investigations.

Our diverse experience spans a wide array of sectors: banking, insurance, NBFCs, regulatory bodies, government institutions, municipalities and panchayats, payment gateways, stockbroking, education, transport, hospitality, manufacturing, IT & ITeS, ports, energy, trading corporations, entertainment, defense, and refineries. This sector agnostic approach ensures business continuity without dependence on any single industry. We are ISO 9001:2015 and ISO 27001:2022 certified, backed by a competent team that ensures timely delivery, proactive threat identification, solutions to mitigate risks.

2. Industry, Structure, and Development of the Economy

Global Economy

The global economy navigated several headwinds during FY 2024 25 but continued on a path of gradual recovery. According to the IMFs April 2025 World Economic Outlook, global growth is projected at 2.8% for 2025 and 3.0% in 2026, reflecting a modest pace compared to the pre-pandemic average of 3.8%. This subdued trajectory is largely influenced by persistent geopolitical tensions, trade disruptions, and their residual impact across global markets.

Source: Reuters, IMF, April 2025

Advanced economies recorded mixed outcomes. The United States maintained a steady growth rate of approximately 2.8% in 2024, supported by strong consumer demand. However, uncertainties in export performance and shifting consumption patterns could slightly taper growth in 2025. The Eurozone, in contrast, showed stronger signs of recovery, improving from 0.4% in 2023 to 1.0% by 2025, primarily due to a revival in the services sector. Still, manufacturing-reliant countries such as Germany continue to struggle with subdued industrial output. for CERT-In empanelled IT security Emerging markets fared relatively better, with an average growth of around 4.2%, underscoring their role in supporting global economic momentum. India emerged as a strong performer, with an estimated real GDP growth of 6.4% in FY25, driven by broad-based contributions from agriculture, services, and private consumption. China, though facing structural adjustments, also remained on a steady growth path.

Source: IBEF Economic Survey 2024–25

On the inflation front, global price pressures eased during the year. Inflation is projected to decline from 5.8% in 2024 to 4.4% in 2025, aided by tighter monetary policies, improved supply chain stability, and softening of commodity prices. Nevertheless, emerging markets continue to grapple with elevated cost structures, with wage dynamics and geopolitical factors still influencing inflation trends. Policymakers globally remain focused on striking a balance between inflation control and supporting sustainable growth through calibrated interest rate adjustments.

Sources: IMF World Economic Outlook, Jan 2024 & April 2025 and actionable

Source: IMF Inflation Tracker

Looking ahead, global GDP growth for 2025 is forecast at around 3.2%, albeit subject to considerable uncertainty. Key influencing factors include shifts in fiscal and monetary policies, climate-related disruptions, geopolitical realignments, and structural changes in global supply chains.

Indian Economy

India continues to demonstrate strong economic fundamentals amid global uncertainties. According to the Ministry of Statistics and Programme Implementation (MoSPI), the countrys real GDP growth for FY 2024 25 is estimated at 6.5%, with Q4 growth clocking in at 7.4%. The Reserve Bank of India forecasts a 7% growth rate for the full fiscal year, supported by domestic demand, policy-led investments, and a stable consumption base.

Source: PIB – MoSPI Estimates

This steady pace of growth is attributed to a mix of structural and demographic strengths, chief among them being a large, young workforce, rising disposable incomes, and an expanding middle class. Government-led capital expenditure has also played a central role in pushing infrastructure and industrial growth.

Sectoral Boosts:

Government-led digital initiatives and policy reforms have created strong tailwinds for companies operating in the Information Systems Audit, IT Governance, and Cybersecurity domains. Increased allocations towards e-governance, digital infrastructure, and national security frameworks have led to a rise in demand for information security audits, compliance consulting, and risk assessments, particularly across public sector undertakings, regulatory bodies, and BFSI institutions. This environment presents sustained growth opportunities for firms like AAA Technologies that are empanelled with key government and financial institutions.

Position on the Global Stage

India has now emerged as the worlds fourth-largest economy, having overtaken Japan in terms of nominal GDP. According to projections, India is on track to become the third-largest economy by 2030, underlining its long-term economic potential.

Source: All India Radio – NITI Aayog

Cyber Security Industry Overview

In 2025, the Data Security Council of India (DSCI), in collaboration with Seqrite, revealed that India faced an alarming 369 million malware detections across 8.44 million endpoints, translating to an average of 702 threats per minute. A major share of 85.44%, was signature based, while 14.56% were behavior based, highlighting how traditional defenses remain central to threat detection. Key malware categories driving this surge included Trojans ( approx. 43%), infectors (approx. 34%), and worms (~8%), with cyber attacks disproportionately impacting regions such as Telangana, Tamil Nadu, and Delhi, and sectors like healthcare, hospitality, and BFSI bearing the brunt of these threats.

Source: "India Cyber Threat Report 2025," DSCI Digest March 2025 (Edition V) The 2025 Digest explains how Generative AI is redefining cybersecurity operations. Indias cybersecurity market is growing rapidly and is projected to account for 5% of the global market by 2028. Over 400+ companies fuel this innovation and service delivery. Despite this momentum, a staggering 1.5 million cybersecurity positions remain unfilled in India by 2025 that compounds the global shortfall. In response, roughly 35 40% of security service providers have integrated Generative AI capabilities into their offerings within just two years, leveraging these tools for enhanced threat intelligence, policy automation, and operational scalability, despite navigating associated ethical and governance challenges.

Source: DSCI Digest March 2025 (Edition V) According to report "India Cyber Security Domestic Market 2023" by DSCI,, the India Cybersecurity market grew at a CAGR of over ~30% during 2019-2023 to reach USD 6.06 billion in 2023. India Cybersecurity market accounted by ~3% of the overall global cybersecurity market. It is expected to account for 5% of the global market by 2028.

Cyber Wars

In todays volatile geopolitical climate, the threat of cyber warfare looms large. With the potential to disrupt critical infrastructure and compromise national security, cyberattacks have become a powerful tool in global conflict. As digital systems grow more interconnected, safeguarding data and infrastructure is essential.

Proactive measures like regular IT audits and strict adherence to cybersecurity compliance are key to staying ahead of threats. Audits help identify vulnerabilities before theyre exploited, while compliance frameworks ensure organizations follow best practices and regulatory standards. Together, they build a strong defence that protects businesses, governments, and individuals from the rising tide of cyber risk.

Medium Term Strategic Objectives Employee Training and Development:

Invest in ongoing training and development programs for your cybersecurity team. Encourage certifications and skill development to ensure expertise in the latest cybersecurity trends and technologies.

Compliance and Regulatory Expertise:

Stay updated with industry regulations and assist clients in achieving compliance through audits, assessments, and remediation plans.

Cybersecurity Awareness Programs:

Educate clients through workshops, seminars, and online resources about cybersecurity best practices. Empowered clients are more likely to invest in comprehensive cybersecurity solutions.

Investment in AI-Driven Security Tools:

Integrate AI and machine learning to enhance threat intelligence, anomaly detection, and automated incident response. As attacks become more sophisticated, AI-driven security solutions offer faster and more scalable protection.

Alliances & Partnership

The Company serves or has served various Companies/ Institutions across various industries like banking, insurance, Financial Institutions, NBFCs, Regulatory Bodies, Government, Municipalities Corporations, Payment Gateways, Stock Brokers, Education, Travel and Transport, Hospitality, Manufacturing and Engineering, Infrastructure, Healthcare, Information Technology, IT Enabled Services (ITeS), Ports, Power, Trading Corporations, Entertainment, E-Tendering, Defence and refineries and many more. The company currently onboard PSU banks such as SBI, Bank of Baroda, Central Bank of India, Bank of India, etc

SWOT analysis

Strengths

• High-Quality Service Delivery: Recognized for consistent, value-driven IT and cybersecurity auditing services.

• Zero Debt, Lean Operations: Maintains financial discipline with no debt and tightly controlled overheads.

• Strong Financial Performance: A stable track record of profitability, healthy EBITDA and PAT margins, strong balance sheet, and consistent cash flows.

Weaknesses

• Tender-Based Work Allocation: Dependence on government tendering processes can restrict pricing flexibility, project timelines, and scalability.

Opportunities

• Expanding Cybersecurity Market: With cybersecurity still in a nascent stage in India, the segment offers vast room for growth and specialization.

• Government-Backed Digital Push: Initiatives such as Digital India and increased digital infrastructure budgets open up sustained demand for audit and compliance services.

• Rising Regulatory Compliance Needs: Organizations are increasingly seeking third-party audits and support to meet evolving compliance and security norms.

Threats

• Rising Competition: Entry of both local players and global giants is intensifying competition across the cybersecurity services landscape.

• Dependency on Empanelment: Any non-renewal or cancellation of empanelment with critical bodies like CERT-In or NICSI can affect credibility and business flow.

Government Regulations and Initiatives

The Government of India continues to accelerate its digital infrastructure and cyber resilience agenda in FY 2024 25. With a marked rise in cyber threats, both at the national and organizational levels, there is increased focus on IT audit, regulatory compliance, and cyber security preparedness has become sharper than ever.

Increased Budgetary Allocation:

The Union Budget 2024 25 has allocated increased funds for digital security infrastructure, particularly supporting public sector digital initiatives. The Union Budget 2025 has allocated over 1,900 crore for cybersecurity initiatives, marking an 18% increase from the previous budgets allocation of 1,600 crore.

Reference: https://www.frost.com/uncategorized/union-budget-2025-prioritizes-cybersecurity-amid-rising-threats/#:~:text=In%20response%2C%20the%20Union%20 Budget,allocation%20of%20%E2%82%B91%2C600%20crore.

DPDP Act Implementation Push:

Following the enactment of the Digital Personal Data Protection (DPDP) Act, 2023, FY 2024 25 is witnessing its active rollout. Organizations across sectors are working toward aligning with the Acts mandates, including data classification, privacy governance, and breach notification.

Under the Digital Personal Data Protection (DPDP) Act, organizations must uphold core data protection principles. Data must be collected only for specific, clear, and lawful purposes with the individuals explicit consent. The collection should follow the principle of data minimization, only information essential for the stated purpose should be gathered. Once the intended objective is achieved, the data must be securely deleted in line with storage limitation norms. Above all, organizations are held accountable and must demonstrate compliance with these obligations, ensuring transparency and responsibility at every stage of data processing. The DPDP Act imposes steep fines to deter

Breach Type	Penalty (INR – Up To)
Failure to take reasonable security safe- guards to protect from a breach	250 Crore
Failure to give notice upon breach of personal data	200 Crore
Breach of obligations owed to children	200 Crore
Breach of obligations of Significant Data Fiduciaries	150 Crore
Breach of consent obligations	50 Crore
Breach of any other provision	50 Crore

The Act is catalyzing widespread investment in audit-readiness and privacy-enhancing technologies, creating a need for professional audit partners like us. (Reference)

Sector-Specific Regulatory Moves:

• RBIs Master Direction (Nov 2023) on IT governance is now in force, making cyber audits and compliance assurance a regulatory necessity for banks, NBFCs, and other financial entities.

• IRDAIs Cyber Security Guidelines (2023) are being implemented across the insurance sector with a focus on perimeter security, cloud controls, and real-time threat detection, further opening avenues for specialized IT audit support.

Ongoing Strategic Initiatives:

Flagship national programs such as Cyber Surakshit Bharat, I4C (Indian Cybercrime Coordination Centre), and the National Cyber Security Exercise (NCX) continue to receive policy and infrastructural backing in FY 2024 25. Additionally, the establishment of the National Facility for Security Testing of IoT Devices is now transitioning into its operational phase, further formalizing certification-led audit ecosystems.

Favourable Market Sentiment:

According to recent reports, over 81% of Indian enterprises cite regulatory compliance as their top driver for cybersecurity investment. For AAA Technologies, this boosts our addressable market driven by compliance urgency, digital maturity, and increasing penalties for governance lapses.

In this evolving landscape, our niche expertise in IT audits and regulatory compliance aligns seamlessly with national priorities, positioning us as a trusted partner in building Indias digital trust and cyber resilience.

3. Financial Performance

in lakhs

Particulars	FY25	FY24
Revenue from Operations	2,545.55	2,379.46
Other Income	157.01	88.99
Total Revenue	2,702.56	2,468.45
EBITDA	516.79	515.69
EBIT	470.07	429.54
Profit Before Tax	470.07	429.54
• Current Tax	117.20	113.85
• Earlier Years Tax	0.72	0.23
• Deferred Tax	1.12	(5.74)
Net Profit for the Year	351.03	321.20

 

Profitability Ratios	FY25	FY24	FY23	FY22
EBITDA Margin	19.12%	20.89%	17.22%	22.55%
EBIT Margin	17.39%	17.40%	16.31%	21.86%
Net Profit Margin	12.99%	13.01%	12.20%	16.04%
Growth Ratios
Total Revenue	9.48%	5.00%	61.28%	30.94%
EBITDA	0.21%	27.41%	23.11%	96.04%
EBIT	9.43%	12.04%	20.31%	106.61%
Net Profit	9.29%	11.98%	22.67%	105.83%
Net worth	10.26%	10.13%	10.64%	11.16%
Liquidity Ratios (Times)
Current Ratio	18.11	19.50	11.33	9.05
Return Ratios
Return on Equity	27.37%	25.04%	26.84%	27.34%
Return on Capi-	15.26%	15.38%	15.09%	13.90%
tal Employed
Return on Assets	10.78%	10.93%	10.76%	9.62%
Efficiency Ratios (Times)
Asset Turnover	0.83	0.83	0.86	0.59
Receivable Turnover	3.73	3.76	2.9	1.5

Refer to the standalone Financial Statement in this Integrated Annual Report for detailed schedules and notes

a. Revenue from Operations

Revenue from operations for the financial year 2024 25 stood at 2,545.55 lakhs, marking a year-on-year growth of 6.98% compared to 2,379.46 lakhs in FY 2023 24. While this reflects a increase, the Company continued its focus on executing high-margin engagements. The 3-year CAGR remains strong at 20.91%, indicating consistent topline growth driven by strategic client acquisition and delivery efficiency.

b. Other Income

Other income rose significantly by 76.44%, from 88.99 lakhs in FY 2023 24 to 157.01 lakhs in FY 2024 25. This increase was primarily on account of efficient investments in Fixed Deposits including Sweep In Fixed Deposits. The rise reflects prudent treasury management and better deployment of surplus funds generated through internal accruals

c. EBITDA

The Companys EBITDA for FY 2024 25 stood at 516.79 lakhs, representing a growth of 0.21% over the previous years EBITDA of 515.69 lakhs. The slight increase is attributed to increase in employee benefit expenses in line with talent expansion and retention initiatives.

d. Other Expenses

Other expenses remained broadly stable at 1,287.62 lakhs in FY 2024 25 as compared to 1,266.00 lakhs in FY 2023 24. This marginal increase of 1.71% is primarily attributable to scaled-up operational activities. However, the Company continued to demonstrate cost discipline by maintaining professional and technical fees and improving overall cost efficiency despite higher business volumes.

e. Debt and Finance Cost

The Company remains debt-free, with zero finance cost in FY 2024 25, consistent with the previous year. This reflects a strong balance sheet and a conservative financial approach, enabling self-funded growth without reliance on borrowings.

f. Profit After Tax

Profit after Tax (PAT) for FY 2024 25 stood at 351.03 lakhs, an increase of 9.29% over 321.20 lakhs in FY 2023 24. The growth was driven by increased revenues and higher other income, while keeping costs relatively stable. The Companys ability to generate higher profits without leveraging external debt continues to reinforce its healthy financial position.

g. Growth Ratios

The EBITDA increased by 0.21%, while EBIT (Profit before Depreciation and Interest) grew by 9.43%, reflecting higher core operational efficiency. Net profit registered a growth of 9.29%, supported by improved topline and treasury income. The Company continues to deliver steady, sustainable growth on the back of operational consistency.

h. Liquidity Ratios

The Current Ratio continued to strengthen, indicating robust short-term financial health. With efficient working capital management and improved collection cycles, the Company has maintained sufficient liquidity to meet its obligations.

i. Return Ratios

Return on Capital Employed (ROCE) and Return on Assets (ROA) reflect stable performance in capital efficiency and asset utilization. ROCE stood at 15.26% in FY 2024 25 compared to 15.38% in FY 2023 24, while ROA was 10.78%, marginally lower than 10.93% in the previous year. This indicates that the company has maintained consistent operational profitability and continues to effectively deploy its capital and assets to generate returns.

j. Leverage Ratios:

The Company is debt-free. There are no borrowings or lease liabilities in the current or previous financial year, reaffirming the Companys strong financial foundation and conservative leverage policy.

k. Efficiency Ratios:

The asset turnover ratio remained unchanged at 0.83x in FY 2024 25, demonstrating consistent asset efficiency in revenue generation. The receivables turnover ratio stood at 3.73x, slightly lower than 3.76x in FY 2023 24. While the drop is marginal, the ratio still indicates effective credit management and timely collections..

l. Liquidity:

Cash and cash equivalents decreased to 97.35 lakhs in FY 2024 25 from 248.44 lakhs in FY 2023 24. This was due to funds transferred to Sweep In Fixed Deposits. Additionally, fixed deposits rose significantly by Rs. 382.59 Lakhs to 2185.04 lakhs from 1802.45 lakhs, reflecting strong liquidity and efficient treasury management. This robust liquidity position enhances the Companys ability to meet short-term obligations and invest in future growth opportunities.

4. Risk and Mitigation Strategy

1. Market Dependency Risk

Multiple factors have impacted the domestic and global economic conditions. Prolonged slowdown of economic growth can potentially reduce demand for IT audit services. This is because IT spending patterns have always been sensitive to global and economic conditions.

Mitigation:

We primarily serve government departments, PSUs, statutory bodies, and municipal corporations. This gives us a relative stability that is not impacted by volatile market cycles. Empanelment with state-level institutions and banks helps generate recurring work and buffers against market fluctuations.

2. Cybersecurity Risk

The nature of our services involves sensitive data management. This makes us increasingly susceptible to cyber threats like malware, ransomware, or data breaches. This risk is further intensified due conditions like remote work exposure.

Mitigation:

We follow a Zero Trust Security model that enforces access control based on specific roles and devices. Our teams operate within clearly defined data access parameters, reducing the risk of internal or external breaches. We also limit contractual liability wherever feasible.

3. Talent Acquisition and Retention Risk

The industry demands highly skilled professionals within the IT and cybersecurity space. There is intense competition in the field for experienced auditors and cybersecurity experts. Thus creating an ongoing demand, but also a retention risk that can risk the business.

Mitigation:

We focus on employee wellbeing through a supportive work culture, secure infrastructure, and worklife balance initiatives. Internal capability-building programs and competitive benefits help in retaining skilled personnel.

4. Technology Risk

The rapid evolution of technology sectors like cloud computing, AI, and big data. Older, obsolete tools and methods threaten the sanctity of business operations. This can impact service quality.

Mitigation:

Our internal tools are routinely upgraded to align with emerging technologies. We closely monitor industry trends and invest in new capabilities as needed to stay current and competitive.

5. Regulatory Compliance Risk

Non compliance with statutory requirements or failure to renew empanelments and certifications on time may impact our ability to bid or execute projects.

Mitigation:

A dedicated compliance team tracks the timeline and ensures all statutory registrations, empanelments, and certifications are renewed well in advance. This approach allows us to remain up to date with all our compliances.

6. Performance Guarantee Risk

Inability to furnish performance guarantees could hinder our chances of securing new contracts, particularly in public sector tenders.

Mitigation:

We maintain strong relationships with multiple banks to issue guarantees when needed. If limits are exhausted, we approach alternative financial institutions to ensure the continuity of bidding activity.

7. Client Concentration Risk

Over-reliance on a single or a few clients for a major portion of revenue can pose financial risk in case of contract discontinuation.

Mitigation:

Our client base spans across sectors and states. We work on medium-term contracts and enjoy high client retention through repeat engagements. Business development efforts are focused on onboarding new clients to reduce dependence further.

8. Internal Control Risk

Weak internal controls could result in inaccurate reporting, fraud, or failure to manage operational risks effectively.

Mitigation:

We follow stringent internal processes and multilevel review mechanisms to maintain audit integrity. Our control systems are periodically reviewed and enhanced to stay ahead of emerging risks and regulatory requirements.

Internal Financial Control Systems and Their Adequacy

The Company views internal controls as a foundational element of corporate governance, enabling operational freedom within a framework of necessary checks and balances. Our internal control framework is robust and has been designed considering the Companys size, operational nature, and risk exposure.

The system ensures the efficient conduct of operations, safeguarding of assets, prevention and detection of fraud and errors, accuracy and completeness of accounting records, timely and reliable financial reporting, and compliance with applicable laws and regulations. Our Internal Auditor conducts regular audits and reports any lapses to the management. These findings are submitted periodically to the Board of Directors for their review and feedback. The presence of a professional and experienced Board, as outlined in the Corporate Overview section, further strengthens internal oversight. Additionally, the Audit Committee periodically evaluates the adequacy and effectiveness of the internal control systems and recommends improvements in response to evolving business dynamics. Continuous upgrades to systems and processes are made through automation, adoption of best practices, and the deployment of modern IT tools.

Developments in Human Resources

At AAA Technologies Limited, we firmly believe that our people are our most valuable asset. Our Human Resource Management (HRM) initiatives aim to not only attract and retain top talent but also foster a culture of continuous learning and innovation. During FY 2024 25, we concentrated on the following key HR areas:

Talent Acquisition and Development

We continued to recruit professionals who not only bring relevant skills but also resonate with our core values. Our targeted hiring strategies and rigorous evaluation processes have strengthened the team with dynamic and diverse talent.

Employee Engagement and Well-being

We prioritised employee well-being by implementing wellness programs, offering flexible work arrangements, and enabling professional development. These efforts aim to create a positive, fulfilling work environment.

Performance Management

Our performance evaluation system has been upgraded to ensure clarity of expectations, ongoing feedback, and career development. This helps align individual goals with the organizations strategic direction.

Diversity, Equity, and Inclusion (DEI)

We are committed to building an inclusive workplace where every individual is respected and valued. Steps have been taken to improve diversity at all levels and ensure equal opportunities for all employees.

Leadership Development

Recognizing the critical role of leadership, we have invested in programs to empower managers with the tools and skills necessary to lead effectively, foster collaboration, and drive performance.

Looking ahead, we remain dedicated to evolving our HRM practices by investing in our people and nurturing a culture that promotes collaboration, innovation, and excellence.

Significant Changes

There were no significant changes in the Company during the financial year under review.

Cautionary Statement

This Management Discussion and Analysis contains forward-looking statements that are subject to risks and uncertainties. Actual results may differ materially from those expressed or implied due to various factors, including changes in economic and political conditions, technological advancements, regulatory developments, and other risks detailed in our regulatory filings. The Company assumes no obligation to update these forward-looking statements.