ACE Alpha Tech Ltd Management Discussions

GLOBAL ECONOMY

In 2024, the global economy remained steady and managed to navigate a backdrop of ongoing macroeconomic pressures and geopolitical turmoil. Heightened tensions from the conflict in Ukraine and disruptions along the Red Sea continued to affect international shipping and strained supply networks. Trade disagreements between leading economies persisted and added to the external challenges faced by manufacturers and consumers worldwide.

According to the International Monetary Funds World Economic Outlook, global GDP growth reached 3.3% during the year. Regional performance was uneven, with advanced economies seeing a slowdown in activity while many developing regions, particularly across Asia, sustained more consistent levels of expansion.

(Source: World Economic Outlook, IMF, Reuters)

The global economy is expected to uphold a steady growth trajectory, with projections indicating expansion of 2.8% in 2025 and 3.0% in 2026. This outlook reflects a generally favourable environment supported by ongoing progress in major advanced economies as well as key emerging markets.

Growth prospects for the United States are forecast at 1.8% for 2025 and 1.7% in 2026. These figures take into account anticipated changes in the labour market and a possible slowdown in consumer expenditure as policy and market conditions evolve.

(Source: World Economic Outlook, IMF)

INDIAN ECONOMY

Indias economy exhibited steady expansion and resilience during FY 2024-25, maintaining its standing as a leading global economy with strong growth momentum. According to the Second Advanced Estimate (SAE), Indias real GDP growth stood at 6.5% in FY 2024-25, reflecting a moderation from the 9.2% recorded in the First Revised Estimates for FY 2023-24. This consistent performance demonstrates the nations firm economic foundation, effective policy measures, a vibrant services sector, and robust domestic consumption, all support a positive outlook for Indias long-term economic trajectory.

Indias economic profile continues to strengthen, as the country now ranks as the worlds fourth-largest economy by nominal GDP and third-largest by purchasing power parity (PPP). Ambitious national milestones have been set with a goal of reaching a $5 trillion economy by FY 2027-28 and $30 trillion by 2047. Achieving these targets will depend on ongoing infrastructure development, continued government reforms, and broader technological adoption. The FY 2025-26 Budget reflects this approach with capital expenditure increasing to 11.21 lac crore, accounting for 3.1% of GDP.

Major policy initiatives and increased investment in both physical and digital infrastructure are central to Indias accelerated growth and economic self-reliance. Key programmes such as Make in India and the Production-Linked Incentive (PLI) scheme have provided important impetus to this progress.

(Source: Press Information Bureau, World Economic Outlook, IMF, PIB)

Indias economy is projected to expand by 6.5% in FY 2025-26 as well, according to the Reserve Bank of India. It is forecasted that by 2030, the country is set to become the worlds third-largest economy, supported by investment in infrastructure, higher private sector capital spending, and growth in financial services. Ongoing reforms are expected to help sustain this progress over the longer term.

Initiatives such as Make in India 2.0, ongoing measures to improve the business environment, and the Production-Linked Incentive (PLI) scheme are focussed on strengthening infrastructure, manufacturing, and exports, positioning India as a key participant in global manufacturing. Inflation is anticipated to align with targets by the end of 2025, which could allow for a more supportive monetary policy. Capital formation is likely to benefit from infrastructure projects and government support, while rural demand should rise due to schemes like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY).

The Union Budget 2025-26 adopts a strategy intended to foster both immediate and long-term growth. Prioritising infrastructure, boosting domestic

manufacturing, and increasing disposable income, the budget is designed to sustain economic expansion whilst maintaining fiscal prudence.

A notable provision is the raised income tax exemption limit to 12.75 lac per year, set to improve disposable income for middle-class households and encourage greater consumer spending. Substantial infrastructure investment, particularly in roads and railways, aims to enhance connectivity and support job creation. The budget also reinforces the PLI scheme in fields such as electronics and textiles, while continuing to endorse the Make in India vision for strengthening Indias presence in global manufacturing.

(Source: Press Information Bureau)

INDUSTRIAL OVERVIEW

Indian IT and Business Process Management (BPM)

The Indian IT and Business Process Management (BPM) industry has demonstrated robust growth and is a significant contributor to the nations economy. The sector is poised for continued expansion, driven by accelerating digital transformation, increasing adoption of advanced technologies, and a growing talent pool.

According to the report, Indias IT industry is projected to reach a market size of $350 billion by 2026, contributing 10% towards the countrys GDP. The Indian IT industrys revenue was $227 billion in FY22, a 15.5% year-on-year growth, and was estimated to be $245 billion in FY23. Direct employment in the IT services and BPO/ITeS segment reached an estimated 5.4 million people in FY23, with an addition of 2,90,000 new jobs. The technology industrys revenue is on track to double to 43,10,000 crore ($500 billion) by 2030.

The IT and BPM sector is a significant source of foreign investment. The computer software and hardware sector attracted cumulative Foreign Direct Investment (FDI) inflows of 7,65,083 crore ($108.40 billion) from April 2000 to December 2024, ranking second in overall FDI inflows.

Key segments of the Indian IT sector in 2023 were as follows:

IT Services: Estimated market size of $125 billion, with over 81% of revenue from exports. This segment accounted for approximately 51.2% of the IT & BPM market revenue.

Business Process Management (BPM): Estimated market size of $47 billion, with around 87% of revenue from exports. This segment held a 19.3% share of the total market.

Software Products and Engineering Services:

Estimated market size of $54 billion, with over 83.9% of revenue from exports. It accounted for a 22.1% revenue share.

Hardware: Estimated market size of $18 billion, with a 7.4% share of the sector, primarily driven by the domestic market.

The industrys growth is further supported by government initiatives and strong market trends. The Union Budget FY26 sanctioned 2,000 crore ($232 million) to accelerate AI adoption and infrastructure development, while another 500 crore ($58 million) was allocated for a Centre of Excellence in AI for Education.

Looking ahead, a recent Microsoft study highlights Indias rapid adoption of Artificial Intelligence (AI), with 65% of surveyed Indians having used AI, more than double the global average of 31%. Generative AI is expected to enhance productivity in Indias retail industry by 35-37% over the next five years. Indias IT spending is anticipated to reach $124.6 billion in 2024, a 10.7% increase from 2023. The countrys public cloud services market is also expanding, with a value of 32,756 crore ($3.8 billion) in the first half of 2023, and is expected to reach 1,53,436 crore ($17.8 billion) by 2027.

COMPANY OVERVIEW

Ace Alpha Tech Limited, originally incorporated as "DM Prime Square Research & Analytics Private Limited" on October 8, 2012, has undergone a series of transformations to become a public limited Company. The Companys name was first changed to "Ace Alpha Tech Private Limited" on May 17, 2024, and subsequently converted to "Ace Alpha Tech Limited" on September 12, 2024.

The Company is engaged in providing a wide range of outsourcing and information technology-enabled services, catering to diverse industries both in India and globally. Its offerings span across data, voice, and video collection and processing, call centre services (inbound and outbound), technical support, managed data centres, training and web support, back-office operations, business and financial analysis, scientific and research services, storage and disaster recovery, accounting, payroll, and inventory management, customer relationship management, enterprise resource planning, as well as software development, consultancy, and application services.

In addition to its outsourcing and IT-enabled services portfolio, the Company serves the financial industry with a comprehensive suite of trading solutions for a wide range of clients, from institutional investors to retail traders via brokers. These solutions are designed to minimise risk exposure and optimise execution practices by providing institutional-grade trading strategies on existing setups, sophisticated integration with order management systems, and consultancy for direct market access.

These offerings include highly customised solutions that leverage advanced, institutional-grade algorithms as a front-end layer over clients existing order management system and risk management system. These solutions enable the seamless, automated execution of trading strategies without manual intervention, supported by robust risk management tools. The Company also provides a simulated environment for clients to back-test their solutions and optimise variables based on outcomes, ensuring the safety and smooth operation of trading activities. The Companys comprehensive user and risk management systems further streamline operations by automating processes such as user onboarding, access management, and ongoing risk monitoring.

For high-volume traders, the Companys proprietary trading system offers advanced electronic trading capabilities and organised management tools. This system, coupled with custom solutions tailored to specific business requirements, provides clients with scalable and adaptable tools to succeed in the dynamic financial landscape. The Company provide a variety of solutions, including setups for institutional trading, B2B retail trading, user management, and proprietary trading, all backed by a robust support system to ensure end-to-end client satisfaction.

FINANCIAL OVERVIEW Financial Performance FY 2024-25

The Companys total income in FY 2024-25 is 1,721.61 lac as compared to 1,535.38 lac in FY 2023-24 and Profit Before Tax is 1,483.85 lac as compared to 1,407.29 lac in FY 2023-24. Profit After Tax is 1,125.75 lac as compared to 1,030.64 lac in FY 23-24.

Particulars	FY 2024-25	FY 2023-24	YoY (%)
Total Net Worth	3,297.11	2,171.36	51.85%*
Total income	1,721.61	1,535.38	12.13%
Profit before taxation	1,483.85	1,407.29	5.44%
Net Profit after taxes	1,125.75	1,030.64	9.23%
EPS Basic (Rs.)	8.68	9,966.62	-99.91%**
EPS Diluted (Rs.)	8.68	7.68***	12.97%

Notes: *The Companys net worth registered a growth of approximately 52% over the previous year, primarily attributable to operational profits commencing from FY 2023-24.

**The EPS for FY 2024-25 declined due to the issuance of bonus shares during the year. The Company allotted 1,296 fully paid-up equity shares of 10 each for every 1 existing fully paid-up equity share of 10.

*** During FY 2024-25, the Company allotted 1,39,99,392 fully paid-up bonus equity shares of 10 each, in the ratio 1,296:1, leading to increase in its paid-up share capital.

In accordance with Accounting Standard (AS) 20 - The Diluted Earnings Per Share (EPS) for all periods presented in the financial statements is required to be restated retrospectively to give effect to the bonus issue, ensuring comparability across reporting periods. Accordingly, the diluted EPS for the financial year 2023-24 has been presented on this basis.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Sl. Ratios No.	Numerator	Denominator	As at March 31, 2025	As at March 31, 2024	% Change In Ratio
1 Current Ratio (in Times)	Current Assets (CA)	Current Liabilities (CL)	73.43	18.45	298.02%
2 Debt-Equity Ratio (in Times)	Borrowing (Current + Non-Current)	Shareholders Fund	Not Applicable, Since Company is Debt-Free
3 Debt Service Coverage Ratio (in Times)	Earning for Debt Service = Net Profit after Taxes + Depreciation + Finance Cost	Finance Cost	Not Applicable, Since Company is Debt-Free
4 Return on Equity Ratio (%)	Net Profit after Tax	Avg. Shareholders Fund	41.00%	81.03%	-49.40%
5 Inventory Turnover Ratio (in Times)	Revenue from Operations	Average Inventory	Not Applicable, Since there is no Inventory in Company
6 Trade Receivables Turnover Ratio (in Times)	Revenue from Operations	Average Accounts Receivable	6.36	4.24	50.15%
7 Trade Payables Turnover Ratio (in Times)	Purchase of Raw Material	Average Accounts Payable	Not Applicable, Since there is no Purchases in Company
8 Net Capital Turnover Ratio (in Times)	Revenue from Operations	Working Capital	0.76	0.74	2.96%
9 Net Profit Ratio (%)	Profit for the year	Total Income	72.08%	69.30%	4.01%
10 Return on Capital Employed (%)	Earnings before interest and taxes (EBIT)	Capital Employed	45.09%	64.81%	-30.42%
11 Return on Investment (%)	Profit for the year + Finance Cost	Total Assets	44.46%	61.37%	-27.57%

REMARKS

Sl. No. of Ratio Reason of Variance

1 The ratio has been improved due to decrease in current liabilities as compared to last year.

4 Decrease in growth of revenue as compared to last year.

6 Ratio has been improved due to decrease in average receivables.

10 Decrease in growth of revenue as compared to last year.

11 Decrease in growth of revenue as compared to last year.

SWOT ANALYSIS

A detailed analysis of our Companys internal strengths and weaknesses, along with external opportunities and threats, provides a comprehensive view of our strategic position.

Strengths

Comprehensive Service Offerings: Our wide array of services, meticulously crafted for various market segments - including institutions, proprietary desks, and brokers - positions us as a comprehensive, single-solution provider. This approach streamlines operations for our clients by reducing their reliance on multiple platforms.

Client-Centric Approach: We are committed to a client-focussed model, providing personalised services and robust customer support. This enhances client satisfaction and fosters long-term relationships, which are critical for sustainable growth.

Weaknesses

High Development Costs: The Company requires significant and continuous investment in technology infrastructure and system enhancements. These high development costs can be resource-intensive and may impact overall profitability.

Complex Sales Process: Our direct sales model, particularly to institutional and proprietary desks, necessitates a highly skilled professional team and involves extended sales cycles. This complexity can potentially slow down our market penetration efforts.

Scalability Challenges: To expand beyond our current operational levels, the Company will need to make substantial investments in human resources, technology, and hardware. This required scaling effort could negatively affect our short-term profitability.

Opportunities

Global Expansion: We have a significant opportunity to enter new international markets. Expanding our presence, particularly in emerging markets with growing

financial sectors, could substantially increase our client base and revenue streams.

Product Diversification: We can enhance our market position by expanding and diversifying our service portfolio. Introducing new tools and features would allow us to address evolving market demands and attract a broader range of new clients.

Education and Training: By offering specialised educational resources and training programmes, we can empower our clients to better utilise our systems. This not only enhances user experience but also serves as a key differentiator from our competitors.

Threats

Intense Competition: The financial technology sector is characterised by intense competition from numerous established players and emerging startups. This environment could lead to pricing pressures and potentially reduce our profit margins. Our current focus on customised solutions for a limited set of customers may be challenged if we need to standardise our product portfolio for broader growth, which could impact our profitability.

Regulatory Risks: Changes in financial regulations across different regions pose a constant threat. Such regulatory shifts could impact our operations and require costly adjustments to our platform to ensure compliance.

Technological Disruptions: The rapid pace

of technological advancements in the industry requires continuous innovation and adaptation to remain competitive. Failure to keep pace with these changes could lead to obsolescence and impact our market share.

Economic Downturns: Economic instability

or broader market downturns could lead to a decrease in trading activities and client investments. Such conditions could have a direct and negative impact on our revenue.

HUMAN RESOURCES

The Company believes that its employees are key contributors to its business success, and its ability to maintain growth depends to a large extent on its strength in attracting, training, motivating, and retaining employees. The Company is focussed on attracting and retaining the best possible talent by seeking individuals with specific skill sets, interests, and backgrounds that are considered valuable assets for its business.

The Companys manpower is a prudent mix of experienced personnel and youth, which provides the dual advantage of stability and growth. Its work processes and skilled resources, along with a strong management team, have enabled the Company to successfully implement its growth plans.

The Company remains focussed on strengthening its talent pool through continuous learning, employee engagement, and leadership development initiatives.

RISK MANAGEMENT

Your Company follows a Risk Management framework aimed at enhancing the control environment by identifying, assessing, and mitigating risks that may impact its assets and operations. The framework is implemented in a phased manner with due emphasis on economic controls to keep risks within acceptable levels. To support this, the Board of Directors has adopted a Risk Management Policy to systematically address risks associated with the Companys business. The key risks and corresponding mitigation strategies are as follows:

Market Risk - Lower liquidity, and dependency on low-margin clients may affect revenue growth. The Company mitigates this risk through client diversification, maintaining adequate liquidity reserves, and focussing on high-value clients.

Regulatory Risk - Frequent changes in financial market regulations may indirectly impact our clients growth and, in turn, our business performance. To mitigate this risk, the Company continuously monitors regulatory updates and has established adaptive systems to ensure timely compliance and seamless execution of modifications.

Human Resource Risk - The availability of skilled manpower is critical to sustaining growth. The Company faces challenges such as limited availability of talent, employee retention, and attrition. To address this, we focus on employee development, structured recruitment processes, and creating a conducive work environment to retain talent.

Client Concentration Risk - Overdependence on a few clients poses potential risks to revenue stability. The Company is actively working to diversify its client base by introducing advanced products and services and by targeting a wider range of clients. This strategy reduces dependency and enhances business resilience.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has established adequate internal financial control systems, commensurate with the size and nature of its business operations. These controls are designed to ensure:

Accuracy and reliability of accounting records, Safeguarding of assets,

Prevention and detection of frauds and errors,

Adherence to applicable laws and regulations, and timely and reliable financial reporting.

The management and the Audit Committee periodically monitors the effectiveness of these controls and ensures that corrective actions are taken wherever necessary.

The Company also undergoes regular internal check by professionals, and the Audit Committee of the Board reviews their findings. Based on these reviews and management evaluations, the Board confirms that the Companys internal financial controls with reference to the financial statements are adequate and operating effectively.

CAUTIONARY STATEMENT

The Management Discussion and Analysis includes statements that outline the Companys goals, forecasts, estimates, and expectations, which may be considered "forward-looking statements" under applicable laws and regulations. These statements are based on informed judgements and estimates. The Companys past performance is not necessarily a predictor of future outcomes, and actual results may vary significantly from those stated or implied. These forward-looking statements are subject to various risks and uncertainties, such as economic conditions impacting supply and demand, market price fluctuations both domestically and internationally, changes in government regulations and policies, tax laws, availability and costs of raw materials, and other legal factors. The Company does not undertake any obligation to publicly update, amend, or revise any forward-looking statements in light of new developments, information, or events.