ace software exports ltd share price Management discussions


Economy review Global

Global economic growth has been decelerating due to diminished investment, heightened inflation, elevated interest rates, and disruptions stemming from the Russia-Ukraine conflict. To counteract inflation, numerous countries have swiftly implemented tighter monetary policies, which have been compounded by substantial currency devaluations against the USD and constrained labor market conditions. These global circumstances have made debt servicing more challenging, leading to increased apprehensions about debt sustainability across various nations. Notably, the United States is undergoing an exceptionally rigorous monetary policy tightening phase, expected to significantly curtail its growth. The Euro area confronts additional obstacles such as substantial energy supply interruptions and price surges, exacerbating their inflation concerns.

While the overall growth prospects for emerging economies in 2023 are predicted to remain relatively stable compared to 2022, thanks to Chinas potential recovery counteracting declines in other emerging economies, apprehensions about financial vulnerabilities loom. This pertains to various aspects including financial institutions, housing markets, and low-income countries. Despite a recent reduction in headline inflation, the persistently high levels raise the possibility of prolonged inflationary pressures.

Forecasts for growth in emerging market and developing economies indicate a modest up tick from 3.9% in 2022 to 4.0% in 2023 and 4.2% in 2024. Its projected that around half of these economies will experience reduced growth in 2023 relative to the preceding year. Meanwhile, the growth trajectory for emerging and developing Asia is anticipated to ascend in both 2023 and 2024.

India

The National Statistical Office (NSO) has unveiled the First Advance Estimates (FAE), projecting Indias real Gross Domestic Product (GDP) to grow by 7.0% in FY23. This optimistic growth projection is underpinned by the Indian economys remarkable resilience, evident in the resurgence of private consumption taking the reins from export stimuli as the primary growth catalyst. The upswing in private consumption has also spurred production, resulting in heightened capacity utilization across various sectors. The revival of contact-intensive industries and discretionary spending is anticipated to bolster urban consumption.

In line with these positive economic dynamics, the FY24 Union Budget has been designed to complement overall macroeconomic growth. It emphasizes comprehensive welfare measures, fosters the advancement of the digital economy and fintech, facilitates technology-driven development, propels energy transition and climate action, and initiates a positive cycle of private investment, complemented by public capital infusion. The confluence of robust credit expansion, resilient financial markets, and sustained government capital expenditure and infrastructure initiatives has cultivated an environment conducive to investment.

Indias rapid rebound from the pandemic has laid a strong foundation, with forthcoming growth poised to be sustained by robust domestic demand and an up tick in capital investment.

a. Industry Structure &Development:

Ace provides Document Management, Digital Publishing and Data Conversion solutions using optimal process engineering and cost-effective and flexible conversion systems. We are a major full-service digital content provider and are able to deliver digital content with 99.995% accuracy and 100% application-based integrity.

Ace has been active in catering to the outsourcing needs of publishers and other organizations for 28 years. Over the years, we have adopted a seamless partnership approach. Our clients tend to work with Ace as true partners; often with the feeling that this is a virtual extension of their own operations. It is our strong belief that this integration is the cornerstone of the success of any business relationship.

The Companys business relates to database creation (E-Publishing) pertaining to Information technology enabled services. This includes creating large volume full text, image-based databases.

b. Opportunity, Threats and Outlook Risk & Concerns

As the businesses started adjusting to the disruption caused by the pandemic, the technology sector responded quickly and decisively to support their customers across the globe. They successfully pivoted into working from home mode, reconfigured supply chain and accelerated digital transformation enabling their customers to continue their operations despite several constraints. With a sharp increase in technology adoption, tech companies will play a leading role in the new ecosystem not just as enablers but also in designing solutions and creating new business models. The consumers have also embraced ordering goods and services online, whether it is less frequently bought goods like car tyres or more frequently purchased items like tea and coffee. This created a significant need for aligning the business processes with the help of technology.

Ace is well positioned to take advantage of the opportunities to support its new and existing customers. The company will continue to focus on enhancing its capabilities and invest in new innovative growth platform going forward. The Company has always maintained healthy and long - standing relationship with its clients in partnering them as their IT solution provider and adding value to their businesses. These have resulted in minimal impact to the overall business of the company.

c. Segment/Product wise performance:

The companys operation falls under single segment namely "Computer Software and Services Exports", therefore segment wise performance is not furnished.

d. Internal control systems and their adequacy:

The company has an effective internal control system in place and this is periodically reviewed for its effectiveness. There are well defined Power and Authority limits to ensure that assets of the Corporate Policies. The company has a cross -functional internal Audit team with pre-determined roles, responsibility and authorities. The team ensures an appropriate information flow and effective monitoring.

e. Discussion on financial performance with respect to operation performance:

The Financial Performance of the company, during the year under review, has been given separately in the Directors Report.

f. Material developments in Human Resources / Industrial Relations front, including number of people employed.

Most valuable capital of Ace Software is its employees. We believe that investment in our human capital has a significant impact on our performance and helps us to stay competitive among our peers. Developing our workforce is our way to grow our organization, improve productivity and reduce employee turnover. The human resource (HR) function of the Company is focused around providing its 41 employees a meaningful and compelling environment. This positive and inspiring environment fosters innovation, stimulates performance culture and motivates employees to develop themselves personally and professionally.

g. Ratio Analysis

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations 2018, the company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios.

The company has identified the following ratios as key financial ratios;

Standalone Consolidated

Unit F.Y. 2022-23 F.Y. 2021-22 F.Y. 2022-23 F.Y. 2021-22

Ratios - Financial Performance

Operating Profit Margin

% 11.00 1.92 18.97 7.54

Net Profit Margin Ratios - Balance Sheet

% 1.20 (7.15) 1.11 (8.26)

Debt-Equity Ratio

Times 0.01 0.01 0.00 0.09

Current Ratio

Times 7.05 6.58 7.02 3.93

Return on net worth

% 0.55 (3.30) 0.62 (4.03)

Ratios - Per Share

EPS

Rs. 0.21 (1.23) 0.25 (173)

Price Earnings Ratio

78.57 (15.04) 66.00 (10.69)

COST AUDIT /RECORDS

Company is not required to maintain the cost records as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013

ACKNOWLEDGEMENT:

Your directors would like to express their appreciation for the assistance and co-operation received from the investors, banks, regulatory and governmental authorities. Your directors also wish to place on record their deep sense of appreciation for the committed services by the executives, staff of the Company.

For & on behalf of Board of Directors

Date: 05.09.2023 Place: Rajkot

Vikram B. Sanghani Jt. Managing Director DIN:00183818

Sanjay H. Dhamsania Jt. Managing Director DIN: 00013892

ANNEXURE -1 -SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED 31st MARCH, 2023

[Pursuant to section 204(1) of the Companies Act, 2013 and rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members,

Ace Software Exports Limited,

I have conducted the secretarial audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by Ace Software Exports Limited (CIN: L72200GJ1994PLC022781) (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts / statutory compliances and expressing my opinion thereon.

Based on my verification of the Companys books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, I hereby report that in my/our opinion, the Company has, during the audit period covering the financial year ended on 31st March, 2023 complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter :

I have examined the books, papers, minute books, forms and returns filed and other records maintained by the Company for the financial year ended on March 31,2022 according to the provisions of:

i. The Companies Act, 2013 (the Act) and the rules made there under;

ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA) and the rules made there under;

iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed there under;

iv. Foreign Exchange Management Act, 1999 and the rules and regulations made there under to the extent of Foreign Direct Investment and Overseas Direct Investment. (Not applicable to the Company during the Audit Period)

v. The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act):

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018; (Not applicable to the Company during the Audit Period);

(d) The Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014; (Not applicable to the Company during the Audit Period)

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008; (Not applicable to the Company during the Audit Period)

(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client. (Not applicable to the Company during the Audit Period)

(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009 (Not applicable to the Company during the Audit Period); and

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018 (Not applicable to the Company during the Audit Period).

(i) Other laws applicable specifically to the Company namely:

Software Technology Parks of India rules and regulations

I have also examined compliance with the applicable clauses of the following:

(i) Secretarial Standards issued by The Institute of Company Secretaries of India

(ii) The Listing Agreements entered into by the Company with Stock Exchanges, if applicable

As explained to me, during the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above except registration of offices nos. 803 to 810, in the name of the company, located at 8th floor of Everest building, Opp. Shashtri Maidan, is kept pending due to pending documentation related to title search at relevant authorities.

I further report, that the compliance by the Company of applicable financial laws, like direct and indirect tax laws, has not been reviewed in this Audit since the same have been subject to review by statutory financial audit and other designated professionals.

I further report that, the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. During the period under review there was no change in the composition of the Board of Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance to all Directors, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members views are captured and recorded as part of minutes.

I further report that, there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

I report further that, during the audit period, there were no other specific events / actions in pursuance of the above referred laws, rules, regulations, guidelines, etc., having a major bearing on the Companys affairs.

For, Sheikh Rathod Mishra & Associates

Date: 18.08.2023

CS SHARDA HANUMANSINGH RATHOD

Place: Nagpur

(Partner)

Mem No. A49150 CP No. 25709 PR C No. 2541/2022 UDIN: A049150E000824430

To,

The Members,

Ace Software Exports Limited

Our report of even date is to be read along with this letter.

1. Maintenance of Secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2. We have followed the audit practices and process as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verification was done on test basis to ensure that correct facts are reflected in Secretarial records. We believe that the process and practices we followed provide a reasonable basis for our opinion.

3. We have not verified the correctness and appropriateness of financial records and books of accounts of the Company.

4. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events, etc.

5. The compliance of the provisions of corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedure on test basis.

6. Management Representation has been taken from the Company regarding Compliance with the list of applicable laws. The secretarial audit is neither an assurance nor a confirmation that the list is exhaustive.

6. The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

Date: 18.08.2023 CS SHARDA HANUMANSINGH RATHOD

Place: Nagpur Mem No. A49150

CP No. 25709 PR C No. 2541/2022 UDIN: A049150E000824430

ANNEXURE 2 - PARTICULARS OF EMPLOYEES

a) Information as per Rule 5(1) of Chapter XIII, Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2022-23, ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year 2022-23 and the comparison of remuneration of each Key Managerial Personnel (KMP) against the performance of the Company are as under:

Sr. No. Name of Director/KMP and Designation

% Increase in

Remuneration

in the

Financial

Year

2022-23

Ratio of

remuneration

of

each Director/ to median remuneration of

employees

Comparison of the Remuneration of the KMP against the performance of the Company

1 Vikram Bhupat Sanghani Jt. Managing Director

00.00% 7.54

The remuneration payable to the KMP is in accordance with the Industry and Geographical standards

2 Sanjay Harilal Dhamsania Jt. Managing Director

00.00% 7.54

3 Dharamsibhai Ramjibhai Vadalia Non-Executive Director

00.00% 0.03

4 Vimal Laljibhai Kalaria Non-Executive Director

00.00% 0.03

5 Pratik Kumar Chandulal Dadhania Non-Executive Director

00.00% 0.03

6 Dhara Sureshchandra Shah Non-Executive Director

00.00% 0.03

7 Jyotin Bhadrakant Vasavada Chief Financial Officer

7.44% -

The remuneration payable to the KMP is in accordance with the Industry and Geographical standards

8 Mansi Patel Company Secretary & Compliance Officer

7.33%

i) The median remuneration of employees of the Company during the financial year was Rs. 4,37,769/-.

ii) In the financial year, there was decrease of 0.37% in the median remuneration of employees.

iii) There were 46 permanent employees on the rolls of Company as on March 31,2023;

iv) Relationship between average increase in remuneration and company performance: - The remuneration payable to the KMP is in accordance with the Industry and Geographical standards

v) Average percentage increase/ (decrease) made in the salaries of employees other than the managerial personnel in the last financial year i.e., 2022-23 were 2.46% whereas the increase in the managerial remuneration for the same financial year was 00.00%. The remuneration payable to the KMP is in accordance with the Industry and Geographical standards.

vi) The key parameters for the variable component of remuneration availed by the directors are considered by the Board of Directors based on the recommendations of the Nomination and Remuneration Committee as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.; and

vii) It is hereby affirmed that the remuneration paid is as per the as per the Remuneration Policy for Directors, Key Managerial Personnel and other Employees.

ANNEXURE 3 - PARTICULARS OF CONTRACTS / ARRANGEMENTS MADE WITH RELATED PARTIES

[Pursuant to Clause (h) of Sub-section (3) of Section 134 of the Companies Act, 2013, and Rule 8(2) of the Companies (Accounts) Rules, 2014 - AOC-2]

This Form pertains to the disclosure of particulars of contracts / arrangements entered into by the Company with related parties referred to in Sub-section (1) of Section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto.

Details of contracts or arrangements or transactions not at arms length basis

There were no contracts or arrangements or transactions entered in to during the year ended March 31,2023, which were not at arms length basis.

Details of material contracts or arrangement or transactions at arms length basis

The details of material contracts or arrangement or transactions at arms length basis for the year ended March 31,2023 are as follows:

Name of related party

Nature of relationship Duration of Salient terms contract Amount 2022-23 (Rs. In Lakhs) Dates of approval by the Board, if any

 

Nature of Contract

Lease and Hire charges agreement

ACE INFOWAY PVT. LTD. Common directors 01.09.2014

and shareholders - on going

The agreement 7.20 Effective from (01.09.2014) and shall be continue, unless otherwise terminated. 30.05.2014

09.08.2014#

Note:

# Necessary approval had been taken in the Annual General Meeting of the Company and approval for modification in lease agreement has been obtained in the 26th AGM held on 10.09.2020.

All the related party transactions are approved by Audit Committee and Board of Directors and approval of members were obtained whenever necessary.

For & on behalf of Board of Directors

Date: - 05.09.2023 Place: Rajkot

Vikram B. Sanghani Jt. Managing Director DIN: 00183818

Sanjay H. Dhamsania Jt. Managing Director DIN: 00013892