Ace Software Exports Ltd Management Discussions

Overview of the Industry Global Economy

The global economy displayed resilience in 2024, recovering faster than anticipated from inflationary pressures, supply- chain disruptions, and the lingering impact of geopolitical conflicts. Coordinated policy tightening by central banks led to moderation in inflation, reducing the risk of a severe recession.

Global IT spending is estimated to reach USD 5.43 trillion in 2025, marking a 7.9% growth over 2024, driven by accelerated adoption of Artificial Intelligence (AI), cloud computing, and data center modernization. Data center systems alone are projected to surge by 42.4% in 2025, underlining the infrastructure shift necessary to support GenAI adoption.

Despite optimism, the growth outlook remains clouded by geopolitical tensions, tighter financing conditions, social inequality, and regional conflicts. Policy support for education, climate transition, and inclusive digitalization remains critical for sustained global productivity.

India

India remains one of the worlds fastest-growing major economies. With strong macroeconomic fundamentals, growth is propelled by healthy domestic consumption, robust public capital expenditure, rising private investments, and relentless services exports. Key contributors in FY 2024-25 include manufacturing profitability, Rabi harvest revival, firm service demand, and strengthened private capital deployment, supported by upbeat business sentiment and stable corporate and banking finances.

a. Industry Structure & Developments Global IT Services Market

The global IT services industry remains on a strong growth trajectory:

Market size: USD 1.50 trillion in 2024, projected to reach USD 2.6 trillion by 2030 (CAGR ~9.4%).

Key drivers: Cloud migration, GenAI integration, IoT expansion, and digital transformation initiatives.

Regional trends: North America remains dominant (~37% share), while Asia-Pacific is the fastest growing region (-11.6% CAGR).

The Indian IT services sector continues to be a cornerstone of global outsourcing, with exports projected to touch USD 210 billion in FY 2024-25. The rapid growth of Global Capability Centers (GCCs) in India underscores the countrys transition from a cost-arbitrage model to a knowledge- and innovation-driven hub.

Challenges include talent retention, pricing pressures, cyber risks, and increasing competition from GCCs and automation- driven models.

Indian IT Services Landscape

Indias role in global IT services remains pivotal. IT exports are forecasted to reach USD 210 billion in FY 2024-25, equating to roughly 18% of global IT outsourcing spend. This is underpinned by sturdy U.S. demand and rapid growth of Global Capability Centers (GCCs) in India-acting faster and more agile than traditional providers.

India also leads M&A activity within IT services: in CY 2024, the sector continued to dominate Indias M&A landscape, with strategic deals up 25% YoY and accounting for 59% of overall deal value-driven by cloud, AI, and digital transformation capabilities

b. Opportunities, Threats, Risks and Concerns

The IT industry is poised for sustained growth, driven by digital transformation, AI adoption, cloud migration, and cybersecurity imperatives. For Ace Software, these megatrends create opportunities to enhance its offerings and deliver higher value to customers through AI-led delivery, automation, analytics, and industry-specific platforms.

However, challenges remain in the form of:

Rapid technological advancements requiring continuous innovation and agility.

Competitive pressures from established IT majors and emerging players.

Regulatory changes and geopolitical uncertainties that may impact cross-border operations.

Cybersecurity and data protection risks, which demand ongoing investment in secure practices.

Ace is well positioned to leverage opportunities while mitigating risks through its customer-centric approach, innovation focus, and healthy client relationships. The Company has consistently delivered value to long-term clients, resulting in stability and resilience, with minimal disruption to operations despite evolving global challenges.

c. Segment / Product-wise Performance

The Company operates in a single reportable segment, namely Computer Software and Services Exports. Accordingly, segment-wise performance is not furnished.

d. Internal Control Systems and Their Adequacy

The Company has in place a robust internal control system commensurate with its size and nature of operations. These systems ensure the safeguarding of assets, compliance with corporate policies, and reliability of financial reporting.

Authority and power limits are clearly defined across levels of management.

A cross-functional internal audit team with predefined roles and responsibilities periodically reviews the adequacy and effectiveness of controls.

The system facilitates an effective information flow, risk monitoring, and operational oversight.

The Audit Committee of the Board regularly reviews the internal audit findings and monitors implementation of recommendations, thereby strengthening governance standards.

e. Discussion on Financial Performance with respect to Operational Performance

The financial performance of the Company for the year under review, in relation to its operational performance, has been discussed in detail in the Directors Report, which forms part of this Annual Report.

f. Human Resources / Industrial Relations

Human capital remains the most valuable asset of Ace Software Exports Ltd. The Company firmly believes that investment in its workforce enhances organizational performance, fosters innovation, and improves retention. During the year, the Company provided a meaningful and enabling environment to its 55 employees, encouraging personal and professional growth. The positive and collaborative work culture continues to stimulate a high-performance mindset, innovation, and employee engagement.

The Company has maintained healthy and cordial industrial relations throughout the year.

g. Ratio Analysis

I n 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
	F.Y. 2024-25	F.Y. 2023-24	F.Y. 2024-25	F.Y. 2023-24
Operating Profit Margin	29.45	5.39	35.45	18.26
Net Profit Margin	20.17	56.77	17.74	22.54
Debt-Equity Ratio (Times)	0	0	0.06	0.06
Current Ratio (Times)	29.85	6.08	5.75	5.22
Return on Net Worth	2.99	17.03	5.98	15.53
Price Earning Ratio	99.71	9.61	41.54	10.92