allied digital services ltd share price Management discussions

INDUSTRY OVERVIEW Global Economy

In late 2022, the world economy began_ to recover from the COVID-19 pandemic and the Russian invasion of Ukraine. Infiation reached multidecade highs in many economies in 2021 and the first half of 2022 due to pent-up demand, supply disruptions, and rising commodity prices, prompting central banks to aggressively tighten monetary policy in order to return inflation to target levels. The impact of the most recent liquidity issues following a succession of global bank crises has been contained; however, these uncertainties continue to undermine the spending confidence of consumers and businesses, thereby slowing overall global economic growth. According to the International Monetary Funds (IMF) April 2023 forecast, the global economy, which witnessed a growth of 3.4% in 2022, is projected to grow by 2.8% in 2023 and by 3.0% in 2024. The reopening of the Chinese economy in 2022 and the resilient_global financial conditions have contributed to a solid beginning for emerging markets in 2023.

India has demonstrated resilience over the past year and continues to be the major economy with the fastest growth rate in the world. Similarly, despite global headwinds, the countrys technology industry continues to experience revenue growth. According to Nasscom, the revenue of the Indian tech industry is expected to have increased by USD 19 billion to USD 245 billion in FY 2022-23, representing an annual growth rate of 8.4%. Of this, domestic revenue stood at USD 51 billion, expanding by 4.9% annually, and exports revenue at USD 194 billion, representing a 9.4% increase over FY 2021-22.

Going forward, forward-looking policies, robust governance, talented workforce, and emphasis on digital trust to ensure accessibility, privacy, security, and reliability, are poised to drive accelerated growth in Indias technology sector. The domestic market is expected to benefit from growing cloud adoption and digital transformation, along with the governments focus on using technology to build public platforms and digital public infrastructure. Also, globally, there is a clear trend of strong growth in IT Services on the back of opportunities around application modernisation, cloud migration, platformisation and cybersecurity. This is likely to benefit Indian IT companies.

OUR BUSINESS

Allied Digital Services Ltd. (hereafter referred to as "our Company" or "ADSL"), situated in Mumbai and established in 1984, began supporting mainframe computers in the pre personal computer era. Our Company was one of the first IT companies in India to specialise in Infrastructure Management Services (IMS) as a third-party support provider, and we_developed an annuity business model by signing multi-year contracts. Today, our Company has developed into a global leader in IT consulting and services, providing ‘Managed Services and ‘Systems Integration for infrastructure technology services in more than 70 countries. In summary, our Company provides ‘Digital Workspace Services, ‘Digital Enterprise Infrastructure Transformative Solutions, ‘Cyber Security, ‘Cloud Services and Support, and multilingual and multichannel service desks.

Our business this year has witnessed an exceptional, 36% YoY growth. This significant growth is contributed to well-oiled strategy for global business development building stronger partner and customer relationship coupled with fine-tuned operations model. We follow a theory of continuous introspection of our business, ensuring customer, supplier, investor and employee satisfaction. High quality corporate governance with efficient finance management and talent acquisition are key stakeholders to our success. We step into the current financial year with strong confidence, risk resilience and are always ready to adopt to change and disruption.

To satisfy changing market demands, ADSL has expanded its Cloud services portfolio to include Hybrid cloud, Edge computing, Automation, Serverless computing, DevOps, and IoT technologies. These services allow our customers to deployed their operations, scale effectively, and maintain a competitive edge in the rapidly evolving digital landscape.

Cybersecurity is a top priority, and our Company has launched its all-encompassing Cybersecurity practice, "AIM 360," in the United States. This emphasis on identity and access management, secure access service edge, endpoint detection and response, zero trust, and threat management enables businesses to operate securely in a deployed environment. In addition, our Company has launched MSI (Master System Integrator) services in the United States, expanding on its successful MSI operations in India. This service offers IoT Smart solutions to State, Local, and Education (SLED) clients, enabling them to leverage technology to enhance operational efficiencies.

ADSL has accomplished significant global expansion of its services and deployed cutting-edge technologies to various businesses around the globe. Our Companys recent expansion into Mexico and other new markets has created new opportunities and stimulated growth. Our Companys extensive partner ecosystem, created through strategic alliances, positions it as an industry leader capable of delivering comprehensive IT technology service a to an expanding client base.

With an experienced global workforce of over 3,000 professionals and robust local support functions, we implement comprehensive governance frameworks and a highly ethical approach with a focus on creating sustained shareholder value. Our client base is comprised of well-known companies, and we offer our technology services to multiple large global customers with relationships spanning multiple years.

Managed IT Services Business Highlights

Large consumers in India have_continuedfito seek out high-quality, all-inclusive IT managed service providers and a market-leading master system integrator. ADSLs several significant managed IT services initiatives are in progress, and others are in the pipeline. Our cybersecurity technology services, "AIM 360," are gaining market traction rapidly amidst rising demand for the cloud transformation market, cybersecurity, and governance.

Our global enterprises, especially in the United States, have significantly contributed to the expansion of our global footprints. Despite significant cost increases in the United States during FY 2021-22, we were able to deliver services exceptionally well due to our refined service delivery models. Moreover, we are upgrading our global business model by expanding to Europe and other parts of the world to ensure continued business expansion across all business verticals.

Some key customers added during FY 2022-23 are as follows,

• Won an order for the implementation of a comprehensive enterprise security platform with managed security services for Indias largest auto manufacturing Companys engineering and research division. Our Company employed an end-to-end Al based cybersecurity platform leveraging Big-Data and machine learning.

• Completed an enormous workplace transformation initiative for one of the worlds largest automobiles Company. We have entirely transformed it so that nearly 2500 users can work from home or from anywhere.

• Won a multi-year managed service contract from a manufacturing Company in the USA.

• Won an end-user services deal for a compliance software Company and luxury car rental agency.

• Won an order from a leading Print & Digital Media Publishing Company in the US for the implementation of End User Support, including 24/7 Service Desk coverage, efficient EUC device provisioning, Management, and Lifecycle services, as well as top-notch endpoint security management.

• Selected by a leading global apparel and accessories Company for providing Global End User Support at offices in the Americas, Europe, and Asia. The scope of work included a Hybrid Onshore/O_shore Support Model.

In the recent years, we have also expanded our presence across key geographies. We expanded in Japan, Brazil, and China over a year ago. In FY 2022-23, we expanded in Mexico. This gives us good coverage for our US clients as a near-shore service. This was very strategic to mitigate inflation challenges in the US, which helps keep our delivery costs in control as well as provide good coverage to our US clients.

From our strategy perspective, we have continued our roadmap of six technology service areas, namely.

• Cloud migration projects and cloud engineering

• Enterprise-managed IT services

• Digital transformation – AI and Automation projects

• Smart city operations

• Cybersecurity services and solutions

• Digital workplace services and solutions

Master Systems Integration (MSI) - Smart City Solutions Highlights

The scope of ADSLs Smart City Solutions business includes designing, developing, and deploying digital solutions, as well as providing end-to-end IT infrastructure services, Enterprise applications, and Integrated solutions. Our Company entered the smart city solutions market and obtained a contract for the Pune-Pimpri-Chinchwad City Surveillance Project. It was the first of its kind, with the goal of preventing crime, enhancing law and order, analysing tra_c violations, and investigating incidents through the establishment of a 24x7 video surveillance and security command centre. The undertaking included the construction of an infrastructure framework as well as its operation and maintenance. The undertaking was accomplished successfully and then expanded.

As a result of the success of the Pune project, our_Company won several new orders. In FY 2022-23, we had an exceptional period for smart /safe city business winning the following orders:

• We bagged the Lucknow safe city project as a sole bidder for the installation of City-Wide Surveillance Systems, Artificial Intelligence-based Video Analytics, Drones, Mobile Device Terminals, an Integrated Smart Control Room, Data Centre, and Cloud-Based Disaster Recovery.

• Our Company received a letter of intent for the Solapur Safe City project for setting up of City Communication Network, State of the art Command Control Center, City-Wide Surveillance System, Intelligent Tra_c Management Systems including Automatic Number Plate Recognition System and Red-Light Violation Detection System, Adaptive Tra_c Management System, Public Address System, Emergency Panic Buttons and Data Center.

• Our Company has been awarded the Smart City contract by the Punjab Municipal Infrastructure Development Company (PMIDC) covering 3 cities i.e., Amritsar, Jalandhar, and Sultanpur Lodhi.

With this, our Company now has 12 smart /safe city initiatives in various phases of implementation, making us a leading MSI in India and highlighting our Companys expanding presence in this space. Our Company has successfully commissioned seven safe/smart city projects including Kalyan, Dombivli, Aurangabad, Bidkin, Rajkot and Pune. Another five secured in FY 2022-23 including Lucknow, Sultanpur, Amritsar, Jalandhar, Solapur are in progress and will go live by October 2023.

Additionally, our re-skilled engineering services division is currently tendering on international IoT-based system integration projects. Our current Smart-City pipeline is robust and bids on enterprise IoT initiatives have also been witnessing exceptional growth. In FY 2022-23, approximately 9% of our Companys revenue was generated through the smart city projects acquired from the government.

Trending Transformation Technologies – Artificial Intelligence (AI) and DevOps Highlights

FinoAllied, our first conversational AI-based platform, was developed with tremendous success, with innovation being a key growth pillar. Indias largest banking agency has recognised our Company for the innovation of its products. This platform will enable small and midsize banks to rapidly and cost-e_ectively digitalise their traditional banking, bringing them on par with a small group of large private banks in India and allowing them to provide a vast array of services to a larger urban/rural customer base. This is an innovative digital fabric that is native to the cloud, supports voice and multiple languages, and is available on a "pay-as-you-use" basis with enhanced consumer analytics and experience.

AdiTaas

Our ADiTaaS (establishing as an AI-Ops based ITSM/ESM no-code/ low-code software) platform has more than 15 years of experience, employs 75 people, and serves 100 customers. ADSL has entered into a strategic relationship with seven global brands, that would use our ADiTaaS as their technology platform.

During the year, our Company implemented the next generation Al based IT Services Management (ITSM) platform – ADiTaaS for a ‘Big 4 global professional services firm. The enhancement enabled the firm to monitor a single platform instead of different technology stacks for each department. ADiTaaS is enabling the implementation partner to deliver more efficient and effective service and support, including troubleshooting and problem resolution. Moreover, we received an order to deploy our ADiTaas platform for a leading Packaging products company in the US. The order covers the implementation of a bi-lingual 24/7 Service Desk, endpoint management, and endpoint security compliance services, as well as cloud and infrastructure management. Our technology platform ADiTaaS is shaping up to be a key AIOps platform to bring further efficiencies in IT and enterprise operations for our clients

Due to a heightened emphasis on DevOps, we have migrated our ADiTaaS platform to a cloud-native platform. We have undertaken RPA (Robotic Process Automation) initiatives to enhance our automation expertise. ADiTaaS, a "PinkVERIFY"-certified product, is already transitioning to an "AI-based Service" platform with numerous features, including intelligent routing, a dynamic interface, and conversational AI. Moreover, our Company Implemented the ADiTaaS platform for a Global IT and Consulting Services firm that specialises in providing 360-degree digital transformation frameworks. Post Implementation of the ADiTaaS platform, service delivery timelines have improved due to codeless con_guration, ITIL (Information Technology Infrastructure Library)-certified processes, built in AI and analytics and technology-enabled automation.

FINANCIAL HIGHLIGHTS

The key financial highlights of our Company for the financial year ended March 31, 2023 are given below

Particulars		Standalone			Consolidated
	2022-23	2021-22	Y-o-Y Change	2022-23	2021-22	Y-o-Y Change
Revenue	21,029	12,258	72%	66,007	48,468	36%
EBIDTA	2,028	2,104	-4%	8,830	7,004	26%
PBT*	1,320	807	64%	7,296	4,972	47%
PAT*	931	569	64%	5,373	3,721	44%

*Excluding exceptional income & losses

Revenue: During the period under review, our Company was awarded a number of high-volume contracts including Smart/Safe city project and also revenue generation started in new geographies. This resulted in continued performance momentum, with revenues of INR 66,007 lakhs in FY 2022-23, up 36% year-over-year.

EBIDTA: Our Company attained a higher consolidated EBIDTA of INR 8,830 lakhs, up 26% compared to the previous year, driven by an increased volume of business.

Profitability: Our Company achieved a 44% increase in consolidated profit margins from continued operations to INR 5,373 lakhs as a result of cost optimisation, and improved operational efficiency practiced throughout the year.

During the previous year, our Company made a strategic decision to discontinue the business of selling IT hardware and peripherals. By exiting this business, our Company has streamlined our operations and focussed on our core competencies & strategic areas.

During FY 2022-23, Acuite Ratings and Research has assigned our Company, a long-term rating of ‘ACUITE BBB (ACUITE triple B) and a short-term rating of ‘ACUITE A3+ (ACUITE A three plus) to its bank facilities, against the earlier rating of BBB- for Long-term and A3 for Short-term facilities by Brickwork Ratings. The Ratings are supported by the robust financial risk profile and strong operating performance of our Company and our subsidiaries, as well as our diverse revenue streams.

Key Financial Ratios

Particulars	Standalone		Consolidated
	2022-23	2021-22	2022-23	2021-22
Debtors Turnover (times)	2.00	0.89	3.68	2.67
Inventory Turnover (times)	5.22	3.38	16.35	13.32
Interest Coverage Ratio (times)	8.17	9.41	20.36	34.62
Current Ratio (times)	2.55	4.05	3.53	3.74
Debt Equity Ratio (times)	0.10	0.09	0.06	0.08
Operating Profit Margin (%)	9.64	17.16	13.38	14.45
Net Profit Margin (%)*	4.31	4.55	8.07	7.64
Return on Equity (%)	1.97	1.17	9.53	7.15

*Excluding exceptional income & losses from discontinued operations

• Debtors and Inventory turnover ratios have improved considerably, mainly due to high turnover and better working capital management.

• The higher revenue growth leading to an increase in finance costs resulted in a decrease in Interest coverage ratio.

• Debt Equity has improved marginally due to an increase in profitability and reduction in debt.

• Current ratio reduced on a standalone basis mainly due to provision against in receivables of discontinued business.

• Standalone operating Profit margin percentage was on the lower side mainly due to higher initial cost incurred for onboarding some of the large contracts. However, the Net Profit margin percentage remained on the same line.

• A higher Return on Equity is a result of improved profitability resulting from cost optimisation, improved operational efficiency during the year.

KEY DRIVERS FOR GROWTH

The key growth drivers for our Company include the following:

• Strategic Global Partnerships: Our Company has established partnerships with major global players, which has expanded our competencies and ability to offer comprehensive technology services. These collaborations enable us to leverage global expertise, access new markets, and tap into a wider customer base, driving growth. It is on the back of these partnerships that we have recently won several large deals for global giants. Our Company remains focused on continually expanding partnerships to unlock new growth opportunities.

• Geographic Expansion: Our Company is actively expanding into newer geographies, opening up fresh opportunities for business growth. As a result of achieving world-class global benchmarks and recognition in service governance, we would continue to expand our partner-driven model globally to further propel our business with large contracts. By diversifying our presence across different regions, we are able to capitalise on emerging markets and cater to the specific needs of customers in the different parts of the world. We are_ actively building_ a strong presence in the United States and haveflexpanded_our footprint to Mexico, Canada, and other nations. We have_ also been engaged in establishing new partnerships for strategic business development in Europe and the rest of the world.

Innovation: As pioneer in technology adoption, innovation is ingrained in our Companys fabric. Our leadership has successfully implemented design-thinking and innovative-focused business model with the organisation, which has set the foundation to generate innovative solutions for the evolving needs of customers. This is evident in the various pathbreaking solutions that we have successfully introduced over the year including ADiTaaS and FinoAllied platforms and the recent AIM 360, empowering our clients and enhancing outcomes for them. Our Company remains focused on continually investing in cutting-edge technologies like artificial intelligence, robotic process automation, cybersecurity, and startup support systems to drive new frontiers of innovation.

Excellent Service Maturity: Our Company has a matured service governance, which has been effective in delivering clients with high-quality technology services. We ensure this by adhering to best practices and maturity models, establishing a Centre of Excellence, and having a diverse workforce comprising individuals with a vast array of skills. We have further enhanced our workforce, ensuring that we have the right talent and expertise to drive growth and deliver exceptional results. Overall, our matured service governance strengthens our competitive edge, enhances our reputation with clients, and opens long-term opportunities.

• Clear Roadmap for the Future: ADSL has evolved as a matured IT services Company that specialises in offering a comprehensive range of technology services, including the design, development, and deployment of digital solutions. Supported by a leadership with future-focused mindset, our Company has undertaken a rigorous introspection and analyzed future opportunities to set a clear roadmap for the next 3-5 years. This strategic planning allows us to align our goals, investments, and resources accordingly, ensuring a systematic approach to achieve growth targets and maintain a competitive edge in the industry.

HUMAN RESOURCE

Human resource (HR)_practices have played a crucial role in our Companys expansion across the world. The human resources division has been a pillar of strength in all aspects, including efficient resource management and the rapid scaling of existing and new initiatives. The HR_ department has been promoting constant communication and providing additional care to support and field personnel worldwide. Our objective is to strengthen our core team in orderfito ensure our success across all business verticals. Our strategy has shifted from individual-driven to team-oriented delegation, as exempli_ed by the "Guru-Shishya model".

In spite of witnessing rising resource costs last year, our HR department has made significant strides in deploying smart global as well as domestic talent acquisition models, which have directly contributed to controlling the cost of operations.

To enhance our people resources_and internal competencies for executing our plan to expand into more advanced technology areas, we have implemented various strategies such as training and development, cross-functional teams and collaboration, internal mobility and career development and continuous learning and innovation culture. Another area where our global HR department has exceeded expectations is in the employment of new leadership roles and the enormous scalability of recruiting.

Our Company also undertakes various efforts for employee engagement initiatives to foster a positive work environment and employee satisfaction. These include feedbacks, wellness programs, team-building activities, and opportunities for career growth. Our Company further offers competitive compensation, alongside attractive benefits such as health insurance, retirement plans, paid time off, flexible work arrangements, and opportunities for career advancement. To promote physical and mental health, employees are supported with wellness programs, access to counselling services, stress management initiatives, and employee assistance programs (EAPs).

Diversity, equality and inclusiveness is an important aspect at ADSL. Our Company fosters a work culture where employees feel valued, respected, and included. To ensure equal opportunity, there is a strong emphasis on fair and unbiased selection processes and promotions. Our Company takes pride in being a truly global and diverse organisation. Across all our global offices, our Company prioritises hiring local leadership and talent, from across all backgrounds, ethnicities and gender. Our US office sets the standard as a beacon of diversity within the organisation with its vibrant mix of diverse diasporas, embodying the essence of a nation built on the power of immigrants.

Our Companys sustained people related efforts have significantly lowered attrition rates, below the industry average. This ensures stability, enhanced team dynamics, and smoother project execution. Moreover, it fosters a positive Company culture, high employee morale, increased productivity, and improved job satisfaction, ultimately contributing to our Companys growth and competitiveness.

From Indian perspective, the total number of permanent employees as of March 31, 2023, was 1,546. Our Company conducted 208 induction trainings and allocated 468 hours to the training.

GOVERNMENT INITIATIVES

The Government of India has been a key enabler our technology adoption with revolutionary initiatives around digital infrastructure, digital payments, cybersecurity, start-up ecosystem, and the Make in India. These are unleashing massive opportunities. Our Company, has been actively undertaking innovative efforts to seize the opportunities while also aligning the governments vision for a digitally empowered and secured nation.

• Digital Infrastructure: Following the pandemic rise of emerging technologies, the government has been proactively focused on creating a digital India and implementing smart cities to empower citizens and enhance efficiency in public service delivery. Our Company leveraging its technological capabilities has been actively promoting the visionary initiative through participating in smart city tenders Our Company with a track record of competing seven such projects and executing another five has successfully established itself as an MSI, capable to undertaking the entire responsibility of project end-to-end. Our Company remains focused on participating in all MSI projects in India and has also leveraged this expertise to enter the US market as an MSI.

Digital Payments: The government aims to drive digital payments and enhance financial inclusion through initiatives like the Uni_ed Payments Interface (UPI). ADSL actively contributes to financial inclusion with the launch of innovative platform ‘FinoAllied. It empowers small and medium banks to digitise their services and extend them to rural populations, both within India and globally. The platform further has the potential to expand into various industries, including insurance, enabling transactions to be conducted seamlessly through conversational bots.

• Cybersecurity: The government as well our Company recognise the importance of cybersecurity in safeguarding data. The government has announced its plans to construct a cyber-lab for the ‘Online Capacity Building Programme on Crime Investigation, Cyber Law and Digital Forensics in an effort to bolster cyber security capabilities. At ADSL, we are also at the forefront of cybersecurity efforts, developing programmes specifically designed to enhance security measures for banks and corporations. Moreover, ADSLs AIM 360 initiative focuses on providing comprehensive cybersecurity solutions to protect critical data assets. In addition, we have acquired extensive knowledge of numerous facets of cybersecurity. We have attained new heights in utilising the most advanced industry tools and platforms in cybersecurity including OT security, which has aided us in acquiring some exceptional projects.

• Start-up Support: Start-ups are key to driving forward the growth of the nation in the digital era. The government recognises this and has been dedicated to supporting start-ups and fostering innovation with favourable policies, incentives and funding. According to a Ministry of Electronics & IT report titled ‘Indias trillion-dollar digital opportunity, India will have 60-65 million jobs that necessitate digital capabilities by 2025-2026. ADSL actively promotes and supports start-ups by assisting in the development and implementation of their innovative ideas. Additionally, ADSL collaborates with select non-profit organisations to drive their technology-enabled initiatives, further supporting the start-up ecosystem.

• Make in India: ADSL aligns with the governments Make in India initiative, which aims to promote local manufacturing and encourage investment and make India an integral part of the global supply chain. ADSL supports this initiative by focusing on empowering domestic companies with digital competencies. Our comprehensive service management platform AdiTaaS, has been driving significant value for customers by empowering them with integrated services.

The solution has been implemented by several domestic companies, providing them with exceptional outcomes.

THE ESG INITIATIVE HIGHLIGHTS

Environmental, Social, and (Corporate) Governance is abbreviated as ESG and_is a practise adopted by our_Company to support environmental and social issues as well as monitor ourflown ethical corporate governance. The initiative includes the measurement and reporting of our_ Companys activities to enhance the environment, engage in social work causes and ensure ethical corporate governance practises are followed.

ADSL has adopted equitable governance and plays an active role in public-facing technology initiatives such as smart cities. Our Company has been documenting these activities but intends to formalise and report them in accordance with the global ESG metrics framework.

ESG facilitates overall top-line growth, attracts talent, reduces costs, and fosters consumer confidence. As sustainability is incorporated into their governance and fundamental values, organisations with excellent ESG practises receive a higher reputation score and face less risk.

Due to recent and ongoing global challenges, such as geopolitical stability (such as the Ukraine-Russia conflict and the US-China relationship), climate change, unethical business practises, food scarcity, soil pollution, and starvation,fithe current fiscal year has been challenging. All of this contributes to greater economic disparity, sustainability issues, and long-term effects on the planet. Therefore, ESG must be adopted to contribute to the current and future well-being of the planet, the surrounding community, and to ensure the organisation is run fairly. It enhances investors confidence in our Companys long-term sustainability planning and identifies any unforeseen risks.

ESG reports include both qualitative and quantitative data pertinent to their three primary topics.

Environmental:
Focus areas	ADSL Initiatives
Combating climate change	ADSL is undertaking various tree plantation activities.
Reducing carbon emissions	ADSL has implemented several energy-saving measures on premises including maximising natural lighting and ventilation, using energy-e_cient systems (for lighting, office equipment, appliances) and sensitising employees. Our Company also proactively monitors resource usage, including electricity bills, and actively managing supply chain risks associated with various electronic goods from OEMs. Further, car-pooling and work from home is also supported.
Focus areas	ADSL Initiatives
Preserving biodiversity, improving air and water quality, combating deforestation, or responsibly managing its waste	Our Company also engaged various NGO agencies to drive e_ective e-waste management practices. Further, our Company has been actively implementing cloud migration projects, enabling efficient, cost-e_ective, and energy-saving utilisation of technology for our clients, helping them optimise operations and reduce environmental impact.
Responsibly using resources and its supply chain	Globally, ADSL has adopted usage of _ltered water and actively discourages the use of plastic bottles. Our Company also proactively monitors supply chain risks relating to electronic goods with OEMs.
Social:
Focus areas	ADSL Initiatives
Nurturing people and workplace	ADSL has comprehensive HR policies and has made them available online. Additionally, the HR department provides frequent updates to employees regarding the ongoing pandemic.
	Our Company also conducts training, health, safety and well- being, engagement and rewards and recognition programmes. ADSL firmly believes in the concept of "Employee nurturing as an everyday role of a manager.
Gender, disability parity initiatives	ADSL is committed to gender neutrality and provides equal opportunities and support for individuals with disabilities.
Employee engagement	Our Company promotes equal opportunity and diversity. We are continuously upholding a strong "Core Value Pyramid" with Ethics and Integrity placed at the top and firmly believe in the importance of "walking the talk." Furthermore, we are regularly publishing newsletters to keep our employees well-informed.
Data Protection and privacy	ADSL is driving extensive cybersecurity practices for clients and is maintaining similar practices internally. This includes ongoing compliance with standards such as ISO 27001, ISO 20000, and SOC 2. Additionally, our Company has established a "Centre of Excellence" to lead by example in driving cybersecurity initiatives.
	Our Company has been undertaking regular campaigns focused on data protection, privacy, and raising awareness about cybersecurity.
Community involvement	ADSL made donations to support social initiatives around promoting health and well-being of the vulnerable communities and eradicating hunger, poverty and malnutrition. Our team also participated in the 3-day blood donation drive organised at Andheri SEEPZ-SEZ office, Mumbai. To create livelihood opportunities, our Company undertook efforts around promoting education and skill development for children, women, elderly and the differently-abled to. Our US team provided volunteering service to Los Angeles, USA Regional Food Bank for supporting their Commodity Supplemental Food Program (CSFP). Our innovative product ‘FinoAllied aligns with the digital India initiative, contributing to significant financial inclusion efforts. It empowers small and medium banks to digitise their services and extend them to rural populations, both within India and globally.
	As a leading MSI for smart city projects, our Company continuously assumes a prominent role in enabling technology for the betterment of society at large. We prioritise citizen safety, citizen- centric services, water and waste management, transportation, and overall urban security, by constantly improving the quality of life for urban populations.
Human Rights and labour standards	ADSL is complying with all statutory regulations and labour laws.

Governance:

Examples	ADSL Initiatives
Internal controls	ADSL is maintaining a range of internal controls that encompass
	• Whistle blower policy
	• Employee grievance and support services online and offine
	• Open door policy
	• Mandatory onboarding procedures to communicate policies, code of conduct and "Core Value Pyramid"
	• Continuous communication during leadership town hall sessions
Policies, principles, and procedures governing leadership, board composition, executive compensation, audit committee structure and shareholder rights.	Our Company, as a publicly listed entity, is actively adhering to and implementing all the essential statutory and regulatory compliances required.

Our Company this year plans to actively formalise these initiatives in a global measurable report.

ADSLs active role in global ESG initiatives

Our Company is continuously making notable improvements in various sustainability aspects that warrant highlighting. Our ongoing focus on energy conservation is leading to significant reductions in energy consumption, resulting in approximately 20% savings year-on-year. We are also making efforts to optimise water consumption and implement efficient waste management practices. Additionally, our commitment to environmental stewardship is demonstrated through initiatives such as tree planting, contributing to the preservation and restoration of natural ecosystems. These accomplishments showcase our unwavering dedication to ESG initiatives, sustainability, and resource efficiency.

Along with these endeavours, our Company has remained dedicated to leveraging technology to benefit all segments of society, drive financial inclusion, and promote sustainable and responsible use of resources.

RISKS, CONCERNS AND THREATS Volatile Global Outlook

ADSL is subject to interest rate risk, currency fluctuations, credit risk, and regulatory risk due to our significant global presence. In the United States, rising inflation and war-related concerns have worsened workforce shortage and attrition issues and even contributed to the onset of a recession. However, our HR department is proactive in ensuring that such problems dont have an impact on business growth. Internal audits of our Company assure robust risk management readiness, where the risks are evaluated quarterly by the management. Due to war-related issues, climate change, and post-pandemic economic changes, some global and India-related macroeconomic risks pose challenges to our Company. We are able to control these risks more effectively by taking proactive measures to de-risk the supply chain.

Technology

Technology is linked to innovation and imminent change. Industry 4.0 and Web 3.0 represent the next wave of technological developments, and we would use technological advances in order to provide our customers with innovative_ technology service areas. This necessitates a proactive adoption strategy for modern technologies and the promotion of innovative solutions, thereby increasing the potential to capitalise on new business opportunities. Our Company engages in ongoing training and skill development programmes in order to maintain our knowledge base. ADSL has explicitly defined its six business-related technology practices, which_have a defined plan for the next three years and will concentrate on new opportunities. It will continue to invest in R&D in order to create new technology service areas in all geographies.

Cybersecurity is currently the most pressing concern for managed service providers and the industry. Due to the execution of significant contracts for new business, we have also increased the limits of our cybersecurity insurance.

We believe in leveraging technologies such as AI and blockchain to benefit an enterprise that enhances the social and environmental sustainability of the customers organisation.

Compliance Risk

As our Companys operations span the world, it is essential for our Company to comply with the legal and regulatory requirements of various countries. Failure to comply with the laws and regulations of a particular country may expose our Company to legal and financial penalties and harm our brand image. Identified key stakeholders across sales and business units, as well as corporate functions, ensure continuous compliance with all applicable laws. The applicable regulations are monitored and amended by the respective departments. Additionally, our Company has hired third-party agencies to support standard compliance in certain countries and mitigate local statutory risks.

From an operations standpoint, we ensure that our compliances, such as ISO, CMMI, and PinkVERIFY, remain active and functional each year.

Last year, we launched_new ESG metrics that would aid in the all-round development of our Company.

Delivery Risk

There is a constant risk of losing a customer or incurring penalties if standard core services are not delivered to the highest standards due to the intense competition in this market. Customers expect continuous value enhancement from service providers. Specifically in India, businesses are under constant pressure to not only surpass the KPI, but also to offer reductions due to the pandemic and free project delivery as a value-addition. Our Company has supported discounts and provided value-added services to customers. This situation is addressed in two sections, with the first being_shift-left automation, which automates routine duties. For instance, our managed services team has developed analytical dashboards for customers and partners. Approximately 300 distinct routine daily duties are digitalised and automated. The alternative strategy is to account for increased operational costs in our pricing for new customers. This year, in response to inflationary pressures, our Company has also reached out to existing global and Indian customers for a price increase in order to maintain profitability.

Payment delays are a persistent problem on a global scale. Despite this, our finance team has been able to successfully manage this risk through rigorous follow-ups on receivables. Obviously, this has been more difficult at times, but our finance department has been able to maintain cash flow without incurring additional finance costs.

Contract Management

Sometimes misunderstandings about the scope of work result in misaligned expectations among participants in the project. Certain contracts have been standardised, and we are continually working to improve contract administration and gain deeper insights into customer environments in order to reduce the risk of service failure at the desired levels. Our contracts team is continually refining new and existing contracts in light of the current business climate.

Employee-Related Risk

As a service-centric, talent-driven organisation, one of our most important strategies is to have the finest talent with the most specialised abilities in every aspect of our business. To increase our differentiation and competitiveness, we strike a balance between the right levels in the right places at the right time.

In India, our attrition rate has decreased over the past year, while in the United States, where inflation is higher than in the past, new challenges have emerged. Our Company mitigates risks through cross-training and diligent collaboration with internal and external recruiters. There are attrition issues in Europe due to changes in immigration law, but we have developed constant vigilance in our delivery operations so that customer deliverables are never affected.

INTERNAL CONTROL SYSTEMS

Internal controls enable the prompt identification and correction of operational irregularities and provide a constant and accurate summary of the organisations position. Adequate internal controls ensure that transactions are authorised, recorded, and reported accurately, and that assets are protected against unauthorised use or disposition. Moreover, operational controls and fraud risk controls encompass the entirety of internal financial controls. Our Company has placed a significant emphasis on enhancing the internal control systems in all departments, including Finance, Sales, Legal, and HR. When deemed necessary, timely actions are taken to safeguard our Companys long-term viability and growth potential.

In finance, a formal system of internal audits manages internal checks and balances. The mechanism for notifying regulatory changes was in place, and the transition to GST-compliant processes was seamless. M/s. Satya Prakash Natani & Co., Chartered Accountants, Mumbai, has been appointed as our Companys Internal Auditors to conduct the Internal Audit.

On the sales front, there is a greater emphasis on customer credit checks, profitability, and sales closures. We enhanced alert communication, automation, and customer system health checks on the delivery and operations sides. Our Companys quality management system has also been annually ISO-certified and updated regularly. This has significantly increased the overall delivery quality, reducing customer concerns. The contract management software in the United States has been updated, and we intend to implement the same in India. This software will enable us to reduce business risk and enhance compliance by incorporating contract management best practices. In FY 2021-22, we launched a significant initiative to achieve CMMI Level 3 compliance. The work is in its final phase for certification before the end of the year. Last year, additional initiatives, such as management performance audits, were effectively implemented.

DISCLOSURE OF ACCOUNTING TREATMENT

The Financial Statements of our Company have been prepared in accordance with the procedure and process provided for in the applicable Accounting Standards. There was no alternative treatment adopted in the preparation of the Financial Statements during the year under review.

BUSINESS OUTLOOK

Our_ Companys innovative and proactive nature has helped us_ diversify and establish a strong vertical with enormous opportunities across the globe originating from a developing nation like India. By improving our operational models to account for global inflationary risks, we would continue to achieve new business expansion, and our strategic plan has produced remarkable results. As a key differentiator, we have continued to enhance our service governance scale to new heights._To further propel business growth, we have signed up some very large companies as partners globally, this will create a new flow of business in the coming times. Going forward, we anticipate rapid expansion in AI and automation, which are progressively becoming mainstream industries._ Our significant future investments would be in Artificial Intelligence (AI), Robotic Process Automation, Cybersecurity, and specific startup incubation areas.

As we continue to invest in innovation that directly contributes to the development of our business, we foresee a rise in the number of data science and artificial intelligence (AI) initiatives in the coming year. Our Company has been_actively delivering order books, andfithe growth outlook for the pipeline appears to be_positive._Multiple smart city project_implementations are currently underway, and are about to reach completion in the near future with different schedules. We are now also expanding our cybersecurity cloud business and our Integrated Solutions business (including smart cities) in the US. This will generate new opportunities and allow us to further explore new business with our existing partners and clients. We anticipate that new geographies and new initiatives will contribute to ADSLs steady expansion._ In the near future, ADSL_ will invest resources in building new strategic business partnerships in Europe and the rest of the globe. Our new ESG initiative will play a crucial role in enhancing our Companys brand and global business context, as well as gaining the trust of our current and potential customers.

The FY 2023-24_would also record_numerous initiatives in progress and revenues committed for the next few years._ADSLs brand value continues to rise, and our accomplishments are gaining more attention in digital media each year.