Athena Global Technologies Ltd Management Discussions.

ECONOMIC OVERVIEW:

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

Indias gross domestic product (GDP) (at constant 2011-12 prices) was estimated to be Rs 145.65 lakh crore (US$ 2.06 trillion) for 2019-20, growing 4.2 per cent over the previous year.

India retained its position as the third largest start-up base in the world with over 8,900-9,300 start-ups as 1,300 new start-ups got incorporated in 2019 according to a report by NASSCOM. India also witnessed the addition of 7 unicorns in 2019 (till August 2019), taking the total tally to 24.

Indias labour force is expected to touch 160-170 million by 2020 based on the rate of population growth, increased labour force participation and higher education enrolment among other factors according to a study by ASSOCHAM and Thought Arbitrage Research Institute.

Indias foreign exchange reserves reached Rs 37.31 lakh crore (US$ 493.48 billion) in the week up to May 29, 2020 according to the data from RBI.

Recent Developments

With an improvement in the economic scenario, there have been investments across various sectors of the economy. The mergers and acquisition (M&A) activity in India stood at US$ 28 billion in 2019, while private equity (PE) deals reached US$ 48 billion. Some of the important recent developments in Indian economy are as follows:

Merchandise export and import (in US$ terms) declined by 4.8 per cent and 9.1 per cent, respectively, in 2019-20.

Nikkei India Manufacturing Purchasing Managers Index (PMI) stood at 30.8 in May 2020, showing contraction in the sector because of coronavirus-related restrictions.

Gross tax revenue stood at Rs 15.04 lakh crore (US$ 215.28 billion) in 2019-20 - income tax collection contributed Rs 4.80 lakh crore (US$ 68.14 billion) to it..

In 2019, companies in India raised around US$ 2.5 billion through 17 initial public offers (IPO).

Indias Foreign Direct Investment (FDI) equity inflow reached US$ 469.99 billion between April 2000 to March 2020, with maximum contribution from services, computer software and hardware, telecommunications, construction, trading, and automobiles.

Indias Index of Industrial Production (IIP) for 2019-20 stood at 129.2.

The combined index of eight core industries stood at 137 in March 2020. Its cumulative growth was 0.6 per cent in 2019-20.

Consumer Price Index (CPI) - Combined inflation was 5.9 per cent in March 2020 as compared to 6.6 per cent in February 2020. The annual consumer price inflation increased to 4.8 per cent in 2019-20 from 3.4 per cent in 2018-19.

Around 12 million jobs in a year were created in India during 2015-19.

India improved its ranking in World Banks Doing Business Report by 14 spots over last year and was ranked 63 among 190 countries in the 2020 edition of the report.

India is expected to have 100,000 start-ups by 2025, which will create employment for 3.25 million people and generate US$ 500 billion in value as per Mr T V Mohan Das Pai, Chairman, Manipal Global Education.

INDUSTRY STRUCTURE AND DEVELOPMENT:

IT SECTOR:

The global sourcing market in India continues to grow at a higher pace compared to the IT & BPM industry. India is the leading sourcing destination across the world, accounting for approximately 55 per cent market share of the US$ 200-250 billion global services sourcing business in 2019-20. Indian IT & BPM companies have set up over 1,000 global delivery centres in about 80 countries

India has become the digital capabilities hub of the world with around 75 per cent of global digital talent present in the country.

REAL ESTATE SECTOR:

Real estate sector is one of the most globally recognized sectors. It comprises of four sub sectors - housing, retail, hospitality, and commercial. The growth of this sector is well complemented by the growth in the corporate environment and the demand for office space as well as urban and semi-urban accommodations. The construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy.

It is also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS:

Asper International Monetary Funds World Economic Outlook (WEO) report, India continue to remain the fastest growing major economy of the world. Indias GDP grew at 7.1% in fiscal 2020 and is projected to accelerate to 7.5% in fiscal 2021. The growth is expected to accelerate driven by the continued recovery of investment and upswing in consumption amid a more expansionary stance of monetary policy and some expected impetus from fiscal policy. Over the medium term, grow this estimated to stabilize based on continued implementation of structural reforms and easing of infrastructure bottlenecks. Indian government have been taking all important steps to strengthen financial sector balance sheets through accelerated resolution of non-performing assets (NPAs) under a simplified bankruptcy framework.

ATHENA GLOBAL focuses on IT core activities i.e., enterprise information management, enterprise integration services, Data Ware housing services. Its clients include organizations from various sectors of the economy such as financial, healthcare, oil, and pharmaceuticals, retail, business services, education, IT and government.

As per IIFL the real estate market in India is currently in the midst of fairly challenging times. In the last few years, there have been a few noticeable macro shifts that have challenged the realty sector.

The demonetization exercise in November 2016 put brakes on the growth of the real estate market as it made the rampant use of cash in real estate transactions (prevalent earlier) more difficult. Further, the Real Estate Regulation Act (RERA) that was passed by the Centre in 2016 and most states in 2017 put a lot of onus on builders which further halted new offerings in the residential space.

In addition, the demand-supply gap has been an issue with most of the key real estate markets such as Mumbai, Bengaluru, and Gurugram facing a serious oversupply of properties. However, the big funding challenge came in 2018 after the IL&FS fiasco.

The implosion of IL&FS raised serious questions about the asset-liability mismatch in the books of NBFCs, which have been the principal financers for the real estate sector. It is in this context that the current real estate scenario in India needs to be understood.

SEGMENT-WISE OR PRODUCT WISE PERFORMANCE:

Revenue is recognized, when the company satisfies a performance obligation by transferring a promised good or service to its customers. The company considers the terms of the contract and its customary business practices to determine the transaction price. Performance obligations are satisfied at the point of time when the customer obtains controls of the asset.

The Segment wise performance of the Company is reported as follows:

IT Segment & SEZ

The Companys IT Segment has performed well during the year and has reported a growth of 12% from previous year. The Growth was a result of transferring a promised good or service to its customers which in the end also resulted in customer satisfaction.

The Company has signed a JDA for the development of its property situated at manikonda for construction of its SEZ unit with Pheonix Tech Zone Private Limited. The project work is in progress wherein the company is eligible for 500196 sq ft of developed property, the present litigation pending against the SEZ project before Honble Supreme court is at final stage.

Real Estate Segment

During the financial year under review the new segment of the Company has realized Rs. 1311.865 Lakhs revenue by sale of Flats.

The Company does not intend to carry on its business of Real Estate Segment in the future as it is not the core business activity of the Company.

GROWTH IN DOMESTIC MARKET:

India GDP Q1 Growth Rate Data 2020: Indias gross domestic product (GDP) declined sharply by 23.9 per cent during the April-June (Q1) period of financial year 2020-21. The GDP for the preceding January-March quarter (Q4) of 2019-20 had witnessed a growth of 3.1 per cent

INTERNAL CONTROLS AND THEIR ADEQUACIES:

The Internal Control System comprises of exercising controls at various stages and is established in order to provide reasonable assurance for:

• Safeguarding Assets and their Usage,

• Maintenance of Proper Accounting Records and

• Adequacy and Reliability of the Information used for carrying on Business Operations.

The key elements of the system are as follows:

a) Existence of clearly defined Organizational Structure and Authority.

b) Existence of Corporate Policies for Financial Reporting and Accounting

c) Existence of Management Information System updated from time to time as may be required.

d) Existence of Annual Budgets and Long Term Business Plans.

e) Periodical Review of Opportunities and Risk factors depending on the global/Domestic scenario and to undertake measures as may be necessary.

HR is the core of the company, influencing change, building cultures and capabilities. The HR processes are continuously evolving and aligning with the changing business requirements. HR is structured into the specialized business units to enable them respond to the needs of their customers and get more strategic advantage.

FUTURE OUTLOOK

As highlighted in the economic and industry review, external factors such as world economy, geo political and policy environment is likely to be a mixed bag with no net impact on performance potential. The Indian IT players have made a transition to remain relevant, skilled and strategic partners to their customers. The overall IT industry and Indian IT services business is expected to show a moderate growth trend.

To further sustain and nurture this growth potential, the Company will be taking critical new initiatives going forward. Continued investments in talent development, enhanced infrastructure and an accent on new approaches based on design thinking capability built across organizational levels will be invested during the next fiscal. Strategic mergers and acquisitions that add leverage to the

Companys growth potential will also remain on the radar. The Company is well placed to sustain its performance trend going ahead. The Company has good prospectus in the Comings financial year and management is confident of getting new projects.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

The details of Significant change in Key Financial Ratio is as follows

S.No. Particulars During year 18-19 During year 19-20 % of Change Reason for Change
1. Debtors Turnover Ratio 30.76% 24.60% -20.02% Due to increase in Turnover from Real Segment by Sale of Flats where we do not have outstanding debtors for more than 90 days.
2. Interest Coverage Ratio 1.58 3.87 144.83% Due to increase in Turnover from Real Segment by Sale of Flats resulted in overall profitability of business.
3. Current Ratio 1.86 2.15 15.20% Due to increase in current financial assets
4. Debt Equity Ratio -4.85 18.03 471.71% Due to increase in borrowings
5. Operation Profit Margin % 21.03% 50.79% 141.50% Due to increase in Turnover from Real Segment by Sale of Flats.
6. Net Profit Margin % 4.56% 36.00% 689.80% Due to deferred tax expense and income tax expense

 

By Order of the board ATHENA GLOBAL TECHNOLOGIES LIMITED
Sd/- Sd/-
M. Satyendra M.Sunitha
Place: Hyderabad Chairman & Managing Director Director
Date:27.08.2020 (DIN: 01843557) (DIN:06741426)