Baron Infotech Management Discussions

Industry Structure and Development

In 2022-23, India renewed its tryst with the recovery that had commenced in previous financial years with the abatement of the Covid 19. Supported by continuing fiscal measures and congenial financial conditions engendered by monetary, regulatory and liquidity initiatives undertaken by the Reserve Bank, Indias GDP growth accelerated to 6.1% in the January to March 2023 quarter, lifting the economys uptick in 2022-23 to 7.2% from the 7% estimated earlier, according to the provisional national income data released by the National Statistical Office (NSO), the Gross Value Added (GVA) in the economy is reckoned to have risen 7% in 2022-23, compared to 8.8% in 2021-22, with manufacturing GVA growth sliding to just 1.3% from 11.1% a year ago, despite a 4.5% rebound in the final quarter after six months of contraction. The agricultural GVA grew 4% up from 3.5% in the previous year. The financial, real estate and professional services sectors saw their GVA grow 7.1%, compared to 4.7% in 2021-22. The GVA of the trade, hotels, transport, and communication sectors as well as services related to broadcasting grew 14%, marginally faster than in the previous year.

Exports of goods and services accounted for 23.5% of GDP, the highest since 2014-15, while private consumption hit the highest level since 2006-07 at 58.5% and gross fixed capital information, reflecting a sustained increase, is at the highest point since 2013-14 at 34% of GDP" by the Chief Economic Advisor. GVA from the employment-intensive construction sector grew 10% in 2022-23 from 14.8% in 2021-22. Mining and quarrying GVA growth slowed to 4.6% from 7.1%. Electricity, gas, water supply and other utility services GVA rose 9% only slightly slower than 9.9% in 2021-22. Public administration, defence and other services GVA grew 7.2% in 202223, compared to 9.7% in the previous year.

Business Outlook

The industry in India has experienced a rapid growth and has been a major contributor to the countrys GDP. It has consistently registered strong growth rates and has been a significant source of employment generation. The industry offers a wide range of services including software development, IT consulting, system integration, application management, infrastructure services, testing and quality assurance and business process outsourcing (BPO). India is globally recognized for its IT and BPM capabilities. The country has a large pool of skilled IT professionals who are proficient in various technologies and programming languages. Indian companies have been successful in delivering high-quality IT services at competitive prices, making them preferred partners for global clients. India is primarily export-oriented, with a significant portion of its revenue coming from overseas clients. It serves clients from diverse sectors such as banking and financial services, healthcare, retail, manufacturing, telecommunications, and more. India has several prominent IT hubs, with cities like Bengaluru, Hyderabad, Chennai, Pune, and Gurugram (near Delhi) being major centers for IT and BPM activities. These cities have a robust technology infrastructure, presence of IT companies, and a supportive ecosystem for innovation and growth, the Indian government has implemented policies and initiatives to support the growth of the IT and BPM industry.

This includes incentives for IT exports, tax benefits, infrastructure development, skill development programs, and initiatives like Digital India and Make in India, which aim to promote digital

transformation and technology adoption across sectors. India has a large pool of skilled IT professionals including software engineers, data scientists and IT project managers. The industry actively focuses on continuous skill development to stay updated with the latest technologies and trends. Many IT companies have their own training programs and collaborate with academic institutions to bridge the skill gap. The Indian IT and BPM industry has witnessed a growing focus on innovation and entrepreneurship. Startups and tech incubators have emerged, fostering innovation in areas like artificial intelligence, blockchain, cloud computing, and cybersecurity. The industry faces certain challenges, such as increasing competition from other countries, rising labor costs, data security concerns, and the need to continually upgrade skills to stay relevant in a rapidly evolving technological landscape.

However, demand is expected to increase for services around digital channels, collaboration and workplace transformation, online learning, and workforce analytics. Companies are also expected to invest more towards building operational resilience, leveraging analytics, intelligent automation, cloud, and cyber security.

Barons aim to optimally utilize its resources to grab all the possible opportunities for achieving the end results of the organization in the short run and to cater to the current needs of the market, while ensuring long-term sustainability in the areas of Software Development and Technology Services.

Performance of the Company

During the year 2022-23, Baron reported revenue of Rs.6.58 lakhs as against Rs. 12.41 lakhs in the financial year 2021-22. The Net Losses of the Company are Rs. 132.82 Lakhs as against the loss of Rs.31.14 lakhs in the financial year 2021-22.

Though the Company has been unable to carry on its operations seamlessly due to lack of software orders, Baron stays committed to its endeavor in exploring various business avenues to improve its performance and emerge as a profitable organization.

Opportunities, Threats, Risks, and Concerns

While the domestic market shows signals of increased IT spend by the government agencies, only large operators of the industry are able to address these big-sized opportunities since they have the capacity built-up with good cash reserves. Even multinational IT players are in the race to take up large deals which require substantial investments. As a result, smaller companies with limited or scarce resources certainly continue to remain handicapped and at a disadvantageous position, thereby facing difficulty in reaching their targets. Baron is one of the preys to such limitation.

The market reaction to the pandemic has been followed by rationalization of IT spend as the focus has shifted to prioritizing spending, based on cost constraints and business priorities. This has resulted in an adverse impact on the economic activity across the IT sector and shall continue to do so over the short term.

Fortunately, the Government is acting decisively to protect its businesses and people from the economic disruption caused by the pandemic. Whether through tax cuts, investment incentives or extensions to filing deadlines, the tax system has played an important role in helping alleviate the current financial and economic turmoil.

The pandemic has changed the consumption and delivery model for IT services leading to opportunities for IT service providers. For a significant number of roles in certain industry

segments, WFH is and will become the norm going forward. The focus on cyber security, network connectivity, resilience, and related business processes are opportunity areas for IT services. The digitization of channels to market are creating omni-channel opportunities which bring in additional room for both, simplification, and automation of the underlying business processes and related supply chains.

Internal Controls and their adequacies

Baron has placed various systems, commensurate with the size and complexity of its operations to have proper control over and accountability for them.

The Board of Directors of the Company have adopted various policies like Related Party Transactions policy, Whistleblower Policy and such other procedures for ensuring orderly and efficient conduct of its business for safeguarding its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records as well as timely preparation of reliable financial information.

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the statutory and secretarial auditors, including audit of internal financial controls over financial reporting by the statutory auditors and reviews performed by the management and the Audit Committee, the Board of Directors is of the opinion that the Companys internal financial controls were adequate and effective during the FY 202223.

Human Resource/ Industrial Relations

Baron believes and recognizes that Human Resource is a critical factor in the sustenance and growth of an organization, and it aims to have seamless focus on harnessing the potential of its human capacity.

The Company Baron Infotech Limited currently has 08 full-time employees, as the Company strives to establish its base in terms of operational excellence, it is committed to enhance the performance of its workforce by nurturing their talent and improving their current capability levels.

The Company has maintained cordial industrial relations during the year under review and the Board of Directors places on record its gratitude and appreciation for the sincere and efficient services rendered by all the associates of the Company.

For and on Behalf of The Board Baron Infotech Limited

Date: 07.09.2023
Place : Hyderabad Sd/-
Bharani Ganapavarapu
Chairman & Whole-time Director