Cambridge Tech. Management Discussions


INDUSTRY STRUCTURE AND DEVELOPMENTS

Bringing Complex AI Models for Real-World Use

With Artificial Intelligence (AI) tools and solutions bringing the spotlight on deep learning and data analytics, technology services businesses are now required to boost their abilities to meet the demands of complex AI/ML models. The focus has shifted to ensuring that the latest technologies are provided with expertise - resulting in improved experiences, faster deployments, better productivity, and cost savings. As a result, more businesses rely on as-a- Service solutions, custom app development, DevOps, Machine Learning (ML), and cloud solutions as fundamentals.

The vision of businesses in the technology services landscape has broadened beyond just deploying AI and ML models. It has evolved to finding ways of deriving last-mile value from operations, delivering sophisticated AI/ML models for real-world use cases and applications, and boosting human productivity. This is where operationalizing AI assists businesses -- to leverage state-of-the-art technology and solution stacks to enhance efficiency, cut costs, add visibility, and accelerate deployments.

Why Businesses Need Operationalizing AI

There are several competitive benefits to operationalizing AI. With infrastructures, applications, and environments relying more on deriving value from sophisticated AI technologies, businesses need expert assistance to meet rapidly changing demands. They need the right strategies and solutions that meet their unique requirements while staying relevant for their operations for a sustained period. They need help with continuously deriving value, productivity, and efficiency from AI solutions.

This is where operationalizing AI can help. From increasing revenues and margins through faster and more seamless deployments to improving customer experiences, bringing AI models has been helping drive business goals. It has also been powering businesses to fast-track innovation, build scalability, boost visibility, enhance productivity, and bring flexibility to their operations?pillars that have become critical in transformation journeys. With its ability to power real-time analytics, operationalized AI has also been helping businesses optimize their operations to bring intelligence to them.

What Businesses Need in the Current Tech Landscape

Although operationalizing AI has taken the spotlight to become one of the most critical methodologies for businesses across industries, it comes with challenges that are not easy to solve.

Over the year, we found that enterprises struggled with three different phases of operationalizing AI - data integration, model development, and production deployment. The process of adopting operationalizing AI required them to bring a blend between legacy infrastructure and modern cloud and hybrid infrastructure that can derive value, offer accurate predictive insights, and help AI deployment for real-world use.

In this scenario, companies need a partner who can understand how the market is changing and break down the gaps with the right data lifecycle approach, technologies, and on-premises and cloud technologies expertise to help them derive value from their AI journey. This is why our focus, over the last three years, has been to help companies operationalize AI better and more seamlessly while working with solutions that facilitate real-world applications.

The State of Operationalizing AI

How Businesses Are Applying AI Today

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Al-Powered Platforms

These provide tools and environments, from edge to cloud, for developing AI software like built-in algorithms, templates, and drag-and-drop facilities.

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Machine Learning Applications

A general class of programs and software that can learn from data and previous interactions with the software.

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Chatbots

Conversational AI programs that achieve realistic and real-time dialogue with users.

Deep Learning Software

Programs that perform speech recognition, image recognition, and other complex functions based on sophisticated algorithms.

Where the Future of Operationalizing AI Would Take Businesses

With sophisticated AI/ML models and large language models (LLMs) bringing in many applications with continuous deep learning processing and data analytics, businesses must look at how to enable these solutions for real-world applications.

For businesses, monitoring and reevaluating existing processes helps prepare their operations for the future. By operationalizing AI, enterprises can deploy applications faster, implement intelligent monitoring for faster insights, get real-time feedback, and improve business lines and operations. Furthermore, Robotic Process Automation (RPA) will reduce the time to complete repetitive tasks, making strategies less cumbersome and more effective.

Getting a clear view of the customers minds can build insights and help businesses make real-time decisions to improve their experiences. Using AI, mobile apps, and other mediums will allow enterprises to realize what users want. On the other hand, data-driven insights lead to personalized solutions and improved interactions.

There will be more people behind AI solutions. As a result, the interactions will be in sync with AI machines. The collaboration will lead to successful engagements and better exposure. Future devices will have more data to learn from, which will eventually help them implement decisions faster and more effectively.

In the coming few years, businesses that have yet to show interest in deriving value from AI solutions will start focusing on operationalizing AI to stay competitive with faster deployments and drive their own business goals with it. This will create opportunities for more competition and improved business processes.

Cambridge Technology:

Driving Resilience, Agility, Scalability, and Innovation with AI

Businesses have accelerated the pace of their digital and AI transformation journeys. What was a choice until three years ago has rapidly become a necessity. But for those embarking on the transformation journey, the road to becoming an AI-first, mobile-first, or digital-first business can get complicated. From the proper infrastructures and approaches to suitable applications and innovation, several factors define the success of the transformation.

An intelligent and creative approach is what we put into action when we operationalize AI for enterprises. Very few companies have deployed AI at scale, and most AI projects still need to be put in pilot mode. Hence, our mission has been to set AI in motion for organizations that see potential in this omnipresent technology. Operationalizing AI is different from standard software release. It differentiates from build/test/deploy model. Most organizations pushing forward AI discover key challenges in establishing guardrails around fairness, accountability, and transparency.

Thats where our focus has been - to help businesses of all sizes, across industries and geographies, simplify not just AI but their cloud and digital journeys with tailor- made services and solutions that help them reach their goals effectively. With decades-long global technology services company expertise, we help businesses solve complex challenges with intelligent services. Ranging across domains, we bring in the goodness of AI, machine learning, data engineering, SaaS, and DevOps with strategic workshops, ready-to-deploy solutions, and straightforward implementations.

Headquartered in India with marketing and support from the US, we pride ourselves on partnerships with experts like AWS, Confluent, Google, Oracle, Atlassian, and many more to give our customers the best technology in the market. We believe in excellence as a differentiator. This is why we have competencies in niche technologies from AWS. We bring certainty to delivery standards while helping customers scale up quickly to create a digital workspace, embedding resiliency, continuity, and security.

Service Offerings

Recognized as a thought leader with ISO/IEC 20000-1: 2018, ISO 9001:2015, and CMMI Maturity Level 5 certifications, our gamut of end-to-end services in AI, data, applications, infrastructures, and the cloud can help with every unique, complex challenge. Our services, solutions, and over 500 employees transform businesses for a changing world with strategic workshops to ready-to-deploy solutions.

Application Services

As an end-to-end service provider, we help customers design, build, and deploy robust applications that help unlock the true potential of business with an AI-led approach. We enable companies to navigate legacy or SaaS applications complexities to drive measurable performance and growth with an agile methodology and innovation at the core of application lifecycle. We help create custom apps that drive personalization, engagement, and user experience while accelerating time-to-market.

Infrastructure and Cloud Services

We help businesses fast- track digital transformation and migration with services that cover the entire IT infrastructure stack with AI and automation. Modernize client IT infrastructure by designing, managing, migrating, and monitoring them better with the agile and DevOps processes. Get complete compliance and governance support for accurate infrastructure and cloud deployment across all environments, embedding best practices and business continuity. Make clients cloud accessible, scalable, agile, efficient, reliable, secure, and flexible with 24/7 global cloud management services, including private or public cloud like AWS, Google, or Microsoft Azure.

AI and Data

We help businesses simplify, modernize, and automate processes with machine learning and data-backed personalization that embed business intelligence with AI. We help imbibe transparency, visibility, and value with an AI-first approach through AIaaS models across various consumption models and hybrid multi-cloud architectures. With pre-built and pre-integrated AI solutions and ML models, we enable businesses to build, deploy and configure solutions faster, improve process automation, detect anomalies, and get data-driven insights.

Internet of Things (loT)

We help businesses bring intelligence to their connected devices and drive business value with services that process IoT data faster to get real-time, AI-driven analytics. With solutions and services to perfect IoT product design, data pipeline, firmware engineering, IoT development, and analytics, we help businesses simplify integrations and management to redefine customer experiences. We help cut wastage, costs, and the time to complete manufacturing cycles with Industrial IoT (IIoT) solutions that simplify operations, increase visibility, and boost innovation.

Our Core Expertise

Artificial Intelligence

Machine Learning

Data Engineering

Data Analytics

loT Services

Cloud Migration and Transformation

AWS Well-Architected Review DevOps

SaaS/Custom Apps

Mobility

IAM Services

Focus Industries

There is no guarantee that old businesses will survive. On the other hand, new companies may need more tools or expertise to conduct effective transformations. They are the have-nots and will need support from experts who have experience across domains and industries.

We are transforming businesses across multiple verticals like energy/industrials, manufacturing, life sciences & pharmaceuticals, banking and financial Services (BFSI), and security/access management.

1. Energy/Industrials

• From how energy is produced and transmitted to how it is consumed, AI can help transform the energy industry to match the new, rising demands. For instance, about 40% of total US energy consumption is by the residential and commercial sectors. Advances in the AI and smart grid infrastructure will see potential challenges in the energy sector getting resolved. Additionally, powerful computation models can help reduce dependency on energy, availability, costs, and consumption.

• We proudly serve one of the worlds most potent energy management and automation specialists in the energy vertical.

2. Life Sciences

• Using transformative technologies to understand the complexities of various data from areas like clinical research, plants, and animal genomics needs innovative approaches for understanding and treatment. With AI, the time spent making a drug discovery can be significantly reduced by migrating to virtual trials to detect patterns and anomalies.

• We are a global pet nutrition and nutrigenomics leader in this vertical.

• Creating engaging experiences for various stakeholders by extending workflows across the supply chain, clinical and financial processes without systems or low code platforms.

• Operationalizing AI by integrating SAP and non-SAP data onto the Google Data/AI platform creates loopback analytics with a system of action interfaces.

3. Banking, Financial Services & Insurance (BFSI)

• We are a US-based pioneering platform in building cross-border electronic trading infrastructure to enable global institutional flows and provide a unique distribution and regulatory network for capital raising in international markets.

4. Security/Access Management

• The yearly internet traffic is expected to reach 120 zettabytes, equal to 328.77 GB per day, in 2023. It presents a huge opportunity to increase collaboration and manage information better with AI in data storage, fraud detection & prevention, compliance reporting, risk management, and several other areas.

• We serve one of the worlds largest companies in storage and information management solutions in this vertical.

Highlights

1. Strategic Importance to AWS

• We launched our cloud practice in the 1st quarter of 2010 and, over the years, have built its expertise across the AWS platform. As the AWS platform grew, so have our capabilities. Since then, we have consistently kept advancing with Azure, Google, and Oracle as strong strategic cloud partners.

• Our capabilities span a broad set of services complementary to the AWS (also Azure, Google, and Oracle) platform by building practices that support Application Development, DevOps, Cloud, Managed Services, Big Data, Analytics, AI/ML, and IoT.

• Our cloud-managed services on AWS are supported by a 100% AWS-certified team of IT professionals.

• Our workforce includes over 40 engineers with AWS professional certifications in SysOps and DevOps.

2. Robust Partner Ecosystem For Better Solutions

We have strengthened our partner ecosystem by completing one year of partnership with Tricentis. Together, this ecosystem provides access to innovative solutions to its customers for solving problems better and more effectively.

3. Culture

We take pride in nurturing a culture of growth and learning while helping employees maintain a work-life balance. To this

effect, we have been reopening office spaces during the year while giving employees the freedom of a hybrid work environment.

Additionally, we have conducted several virtual activities to boost employee engagement to help keep the collaboration

spirits up.

4. Focused on the US market - Presence in India, the US, the Philippines, & Malaysia

• In line with providing its global customers access to a 24/7 development cycle, we have expanded our presence across the USA (Atlanta, Boston, Kansas, and Louisville), India, and the Philippines.

• We realize the significance of trained and skilled employees and have invested heavily in training employees through our competency centers in India and the US.

5. Certifications

• Attainment of ISO 20000-1:2018 certification validates that we help establish, implement, maintain, and continually improve a service management system (SMS)

• Attainment of ISO 9001:2015 for quality management system

• Attainment of CMMI Maturity Level 5 certification

• Awarded ISO/IEC 27000: 2013 certification in recognition of our IT Service & Information Security Management excellence.

• Attainment of ISO/IEC 27000: 2013 certification validates our continued efforts toward ensuring data safety and complying with the highest security standards.

Our client base of established market players encompasses the US, Europe, and Asia. Our service solutions have received some of the highest industry certifications. We have restructured and retooled capabilities to position ourselves as a market leader in AI and Data Management to focus on higher-margin service solutions.

The client ecosystem is changing at a rapid pace. Our trained employees, deep delivery capabilities, technological expertise, and customer interests have established a strong foundation over the years, which has resulted in exciting new projects and opportunities.

Despite changing ecosystems, the company is committed to safeguarding the workforces health and continues recruiting the best talent. The clients are maintaining business as usual. Today, our customers want to invest in technology to approach the future with a competitive edge.

The long-term objective is to create transformative business models and build real value for our customers, employees, and shareholders.

THREATS, RISKS & CONCERNS

The potential threats and risks are usually aligned to changes in the external environment, such as changes in the technology/ customer preferences/business dynamics or finding and retaining the right talent. We are well-positioned to minimize the potential identified threats and risks, and the way we do this is detailed below:

Changing Technological Trends

With the rapid advancements in technology today, it becomes imperative for the service provider to keep pace and adapt to the learning curve. We constantly endeavor to stay ahead of the curve by building capabilities that meet our customers current and future needs.

Training

With us, all employees undergo a relevant set of training imperative to serve the existing and future business needs. This helps greatly minimize the risk of technological change.

Attracting and Retaining Talent

Finding and retaining the right talent could challenge a business like ours. The dynamic nature of technology, increasing demand from clients, etc., warrants us to focus on finding the right talent and their retention for its existence and delivering sustainable growth. Hiring the best of the breed talent forms the core belief at Cambridge Technology.

Financial Risk

We are exposed to market risk (fluctuation in foreign currency exchange rates, price, and interest rate), liquidity risk, and credit risk, which may adversely impact the fair value of our financial instruments. We assess the unpredictability of the economic environment and seek to mitigate potential adverse effects on the Companys financial performance. The details related to financial risk management are provided in Note 35 of the Standalone Financial Statements, which form part of the annual report.

Exchange Rate Risk

Foreign currency risk is the risk that the fair value or future cash flows of exposure will fluctuate because of changes in foreign exchange rates. Our exposure to this risk of changes in foreign exchange rates relates primarily to the trade/other payables, trade/other receivables, and derivative assets/liabilities. The risks primarily relate to fluctuations in US Dollars against the functional currencies of the Company. The Companys exposure to foreign currency changes for all other currencies is not material. We evaluate the impact of foreign exchange rate fluctuations by assessing its exposure to exchange rate risks.

Employee Benefits - Risk Exposure

Through its defined benefit plans, we are exposed to several risks, the most significant of which are interest rate risk, salary inflation risk, and demographic risk. Note 32 of the Standalone Financial Statements provides the exact details which form part of the annual report.

Competition

The IT services industry is intensely competitive with local and MNC players, each with a sizable presence in the market. Competitive pressure could adversely affect service pricing strategy, impacting growth and profitability. We have developed deep domain knowledge and delivery capabilities with a skilled workforce to remain competitive over the years.

FINANCIAL AND OPERATIONAL PERFORMANCE

CONSOLIDATED PERFORMANCE

(In Rupees Crores)

Year

2022 - 23 2021 - 22 Change (in %)

Revenue from operations

181.99 112.24 62.14

Total Expenses

174.75 102.52 70.46

Profit Before Tax

10.17 11.76 (13.51)

Profit After Tax

8.17 9.80 (16.63)

Total Comprehensive Income

11.76 10.65 10.43

Reserves & Surplus

79.15 65.76 20.37

EPS

4.15 4.99 (16.84)

a. Revenue

Revenue increased by 62% to Rupees 181.99 crores ("cr”) for the year ended 31st March, 2023 as compared to Rupees 112.24 crores for the same period last year.

b. Profit Before Tax

Profit Before Tax decreased by 13.51% at Rupees 10.17 cr for the year ended 31st March, 2023 as compared to Rupees 11.76 cr for the same period last year.

c. Profit After Tax, Comprehensive Income & Reserves and Surplus

Profit After Tax decreased by 16.63% to Rupees 8.17 cr for the year ended 31st March, 2023 as compared to Rupees 9.80 cr for the same period last year, whereas, Total Comprehensive Income increased by 10.43% during the FY 2022-23. Reserves and Surplus have increased from Rupees 65.76 cr in Fy 2021-22 to Rupees 79.15 cr in FY 2022-23.

d. Expenditure

Total Expenditure increased by 70.46% to Rupees 174.75 cr for the year ended 31st March, 2023 as compared to Rupees 102.52 cr for the same period last year. Out of the above, Employee benefits expense stood at Rupees 103.58 cr in FY 2022-23 as compared to Rupees 60.19 cr for the same period last year.

STANDALONE PERFORMANCE

(In Rupees Crores)

Year

2022 - 23 2021 - 22 Change (in %)

Revenue from operations

63.06 46.48 35.67

Total Expenses

60.45 43.71 38.30

Profit Before Tax

4.96 3.76 31.91

Profit After Tax

3.56 2.06 72.82

Total Comprehensive Income

3.40 2.20 54.54

Reserves & Surplus

26.30 22.92 14.75

EPS

1.81 1.05 72.38

a. Revenue

Revenue increased by 35.67% to Rupees 63.06 cr for the year ended 31st March, 2023 as compared to Rupees 46.48 cr for the same period last year.

b. Profit Before Tax

The PBT increased by 31.91% at Rupees 4.96 cr for the year ended 31st March, 2023 as compared to Rupees 3.76 cr for the same period last year.

c. Profit After Tax, Comprehensive Income & Reserves and Surplus

Profit After Tax increased by 72.82% to Rupees 3.56 cr for the year ended 31st March, 2023 as compared to Rupees 2.06 cr for the same period last year, whereas, Total Comprehensive Income increased by 54.54% during the FY 2022-23. Reserves and Surplus have increased from 22.92 cr in FY 2021-22 to Rupees 26.30 cr in FY 2022-23.

d. Expenditure

Total Expenditure increased by 38.30% to Rupees 60.45 cr for the year ended 31st March, 2023 as compared to Rupees 43.71 cr for the same period last year. Out of the above, employee benefits expense stood at Rupees 41.61 cr in FY 2022-23 as compared to Rupees 33.77 cr for the same period last year.

The details of the financial performance of your company are appearing in the Balance Sheet, Profit & Loss Account and other financial statements forming part of this Annual report.

SEGMENT INFORMATION

The primary business segment of your Company is Information Technology Services. The primary activity as per NIC code is Computer programming, consultancy and related activities.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your companys board and management team monitor and make enhancements to your companys systems for internal control and risk management on an ongoing basis. Your companys efforts towards this go beyond what is mandatorily required, with active monitoring and review to ensure adequacy of control systems and to identify potential risks as well as recommend or implement measures to mitigate them.

Your Company has a proper and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, reported and recorded correctly. Your companys internal control system is adequate considering the nature, size and complexity of its business. Your companys internal control systems provide, among other things, reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against significant misuse or loss of company assets. These also enable your company to adhere to procedures, guidelines, and regulations as applicable in a transparent manner.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

Your company is committed to create an environment of learning and development, openness, promote internal talent and build an appreciating culture and transparent communication. Your Company has created platforms for recognizing and motivating employees for the good work they do in the organization. Sound human resource development policies of your Company ensures that each employee grows as an individual and contributes to the performance of your Company. It also works towards building a work culture aimed at achieving higher performance orientation. Recognition and Appreciation culture in the Company has been further strengthened. It also continues to build on the engagement level of employees.

Our employees are our most important and valuable assets. All your Companys policies are focused towards a healthy, happy and prosperous work environment for its employees and

thereby also fulfil the aspirations of the people at work. The key elements that define our culture include professional working environment, training and development, and compensation.

During 2020, the Company was able to seamlessly transition to work from home protocols without effecting its operations and services. With effect from November 11, 2022, the Company has moved its office to its own premises situated at Capital Park, 4th Floor, Unit No. 403B & 404, Image Gardens Road, Madhapur, Hyderabad - 500 081, Telangana and since then the Company is encouraging its employees to return to office in hybrid mode.

There are no material developments in Human Resources/Industrial Relations front during the period ended March 31, 2023. Your Company had 364 permanent employees on its rolls as on March 31, 2023 when compared to 258 permanent employees as on March 31, 2022. The headcount of the Company along with its subsidiaries is 622.

FINANCIAL RATIOS

Following are ratios for the current financial year and their comparison with preceding financial year, along with explanations where the change has been 25% or more when compared to immediately preceding financial year:

STANDALONE:

Ratio Description

March

31,

2023

March

31,

2022

Change

(%)

Explanation

1 Debtors Turnover

32.48 26.74 21.44

-

2 Inventory Turnover

NA

-

3 Interest Coverage Ratio

5.06 7.74 (34.71)

The company interest coverage ratio has been decreased to 5.06 from the previous year of 7.74 due to new foreign currency debts are increased and cost of resultant the decrease in the interest coverage.

4 Current Ratio

1.67 1.14 47.39

The current ratio is 1.67 for the year when compared to previous year of 1.14 due to increase in short term liabilities during the year.

5 Debt Equity Ratio

0.40 0.33 21.21

-

6 Operating Profit Margin (%)

9.45 9.09 4.03

7 Net Profit Margin (%)

7.87 8.08 (2.60)

-

8 Return on Net Worth (%)

7.75 4.84 60.13

The return on net worth has been increased to 57.75 from 4.84 in the current year due to increase in the proportion profit margin.

CONSOLIDATED:

Ratio Descriptio n

March 31, 2023 March 31, 2022 Chang e (%)

Explanation

1 Debtors Turnover

3.30 3.97 (16.88)

-

2 Inventory Turnover

NA NA

NA

3 Interest Coverage Ratio

4.61 20.90 (77.94)

The company interest coverage ratio has been decreased to 4.61 from previous year of 20.90 due to increase in short and long term debts in Holding company and well in subsidiaries.

4 Current Ratio

2.44 2.62 (6.87)

-

5 Debt Equity Ratio

0.58 0.39 48.71

There is an increase in debt equity ratio to 0.58 when compared to 0.39 last year as the long-term debt has been increased at group level.

6 Operating Profit Margin (%)

44.88 10.80 315.55

The operating profit margin has increased from 10.80 to 44.88 as main subsidiaries has done well resulting to increase in core business profits when compared to the previous year.

7 Net Profit Margin (%)

5.59 10.47 (46.61)

The net margin has been decreased from 10.47 last year to 5.59 in the current year due to increase of indirect cost when compare to previous year.

8 Return on Net Worth (%)

8.25 11.47 (28.07)

The return on net worth of the Group has been decreased to 8.25 when compared to last year 11.47 as group did well.

CAUTIONARY STATEMENT

Certain statements in this report or elsewhere in the Annual Report may contain statements concerning Cambridge Technology Enterprises Limited and its growth prospects, expected financial position, business strategy, future development of the companys operations, general economy, industry structure and other developments that are individually and collectively forward-looking statements.

Such forward-looking statements are not guarantees of actual results, future performance or achievements and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, changes in government policies or regulations of India, changes relating to the administration of the company, the companys ability to successfully implement its strategy, the Companys future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Companys market preferences and its exposure to market risks, as well as other risks.

The Companys actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this report. The Company assumes no obligation to update any forward-looking information contained in this report.