Capricorn Systems Global Solutions Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company is primarily engaged in the business of software development, Business Process Outsourcing (BPO), and consultancy services in the fields of software and allied services.

During the financial year under review, the Company expanded its business operations by entering into the trading, supply, and distribution of agricultural commodities . This strategic diversification has strengthened the Company s revenue base and created additional opportunities for growth and value creation.

2. OPPORTUNITIES

The primary market for the Companys software services continues to be the United States of America (USA) . The Company expects stable demand for its services and remains committed to strengthening its relationships with existing customers while exploring new business opportunities and markets.

Additionally, the newly introduced agricultural commodities trading segment is expected to provide further avenues for growth and business expansion.

3. THREATS

The Company operates in a highly competitive environment and faces competition from both established domestic and international players. Key operational threats that may impact the Companys business and profitability include:

?‚? Foreign exchange fluctuations

?‚? Regulatory changes

?‚? Economic uncertainties

?‚? Changing customer preferences

?‚? Technological advancements

4. SEGMENT-WISE/PRODUCT-WISE PERFORMANCE

The segment-wise revenue breakdown of the Company for the financial year 2025-26 as compared to the previous financial year is as follows:

(Rs. in Lakhs)

Particulars	FY 2025-26	FY 2024-25
Software Services	106.70	100.81
Trading, Supply and Distribution of Agricultural Commodities	2,796.81	-
Total Revenue	2,903.51	100.81

The significant exponential increase in revenue during the year was primarily driven by the commencement of the agricultural commodities trading business. Consequently, the Company reported a profit before tax of Rs. 18.60 Lakhs during FY 2025-26, compared to a loss of Rs. 90.81 Lakhs in the previous financial year, reflecting a substantial turnaround and improvement in its overall financial performance.

5. OUTLOOK

The Company remains optimistic about the future prospects of both its software services business and agricultural commodities trading business. Management will continue to focus on business diversification, operational efficiency, customer acquisition, and sustainable growth. The Management believes that this diversified business model will contribute positively to long-term performance and profitability.

6. RISKS AND CONCERNS

The Companys performance is influenced by domestic and global economic conditions, customer spending patterns, foreign exchange movements, technological developments, and regulatory compliance changes. Pricing pressures and increased competition may also affect margins.

Management continuously monitors these variables and has implemented risk mitigation measures. No material risk has been identified that may adversely affect the Companys ability to continue as a going concern .

7. ADEQUACY OF INTERNAL CONTROL SYSTEMS

The Company has established adequate internal control systems commensurate with the size, nature, and complexity of its business operations. These systems are systematically structured to:

?‚? Safeguard corporate assets

?‚? Ensure compliance with applicable laws and regulations

?‚? Prevent and detect frauds and operational errors

?‚? Maintain accurate accounting records

?‚? Facilitate timely preparation of reliable financial disclosures

The effectiveness of this internal control framework is periodically reviewed by the Management.

8. FINANCIAL PERFORMANCE DISCUSSION

During the financial year 2025-26, the Company recorded total revenue of Rs. 2,903.51 Lakhs as compared to Rs. 100.81 Lakhs in the previous financial year. The Company reported a net profit before tax of Rs. 18.60 Lakhs during the year as against a net loss of Rs. 90.81 Lakhs in the previous year. The improvement in performance was primarily attributable to the revenue contribution from the newly introduced agricultural commodities trading business (specifically, the purchase and sale of broken rice) and improved operational performance.

9. HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

The Company views its employees as its most valuable asset and core contributor to growth and success. Various training and skill enhancement initiatives are undertaken for employee development. As on March 31, 2026, the permanent employee strength of the Company stood at 6 employees , which remained the same as the previous year. Industrial relations remained cordial and harmonious throughout the year.

10. KEY FINANCIAL RATIOS

The standard financial performance ratios of the Company and explanations for major variances exceeding 25% are detailed below:

S. No.	Ratio Formula / Description	Current Year (FY 26)	Previous Year (FY 25)	% of Change	Explanation for Variance >25%
(a)	Current Ratio (Current Assets / Current Liabilities)	5.33	0.42	1,154.63%	Significant amount received from the Rights Issue is held in Bank accounts.
(b)	Debt-Equity Ratio (Total Debt / Shareholders Equity)	NA	NA	0.00%	The Company has no outstanding debt .
(c)	Debt Service Coverage Ratio (Earnings Available for Debt Service / Debt Service)	NA	NA	0.00%	The Company has no outstanding debt .
(d)	Return on Equity Ratio (in %) ((Net Profit after Taxes - Pref. Dividend) / Equity Shareholders Funds)	0.69%	(32.99)%	102.00%	Driven by profits earned during the current financial year.
(e)	Inventory Turnover Ratio (Cost of Goods Sold or Sales / Average Inventory)	NA	NA	0.00%	There is no stock held at the end of the period.
(f)	Trade Receivables Turnover Ratio (Net Credit Sales / Average Accounts Receivable)	3.37	NA	0.00%	No Trade Receivables existed in the previous reporting period.
(g)	Trade Payables Turnover Ratio (Net Credit Purchases / Average Trade Payables)	12.73	NA	0.00%	The Company did not execute any credit purchases in the previous year.
(h)	Net Capital Turnover Ratio (Net Sales / Average Working Capital)	2.54	7.56	(66.00)%	Impacted by the significant expansion of revenue from operations.
(i)	Net Profit Ratio (in %) (Net Profit / Net Sales)	0.63%	(90.35)%	101.00%	Driven by profits earned during the current financial year.
(j)	Return on Capital Employed (in %) (EBIT / Capital Employed)	0.71%	32.89%	102.00%	Driven by profits earned and the Rights Issue executed during the year.

Return on Net Worth:

The Companys net worth increased significantly to Rs. 2,629.67 Lakhs in FY 2025-26 from Rs. 276.09 Lakhs in FY 2024-25. This change is primarily due to the equity infusion through the Rights Issue to the extent of Rs. 2,397.60 Lakhs and a return to profitability due to operational diversification.

Accounting Treatment:

In the preparation of the financial statements, the Company has strictly followed the accounting policies and practices as prescribed in the applicable Accounting Standards.

11. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to external economic factors, government policies, market developments, competitive pressures, and other parameters beyond the control of the Company.

FINANCIAL RATIOS

The key financial ratios, together with explanations for significant changes therein as compared to the previous financial year, have been disclosed in the Financial Statements forming part of this Annual Report.

Accounting Treatment:

In the preparation of the financial statements, the Company has followed the accounting policies and practices as prescribed in the Accounting Standards.

KEY FINANCIAL RATIOS
Ratio.	Formula	Current Year	Previous Year	% of Change	Explanation if >25% change
(a) Current Ratio	Current Assets/ Current Liabilities	5.33	0.42	1154.63%	Amount received from Rights issue is held at Bank.
(b) Debt-Equity Ratio	Total Debt/ Shareholder \u2019 s Equity	NA	NA	0.00%	Company has no debt.
(c) Debt Service Coverage Ratio	Earnings Available for Debt Service/ Debt Service	NA	NA	0.00%	Company has no debt.
(d) Return on Equity Ratio (in%)	(Net profit after taxes-Preference dividend) / Equity Shareholder \u2019 s Fund	0.69%	(32.99)%	102%	Profit earned during the year
(e) Inventory turnover ratio	(Cost of Goods Sold or Sales)/ Average inventory	NA	NA	0.00%	There is no stock at the end of the period
(f) Trade Receivables turnover ratio	Net credit Sales/Average Accounts Receivable	3.37	NA	0.00%	No Trade Receivables in Previous Rerpor -ting Period.
(g) Trade payables turnover ratio	Net credit Purchases/Average Trade payables	12.73	NA	0.00%	During the previous year company has not made any purchases.
(h) Net capital turnover ratio	Net Sales/Average Working Capital	2.54	7.56	(66.00)%	Due to increase of revenue from operations
(i) Net profit ratio (in %)	Net profit/Net Sales	0.63%	(90.35)%	101%	Profit earned during the year
(j) Return on Capital employed (in %)	Earnings before interest and taxes/ Capital Employed	0.71%	32.89%	102%	Profit earned during the year; and Right issued during the year.

RETURN ON NET WORTH: The Company s net worth increased to Rs.2629.67 Lakh in FY 26 from Rs.276.09 Lakh in FY 25, with a change in Return on Net Worth primarily due to increased in equity by issue of rights to the extent of 2397.60 Lakhs and increase in profitability during the year due to diversification of operations.