1. INDUSTRY STRUCTURE
The global economy is facing the effects of the Russia-Ukraine war, record-high inflation along with persistent supply chain issues . As a result, the global economy is expected to have grown slowly and estimated at 3.4% of growth. Indian IT industry witnesses a continued revenue growth with a focus on strengthening industry fundamentals and building on trust and competencies. The IT industry in India continues to be the largest employer within the private sector. The Indian technology industry is estimated to grow at 8.3% in the FY 2023. The IT industry makes use of new technologies and platforms like cloud services, adoption of Dev Ops, IoT, AI, Machine learning to help businesses to offer better customer experience and change the way business is done. Despite the global situation, the Indian IT industry is a significant contributor to Indias GDP.
India is one of the major players in the Global IT outsourcing market and has become the worlds largest capability hub.
FY 2022-23 has been a challenging year due to Russia-Ukraine war, high inflation, economic volatility, and technological disruptions. However, opportunities in Digital Technologies continue to grow. North American market continues to be the major contributor for Indias IT exports.
2. OPERATIONAL PERFORMANCE
During the year under review your Company has achieved a turnover of Rs.5489.33 lakhs as against Rs. 3830.72 lakhs in the previous year. The profit after tax for the year is Rs. 1168.75 lakhs as against Rs. 892.28 lakhs in the previous year. The company strengthened its focus on the offshore software services and Outsourced Product Development (OPD) market segment.
Business Continuity
The company activated the Business Continuity Plan (BCP) and ensured that employees are able to work from home without diluting the quality of services offered to our clients and also ensuring the safety of employees. Currently we are adopting a hybrid working model and we have tuned our process to suit the same.
3. SEGMENT-WISE PERFORMANCE
The contributions ofbusiness from various Geographical area were:
North America contributed to 80% and Rest of the world 20%.
The company has strategically increased the focus on offshore software services. The revenue Offshore Software Services is Rs. 5485.80 lakhs for the year 2022-2023 as against Rs. 3827.11 lakhs in the previous financial year. The increase has been at 43% compared with previous year. The business from onsite services is NIL. This shift to offshore services over the years has benefited the company in many ways.
4. OPPORTUNITIES. THREATS, RISKS AND CONCERNS
New technologies are helping businesses even more in the present connected world and businesses are fast adapting to mitigate the possible disruptions in their business models. Good traction is seen in Cloud migration services, Analytics, Outsourced Product Development (OPD), Product modernization, Automation, AI and Mobile application development services. We see good opportunities from existing customers as they continually invest in the latest technology upgradation. We have built many longstanding relationships with customers and seek to deepen the same by improving the value we offer to our clients particularly on technology adoption and we expect a good growth in the repeat business we get. The sales pipeline has been growing well and this provides good opportunities for growth. There is stiff competition from many Indian and International IT companies for business. While there is no direct impact in our business from the ongoing geo-political conflict between Russia and Ukraine, the Company continues to monitor the developments. We are closely monitoring the developments as always and will be re-strategizing our business and delivery model to mitigate the risks. Our Industry is marked by high attrition rate and the prime challenge is to retain the best talent. We are trying to mitigate the risk by offering good HR practices, career growth and opportunity to work on cutting edge technologies. The company is exposed to the risks and benefits of foreign exchange fluctuations. The company is now adopting a very cautious approach in hedging the currency. High dependency on the North American market is again a risk, which we are trying to mitigate by expanding the geographical spread of our market. Currently we get 80% of our business from North America.
5. OUTLOOK FOR THE FUTURE
The IT-BPM exports from INDIA for FY 2023-24 is expected to grow inspite of the continued impact in the world economy due to the Russia-Ukraine war. New models like remote delivery, increased offshore work, new compensation structures are likely to continue and could become the new normal. Businesses worldover continue to invest in transforming their processes using emerging technologies. They look at improving resilience, agility and aim to offer personalized experiences to their customers. This provides continuous opportunities for IT service providers.
CG-VAK has successfully delivered solutions/projects in the areas like Cloud, Mobile, Social media, DevOps and Analytics. We are also investing our efforts in emerging technologies like AI, IoT and we are well positioned to capitalize on the opportunities that are thrown open due to these trends.
The Company has been investing on technology adoption, building domain expertise, innovative delivery methods in the Outsourced Product Development space that has helped in differentiating our service offerings to win deals. A positive growth is expected to continue in the current financial year as well.
6. IN ACCORDANCE WITH THE SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS 2018) (AMENDMENT) REGULATIONS, 2018, THE COMPANY IS REQUIRED TO GIVE DETAILS OF SIGNIFICANT CHANGES (AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS.
S.No Ratios | 31.03.2023 | 31.03.2022 | Remarks |
1. Debtors turnover | 46 days | 41 days | - |
2. Inventory turnover | NA | NA | - |
3. Debt Service Coverage Ration | 3.93 | 9.93 | Term Loan was taken during the FY 202122 for Purchase of Property and closed in the FY 2022-23 |
4. Current ratio | 3.61 | 1.99 | Surplus cash generated in operations invested in Liquid Funds |
5. Debt Equity ratio | 0.01 | 0.09 | Term Loan was taken during the FY 202122 for Purchase of Property and closed in the FY 2022-23 |
6. Operating profit margin | 30% | 32% | - |
7. Net profit margin | 21% | 24% | - |
8. Net Capital turnover ratio | 5 | 9 | Increase in currentAssets |
9 Return on Capital Employed | 38% | 36% | Increasing Profitability consistently |
10. Return on Equity | 28% | 29% | - |
11. Return on Investment% | |||
A. Ouoted Investments : | |||
1. Debt Mutual Fund | 6% | 6% | - |
2. Equity Mutual Fund | 14% | 37% | In line with Index. |
3. Bond UPPC-9.95% | 10% | - | - |
B. Fixed Income Investments : Fixed income from deposits with Banks | 4% | 3% | In line with Bank Interest rates |
* * Ratios are based on standalone financials. Wherever movements are not greater than 25%, they are not material
7. DETAILS OF ANY CHANGE IN NETWORTH AS COMPARED TO IMMEDIATELY PREVIOUS FINANCIAL YEAR WITH A DETAILED EXPLAINATION THEREOF
Return on Networth | 31.03.2022 | 29.01% |
Return on Networth | 31.03.2023 | 27.40% |
8. INTERNAL CONTROLS & THEIR ADEQUACY
We have a good control mechanism in place at all our departments. As we are an ISO 9001:2015 & 27001:2013 Certified Company, it has a well-matured development process in place where there is continuous enhancement of the processes in all our departments.
Every department has Performance Objectives fixed for each year and the same is reviewed every month. The Company has also a Risk Management plan in place where the potential risks are identified and a mitigation plan is also in place for each of the identified risks.
9. HUMAN RESOURCES
One of the top priorities for the company has been recruiting and retaining good talent. The company has made various HR initiatives to ensure that higher level of job satisfaction is attained for its engineers. Also the company adopts continuous skill enhancement practice for its engineers. As of 31* March 2023, the employee strength stood at 314.
10. CAUTION
The views and statements expressed or implied in the Management Discussions and Analysis are based on available information, experience and our own assessments. They are subject to alterations. The Companys actual Performance may differ due to national or international ramifications, Government Regulations, Policies, Tax Laws and other unforeseen factors over which the Company does not or may not have any control.
(By Order of the Board) For CG-VAK SOFTWARE AND EXPORTS LIMITED | |
Place: Coimbatore | G.Suresh |
Date : 11th August, 2023 | Managing Director & CEO |
DIN 00600906 |
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www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.