CG-VAK Software & Exports Ltd Management Discussions

1. INDUSTRY STRUCTURE

The global economy continues to navigate geopolitical tensions and economic uncertainty, but has shown gradual recovery in key markets. While macro challenges, particularly ongoing conflicts and tariffs by USA, the Indian tech industry is estimated to grow at over 5% in 2025, with total sector revenues expected to cross $280 billion. Indias IT industry has further consolidated its position as a global capability hub and remains among the largest private sector employers in the country.

Indian IT companies, despite facing margin pressures and evolving client demands, are deepening their focus on high-value services and expanding their digital, cloud, and AI-led offerings. Investments in artificial intelligence, cyber security, and next-generation platforms have accelerated innovation and supported global clients with digital transformation priorities. The sector now plays a crucial role in the countrys economic growth and is projected to contribute about 10% of Indias GDP by FY 2025.

Over the year 2024-25, Indian IT export revenues were estimated to have grown by about 4% with North America remaining the dominant contributor to Indias IT exports. While global clients continue to exercise caution in discretionary IT spending, the surge in demand for emerging technology skills especially in AI/ML, cloud, and data analytics has driven job creation and reaffirmed Indias leadership in global IT outsourcing. The industry is expected to maintain a growth momentum, further strengthening its position as the worlds largest technology delivery partner.

2. OPERATIONAL PERFORMANCE

During the year under review your Company has achieved a turnover of Rs.5400.73 lakhs as against Rs. 5,401.68 lakhs in the previous year. The profit after tax for the year is Rs. 891.74 lakhs as against Rs. 884.43 lakhs in the previous year. The company strengthened its focus on the offshore software services and Outsourced Product Development (OPD) market segment.

3. SEGMENT-WISE PERFORMANCE

The contributions of business from various Geographical area were: North America contributed to 81% and Rest of the world 19%.

The company has strategically increased the focus on offshore software services. The revenue Offshore Software Services is Rs. 5397.59 lakhs for the year 2024-2025 as against Rs. 5397.70 lakhs in the previous financial year.

4. OPPORTUNITIES, THREATS, RISKS AND CONCERNS

Rapid advances in digital technologies, especially GenAI, analytics, cyber security and cloud, continue to present significant opportunities for IT service providers. Businesses are accelerating their adoption of new technologies to remain competitive and to mitigate potential disruptions in their business models. We are witnessing traction across multiple service areas including Outsourced Product Development (OPD), Product Modernization, AI enablement of software products, Cloud migration, Data Analytics, AI powered solutions and Mobile Application Development. Our strong customer relationships and proven delivery track record position us to deepen value for existing clients while successfully converting new opportunities in our favor.

However, the industry continues to face intense global competition, both from established multinational players and regional firms in emerging markets. Economic headwinds, margin pressures, and increasingly sophisticated cyber threats require companies to be highly adaptive. Geopolitical events, regulatory changes, possible tariff threats from USA add to the sectors challenges.

Talent availability and retention remain ongoing challenges, with skill shortages in emerging domains such as AI, cloud, and cyber security driving up hiring costs and attrition rates. We are pro-actively scaling up skilling efforts, enhancing employee engagement, and strengthening our HR value proposition to attract and retain talent. Foreign exchange fluctuations continue to pose business risks. We are mitigating this risk through prudent hedging. Additionally, our high dependency on the North American market, which currently accounts for 81% of our business, is a risk we are mitigating by expanding our geographical market spread.

5. OUTLOOK FOR THE FUTURE

Indias IT-BPM sector experienced a growth through FY 2024-25, driven by accelerating digital transformation mandates across industries and geographies worldwide. IT Exports is projected to grow at about 4% in 2025. This would be led by AI adoption, Cloud native development, Product modernization, Infrastructure services and Cyber security services.

Foundational investments in cloud, cyber security, analytics, and digital customer experience remain top priorities for global and domestic clients. The industry is witnessing rapid migration towards cloud-native operations, expansion of hybrid architectures, and major initiatives in AI and machine learning, with majority of the businesses are expected to integrate AI into core business processes by 2025. GenAI-led productivity gains, platform engineering, and regulatory advancements especially regarding data protection and responsible AI are creating new product and partnership opportunities.

Sustainability, operational resilience, and talent access are central considerations as global organizations seek higher cost optimization and innovation velocity. The faster adoption of 5G networks and IoT expansion is driving new demand for distributed architectures and connected solutions. The sector is emerging as a global leader in high-value engineering services, SaaS platforms, and product innovation, supported by increased investments in upskilling.

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CG-VAK continues to invest in emerging technologies such as Generative AI, IoT, next-generation Cloud, and advanced Analytics platforms, along with AI-driven delivery methods. Building on our longstanding expertise in Product Engineering and Innovation, we are well positioned to win new deals and drive growth. We remain focused on achieving positive and sustainable growth in the current financial year..

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.

** 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

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 2025, the employee strength stood st at 273.

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..