City Online Services Ltd Management Discussions.

(1)

(a) Industry structure and developments:

Companies in the Internet Industry operate in a highly competitive environment, subject to rapid technological change. Barriers to entry vary, depending upon the particular markets served. Internet companies operate on the global stage and results often depend upon the performance of overseas markets and currency exchange rates. Moreover, weakness in the retail economy or lower online advertising expenditures can hinder the performance of many participants. Still, long-term prospects for the industry are fairly encouraging. Trends such as increasing worldwide Internet usage, overseas expansion, and the continued popularity of online advertising ought to further benefit companies in this industry. As a result, many industry participants seem well-positioned in attractive markets. New players launching their services will further boost the market although margins in the next few years may shrink to a little extent owing to raising other costs.

Given the dynamic nature of the Internet industry, companies must innovate to remain competitive. This can simply mean offering customers new products and services. However, industry participants must also position themselves to benefit from technological developments, and the creation or expansion of markets. For example, in the search engine arena, prospects appear bright in the mobile and video markets. The continued introduction of new applications in these areas appears likely.

(b) Opportunities and Threats:

The Company enjoys goodwill from its Customers. Our Corporate objective is to create mutual long term sustainable value through a collaborative approach driven by the vision of becoming a preferred Internet choice for distinguished Clientele demanding Quality, Value for Money & Flexibility translating into a perfect Win Win for either Entities. This formula is working fine in favor of our Organisation. Additionally, we are operating in Niche business segments in the geographic locations within Telangana, AP and Karnataka State with directly taking on large companies head on. We continue to optimistically protect and retain our current base and progressively increase the sales revenue and market share moving forward. New technologies like WiFi & Free WiFI to Citizens envisaged by Governments, although may pose a little challenge to startwith, In reality these may not be any threat to us as these service offerings may have challenges from the point of view of logistics and technological obstacles and will have lots of limitations and therefore may not be commercially viable . This would in reality enlarge the usage in the market place creating a level playing field in the long run.

The Company is also exploring the business opportunity in IP TV services along with internet which supports mobiles, IPads and Setup Boxes.

(c) Segment–wise or product-wise performance:

During the year under review, the Company has recorded revenue of Rs. 12,26,11,587 and made a loss of Rs. 1,11,60,309 against revenue of Rs. 13,58,24,674 and a loss of Rs. 83,65,912 in the previous financial year 2018-19.

(d) Outlook:

In order to meet the changing market realities, your Company has been following the philosophy of providing the highest quality products and services at the lowest possible prices. All endeavours are made to achieve possible cost reduction in every area of operations. Your Companys philosophy to provide high class quality products i.e. full value for money, to consumers would greatly benefit in the long run. In the otherwise increasing cost arena, every expense, whether capital or revenue is minutely reviewed to achieve all possible savings.

The management is doing its best to forge relations with other companies and take the company forward in the new business lines. However, the outlook of the management is cautious in view of the competitive nature of the market.

(e) Risks and concerns:

The Companys products are largely intended for sale in the domestic market. Apart from normal risks as are applicable to an Industrial Undertaking the Company does not foresee any serious area of concern. The Company is obtaining adequate insurance coverage for its assets at the plant and the field locations etc. The company has no foreign exchange risk coverage due to its limited exposure. Compliance of safety requirements and norms placed by different Government agencies is a top priority of your Management.

(f) Internal control systems and their adequacy:

The system of internal control has been established to provide reasonable assurance of safeguarding assets and maintenance of proper Accounting Records and its accuracy. The business risks and its control procedures are reviewed frequently. Systems audit is also conducted regularly to review the systems with respect to Security and its Adequacy. Reports are prepared and circulated to Senior Management and action taken to strengthen controls where necessary.

(g) Discussion on financial performance with respect to operational performance:

During the year under review, the Company has recorded revenue of Rs. 12,26,11,587 and made a loss of Rs. 1,11,60,309 against revenue of Rs. 13,58,24,674 and a loss of Rs. 83,65,912 in the previous financial year 2018-19.

(h) Material developments in Human Resources/Industrial Relations front, including number of people employed:

During the year under review, the Company has undertaken extensive steps in optimizing the man power at the Registered office, Branches and Field locations. Employee/employer relations were cordial throughout the year. Measures for safety of the employees, training and development continued to receive top priorities. The Company has 55 employees as on 31.03.2020.

(i) Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios along with detailed explanations thereof :

a.) Debtors Turnover: 3.66 b.) Inventory Turnover: NA c.) Interest Coverage Ratio: (10.16) d.) Current Ratio: 0.88 e.) Debt Equity Ratio:1.50 f.) Operating Profit Margin (%): (0.23) g.) Net Profit Margin (%): (0.10) h.) Sector-specific equivalent ratios, as applicable: N.A.

(i) Details of any change in return on net worth as compared to the immediately previous financial year along with a detailed explanation thereof: Return on net worth for the year 2019-20 – (0.69) and 2018-19 (0.30). The change is due to decrease in revenue and net profits.

(2) Disclosure of Accounting Treatment:

The Company has not carried out any treatment different from that prescribed in Accounting Standards.

(3) Cautionary Statement:

Statements in this Management Discussion and Analysis Report may be "forward looking statements" within the meaning of applicable securities laws and regulations. These statements are based on certain assumption and expectations of future events. Actual results could differ materially from those expressed or implied. Important facts that could make a difference at the Companys operations include economic conditions affecting domestic demand and supply conditions, finished goods prices, changes in government regulations and tax regime etc. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of subsequent developments, information or events.