cranes software international ltd Management discussions


(Annexure to Boards 2022-23 Report)

(Note: This discussion covers the consolidated financial performance of Cranes Software International Limited)

Overview:

Cranes Software International Limited (NSE: CRANESSOFT, BSE: 512093), is a global scientific & engineering products, services and solutions provider. The Companys business interests have focused on software products (proprietary products and product alliances), Solutions (Business Data Analytics & Engineering Services) and Services (training in niche domain areas). The company has been dedicated to excellence and recognized leadership in technical software products and training services, with a focus on product development, consulting, distribution and training.

Global Business Environment:

Despite challenges posed by supply chain disruptions, inflation, talent shortages and geopolitical uncertainties, Gartner projects Worldwide IT spending to reach $4.4 trillion in 2023 (a 4% increase from 2022). Businesses are expected to accelerate IT investments, particularly in areas like cloud computing, analytics, security and seamless customer experiences. As IT talent challenges lead to more competitive salaries, Technology Services providers are expected to fuel growth through 2023-24 with higher prices. IT spending on hold in early 2023 due to the Omicron variant and subsequent waves is getting freed up in most sectors. Gartners forecasts show software spending growing 9.8% to $674.9 billion in 2023 and IT services is forecast to grow 6.8% to reach $1.3 trillion.

Indias current market conditions continue to reflect growing recovery from the pandemics economic impact, especially in the industrial and manufacturing sectors and from disruption in the services segment. Focused businesses in the IT sector, particularly the Ed-Tech segment, have rebounded well by learning from, anticipating, and leveraging the new business realities stemming from lockdowns, remote-working, and changed expectations of business stakeholders. Education & Learning now globally present a $5.5 to $6 trillion dollar market and Ed-Tech has become a large and rapidly growing part of the overall education market, with forecasts of close to $200 billion in revenue today and growing at about 15% annually. Consequently, public and private valuations of Ed-Tech businesses are being made in the range of 10X to 20X of revenue.

Cranes Software: Business Initiatives & Structure:

The Company has focused in the post-Pandemic era on core business strengths and processes based on its legacy, recognition, competencies, and customer relationships. Over the past year, Company Management has continued to rely on strategic planning and actions, prioritized capital infusion, and business collaborations to make good progress in operational effectiveness, margins and market reach. Cranes has successfully tackled the Pandemic-related slowdown and achieved significant stability and growth by applying its core Ed-Tech legacy and growing Hybrid Training strengths to emerging business and market realities.

Core Business highlights for FY 2022-23: -

? The Varsity Business continued its sharp focus on three verticals - Retail/Students; Working Professionals; & Corporates, while growing its collaborations with Knowledge Partners and maintaining necessary presence in the Colleges/Universities segment.

? About 3,020 college students, engineers, & working professionals from across India & abroad were trained in Placement-Oriented Programs, Internships, Technical Workshops & Reskilling/Upskilling courses.

? FY 2022-2023 saw a major breakthrough for Providing training to 750 staff of Government of California by signing the agreement.

? Collaborated with IT-ITes SSC NASSCOM to launch a Boot Camp program in Embedded Software Engineering! This is a great opportunity to leverage our expertise and knowledge to help train and develop the next generation of embedded software engineers.

? An Exemplary mega event for a perfect learning was organised for 5 days for 1000 students from VIT Bhopal through a multi-track hands-on program.

? Kickstarted college training Vertical post-pandemic with a new team! Successfully delivered trainings to 1400 + college students. Major colleges included BNMIT, Acropolis, Reva, SJCIT, Atria. Delivering effective training programs to educational institutions is a critical component of preparing students for successful careers in their chosen fields.

? Stated a new course - Diploma in Business Analytics for non-engineers with placement assistance. This is a great initiative to train BA students and place them in BFSI sectors. Placed students in Bosch.

? Strengthened our engagement as Knowledge partner with Career Labs.

? Over 1,168 participants were trained under the corporate segment Conducted series of training programmes for top Corporates like Bosch, Veoneer, UST Global, Thales, Tech Mahindra and BEL. This is a significant achievement and a testament to our expertise and reputation in the field of training and development.

? Close to 400 students were trained in Engineering courses including Electrical/Electronics, Computer Science, Aeronautics, Automobile, Mechanical and Instrumentation.

? 154 students were trained and placed in the Automotive, Manufacturing, Engineering, Semiconductor, Aerospace, Telcom and IT sectors with prestigious businesses including startups, mid-level & large businesses, and MNCs.

? Hiring partners included high profile firms like Accolade, BORQS, Cyient, Genpact, Great Wall Motors Harman, IAST, Infeneon, Johnson Controls, L&T, LG Soft, LTTS, Luxoft, Marelli, Mindteck, Mindtree, Mirafra, NIC, Onward Technologies, Robert Bosch, Tech Mahindra, Tosall, Triphase and ZF Technology to name a few.

? Expanded relationships to cover businesses like BEL, C-DOT, Tata Advanced Systems, Talodyn, Techademy, Bosch Global, CTACT, Allegis, Suprajith, U R Rao Satellite Centre, Park Controls, LRDE - DRDO, L&T and Sharp Software.

? Successfully expanded the Varsity Hybrid Training Model based on Onsite & Online delivery, with good leverage of the proprietary Cranes Online Training platform.

? Catered to unique needs of working professionals by Weekend & Evening programs and targeted Placement for Reskilling & Upskilling courses.

? Built upon the Train-Hire-Deploy model with recognized successes for companies like LTTS, Tata Elxsi & Umlaut.

Opportunities & Threats:

Over the past year, our Company Management successfully kept the business stabilized and growing despite the wide-spread impact from the pandemic crisis. Management simultaneously continued the push for debt-free & litigation-free settlement of its financial burden from the 2007-08 global downturn. Cranes business IP and assets were creatively leveraged, and capital was strategically infused to stabilize core business operations, while also settling institutional debts, financial liabilities to employees, vendors and partners, and multiple legal, statutory and compliance cases.

Cranes Management actions have preserved the Cranes business, goodwill and legacy for the benefit of our valued stakeholders. Over the past year, OTS resolutions have been achieved for past debts with major banks; one final pending bank loan should be resolved within a few months. The resulting stability and growth of the core Cranes business have validated the strategic evolution of Cranes into an "Assets-Lite and IP-rich" business which strategically leverages its core competencies & legacy in Ed-Tech legacy for emerging Hybrid & Online Training demands.

On a standalone basis, the Companys Cranes Varsity division has recovered well over the past year by reinforcing its market position in the training and education market. Your company has become stabilized and also achieved growth by expanding the scope and reach of its Ed-Tech training, and our placement strengths and portfolios to meet evolving demands of students and corporates; and consolidating our Hybrid Training expertise and programs, as well as collaborations with Knowledge Partners, for growth in the expanding Online training industry. We are also addressing the unique needs of working professionals via innovative evening/weekend courses, targeted placements and novel Train-Hire-Deploy programs.

The Companys balance sheet is fundamentally strengthened by settling lingering corporate debts owed to several large, secured lenders. We have attempted hard to mitigate the large potential risk from pending winding-up and liquidation actions in litigation by CSILs FCCB holders and pending regulatory actions. Company Management is pleased that your company has strategically been moved to soon become a debt/litigation-free business.

With these strategic moves, your company is poised to actively participate with its sharpened core competencies in the globally expanding Ed-Tech market which, as noted above, is forecast at about $200 billion and growing 15% annually. We are optimistic that the stage is set for Cranes Software to build and grow upon its core Ed-Tech origins and expand this legacy!

Risk Management:

The Company has developed and adopted a Risk Management Policy. This policy identifies perceived risks which might reasonably be expected to impact the operations and possibly threaten the existence of the Company. The Company has laid down well-structured procedures for monitoring the risk management plan and implementing the risk mitigation measures. The strategic risks are taken into consideration in the annual planning process and these risks together with their mitigation plan are subject to review by the management on a regular basis. The business processes risks and the related controls are subject to internal audit and reviews.

Human Resources:

The Company continues to focus on business expansion while limiting the resources deployed to achieve such expansion. The mix of such members consists of Technology Experts, Sales and Marketing personnel.

Internal Control Systems:

Management recognizes the importance of strong internal control systems and processes to support further growth opportunities. We expect to benefit from and build upon the Companys certification under ISO 9001 standards in FY2002 and the subsequent achievements of SEICMM Level 5 during FY 2005, and ISO 27001 Information Security Management System in FY 2006 as well as SEI-CMMi Level 5 assessment for its processes.

Safe Harbor:

Certain statements in this release concerning our growth prospects are forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties, including government actions; local political or economic developments; technological risks; risks inherent in the Companys growth strategy; dependence on certain customers and business partners; dependence on availability of technical consultants and other factors that could cause our actual results to differ materially from those contemplated by the relevant forward-looking statements. The Company undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.