Orchasp Ltd Management Discussions.

Annexure VII

Our Business

Cybermate is a conventional IT Services rm known for its bespoke software services. Our innovative and cost-eecti ve services ensure our customers gain competitive edge and remain on par with cutting edge technologies. Our focus remains on maintaining quality standards in our key deliverables. We ensure to deliver best-of-breed technological solutions to enable our customers to meet their software development requirements. We are a public limited company based in India, and have our registered corporate oce at Hyderabad, Telangana. Our company is listed on the Bombay Stock Exchange (BSE).

Our services include, compiling and selling products for general IT use and domain specic solutions. Some of the services we provide are listed below:

• System integration services

• Network & Surveillance

• Product assembling and marketing

• Soft selling third party products

• Assembling business platforms

• Analytics

• Mobile applications

• Cloud-based solutions

• BPO

• Healthcare

• Telecom

• Engineering

• Energy and retail platforms.

We at Cybermate administer projects on web and web-related technologies. Our objective is to bring together business and technology strategies so as to focus on reorienting and refocusing on gaining ground. We rely on our industry experience and technology expertise to effectively develop products and create next-gen solutions that meet our customers evolving business challenges. Having faced quite a few challenges due to our conventional approach and services, we have conceptualized to the “Refurbish-Remodel-Revive” model, and the changing technology landscape puts us in a position to seize the opportunity and initiative.

The ways businesses are run dier from country to country and from business to business. When people nd new approaches to old problems, create solutions by combining cultural perspectives and learn to see issues from the viewpoint of others, businesses are enhanced. Despite the odds, the Indian economy emerged and was able to accelerate growth out of its own potential. Improved political reforms, reduced trade barriers, and enhanced workforce education, reduction in regulatory burden and business costs have contributed to this emergence.

Mobile innovation has taken over todays emerging technologies and thus remains the centre of huge digital transformation for organizations, both small and big. Digital technology business is outpacing traditional business growth rapidly and this strengthened Indias consumer economy and the Indian governments initiative for digitization. We entered the business of smart enterprise through a multitude of digital technologies in order to continue to provide conventional IT products, services and solutions, Internet of Things (IoT), Social, Mobile, Analytics and Cloud (SMAC), Digital and Platform.

Overview of the Industry

In FY 2018-19, the global market for software and services is estimated to have grown to $1.4 trillion. IT Services is estimated to have grown by 3.2% YoY, driven by strong growth in digital engagements, particularly cloud adoption.

Organizations across the globe are undergoing an unprecedented change and transformation in their businesses led by forces such as digital, increasing consumerization of IT, emergence of new platforms such as cloud services and increasing disruptions and competition from new-age companies. Technology access and usage has been largely democratized and mainstreamed. There has been a profound change in how technology is developed, delivered and consumed. Large multinational enterprises are thus reimagining multiple aspects of their business leveraging digital technologies and are engaging global IT services companies who can deliver high quality service on a global scale and at competitive price points. The market is shifting from traditional services to digital technologies, DevOps and as-a-service models. We believe that the IT Services industry has significant growth potential and the next wave of growth will come from digital technologies. According to the Strategic Review 2019 published by NASSCOM (the “NASSCOM Report”), “Digital” continues to drive growth (more than 30% of growth in FY 2019) and now contributes $33 billion to the overall IT industry in India. Technologies such as industrial automation, robotics, cloud, Internet of things (“IoT”), augmented reality (“AR”)/virtual reality (“VR”) and blockchain continue to fuel growth. In 2018, there was a 45% increase in as-a-service deals, according to the NASSCOM Report. Cloud platforms are driving growth in managed services for security and data platforms. Digital and automation has moved from point deployments to enterprise-wide adoption. Global IT service providers oeer a range of end to-end software development, digital services, IT business solutions, research and development services, technology infrastructure services, business process services, consulting and related support functions. According to the NASSCOM Report, IT export revenues from India grew by 8.3% to an estimated $136 billion in fiscal year 2019. The opportunities that exist for the industry are signicant..

Our Platforms

Internet of Things (IOT)

In the energy sector Natural gas is fast becoming a dominant source for industry as well as domestic sectors. The distribution, monitoring and regulation of natural gas with present day infrastructure and technology has multiple ineciencies and breakdown points.

To address the deficiencies, Cybermate has developed an IOT driven smart Meter regulating Station devices for natural gas control, supply and distribution which can provide unprecedented advantages like:

• Complete control over gas supply with instantaneous remote supply cut-o

• Immediate detection of gas leakage and safety warnings with automatic supply cut-o

• Real time gas consumption data and monitoring of gas properties

• Centralized data integration with easy automatic billing

• Theasy consumer side access to consumption information, historical trends and easy bill payment

• Theecti ve data integration and protection with legacy SAP platforms for two-way data sharing

• Minimal downtime

• Theasy integration.

Healthcare Platform (www.cyber1health.com)

Electronic Health Records (EHR) is a systematic collection of health records of individuals and patients. We were touched by a true incident that made us foray into the EHR space. An elderly gentleman was admitted into a reputed hospital for treatment. After he was discharged from the hospital, due to some medical complications he had to go to the hospitals branch in another part of the city. The doctors in this branch insisted that he undergo the same tests conducted in the main hospital recently at the earlier hospital, because neither the patient carried any reports nor the hospital branch had any access to the records. is is where she comes to the rescue, in dealing with such situations. EHR is a repository/longitudinal record which can be accessed anytime, anywhere by the customer with the following highlights:

• Diagnostic reports, prescriptions, discharge summaries and procedure summaries, medical images such as x-ray, MRI scan, CT scan and procedure videos can be stored and accessed electronically

• Entire health history of an individual including data from multiple providers is available

• Web based platform facilitates access to health records irrespective of the hospital from anywhere in the world

• Facilitates telemedicine

• Provides exclusive logins for patients, doctors and insurance companies

We have launched the pilot platform and the response has been encouraging with 10000 active users on board. Smart phone users are expected to grow to 650 million by 2020 there by increasing our scope.

Healthcare Platform (www.healsoft.in)

An all-in-one hospital management system is what CIL has versioned and built an all inclusive hospital management software system namely “Healsoft”. This was to ensure smooth and hassle free hospital management. Our software seamlessly manages all areas of hospital operations. Almost every aspect of this software is customized to enable hospitals to manage all financial , clinical and operational requirements of a hospital/clinic.

• Appointment management

• Inpatient and outpatient management

• Patient records management

• Billing and Invoicing

• Inventory management

• Revenue management

• Pharmacy

• Laboratory

• Human Resources and Financial accounting Etc HealSoft streamlines the workThow and boosts eciency by eliminating any possibility of human error, eases information availability through Cloud.

Logistics Platform (www.bharatcargo.in)

Our Logistics platform helps to make the most out of your logistics function by managing them through one technology platform. This all-encompassing platform speeds up system integration, reduces risk and improves eciency . Logistics is an integral part of operations and we focus on optimizing logistics management with respect to road transportation.

Transport operators can be broadly categorized as below:

• Small Fleet Operators (SFOs) - owning up to v e vehicles

• Medium Fleet Operators (MFOs) owning between 6 and 20 vehicles

• Large Fleet Operators (LFOs) owning typically over 20 vehicles

Road cargo is oer ed as Full Truck Load (FTL) and partial truck load (PTL).

LFOs have long term contracts and are geographically spread to source business. They also have the capability to operate through their own web presence whereas SFOs and MFOs look forward to source customers to optimize cost per trip. Domestic and business customers look out for cargo operators to optimize costs and to arrive quickly. LTL requires a wider reach and adequate infrastructure and hence CIL has a cargo platform.

This platform facilitates the SFO & MFOs interaction with SME, MSME and domestic customers to achieve their goals. In this segment of service, the customers do not hire the entire truck and the LTL service provider aggregates consignments from various clients and sends them across to the desired destination.

Market place for artsandcrafts

(www.indycrafts.in)

We have built an online one-stop shop for people who love rich Indian heritage handicrafts and handlooms that are unique in their tradition and make. Indycrafts is an extraordinary e-commerce platform where the unique skills are passed down several generations of artisans, so that they will be available to both the connoisseur and the novice for many years. We launched this platform in an eort to boost sales, and to benet the artisans in more ways than one, such as capacity enhancement, skill development, marketing of their products and employment opportunities to name a few. By doing this the small entrepreneurs are encouraged and the natural corollary to such developments would be innovation.

In order to enhance our service oeerings, our strategy focuses on bringing in concepts of automation, analytics, improving productivity with higher accuracy and to reduce costs to customers. We continue to leverage the advantage of open source technologies in providing innovative and cost-eective performance solutions.

Risk Management

Great achievements involve great risk! Hence, in order to succeed you have to take risks. Risk Management is an enterprise wide function backed by a qualified team of specialists with deep understanding of frameworks and methodologies for assessing and mitigating risks. Being mindful of our customers and investors, our company has classied risks in to some major categories.

Major Risks:

• Strategic risks arise from taking poor business decisions like substandard execution, poor resource allocation, failure to respond to changes in any given business environment.

• Operational risks are the losses resulting from failed procedures, systems or policies like employee errors, system failures, fraud or criminal activity.

• Financial risks pertain to a rm unable to meet its financial obligations. Regulatory risk is the potential material impact because of a change in laws and regulations.

• Human Capital risks pertain to potential risks related with managing human resources incorrectly.

Risk Assessment

Risk assessment is basically the identication of hazards that could possibly impact an organization, which doubts the ability to conduct business. Identifying these potential risks and providing measures, processes and controls to reduce the impact of these risks to business is risk assessment. In other words, risk identication, risk analysis, risk evaluation and risk control are the approaches we take.

The risks that the management reviews include:

• Technology Obsolescence Risk-By keeping abreast with market demands and customer expectations, your company averts technology obsolescence by timely investment in new technology, keeping pace with updates in technology, training its resources accordingly and by not being reliant on any one technology or platform.

• Human Resource Risk- Our Company maintains a resource pool by recruiting the best talents across the country, imparting training and honing knowledge and skills, creating quality work environment and providing opportunities and challenges for growth. A transparent performance based incentive system ensures motivation and prevention of brain drain from the company.

• International Exposure Risk- Thorough understanding of compliance of local laws and

• the possibility of regulatory, visa and tax complications of dier ent countries mitigates risks by engaging specialists and professional agencies with expertise in the areas of concern.

• Foreign Currencies Risk- Economic volatility across the globe, Thuctuations in major currencies and cross currency movements have a strong bearing on Indias IT industry as most of its market is overseas. As a preventive measure, your company enters into forward cover for predictable inward remittances in order to minimize risks associated with foreign currency rate Thuctuations.

• Information Security and Disaster Recovery- As per the European Unions (EU) General Data Protection Regulation (GDPR), consumers will be in charge of their online data. In addition to all the internal compliance issues, there a lot of amendments that needs to be done to the contracts to reHect GDPR standards. We are a law abiding organization and totally comply with GDPR standards and ensure the data privacy of both our vendors and clients.

The other risks CIL examines are as follows:

• Credit Risk includes creditworthiness; risk in settlement of dues by clients and provisions for doubtful and bad debts.

• Legal Risk includes Contract risk; Contractual liability; Frauds; Judicial Risk and Insurance risk

Our Risk Management Framework (RMF)

Our Risk Management Framework (RMF) allows for striking the right balance between taking risks and reducing them, because it results in adding value to the organization. An eecti ve risk management framework seeks to protect an organizations capital base and profits without hindering the growth of the organization. In other words, its about managing uncertainty and creating an environment with fewer surprises.

The RMF approach…

• A stable and structured approach to identifying and managing risks.

• Anticipation of a consistent approach to identifying, rating, mitigating, managing and monitoring risks.

• Taking good management decisions and deploying risk management policies and procedures across the board.

• An environment where the sta understands the importance of RMF and making sure to adhere to risk management policies and procedures.

• Auditing and approving risk management framework and practices of the company.

• Implementing the prescribed risk mitigation actions.

• Reporting and reviewing risk events and incidents in a timely manner.

Provision of relevant and timely information across, regular audits, provision of feedback to management, and ensuring the quality and processes are in place and are eecti ve.

Advantages of Risk management

Risk identication is critical to eecti vely manage a crisis situation. It points to all the risks involved well ahead of time without any assumptions. It helps in opportunity risks so as to be aware of the forthcoming issues. It focuses on the tasks which help on assisting the impact of business or projects. It basically is the greatest advantage of dealing with the problems that are nalized with more possible solutions.

Disadvantages of Risk management

Managing risks results in some waste of time which may create barriers to compensate the projects. Most of the time is spent on the research and development of the allocated issues than to on managing projects.

II. Financial /operational performance:

The Company has adopted Indian Accounting Standards (Ind AS) from current financial year in the preparation and presentation of Financial Statements. Sources of Funds 1. Reserves and Surplus

The Companys Reserves and Surplus as on 31st March 2019 were INR 76.55 Lakhs as against INR 7.84 Lakhs as on 31st March 2018

These Reserves include a share premium of Rs.1.94 Cr on account of issuance of share warrants at a premium.

2. Property Plant and Equipment

During the year there are no additions to Tangible Fixed Assets or Intangible Fixed Assets of company

3. Investments in Subsidiaries

CIL Inc : The operations of the US Subsidiary remained dormant during the current period. Hence there is no addition either to the turnover, expenditure, assets and liabilities to the consolidated financial statements.

Cybermate International Unipessoal LDA :

During the year the company has incorporated a Wholly Owned Subsidiary at Portugal for marketing its health care and Logistics Platforms in the Europe and African regions. The company has not commenced operations as at 31st March and hence there is no turnover or prot to be consolidated in the financial statements.

4. Deferred taxes Assets and Liabilities

The Company has Deferred Tax Asset (Net) amounting to Rs. 16.60 Lakhs as against a liability of 53.59 Lakhs in previous year, attributable to dier ence between depreciation as per companies act 2013 and Income Tax Act

5.Trade Receivables

The position of outstanding debtors was

Rs in lakhs
As at 31-03-19 As at 31-03-18
Considered Good 3,143 3,988
Considered Doubtful - -
Allowances for Loss - -
Total Receivables 3,143 3,988

6.Inventories

The Company does not have any inventories as at 31st March 2016.

7.Cash and Cash Equivalents

The balance of cash and cash equivalents as at the beginning of the year was Rs. 13.28 Lakhs.

The closing balance of Cash and Cash Equivalents is Rs. 147.35 Lakhs held as cash, balances in current account and in deposit accounts and reconciliation elements.

8. Trade Payables and Other Current Liabilities

Trade payables at the beginning of the year were at Rs.1054.40 Lakhs and at the end of the year were Rs. 252.46 Lakhs.

Other Current Liabilities include an amount of Rs.557.72 Lakhs as Advances from Directors and Related Parties , Accrued Salaries.

9.Provisions and Income Tax Liability

Provisions include an amount of Rs.86.28 Lakhs towards outstanding expenses and Income Tax Liability of past period amounting to Rs.72.17 Lakhs

I. Results of Operations

Income : Revenues for the year include sale of Software Products, software development and IT Enabled Services. There has been a significant increase in the revenues of the company over the previous year.

Expenditure : During the year the employee benet expenses have increased due to the IT consulting activity which has been the revenue component for the year.

Increase in Professional consultancy fee is linear to the revenues.

Interest on Loans is not provided for as the lender has invoked SARFAESI proceedings.

Depreciation and Amortisation : Depreciation on Tangible and Intangible assets was provided for the full year.

Other Income- Net : Other income of the company includes Dividend income from investment in Shares of Listed Companies.

Net Prot : The Company had earned a net prot of Rs. 380. 96 Lakhs as against Rs. 232.20 Lakhs in the previous year.

EPS after Exceptions : EPS for the year was Rs. 0.47 as against 0.32 in the previous year.

Liquidity : Liquidity has improved during the current year owing to increased turnover and infusion of funds by way of Preferential Allotment of Equity Share Warrants to Promoters/Promoter Group and Investors.

Related Party Transactions :Transactions with related parties have been made at an arms length basis and hence are not prejudicial to the interest of the company.

These have been discussed in detail in Note no 28 to the standalone financial statements in this Annual report.

II. Opportunities and Threats

Our Strengths

We have positioned ourselves as a custom built application development company suiting the requirements of mid and emerging companies.

Our strengths include:

Product development We have invested time and eort in enhancing our domain expertise in health care, telecom, engineering, energy, logistics and retail segments. We have been able to quickly adopt to the emerging developments in trade practices and enabling new features to our products to keep our customers ahead of their expectations.

End to End Oerings Our end to end business solutions include transaction processing, data management, integration with third party tools and applications, independent testing and validation , network and surveillance, IT Support and Analytics.

Relationships: We have long standing relationships with midsized companies and Government Business Units and are quite seasoned in their processes which enable us seek repeat business. Our track record delivering quality solutions help us strengthen these relationships over time.

Quality and Process Execution: Our clients have always been appreciative of our process implementation proceduresand documentation which helps us maintain a healthy relationship and achieve business value.

Our Strategy

We are exploring opportunities to build strategic partnership with start ups to create innovative solutions in emerging technology space. We also intend to create platforms on analytics, big data, IT infrastructure and Business process outsourcing capabilities apart from strengthening our core product oerings across domains. We wish to make signicant investments in these partnerships, our acquisitions to build capabilities to deliver emerging mobile and digital technology solutions.

Our Competition

We compete with small and midsized companies in Government and large corporations in application development, maintenance and business process out sourcing segments.

III. Outlook, Risks & Concerns

• Our revenue and expenses are di?cult to predict and can vary signicantly from period to period.

• Our success largely depend upon retaining skilled technology professionals and our ability to hire, motivate and retain them.

• We are a company in mid segment space and may not be providing adequate condence to companies / customers for long term contracts.

• We may not be able to sustain the working capital cycles.

• Our liquidity may not keep us comfortable to stay in the race in case of long sale cycles.

• We may be unable to recoup investments made in developing our software products.

• Our success depends on our management team and key personnel and our ability to attract and retain them.

• Our failures to complete fixed price and fixed time frame contracts or transaction based pricing contracts within budget and on time may adversely aect our protability .

• We may not be able to provide end to end business solutions for our clients which could lead to clients discontinuing their work with us which in turn could impact our business.

IV. Internal Control Systems and their adequacies

The CEO and CFOfficertification provided in the Annual report discusses the adequacy of our internal control systems and procedures.

V. Material Developments in Human Resources / industrial relations , number of people employed.

Human Capital : As at March 31st 2019, the company employed about 165 employees which include software engineers, trainees , process executives and administration.

Recruitment : We have built our software programming skill set by recruiting new graduates from dier ent Engineering colleges and IT training institutes.

We have recruited process executives from Government aided foundations and aided consultancies.

We have in place a robust process which includes aptitude tests and interviews followed by a technology task approach in screening our programmers.

Training and development : CIL has always been conducting on the job training programmes on technology , business process , quality and presentation skills to mould its resources into techno commercial resources.

Compensation and Benets :CIL has always been a midsized company attracting trainees to build their capabilities. CIL has always been facing challenges to retain its talent from large corporations which offer packages liked to performance and E- SOPs. In order to address this challenge, CIL has in this year proposed a resolution to implement E-SOPs to retain its talent.

Risk Management Framework:

In todays economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor and take precautionary measures in respect of the events that may pose risks for the business. Your Companys Board believes that to ensure sustainable business growth with stability of aair s and operations of the Company, periodical review of various risks having a bearing on the business and operations is vital to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. Further, it is also belief of your management that Risk Management Framework enables a systematic approach to risk identication, leverage of any opportunities and provides treatment strategies to manage, transfer and avoid or minimize the impact of the risks.

Keeping in view of the above, your Companys risk management is embedded in the continuous business processes and as a part of review of business and operations, your Board with the help of the management periodically reviews various risks associated with the business and products of the Company and considers appropriate risk mitigation process. However there are certain risks which cannot be avoided but the impact can only be minimized.

The risks and concerns associated with each segment of your companys business are discussed while reviewing segment-wise Management and Discussion Analysis. The other risks that the management reviews also include:

a. Industry & Services Risk: this includes Economic risks like demand and supply chain, Protability , Gestation period etc.;

Services risk like infrastructure facilities;

Market risk like consumer preferences and distribution channel etc.;

Business dynamics like in ation/deLation etc.;

Competition risks like cost effectiveness

b. Management and Operational Risk: this includes Risks to Property; Clear and well dened work process; changes in technology / upgradation; R&D Risks; Agency network Risks; Personnel & labour turnover Risk; Environmental and Pollution Control Regulations etc.; Locational benefits near metros

c. Market Risk: this includes Raw Material rates; Quantities, quality, suppliers, lead time, interest rates risk and forex risk.

d. Political Risk: this includes Elections; War risk; Country/Area Risk; Insurance risk like Fire, strikes, riots and civil commotion, marine risk, cargo risk etc.; Fiscal/Monetary Policy Risk including Taxation risk.

e. Credit Risk: this includes Creditworthiness; Risk in settlement of dues by clients and Provisions for doubtful and bad debts.

f. Liquidity Risk: this includes risks like Financial solvency and liquidity; Borrowing limits, delays; Cash/Reserve management risks and Tax risks.

g. Disaster Risk this includes Natural calamities like r es, Thoods, earthquakes etc.;

Manmade risk factors arising under the Factories Act, Mines Act etc.;

Risk of failure of effective disaster Management plans formulated by the Company.

h. System Risk this includes System capacities; System reliability; Obsolescence risk; Data Integrity risk & Co-ordination and Interface risk.

I. Legal Risk: this includes Contract risk; Contractual liability; Frauds; Judicial Risk and Insurance risk.

j. Government Policy: This includes Exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benets etc.