Forward looking statement
Statements in this Management Discussion and Analysis of Financial Condition and
Results of Operations of the Company describing the Companys objectives, expectations or
predictions may be forward looking within the meaning of applicable securities laws and
regulations. Forward looking statements are based on certain assumptions and expectations
of future events.
The Company cannot guarantee that these assumptions and expectations are accurate or
will be realized. The Company assumes no responsibility to publicly amend, modify or
revise forward looking statements, on the basis of any subsequent developments,
information or events. Actual results may differ materially from those expressed in the
statement. Important factors that could influence the Companys operations include changes
in government regulations, tax laws, economic developments within the country and such
other factors globally.
The financial statements are prepared under historical cost convention, on accrual
basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the
Act) and comply with the Indian Accounting Standards as pronounced by the Institute of
Chartered Accountants of India (ICAI) from time to time. The Management of DC Infotech
& Communication Limited has used estimates and judgments relating to the financial
statements on a prudent and reasonable basis, in order that the financial statements,
reflect in a true and fair manner, the state of affairs and profit for the year.
The following discussions on our financial condition and result of operations should be
read together with our audited financial statements and the notes to these statements
included in the annual report. Unless otherwise specified or the context otherwise
requires, all references herein to “we”, “us”, “our”,
“the Company”, “DC Info” are to “DC Infotech & Communication
Limited”.
ECONOMIC OVERVIEW
Global & India Scenario
According to the World Banks latest Global Economic Prospects report, global growth is
slowing sharply in the face of elevated inflation, higher interest rates, reduced
investment, and disruptions caused by Russias invasion of Ukraine.
Given fragile economic conditions, such as higher-than-expected inflation, unexpected
rises in interest rates, a resurgence of the COVID-19 pandemic, could push the global
economy into recession. This would mark the first time in more than 80 years that two
global recessions have occurred within the same decade.
The global economy is expected to grow by 1.7% in 2023 and 2.7% in 2024. This growth
will be slow, and many countries, both advanced and emerging markets, will experience a
sharp downturn in growth. The forecast for 2023 has been revised downwards for 95% of
advanced economies and nearly 70% of emerging market and developing economies. This
suggests that the economic slowdown will be widespread and affect many countries around
the world.
By the end of 2024, GDP levels in emerging and developing economies will be roughly 6%
below levels expected before the pandemic.
Source: Global Economic Prospects: Sharp, Long-lasting Slowdown to Hit Developing
Countries Hard (worldbank.org)
Business and Commerce
In recent years India has experienced a boom in internet and smartphone penetration.
The number of internet connections in 2021 increased significantly to 830 million, driven
by the ‘Digital India Programme. Out of the total internet connections, ~55% of
connections were in urban areas, of which 97% of connections were wireless. The smartphone
base has also increased significantly and is expected to reach 1 billion by 2026. This has
helped Indias digital sector and it is expected to reach US$ 1 trillion by 2030.
The Indian e-commerce market is estimated to reach US$ 26.93 billion in 2027 from US$
3.95 billion in FY21, expanding at a CAGR of 33%. Indias consumer digital economy is
expected to become a US$ 1 trillion market by 2030, growing from US$ 537.5 billion in
2020, driven by the strong adoption of online services such as e-commerce and edtech in
the country. According to Grant Thornton, e-commerce in India is expected to be worth US$
188 billion by 2025.
Since 2014, the Government of India has announced various initiatives, namely Digital
India, Make in India, Start-up India, Skill India and Innovation Fund. Initiatives under
the Digital India movement, including the invitation to startups to register at GeM, the
hike in FDI limit in e-commerce marketplace models, Open Network for Digital Commerce
(ONDC) to systematize the onboarding process of retailers on e-commerce platforms, heavy
investment in rolling out fiber networks for 5G is expected to boost e-commerce in India.
Source: https://www.ibef.org/industry/ecommerce
About DC Infotech & Communication Limited
DC Infotech & Communication Limited has been specializing in the IT networking and
security business since last twenty years, with a national footprint. The company was
founded in April 1998 by Mr. Devendra Sayani & Mr. Chetankumar Timbadia, who between
them, have a combined experience of four decades in the field. From an initial six-member
outfit, the Company has now grown into an organization with a team of more than seventy.
The idea was and still is to provide innovative networking, security products and
solutions by utilizing the latest technology know-how. Today, DC Infotech has established
itself as one of the leading architects and solution providers of networking, security and
unified communication products and services. The main objective is to be “one step
ahead“, i.e., to understand the future market needs and trends before they become
obvious and to accommodate demands before they occur. www.dcinfotech.com
FINANCIAL OVERVIEW
The consolidated financial performance of the Company for the financial year ended
March 31st, 2023, is as follows: Total revenue from operations stood at Rs.
359.63 crore for the year ended March 31, 2023, as against Rs. 232.51 crore for the
corresponding previous period, an increase of 54.67%, mainly on account of due to strong
demand for products like Samsung, Netgear and Software & Services.
EBITDA for the full year is Rs. 12.72 cr, an increase of 73.63% year-on-year. The Net
Profits during this full year is Rs. 7.08 cr, as against profit of Rs. 4.00 cr in FY22.
Net Profit margin stood at 1.97% EPS for this period is Rs. 5.90
RESOURCES AND LIQUIDITY
As on March 31, 2023, the consolidated net worth stood at Rs. 29.53 crore and the
consolidated debt was at Rs. 26.01 crore. The cash, cash equivalents and bank balances at
the end of March 31, 2023 were Rs. 3.46 crore. The net debt to equity ratio of the Company
stood at 0.76 as on March 31, 2023.
Business Category wise Performance
DC Info operates in two broad segments covering Products, Solutions and other services
pertaining to IT networking, security and unified communication solutions:
1. Products
2. Security Software and Services
The Company is performing well in all product categories and expects the momentum to
continue in next financial year.
ACHIEVEMENTS IN BUSINESSES DURING THE YEAR:
DC Info ranks 13th out of 125 companies in Economic Times and Statistas India‘s
Growth Champions 2023 that have achieved the highest percentage growth in revenues between
2019 and 2022 DC Info enters into a partnership with Array Networks to offer entire suite
of Array Network solutions across India DC Info bags new orders from prestigious clients
namely Kotak Mahindra Bank, Tata Teleservices and Bharat Petroleum Corporation (BPCL) for
value added Security Product line “Netscout” DC Infotech added several new
clients, including Maruti Suzuki Gujarat, Bluestar and Tata Play, among others The Company
signed up with Versa Networks to distribute their range of products across India and SAARC
region DC Info won an award from Samsung for significantly contributing to their smart
signage business DC Info opened a new branch in Surat, Gujarat, offering the entire basket
of products The Company won an Award of Excellence from D-Link as a top SMB partner
RISKS AND CONCERNS
Like every business, the Company faces risks, both internal and external, in the
undertaking of its day-to-day operations and in pursuit of its longer-term objectives. A
detailed policy drawn up and dedicated risk workshops are conducted for each business
vertical and key support functions wherein risks are identified, assessed, analyzed and
accepted / mitigated to an acceptable level within the risk appetite of the organization.
The risk registers are also reviewed from time to time. The Company faces the following
Risks and Concerns:
Rapid Obsolescence of Technology & Change in Consumer Preferences
A technology business is always exposed to sudden and unanticipated changes in
technology and consumer trends and preferences. This exposes the company to the risk of
becoming uncompetitive in terms of product/services offering to the customers. There is a
need to constantly upgrade the product and service portfolio (e.g. Cloud, IoT, Mobility
Analytics, etc.), and stay on top of changing consumer preferences.
Credit Risk
To manage its credit exposure, DC Info has determined a credit policy with credit limit
requests and approval procedures. Company does its own research of clients financial
health and project prospects before entering into an agreement with them. Timely and
rigorous process is followed up with clients for payments as per schedule. The company has
suitably streamlined the process to develop a focused and aggressive receivables
management system to ensure timely collections.
Interest Rate Risk
The Company has judiciously managed the debt-equity ratio. It has been using a mix of
loans and internal cash accruals. The Company has well managed the working capital to
reduce the overall interest cost.
Competition Risk
Like in most other industries, strong scope of opportunities come with intense
competition. We face different levels of competition in each of our operating categories,
from domestic as well as multinational companies. DC Info has created strong
differentiators in project execution, portfolio, level on involvement in marketing and
delivery, which make it resilient to competition. Furthermore, the Company continues to
invest in technology and people to remain ahead of the curve. A strong and stable client
base, comprising large and mid-sized corporations, further helps mitigate this risk. We
counter this risk with the quality of our infrastructure, our customer-centric approach,
value-added services and our ability to innovate customer specific solutions, focusing on
pricing and aggressive marketing strategy, disciplined project executions, along with
prudent financial and human resources management and better control over costs. Thus, we
expect to be significantly insulated from this risk.
Risk from COVID-19
Many of the products under the Companys portfolio classify as non-essential.
Therefore, any potential lockdown in any region, or restrictions on logistics, could
impact the operations and sales of such products.
OPPORTUNITIES
Rapid growth in digital economy and online business activity, presents many new
opportunities for networking, security and unified communication solutions.
Changing consumer preferences and growing urbanization:
- With evolving consumer needs and preferences, there is a strong growth in
demand for good quality products, services and a unique customer experience.
- With rising disposable incomes and urbanization, consumers demand better
experiences and after sales service, which paves the way for new innovations.
Technological Tie-ups With many technological tie-ups and extensive R&D theres
huge scope for new and innovative products to enter the market.
Distribution agreements with renowned brands: An increasing number of international
brands want to come to India to tap into the market potential. Such brands typically want
ready and modern distribution system covering the geographical territories of the country
and serving customers on a pan-India basis which will grow their brand quicker.
Growth in the existing and new product lines: Consumer electronics are evolving
rapidly, giving rise to many new product concepts. This gives scope to not only grow the
existing products but also venture into new product lines to fulfill the needs of the
consumers.
THREATS
Competition from local and multinational players.
Regulatory changes including unfavorable tax changes or import regulations. Attraction
and retention of talented human resources. Frequent and rapid technological advancements
leading to early obsolescence of products in inventory. Over-dependence on few brands
which account for majority revenue.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has an internal audit function designed to review the adequacy of internal
control checks in the system which covers all significant areas of Companys operations
such as accounting and finance, procurement, business operations, statutory compliances,
IT processes, safeguarding the assets and their protection against unauthorized use, among
others. The Internal Audit function performs the internal audit of Companys activities
based on an internal audit plan, which is reviewed each year and is approved by the Board
of Audit Committee. The Audit Committee reviews the report submitted by the internal
auditors. Suggestions for improvement are considered and the audit committee follows up on
corrective action. Disciplinary action is taken, wherever required, for non-compliance to
corporate policies and controls.
The Company has also implemented effective systems for achieving highest level of
efficiency in operations, to achieve optimum and effective utilization of resources,
monitoring thereof and the compliance with provisions all laws including the Companies
Act, 2013, Listing Agreement, directions issued by the Securities and Exchange Board of
India, labour laws, tax laws etc. It also aims at improvement in financial management, and
investment policy. The System ensures appropriate information flow to facilitate effective
monitoring.
HUMAN RESOURCES
We believe that our employees are key contributors to our business success. We focus on
attracting and retaining the best possible talent. Our Company looks for specific
skill-sets, interests and background that would be an asset for our business.
As on March 31, 2023, the Company had 77 employees on payroll. The manpower is a
prudent mix of experienced and young professionals which gives us the dual advantage of
stability and growth. The work progress and skilled/ semi-skilled/ unskilled resources,
together with the Companys strong management team, have enabled it to successfully
implement our growth plans.
The Company also imparts behavioral, technical and on the job training to our
employees. Technical trainings are mandated by the vendor whenever the employees have to
deal with pre-technical or post technical issues. Training calendars are set by the
vendors and nominated employees from our Company attend the program and obtain a feedback
on the completion of the program.
OUTLOOK
After the epidemic, networking solutions have become even more important. Increased
need for networking solutions that enable secure and dependable communication and
collaboration between employees, customers, and partners is a result of the trend towards
remote work and the digital revolution.
Organizations have had to quickly adjust to new networking requirements as remote work
has become the new norm. Companies must make sure that remote employees have access to the
resources and equipment they need to do their jobs efficiently and safely where DC
Infotech stands for. This comprises platforms for virtual meetings, cloud-based
collaboration tools, and secure VPN connections. Surge in e-commerce and online business
activities. This has resulted in an increased demand for networking solutions that provide
secure and reliable online transactions and data exchange. This includes secure payment
gateways, encrypted data transfer, and reliable network infrastructure.
The Company is positive on both its immediate and long term prospects. DC Infotech is
well positioned to cater to the domestic as well as international markets while keeping a
lean and efficient value added business model, diverse product portfolio and strong client
relationships help us to sustain and continue growing. Some of the recent addition in the
Companys portfolio enables it to strengthen their networking solutions and expand
geographical footprint in the overseas markets.
In line with the Companys strategy, it continues to build on their portfolio to bring
cutting- edge technologies and solutions to more and more consumers. Their value-addition
in terms of installation and end-to-end execution, allows the Company to get good margins.
The Company is well positioned to leverage its strengths and is optimistic for the
ongoing fiscal year.
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