Delaplex Ltd Management Discussions

Industrial Structure and Developments:

Delaplex Limited, a NSE Emerge Portal Registered Company (formerly known as Delaplex Private Limited) is the software development Company and also provide supply chain consultancy services and technology innovation with its presence in India, Europe and North America.

ORGANIZATIONAL STRUCTURE

• Development Teams: Typically organized into various teams, including frontend, backend, and full-stack developers.

• Project Management: Product Managers, Project Managers, and Scrum Masters play a crucial role in overseeing development processes, ensuring that projects align with business goals, and managing timelines.

• Quality Assurance (QA): Dedicated teams focus on testing and quality control to ensure software is bug-free and meets user requirements.

• DevOps: Integration of Development and Operations teams to streamline the software delivery process, enhance collaboration, and improve deployment efficiency.

• Support and Maintenance: After deployment, support teams handle customer issues and maintenance to ensure software continues to perform well.

OPPORTUNITIES AND THREATS:

Opportunities

1. Emerging Technologies:

• Artificial Intelligence (AI) and Machine Learning (ML): Developing AI-powered applications for various industries (e.g., healthcare, finance) offers new business avenues.

• Blockchain: Applications in financial transactions, supply chain management, and smart contracts provide innovative solutions.

• Internet of Things (IoT): Expanding into IoT can lead to growth in smart devices and data-driven solutions.

2. Cloud Computing:

o Scalability: Offering cloud-based solutions and services can enhance scalability for clients and reduce infrastructure costs.

o SaaS: The rise of Software-as-a-Service (SaaS) models provides recurring revenue streams and opportunities for ongoing client engagement.

3. Remote Work and Collaboration Tools:

o Global Talent Pool: Remote work enables companies to hire talent from around the world, diversifying skills and perspectives.

o Collaboration Solutions: Developing or integrating with tools that facilitate remote collaboration and productivity can meet growing market demand.

4. Increased Digital Transformation:

o Adoption by Traditional Industries: As sectors like healthcare, education, and manufacturing digitize their operations, software development companies can provide essential solutions.

o Customized Solutions: Tailoring software to specific industry needs creates niche opportunities and differentiates offerings.

5. Cybersecurity Demand:

o Enhanced Security Solutions: Developing robust cybersecurity solutions is increasingly critical as businesses seek to protect their data and systems from breaches.

6. Data Analytics:

o Big Data: Leveraging big data analytics to offer insights and decision-making support can be a significant growth area for software solutions.

Threats

1. Rapid Technological Change:

o Keeping Up: The fast pace of technological advancements can be challenging, requiring constant learning and adaptation.

o Obsolescence: Technologies and tools can quickly become outdated, necessitating frequent updates and innovations.

2. Intense Competition:

o Market Saturation: High competition from both established players and new entrants can pressure margins and require differentiation.

o Global Competition: Outsourcing and offshoring introduce competition from companies with lower operational costs.

3. Talent Shortage:

o Skilled Workforce: Finding and retaining skilled developers and IT professionals can be difficult, leading to potential delays and increased costs.

o High Turnover: High employee turnover rates can disrupt projects and increase recruitment and training expenses.

4. Cybersecurity Risks:

o Data Breaches: As software becomes more integral to businesses, the risk of data breaches and cyberattacks increases, posing potential legal and financial consequences.

o Regulatory Compliance: Adhering to evolving regulations and standards (e.g., GDPR, CCPA) adds complexity and costs.

5. Economic Downturns:

o Budget Cuts: Economic recessions or downturns can lead to reduced IT budgets and delayed or canceled projects.

o Client Financial Stability: Dependence on clients who face financial difficulties can impact revenue and project stability.

6. Intellectual Property (IP) Issues:

o IP Theft: Protecting proprietary software and technology from theft or unauthorized use can be challenging.

o Patent Disputes: Navigating patent disputes and infringement claims requires legal resources and can be costly.

7. Client Expectations:

o Quality Assurance: High expectations for software quality, performance, and reliability necessitate rigorous testing and support.

o Customization Requests: Meeting diverse and complex client requirements can stretch resources and impact project timelines.

OUTLOOK:

Technological Advancements:

• AI and Machine Learning: The integration of AI and ML into various applications will continue to grow, offering opportunities in areas like automation, predictive analytics, and natural language processing. Companies that innovate in AI-driven solutions will likely see significant growth.

• Cloud Computing: Cloud adoption is expected to expand further, with increased use of multi-cloud and hybrid cloud environments. Companies providing cloud-based services, including SaaS, IaaS, and PaaS, will benefit from the continued shift to remote and scalable solutions.

• 5G and Edge Computing: The rollout of 5G networks will enable faster and more reliable connections, fueling advancements in edge computing and IoT. Software companies focusing on these areas will be well-positioned to capitalize on new use cases and business models.

• Cybersecurity: As cyber threats become more sophisticated, there will be a growing demand for advanced cybersecurity solutions. Companies specializing in security software, threat detection, and compliance will be in high demand.

• Blockchain: While still evolving, blockchain technology has the potential to disrupt various sectors by enhancing security, transparency, and decentralization. Applications in finance, supply chain management, and identity verification are likely to see continued interest.

2. Market Trends:

• Digital Transformation: Organizations across industries are accelerating their digital transformation efforts. This creates opportunities for software companies to provide solutions that enhance operational efficiency, customer engagement, and data management.

• Remote and Hybrid Work: The trend towards remote and hybrid work environments is expected to persist. Software companies that offer collaboration tools, remote management solutions, and productivity software will continue to see strong demand.

• Subscription Models: The shift towards subscription-based pricing models provides recurring revenue opportunities. Companies that can offer flexible, scalable solutions with regular updates will benefit from this trend.

• Personalization and User Experience: There is an increasing emphasis on creating personalized user experiences. Software companies focusing on UX/UI design, user-centric development, and data-driven customization will likely find success.

3. Economic and Regulatory Factors:

• Economic Uncertainty: Economic fluctuations can impact IT budgets and spending. Software companies need to be adaptable and offer solutions that demonstrate clear value to withstand economic downturns.

• Regulatory Compliance: Compliance with evolving regulations (e.g., data protection laws) will remain a critical aspect. Companies that can navigate these complexities and ensure their solutions meet regulatory standards will gain a competitive edge.

• Investment and Funding: Venture capital and investment trends will influence the growth of software companies. Companies that attract investment and focus on innovative solutions will have the resources to scale and compete effectively.

4. Competitive Landscape:

• Global Competition: The software industry is highly competitive, with both established players and emerging startups vying for market share. Companies will need to innovate, differentiate their offerings, and build strong customer relationships to stay ahead.

• Talent Acquisition: Attracting and retaining top talent will be crucial. Companies that invest in employee development, offer attractive work environments, and stay abreast of emerging skills will have a competitive advantage.

5. Opportunities for Growth:

• Niche Markets: Targeting specific industries or niches with tailored solutions can provide significant growth opportunities. Identifying underserved markets or unique customer needs can lead to successful business ventures.

• Global Expansion: Expanding into international markets offers new revenue streams. However, this requires understanding local regulations, market dynamics, and cultural differences.

• Innovation and R&D: Investing in research and development will be key to staying at the forefront of technological advancements and meeting evolving customer needs.

RISK AND CONCERNS:

Technological Risks:

• Rapid Technological Change: Keeping up with the fast pace of technological advancements can be challenging. Companies may struggle to stay current with new tools, languages, and frameworks, leading to potential obsolescence of their existing solutions.

• Integration Challenges: Incorporating new technologies or integrating with existing systems can be complex and may lead to unforeseen issues or compatibility problems.

• Cybersecurity Threats: As software becomes more integral to business operations, the risk of cyberattacks, data breaches, and other security incidents increases. Ensuring robust security measures and compliance with data protection regulations is essential.

• Technical Debt: Accumulation of technical debt shortcuts or suboptimal code practices taken to expedite development can lead to maintenance issues, increased costs, and difficulties in scaling.

2. Operational Risks:

• Project Management: Mismanagement of projects, including scope creep, missed deadlines, and budget overruns, can negatively affect client satisfaction and company profitability. Effective project management practices and tools are critical.

• Resource Allocation: Inefficient allocation of resources, including personnel and technology, can lead to delays, reduced productivity, and increased costs.

• Quality Assurance: Inadequate testing and quality assurance can result in software defects, poor user experience, and customer dissatisfaction.

• Dependence on Key Personnel: Reliance on a few key individuals for critical knowledge or skills poses a risk if they leave the company or become unavailable.

3. Market Risks:

• Intense Competition: The software development industry is highly competitive, with numerous players ranging from large corporations to startups. Differentiating offerings and maintaining a competitive edge is crucial.

• Client Dependence: Heavy reliance on a few major clients can be risky if those clients reduce their spending, switch to competitors, or face Financial difficulties.

• Changing Customer Needs: Rapid changes in customer preferences and market demands require software companies to adapt quickly to avoid losing relevance.

4. Financial Risks:

• Cash Flow Management: Software development companies may face cash flow issues, especially if they rely on long sales cycles, delayed payments, or large upfront investments in development.

• Cost Overruns: Unforeseen expenses, such as additional development costs or higher- than-expected maintenance needs, can impact profitability.

• Economic Downturns: Economic fluctuations or recessions can lead to reduced IT budgets, postponed projects, and Financial instability for clients, affecting revenue.

5. Legal and Compliance Risks:

• Intellectual Property (IP) Issues: Protecting proprietary technology and dealing with potential IP theft or infringement claims can be costly and complex.

• Regulatory Compliance: Compliance with data protection laws (e.g., GDPR, CCPA) and other regulations is essential to avoid legal penalties and maintain client trust.

• Contractual Obligations: Misunderstandings or disputes over contract terms can lead to legal issues and affect client relationships.

6. Talent Management Risks:

• Talent Shortage: Difficulty in finding and retaining skilled developers and IT professionals can impact project delivery and innovation.

• High Turnover Rates: Frequent employee turnover can disrupt projects, increase recruitment and training costs, and affect team cohesion.

• Skill Gaps: Keeping the teams skills up-to-date with emerging technologies requires continuous learning and training.

7. Reputation Risks:

• Negative Reviews: Poor user feedback, unsuccessful projects, or failed product launches can damage a companys reputation and affect its ability to attract new clients.

• Public Relations Issues: Handling negative publicity or customer complaints effectively is crucial for maintaining a positive image.

8. Strategic Risks:

• Scalability Issues: As companies grow, scaling operations, technology, and processes effectively can be challenging and may require significant investment.

• Innovation Pressure: Constant pressure to innovate and differentiate can strain resources and impact the companys ability to deliver on time and within budget.

Internal Financial Control Systems and their Adequacy:

Internal financial control systems are essential for managing a software companys financial health, ensuring compliance, and maintaining operational efficiency. They involve a set of processes, procedures, and controls designed to safeguard assets, ensure accurate financial reporting, and prevent fraud.

The Company has adequate and efficient internal control system, which provides protection to all its assets against loss from unauthorized use and ensures correct reporting of transactions. The internal control systems are further supplemented by internal audits carried out by the respective Internal Auditors of the Company and Periodical review by the management. The Company has put in place proper controls, which are reviewed at regular intervals to ensure that transactions are properly authorized, correctly reported and assets are safeguarded.

The Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

Segment-wise or product-wise performance:

The Company is presently engaged in single segment of software development and also provide supply chain consultancy services and technology innovation.

The performance of Company for the financial year 2023-24 is summarized below:

(Amount in Lakhs)

Particulars	31/03/2024	31/03/2023
Revenue from operations and Other Income	5,640.10	5,521.81
Profit/Loss before Interest, Depreciation and Tax	1,209.98	1,148.46
Less: Finance Cost	0.67	0.40
Net Profit/Loss before Depreciation and Tax	1,209.31	1,148.06
Less: Depreciation and amortization for the year	34.69	48.01
Net Profit/Loss before exceptional and extraordinary items and tax	1,174.62	1,100.05
Less: Exceptional Items	0.00	0.00
Profit before extraordinary items and tax	1,174.62	1,100.05
Less: Extraordinary Items	0.00	0.00
Profit before tax	1,174.62	1,100.05
Less: Tax Expenses
Current tax expense	214.32	277.26
Deferred tax Charge/(Credit)	(47.59)	0.00
Profit/Loss for the period from continuing operations	1,007.89	822.79
Tax expense of discontinuing operations	0.00	0.00
Profit/Loss from discontinuing operations (after tax)	0.00	0.00
Profit/Loss transferred/adjusted to General Reserve	1,007.89	822.79
Basic earnings per equity share	13.26	11.26
Diluted earnings per equity share	13.26	11.26

Key Observations

1. Revenue Growth: Revenue from operations and other income increased from 5,521.81 to 5,640.10, showing a positive growth trend.

2. Profitability: Profit before interest, depreciation, and tax improved from 1,148.46 to 1,209.98, reflecting better operational efficiency.

3. Depreciation: Depreciation and amortization expenses decreased from 48.01 to 34.69, contributing positively to net profit.

4. Tax Impact: The current tax expense decreased from 277.26 to 214.32, while a deferred tax credit of (47.59) was recognized in 2024, compared to no such credit in 2023.

5. Earnings Per Share: Both basic and diluted earnings per share increased from 11.26 to 13.26, indicating improved profitability per share.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL

PERFORMANCE:

1. Revenue Analysis

Revenue from Operations and Other Income:

- 31 March 2024: 5,640.10

- 31 March 2023: 5,521.81

Analysis: The revenue increased by 118.29, or 2.14%, from 5,521.81 in 2023 to 5,640.10 in 2024.

This growth reflects the companys ability to enhance its operational performance and achieve higher

sales.

2. Operational Profitability

Profit/Loss before Interest, Depreciation, and Tax:

- 31 March 2024: 1,209.98

- 31 March 2023: 1,148.46

Analysis: The profit before interest, depreciation, and tax increased by 61.52, or 5.35%. This indicates improved operational efficiency and cost management, contributing positively to overall profitability.

Net Profit/Loss before Depreciation and Tax:

- 31 March 2024: 1,209.31

- 31 March 2023: 1,148.06

Analysis: The net profit before depreciation and tax improved by 61.25, or 5.34%. The slight increase in this metric suggests effective control over operational expenses.

3. Depreciation and Amortizad on Depreciation and Amortization for the Year:

- 31 March 2024: 34.69

- 31 March 2023: 48.01

Analysis: Depreciation and amortization expenses decreased by 13.32, or 27.76%. This reduction in non-cash expenses positively impacted net profit, reflecting more efficient use of assets or reduced capital expenditure.

4. Profitability After Depreciation

Net Profit/Loss before Exceptional and Extraordinary Items and Tax:

- 31 March 2024: 1,174.62

- 31 March 2023: 1,100.05

Analysis: This metric increased by 74.57, or 6.77%. The improvement highlights enhanced operational efficiency and effective cost management, even before considering exceptional or extraordinary items.

5. Tax Impact Current Tax Expense:

- 31 March 2024: 214.32

- 31 March 2023: 277.26

Analysis: The decrease in current tax expense by 62.94, or 22.71%, indicates either lower taxable income or more effective tax planning.

Deferred Tax Charge/(Credit:

- 31 March 2024: (47.59)

- 31 March 2023: 0.00

Analysis: The deferred tax credit in 2024 suggests a favorable tax adjustment or timing differences affecting tax liabilities.

6. Final Profitability

Profit/Loss for the Period from Continuing Operations:

- 31 March 2024: 1,007.89

- 31 March 2023: 822.79

Analysis: The profit from continuing operations increased by 185.10, or 22.5%. This significant improvement reflects a stronger operational performance and effective management of expenses and taxes.

7. Earnings Per Share

Basic and Diluted Earnings Per Equity Share:

- 31 March 2024: 13.26

- 31 March 2023: 11.26

Analysis: The basic and diluted earnings per share increased by 2.00, or 17.76%. This increase in earnings per share indicates stronger profitability and operational performance, benefiting shareholders.

SUMMARY AND CONCLUSIONS

1. Revenue Growth: The company achieved modest revenue growth of 2.14%, suggesting steady performance in its core operations.

2. Operational Efficiency: Improvements in profit before interest, depreciation, and tax, as well as net profit before depreciation and tax, highlight enhanced operational efficiency and cost control.

3. Depreciation Management: The reduction in depreciation and amortization expenses indicates more efficient asset utilization or reduced capital expenditures, positively affecting profitability.

4. Tax Management: Decreased current tax expenses and a deferred tax credit contributed favorably to net profit, reflecting effective tax planning and adjustments.

5. Final Profitability: The substantial increase in profit from continuing operations (22.5%) underscores strong operational performance and effective management strategies.

6. Earnings Per Share: The rise in earnings per share signals improved profitability and value for shareholders.

Overall, the Financial performance for the year ending 31^st March 2024 reflects strong operational performance, effective cost management, and enhanced profitability compared to the previous year. The company has demonstrated resilience and growth in its core operations, benefiting from strategic management of expenses and taxes.

MATERIAL DEVELOPMENT IN HUMAN & OTHER RESOURCES / INDUSTRIAL RELATIONS FRONT:

1. Human Resources Development

1.1 Recruitment and Talent Acquisition Initiatives:

- Implemented a new recruitment strategy leveraging AI-driven tools to streamline the hiring process.

- Expanded talent acquisition channels through partnerships with industry-specific job boards and universities.

- Increased the recruitment budget by 15% to enhance employer branding and attract high caliber candidates.

Outcomes:

- Reduced time-to-hire due to improved screening processes.

- Increased the quality of hires.

1.2 Employee Training and Development

Initiatives:

- Launched a comprehensive training program focused on leadership development, technical skills, and soft skills.

- Introduced a new Learning Management System (LMS) for tracking employee progress and providing access to a wide range of learning resources.

- Implemented quarterly performance reviews to identify training needs and career development opportunities.

Outcomes:

- employees participated in at least one training program, with positive feedback on program effectiveness.

- Improved employee performance metrics, with increase in productivity as measured by key performance indicators (KPIs).

1.3 Employee Engagement and Retention

Initiatives:

- Introduced an Employee Engagement Survey to gauge satisfaction and identify areas for improvement.

- Launched a new recognition program to celebrate employee achievements and milestones.

- Enhanced employee benefits, including increased health and wellness offerings and flexible work arrangements.

Outcomes:

- Employee engagement scores improved, indicating higher job satisfaction and morale.

- Reduced voluntary turnover rate, reflecting successful retention strategies.

1.4 Diversity, Equity, and Inclusi?n (DEI)

Initiatives:

- Developed and implemented a DEI strategy with clear goals and metrics.

- Conducted mandatory DEI training for all employees and leadership teams.

- Established Employee Resource Groups (ERGs) to support diverse employee communities.

Outcomes:

- Increased representation of underrepresented groups in new hires.

- Positive feedback from employees on the inclusiveness of workplace culture.

2. Industrial Relations Development

2.1 Employee Relations and Communication Initiatives:

- Implemented regular town hall meetings and feedback sessions to address employee concerns and provide organizational updates.

- Established a new HR Helpdesk to resolve employee issues and inquiries promptly.

- Enhanced communication through updated internal newsletters and an intranet portal.

Outcomes:

- Increased employee satisfaction with communication processes, as indicated by survey results.

- Resolved employee grievances within 30 days, improving overall employee relations.

2.2 Compliance and Legal Affairs Initiatives:

- Conducted regular audits of HR practices to ensure compliance with employment laws and regulations.

- Provided ongoing training for HR personnel on legal and regulatory changes.

- Updated employee handbooks and policies to reflect current legal requirements.

Outcomes:

- Achieved 100% compliance with legal and regulatory requirements.

- Minimized legal risks and potential liabilities through proactive compliance measures.

3. Summary

The fiscal year ending 31 March 2024 has seen significant advancements in human resources and industrial relations. Key achievements include improvements in recruitment efficiency, employee training, engagement, and retention, as well as effective management of industrial relations and compliance with legal standards.

Overall, the HR and IR developments for the year reflect a commitment to improving workforce management, fostering a positive work environment, and maintaining strong industrial relations.

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

Sr. No. Ratios	Numerator	Denominator	31- Mar-24	31- Mar-23	% Change	Reason for Variance
1 Current Ratio	Current Assets	Current Liabilities	40.07	28.55	40.35	Sub-note (i)
4 Return on Equity Ratio	PAT	Equity Share Capital + Reserves & Surplus	0.16	0.33	(52.88)%	Sub-note (ii)
6 Trade Receivables Turnover Ratio	Total Sales	Average Accounts Receivable	2.55	2.75	(7.27)%	-
8 Net Capital Turnover Ratio	Total Sales	Average Working Capital	0.89	2.23	(60.09)%	Sub-note (iii)
9 Net Profit Ratio	PAT	Total Sales	0.18	0.15	18.14%	-
10 Return on Capital Employed	EBIT	Capital Employed	0.18	0.44	(59.09)%	Sub-note (iv)
11 Return on Investment	PAT	Total Assets	0.15%	0.32	(53.07)%	Sub-note (v)

Sub-note (i): Increase in cash balance due to IPO funds infusi?n.

Sub-note (ii): The Equity increased towards the end of FY and funds were yet to be deployed for usage.

Sub-note (iii): IPO funds received towards the end of FY andfunds were yet to be deployedfor usage. Sub-note (iv): IPO funds received towards the end of FY andfunds were yet to be deployedfor usage. Sub-note (v): IPO funds received towards the end of FY andfunds were yet to be deployedfor usage. Disclosure of Accounting Treatment:

The company prepares financial statements in accordance with the Generally Accepted Accounting Principies in India (Indian GAAP) including the Accounting Standards notified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014 and the relevant provisions of the Companies Act, 2013.

The financial statements have been prepared under the historical cost convention on accrual basis. The accounting policies are applied consistently to all the periods presented in the standalone financial statements

The standalone financial statements are presented in Indian Rupee (INR), the functional currency of the Company. Items included in the standalone financial statements of the Company are recorded using the currency of the primary economic environment in which the Company operates (the ‘functional currency). Foreign currency transactions are translated into the functional currency using exchange rates at the date of the transaction.

Date: 10.08.2024	FOR & ON BEHALF OF THE BOARD OF DIRECTORS
Place: Nagpur		Sd/-	Sd/-
	Name	Nitin Sachdeva	Preeti Sachdeva
	Designation	Managing Director	Director
	DIN	01627153	05354561