Identixweb Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 28, which discusses several factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year") are to the twelve-month period ended March 31 of that year.

The financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditors dated July 10, 2024 which is included in this Draft Red Herring Prospectus under the section titled "Restated Standalone Financial Information" beginning on page 165of this Draft Red Herring Prospectus. The restated financial statements have been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. We do not provide a reconciliation of our restated financial statements to US GAAP or IFRS and we have not otherwise quantified or identified the impact of the differences between Indian GAAP and U.S. GAAP or IFRS as applied to our restated financial statements.

Our Company was required to prepare Consolidated Financial Statements for the FY 2023-24 and FY 2022-23. Consolidation of financial statement for FY 2021-22 was not applicable to the Company. Therefore, Our Company has prepared Restated Consolidated Financial Statements for the FY 2023-24 and FY 2022-23. However, in order to have better understanding and comparability, information provided in this chapter is based on Restated Standalone financial statement for the period ended FY 2023-24, FY 2022-23 and FY 2021-22.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" beginning on pages 28 and 16 respectively, and elsewhere in this Draft Red Herring Prospectus Accordingly, the degree to which the financial statements in this Draft Red Herring Prospectus will provide meaningful information depend entirely on such potential investors level of familiarity with Indian accounting practices. Please also refer to section titled "Presentation of Financial, Industry and Market data" beginning on page 14 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Incorporated in 2017, Our company, as an IT firm, is involved in providing Software as a service (SAAS) - based digital product solutions. Our Company offers E-Commerce Store Development, Web App Development, UI/UX Design, Website development, Customize Software Development, support and maintenance with a primary focus on Shopify application development. The primary goal of our company is to deliver applications online, eliminating the need for installation and maintenance. This approach simplifies software management. Our products include more than 10 Shopify applications that are conversion-optimized and tailored made to meet customer needs. We provide our products and services worldwide across a wide range of sectors. Our company leverages the extensive experience of our promoters, Mr. Priyankkumar Jivarajbhai Savani and Mr. Ankur Jagdishbhai Lakhani. The Promoters, who has been with us since 2019, collectively bring over 13 years of expertise in Shopify application development. The significant contributions from our Board of Directors, Key Managerial Personnel, and Senior Management team have also played a crucial role in our companys growth. Our company specializes in Shopify application development, which focuses on creating applications that enhance the functionality and performance of Shopify stores. These applications can range from tools that improve store management and customer engagement to features that optimize sales and streamline operations. Shopify is a leading e-commerce platform that powers over a million businesses worldwide. Its flexibility and scalability make it an ideal choice for businesses of all sizes. However, to truly maximize the potential of a Shopify store, merchants often need custom applications that cater to their specific needs. Our extensive experience and deep understanding of the Shopify platform enable us to deliver top-tier Shopify solutions. We are committed to ensure that all our services are executed with the highest level of precision and customer satisfaction. Our dedication to excellence has earned us a reputation for delivering innovative, reliable, and efficient Shopify solutions that help merchants achieve their business goals.

FINANCIAL KPIs OF OUR COMPANY

The financial performance of the company for last three years as per restated financial Statement:

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO LAST AUDITED BALANCE SHEET

After the date of last Audited accounts i.e. March 31, 2024 the Directors of our Company confirm that, there have not been any significant material developments; FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS:

Our Companys future results of operations could be affected potentially by the following factors:

Global GDP growth

Changes in laws or regulations

Political Stability of the Country;

Competition from existing players;

Our dependence on limited number of customers/suppliers/brands for a significant portion of our revenues;

Any failure to comply with the financial and restrictive covenants under our financing arrangements;

Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner;

Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition;

Conflicts of interest with affiliated companies, the promoter group and other related parties;

The performance of the financial markets in India and globally;

Our ability to expand our geographical area of operation;

Concentration of ownership among our Promoters.

OUR SIGNIFICANT ACCOUNTING POLICIES:

For Significant accounting policies please refer Significant Accounting Policies and Notes to accounts, "Annexure IV" beginning under Chapter titled "Restated Standalone Financial Information" beginning on page 165 of this Draft Red Herring Prospectus. RESULTS OF OUR OPERATION

The following table sets forth detailed total income data from our restated standalone statement of profit and loss for the Financial Years 2024, 2023 and 2022, the components of which are expressed as a percentage increase from previous year.

Revenue from operations

Incorporated in 2017, Our company, as an IT firm, is involved in providing Software as a service (SAAS) - based digital product solutions. Our Company offers E-Commerce Store Development, Web App Development, UI/UX Design, Website development, Customize Software Development, support and maintenance with a primary focus on Shopify application development. The primary goal of our company is to deliver applications online, eliminating the need for installation and maintenance. This approach simplifies software management. Our products include more than 10 Shopify applications that are conversion-optimized and tailored made to meet customer needs. We provide our products and services worldwide across a wide range of sectors. We provide our products and services worldwide across a wide range of sectors. Our revenue from operation increased from 622.11 lakhs in FY 2022-23 to 632.90 lakhs in FY 2023-24, showing increase of 1.73%. Out of total Revenue from Operations, revenue from sale of products and revenue from sale of services constitutes 85.41% amounting to 540.55 lakhs and 14.59% amounting to 92.35 lakhs in FY 2023-24 of total revenue from operations respectively.

*Note Geographical Revenue Bifurcation

*Note Statewise Revenue Bifurcation

*Note Country-wise revenue Bifurcation

As we are engaged in the business of applications for Shopify platform, substantial part of revenue is forming part of export revenue. However, we have already commencing provision of services at domestic level also from FY 2023-24 through our Surat and Ahmedabad business office.

Other Income

Other income of the company increased to 26.80 lakhs in FY 2023-24 from 4.46 lakhs in FY 2022-23. Increase in other income mainly attributes to interest received from loans and advances and fixed deposits.

Employee Benefit Expenses

Employee Benefit expenses decreased by 177.79 lakhs from 172.68 lakhs in FY 2023-24 to 350.48 lakhs in FY 2022-23. Employee benefit expense mainly includes salaries and wages, Director remuneration and gratuity expenses. Decrease in Employee Benefit Expenses is mainly attributed to decrease in salaries and wages of employees due to decreased employee count from 100 in FY 2022-23 to 60 in FY 2023-24.

Finance Costs

Finance Costs decreased to 5.43 lakhs in FY 2023-24 from 5.46 lakhs in FY 2022-23. Finance cost includes Interest on Bank Loans, Interest on car loans and Interest on others.

Depreciation and amortization expense

Depreciation and amortization expense increase to 80.35 lakhs in FY 2023-24 from 25.01 lakhs in FY 2022-23. The increase in depreciation and amortization expenses is mainly attributable to increase in capital expenditure in computer and peripherals and Furniture & fixtures.

Other Expenses

Other Expenses increased by 43.64 lakhs to 100.18 lakhs for FY 2023-24 from 56.54 lakh for FY 2022-23. The increase in other expenses was mainly attributable to increase in Advertisement and Marketing Expenses, Rent, Legal Professional and RoC Charges. Other expenses also include Bank Charges, Electricity Expense, Office Expense & Other Expense, Domain Charges, Hosting Expenses and Cloud Space Expenses.

Profit before Tax

As a result of the foregoing, we recorded an increase of 111.97 lakhs from 189.08 lakhs in FY 2022-23 to 301.05 lakhs in FY 2023-24. The Profit before Tax for the FY 2023-24 was 45.64% of the total income and it was 30.18% of total income for the FY 2022-23.

Exceptional Item

Our company recorded exceptional item of 75.00 lakhs in FY 2023-24 due to long term gain on sale of Compulsory Convertible Debentures.

Tax Expenses

Total tax expenses for the FY 2023-24 was 92.15 lakhs amounting to 13.97% of total income as compared to 51.41 lakhs in FY 2022-23 amounting to 8.20% of total income.

Profit after Tax (PAT)

As a result of the foregoing, we recorded an increase of 146.23 lakhs from 283.90 lakhs in FY 2023-24 to 137.67 lakhs in FY 2022-23. The Profit after Tax for the FY 2023-24 was 43.03% of the total income and it was 21.97% of total income for the FY 2022-23. The primary reason for increase PAT margin was decrease in total employee expenses as above-mentioned.

Revenue from operations

Incorporated in 2017, Our company, as an IT firm, is involved in providing Software as a service (SAAS) - based digital product solutions. Our Company offers E-Commerce Store Development, Web App Development, UI/UX Design, Website development, Customize Software Development, support and maintenance with a primary focus on Shopify application development. The primary goal of our company is to deliver applications online, eliminating the need for installation and maintenance. This approach simplifies software management. Our products include more than 10 Shopify applications that are conversion-optimized and tailored made to meet customer needs. We provide our products and services worldwide across a wide range of sectors. We provide our products and services worldwide across a wide range of sectors. Our revenue from operation increased from 622.11 lakhs in FY 2022-23 to 600.09 lakhs in FY 2021-22, showing increase of 3.67%. Out of total Revenue from Operations, revenue from sale of products and revenue from sale of services constitutes 64.16% amounting to 399.14 lakhs and 35.84% amounting to 222.96 lakhs in FY 2022-23 of total revenue from operations respectively.

*Note Country-wise revenue Bifurcation

Other Income

Other income of the company decreased to 4.46 lakhs in FY 2022-23 from 7.66 lakhs in FY 2021-22. Other income constitutes only interest on fixed deposits of the company.

Employee Benefit Expenses

Employee Benefit expenses decreased from 350.48 lakhs in FY 2022-23 to 438.50 lakhs in FY 2021-22, showing decrease of 88.02 lakhs. Employee benefit expense mainly includes salaries and wages, Director remuneration and gratuity expenses.

Finance Costs

Finance Costs increased to 5.46 lakhs in FY 2022-23 from 1.60 lakhs in FY 2021-22. Finance cost includes Interest on Bank Loans and Interest on car loans.

Depreciation and amortization expense

Depreciation and amortization expense increase to 25.01 lakhs in FY 2022-23 contributing 3.99% of total income from 17.24 lakhs in FY 2021-22 contributing 2.84% of total income.

Other Expenses

Other Expenses decreased by 12.78 lakhs to 56.54 lakh for FY 2022-23 from 69.32 lakh for FY 2021-22. The decrease in other expenses was mainly attributable to decrease in Legal Professional and RoC Charges. Other expenses also include Bank Charges, Electricity Expense, Office Expense & Other Expense, Domain Charges, Hosting Expenses and Cloud Space Expenses.

Profit before Tax

As a result of the foregoing, we recorded an increase of 107.99 lakhs from 189.08 lakhs in FY 2022-23, as compared to 81.09 lakhs in FY 2021-22. The Profit before Tax for the FY 2022-23 was 30.18% of the total income and it was 13.34% of total income for the FY 2021-22.

Tax Expenses

Total tax expenses for the FY 2022-23 was 51.41 lakhs amounting to 8.21% of total income as compared to 5.80 lakhs in FY 2021-22 amounting to 0.95% of total income.

Profit after Tax (PAT)

As a result of the foregoing, we recorded an increase of 62.37 lakhs in Profit After Tax (PAT) from 75.30 lakhs in FY 2021-22 to 137.67 lakhs in FY 2022-23. The Profit after Tax for the FY 2022-23 was 21.97% of the total income and it was 12.39% of total income for the FY 2021-22. The primary reason for increase PAT margin was decrease in total employee expenses as above-mentioned.

DISCUSSION ON THE STATEMENT OF CASH FLOWS

The following table sets forth certain information relating to our Companys statement of cash flows for the periods indicated:

Operating activities

In Financial Year 2023-24, net cash generated from operating activities was 345.69 lakhs. This comprised of the profit before tax of 376.05 lakhs, which was primarily adjusted for depreciation and amortization expenses of 80.35 lakhs, finance cost of 5.43 lakhs, Gratuity expenses of (0.83) lakhs, other income of 26.80 lakhs and exceptional item due to long term capital gain on sale of debenture of 75.00 lakhs. The resultant operating profit before working capital changes was 359.20 lakhs, which was primarily adjusted for an increase in trade receivables of 49.59 lakhs, increase in loans & advances and other assets 80.17 lakhs, increase in other current assets of 11.52 lakhs, increase in Trade Payables by 0.89 lakhs, increase in other current liabilities and short-term provision of 67.42 lakhs and income tax paid of 100.89 lakhs.

In Financial Year 2022-23, net cash generated from operating activities was 153.43 lakhs. This comprised of the profit before tax of 189.08 lakhs, which was primarily adjusted for depreciation and amortization expenses of 25.01 lakhs, interest expenses of 5.46 lakhs Gratuity expenses of 4.47 lakhs and other income of 4.46 lakhs. The resultant operating profit before working capital changes was 219.56 lakhs, which was primarily adjusted for an increase in short term loans & advances and other assets 79.40 lakhs, increase in Trade Payables & Other Liabilities by 63.57 lakhs and income tax paid of 50.32 lakhs.

In Financial Year 2021-22, net cash generated from operating activities was 55.23 lakhs. This comprised of the profit before tax of 81.09 lakhs, which was primarily adjusted for depreciation and amortization expenses of 17.24 lakhs, interest expenses of 1.60 lakhs Gratuity expenses of 3.91 lakhs and other income of 7.62 lakhs. The resultant operating profit before working capital changes was 96.22 lakhs, which was primarily adjusted for an increase in short term loans & advances and other assets 21.28 lakhs, decrease in Trade Payables & Other Liabilities by 13.20 lakhs and income tax paid of 6.50 lakhs

Investing Activities

In Financial Year 2023-24, net cash used in investing activities was 448.32 lakhs, which is mainly due to purchase of fixed assets & Intangible assets under development of 392.58 lakhs, Other income of 26.80 lakhs, exceptional item of 75.00 lakhs, increase in long term loans and advances of 307.44 lakhs and decrease in non-current investment of 149.90 lakhs.

In Financial Year 2022-23, net cash used in investing activities was 292.22 lakhs, which is mainly due to purchase of fixed assets of 145.13 lakhs, increase in non-current investment of 150.40 lakhs, increase in long term loans and advances of 1.15 lakhs and other income of 4.46 lakhs.

In Financial Year 2021-22, net cash used in investing activities was 3.00 lakhs, which is mainly due to purchase of fixed assets of 10.62 lakhs, and other income of 7.62 lakhs.

Financing activities

In Financial Year 2023-24, net cash generated in financing activities was 227.52 lakhs, which is predominantly due to proceeds from issuance of shares amounting to 282.96 lakhs, decrease in borrowings of 50.00 lakhs and interest and finance cost paid of 5.43 lakhs.

In Financial Year 2022-23, net cash generated in financing activities was 276.19 lakhs, which is predominantly due to proceeds from issuance of shares amounting to 247.09 lakhs, increase in borrowings by 34.56 lakhs and interest and finance cost paid of 5.46 lakhs.

In Financial Year 2021-22, net cash used from financing activities was 49.00 Lakhs, which is predominantly due to repayment of short term borrowing of 40.67 lakhs, repayment of long-term borrowings of 6.74 lakhs and interest and finance cost paid of 1.60 lakhs.

RELATED PARTY TRANSACTIONS

For further information please refer Annexure X "Related Party Transaction" under Chapter titled "Restated Financial Statement" on page 165 of the Draft Red Herring Prospectus.

FINANCIAL MARKET RISKS

We are exposed to financial market risks from changes in borrowing costs, interest rates and inflation. INTEREST RATE RISK

We are currently exposed interest to rate risks to the extent of outstanding loans. However, any rise in future borrowings may increase the risk. EFFECT OF INFLATION

We are affected by inflation as it has an impact on the material cost, operating cost, staff costs etc. In line with changing inflation rates, we rework our margins so as to absorb the inflationary impact.

INFORMATION REQUIRED AS PER ITEM (2) (C) (I) (11) OF PART A OF SCHEDULE VI TO THE SEBI REGULATIONS, 2018:

Factors that may affect the results of the operations:

1. Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions to the best of our knowledge which may be described as "unusual" or "infrequent".

2. Significant economic changes that materially affected or are likely to affect income from continuing operations. Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page no. 28 of the Draft Red Herring Prospectus. To our knowledge, except as we have described in the Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page no. 28 in this Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known.

Our Companys future costs and revenues will be determined by demand/supply situation, government policies and other external and internal economic factor.

5. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or increased sales prices.

Our Company is engaged in business of manufacturing fabricated and hot-dip galvanized steel products. Increases in revenues are by and large linked to increases in Sale of our products and also dependent on the price realization of our products.

6. Total turnover of each major industry segment in which the issuer company operated.

Our company, as an IT firm, is involved in providing both Software as a service (SAAS) -based and product-based digital solutions. Our Company offers E-Commerce Store Development, Web App Development, UI/UX Design, Website development, support and maintenance with a primary focus on Shopify app development. Relevant Industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page no. 101 of this Draft Red Herring Prospectus.

7. Status of any publicly announced new products or business segment.

Otherwise as stated in the Draft Red Herring Prospectus and in the section "Business Overview" appearing on page no. 111, Our company has not publicly announced any new business segment till the date of this Draft Red Herring Prospectus.

8. The extent to which business is seasonal.

Our company, as an IT firm, is involved in providing both Software as a service (SAAS) -based and product-based digital solutions. Our Company offers E-Commerce Store Development, Web App Development, UI/UX Design, Website development, support and maintenance with a primary focus on Shopify app development. We provide our services worldwide across a wide range of sectors. Business of our company is not seasonal in nature.

9. Any significant dependence on a single or few customers.

The percentage of contribution of our Companys customer vis-a-vis the total revenue from operations respectively for the year ended on March 31, 2024, March 31, 2023 and March 31, 2022 is as follows:

10. Competitive conditions:

We face competition from existing and potential competitors which is common for any business. We have, over a period of time, developed certain competitors who have been discussed in section titles "Business Overview" beginning on page no. 111 of this Draft Red Herring Prospectus.