GLOBAL ECONOMY
After the snapback recovery of the economies around the world with a
sharp rebound to Mars in 2021, 2022 saw things coming back to Earth once again. Sanity
started hitting the market and 2022 turned out to be a year of resilience where we saw an
elevated inflation, higher interest rates, turmoil in the banking system of some advanced
economies, tight financial conditions and so called recessionary fears. This meant
consumers turning frugal and spending cautiously. As we move towards 2023, experts are
hopeful that the global economy is up for gradual recovery. Supply-chain disruptions are
unwinding and the tightening of monetary policy by most central banks may start to bear
fruit and inflation may start moving back towards its target. However, it is uncertain and
yet to be seen, what kind of slowdown would 2023 bring.
According to the International Monetary Funds (IMF) World
Economic Outlook released in April 2023, the global growth is expected to bottom out at
2.8% in 2023 from 3.4% in 2022, and rise then moderately to 3.0% in 2024. However, this is
significantly dependent on the pace and sequence of further monetary tightening, the
course and consequences of the Russia – Ukraine war, geopolitical tensions and the
potential for further supply-chain disruptions. For advanced economies, the slowdown is
anticipated to be more pronounced, with a decline from 2.7% in 2022 to 1.3% in 2023. The
United States economic growth is projected to slow down to 1.6% in 2023 and 1.1% in 2024
from 2.1% in 2022 as Federal Reserve interest-rate hikes work their way to balance rising
inflation. Euro area conditions are more challenging despite signs of resilience to the
energy crisis and generous fiscal support. With the European Central Bank tightening
monetary policy, and a negative terms-of-trade shock due to the increase in the price of
its imported energy, IMF expects growth to bottom out in Europe at 0.8% in 2023. The
global inflation is forecasted to decline from 8.7% in 2022 to 7.0% in 2023 and 4.9% in
2024, still above pre-pandemic levels of 3.5% in 2019.
INDIAN ECONOMY
The Indian economy continues to remain resilient amid global
uncertainties. Growth impulses are witnessing a boost from the easing of supply side
pressures and a rebound in services activity.
As per International Monetary Funds (IMF) World Economic Outlook
released in April 2023, the Indian economy is projected to grow at 5.9% in 2023, a drop
from 6.8% in 2022, before rebounding to 6.3% in 2024.
According to the Reserve Bank of Indias (RBI) Bi-monthly Monetary
Policy released on 6th April 2023, the Indian economy grew at 7% in 2022-23. The growth is
primarily driven by strong public investments and buoyant private consumption. Businesses
and consumers surveyed by the RBI are optimistic about the future outlook. Strong credit
growth, stable Indian financial markets, and the governments continued thrust on
capital spending and infrastructure create a favourable environment for investment. On the
other hand, a slowdown in global activity is expected to have a negative impact on exports
weakening the external demand environment. Persistent geopolitical tensions and
challenging global financial conditions pose risks to the outlook. Taking all these
factors into consideration, the Indian Economy is projected to grow at 6.5% in 2023-24
(v/s 5.9% projected by IMF) with Q1:2023-24 at 7.8%; Q2 at 6.2%; Q3 at 6.1% and Q4 at
5.9%.
Economies across the globe are slowing sharply due to headwinds
discussed in the above industry sections. Economists are warning that the slowdown would
be widespread and any adverse developments risk could push the global economy into
recession.
Overview of World Economic Outlook Projections (%)
| Economy |
Actual |
Projections |
|
2021 |
2022 |
2023 |
2024 |
| World Output |
6.2 |
3.4 |
2.8 |
3.0 |
| Advanced Economies |
5.4 |
2.7 |
1.3 |
1.4 |
| United States (US) |
5.9 |
2.1 |
1.6 |
1.1 |
| Eurozone |
5.3 |
3.5 |
0.8 |
1.4 |
| Japan |
2.1 |
1.1 |
1.3 |
1.0 |
| United Kingdom (UK) |
7.6 |
4.0 |
(0.3) |
1.09 |
| Other Advanced Economies |
5.3 |
2.6 |
1.8 |
2.2 |
| Emerging Market and Developing Economies |
6.7 |
4.0 |
3.9 |
4.2 |
| China |
8.4 |
3.0 |
5.2 |
4.5 |
| India |
8.7 |
6.8 |
5.9 |
6.3 |
Source: IMF – World Economic Outlook (WEO) April 2023
IT Sector
In 2022, the IT sector experienced a roller coaster of changes. Instead
of the straightforward post-pandemic world of recovery and growth, the industry first
confronted an insane demand environment with shortage of supply and then with high
inflation, financial volatility and fears of recession. As we close 2022-23, the industry
seems to be moving towards the pre-pandemic era. With the supply-side issues easing,
efforts are required to generate demand as the overall environment remains uncertain in
the short term. Nonetheless, experts opine that the IT sector is fundamentally strong and
will overcome adverse conditions in the coming years.
As per January 2023 release by Gartner, the worldwide IT spending is
estimated to total USD 4.5 trillion in 2023, reflecting an increase of 2.4% from 2022. The
software and IT services segments are expected to grow at 9.3% and 5.5% in 2023,
respectively. Despite the fact that inflation is distressing consumer markets and causing
layoffs at B2C companies, organisations are required to continue investments in digital
transformation and emerging technologies such as Artificial Intelligence (AI), Cloud
Computing, Robotics Process Automation (RPA) or Hyper Automation, Platform Engineering,
Machine Learning (ML), Big Data Analytics, Blockchain, Internet of Things (IoT) and
Cybersecurity to remain agile and sustain in competitive environment. A turbulent economy
has shifted the context of business decisions and can cause CIOs to become more cautious,
delay decisions or rearrange priorities. Gartner sees this in action with the reallocation
taking place among some B2B companies, especially those that overinvested in growth.
However, IT budgets are not driving these shifts, and it is anticipated that the IT
spending would remain resilient to the economic slowdown with cautious decision making.
The Indian industry is steadily enhancing its digital capabilities through the adoption of
deep tech technologies and a focus on the implementation of cutting-edge technology
solutions like AI, Cybersecurity, IoT, AI/ML, Blockchain and Automation. Nasscom also
predicts a significant shift towards automation and robotics, which is expected to drive
efficiency and reduce costs for firms in the future.
According to Nasscoms Strategic Review 2023 report, the Indian
Information Technology – Business Process Management (IT-BPM) industry revenue stood
at USD 226 Bn in FY2022 and is expected to reach USD 245 Bn in FY2023, in reported
currency with a cross-currency impact of 2%. This reflects an incremental net revenue
addition estimated at USD 19 billion during the year. The growth was broad-based across
segments of IT services, BPM, Software products, ER&D and Domestic market. Indian IT
exports are likely to touch USD 194 Bn in FY2023, which is ~79% of revenue, reflecting a
growth of 9.4% over FY2022. Growth in exports is seen across all the major markets. The
USA growing at 10.4% and APAC at 10.1%, each continues to be the major market. FY2023
recorded growth across core sectors-BFSI, Manufacturing, and Telecom/HiTech, emphasizing
the industrys resilience narrative. However, specifically for 2024, it looks like
the industry focus is moving from bold investing in growth to cautious investing in
growth. But as we look towards the long term story, propelled by forward-looking policies,
strong governance, talent and digital trust to ensure accessibility, privacy, security,
and reliability, the Indian IT sector is on track to accelerate growth to USD 500 Bn by
2030.
With over 5.4 million workforce, the Indian IT sector continues to
remain the net employer and added 290,000 new jobs in FY2023. The industry continues to
lead in the adoption of AI skills, with a workforce that is 36% digitally skilled and the
second-largest talent pool for AI/ML BDA.
According to a McKinsey CIO survey, 75% of CIOs anticipate that
spending on digital will continue with evolving priorities as per changing macroeconomic
environment. As consumer preferences are changing rapidly, tech service providers are
shifting their focus to being transformational partners from vendors with a focus on
bringing domain specialization and impact-based business models.
In 2023-24, the IT industry priorities will be to invest in digital
capabilities and emerging technologies, shift from vendor to digital transformation
partner, increase focus on learning and upskilling, and develop the value enablers of
sustainability, inclusion and trust. In the current uncertain economic environment,
strategic execution will be the key differentiator for organizations.
Company Overview
InfoBeans, founded in 2000 and now 1450+ strong, is a publicly listed
Digital Transformation and Product Engineering organization. We strive to deliver
exceptional value to our clients using the best software technologies while solving their
complex business problems. Strengthened by our partnership with Salesforce, ServiceNow,
Microsoft, UiPath and Automattic, our services enable corporations to digitally transform
their businesses and gain competitive advantage.
Creating WOW! is not just a tagline for us, its our religion!
On 10th November, 2022, InfoBeans got listed on the countrys
premier stock exchange, BSE, and conducted the Opening Bell Listing Ceremony in the august
presence of Shri Shivraj Singh Chouhan (Hon. Chief Minister of Madhya Pradesh), and
InfoBeans co-founders Siddharth Sethi and Avinash Sethi. Also present on the
momentous occasion were Shri Rajvardhan Singh Datigaon (Hon. Minister, Department of
Industrial Policy and Investment Promotion – DIPP, Government of India) and Shri
Sanjay Kumar Shukla (IAS) (Principal Secretary, DIPP, GOI). The InfoBeans BSE listing is
one more WOW moment for the Company that started in the heart of India and now has spread
its wings globally.
REVIEW OF FINANCIAL AND OPERATING PERFORMANCE
Financial Performance Review
For the year ended March 31, 2023, our business performance in terms of
revenue witnessed strong growth. This was true at both Standalone and Consolidated level.
Profit & Loss Statement
On a consolidated basis, the Company registered a total revenue of INR
399 Crores (including other income of INR 14 Crores) for the year ended March 31, 2023, as
compared to INR 289 Crores (including other income of INR 18 Crores) for the year ended
March 31, 2022, registering a growth of 38%. The Company registered a net profit of INR 36
Crores for the year ended March 31, 2023, as compared to INR 55 Crores in the year ended
March 31, 2022. The key reason for the drop in our PAT numbers is our investments in our
team and technology, which is ~8% of FY23 revenue. As mentioned before, our focus remains
steady on capturing the revenue first and simultaneously optimize processes and team
structure to improve the margins in the near term.
Balance Sheet
APPLICATION OF FUNDS
NON CURRENT ASSETS
1. Property plant and equipment:
Property, plant and equipment as on March 31, 2023, did not observe any
significant movement from the previous year and remained stable at INR 14 Crores
2. Other intangible asset
Other intangible assets as on March 31, 2023, were INR 118 Crores as
compared to INR 131 Crores in the previous year. Variance is explained as below:
• Amortization charge of INR 15 Crores
• Exchange rate adjustment of INR 2 Crores
3. Non- current financial assetsp>
A. Investments
Non-current investments as on March 31, 2023, were nil as compared to
INR 33 Crores in the previous year.
B. Other financial assets
Other financial assets as on March 31, 2023, were INR 4 Crores as
compared to INR 3 Crores in the previous year.
4. Deferred tax assets
A. Deferred tax assets (net) as on March 31, 2023, did not observe any
significant movement from the previous year and remained stable at INR 17 Crores. B.
Income tax assets (net) as on March 31, 2023 were nil as compared to INR 1 Crores in the
previous year.
5. Current financial assets
A. Investments
The current investments as on March 31, 2023, were INR 70 Crores as
compared to INR 3 Crores in the previous year.
B. Trade receivables
Trade receivables as on March 31, 2023, were INR 64 Crores as compared
to INR 68 Crores in the previous year.
C. Cash and cash equivalents
Cash and cash equivalents as on March 31, 2023, were INR 33 Crores as
compared to INR 41 Crores in the previous year.
Bank balance other than cash and cash equivalents as on March 31, 2023,
were INR 11 Crores as compared to INR 21 Crores in the previous year.
D. Other financial assets
Other financial assets as on March 31, 2023, did not observe any
significant movement from previous year and remained stable at INR 1 Crores.
6. Other current assets
Other current assets as on March 31, 2023, did not observe any
significant movement from previous year and remained stable at INR 6 Crores.
SOURCES OF FUNDS
EQUITY AND LIABILITIES
7. Total equity
We have only one class of equity share of par value Rs. 10 each. The
issued, subscribed and paid-up capital along with other equity stood at INR 272 Crores as
at March 31, 2023, which was INR 231 Crores in the previous year. During the year, we have
allotted 79,801 Equity Shares to the eligible team members as per the InfoBeans
Partnership Programme, (Employee Stock Option Plan 2016), resulting in an increase in the
number of Equity Shares.
8. Non current financial liabilities
Non current financial liabilities
(includes borrowings, lease liability and other financial liability).
The non-current financial liabilities as on March 31, 2023, were INR 60
Crores as compared to INR 77 Crores in the previous year.
9. Long term provisions
The long term provisions as on March 31, 2023, were INR 9 Crores as
compared to INR 7 Crores in the previous year.
10. Current financial liabilities
Current financial liabilities (includes borrowing, lease liability,
trade payables and other financial liability).
The current financial liabilities as on March 31, 2023, were INR 40
Crores as compared to INR 61 Crores in the previous year.
11. Other current liabilities
The short-term other current liabilities as on March 31, 2023, were INR
10 Crores as compared to INR 8 Crores in the previous year.
12. Short term provisions
The short-term other current liabilities as on March 31, 2023, were INR
3 Crores as compared to INR 2 Crores in the previous year.
13. Current tax liabilities
The current tax liabilities as on March 31, 2023, were INR 2 Crores as
compared to nil in the previous year.
Financial Ratios
In accordance with the SEBI (Listing Obligations and Disclosure
Requirements 2018) (Amendment)
Regulations, 2018, the Company is required to give details of
significant changes (change of 25% or more) as compared to the immediately previous
financial year) in key sector-specific financial ratios.
The Company has identified the following ratios as key financial
ratios:
Ratios |
March 31, 2023 |
March 31, 2022 |
Change |
Remarks |
| Debtors Turnover |
5.84 |
5.40 |
8% |
|
Current Ratio |
3.41 |
1.97 |
73% |
The Company has additional
investment in securitiesRs. in the current year classified as current investment |
| Debt Equity |
0.13 |
0.13 |
1% |
|
Operating Profit Margin |
14% |
23% |
-40% |
Changed due to increase in
Employee benefit expenses |
Net Profit Margin |
9% |
19% |
-53% |
Changed due to increase in
Employee benefit expenses |
People
The success of a company relies on the strength of its people and
InfoBeans is no different. Being in the service industry, our people are the greatest and
most important asset we have. The success of InfoBeans is dependent upon engaged,
motivated individuals who love what they do. InfoBeans has for long held a reputation for
being a great place to work-a reputation we have worked very hard to earn over the last
two decades and for which we have been awarded multiple times. Our commitment to providing
a positive, productive environment is so critical that it is one of our core values and is
what makes the Company a great place to work. We continue to deploy different strategies
like stock options, retention bonuses, people friendly policies, deep engagement, and
career progression plans for the majority of the team. We continue to hire aggressively
across our service offerings, especially at the bottom of the pyramid. During the year, we
opened our third office in Baner, Pune, after Viman Nagar and Aundh having 500+ seating
capacity. We witnessed an impressive increase in projects, predominantly Salesforce, over
the last several years. This led us to the decision to open a new office in the best
emerging tech hub in the world – Pune. This center will serve as a Center of
Excellence focusing primarily on Salesforce with other offerings like cloud, automation
and enterprise mobility. The new office is undeniably a part of our plans for continuous
growth. The new office will allow us to invite more brilliant minds to our already
existing team of Salesforce trailblazers. These new opportunities will add more jobs to
the local economy and further attract the brightest minds in the country.
This year we held our flagship annual event (coming back after 3 years
this time), Innovation Day 2023, to showcase our craft, prowess and potential. InfoBeans
Flagship event Innovation Day 2023 was held at both Pune and Indore on 21st and 22nd
January 2023 respectively. The event saw 60+ innovative ideas and boosted the culture of
innovation to enhance problem solving and optimize solutions for the clients. It was a
great opportunity for our team members to bond and showcase their talent to select
customers, investors and their own InfoBeans team at large. Innovation day was successful
in strengthening the culture, bolstered team bonding and witnessed great teamwork.
InfoBeans has a mission to deliver value to all our stakeholders and
our people are no exception. We have undertaken initiatives to strengthen recruitment and
team engagement, through leadership and development programs. Our benefits move beyond
healthcare and retirement savings into wellness programs, volunteer time, and one of the
most cherished, flexible work schedules. These factors are critical to our success as we
expand our global footprint.
INTERNAL CONTROL SYSTEMS & RISK MANAGEMENT
In view of the changes in the Companies Act, the Company has taken
additional measures to strengthen its internal control systems. Additional measures in
this regard are fraud risk assessment, mandatory leave for employees, strengthening the
background verification process of new joiners, whistle blower policy, and strengthening
the process of risk management.
The Company maintains a system of internal controls designed to provide
a high degree of assurance regarding the effectiveness and efficiency of operations, the
adequacy of safeguards for assets, the reliability of financial controls, and compliance
with applicable laws and regulations. The organization is well structured, and the policy
guidelines are well documented with predefined authority.
The Company has also implemented suitable controls to ensure that all
resources are utilized optimally, financial transactions are reported with accuracy and
there is strict adherence to applicable laws and regulations. The Company has put in place
adequate systems to ensure that assets are safeguarded against loss from unauthorized use
or disposition and that transactions are authorized, recorded and reported.
The Company also has an exhaustive budgetary control system to monitor
all expenditures against approved budgets on an ongoing basis. Recognizing the important
role of internal scrutiny, the Company has an internal audit function which is empowered
to examine the adequacy of, and compliance with, policies, plans and statutory
requirements. It is also responsible for assessing and improving the effectiveness of risk
management, control and governance processes. Periodical audit and verification of the
systems enables the various business groups to plug any shortcomings in time. As stated
earlier the Company has improved the effectiveness of the risk management process wherein
it evaluates the Companys risk management system and suggests improvements in
strengthening risk mitigation measures for all key operations, controls and governance
processes. Further, these controls are tested by our statutory auditor SRBC & Co. (one
of the member firms and affiliates of EY). The top Management & the Audit Committee of
the Board periodically review the findings and ensure corrective measures are taken.
INDUSTRIAL RELATIONS
The Company has maintained cordial industrial relationships during FY23
RISKS & CONCERNS
This section lists forward-looking statements that involve risks and
uncertainties. Our actual results could differ materially from those anticipated in these
statements as a result of certain factors.
OUTLOOK
Consistent, responsible, and sustainable growth is at the core of
InfoBeans mission. Growth consistency is essential to staying relevant in the
current cutthroat competition. We intend to achieve this over the long-term using a
combination of organic and inorganic techniques.
Organic
We are investing heavily in increasing revenue globally and expanding
our capability mix to new age cloud, Blockchain/NFT and AI based technologies. Our strong
partnerships with Salesforce, ServiceNow, UiPath, Automatic not only helps us in expanding
the business with our existing clients but also helps us get foot into the door of new
enterprise clients with sound financials who have long-term requirements for cutting-edge
cloud solutions. We continue to expand our footprint in North America and continue to
invest in developing a very strong engineering team to deliver the best solutions and
foster a positive work environment.
In-organic
In addition, InfoBeans has a clear inorganic growth strategy in place,
supported by ample cash on hand and a strong desire to meet the growth goals we have set
for ourselves. We at InfoBeans are confident in our ability to generate sustainable growth
and continue to be adaptable for the foreseeable future, despite challenges like
geopolitics, macroeconomic changes, supply chain disruptions, and inflation. In the coming
years there will be a significant demand for digital transformation, and we are
well-positioned to meet that demand with faster growth.
CAUTIONARY STATEMENT
This document contains statements about expected future events,
financial and operating results of InfoBeans Technologies Limited, which are
forward-looking. By their nature, forward-looking statements require the Company to make
assumptions and are subject to inherent risks and uncertainties. There is a significant
risk that the assumptions, predictions, and other forward-looking statements will not
prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking
statements as a number of factors could cause assumptions, actual future results and
events to differ materially from those expressed in the forward-looking statements.
Accordingly, this document is subject to the disclaimer and qualified in its entirety by
the assumptions, qualifications and risk factors referred to in the managements
discussion and analysis of InfoBeans Technologies Limiteds Annual Report, FY2023.
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