Inspirisys Solutions Ltd Management Discussions.

ANNEXURE-II

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

Enterprises of today are reimagining multiple aspects of their business model, investing in technology-led product customer analytics and insights, orserviceinnovation, and core transformation programs. We hear most of the Board Room Discussions today hover around who could threaten their existence by bringing about a complete disruption in the way business can be done. In FY 2019, 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. Business Process Management grew by 4.5% over the prior year, on account of greater focus on automation, while packaged software grew 7.4% YoY, driven by rapid adoption of SaaS, and security and privacy solutions.

The global economy is projected to grow at 3.5% in 2019 and 3.6% in 2020, attributed to escalating trade tensions between US and China, soft domestic demand in Italy after recent sovereign and financial risks, weakness in

German auto manufacturers due to new fuel emission standards and weakening sentiment in global financial markets. Europes factory output declined by the biggest margin in three years. According to leading indicators released by the Organization for Economic Cooperation and Development (OECD), the US and many other economies are set for a further slowdown this year. While the World Bank also cut the growth forecast for advanced economies in 2020 to 1.6% (down from 2.2% in 2018), the future is somewhat brighter for the emerging world. As the World Bank report emphasizes, emerging economies are increasingly strained by government debt, which has risen by 20 percentage points of GDP, on average, since 2013, with payments owed largely to private creditors demanding high interest rates. (Source: IMF, World Economic Outlook, January 2019)

Indian Economy

Indias growth accelerated to an estimated 7.3% in FY 2018 (April to March) as economic activitycontinued to recover with strong domestic demand, which is expected to widen the current account deficit to 2.6% of GDP next year. The World Bank stated in its January 2019 Global Economic Prospects report that while investment continued to strengthen amid the GST harmonisation and a rebound of credit growth, consumption remained the major contributor to growth. Itattributedthepositive sentiments to an upswing in consumption and investment growth, as the benefits of structural reforms such as the Goods and Services Tax (GST) harmonisation and bank recapitalisation took effect. Inflation is projected to rise somewhat above the midpoint of the Reserve Bank of Indias target range of 2% to 6%, mainly owing to energy and food prices. The World Bank report said, India climbed eight places in the latest annual International Intellectual Property (IP) Index released by the US Chambers of Commerce to reach 36th place out of 50 countries, climbing from 44th rank in the index last year.

The Political Stability attained with recently concluded General elections will also have its bearing in the way economy should be shaping up over next 2 to 3 years.

Global IT Industry and IT spending: Key Growth Drivers

IT spending is witnessing a shiftfrom ownership to service - increase in use of varied IT services aligned with contemporary technologies by enterprises to not only reduce cost, but gain agility to deal with sustained and rapid changes, and ultimately help them in digital transformation.

Cloud based solutions& services is projected to grow at more than 22% this year, compared with 6% growth for all other forms of software. However, spending is not uniform across geographies. US contributes 60% of the cloud spend. Lack of hyper scale data centres in developing markets contributes to slow growth on cloud spend.

Global spending on Enterprise security is expected to surpass USD 133 billion in 2019; in EMEA (due to GDPR) it is expected to reach USD 40 billion in 2019, up 7.8% from 2018.

Expected global slowdown in economic prosperity, paired with internal pressures to cut spending, is driving organisations to optimise enterprise external spend for business services (IT services and supplier consolidation are optimisation top three most effective cost-approaches).

In additionto buying behaviour changes, the larger challenge engulfing IT Companies is about the technical staff which is beginning to lag as organisationsadopt new technologies, such as IoT devices, to drive digital business. Nearly half of the IT workforce is in urgent need of developing skills or competencies to support their digital business initiatives as artificial intelligence (AI), machine services platform design and data science are changing faster than ever before.

Indian IT Sector Overview

India continuesto be among one of the leading sourcing destination for approximately 55% market share of the USD 185-190 billion global services sourcing business in 2017-18. Indian IT & ITeS companies have set up over 1,000 global delivery centres in about 80 countries across the world. India has becomethedigitalcapabilitieshub of the world with around 75 per cent of global digital talent present in the country. Indias IT & ITeS industry was valued at USD 167 billion in 2017- 18. Exports from the industry increased to USD 126 billion in FY 2018, while domestic revenues (including hardware) advanced to USD 41 billion. Spending on Information Technology in India is projected to grow over 9% to touch USD 87.1 billion in 2018. Revenue from the digital segment is seen comprising 38% of the forecasted USD 350 billion industry revenue by 2025. (Source: NASSCOM & Gartner)

B. OPPORTUNITIES & THREATS

Enterprises are increasingly embracing business models that are defined by technology, structurally driving up technology intensity across industries. This, as well as the greater leverage of technology for competitive differentiation, significantly increases the market opportunity for us. As enterprises become more technology-defined, they will aspire to work and partner with Inspirisys SolutionsLimited (ISL) kind of who understand their businesses very well and help align, build, innovate solutions - services around most contemporary technologies which can provide them the desired competitive edge in market.

The opportunities ahead are huge. Imbibing right set of values and guiding principles, ISL is positioning itself well to become the trusted and preferred partner of choice to every business enterprise in India & Globally to help establish and meet their growth aspirations digital transformation milestones. Having initiated a brand new GTM last year, we have noted the continually evolving and growing adoption of digital technologies such as Cloud, IoT, Analytics, Machine Learning, AI, RPA driven automation reaching an inflexion point which is triggering large re-architecture programs. This is a strong endorsement to the fact of such technologies becoming mainstream for most enterprises to bet their investments in as part of overall Digital Transformation supporting their business needs It is also pretty significant to discussions today harbour around the kind of competition they would be facingnowtofuture.ConventionalBusiness , Data Science, Cloud and AI.

Models are being challenged by Technology driven Apps that the Millennial and Gen Z are more amiable to use and adopt. The enterprises are thus reimagining multiple aspects of their own business model, investing in technology-led product or service innovation,customer analytics and insights, and core transformation programs. These envisaged engagements can be huge in its scope, spread over multi-years.ISLispositioningitself in this space by leveraging and establishing a robust ecosystem via partnering with focused start-ups which have built specific solution servicesoffering.

BUSINESS OVERVIEW

Head-quartered in Chennai, Inspirisys Solutions continues to being a preferred partner for many Enterprises in BFSI, Govt / PSU, Telecom while Healthcare & Manufacturing will be strongly focused to expand and extend its dominance amid similar sized and structured competitors. The key services it provides to its clients globally include - Infra (Managed Services, RIM, DC Optimization), & Services. It has Modernization Solutions and Consulting to provide customised solutions builtinherentcapabilities + services offerings to its clients, which leverages robotic process automation, AI based framework designs as well as SOC. The services include integration, development support, testing services and implementation.

Key Industry Segment

Banking & Financial Services

Health & Insurance

Travel & Transportation

Manufacturing & Consumer

Professional Services entities,

Continuing its Business Transition helping its Customers "Experience Possibilities"

The Company continues to be on a transformation journey which commenced mid last year, helping organisations inculcate most contemporary technologies which align, suit and fit their business aspirations of doing more with less - delivering better, more value to their customers.

Key Service Offerings

Enterprise Security and

Cloud

IoT

Product Engineering & Development

o Banking

o Non-Banking

o Mobility

Enterprise Infrastructure Services

Key Elements helping drive the aspired Growth Engine:

Strategy Creating Value - Internally and for Customers.

Leveraging Solution - Services Ecosystem with that manyboard room expanded Partner Network involved in most contemporary technology space of Digital

Transformation, which can Creatinga highly empowered organization adapt & transform rapidly.

Establishing ISL (Inspirisys Solutions Equity among being top notch thought leaders globally.

Focus on Innovation and IP Creation.

PARTNER-LED GROWTH STRATEGY

It is a recognition that drives a strong belief that when there are smarter, smaller entities building efficient solutions it is imperative to build a partner ecosystem through collaboration with focused Start-up Tech firms, Innovative technology vendors, Platform vendors and business software providers. The right blend of partners, combined with unique service offerings and frameworks Limited and under pinned by robust governance models, enables ISL to help customers reach their goals faster. This growth strategy will help offer disruptive tech solutions and services to Enterprises Globally. Addressing specific Critical Business Issues within an Enterprise solution - service is the key. Generic offerings today do not address business challenges. ApplicationDevelopment, Over the past few years, ISL has been involved in developing "ahead-of-times" Prototypes, POCs and Solutions for diverse industries (be it for a Large Retail -converged technology, IoT & outlet, an Aerospace manufacturer, a Major Automobile manufacturer, an Insurance conglomerate, a Farming enterprise etc.) jointly developed with partners. These path-breaking innovationsprovide a strong precedence and conviction to new technologies effectively and address business challenges while driving market differentiator for themselves.

C. FOCUS AREAS OF THE COMPANY

The Company has successfully reorganized its business to focus on 5 practices Viz., IT Infra services, IT Security, Cloud, IOT and Product Engineering Development across the Banking, Telecom, Manufacturing, Government/PSU, Healthcare verticals.

This has helped the company to leverage across practices to provide end to end IT solutions and address cross sell - upsell opportunities prospective clients. The restructure has also enabled the company to be domain focussed and be more relevant to its customers who are on their digital transformation journey.

We are also creating a strategic and growth oriented partnerecosystem.These alliancewithnichesolution/ Technology vendors provide a platform for the company to strengthen its offerings in the focussed verticals and increase its market foot print.

The overall needtoadopt focus of the Company continues to be on increasing the share of the services business in India, increase the share of the exports / overseas business, cross-sell its services across divisions and geographies, develop niche products and services and target private sector including multinational above measures will help in improving the profitability of the Company over the long run.

D. RISK MANAGEMENT

The Board continues to provide the guidance to the company in terms of ascertaining the risk factors as applicable to the companys business and providing the direction to assess and mitigate the same. The company from its existing as well as periodically assesses the risks involved in the business and reports to the Board for them to take necessary steps in mitigating them.

E. DETAILED REVIEW OF FINANCIAL PERFORMANCE

The financial statements are prepared in compliance with the Companies Act, 2013 and Ind AS.

The following table gives an overview of the financial results of the company on a consolidated basis:

Particulars Year ended 31 March 2019 Year ended 31 March 2018
In र Lakhs % In र Lakhs %
Revenue
Revenue from operations 54,641 98% 48,559 98.50%
Other income 751 2% 732 1.50%
Total revenue 55,392 100% 49,291 100%
Expenses
Materials / Service costs 26,995 49% 21,993 45%
Employee benefits expense 13,359 24% 13,998 28%
Other expenses 12,339 22% 12,800 26%
Total expenses 52,693 95% 48,791 99%
EBITDA 2,699 5% 500 1%
Finance costs 1,825 3% 1,923 4%
Depreciation and amortization expense and impairment loss 469 1% 670 1%
Profit / (loss) before tax and exceptional items 405 1% (2,093) -4%
Exceptional items - - (1,566) -3%
Profit / (loss) before tax 405 1% (3,659) -7%
Tax expense 338 1% 209 1%
Profit / (loss) for the year 67 - (3,868) -8%
Profit from discontinued operations (net of tax) - - 5,078 10%
Profit 67 - 1,210 2%
Other comprehensive income for the year, net of tax (136) 0% 137 0%
Total comprehensive income for the year (69) 0% 1,347 3%
Minority interest - - (265) -1%
Total comprehensive income after Minority Interest (69) 0% 1,082 2%

F. REVENUE ANALYSIS

in lakhs
BUSINESS MIX FY 2019 % FY 2018 %
SI - System Integration 27,751 51% 23,090 48%
Services 24,601 45% 23,350 48%
WMS - Warranty Management Services 2,274 4% 1,972 4%
Training 15 0% 147 0%
TOTAL 54,641 100% 48,559 100%

G. ANALYSIS OF BUSINESS BY SERVICE

The Infra practice continue to be the largest revenue earner for the company. We are positioning ourselves as a System Integrator of choice, where the IT products are provided only as a complement to our IT service offerings rather than selling stand-alone products.

We have set up an SOC (Security Operations Center) to provide managed security services to our clients. The MSOC and RIMS, will help the company to cater to the Global Enterprise customers in the Infra and Security space. We are also seeing demand for our Cloud services and in the coming years, we expect the Infra and IT security and Cloud services to be export revenue earners apart from the software services Viz, IOT & Project engineering Development.

WMS business has turned profitable and continues to show a steady growth over the past years. Though the WMS business remains competitive, our continuous endeavour has been to significantly improve quality of services rendered, focus on Customer experience delight initiatives and control costs by improving Operational Efficiencies resulting in this turnaround.

H. HUMAN RESOURCE MANAGEMENT

ISL has inculcated and imbibed a diversified workforce and varied cultures. It is thus comprisingmultinationalities imperative that Core of HR Practicepivots around every employees individual development and welfare. Having a workforce which is High on Enthusiasm, Empowerment and Energy is a continuous and evolving journey in the current market dynamics. It is thus a clear objective that ISL will have the HR Processes and Competencies to be well alignedwithBusinessentitieswithinandbe are, estimated useful life of the assets is applicationsoftw greater contributor in achieving Goals of Growth & Better Profits.

AttractingwellsoughtforTalentsandcontinueduplifting skills of existing workforce will be two key criteria in making ISL a great place to work for.

The Corporate HR team focuses catering to functional areas such as:

• Talent acquisition

• Compensation and Benefits

• Automation, Key Policies & Guidelines, People processes

• Capability Development

• Learning & Development initiatives

• Employee Delight Programs

Company recognizes the immense value of its true assets - Human Assets in the business we are in. Right time resourcing with Right Talents and Retaining them is a continuous challenge. Establishing a business aligned, business aware HR function is one step the company has initiated. Employee Delight Initiatives are evolved / improvised to ensure retention of required talent.

Performance Measurement Guidelines with Quarterly led Reviews are aimed to ensure building up the company which is Performance Driven. A comprehensive initiative around updating the Employee Guidelines & HR Policies (for all Geos) to keep it current is nearing completion, as well as implementing a more user friendly - employee driven HRMS system. ISL prides itself in being more humane and aligned organization where Passion, Fun and Customer Happiness Quotient are paramount. This company will continue to innovate and create platform for personal growth and success by initiating a few more of the following:

Learning and Development:

o Designing Framework to Implement Digital Platform learning

o Soft skill framework

o Continue improving in-house training deliverables

• Employee Connect via Zero Hour with Existing Employee.

• Creating a highly positive experience for all new recruits aswellthoseexitingthecompany.

• Employee Engagement Map Design by Channelizing, Implementation & Rework based on feedbacks.

• Employee Climate Survey.

• Continuous Communication through HR Info.

I. DEPRECIATION AND AMORTIZATION

The Company has been following straight-line basis of depreciationand has depreciated assets based on the rates mentioned in the Companies Act. In respect of taken as 7 yearsandhasaccordinglyamortized the value of the software assets capitalized. Intangible asset in the form of goodwill is being amortized over a period of ten years. Considering the indefinite life of the goodwill, the Amortisation of goodwill has been stopped from the current year. This asset will be tested for impairment at the end of every financial year.

J. FINANCING COSTS

The company had obtained working capital loans from Japanese banks at a much lower cost on account of guarantees from the holding company from Japan. This has helped the company to contain the interest costs.

K. TAXATION

The company on account of the brought forward business losses did not provide for the tax under the normal computation. Accordingly the tax has been provided under the provisions of MAT. Further on account of losses in the overseas subsidiary no taxes are provided for the year under review for the overseas subsidiary companies

The ConsolidatedBalanceSheetofInspirisysSolutions (Formerly Accel Frontline Limited) is given below :

in lakhs
ConsolidatedBalanceSheetofInspirisysSolutionsLimited
31 March 19 31 March 18
ASSETS
Non-current assets
Property, plant and equipment 508 676
Goodwill 930 1,344
Other Intangible assets 313 498
Intangible asset under development 86 41
Financial assets
- Investments - -
- Trade receivables 128 45
- Bank balances 966 1,310
- Other financial assets 511 551
Income tax assets (net) 4,621 4,730
Other non-current assets 537 622
8,600 9,817
Current assets
Inventories 1,261 1,524
Financial assets
- Trade receivables 20,593 12,551
- Cash and cash equivalents 1,180 891
- Bank balances other than those mentioned in cash and cash equivalents 1 2
- Loans - -
- Other financial assets 453 515
Other current assets 4,920 2,971
28,408 18,454
Total assets 37,008 28,271
Equity
Equity share capital 3,399 2,976
Other equity (4,561) (6,697)
(1,162) (3,721)
Non - Controlling Interests - -
Non - Current liabilities
Financial liabilities
- Borrowings 5,168 4,183
Deferredtaxliabilities - -
Provisions 710 665
5,878 4,848
Current liabilities
Financial liabilities
- Borrowings 12,388 14,050
- Trade payables 10,925 6,413
- Other financial liabilities 3,007 3,022
Other current liabilities 5,706 3,270
Provisions 266 389
32,292 27,144
Total equity and liabilities 37,008 28,271

Key Highlights

A. Equity and Reserves

The Equity Capital of the Company increased from र 29,76,18,730 (divided into 2,97,61,873 equity shares of face value र 10 each) to र 33,99,18,730 (divided into 3,39,91,873 equity shares of face value र 10 each) and further increased to र 39,61,68,730 (divided into 3,96,16,873 equity shares of face value र 10 each) pursuant to the issue and allotment of 42,30,000 equity shares and 56,25,000 equity shares of face value र 10 on preferential allotment basis to CAC Holdings Corporation,

Promoter.

B. Borrowings

The Long Term Borrowings of the Company with respect to External Commercial Borrowings remained the same except for exchange with long term borrowings and working capital facilities the Banks were reduced consequent to cash inflow on account of additional capital infusion from preferential allotment of equity shares to CAC Holdings Corporation,

Japan in March 2019.

C. Receivables Management

The company has written off/provided for bad debts of र 185 lakhs on standalone basis and र 1,432 lakhs on consolidated basis during the financialyear. The Receivables (before allowances for credit loss) which are classified as "Current" under the new Ind AS stands at र 20,721 lakhs as at 31st March, 2019 as compared to र 12,596 lakhs as at 31st March, 2018.

D. Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include change in Government regulations,tax laws, economic & political within and outside the country and such other factors.

For and on behalf of the Board of Directors
Place: Chennai Malcolm F. Mehta
Date: 08th August, 2019 Chairman & Chief Executive Officer