Intrasoft Technologies Ltd Management Discussions.


The US is the Companys principal market.

The country accounts for about 20% of global production, making it the largest economy. Its developed and technologically-advanced services sector accounts for about 80% of national output, comprising technology, financial services, healthcare and retail. More than a fifth of the companies on the Fortune Global 500 are from the US.

The U.S. is the second largest global manufacturer and a leader in higher-value industries like automobiles, aerospace, machinery, telecommunications and chemicals. US manufacturing (US$ 2.33 trillion, 2018) accounted for 11.6% of U.S. economic output and half of U.S. exports.

Every dollar spent in manufacturing added US$ 1.89 in the growth of other sectors.

The US economic growth is sustained by continuous innovation, research and development combined with capital investment.

(Source: Focus Economics, The Balance, GSMA)


E-commerce has been possibly the most dramatic retail development in decades, making it possible to buy without stepping out of ones premises and paying for the purchase without using cash.

The other advantages of online commerce include the ability to examine a virtually unlimited array of merchandise compared to the limitations of a brick and mortar store, transact with speed and get products delivered home.

The worlds two largest economies — United States and China— dominate global online retailing, accounting for more than half the worldwide e-commerce sales of physical goods.

In 2018, global e-retail sales were estimated to be US$ 2.8 trillion, and likely to outperform brick-and-mortar retail offtake across the foreseeable future.

Top categories by purchase, 2018

(% of global online consumers having purchased)

Fashion 61%
Travel 59%
Books & Music 49%
IT & Mobile 47%
Event Tickets 45%

By 2019, for the first time, global m-commerce transactions could exceed e-commerce transactions, establishing the mobile phone as not only the primary communication platform of the world, but also the leading digital commerce channel.

(Source: Nielson, Statista, Marketing charts)

The global e-commerce revolution

Drivers of e-commerce

Assured connectivity: The increased penetration of smartphones and related innovation (Wi-Fi, social media and data sharing) have made e-commerce a preferred transaction choice for millions.

Advanced technologies: Advanced digital platforms have brought about a seamless consumer experience (from access, viewing, selection, payment and delivery). Increased digitalization and innovation (biometrics and retailer wallets) are likely to enhance consumer experience.

Customer priority: E-commerce provides round-the-clock product and services availability through connected devices.

Logistical support: E-commerce has grown following significant improvements in logistical support, helping deliver products quicker with high packaging integrity.

Mobile internet revolution: The penetration of internet in mobile phones is playing a key role in the growth of e-commerce.

Millennials role: Millennials make up around a quarter of the US population and could overtake Baby Boomers as Americas largest population segment in 2019 (73 million vs 72 million).

Gen Zs influence: By 2020, Gen Z could be the third largest generation group in USA, making it a leading online buyer.

E-commerce technology developments

Blockchain: The customers growing need for transparency led to the blockchain technology, reducing the incidence of counterfeit products.

Machine learning: Machine learning allows enhanced and upgraded visual searching by making a wide range of products available.

IoT: IoT is a sought-after technology in reducing theft, optimising store operations and maximising cross-purchases.

Artificial intelligence: Artificial intelligence provides improved recommendations when it comes to items frequently bought together. By automating the customer service experience through chatbots and sending engagement mails, service providers are able to make strong recommendations.

Data analytics: Data analytics help provide reliable, accurate and timely access to vast data volumes, accelerating processes and inducing customer delight.

Investments: Artificial intelligence-related investments grew by ~72% in 2018 compared to 2017, with the possibility that 85% of all customer interactions could be addressed without human intervention by 2020.

(Source: Forbes, Gartner, Pew Reaseach Centre)


The digital commerce segment is expected to grow at a CAGR of 20% till 2022. Global e-retail sales are also set to grow up to US$ 5.8 trillion by 2022. In light of all the aforementioned factors, it is clear that shopping is still evolving and fast, paving the way for strong e-commerce growth. (Source: Forbes, Business Wire, Digital Commerce 360, Statista)

US e-commerce trends

Black Friday and Cyber Monday: These are two of the biggest sales days of the year, marked by attractive discounts and large purchases. In 2018, US$ 6.2 billion was spent on Black Friday alone, which is up 23.6% from last year.

Reduced month-end offtake: Customers buy less towards the end of the month as they wait for their next pay cheque.

Busiest and weakest months: November and December are usually the busiest months while February is the slowest for ecommerce. Holiday season in the United States generated appoximately US$ 122 billion in 2018, an increase of 17.4% as compared to 2017.

Reduction in delivery time: The maximum delivery time an average customer is willing to accept for an online order is just 4.5 days as of March 2018, down from 5.5 days in 2012.

Retail as a service: People seek a personalised experience; they expect a wide product range available round-the- clock with minimal delivery time. The number of US Prime members crossed 100 million in 2018.

Growth of sharing economy: Millennials value access to goods and services over ownership, prompting the growth of a sharing economy.

Smartphone penetration: In North America, smartphone adoption was estimated at 80% in 2018 and projected to rise to 90% by 2025, strengthening prospects for e-commerce.

Emergence of Virtual Personal Assistants (VPA): Smart home assistants and voice recognition systems are emerging as an e-commerce game- changer. By 2019, 20% smartphone interactions could take place via Virtual Personal Assistants.

Sales moves online: Companies are not only investing in proprietary e-commerce sites but also selling through other online channels, including company-owned stores and large marketplaces.

(Source: Forbes, Digital trends, Statista, Microsoft 2019 Retail Trends Report, GSMA, Gartner, Alix Partners survey of more than 1,000 US consumers)

Online growth by merchandise category

Merchandise category Number of retailers Growth (%) in 2018
Food/Beverage 36 28.1
Housewares/Home Furnishings 98 27.0
Health/ Beauty 53 22.5
Sporting Goods 73 19.9
Hardware/Home Improvement 83 19.7
Mass Merchant 58 19.7
Apparel/Accessories 252 17.3
Consumer Electronics 97 14.5
Jewelry 44 13.6
Automotive Parts/Accessories 38 11.1
Speciality 79 10.3
Flowers/Gifts 17 3.6
Office Supplies 26 1.2
Toys/ Hobbies 46 (2.0)

(Source: 2019 internet Retailer Top 1000)


IntraSoft Technologies Limited operates as a multi-channel e-retailer in USA. The Company enjoys a credible presence across major online marketplaces like Amazon, eBay, Rakuten, Jet and Newegg. The Company works with brand partners across all major categories (garden & outdoor, beauty & personal care, baby products, home & kitchen, toys & games, tools & home improvement, and others).

The Companys operations are centred around the prudent use of technology, the culmination of learnings aggregated through the years. The Company invested in APIs and web-based ERP solutions to service brand partners with speed and dependability.

The Companys marketplace credentials, wide product assortment, competitive pricing, efficient demand fulfilment and prompt marketplace customer service enhanced our brand recognition in the US e-commerce ecosystem.


The Company reported a year of positive cash flows following conscious revenue reduction and correspondingly enhanced revenue quality.

Operating cash flow of US$ 2.72 million was generated during the year under review compared to an operating cash outflow of US$ 8.24 million during the previous year. This financial recalibration was accompanied by operational recalibration, where the Company consolidated its knowledge capital aggregated during years of strong CAGR revenue growth.

The resulting delivery engine and marketplace expertise strengthened the Companys value proposition for brand partners. The Companys deep understanding of the sector and tech- driven orientation made it a preferred partner for online marketplaces. This competitive positioning translated into superior terms of trade that enhanced working capital efficiency and long-term sustainability.

In line with its established momentum, the Company featured in Internet Retailers list of the largest online retailers in the US, ranked #232 in the Top 1000 Report. As the Company heads into FY20 with the financial and operational learnings in place, it is focused on working towards a growth trajectory that is self-funded and delivers strong value.

The Companys consolidated Profit and Loss Account for the year ended 31 March 2019 is provided below:

Particulars Year ended 31 March 2019 Year ended 31 March 2018
Revenue from Operations 83,655.42 116,986.78
Cost of Goods Sold (Incl. Shipping) 70,700.49 96,673.62
Gross Profit 12,954.93 20,313.16
Sales & Marketing Expenses 9,514.98 14,952.79
Employee Benefit Expenses 1,523.92 2,039.06
General & Administrative Expenses 1,426.14 1,417.83
Earnings/(Deficit) from Operations 489.89 1,903.48
Other Income (Net) 496.18 510.88
Earnings Before Interest, Tax, Depreciation & Amortization 986.07 2,414.36
Depreciation & Amortization 176.19 195.57
Earnings Before Interest & Tax 809.88 2,218.79
Finance Costs 497.95 264.33
Profit Before Tax (PBT) 311.93 1,954.46
Tax Expense (254.52) 581.31
Profit After Tax (PAT) 566.45 1,373.15

On a standalone basis, Net Profit Margin increased from 13.11% in FY18 to 21.38% in FY19; reasons being the fall in Employee Benefits Expense and Professional Services due to automation. Debtors Turnover increased from 7.26 to 12.78; reason being the fall in Trade Receivables. Current ratio fell from 31.05 to 13.16; reasons being the fall in Trade Receivables, excess refund received against Advance Tax, and increase in Liability for financial guarantee to subsidiary.


Seasonal business Mitigation
The U.S. festive season falls in the third quarter of our financial year, leading to e-commerce revenue and accordingly that of the Company being concentrated towards the same quarter. The Companys investments in proprietary technology strengthened order management and fulfillment. This allowed the Company to scale in line with the ^ increased festive season demand. The data-driven demand forecasting capability serves as a critical input for brand partners to manage inventory during this busy season.
Managing growth Mitigation
The Company is required to continuously strengthen processes and systems, which could prove challenging. The year under review was marked by two initiatives. One, the integration of years of learnings and data into the technology backbone. Two, establishing cash flow consistency resulting in the consolidation of a working capital-efficient and sustainable financial model. In view of these initiatives, the Company strengthened its business to respond efficiently across operational and financial fronts.
Operational challenges Mitigation
The Company is required to build and maintain a vast network of brand partners, strengthening its eco-system. The brand-partners are our customers whom we service with our technology and marketplace expertise. Our investments in proprietary technology give us the end-to- end capability to solidify our network of brand-partners. A dedicated brand-outreach team engages with them across all levels of the online selling process, and participation in industry events like trade-shows, marketplace promotional events and conferences further strengthens our relationship with the brand-partners. These, along with our consistent marketplace credentials, facilitate the management of our network of brand- partners.


The Company believes that employees are its most valuable asset, who play a pivotal role in interactions with brand-partners and in technological development. The Companys invigorating work culture complements talent resulting in the creation of teams comprising talented and motivated individuals with the right skill sets. Through regular investments in training initiatives, the Company creates a platform to catalyse employees personal and professional development.

The Companys success is the result of a team of talented, skilled and hard-working professionals. The Company continues to hire the right employees and provide them with a workplace environment to grow and learn.

The Company has in place a programme of rewards and recognition to motivate talented employees. The result is that employee productivity has consistently grown. The Company employed 41 individuals as of 31 March 2019.


Our robust and intricate internal control systems ensure that there is efficient use and protection of resources, and compliance with policies, procedures and statutory requirements. We have developed well-documented guidelines and procedures for authorisation and approvals. Internal audit, which is a critical pillar of the internal control systems, is conducted regularly to check and verify whether all systems and processes are in compliance with the applicable requirements and adequate in safeguarding the assets from unauthorised use or losses.

An Audit Committee keeps a check on the existing systems and undertakes corrective actions as required. The management also regularly reviews all vital processes and control systems that further strengthen the organisation.

The emphasis on internal controls is implemented across all units, functions, departments and processes. All measures are taken to ensure that the controls put in place are both adequate and commensurate with the size and nature of our operations.