Jump Networks Ltd Management Discussions.

Industry Overview

Indias Technology sector is expected to grow at a healthy rate. Technologies such as robotics, cloud, IoT and AR/VR are driving a large part of this growth. According to NASSCOM, India continues to be the core for developing ‘Intelligent Solutions with enormous opportunities for digital engineering & connected solutions, innovation and R&D hubs, SaaS & deep tech solutions, IT digital solutions partners, intelligent operations partners, and disruptive products & solutions.

The Government of Indias initiatives for digitizing India has attracted additional capital and talent towards finding technology enabled smart solutions to the problems faced by the people. The Technology sectors is in the middle of a rapid transformation. The present market leaders may even become obsolete if they fail to transform their business to match the fast changing environment.

Company Overview:

Your company is in the process of investing and leveraging technology to expand its business and diversify into different sectors. Through its tie-up with Hologo Private Limited, your company endeavors to provide cutting edge education technology, including augmented realty to India. Delivered via Edmission Centres as well as Set Top Boxes (STBs), the content will reach consumers at an extremely affordable price.

Additionally, your company has also launched Rural Organic Farming Initiatives using TORUS. This initiative was launched at Talavade, Sindhudurg, by Hon. Minister Shri. Deepak Kesarkar (Minister of Home, Planning and Finance and Guardian Minister of Sindhudurg). With this initiative, your company aspires to take ‘Agri Tech to the remotest parts of the country and help part of the ‘next billion users cross the digital divide with the hope of enriching their lives.

Your company intends to introduce its proprietary technology layer i.e. block chain which will facilitate farmers to complete their KYC, receive payments directly to their verified bank accounts and every step of the agri process stored and authenticated securely nodes into our owned data centers providing a completely private, secure and distributed network.

Financial Performance:

During the year under review your company recorded a top line growth of 3.56% YoY. The total revenue stood at Rs. 6696.66 lakhs as compared to Rs. 6466.34 last year. Your company has seen 1.5 times (i.e. 44.57 %) YoY growth in EBITA. Your company has been able to perform exceptionally well in the challenging environment. Even though the revenue growth was muted due to the overall slowdown, your company has been able to improve the bottom line due to its operational efficiency.

Significant Changes in the Key Financial Ratios:

There has not been any significant change in most of the Key financial parameters / ratios of the Company. As compared to the previous year:

The Operating Profit margin has increased by 39.49%, Net Profit Margin has increased by 28.73 % and Return on Networth has increased by 32.91%.

The increase in profit margins and return on equity was due to improved operational efficiency.

The debtors turnover ratio has reduced by 33.94%. However, the company has still maintained a healthy debtors turnover ratio of 2.08 even after the said reduction.

Opportunities:

Your company is focused on exploring for growth opportunities in the areas of its expertise. This shall enable us to generate value to all its stake holders and also integrate new businesses in its existing business model. While it is always recommended to leverage our own expertise, it is equally important to collaborate with other businesses to expand our product offerings and market reach.

The existing tie ups and initiatives are expected to create long term value for our stake holders and also open up more opportunities to scale up the business.

Your Company shall also offer a range of end to-end software development, digital services, IT business solutions, research and development services, technology infrastructure services, business process services, consulting and related support functions.

Given that transformation, modernization, innovation and trust are fundamental imperatives for organizations, the opportunities that exist for the industry are significant.

Threats, Risks, and Concerns:

The Company recognizes that every business has its inherent risks and it is required to possess a proactive approach to identify and mitigate them. Your Company has embedded an efficient organizational risk management framework, which regularly scans all possible internal and external environment to identify risks, decide on possible mitigation plans and incorporate them in its strategic plans. Some of the key risks include industry risk, client concentration, technology risks and financial risk. The processes relating to minimizing of the above risks have already been put in place at different levels of management. The risk mitigation plans are regularly monitored and reviewed by the Management and Audit Committee of your Company.

Financial Risks:

The happenings and financial developments in the large markets that we operate in have very significant impact on our business conditions, but these are the things which are beyond our control but what is within our control is to make sure that we are not vulnerable to major event risks of this nature and therefore we conduct a business in a manner that we take these risks into account and we mitigate these risks by appropriate hedging strategies. The risk policy of the Board covers some of this large macro level risk and the remedial measures taken by the company to face and mitigate some of these risks.

Competition Related Risks:

India has established itself as the major off shoring destination for global IT Media companies. IT Media companies are facing tremendous pressure on cost, productivity and ROI. Thus the Indian IT Media sector needs to make extra endeavor to remain competitive in terms of cost efficiency measures and scalability of various high end services to handle competition. We compete with other technology service providers in response to requests for proposals and in certain services there is increased competition resulting in pressures in pricing. The companys capability to offer innovative and value added solutions and services by integrating its diverse domain knowledge enables it to move ahead in an environment of increasing competition.

Iris Media is aware of these challenges and is positive about the prospects of the Company. Change in government policies, rise in inflation, unexpected events and increasing competition are some of the threats that can dampen the companys position and growth. Your company is capable and very vigilant to tackle all such threats. Your company has processes in place to address any challenges.

Regulatory Risk:

The Media and Entertainment industry suffers from a plethora of Central and State levies including levies by local bodies and authorities. These multiple taxes, administered by different Government authorities add to the cost of business. The existing, as well as future rules and regulations, can impact the financial performance of the Company.

Developments in terms of amendments in existing tax laws, new laws like Goods and Services Tax (GST), landmark judgments, notifications, etc., will lead to an ever changing regulatory framework that will pose a grave risk to the sector.

Internal Control System and their adequacy

The Company has a system of internal controls focusing on all processes to ensure the integrity of the financial accounting and reporting processes of the Company to ensure compliance with all legal rules and regulations.

The Company has an Audit Committee which meets once in every quarter to review internal control systems, accounting processes, financial information, internal audit findings and other related areas including their adequacies.

Human resources and industrial relations:

The Companys performance is critically dependent on the knowledge and skill of its people. Your company continues to focus strongly on attracting and retaining the best talent across various functions of its businesses.

Your Company maintains a cordial relationship with its employees and it values the safety of its employees and constantly raises the bar in ensuring their safety.

Cautionary Statement

Statements in this report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute ‘forward-looking statements within the meaning of applicable laws and regulations. Your Company undertakes no obligation or liability to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise actual results, the performance of achievements could differ materially from those either expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements and read in conjunction with financial statements included herein.

Disclaimer: All the data used in the initial sections of this report has been taken from publicly available resources and discrepancies, if, any, are incidental and unintentional.