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LCC Infotech Ltd Management Discussions

Jul 19, 2024|12:00:00 AM

LCC Infotech Ltd Share Price Management Discussions


After two years of pandemic-led disruptions, FY 2022-23 marked a return to normalcy in operations. However, geopolitical tensions, continued supply chain dislocations and climate crisis resulted in unprecedented inflation and volatility in global commodity and energy prices. Central banks across the world responded swiftly with sharp increase in interest rates within a relatively short time frame. As per IMF estimates, global GDP growth slowed to 3.4% during 2022, well below proj ections made at the beginning of the year. Growth in Advanced Economies decelerated sharply to 2.7% in 2022 (Vs. 5.4% in 2021) while Emerging Markets & Developing Economies grew at a relatively slower pace of 4.0% (Vs. 6.9% in 2021), mainly impacted by lower growth in China. Going forward, the global macroeconomic environment continues to be confronted with myriad challenges; these include the continuing impact of the Russia-Ukraine conflict, global inflation remaining sticky and at elevated levels, recessionary pressures in most Advanced Economies, spectre of stress in the financial sector and the cost-of-living crisis in several economies, especially in the near term. As per IMF estimates, aggregate global economic growth is expected to further decelerate to 2.8% in 2023. Advanced Economies are projected to grow at 1.3% with major economies such as the United States and Euro Area set to grow at a slower pace than 2022. Emerging Markets and Developing Economies are estimated to grow by 3.9% in 2023 as against 4.0% in 2022. As priority of policy makers currently centre largely around inflation control, the monetary policies of central banks would remain a key monitorable in the near term.

The Indian economy remained a bright spot in FY 2022-23 amidst the global slowdown. Real GDP growth for the year is estimated at 7.0% (first half: 9.6%; second half: 4.8%) with Nominal GDP growth at 15.9% (first half: 22.3%; second half: 10.5%), reflecting the inflationary pressures in the economy. While Agriculture grew by 3.3% in real terms, Services and Industry sectors grew by 9.4% and 3.6% respectively, on a soft base. With steep inflation eating into household budgets, consumption demand remained subdued in rural markets and for discretionary categories in urban markets. In spite of severe global headwinds, India remained one of the fastest growing maj or economies enabled by purposeful interventions by policy makers. The Government of India has continued its thrust on structural reforms to raise Indias potential growth. During the year, concerted efforts continued to be made towards shaping India as a global manufacturing hub through policy initiatives such as Production Linked Incentive (PLI), Make in India, schemes and strengthening the countrys digital public infrastructure as well as the healthcare infrastructure.

Further, astute management of macros including fiscal and monetary policies also aided in mitigating the volatility in the operating environment. While the pace of growth of the Indian economy is projected to decelerate in FY 2023-24 against the backdrop of global macro headwinds as aforestated, India would continue to be the fastest growing major economy in the world. Even as inflation is projected to soften on an overall basis, prices of certain industry-specific commodities are expected to remain elevated with continued geopolitical issues and supply chain disruptions. The year is also expected to witness ‘El Nino weather phenomenon after three consecutive ‘La Nina years; the impact of this on monsoon, along with related events like heat waves, spatial and temporal rainfall distribution etc. will remain a key monitor able for inflation and consumer demand in 2023. Healthier Bank and Corporate Balance Sheets, improving capacity utilization levels and structural reforms represent some of the key positive factors for revival in private capex. India is widely acknowledged as one of the most dynamic major economies in the world with immense headroom for growth over the medium and long term. A favorable demographic profile, increasing affluence, rapid urbanisation and accelerated digital adoption represent some of the key structural drivers of growth of the Indian Economy. Policy PM Gati Shakti, National Monetization Pipeline announcements in the Union Budget 2023 including focus on expanding digital infrastructure, direct benefit transfer, etc. are expected to provide further impetus to enhance Indias competitiveness, enable greater empowerment and foster inclusive growth while maintaining the path to fiscal consolidation. Sharp step-up in capital expenditure outlay, focus on infrastructure and promotion of exports are expected to boost domestic manufacturing, spurring a virtuous consumption-investment-employment cycle. As the Indian economy combats uncertainties in the external environment, policy interventions focused on supporting sustainable livelihoods and fostering inclusive growth augur well for the economy. Structural support would need to be provided to sectors with large economic multiplier impact; the development of robust domestic agri and wood-based value chains hold special importance in the Indian context given their enormous potential to contribute to national objectives. Agricultural sector plays a crucial role in the economy with about half of the Indian workforce engaged in the sector. As reported in earlier years, enhancing agricultural productivity and value addition to international standards, while simultaneously improving market linkages, remain critical to enhance the competitiveness of the agricultural sector and drive significant increase in farmers income. India is the leading producer worldwide of several commodities, including pulses, spices, fruits such as bananas, etc. While Indias agri exports have grown sharply over the last few years to reach appx. US$ 53 billion in FY 2022-23, its share of global agri-trade remains low at only about 3%.

Indian economic

Indias gross domestic product (GDP) has touched the $3.75 trillion-mark in 2023 so far from around $2 trillion in 2014, said finance minister Nirmala Sitharaman on June 12. FM Sitharaman has called India a ‘bright spot in the global economy, highlighting its position as the fifth largest economy in the world. At current prices, Indias GDP ranks above the UK ($3,159 billion), France ($2,924 billion), Canada ($2,089 billion), Russia ($1,840 billion), and Australia ($1,550 billion) at current prices. Last year, India surpassed UK to become the fifth largest economy and is now only behind US ($26,854 billion), China ($19,374 billion), Japan ($4,410 billion), and Germany ($4,309 billion) according to projections by the International Monetary Fund (IMF). Recent government data revealed that Indias GDP grew by 6.1 per cent in the fourth quarter of fiscal year 2022-23 beating Street estimates. For the entire fiscal 2022-23, the growth rate came in at 7.2 per cent underscoring the countrys economic resilience amid geopolitical conflicts and global headwinds. the 7.2 per cent growth recorded in the last fiscal and said that this is the first reliable estimate of GDP growth and ‘as more and more data become available, further revision will be for upside from 7.2 per cent. "Private consumption has caught up with the pre-pandemic trend. It is almost as though the pandemic did not happen hurting consumption of households. Recently, ratings agency Moodys estimated the Indian economy to clock a 6-6.3 per cent growth in the April-June quarter, while also flagging risks of fiscal slippage arising from weaker-than-expected government revenues in the current fiscal. In an interview with news agency PTI, Moodys Investors Service Associate Managing Director Gene Fang said India has a relatively high level of general government debt at around 81.8 per cent of GDP for 2022-23, and low debt affordability. India, , has a high growth potential and its credit strengths include a stable domestic financing base for government debt, as well as a sound external position. "We expect Indias growth to come in around 6-6.3 per cent in the first quarter of the current fiscal year, which remains relatively flat from the 6.1 per cent recorded in the final quarter of fiscal 2022-23.

Industry Overview

Indias information technology services companies have been struggling amid heightened fears of recession across developed markets and the repercussions of a banking crisis in the US and Europe. And the situation is unlikely to improve until the end of the year, analysts say. Amid the ongoing weakness in the sector, foreign portfolio investors (FPIs) have also sold their stakes in IT companies. Considering the macro economic challenges like high inflation, interest rates and banking crisis in the US and European regions, analysts expect it will be a watchful few quarters for the IT sector.

"The biggest issue in the IT sector is growth slowdown and possibility of recession. So, as long as the slowdown persists and global growth remains uncertain, the market will expect lesser order flow, slower execution and pricing challenges. All these three factors will lead to IT companies suffering and valuations may also not expand. Investors will have to remain watchful for one to two quarters till there is some clarity on the global growth scenario. IT majors like TCS, Infosys and Wipro have also neared their 52-week low since March considering IT companies exposure to US banks amid the banking sector crisis. BFSI clients are among the Indian IT companies largest clients.

"Most of the price damage in the IT stocks has already been done. However, outperformance of the sector from the current level seems restricted till global macro headwinds stabilises. The sector valuation multiple is driven by earnings growth and if growth tapers off, there are little chances of the (IT) stocks outperforming the broader market indices," added Hota. He, however, recommends staggered buying in TCS among the large caps and Persistent Systems from the mid-cap stocks, for long-term investors.

In India, the purpose of vocational training is to generate skilled labour through a variety of programs to fulfil the requirements of the most unorganised sector and to instil self-employment capabilities in individuals through a wide number of self-employment targeted curricula. Since the maj ority of existing programs grant a diploma and place students in blue-collar jobs without the potential of progression or admission to higher learning, many do not choose vocational schools. The UGC has now developed a new degree for vocational courses to alter this situation. As per your chosen specialisation, it is known as a Bachelor of Vocation. It has certain distinctive characteristics, such as the ability of universities and colleges to create vocational programmes depending on the demands of the industry.

Company Operational and financial performance:

The company is engaged in business of providing vocational and skill development training to young people. We are also affiliated for imparting vocational training and skill development of young people. We create pool of talent for the various industries as many sectors are stepping up to hire fresher with trained skill. We ensure that the students are assigned to professional experience at NGOs and other organizations with knowledge in the associated field as part of the curriculum.

The last two years your Company has successfully moved its operations online completely, including all the student lifecycle processes.

Our financial performance, balance sheet quality and financial ratios have seen strong improvements after a heavy impact from the pandemic. In the reported financial year, we have also achieved some major operational milestones like empanelment with UPSDM and many projects are in pipe line for operation growth of the company.

The performance of your Company for the financial year ended March 31, 2023, is summarized below:

(Rs. in lakhs)

Particulars Standalone Consolidated
2022-23 2021-22 2022-23 2021-22
Profit/(Loss) before depreciation and Tax Expenses (A) (64.08) (73.61) (64.29) (73.72)
Less- Depreciation and amortization Expenses (B) (4.98) (4.98) (4.98) (4.98)
Profit/(Loss) before Tax (A-B) (69.06) (78.59) (69.27) (78.7)
Less-Tax Expenses for the year (C)
Less- Deferred tax expenses for the year (D)
Profit/(Loss) after Taxation (A-B)-(C)-(D) (I) (69.06) (78.59) (69.27) (78.7)
Less-Transfer to reserve (E)
Add-Amount Brought Forward (II) (864.08) (785.49) (900.23) (821.53)
Total (I-II) (933.14) (864.08) (969.50) (900.23)
Less- Deferred Tax (F)
Balance carried forward to Balance Sheet (I-II)-(F) (933.14) (864.08) (969.50) (900.23)

Risks, Challenges and Concerns

The Company faces a variety of risks. Risk management is, therefore, an integral part of the Companys core process and involves recording, monitoring, independent testing, and controlling of the internal functions of the enterprise by way of establishing the Risk Control department to ensure process control, the Business Risk Management framework for business objectives, and Entity Level Control for comprehensive risk reporting. The rapid changes in technology across the globe have necessitated a dynamic change in the Companys business and delivery models. The Companys risk framework encompasses strategic risks, operational risks, financial risks, governance risks, and information & technology risks.

1. Strategic Risk : Strategic risks are those risks that threaten to disrupt the assumptions at the core of business strategy and strategic objectives.

2. Financial Risk : Financial risks include areas such as financial reporting, valuation, treasury, liquidity, and credit risks.

3. Governance Risk : Threat posed to a companys financial or reputational standing resulting from violations of laws, regulations, codes of conduct, or organizational internal standards and practices.

4. Operational Risk : Risks affecting our internal practices, policies, people and systems which may impact on organizations ability to execute its strategic plan.

5. Information Technology Risk : IT risks include hardware and software failure, human error, and malicious attacks, as well as natural disasters such as fires, cyclones, floods or pandemic.

Opportunities and Threats Opportunities

The post-pandemic world has many discoveries - one of the major ones being endless opportunities for the trained and talented youth in the Indian as well as global IT sector. And if you are passionate enough, you would start to discover your scope and create your niche right away. This is just the article you should read to know more about career prospects in IT sector and where do you stand. Gone are the days when jobs in information technology sector meant working as a computer science engineer or as a website developer or website designer. Information technology is the buzz word today and there is no dearth of jobs and opportunities. So much is the omnipresence of information technology in our life that even schools, colleges, NGOs, business organisation and even small shops are shifting to online mode. So every time a new e- commerce business opens or online functioning of a service starts, there Is a need for trained and skilled information technology students.


Threats refer to negative influences which not only hamper the productivity of an organization but also bring a bad name to it. Let us go through common threats faced by an organization. One of the most common threats faced by organization is employees with a negative approach. IT sector has become a major threat with competition from players offering formal undergraduate and graduate level programs online in addition to the direct competition from players in the same space as the Company.

Training & Skill Development:

While there is an urgent need for skill training across the country, the absence of sufficient training avenues prevents the people from acquiring skill training and certification through formal channels. As a result, most of the skill acquisition takes place through informal channels such as family occupation, on-the-job training under master craftsman, etc. These skills go unrecognized as they are not acquired through formal means and are never formally recognized. This prevents some section of skilled workforce from accessing formal employment opportunities, utilizing their experience to further taking up educational course and benefitting from other career progression opportunities available through formal training system. Recognition of Prior Learning (RPL) is defined as the process of recognizing previous/ prior learning, often experiential, towards gaining a qualification. The program trains, assesses and certifies those who have acquired their skills informally. Skills training is designed to provide employees with the targeted training they need to gain the knowledge and abilities necessary to fulfill the specific requirements of their job positions. Skills training can also be used to re-educate and retrain employees whenever new technology, processes or systems debut.

Internal Control Systems:

The Company adequate internal controls to manage its business operations.The Company invests time and resources to continuously upgrade its internal control systems. The Company has appointed 3rd party internal auditors to conduct regular internal audits of all its business operations and holds regular reviews by management to ensure compliance with policies, guidelines and business plans. The information systems also help in ensuring the reliability of financial and other records to prepare financial statements and operational reports. It has also implemented various facets of business operations, including Human Resources, Finance, and Sales. This has enabled the Company to control and monitor its operations and strengthen the ability of internal controls to function most optimally. The evaluation of internal controls is an integral part of the plan for the Audit & Assurance Organization.

Future Prospects:

In todays competitive world, IT-based services are critical for every firm looking to increase productivity, ease of doing business, and grow efficiently and inexpensively. Not only has information technology aided the countrys economic success, but it has also made governance more competent and approachable. It has made receiving government services and information easier and less expensive. By enhancing transparency, information technology has also enhanced the management and delivery of government services such as health care, educational information, consumer rights and services, and so on. According to a report released by industry body Nasscom and global consulting firm McKinsey, Indias technology services industry has the potential to generate $300-350 billion in annual revenue by 2025 if it can capitalize on rapidly emerging business opportunities in cloud, artificial intelligence (AI), cyber security, and other emerging technologies. With a large proportion of work from all over the world and the placement of Indian expertise all over the world, the future belongs to India Human Resources:

LCC has implemented innovative practices and invested in best-in-class processes to develop an enabling environment for its workforce. LCCs talent pool is the key ingredient to its success as an Education and Training organization. The people and processes at the Company are geared toward increasing workforce productivity. The Company on an ongoing basis conducts events, employee engagement activities, and collaborative training programs to succeed in having an engaged and motivated workforce. As at March 31, 2023, we have a total work force of 32 employees.

Cautionary Statement

Statements in this Management Discussion and Analysis report detailing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand supply conditions, raw material prices, finished goods prices, cyclical demand and pricing in the Companys products and their principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries with which the Company conducts business and other factors such as litigation and / or labor negotiations.

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