LCC Infotech Ltd Management Discussions

SOCIO-ECONOMIC ENVIRONMENT

The global economy witnessed another year of deceleration in growth to 3.2% in 2023 (Vs. 3.5% in 2022) with the slowdown being largely attributable to Advanced Economies, particularly the Euro Area and UK, and structural weakness in the Chinese economy. Advanced Economies grew by 1.6% with the US economy belying expectations of recession with a resilient performance in 2023, registering a growth of 2.5% (Vs. 1.9% in 2022). Emerging Markets & Developing Economies grew at a relatively faster pace of 4.3% (Vs. 4.1% in 2022), though remaining well below the long period average. The recent conflict in the Middle East, extreme weather events and the overlapping shocks of the past four years COVID pandemic, Russia-Ukraine conflict, unprecedented inflation and subsequent sharp increase in interest rates have rendered the global macroeconomic environment highly uncertain and volatile. Going forward, aggregate global economic growth as per IMF estimates is expected to remain subdued at 3.2% in 2024, well below the historical (2000-19) annual average of 3.8%. In 2024, Advanced Economies are projected to grow at 1.7% while Emerging Markets and Developing Economies are estimated to grow at 4.2%. With expectations of inflation easing towards target levels, the timing of central banks pivoting towards policy easing in major economies remains a key monitorable in the near term

India remained a relatively bright spot amidst the global slowdown, recording robust Real GDP growth of 7.6% in FY 2023-24. Growth was primarily driven by Fixed Investments led by Government’s thrust on infrastructure creation and household investments in real estate. Private Consumption, on the other hand, grew 3.0% - its slowest pace in two decades. The weakness in consumption was reflected, inter alia, in the muted volume growth of the FMCG sector (FY 2023-24 Volume growth appx. 3% Vs. 7% p.a. average in the pre-pandemic period). While Industry and Services sectors grew by 9.0% and 7.5% respectively, growth in the Agri sector slowed to 0.7%, with adverse weather events impacting harvests. Going forward, the Indian economy is expected to sustain its high growth trajectory in FY 2024-25 driven by strong momentum in Fixed Investments and a pickup in Private Consumption on the back of moderation in inflation, improvement in agri terms of trade, a good Rabi harvest and normal monsoons. Green shoots of recovery in rural markets, improving employment conditions and sustained momentum in manufacturing and services sectors augur well for consumption demand in the near term. India continues to be acknowledged as one of the fastest growing major economies in the world with significant headroom for growth over the medium and long-term benefiting from a slew of purposeful interventions over several years. A favourable demographic profile, increasing affluence, rapid urbanisation and accelerated digital adoption represent some of the key structural drivers of growth of the Indian Economy. Multi-dimensional interventions undertaken by the Government of India towards expansion of physical and digital public infrastructure, enhancing the competitiveness of the manufacturing sector, indirect/direct taxation and financial sector reforms along with measures to promote ease of doing business are expected to power the economy going forward. While stepped-up capital expenditure outlay and focus on infrastructure are expected to drive growth in domestic manufacturing, focus on agri-related schemes are expected to boost farmers’ welfare and rural consumption demand, spurring a virtuous investment employment-consumption cycle. As the Indian economy contends with 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. In this regard, 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.

The journey over the past few years has been eventful, starting with supply-chain disruptions in the aftermath of the pandemic, the Russia-Ukraine war that triggered a global energy and food crisis, and a considerable surge in inflation, followed by a globally synchronized monetary policy tightening. The global GDP is estimated to have grown at 3.2% in

CY 2024, lower than 3.5% in CY 2023 , led by fears of a hard recession. Yet, despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops. Economic growth has been stronger than expected in the second half of 2023 in the United States, and several major emerging market and developing economies. In extreme cases, organizations resorted to cost-cutting measures, such as reducing headcount and cutting discretionary spending, including IT services. Organizations taking a more rational approach are simply shifting the emphasis of ongoing IT projects toward cost control, efficiencies and automation while curtailing IT initiatives with longer RoIs. The global IT services industry continues to be a highly fragmented one, with even the largest provider having a mid-single digit market share.

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 Uttar Pradesh goveronment, Jharkhand Government, Odisha Government for 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:

LCC understands the importance of effectively managing and mitigating risks to protect the company’s business, its clients, to add value for all its stakeholders, and ensuring that the company’s reputation is intact. The company follows a comprehensive enterprise risk management framework that encompasses risk identification, risk assessment, risk response planning and actions, risk monitoring and overall risk governance. Fostering a risk aware culture and empowering leaders to take intelligent risks to maximize value are crucial. LCC regularly conducts risk reviews, assessments, and scenario planning to anticipate potential challenges and develop mitigation plans. Key risk indicators and control indicators are used to assess risks, provide early warnings, and consider effectiveness of the mitigation actions, respectively. Furthermore, the company engages with all stakeholders, including customers, employees, , partners and regulatory authorities, to ensure transparent and collaborative risk management practices. LCC takes a holistic view of its enterprise risk profile, covering strategic, operational, compliance, financial and catastrophic risks, thus enabling informed decision-making. Risks are assessed and managed at various levels with a top-down and bottom-up approach across the enterprise, business units, geographies, business functions, customer relationships and individual projects. Listed below are some of the key risks and opportunities, anticipated impact on the company and mitigation strategies.

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 company’s 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 organization’s 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.

Emerging technologies like AI, IoT, and blockchain, increasing digitization across industries, expansion into new markets. Threats: Intense competition, regulatory challenges, data privacy concerns, economic downturns affecting IT spending. There are various opportunities available at present scenario to the IT industries like :

Big Data

Also known as business intelligence, data science, data analytics and so forth, this area is exploding with technology and activity, as companies and organizations seek to make more and better use of the data they already collect about customers, clients, processes and business. Cybersecurity Cybersecurity, aka information security or infosec, has been an evergreen growth and opportunity area in IT since the late 1990s, and the increasing need for qualified professionals in this area shows no sign of abating Cloud Computing As the world continues to migrate its data, services and apps to the cloud, job opportunities in cloud-related platforms, tools and technologies continue to increase Mobile App Development No matter what type of functionality or access a company, software or service provider might want to deliver these days, one sure form of delivery is as a mobile application ready for access via smartphone or tablet. Thus, the folks who build such things are in high demand Artificial Intelligence(AI)

The market for AI technologies is vast, amounting to around 200 billions U.S.dollars in 2023 and is expected to grow well beyond that to over 1.8 trillion U.S. dollars by 2030

Threats

Globalisation of competition and the accelerating rate of technology change set difficult challenges for advanced technology-based industries in the new millennium. Companies in these industries must now continually reduce costs and develop better products and services in order to sustain a competitive advantage in an endlessly changing business environment. High research and development (R&D) costs force high technology companies to select more carefully which technologies to invest in. Technologies are introduced into a company in order to make a positive contribution to its products and services. Companies need technology planning in order to make better decisions with regard to strategic corporate planning, R&D management, product development, production and marketing. In this paper, we describe a technology planning support function that is used to analyse relevant information from various sources in order to optimise the impact of technological developments on the business and avoid threats that come from both within and outside the sector/industry. This function highlights possible threats and so helps planners and decision makers in making the right decision before the anticipated problem occurs. Innovation is creating robots and computers that are able to perform many tasks previously accomplished by man. The place occupied by men in the job field will shrink. The current organization and the existence of many jobs are in danger.

These initiatives are expected to benefit 41 million youth. The current Budget has already allocated Rs 1.48 lakh crore towards education, employment and skilling, marking a 30 per cent increase from the previous allocation of Rs 1.13 lakh crore. The Govt. has introduce various yojna for skill training like Pradhan Mantri Kaushal Vikas Yojna, Skills Acquisition and Knowledge Awareness for Livelihood Promotion (SANKALP) UDAAN. Your company has recent tiups with Govt. of Odisha for the skill project named Nutana Unnata Abhilasha (NAU)-Odisha. Further your company has been in continually focusing on getting more project in skill India companion to achieve the Government objective.

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.

The future of IT industry is full of potential and creates new opportunities for many businesses, professionals, and consumers. The IT industry covers various sectors, such as software development, hardware manufacturing, cloud computing, cybersecurity, artificial intelligence, the Internet of Things, and more. Nowadays, IT-based services are crucial for every business to operate to its full potential. The IT industry is a constantly evolving and competitive field that requires constant adaptation and innovation to survive and thrive in the digital era to meet society’s changing needs and demands. The IT industry also has a significant impact on the economy, society, environment, and culture of the world. With the global contribution of Indian professionals and the widespread deployment of Indian expertise across various nations, it is right to say that India has the potential to play a significant role in shaping the future of the IT industry. In the future, IT security will call for better training of individuals, but it will also call for more efficient methods. The IT industry is constantly evolving, and IT professionals need to continuously update their skills to stay competitive. In the future, there will be a greater emphasis on digital skills, such as coding, data analysis, and machine learning. IT professionals in India who can demonstrate these skills will be in high demand. Increased global IT spending is being fueled by the adoption of cloud services, digital transformation initiatives, and the emergence of new technologies such as artificial intelligence (AI) and the Internet of Things (IoT).

Human Resources:

The talent management strategy of your Company is to attract, retain and develop human capital that enables your

Company to stand its reputation. Your Company’s thought, strategy and action are inspired by a larger purpose of being an exemplary Indian enterprise that not only delivers superior competitive performance, but also embeds sustainability and inclusiveness at the core of its Businesses. This approach enables your Company to delight consumers and customers with a vibrant portfolio of industry leading products and services while generating enduring value for the Indian economy and the larger community of stakeholders. Your Company’s employees relentlessly strive to deliver effortless performance. Your Company is committed to perpetuating this vitality its growth as a value generating engine and also as an exemplary institution so that it continues to succeed in its relentless pursuit of creating enduring value

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.