LCC Infotech Ltd Management Discussions

SOCIO-ECONOMIC ENVIRONMENT

Global growth slowed down from 3.5% in 2023 to 3.3% in 2024 and remained appx. 40 bps below long-term trend rate. Amongst Advanced Economies which grew at 1.8% (Vs. 1.7% in 2023), uptick in EU (0.9% in 2024 Vs. 0.4% in 2023) was offset by a relatively slower pace of growth in US & Japan. Emerging Markets & Developing Economies grew at a subdued rate of 4.3% (Vs. 4.7% in 2023), largely due to structural weakness in China. Rising geopolitical tensions, evolving global trade dynamics and extreme weather events have rendered the global macroeconomic environment highly uncertain and volatile. Aggregate global economic growth, as per recent IMF estimates, is expected to decelerate sharply by 50 bps to 2.8% in 2025. Advanced Economies are expected to grow at a slower pace of 1.4% with US GDP growth projected to decelerate by 100 bps to 1.8% in 2025. Growth in Emerging Markets and Developing Economies is estimated to decelerate by 60 bps to 3.7% in 2025. India continues to remain the fastest growing large economy in the world - a relatively bright spot amidst the challenging global operating environment. The pace of growth, however, moderated from 9.2% in FY 2023-24 to 6.5% in FY 2024-25. While headline inflation (CPI) remained within the RBIs target range at 4.6%, food inflation witnessed a sharp uptick (FY 2024-25: 7.3% YoY). Indias macro-economic variables are expected to remain stable in the year ahead, with GDP growth for FY 2025-26 expected to be appx. 6.5%. Consumption expenditure is expected to pick up progressively led by continued recovery in rural demand backed by a good monsoon, along with improvement in urban demand as inflation stabilises and tax cuts announced in the Union Budget boost disposable incomes. The cumulative impact of pick-up in capex in the second half of FY 2024-25 and front loading of Government capex outlay in FY 2025-26, along with interest rate cuts and liquidity support from RBI, would also be supportive of growth.

Industry Overview

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.

Your company provides training in market linked skills to youth from marginalised sections including differently abled, to enable them to engage in decent livelihoods. During the year under report approx. 5000 youth across state of Uttar Pradesh, Jharkhand, Odisha, West Bengal were trained under different courses during the year. Cumulatively, around 1.27 lakh youth have been trained under the skilling programme. To scale up the skilling programme, your Company has also initiated pilots for potential pathways of skilling in the community itself and leveraging other skill training partners in the ecosystem .Further, the programme for skilling differently abled youth running in Odisha, uttar Pradesh and West Bengal last year, was expanded to by establishing new centres and also leveraging the existing centres of implementing partners.

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 government, 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:

Particulars	Standalone
	2024-25	2023-24
Profit/(Loss) before depreciation and Tax	(113.99)	(54.68)
Expenses (A)
Less- Depreciation and amortization	(1.03)	(4.32)
Expenses (B)
Profit/(Loss) before Tax (A-B)	(115.02)	(59.00)
Less-Tax Expenses for the year (C)
Less- Deferred tax expenses for the year (D)
Profit/(Loss) after Taxation (A-B)-(C)-(D) (I)	(115.02)	(59.00)
Less-Transfer to reserve (E)
Add-Amount Brought Forward (II)	(1061.2)	(1002.2)
Total (I-II)	(1061.2)	(1061.2)
Less- Deferred Tax (F)
Balance carried forward to Balance Sheet (I- II)-(F)	(1176.22)	(1061.2)

Risks, Challenges and Concerns

Technological advancements shape the very foundation of the modern digital world, transforming the lives of individuals and impacting societies at large. Breaking the boundaries of innovation and the restrictions of geographical borders is another major transformation that technological breakthroughs offer businesses. Such transformations in the corporate world couldnt be possible without major developments in the information technology (IT) or tech industry.

Over a few decades, its fascinating how the IT industry evolved due to major technological innovations and new developments, leading to paradigm shifts in the business sectors. Today, itd be unthinkable if we just had to rely on mainframe computers, a technological breakthrough in the

1990s. Artificial Intelligence (AI), the Internet of Things (IoT), and cloud computing are todays reality of technological advancements brought about by the tech industry. Undoubtedly, the tech industry has a good prospect for unparalleled growth in the future. As analyzed by Gartner, global spending on IT services is projected to reach USD 1.5 trillion in 2024, with an 8.7% growth rate. IT services remain a core segment in the IT industry. The global tech industry growth rate looks promising in the coming years; yet, it has several challenges to be dealt with.

Through this blog, youll learn the major challenges of the tech companies in 2025. And, weve suggested a few solutions to address the challenges of the IT industry. Also, youll learn more about certain business models through which you can explore your options to create business opportunities in 2025 in the IT industry.

Challenges

The Indian IT industry, while robust and growing, faces several challenges that can impact its growth and sustainability. Understanding these challenges is crucial for investors and stakeholders to make informed decisions.

1. Skill Gaps in the IT Industry Despite producing a large number of engineering and IT graduates annually, there is a significant skill gap in the workforce. The rapidly evolving technology landscape often outpaces the curriculum of educational institutions, leading to a shortage of specialized skills in areas like artificial intelligence, machine learning, cybersecurity, and blockchain. This mismatch can hinder the industrys ability to innovate and maintain competitiveness.

2. Dependence on Outsourcing in the IT Industry

A substantial portion of the Indian IT industrys revenue comes from outsourcing contracts from overseas markets. This dependence makes the sector vulnerable to global economic fluctuations and changes in outsourcing policies of client countries. Economic downturns or policy shifts in major markets like the US and Europe can significantly impact revenue streams.

3. Data Security and Privacy in the IT Industry With the increasing adoption of digital technologies, data security and privacy have become major concerns. High-profile data breaches and stringent data protection regulations, such as the GDPR in Europe and similar laws proposed in India, pose compliance challenges for IT companies. Ensuring robust data security measures and compliance with international standards is critical yet challenging.

4. Economic and Political Instability in the IT Industry Economic instability, inflation, and political uncertainties can affect business operations and investor confidence. Additionally, geopolitical tensions, such as those between India and neighbouring countries, can disrupt business activities and impact foreign investments in the IT sector.

5. Infrastructure and Connectivity Issues in the IT Industry While urban areas in India boast robust digital infrastructure, rural and semi-urban areas still suffer from inadequate connectivity and infrastructure. This digital divide limits the industrys ability to tap into the full potential of the domestic market and hinders the expansion of digital services across the country.

6. Regulatory and Policy Challenges in the IT Industry The IT industry must navigate a complex regulatory environment with frequent changes in policies and regulations. Compliance with diverse and evolving regulations can be resource-intensive and challenging, especially for smaller companies and startups. The regulatory landscape needs to be streamlined to support the growth and sustainability of the sector.

Opportunities and Threats

Opportunities

Indias IT industry is set for a transformative year in 2025, with significant growth opportunities driven by emerging technologies and digital transformation. However, addressing challenges such as skill gaps and cybersecurity threats will be crucial for sustaining this growth trajectory. To combat challenges in 2025, Indian IT companies should focus on several key strategies:

1. Upskill the workforce: Invest heavily in training programs to address the skill gap in emerging technologies such as AI, machine learning, data analytics, and cloud technologies. This will help meet the growing demand for specialized tech roles.

2. Embrace AI and automation: Integrate AI into business processes to enhance efficiency and stay competitive. By 2025, 75% of Indian enterprises are expected to incorporate AI.

3. Focus on cybersecurity: Invest in regular audits, awareness training, and AI-driven threat detection to combat rising cybersecurity threats.

Threats

IT industries face a multitude of threats, including cyberattacks, data breaches, and insider threats. These threats can stem from various sources like malicious software (malware), phishing scams, and ransomware attacks, all of which can lead to significant financial and reputational damage.

Insider Threats:

Malicious or unintentional actions by employees or contractors can compromise security.

Data Breaches:

Unauthorized access to sensitive data, leading to financial loss and reputational damage.

Zero-day Exploits:

Attacks targeting previously unknown vulnerabilities, making them difficult to defend against.

IoT Vulnerabilities:

Security weaknesses in Internet of Things (IoT) devices can be exploited to gain access to networks.

Training & Skill Development:

A skill development training program is a structured learning initiative designed to equip individuals with the knowledge and abilities needed for specific job roles or to enhance their overall employability. These programs can focus on a wide range of skills, from technical and vocational training to soft skills and entrepreneurship, and are crucial for both personal and professional growth. Key Aspects of Skill Development Training Programs:

Targeted Training:

Programs focus on specific skills relevant to a particular industry or job, ensuring participants gain practical, job-ready abilities.

Flexibility and Adaptability:

They can be tailored to meet the needs of various individuals and industries, including short-term courses, long-term programs, and specialized training for specific roles.

Government Initiatives:

Many governments have launched large-scale skill development missions, such as Indias Skill India Mission, to address national skill gaps and boost employability.

Industry Relevance:

Collaboration between industry and educational institutions is vital to ensure training programs align with current and future job market demands.

Focus on Employability and Entrepreneurship:

Programs often aim to enhance both the job prospects of participants and their ability to start their own businesses.

Upskilling and Reskilling:

Training programs are also crucial for existing employees to adapt to new technologies and changing job roles.

Internal Control Systems:

The internal control system is a vital component of any organization, especially within the banking sector, where the management of financial resources and risk mitigation are of utmost importance. The company is characterized by intense competition, regulatory scrutiny, and evolving customer preferences, making effective internal controls crucial for sustaining operational excellence and ensuring financial stability. Internal controls encompass policies, procedures, and practices that safeguard an organizations assets, ensure accurate financial reporting, and promote compliance with laws and regulations. In banks, these controls help prevent fraud, errors, and mismanagement of funds, ultimately contributing to the institutions financial health and reputation. Financial performance indicators such as return on assets (ROA), return on equity (ROE), net interest margin (NIM), and asset quality are used to assess the profitability, efficiency, and risk management capabilities of banks (Robin, Salim & Bloch, 2018). These metrics provide insights into how well the banks internal control system is functioning

Future Prospects:

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 societys 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. AI and machine learning are currently the most sought-after technologies in the IT industry. These technologies allow machines to perform jobs that would normally require human oversight and intelligence. AI primarily focuses on building systems capable of making decisions, whereas machine learning focuses on assisting the system in learning and improving from data.

These technologies are widely employed in different sectors, including:

1. Healthcare (diagnosis and treatment planning).

2. Retail (to personalize the shopping experience).

3. Manufacturing (Process Automation)

India is emerging as a global hotspot for AI research due to its powerful IT industry and big pool of tech talent. Another push comes from the governments programs like the National AI Strategy India is primarily using AI and ML technology to improve governance, agricultural operations, and education. As a result, AI and machine learning will play critical roles in determining the future of IT industry in India in 2030 and beyond. Enroll in AI and ML courses to remain ahead of the competition and learn these technologies as soon as possible.

Human Resources:

Your Companys 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. The talent management strategy of your Company is designed to attract, retain and develop human capital that enables your Company to sustain its position as one of Indias most valuable corporations, whilst continuing with its mission of building a responsible ‘Future-Tech enterprise. Your Companys employees relentlessly strive to deliver world-class performance, collaborating with each other and discharging their role as ‘trustees of all stakeholders.

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.