Lee & Nee Software Exports Ltd Management Discussions

OVERVIEW

The objective of this Management Discussion and Analysis is to provide stakeholders with Managements perspective on the business environment, industry trends and key factors influencing the performance of Lee & Nee Softwares (Exports) Limited during FY 2025-26. The discussion covers the Companys business operations and strategy, operating and financial performance, key developments in human resources, risks and opportunities, internal control systems and their adequacy, and the outlook for the business. Lee & Nee operates in the technology solutions space, with expertise in SAP solutions including SAP Business One, ERP implementation, customisation, integration and support services, along with emerging areas such as Artificial Intelligence, data analytics, mobility, cloud and digital transformation solutions. This discussion should be read together with the audited financial statements, related notes and other disclosures forming part of the Annual Report. The financial statements have been prepared in accordance with Indian GAAP and the Accounting Standards specified under Section 133 of the Companies Act, 2013, along with the applicable provisions of the Companies Act, 2013 and rules made thereunder.

INDUSTRY & MARKET OUTLOOK

The global economy expanded by 3.4% in 2025, although the pace of growth remained relatively moderate. Easing inflation and sustained investments in digital technologies offered some support to economic activity; however, businesses continued to adopt a cautious approach towards discretionary expenditure. Technology-related investments, in particular, came under increased evaluation, with organisations prioritising initiatives that demonstrated measurable business value, improved productivity, and cost efficiencies.

Looking ahead, the global economic environment is expected to remain challenging, with weaker growth momentum and heightened downside risks weighing on the medium-term outlook. Against this backdrop, the IMF revised its global growth forecast for 2026 downward by 0.2 percentage points to 3.1%, reflecting the increasing uncertainty surrounding the global economic recovery. Despite a challenging macro environment, enterprises continued to prioritise technology as a strategic lever for competitiveness and long-term transformation.

India continues to remain one of the fastest-growing major economies, supported by resilient domestic consumption, investment, infrastructure development and digitalisation. The IMFs latest July 2026 outlook projects Indias real GDP growth at 6.4% in 2026, with growth expected to strengthen thereafter as temporary external pressures ease. Despite global uncertainties, Indias strong domestic demand and expanding digital economy continue to provide a favourable foundation for sustained growth.

India is also emerging as a significant global hub for Artificial Intelligence (AI), Generative AI and digital technologies, driven by its large technology talent pool, digital infrastructure and growing enterprise adoption. AI is increasingly being deployed to improve productivity, automation, customer experience and cost efficiency across sectors. The global technology environment is likewise being shaped by AI-led investment, with the IMF projecting global growth of 3.0% in 2026, while AI-driven demand is providing support to economies integrated into the global technology value chain.

OUR BUSINESS

• Artificial Intelligence:

Artificial Intelligence and Generative AI continue to reshape the technology landscape, creating new opportunities for businesses to improve productivity, automate processes and optimise costs. The Company is positioning AI and Generative AI as important growth drivers for its technology business, with a focus on translating emerging technologies into practical business solutions. Through its strategic association and partnerships with technology providers, Lee & Nee is developing and offering solutions including Chatbots, AI Agents and business automation solutions to help customers automate operations, enhance productivity and achieve greater cost efficiency. The company has also invested in several AI tools to improve the efficiency of its technical team across all departments. For The Company remains committed to expanding its AI capabilities and building scalable, customercentric solutions as adoption of intelligent automation continues to accelerate.

• ERP: ENTERPRISE RESOURCE PLANNING

Enterprise resource planning (ERP) is business process management software that provides seamless communication and realtime data for businesses, and is an extremely helpful tool that centralizes all islands of information and streamlines it to multiple departments in an enterprise. By providing a "single source of truth," ERP systems eliminate data duplication, automate tasks, improve operational efficiency, and offer real-time insights into business performance, making them essential for managing organizations of all sizes.

To stay relevant these days, modern ERP solutions are tapping into AI, big data, IoT, and other emerging tech. In this article, Ill walk you through these ERP industry trends and explain why custom ERP solutions can sometimes handle real operational complexity better than a standard product. From AI to IoT to blockchain, these ERP trends are already changing how these systems work. This year is set to bring even more automation, sharper forecasting, and efficiency that truly changes the game. And as every day grows more competitive, having that extra edge becomes crucial.

The erp software market size has grown rapidly in recent years. It will grow from $159.87 billion in 2025 to $175.94 billion in 2026 at a compound annual growth rate (CAGR) of 10.1%. The growth in the historic period can be attributed to enterprise digital transformation initiatives, need for centralized business operations, growing complexity of financial reporting, demand for operational efficiency, expansion of global supply chains.

Key Players and Market Share:

• Oracle: Leading the market with a 6.5% share, according to LinkedIn.

• SAP: A major player with a 6.4% market share.

• Intuit: A significant competitor, holding 25.74% of the market by customer count.

• CSI Software: Also a major player, with 11.83% market share.

• Other notable vendors: Workday, Raper & Microsoft among others.

a. SAP:

SAP continues to be a leading global provider of enterprise applications and business technology solutions, enabling organisations to integrate core business functions, improve visibility and support data-driven decision-making. As every business is different, SAP Business One is designed with flexibility in mind. Whether its deployed on premise or in the c loud, you can access SAP Business One at anytime, anywhere via any mobile device. And because SAP Business One runs on both the SAP HANA? and Microsoft SQL server platforms, one can choose the one that suits their business best.

Lee & Nee Softwares (Exports) Ltd. is an authorized SAP Partner and continues to focus on SAP Business One, an integrated ERP solution designed particularly for small and medium-sized enterprises. Through its SAP-related capabilities, the Company assists businesses in streamlining key functions, improving operational visibility and adopting scalable digital solutions. During FY 2025-26, the Company continued to build on its technology-led business model, with revenue increasing to approximately ?11.14 crore from ?10.27 crore in the previous year, reflecting continued demand for its technology and enterprise solutions.

b. BizERP for manufacturing sector

Your company has developed a cloud based ERP Solution for manufacturing & trading industries. It comprises of all the modules that is required for any business to operate. It has been deployed in many industries like Steel, Plastic, FMCG, Industrial & Engineering Products, and Leather etc. This is developed using the dot net platform which is highly secured. The company is continuously making enhancements to this product and planning to offer this on SaaS model to its customers to make it more affordable.

c. Spine HR - HRMS & Payroll Solutions:

The Company has continued its successful collaboration with SPINE Technologies, a pioneer in HRMS and Payroll solutions, as its Channel Partner for Eastern India. During the year, SPINE HR proved to be a successful and efficient solution, both for the Companys own operations and for several clients, enabling streamlined HR and payroll processes. Its effective implementation has strengthened customer confidence and trust, while also contributing to the Companys business growth and revenue generation. Building on this success, the Company remains focused on expanding its customer base and further strengthening its presence in the HRMS and Payroll solutions segment.

d. Digital Marketing:

The company offers Digital Marketing services to many clients in India as well as overseas. There is a huge demand for these services in the entire world. There is a huge growth of business in this area. With vast experience and in-depth knowledge, our experts serve multiple industries across the world with robust solutions fit for modern - day businesses. Your company provides 360 degree Digital Marketing Agency that helps your business grow consistently. With years of experience as a top digital marketing agency in Kolkata, weve successfully managed campaigns across industries. And to do so the company offers following services to its clients:

• SEO : Search Engine Optimization

• GEO : Generative Engine Optimization

• SMO : Social Media Optimization

• SMM : Social Media Marketing

• PPC : Pay-Per-Click

• LINKEDIN MARKETING

• GOOGLE MY BUSINESS PAGE

• EMAIL MARKETING

• VIDEO MARKETING

e. MOBILE APPLICATIONS:

Indias rapid adoption of smartphones, internet services and digital platforms continues to drive demand for mobile-first solutions across industries. The growing integration of mobile applications, cloud platforms, Artificial Intelligence and digital services is creating opportunities for technology companies to deliver innovative, scalable and customer-focused solutions.

Lee & Nee Softwares (Exports) Ltd. (LNSEL) provides mobile application development services across multiple platforms, with capabilities in Hybrid Mobile Development and Native Mobile Development for Android and iOS. The Company develops customised applications aligned with specific business requirements, enabling clients to enhance operational efficiency, real-time visibility, decision-making and customer engagement.

During the year, the Company continued to leverage its capabilities in developing customised mobile solutions, including applications for manufacturing and investment tracking for family offices. With the continued evolution of the digital ecosystem, LNSEL remains focused on delivering scalable and business-oriented mobile solutions that support customers changing technology requirements and long-term growth.

• Cloud Solutions: Driving Agility and Operational Excellence

Cloud computing continues to be a key enabler of digital transformation across industries. By offering on-demand access to scalable computing resources—including storage, processing power, and software—cloud solutions eliminate the need for traditional on-premises infrastructure. This shift empowers businesses to focus on their core operations while leveraging powerful, cost-effective, and flexible computing capabilities.

The transition from on-premises systems to cloud-based architectures is accelerating, driven by the need for agility, innovation, and cost optimization. Leading ERP vendors are actively migrating their platforms to the cloud, reflecting an industry-wide shift. Enterprises are increasingly adopting cloud strategies to house mission-critical applications, streamline operations, and reduce capital expenditure.

Our commitment to cloud adoption is not only improving our operational efficiency but also ensuring we remain agile and resilient in a rapidly evolving digital landscape.

Your company has also been involved with Cloud Solutions. We are partners with world leaders like AWS (Amazon Web Services) and Microsoft Azure for offering robust cloud solutions to its customers.

RISKS & CONCERNS

The IT industry continues to face significant challenges arising from rapid technological advancements, increasing cybersecurity threats, intense market competition, evolving regulatory and compliance requirements, infrastructure demands and the shortage of skilled technology professionals. Continuous innovation requires companies to regularly upgrade their technology, while growing dependence on digital, cloud and AI-enabled platforms increases exposure to data security and cyber risks. At the same time, changing customer expectations, pricing pressures and competition for skilled talent can impact business growth, operational efficiency and employee retention.

Lee & Nee Softwares (Exports) Limited addresses these challenges through continuous technology upgradation, employee training and skill development, strengthening of cybersecurity and data protection measures, and regular review of its IT infrastructure and internal controls. The Company focuses on its domain expertise, client-centric approach and technology capabilities to remain competitive, while maintaining a positive work environment and opportunities for employee development to attract and retain talent. The Company also remains committed to applicable legal and regulatory requirements, sound governance practices and effective risk management. Through these measures, Lee & Nee aims to remain agile and resilient and to leverage emerging technologies to create sustainable value for its customers and stakeholders.

SEGMENT-WISE / PRODUCT-WISE PERFORMANCE

Given the uniformity in the geographical location and the nature of the Companys core business—Information Technology Enabled Services (ITES)—separate segmental reporting is not applicable for the year under review. All operations are carried out within the same segment and region, eliminating the need for distinct reporting based on geography or product classification.

FUTURE OUTLOOK

The Indian IT industry continues to present significant growth opportunities, supported by rapid digital transformation, increasing enterprise technology spending, cloud adoption and the accelerating integration of Artificial Intelligence. Indias IT spend ing is projected to reach approximately US$176.3 billion in 2026, representing a growth of 10.6%, while IT services spending is expected to grow by 11.1%. The increasing adoption of cloud, AI-enabled applications, cybersecurity and digital platforms is expected to remain a key driver of industry growth.

Key Factors Shaping the Industrys Future

1. Artificial Intelligence and GenAI

Artificial Intelligence, Generative AI and Agentic AI are increasingly becoming integral to enterprise technology strategies. Organisations are moving beyond experimentation towards practical implementation of AI across automation, customer engagement, analytics and business processes. This presents opportunities for technology companies to develop AI-enabled applications and solutions that deliver measurable business value.

2. Cloud and Digital Transformation

The continued shift towards cloud-based infrastructure, application modernisation and digital platforms is expected to create sustained demand for scalable technology solutions. Public cloud spending in India is forecast to grow strongly in 2026, driven by AI-ready infrastructure, application modernisation and the need for flexible and scalable technology platforms.

3. Cybersecurity and Data Protection

With increasing digitisation and AI adoption, cybersecurity, data protection and regulatory compliance are becoming important priorities for businesses. The growing focus on secure cloud environments, identity management and protection against emerging digital threats is expected to create additional opportunities for technology solution providers.

4. Talent and Technology Skills

The rapid evolution of AI, cloud computing, cybersecurity and enterprise technologies is increasing the need for specialised technical capabilities. Continuous learning, skill development and retention of experienced professionals will remain important for maintaining service quality and competitiveness.

Strategic Direction of Lee & Nee Softwares (Exports) Ltd.

Against this evolving industry backdrop, Lee & Nee Softwares (Exports) Ltd. (LNSEL) remains focused on expanding its technology capabilities and identifying new business opportunities across AI, enterprise applications and digital solutions.

• AI and GenAI Solutions: The Company is strengthening its focus on Artificial Intelligence through technology partnerships and solutions such as Chatbots, Conversational AI and AI Agents, with an objective to enhance automation, customer engagement and business productivity.

• Enterprise Solutions: The Company continues to explore opportunities in ERP and CRM solutions, including its capabilities around SAP Business One, to address the growing digitalisation needs of businesses.

• Product and Solution Diversification: LNSEL intends to expand its offerings across AI Solutions, ERP Solutions, HRMS & Payroll Solutions, Digital Marketing Tools and customised mobile applications.

• Industry-Specific Solutions: The Company will continue to develop customised and niche software solutions aligned with specific industry and customer requirements, with opportunities across both domestic and international markets.

Going forward, LNSEL remains committed to innovation, technology partnerships, product diversification and customercentric solutions. The Company believes that its focus on AI, enterprise software, cloud-enabled solutions and customised digital applications will enable it to respond effectively to evolving market requirements and create sustainable long-term growth opportunities.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

Lee & Nee Softwares (Exports) Ltd. has established a robust framework of Internal Control Systems (ICS) designed to support the effective and efficient conduct of its business operations. The Company periodically reviews its processes and control mechanisms and strengthens them, wherever required, to remain responsive to changes in the regulatory, operational and business environment

The Company has implemented well-defined policies, procedures and guidelines governing authorisations and approvals,

thereby establishing appropriate levels of accountability and control across its operations.

Internal audit forms an integral part of the Companys internal control framework. Internal audits are conducted periodically to assess the effectiveness and compliance of established systems and processes, verify adherence to applicable policies and guidelines, and evaluate the adequacy of controls for safeguarding the Companys assets against unauthorised use, misuse or potential losses.

The adequacy and effectiveness of the Companys internal control systems are reviewed on a regular basis and enhanced, wherever necessary, to address emerging business and operational risks. The internal and statutory auditors also periodically evaluate the Companys internal control framework, policies and procedures, including their effectiveness in supporting risk identification, management and mitigation.

The Companys internal control framework provides reasonable assurance regarding the accuracy and completeness of financial and operational records, the proper authorisation and recording of transactions, compliance with applicable policies and procedures, and the safeguarding of its assets.

Further, the Companys ERP system has contributed to strengthening the overall internal control environment by enabling greater integration, standardisation, monitoring and control of business processes.

FINANCIAL & PERFORMANCE OVERVIEW

At the Standalone level the Revenue of the Company have increased by 8.41% as compared to previous year. The international sales of the company continues to increase steadily. We have started working with many new international partners from USA, Canada, UK & Australia. We have recently added several new partners in USA and UK Market.

Overview of Funds Invested

The Company follows a prudent investment approach focused on efficient deployment of surplus funds, liquidity management and preservation of capital. The total investments of the Company increased to ?1,179.30 lakh in FY 2025-26, from ?1,092.56 lakh in FY 2024-25, registering a growth of 7.98%. The Company continues to evaluate investment opportunities while maintaining an appropriate balance between returns, liquidity and risk.

HUMAN CAPITAL

At Lee & Nee Softwares (Exports) Ltd., people remain central to delivering quality technology solutions and creating sustainable value. During FY 2025-26, the Company successfully strengthened its KRA and KPI-based performance management system, improving accountability, performance tracking and alignment of individual and departmental objectives with organisational goals. Regular feedback and performance reviews have supported greater efficiency and productivity.

The Company conducts monthly and quarterly strategic review meetings with departmental heads to assess departmental performance, review key objectives and identify areas for improvement. The Company also recognises and rewards outstanding individual performers and the best-performing departments, fostering a culture of accountability, excellence and continuous improvement. Focus also remains on developing employee capabilities in emerging areas such as Artificial Intelligence, Generative AI, automation and other digital technologies.

Through a performance-oriented and learning-focused culture, Lee & Nee aims to develop a future-ready workforce that can respond effectively to changing customer needs, emerging technologies and evolving business opportunities. The Company remains committed to creating an environment where employees can contribute meaningfully, develop their capabilities and grow alongside the organization.

As on 31 March 2026, the Company had 109 permanent employees, compared with 99 as on 31 March 2025. Despite the change in employee strength, the Company continues to focus on workforce productivity, capability development and employee engagement, with the objective of building a skilled, future-ready and high-performing workforce aligned with evolving customer and business requirements.

RATIO ANALYSIS

The Board of Directors and the Management of the Company are pursuing various available options to rehabilitate the Company and considering future business plans for the Company.

Details of significant changes in key financial ratios, along with detailed explanations therefore: