Mangal Compusolution Ltd Management Discussions

1. Global IT Economic Overview

The global IT equipment rental market was estimated at USD 25 billion in 2023 and is expected to expand to USD 45 billion by 2032, registering a compound annual growth rate (CAGR) of 6.5% during the forecast period. This healthy growth trajectory reflects a structural shift in how businesses across the world acquire and utilize IT infrastructure. Instead of incurring heavy upfront capital expenditure on purchasing hardware, organizations are increasingly adopting rental models that provide operational flexibility, cost efficiency, and access to the latest technologies without long-term ownership liabilities.

The expansion of the IT equipment rental market is driven by several key factors:

1. Rising Enterprise Demand for Cost-Effective IT Solutions

Businesses, particularly small and medium enterprises (SMEs) and start-ups, are under continuous pressure to optimize operational costs. Renting IT equipment allows companies to shift expenditure from capital budgets (CAPEX) to operational budgets (OPEX), preserving cash flow while avoiding depreciation costs.

Large enterprises, too, find value in rentals for short-term projects, seasonal demands, and pilot programs where purchasing equipment would be financially inefficient.

2. Accelerated Remote Work Adoption

The pandemic-induced shift towards remote and hybrid work models has fundamentally changed IT requirements for businesses. Organizations must now equip a distributed workforce with reliable laptops, desktops, and networking devices on flexible terms.

Rentals offer a scalable solution - equipment can be deployed, upgraded, or returned as workforce needs evolve, ensuring adaptability without long-term commitment.

3. Increased Digital Transformation Activities Across Sectors

As industries embrace automation, data analytics, cloud computing, and AI-driven processes, there is a growing need for high-performance computing systems and peripherals.

Rental models enable companies to quickly access cutting-edge hardware required for digital transformation initiatives without delays caused by procurement budgets or long purchase cycles.

This is particularly relevant in sectors like IT services, education, healthcare, media production, and financial services, where technology refresh cycles are becoming shorter due to rapid innovation.

Overall, the convergence of these drivers is creating sustained global demand for IT hardware rentals. For companies like Mangal Compusolution, which operate in the IT equipment rental segment, this global trend presents significant opportunities to capture market share, especially as the Indian economy aligns with global digitalization patterns and the demand for flexible, asset-light technology solutions accelerates.

2. Indian IT Economic Overview

1. Indias IT Sector

The Indian IT industry contributed approximately US $253.9 billion in revenue in FY 2024, with US $194 billion from exports and US $51 billion from the domestic market

IT accounts for 7.4% of Indias GDP

Employment stands at around 5.4 million people as of March 2023

The sector is projected to grow to US $282.6 billion in FY 2025, and potentially reach US $300 billion by FY 2026

2. IT Equipment Rental Market: India & Global Trends Asia-Pacific & India Dynamics

Asia-Pacific captured 28% of the global IT equipment rental volume in 2023, with India accounting for 39% within the region

This translated to well over 2.4 million laptops and tablets rented, particularly in the education sector; corporate rentals also surged by 23%

Asia-Pacific & India Dynamics

The rise of Device-as-a-Service (DaaS) and flexible subscription models supports remote and hybrid work trends

Key advantages include: o No heavy upfront capital needed. o Scalability and rapid deployment, ideal for fluctuating demands. o Predictive maintenance using IoT and AI for enhanced uptime and operations o Dynamic pricing models, optimizing utilization and revenue during peaks and troughs

3. Indias IT Rentals: Local Trends & Market Evolution

While distinct numbers for India-specific IT rental revenues are limited, several clear trends are emerging:

Expansion & Diversity

A leading Indian IT rental provider now offers over 70,000 devices across 400+ cities, including DaaS and even Drone-as-a-Service solutions Theres rising interest in VR headsets, advanced scanners, and other specialized gear for sectors like education and design

Technology & Platforms

Rental firms are integrating IoT, automation, and AI to optimize fleet management, maintenance schedules, and user service

Mobile platforms (apps, digital marketplaces) are streamlining bookings and customer experience

Business Models & Services

The DaaS model is gaining traction—e.g., Orient Technologies Ltd offers laptops, desktops, printers, and servers bundled with software and services on pay-per-use terms

Many providers offer bundled services, including on-site support, maintenance, and integration with clients branded infrastructure.

Sources of information : NASSCOM, The Economic Times, DataIntelo, Coherent Market Insights, The Business Research Company, Market.us

3. Industry Structure and Developments

The Indian IT hardware rental industry is witnessing strong growth, driven by increasing demand for cost-effective, flexible technology solutions. Companies are moving away from outright hardware purchases towards rental models to optimize capital expenditure and stay updated with evolving technology. Additionally, the growth of remote work, hybrid office setups, start-up ecosystems, and project-based contracts has created significant opportunities in IT rentals.

Government initiatives promoting digitization and increased adoption of cloud, AI, and IoT-based systems are further propelling the sector. However, the industry faces challenges from rapid technological obsolescence, competitive pricing pressures, and fluctuating global supply chains for IT hardware components.

4. Financial Performance

The highlights of the Companys performance are as under:

- During the year under review, the Revenue from Operations of the Company is Rs. 2524.05 lakhs as against Rs. 2088.58 lakhs in the previous year;

- Total Income is Rs. 2732.84 lakhs as against Rs. 2,344.43 lakhs in the previous year;

- Net profit after taxes is Rs. 456.87 lakhs as against 385.80 lakhs in the previous year;

- The earnings per share in the year is Rs. 4.05 per share as against Rs. 5.67 per share for the financial year 2023-24.

The rental segment remains the backbone of the companys business, supported by value-added services and customized configurations.

6. SWOT Analysis

Strengths

Diverse product portfolio, long-standing market presence (13+ years), and strong management team.

High customer service orientation (24/7 support) and standby inventory.

Weaknesses

Capital intensity and inventory carrying costs.

Geographic concentration risks despite presence in 6 states.

Opportunities

Rising adoption of flexible IT rental models in sectors such as IT/ITES, BFSI, education, and healthcare.

Growing demand for short-term rentals for events, exhibitions, and seasonal projects.

Potential to expand into emerging technologies such as cloud-based desktops, AR/VR systems, and high-performance computing rentals.

Strategic tie-ups with OEMs and software vendors to offer bundled solutions.

Threats

Competition from established IT rental players and cloud service providers offering device-as-a-service models.

Rapid technological obsolescence leading to frequent asset refresh requirements.

Price sensitivity in SME and startup segments.

Macroeconomic uncertainties impacting client IT budgets.

7. Risks and Concerns

Technological Obsolescence – Continuous monitoring of technology trends and planned asset refresh cycles are essential. Credit Risk – Managed through stringent credit checks, advance deposits, and robust client onboarding processes.

Asset Utilization Risk – Optimized by efficient redeployment strategies and cross-industry rental demand mapping. Economic Slowdowns – May impact capital allocation by clients, reducing rental uptake.

8. Internal Control Systems and Their Adequacy

The Company has in place adequate internal financial controls with reference to financial statements, commensurate with the size, scale, nature and complexity of its operations and regulatory requirements. A comprehensive review of the internal financial controls of the Company was undertaken during the year which covered testing of Process, IT and Entity level controls including review of key business processes for updating Risk Control, Matrices, etc.

Moreover, the Company continuously upgrades its systems and undertakes review of policies, guidelines, manuals, and authority matrix. The internal financial control is supplemented by extensive internal audits, regular reviews by the Management and standard policies and guidelines to ensure reliability of financial and all other records to prepare financial statements, its reporting and other data. The Audit Committee of the Board reviews internal audit reports given along with management responses. The Audit Committee also monitors the implemented suggestions. The Company has, in all material respects, adequate internal financial control over financial reporting and such controls are operating effectively.

9. Human Resources

Mangal Compusolution recognizes human capital as its most critical asset. Training and development programs are conducted regularly to enhance technical skills and customer service competencies. Industrial relations remained cordial throughout the year, with no major disruptions.

10. Additional Disclosure- Ratios

Ratio	Current year	Previous year	% of Variance	Reason for Variance (more than 25%)
Current Ratio (times)	3.62	2.52	43.52%	Due to increase in current assets during the year
Debt Equity Ratio (times)	0.36	1.02	-64.58%	Due to repayment of borrowings during the year
Return on equity Ratio (times)	0.15	0.21	-28.28%	Due to increase in shareholders equity during the year
Trade Receivables Turnover Ratio (times)	3.58	2.95	21.6%	NA
Trade Payable Turnover Ratio (times)	4.26	0.5	756.96%	Due to increase in purchases during the year
Net Capital Turnover Ratio (times)	1.03	1.4	-26.71%	Due to increase in revenue during the year
Net Profit Ratio (times)	0.18	0.18	-2.01%	NA
Return on Capital Employed (percentage)	0.19	0.23	-17.98%	NA

*Ratios to the extent applicable to the Company has been disclosed.

11. Cautionary Statement

Statements in this report pertaining to the Companys objectives, projections, estimates, exceptions and predictions are forward-looking statements subject to the applicable laws and regulations. These statements may be subject to certain risks and uncertainties. Important factors that could make a difference to the Companys operations include changes in Government regulations and tax regime, economic developments within India and abroad, financial markets, etc. The Company assumes no responsibility in respect of forward-looking statements that may be revised or modified in future on the basis of subsequent developments, information or events.

The financial statements are prepared in accordance with the Accounting Standards notified under Section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. The management of the Company has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect a true and fair manner, the state of affairs and profit / loss for the year. The narrative on our financial condition and result of operations should be read together with the notes to the financial statements included in the annual report.