Naapbooks Ltd Management Discussions

OVERVIEW

Naapbooks is engaged in the business of developing and providing Information Technological solutions to corporates for their requirements. The company develops and provides Fintech App, Cloud Consulting, Block chain App, Mobile App, Web App, Embedded App products to its clients. The services broadly cover designing, developing, operating, install installing analyzing, designing, maintaining, converting, porting, debugging, coding and programming software to be used on computer or any microprocessor-based device or any other such hardware.

Our Company is also engaged in Software Consultancy services. Our Company adheres to all necessary regulatory specifications. We firmly believe in maintaining our service quality against the highest standards, are unflinchingly customer centric, deeply people focused, and follow ethical business practices and corporate governance standards overall. We draw our strength from an age-old tradition of quality services as the best strategy for sustained growth.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Software and computing technologies are transforming businesses in every industry around the world in a profound and fundamental way. During the fiscal year 2022, we witnessed an acceleration in the adoption of digital technologies as businesses attempted to reimagine their cost structures, increase business resilience and agility, personalize experiences for their customers and employees, and launch new and disruptive products and services. This gives major boost to the IT companies providing technology as products or services to digitalize the processes of the businesses.

INDIAN ECONOMIC OVERVIEW

According to the Department for Promotion of Industry and Internal Trade (DPIIT), foreign direct investment (FDI) equity inflows to India reached US$ 72.12 billion in 2020-21 (until January 2021) while the cumulative FDI equity inflows to the country from April 2000 to January 2021 reached US$ 545.0 billion.

The IT and BPM market accounts for 9.3% of Indias GDP and 56% of the global outsourcing market.

The IT industry accounted for 8% of Indias GDP in 2020. Indias IT industry is expected to contribute 10% to Indias GDP by 2025. As of FY21, the IT industry employs 4.5 million people.

In FY 2022, the top three Indian IT companies, TCS, Wipro and Infosys, are expected to offer 1.05 lakh job opportunities due to the increasing demand for talent. Indias IT and business services market is projected to reach US$ 19.93 billion by 2025. According to Gartner estimates, IT spending in India was forecasted to be US$ 81.89 billion in 2021 and further increase to US$ 101.8 billion in 2022, a 24.31% YoY increase.

In FY 2021, India ranked third worldwide with 608,000 cloud experts across all verticals, including technology. Japanese investments in the Indian IT sector grew 4X between 2016 and 2020. Investments stood at US$ 9.2 billion in the review period. A preferred destination for IT & BPM in the world, it continues to be a leader in the global sourcing industry with 52% market share (as of FY20) in services exports from the country.

Exports from the Indian IT industry stood at US$ 149 billion in FY21. Export of IT services has been the major contributor, accounting for more than 51% of total IT export (including hardware). BPM and Engineering and R&D (ER&D) and software products exports accounted for 20.78% each of total IT exports during FY21. ER&D market is expected to grow to US$ 42 billion by 2022.

In November 2021, Mr. Piyush Goyal, Minister of Commerce and Industry, Consumer Affairs, Food and Public Distribution and Textiles, lauded the Indian IT sector for excelling its competitive strength with zero government interference. He further, added that service exports from India have the potential to reach US$ 1 trillion by 2030. Indian IT & business services industry is expected to grow to US$ 19.93 billion by 2025.

(Source: https: //www. ibef. org/industrv/indian-iT- and-iTeS-industrv-analvsis-presentation)

OPPORTUNITIES AND THREATS

i) OUR STRATEGY

> Leveraging expertise in Mobility, Cloud and Analytics domain.

We are developing a sound analytic strategy that involves step by step stakeholder participation and socializing them into the utility of the platform. Most importantly, dashboard updates will be designed to correspond to day-to-day planning or execution insights. We are working on seamless integration of strong analytics with our solution in the backend which will provide insightful Business Intelligence for the clients.

> Leveraging our Market skills and Relationships

We are planning to expand our network and reaching new geographies. In respect of our present location, we are expanding our network by marketing. We have always aimed to maintain our relationship with our clients by satisfying their requirements. We aim to do this by leveraging our marketing skills and relationships and further enhancing customer satisfaction. We plan to increase our customers by meeting orders in hand on time, maintaining our customer relationship and renewing our relationship with existing clients.

> Continue to develop customer relationships and expand our customer base

A business can grow by increasing the number of customers, as we believe that increased customer relationships will add stability to our business. We seek to maintain our existing relationships while also focusing on bringing more customers in our portfolio. Our Company believes that our business is a by-product of relationship. We have built long term relations with our clients by building trust and providing them good quality of services.

ii) COVID-19

At NBL, as we continue in our endeavour to fight waves of the COVID-19 pandemic, our priority remains the safety and well-being of our employees, and business continuity for our clients. Business continuity programs were tested and practiced, and the processes were proven to be resilient.

iii) Our strengths

We believe that we are well-positioned for the principal competitive factors in our business. With almost 5 (five) years of experience in managing the systems, we believe we are uniquely positioned to help them steer through their digital transformation with our Digital Navigation Framework.

We believe that the following strengths have contributed to success and will be of competitive advantages for us, supporting our strategy and contribution to improvements in financial performance.

> Quality Assurance and Standards

The company holds ISO 9001:2015 quality certificate. We believe in providing our customers the best possible quality. We adopt stringent quality control process which is managed at every stage of our service to ensure the adherence to desired specifications and quality. Since, our Company is dedicated towards quality services; we get repetitive clients as we are capable of meeting their quality standards.

> Growing Domestic Economy

India is moving as developed country from developing country now. The GDP rate of India is also higher as compared to the other developing countries. It forecasts more demand for our services and there will be a huge expansion of disposable incomes and our main services will have huge demand.

With the changes in landscape because of Covid19, India have become a manufacturing and trade hub in Asia because of highly skilled manpower and infrastructure available in abundance. With MNCs coming to India for new manufacturing set up with high end automation, we seek greater requirement of office automation and information technology.

> Development of products incorporating latest technology trends

We update and upgrade our Software/Digital Products with the latest developments in all the mobile technology platforms by leveraging: 1) Vertical specific and in-depth domain and industry knowledge 2) Agile Cloud based Mobility Technology platform and solutions 3) Center of Excellence where constant innovation happens on both the technology and the applications front.

> Experienced & Qualified Management

Our Company is managed by Qualified Management Team of Ashish Jain, Yaman Saluja and Nirmal Jain and we believe that the leadership and exemplary vision of our Promoters have been instrumental in driving our growth and implementing our business strategies. Our management team has the requisite experience to manage the current scale of business as well as the expansion plans for the future. We believe that we have achieved a measure of success in attracting an experienced senior management team with operational and technical capabilities, management skills, business development experience and financial management skills. For further details, please refer "Our Management" on Page No. 96 of this Prospectus.

> Skilled and dedicated manpower

We believe that Human resource is the most important resource. Our Company is managed by a team of well experienced and highly knowledgeable personnel. The team comprises of personnel having technical, operational and business development experience. We take pride in relating our success to our employees, for their consistent efforts and dedication has brought us to where we are today. We also require application of high levels of technology at key stages of design and manufacturing processes as an important part of the business procedure.

> Strong customer relationship

We believe that we constantly try to address our customers needs which help us to maintain a long-lasting working relationship with them and improve our customer retention strategy. We believe that our existing relationship with our customers represents a competitive advantage in gaining new customers and increasing our business.

OUR COMPETITION

The Software Consultancy industry in India is highly competitive, and we expect that the competition in this industry will continue to increase. Our Industry is fragmented consisting of large established players and niche players. We compete with organized as well as unorganized sector on the basis of availability of consumers. Thus, our customers have the option of choosing any competitor providing similar services. Further, there are no entry barriers in this industry and any expansion in capacity of existing competitors would further intensify competition. If we are not able to compete effectively with existing or future competitors, our business and financial condition could be adversely affected.

FINANCIAL CONDITION

The Company has considered the possible effects that may result from the pandemic relating to COVID-19 in the preparation of its financial statements, including the recoverability of carrying amounts of financial and nonfinancial assets. The impact of COVID-19 on the Companys financial statements may differ from that estimated at the date of approval of its financial statements. Refer to the Standalone financial statements in this Integrated Annual Report for detailed schedules and notes.

RESULTS OF OUR OPERATIONS

The function-wise classification of the Standalone Statement of Profit and Loss is as follows:

(Rs in Lakhs)

PARTICULARS	Year ended March 31,
	2022	%	2021	%
I. Net Sales/Income from Operations	280.45	100	271.32	100
II. Other Income	0.019	0.01	0.12	0.04
III. Total Income (I+II)	280.47	-	271.44	-
IV. Earnings Before Interest, Taxes, Depreciation and Amortization Expense	191.01	68.11	180.55	66.55
V. Finance Cost	8.73	3.10	6.72	2.40
VI. Depreciation and Amortization Expense	45.60	16.26	18.79	6.92
VII. Profit Before Tax (IV-V- VI)	35.13	12.53	65.38	24.10
VIII. Tax Expense:
i Current Tax Expense	8.46	3.02	15.94	5.87
ii MAT Credit	0	0	0	0
iii MAT Credit Relating to prior years	0	0	0	0
iv Tax Expense Relating to prior years	(1.72)	(0.61)	0	0
v Deferred Tax (Asset)/Liabilities	5.14	1.83	2.40	0.88
IX. Profit After Tax (VII-VIII)	23.25	8.29	47.04	17.34

> During the year under review, the revenue from operation (turnover) is f 280.45 lacs compared to the previous year were f271.32. This gradually increased to 3.4% compared on Y-o-Y.

> During the year under review, the Profit after tax (PAT) is f 23.25 lacs compared to the pr evious year was f47.04 lacs. This is significantly declined to 49.43% compared on Y-o-Y.

RATIOS WHERE THERE HAS BEEN A SIGNIFICANT CHANGE FROM FISCAL 2021 TO FISCAL 2022

Revenue growth has been explained in the relevant sections above.

1. The details of return on net worth at standalone is as follows:

Particulars	Standalone
	2022	2021
Return on net worth (%)	5.62%	24.64%

2. The other key ratios are as below:

Particulars	Standalone
	2022	2021
Debtors Turnover Ratio	1.33	2.89
Creditors Turnover Ratio	3.12	4.51
Inventory Turnover Ratio	NA	NA
Current Ratio	3.54	1.61
Interest Coverage Ratio	16.86	15.33
Debt Equity Ratio	0.05	0.16
Operating Profit Margin Ratio	15.64%	26.58%
Net Profit Margin	8.29%	17.34%

Explanation for change in the ratios by more than 25%:

> Current Ratio has increased majorly due to increase in the Trade Receivables and Short Term Loans and Advances

> Debt Equity Ratio has been reduced due to the Increase in the Equity Share Capital on account of Initial Public Issue

> Return on Net worth has decreased majorly due the increase in the Equity Share Capital on account of Initial Public Issue

> Trade Receivables Turnover Ratio has been decreased due to lower debtors realization in the year

> Trade Payables Turnover Ratio has been decreased due to increase in outstanding at the end of the year

> Net capital turnover Ratio has been decreased to the expenses related to the Initial Public Issue and Amortization of Intangible Assets.

> Operating Profit Margin has been decreased to the expenses related to the Initial Public Issue and Amortization of Intangible Assets.