Nettlinx Ltd Management Discussions

1. FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements based on certain assumptions and expectations of future events. The Company, therefore, cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements can thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

2. INDUSTRY STRUCTURES & DEVELOPMENTS:

The Internet services market is rapidly growing , partly on account of higher penetration of users in rural areas getting on to Net and higher frequent usage of broadband in urban locations as most are using internet for multiple uses inclusive of Voice , Data & Video. Add to this is the aggressive campaigns of Large TELCOs who are constantly attracting Users for their Cellular Data plans , both in terms of upgrading existing users and also creating new ones. The market is rapidly adapting to the use of popular social networking sites. New players launching their services will further boost the market although margins in the next few years may shrink to a little extent owing to raising other costs.

3. OPPORTUNITIES & THREATS:

The Company enjoys goodwill from its Customers. Our Corporate objective is to create mutual long term sustainable value through a collaborative approach driven by the vision of becoming a preferred Internet choice for distinguished Clientele demanding Quality, Value for Money & Flexibility translating into a perfect Win-Win for either Entities. This formula is working fine in favor of our Organisation. Additionally, We are operating in Niche business segments & geographic locations within Telangana State & AP State without directly taking any of those large companies head on. We continue to optimistically protect and retain our current base and progressively increase the sales revenue and market share moving forward.

New technologies like WiFi & Free WiFI to Citizens envisaged by Govts , although may pose a little challenge to start with , In reality these may not be any threat to us as these service offerings may have challenges from the point of view of logistics and technological obstacles and will have lots of limitations and therefore may not be commercially viable . This would in reality enlarge the usage in the market place creating a level playing field in the long run.

4. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE.

Internet Leased Line Business (ISP)

The Internet Leased Line (ILL) business segment has been a cornerstone of Nettlinxs operations, showcasing strong growth and solid performance throughout the financial year 2023-24. Below are the key highlights and detailed analysis of this segment:

Key Performance Highlights

1. Revenue Growth

- Total Revenue: The Internet Leased Line business generated substantial revenue, contributing significantly to the overall financial performance of Nettlinx.

- Year-on-Year Growth: The segment experienced a robust year-on-year revenue growth rate, driven by an increase in customer acquisition and retention.

2. Customer Base Expansion

- New Contracts: A notable number of new contracts were secured, reflecting the growing demand for reliable internet connectivity solutions.

- Retention Rate: High customer satisfaction and superior service quality have led to an impressive customer retention rate.

3. Market Share

- Increased Market Penetration: Nettlinx has successfully expanded its market share in the ISP sector, leveraging its competitive pricing and superior service delivery.

- Geographical Reach: Expansion into new geographical areas has broadened the customer base and enhanced market presence.

Operational Efficiency

1. Network Infrastructure

- Upgraded Infrastructure: Significant investments in upgrading network infrastructure have resulted in enhanced bandwidth capacity, lower latency, and improved service reliability.

- Scalability: The scalable network infrastructure has allowed Nettlinx to meet the increasing demand for highspeed internet services.

2. Service Quality

- Service Uptime: The ILL segment maintained an impressive service uptime, ensuring uninterrupted connectivity for clients.

- Customer Support: Dedicated customer support teams have effectively managed and resolved customer issues, contributing to high satisfaction levels.

Strategic Initiatives

1. Product Innovation

- New Service Offerings: Introduction of innovative service offerings, such as tailored bandwidth solutions and flexible pricing models, has catered to diverse customer needs.

- Val ue-Added Services: Additional services, such as cybersecurity solutions and managed network services, have enhanced the value proposition for clients.

2. Partnerships and Alliances

- Strategic Partnerships: Collaborations with leading technology providers have enabled Nettlinx to offer cutting-edge solutions and stay ahead of industry trends.

- Alliances: Forming alliances with local and international partners has facilitated market expansion and service diversification.

Financial Performance

1. Revenue Contribution

- The ILL segment contributed a significant portion of the total revenue, underscoring its importance to Nettlinxs overall financial health.

2. Profit Margins

- Operating Margins: The segment maintained healthy operating margins through efficient cost management and strategic pricing.

- Net Profit: The profitability of the ILL business has been bolstered by consistent revenue growth and operational efficiency.

Challenges and Mitigation

1. Market Competition

- Intense Competition: The ISP market is highly competitive, with numerous players vying for market share. Nettlinx has countered this by emphasizing service quality and customer satisfaction.

- Price Sensitivity: To address price sensitivity in the market, Nettlinx has introduced flexible pricing models and bundled service offerings.

2. Technological Advancements

- Rapid Technological Changes: Staying abreast of rapid technological advancements is crucial. Nettlinx continuously invests in R&D to integrate the latest technologies into its service offerings.

Future Outlook

1. Expansion Plans

- Geographical Expansion: Continued focus on expanding into new regions to capture untapped markets.

- Service Diversification: Developing new services to meet evolving customer needs and stay competitive.

2. Sustainable Growth

Nettlinx aims to achieve sustainable growth in the ILL segment through ongoing innovation, superior service delivery, and strategic market positioning.

5. OUTLOOK:

In order to meet the changing market realities, your Company has been following the philosophy of providing the highest quality products and services at the lowest possible prices. All endeavours are made to achieve possible cost reduction in every area of operations. Your Companys philosophy to provide high class quality products i.e. full value for money, to consumers would greatly benefit in the long run. In the otherwise increasing cost arena, every expense, whether capital or revenue is minutely reviewed to achieve all possible savings.

6. RISKS AND CONCERNS:

The Companys products are largely intended for sale in the domestic market. Apart from normal risks as are applicable to an Industrial Undertaking the Company does not foresee any serious area of concern. The Company is obtaining adequate insurance coverage for its assets at the plant and the field locations etc. The company has no foreign exchange risk coverage due to its limited exposure. Compliance of safety requirements and norms placed by different Government agencies is a top priority of your Management.

7. INTERNAL CONTROL SYSTEMS

The Company has proper and adequate systems of internal controls in order to ensure that all assets are safeguarded against loss from unauthorized use of disposition and that all transactions are authorised, recorded and reported correctly. An Audit Committee headed by a non-executive independent Director is in place to review various areas of the control systems.

8. DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The financial performance of Nettlinx for the year 2023-24 reflects a significant improvement and is detailed in the Balance Sheet, Profit & Loss Account, and other financial statements presented separately. Key highlights for the year are summarized below:

Key Financial Highlights C2023-24)

Sales for the year 2023-24	1998.33
Current tax	243.59
Profit after tax	633.85
Paid up equity share capital as on 31st March, 2024	GHT>2417.66

Analysis

1. Sales Performance:

- The total sales for the year stood at Rs. 1998.33 lakhs. This reflects the companys robust sales strategy and strong market presence, which have contributed to maintaining a steady revenue stream.

2. Profitability:

- The company achieved a Profit After Tax CPAT) of Rs. 633.85 lakhs. This notable profit is a result of effective cost management, enhanced operational efficiencies, and strategic business initiatives undertaken during the year.

3. Taxation

- The current tax expense for the year amounted to Rs. 243.59 lakhs. The effective tax planning and compliance with statutory requirements have ensured a balanced tax expense aligned with the companys profitability.

4. Equity Share Capital:

- The paid-up equity share capital as of 31st March 2024 is Rs. 2417.66 lakhs. This strong capital base indicates the companys healthy financial structure and its ability to leverage equity financing for growth and expansion.

Operational Performance

- Operational Efficiency: The company has focused on streamlining operations, which has resulted in higher productivity and reduced operational costs. This efficiency is reflected in the increased profitability margins.

- Market Expansion: Strategic initiatives to enter new markets and expand the customer base have been successful, contributing to the revenue growth.

- Product Innovation: Investment in research and development has led to the introduction of new products and services, meeting customer demands and staying competitive in the market.

Conclusion

Nettlinxs financial performance for the year 2023-24 is a testament to the companys effective operational strategies and robust financial management. The significant profit, along with a strong sales performance, underscores the companys successful execution of its business plans and its commitment to delivering value to its stakeholders.

9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OFPEOPLEEMPLOYED:

Overview:

The financial year 2023-24 has been a significant period of transformation and growth for Nettlinx in terms of human resources and industrial relations. Our commitment to fostering a dynamic and engaging work environment has been pivotal in achieving our organizational goals. Below are the key developments and achievements in this area:

Human Resources:

Talent Acquisition and Retention:

Strategic Hiring: We have strengthened our workforce by recruiting top talent across various functions to support our expanding business operations.

Retention Programs: Initiatives such as enhanced employee benefits, career development programs, and recognition schemes have been instrumental in reducing attrition rates and retaining key talent.

Training and Development:

Skill Enhancement: Comprehensive training programs focused on both technical and soft skills have been implemented to ensure our employees are well-equipped to meet current and future challenges.

Leadership Development: Special emphasis has been placed on grooming future leaders through mentorship programs and leadership workshops.

Employee Well-being Health and Wellness Programs:

We have introduced several health and wellness initiatives, including mental health support, fitness programs, and health check-ups, to ensure the overall well-being of our employees.

Work-Life Balance:

Flexible working hours, remote working options, and leave policies have been optimized to promote a healthy work- life balance.

Industrial Relations.

Collaborative Environment Open Communication:

Establishing transparent communication channels between the management and employees has fostered a collaborative and trust-based work environment.

Employee Engagement:

Regular town hall meetings, feedback sessions, and employee surveys have been conducted to understand and address employee concerns effectively.

Labour Relations Fair Practices:

Adhering to fair labor practices and ensuring compliance with all statutory regulations have been our top priorities. Conflict Resolution:

A proactive approach to resolving any industrial disputes has helped in maintaining harmonious industrial relations. The advancements in our human resources and industrial relations fronts have been crucial in driving Nettlinx towards achieving its strategic objectives. We remain committed to creating a supportive and growth-oriented workplace for all our employees.

10. DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING:

S.No. Particulars	Year Ended 31.03.24	Year Ended 31.03.23	Variance	Reason
1. Debtors Turnover	1.57	4.46	-65%	due to increase of sales and increasing of credit period leading to lower collections
2. Inventory Turnover				NA
3. Interest Coverage Ratio	0.94	0.82	14
4. Current Ratio	1.16	3.18	64%	Due to increase in credit period to customers
5. Debt Equity Ratio	0.02	0.22	90.00%	due to debt repayment
6. Operating Profit Margin (%)	7784	72.88	6.85%
7. Net Profit Margin (%)	32	13	136%	The company has significantly improved its net income due to higher revenues and better cost management. Operational Efficiency: Improved operational efficiencies have led to better profit margins,

11. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

S.No. Particulars	Year Ended 31.03.24	Year Ended 31.03.23	Variance	Reason
1. Return on Equity Ratio	33.7%	-1.8%	1924%	Reason:
				The substantial increase in the Return on Equity Ratio from -1.8% to 33.7% can be attributed to several key factors:
				- Improved Net Income: The company has significantly improved its net income due to higher revenues and better cost management.
				Operational Efficiency: Improved operational efficiencies have led to better profit margins, thus increasing the return on equity.
2. Return on Capital employed, (Earnings before interest and taxes (EBIT), by capital employed) "Capital Employed = Total Assets - Current Liabilities	21%	2%	71%	The increase in the Return on Capital Employed from 2% to 21% is driven by:
				- Higher EBIT: Increased Earnings Before Interest and Taxes (EBIT) indicates improved operational performance and higher profitability.
				- Efficient Use of Capital: Better utilization of the capital employed in the business, such as investments in high- return projects or costcutting measures, has led to higher returns.

12. CAUTIONARY STATEMENT:

Certain statements in the Management Discussion and Analysis describing the Companys views about the industry, expectations/predictions, objectives etc, may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the statement. Companys operations may inter-alia affect with the supply and demand situations, input prices and their availability, changes in Government regulations, tax laws and other factors such as Industrial relations and economic developments etc. Investors should bear the above in mind.