S A Tech Software India Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of financial condition and results of operations together with our financial statements included in this Red Herring Prospectus. The following discussion relates to our Company and is based on our restated financial statements. Our financial statements have been prepared in accordance with Indian GAAP, the accounting standards and other applicable provisions of the Companies Act.

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward looking statement" 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 our operations include, among others, economic conditions affecting demand/supply and price conditions in domestic and overseas market in which we operate, changes in Government Regulations, Tax Laws and other Statutes and incidental factors.

BUSINESS OVERVIEW

Our Company was originally incorporated as ‘S A Tech Software India Private Limited a private limited company under the Companies Act, 1956 at Pune, Maharashtra, pursuant to a certificate of incorporation dated November 01, 2012, issued by the Registrar of Companies, Maharashtra, Pune ("RoC"). Thereafter, name of our Company was changed from ‘S A Tech Software India Private Limited to ‘S A Tech Software India Limited, consequent to conversion of our Company from private to public company, pursuant to a special resolution passed by the shareholders of our Company on October 16, 2023, and a fresh certificate of incorporation consequent to change of name was issued by the RoC on November 03, 2023. Our Companys Corporate Identity Number is U72900PN2012FLC145261.

We have consistently grown in terms of our revenues over the past years. In the past three (3) years our revenues from operation were Rs.4,106.11 lakhs in F.Y.2021-22, Rs. 5,639.31 lakhs in the FY 2022-23 and 7,188.22 lakhs in the FY 2023-24. Our Net Profit after tax for the above-mentioned periods are Rs. (548.25) lakhs, Rs. 108.59 lakhs and 368.86 lakhs respectively.

Factors contributing to the growth of our Revenue:

1. For FY 2022-23 the following were the factors that contributed to growth of our revenue:

• Significant Surge in Revenue from Operations:

Our revenue from operations surged from Rs. 4106.11 lakhs in FY 2021-22 to Rs. 5639.31 lakhs in FY 202223, reflecting an impressive growth of almost 37.34%. This substantial increase was primarily attributed to the strategic expansion in business operations and steady recovery from the post covid impacts._The company managed to onboard new contracts, and added new clients like KSB Tech, Toll India, Roche India and more and also the company managed to secure new projects with the existing clients. ²

2. For FY 20223-24 the following were the factors that contributed to growth of our revenue:

• Steady Revenue Increase:

Our revenue from operations experienced a positive trajectory, escalating from Rs. 5639.31 lakhs in FY 2022-23 to Rs. 7188.22 lakhs in FY 2023-24, marking a substantial growth of almost 27.47%. This noteworthy increase was primarily a result of strategic expansions in our business operations as well as with the onboarding of more clients and varied segments of business line, including the GCC business, which enhanced the revenue and profitability of the Company.

FINANCIAL KPIs OF THE COMPANY:

				(Amt Rs. in Lakhs)
Key Performance Indicator	For the period ended June 30, 2024	For the year ended March 31, 2024	For the year ended March 31, 2023	For the year ended March 31, 2022
Revenue from Operations11	2,388.87	7,188.22	5,639.31	4,106.11
Growth in revenue from operations (%)	N.A.	27.47%	37.34%	(24.48%)
Total Income (2)	2,397.18	7,238.12	5,673.05	4,154.37
EBITDA(3)	413.93	875.32	520.10	(399.00)
EBITDA Margin (%) (4)	17.33%	12.18%	9.22%	(9.72%)
Restated profit for the period/year(5)	248.07	368.86	108.59	(548.25)
Restated profit for the period/year Margin (%) (6)	10.38%	5.13%	1.93%	(13.35%)
Return on Net worth(7)	17.54%	31.63%	14.06%	(82.58%)
Return on Average Equity ("RoAE") (%) (8)	19.22%	38.05%	15.12%	(58.45%)
Return on Capital Employed ("RoCE")(%) (9)	10.95%	32.24%	19.66%	(17.35%)
Debt-Equity Ratio (10)	1.49	1.10	1.89	2.95

* EBITDA margin is calculated as EBITDA as a percentage of total income and PAT Margin (%) is calculated as Profit for the year/period as a percentage of Revenue from Operations.

FACTORS AFFECTING OUR RESULT OF OPERATIONS

Except as otherwise stated in this Red Herring Prospectus and the Risk Factors given in the Red Herring Prospectus, the following important factors could cause actual results to differ materially from the expectations include, among others:

Change in Technology

In the IT consulting sector, continuous observation and evaluation of emerging technology trends are fundamental to our business strategy. This commitment to staying informed about technological developments comes with an acknowledgment of the inherent risks. Rapid technological advancements can challenge our existing infrastructure and previous investments, presenting risks that require careful management.

Client/Customer Dependency

Although most of our Client Contracts are signed for long term, but the client always has an option to terminate the contract by giving the specific notice period to the company as per the terms of the contract in case if the client decides to set-up their own internal team for the Software Development.

Regulatory Framework

We have obtained all regulatory permissions which are necessary to run our business, Further, some of the approvals are granted for fixed periods of time and need renewals, which are obtained in the course of business, however, there may be change in statutory regulations at any time which cannot be predicted by us. There can be no assurance that the change in regulations will not impact our operations in the future.

Ability of Management

Our success depends on the continued services and performance of the members of our management team and other key employees. Competition for senior management in the industry is intense, and we may not be able to retain our existing senior management or attract and retain new senior management in the future. The loss of any member of our senior management or other key personnel may adversely affect our business, results of operations and financial condition.

Market & Economic conditions

India is one of the largest economies and is growing at a rapid pace. But in this globalised economy, all the businesses face an uncertain level of volatility from unexpected global events which ranges from global pandemics to wars, to weather changes to supply chain disruption, which may change the economic dynamics and the purchasing capability of the end customers. At the time of market slowdown, the demand falls which has adverse impact on our business.

Competition

We operate in a competitive atmosphere. Our competition varies by market, geographic areas and type of products. Our Company may face stiff competition from domestic as well as global market as the dynamic changes. Some of our competitors may have greater resources than those available to us. While service quality, technical ability, performance records, etc. are key factors in client decisions among competitors, however, price& quality are the deciding factor in most cases. Further, this industry is fragmented with many small and medium sized companies and entities, which provides such services at various levels, which may adversely affect our business operation and financial condition. Further, there are no entry barriers in this industry and any expansion in capacity of existing market players would further intensify competition. Moreover, as we seek to diversify into new geographical areas, new territories, new emerging markets, we may face competition from competitors that have a pan-India presence and also from competitors that have a strong presence in regional markets. The markets in which we compete and intend to compete are undergoing, and are expected to continue to undergo, rapid and significant change. We expect competition to intensify as technological advances and consolidations continue. These competitive factors may force us to reduce rates, and to pursue new market opportunities. Increased competition could result in reduced demand for our products, increased expenses, reduced margins and loss of market share. Failure to compete successfully against current or future competitors could harm our business, operating cash flows and financial condition.

Significant Developments after June 30, 2024 that may affect our Future Results of Operations

The Directors confirm that there have been no other events or circumstances since the date of the last financial statements as disclosed in the Red Herring Prospectus which materially or adversely affect or is likely to affect the business or profitability of our Company or the value of our assets, or our ability to pay liabilities within next twelve months.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

a) Basis of Accounting and Preparation of Financial Statements:

The restated summary statement of assets and liabilities of the Company as at June 30, 2024, March 31, 2024, March 31, 2023 and 2022 and the related restated summary statement of profits and loss and cash flows for the year/period ended on June 30, 2024, March 31, 2024, March 31, 2023 and 2022 (herein collectively referred to as ("Restated Summary Statements") have been compiled by the management from the audited Financial Statements of the Company for the year/period ended on June 30, 2024, March 31, 2024, March 31, 2023 and 2022 approved by the Board of Directors of the Company. Restated Summary Statements have been prepared to comply in all material respects with the provisions of Part I of Chapter III of the Companies Act, 2013 (the "Act") read with Com panies (Prospectus and Allotment of Securities) Rules, 2014, Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 ("ICDR Regulations") issued by SEBI and Guidance note on Reports in Companies Prospectuses (Revised 2019) ("Guidance Note"). Restated Summary Statements have been prepared specifically for inclusion in the offer document to be filed by the Company with the NSE in connection with its

proposed SME IPO. The Companys management has recast the Financial Statements in the form required by Schedule III of the Companies Act, 2013 for the purpose of restated Summary Statements.

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention.

The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles in India.

All assets and liabilities have been classified as current or non-current as per the Companys normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current - non-current classification of assets and liabilities.

b) Use of Estimates:

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

c) Property, Plant & Equipment and Intangible Assets

(i) Property, Plant & Equipment

All Property, Plant & Equipment are recorded at cost including taxes, duties, freight and other incidental expenses incurred in relation to their acquisition and bringing the asset to its intended use.

(ii) Intangible Assets

Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any.

d) Depreciation / Amortisation:

Depreciation on fixed assets is calculated on a straight-line method using the rates arrived at based on the useful lives estimated by the management, or those prescribed under the Schedule II to the Companies Act, 2013. Individual assets cost of which doesnt exceed Rs. 5,000/- each are depreciated in full in the year of purchase.

Intangible assets including internally developed intangible assets are amortised over the year for which the company expects the benefits to accrue. Intangible assets are amortized on written down value basis over 3 years in pursuance of provisions of AS-26.

e) Impairment of Assets:

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arms length transaction between knowledgeable, willing parties, less the costs of disposal. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of the recoverable value.

f) Investment:

Current investments are carried at cost or fair-value whichever is lower. Further, any reduction to fair value and any reversals of such reductions are included in the profit and loss statement.

Profit or loss on sale of investments is determined as the difference between the sale price and carrying value of investment, determined individually for each investment. Cost of investments sold is arrived using average method.

g) Borrowing Costs:

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.

h) Provisions, Contingent Liabilities and Contingent Assets:

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

i) Revenue Recognition:

Revenue from software development and support services comprises of income from time and material and fixed price contracts. Revenue with respect to time and material contracts is recognized as and when related services are performed. Revenue from fixed price contract is recognized in accordance with the percentage of completion method. Revenue is recognised upon transfer of control of promised services to customers in an amount that reflects the consideration which the company expects to receive in exchange for those services. Unbilled revenue (only act of invoicing is pending) when there is unconditional right to receive cash, and only passage of time is required, as per contractual terms.

j) Other Income:

Interest Income on fixed deposit is recognized on time proportion basis. Other Income is accounted for when right to receive such income is established.

k) Taxes on Income:

Income taxes are accounted for in accordance with Accounting Standard (AS -22) - "Accounting for taxes on income", notified under Companies (Accounting Standard) Rules, 2014. Income tax comprises of both current and deferred tax. Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using substantially enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognized, only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realization.

l) Cash And Bank Balances:

Cash and cash equivalents comprises Cash-in-hand, Current Accounts, Fixed Deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. Other Bank Balances comprises of cash and bank balances other than cash and cash equivalents which has original maturity of more than three months and restricted balances.

m) Earnings per Share:

Basic earnings per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity share outstanding during the year. Diluted earnings per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

n) Employee Benefits:

Defined Contribution Plan:

Contributions payable to the recognised provident fund, which is a defined contribution scheme, are charged to the statement of profit and loss.

Defined Benefit Plan:

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service without any monetary limit. Vesting occurs upon completion of five years of service. Provision for gratuity has been made in the books as per actuarial valuation done as at the end of the year.

o) Segment Reporting:

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

RESULTS OF OUR OPERATIONS

Particulars	For the half year ended June 30, 2024 ( Rs. in lakhs)	% of Total**	For the year ended 31st March, 2024 ( Rs. in lakhs)	% of Total**	For the year ended 31st March, 2023 ( Rs. in lakhs)	% of Total**	For the year ended 31st March, 2022 ( Rs. in lakhs)	% of Total**
INCOME
Revenue from Operations (Gross)	2,388.87	99.65%	7,188.22	99.31%	5,639.31	99.41%	4,106.11	98.84%
Other Income	8.31	0.35%	49.90	0.69%	33.74	0.59%	48.26	1.16%
Total Revenue (A)	2,397.18	100.00%	7,238.12	100.00%	5,673.05	100.00%	4,154.37	100.00%
EXPENDITURE
Employee Benefit Expenses	1,773.38	73.98%	5,497.47	75.95%	4,824.91	85.05%	4,103.06	98.76%
Finance Costs	52.98	2.21%	279.75	3.86%	266.18	4.69%	261.49	6.29%
Depreciation and Amortization expense	27.91	1.16%	83.17	1.15%	80.87	1.43%	55.59	1.34%
Other Expenses	209.78	8.75%	852.43	11.78%	326.95	5.76%	424.52	10.22%
Total Expenses (B)	2,064.05	86.10%	6,712.82	92.74%	5,498.91	96.93%	4,844.66	116.62%
Profit/(Loss) before Tax	333.13	13.90%	525.30	7.26%	174.14	3.07%	-690.29	-16.62%
Tax Expense/ (benefit)
(a) Current Tax Expense	85.91	3.58%	72.44	1.00%	-	0.00%	-	0.00%
(b) Deferred Tax	-0.85	-0.04%	84.00	1.16%	65.55	1.16%	-142.04	-3.42%
Net tax expense / (benefit)	85.06	3.55%	156.44	2.16%	65.55	1.16%	-142.04	-3.42%
Profit/(Loss) for the year	248.07	10.35%	368.86	5.10%	108.59	1.91%	-548.25	-13.20%

**Total refers to Total Revenue

Components of our Profit and Loss Account Income

Our total income comprises of revenue from operations and other income.

Revenue from Operations

Our revenue from operation as a percentage of our total income was 99.65%, 99.31%, 99.41%and 98.84% for the period ended June 30, 2024 and Financial Years ended March 31, 2024, March 31, 2023 and March 31, 2022 respectively. Our Revenue of Operations comprises of Sale of Service both domestic and export.

Particulars	For the period ended June 30, 2024	For the year ended March 31, 2024	For the year ended March 31, 2023	For the year ended March 31, 2022
Sale of Services - Export	1,024.41	1,031.95	257.33	202.51
Sale of Services - Domestic	1,364.46	6,156.27	5,381.98	3,903.60
	-	-	-	-
TOTAL	2,388.87	7,188.22	5,639.31	4,106.11

Other Income

Our other Income consists of Interest received on deposits with banks and others, Foreign Exchange Fluctuations, Reversal of Gratuity Provision, Rental Income & miscellaneous Income etc.

Particulars	For the period ended June 30, 2024	For the year ended March 31, 2024	For the year ended March 31,2023	For the year ended March 31, 2022
Interest Income on FD	1.06	2.67	9.21	1.78
Interest Income on Refund of Income tax	-	18.53	-	-
Foreign Exchange Gain	-	-	13.13	-
MSME Interest received	-	0.50	-	-
Miscellaneous Income	-	-	-	2.85
Reversal of Gratuity Liability	-	-	-	32.83
Rental Income	7.25	28.20	11.40	10.80
TOTAL	8.31	49.90	33.74	48.26

Expenditure

Our total expenditure primarily consists of cost of employee benefit expenses, finance costs, Depreciation and Other Expenses.

Employee Benefit Expenses

Our employee benefits expense comprises of Director Remuneration, & Staff Welfare Expenses, Contribution to EPF & ESIC, Gratuity expense, Recruitment Expenses, Meals & Entertainment Expenses, Labour Welfare Expenses, Salary to Staff, Intern Stipend Expenses.

Finance costs

Our Finance cost expenses comprises of Interest Expenses & other borrowing costs.

Other Expenses

Other expenses primarily include Auditors Fees, Rent, Maintenance charges, Insurance charges, Foreign Exchange Loss, Legal and Professional Charges, Computer Software and Internet Expenses, Travelling & Entertainment Expenses etc.

Particulars	For the period ended June 30, 2024	For the year ended March 31, 2024	For the year ended March 31, 2023	For the year ended March 31, 2022
Audit Fees	2.00	9.16	4.75	4.25
Brokerage/Commission Expenses	-	2.35	-	15.95
Loss on sale of fixed assets	-	-	-	0.29
Google Cloud Expenses	2.13	14.54	12.88	5.84
Computer Software and Internet Expenses	6.41	27.09	26.40	19.45
Courier Expenses	1.33	6.47	4.56	1.93
Dues and Subscriptions	-	3.14	0.21	1.15
Electricity Expenses	1.21	5.27	0.10	1.80
Foreign Exchange Loss	6.06	46.82	-	14.47
Late Fees & Penalties	-	-	1.80	26.84
Insurance Expenses	6.86	25.15	29.62	-
Legal & Professional Fees	94.98	551.42	169.65	218.04
Office Expenses	15.67	14.57	0.28	25.33
Office Maintenance	1.51	7.29	8.37	8.43
Professional Tax	0.03	0.08	0.05	0.05
Rate and Tax Paid	-	13.42	0.50	-
Rent	31.19	47.33	15.11	36.78
Rent Charges of Laptop	0.76	6.10	31.11	32.26
Repairs & Maintenance	-	-	-	0.42
Telephone Expenses	0.22	2.72	2.02	1.17
Travelling & Entertainment Expenses	4.55	29.56	19.17	1.87
Printing and Stationery	0.37	6.35	0.22	1.98
Donation	4.94	5.31	0.15	6.22
Placement Fees	28.51	15.01	-	-
Bad debt	-	0.14	-	-
Hotel and Food Expenses	-	10.21	-	-
Advertisement Expenses	1.05	2.93	-	-
TOTAL	209.78	852.43	326.95	424.52

Provision for Tax

The provision for current taxation is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

For the period ended June 30, 2024 Revenue from Operations

For the period ended June 30, 2024, Revenue from Operations of our company was Rs. 2,388.87 lakhs.

Other Income

For the period ended June 30, 2024, Other Income of our company was Rs. 8.31 lakhs.

Income

The total income of our company for the period ended June 30, 2024 was Rs. 2,397 lakhs.

Expenditure

Employee Benefit Expenses

For the period ended June 30, 2024 our Company incurred for employee benefit expenses Rs. 1,773.38 lakhs.

Finance Costs

The finance costs for the period ended June 30, 2024 was Rs. 52.98 lakhs.

Other Expenses

For the period ended June 30, 2024 our other expenses were Rs. 209.78 lakhs.

Profit/ (Loss) before Tax

Our Company had reported a profit before tax for the period ended June 30, 2024 of Rs. 333.13 lakhs Profit/ (Loss) after Tax

Profit after tax for the period three months ended June 30, 2024, 2023 was at Rs. 248.07 lakhs.

Fiscal 2024 compared with fiscal 2023 Revenue from Operations

The Revenue from Operations of our company for fiscal year 2024 was Rs. 7,188.22 lakhs against Rs. 5,639.31 lakhs for Fiscal year 2023. An increase of 27.47% in revenue from operations. This increase was primarily a result of strategic expansions in our business operations as well as with the onboarding of more clients and varied segments of business line, including the GCC business, which enhanced the revenue and profitability of the Company

Other Income

The other income of our company for fiscal year 2024 was Rs. 49.90 lakhs against Rs. 33.74 lakhs for Fiscal year 2023. An increase of 47.90% in other income. This increase was due to refund of income tax received during the period under report from the Income Tax Department.

Total Income

The total income of our company for fiscal year 2024 was Rs. 7,238.12 lakhs against Rs. 5,673.05 lakhs total income for Fiscal year 2023. An increase of 27.59% in total income. This increase was due to constant expansion of the business operations of the company and inclusion of new clientele and business segments.

Expenditure

Employee Benefit Expenses

In Fiscal year 2024, our Company incurred for employee benefit expenses Rs. 5,497.47 lakhs against Rs. 4,824.91 lakhs expenses in fiscal year 2023. An increase of 13.94%. This increase was due to the increase in the number of employees and increase in their remuneration, being directly related to delivering the desired results to the clients. Also, despite of challenges suffered by the company in increasing revenue during the previous years, increments and rewards to employees were provided in due course adding additional cost of employee benefits.

Finance Costs

The finance costs for the Fiscal year 2024 was Rs. 279.75 lakhs while it was Rs. 266.18 lakhs for Fiscal year 2023. An increase of 5.10% was primary due to holding of funds raised from banks for longer tenure and raising more funds from the banks for meeting the working capital requirements, as the trade receivable period pro-longed during the period under report.

Other Expenses

In fiscal year 2024, our other expenses were Rs. 852.43 lakhs and Rs. 326.95 lakhs in fiscal year 2023. This increase of 160.72% was due to various factors resulting in the overall increase in the other expenses. The major reasons for the increase in other expenses are:

a. Foreign currency exchange loss

b. Hotel & Travelling expenses

c. Computer, software and intangible expenses

d. Office Rent and Admin cost

e. Professional Fee of Consultants and Freelancers

f. Recruitment fee for hiring new talents.

Profit/ (Loss) before Tax

Our Company had reported a profit before tax for the Fiscal year 2024 of Rs. 525.30 lakhs against profit before tax of Rs. 174.14 lakhs in Fiscal year 2023. An increase of 201.65%. This increase was primarily due to increase in the revenue of the Company and the efficiency of the Company to keep the costs under check, leading to increased profit generation.

Profit/ (Loss) after Tax

Profit after tax for the Fiscal year 2024 was at Rs. 368.86 lakhs against profit after tax of Rs. 108.59 lakhs in fiscal year 2023. An increase of 239.68%. This increase was due to the increase in the overall revenue, reduction in costing, not much change in the finance cost and increase in the profit before tax.

Fiscal 2023 compared with fiscal 2022

Revenue from Operations

The Revenue from Operations of our company for fiscal year 2023 was Rs. 5,639.31 lakhs against Rs. 4,106.11 lakhs total income for Fiscal year 2022. An increase of 37.34% in revenue from operations. This increase was due to rise in number of projects and tenders received during the year.

Other Income

The other income of our company for fiscal year 2023 was Rs. 33.74 lakhs against Rs. 48.26 lakhs for Fiscal year 2022. A decrease of 30.09% in other income. This decrease was due to reduction in the misc. Income.

Total Income

The total income of our company for fiscal period 2023 was Rs. 5,673.05 lakhs against Rs. 4,154.37 lakhs total income for Fiscal period 2022. An increase of 36.56% in total income. This increase was primarily due to rise in number of projects and tenders received during the year.

Expenditure

Employee Benefit Expenses

In Fiscal 2023, our Company incurred for employee benefit expenses Rs. 4,824.91 lakhs against Rs. 4,103.06 lakhs expenses in fiscal 2022. The increase of 17.59%. This increase was due to increase in the projects received and hence additional workforce was deployed and few attritions during the Fiscal ended 2023

Finance Costs

The finance costs for the Fiscal 2023 was Rs. 266.18 lakhs while it was Rs. 261.49 lakhs for Fiscal 2022. This increase of 1.79% was due to longer holding period of Temporary Loan (Bill Discounting).

Other Expenses

In fiscal 2023, our other expenses were Rs. 326.95 lakhs and Rs. 424.52 lakhs in fiscal 2022. This decrease of 22.98% was due to the optimisation of our cost which enabled us to reduce our other expenses primarily due to reduction of Brokerage /Commission expenses and Foreign Exchange Loss.

Profit/ (Loss) before Tax

Our Company had reported a profit before tax for the Fiscal 2023 of Rs. 174.14 lakhs against profit before tax of Rs. (690.29) lakhs in Fiscal 2022, a 125.23% increase. This was due to increase in sales and optimization of our cost.

Profit/ (Loss) after Tax

Profit after tax for the Fiscal 2023 was at Rs.108.59 lakhs against profit after tax of Rs. (548.25) lakhs in fiscal 2022, a 119.81% increase. This was due to increase in sales and optimization of cost.

Fiscal 2023 compared with Sept 2023

The companys financial performance, specifically in terms of sales and profit, has undergone notable fluctuations, with a substantial increase in profit after tax (PAT) margin in the period ending September 2023. This transformation is a result of strategic adjustments post-COVID, focusing on revenue growth, and a commitment to sustained profitability through operational excellence.

Sales Fluctuations:

The company experienced a decline in sales from INR 5,436.88 Lakhs in fiscal 2021 to INR 4,106.11 Lakhs in fiscal 2022. This dip was attributed to the industry-wide impact of the COVID-19 pandemic, a challenging period for many businesses globally. However, the company displayed resilience and adaptability, bouncing back with a significant increase in sales to INR 5,639.31 Lakhs in fiscal 2023. The sales figure for the half-year ended September 2023 stands at INR 3,154.83 Lakhs.

The recovery in sales can be attributed to the strategic adjustments made post-COVID, including targeted efforts in client diversification and resource optimization. These measures allowed the company to navigate the challenges posed by the pandemic, regain momentum, and position itself for sustained growth.

Profit After Tax (PAT) Margin:

The most striking aspect is the improvement in the Profit After Tax (PAT) margin. Fiscal 2021 witnessed a PAT of 79.47 Lakhs, which dramatically turned negative in fiscal 2022 to -549.50 Lakhs. This negative PAT was a

consequence of the challenging market conditions during the pandemic. However, the company swiftly recovered, showcasing a remarkable turnaround in fiscal 2023, achieving a PAT of 107.19 Lakhs.

The significant increase in the PAT margin can be attributed to strategic initiatives implemented during this period. These initiatives involve a focus on client diversification, reducing dependency on specific clients or sectors, and optimizing resources for better efficiency. The companys commitment to sustaining growth and profitability is evident in its projection of a PAT margin of 8-10% in the near term, with ambitions to elevate it to 10-12% by FY 2025.

Revenue Decline and PATfluctuation for FY22 compared to FY21

In Fiscal Year 2022, the company encountered a significant decline in revenue, approximately 24%, due to unexpected project discontinuations. Despite this challenge, the company maintained its commitment by bearing a substantial portion of direct operating costs, particularly employee expenses. The fixed nature of employee costs persisted, impacting on the profit margin for the period.

Revenue Increase and PAT increase for FY23 compared to FY22

1. In FY23 company managed to win new contracts, and added new clients like KSB Tech, Toll India, Roche India and more, also company managed to win new projects with the existing clients

Client Name	Revenue for FY22 (Amt Rs. in Lakhs)	Revenue for FY23 (Amt Rs. in Lakhs)
Applied Material	350	950
KSB Tech	Nil	82.64
Toll India	Nil	172
Society General	231	380
Roche India	Nil	44.50

2. In FY23, the companys revenue grew by 37% compared to FY22, while employee costs increased by just 17%. This indicates that the company successfully optimized workforce utilization, allowing it to manage and deliver more projects efficiently

	As on March22	As on March23
Particulars	(Amt Rs. in Lakhs)	(Amt Rs. in Lakhs)
Sales	4106	5639
COGS (Employee Cost)	4103	4825
Gross Profit	3	814
Gross Profit %	0.07	14.44

Revenue and PAT comparison for Stub Period compared to FY23

Rationale for Revenue and Profitability for Stub Period Sept 2023 as compared to March 23

1. The Company continued to gain more projects with the existing client as well as new clients.

2. The factors contributing to the increase in the PAT (Profit After Tax) for the company during the stub period compared to FY23:

Major Factors:

1. Strategic Move:

Previous Mark-up Strategy: Until March 23, the company operated with an average mark-up of 15-20% on projects.

New Mark-up Strategy: Starting April 2023, the company adopted a strategic approach to undertake projects with a minimum mark-up of 30-40%.

2. Operational Efficiency:

The company has increased its operational efficiency by delivering more projects without the increase in its cost of employment by working on multiple projects simultaneously.

Particulars	FY23	Sept23
Sales	5639.31	3154.83
Employee Cost	4824.91	2169.36
Gross Margins %	14%	31%

The Company was able to deliver more projects and generate more revenue with reduced employee strength from 380 employees as on 31st March23 to 346 employees as on 30th September 2023.

Cash Flows

			(Amount Rs. in lakhs)
	For the period ended June 30, 2024	For the year ended March 31, (Standalone)
Particulars		2024	2023	2022
Net Cash from Operating Activities	(416.39)	61.05	1,334.66	36.07
Net Cash from Investing Activities	(161.54)	(138.58)	(79.41)	(248.46)
Net Cash used in Financing Activities	758.06	(472.63)	(766.34)	203.05

Cash Flows from Operating Activities

Net cash from operating activities for the period ended June 30, 2024 was Rs. (416.39) lakhs as compared to the Profit Before Tax at Rs. 333.13 lakhs due to increase in Trade Receivables. Net cash from operating activities for the year ended 31^st March 2024, was Rs. 61.05 lakhs as compared to the Profit Before Tax at Rs. 525.30 lakhs. Net cash from operating activities for the year ended 31^st March 2023, was Rs. 1,334.66 lakhs as compared to the Profit Before Tax at Rs. 174.14 lakhs. Net cash from operating activities for fiscal 2022 was at Rs. 36.07 lakhs as compared to the Profit Before Tax at t (690.29) lakhs.

Cash Flows from Investment Activities

Net cash from investing activities for the period ended June 30, 2024 was Rs. (161.54) lakhs due to purchase of capital assets. Net cash from investing activities for the year ended 31st March 2024 was Rs. (138.58) lakhs due to increase in capital expenditure. Net cash from investing activities for the year ended 31st March 2023 was Rs. (79.41) lakhs due to

increase in capital expenditure. Net cash flow from investing activities for fiscal 2022 was at Rs. (248.46) lakhs due to due to increase in capital expenditure.

Cash Flows from Financing Activities

Net cash from financing activities for the period ended June 30, 2024 was Rs. 758.06 lakhs. Net cashflow from financing activities for the year ended 31st March 2024 was Rs. (472.63) lakhs due to repayment of debt. Net cashflow from financing activities for the year ended 31st March 2023 was Rs. (766.34) lakhs due to repayment of debt. Net cash from financing activities for fiscal 2022 was at Rs. 203.05 lakhs due to increase in debt.

OTHER MATTERS

1. Unusual or infrequent events or transactions including unusual trends on account of business activity, unusual items of income, change of accounting policies and discretionary reduction of expenses etc.

Except COVID-19 or any such kind of pandemic and as described in this Red Herring Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

2. Significant economic changes that materially affected or are likely to affect income from continuing Operations

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page no. 34 of the Red Herring Prospectus. To our knowledge, except as we have described in the Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations

Other than as described in the chapter titled "Risk Factors" and "Managements Discussion and Analysis of Financial Conditions and Result of Operations", beginning on Page 34 and 170 respectively of this Red Herring Prospectus, best to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our company from continuing operations.

4. Expected future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known

Other than as described in the chapter titled "Risk Factors" beginning on Page 34 of this Red Herring Prospectus, best to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances. Our Companys future costs and revenues will be determined by demand/supply situation, both of the end products/services as well as the raw materials, government policies and other economic factors.

5. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or increased sales prices.

Our company is an IT consulting company and caters to global as well as domestic customers offering products and digital solutions. in support of their digital transformation initiatives including Application development, mobile apps development, Cloud infrastructure, Software Quality assurance, generative AI, machine learning, IoT solutions, data science and analytics etc. Increase in revenues are by and large linked to increases in volume of business and also dependent on the price realization on our products/services.

6. Total turnover of each major industry segment in which the issuer company operated.

Our company is an IT consulting company and caters to global as well as domestic customers offering products and digital solutions. in support of their digital transformation initiatives including Application development, mobile apps development, Cloud infrastructure, Software Quality assurance, generative AI, machine learning,

IoT solutions, data science and analytics etc. Relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 101 of this Red Herring Prospectus.

7. Status of any publicly announced new products or business segment.

Our company is an IT consulting company and caters to global as well as domestic customers offering products and digital solutions. in support of their digital transformation initiatives including Application development, mobile apps development, Cloud infrastructure, Software Quality assurance, generative AI, machine learning, IoT solutions, data science and analytics etc. Except as disclosed elsewhere in the Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new products or business segments.

8. The extent to which business is seasonal.

Our company is an IT consulting company and caters to global as well as domestic customers offering products and digital solutions. in support of their digital transformation initiatives including Application development, mobile apps development, Cloud infrastructure, Software Quality assurance, generative AI, machine learning, IoT solutions, data science and analytics etc. Our Companys business is not seasonal in nature.

9. Competition Conditions

We face competition from existing and potential competitors which is common for any business and our results of operations could be affected by competition in the information technology industry in the future. We expect competition to intensify due to possible new entrants in the market, existing competitors further expanding their operations and our entry into new markets where we may compete with well-established unorganized companies / entities. This we believe may impact our financial condition and operations. For details, please refer to the chapter titled "Risk Factors" beginning on page 34 of this Red Herring Prospectus.