Safa Systems & Technologies Ltd Management Discussions

I. Overview:

The objective of this report is to convey the Managements perspective on the external environment and trading and distribution of mobile phones, electronic gadgets as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during the FY 2024-25. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Integrated Report. 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 ("the 2013 Act") and the relevant provisions of the 1956 Act / 2013 Act, as applicable.

Industry Structure and Developments:

Global Economy:

The global economy continues to gradually recover from the pandemic.

In past years, the technology industry has seen significant fluctuations. The years 2020 and 2021 were characterized by rapid innovation, substantial growth, and a boost in workforce numbers. However, in 2022 and 2023, the sector faced challenges such as widespread layoffs, declining market valuations, and reduced global tech spending.

As we move through 2024 & 2025, the tech industry seems set for a strong recovery. With inflation expected to moderate and exciting new technologies drawing interest from consumers, investors, and business leaders, the scene is ripe for revitalization.

At the same time, major tech companies are placing a strong emphasis on sustainability and cyber security. This is because managing environmental impact and ensuring data protection are crucial for long-term growth and success. With growing dynamics and opportunities, we combine business knowledge and industry expertise of our domain specialists and the technical knowledge and implementation skills of our delivery team leveraging our products, platforms, partnerships and solutions in our development centers located in different cities. Overall, the IT industry is poised for significant growth and transformation over the next five years, driven by technological advancements and evolving business needs and we will make sure to stay ahead of these trends and adapt to changes which will put us well-positioned for success.

Indian Economy:

India may well be on track to becoming the third largest economy in the world in the coming years, but a number of factors including the performance of other countries, skilling of our workforce as well as a sustained revival in domestic consumption demand would play a

key role in achieving this. The Indian economy, however, has the potential to grow by a robust 6.5-7% per annum, according to economists.

India is very much on target to becoming the third largest economy based on the IMFs projections as well as domestic estimates. Our real rate of investment is about 33%, the current account deficit is lowering and our demographic dividend is coming into play," said DK Srivastava, Chief Policy Adviser, EY, while noting that India has also managed to meet the challenges thrown up by the Russian-Ukraine war that has led to supply side bottlenecks for many countries.

Technology Industry:

Economic headwinds seem to be gathering for business in general, and for the technology industry specifically. But there are many regulatory incentives that may spur innovation and growth in 2025 and beyond. To survive and thrive, technology companies should rededicate their efforts to improving supply operations, modernizing infrastructure, and leveraging growth opportunities.

The technology industry has not just weathered the pandemic-driven disruptions of the past few years; it has flourished. The crisis thrust many organizations into the future, accelerating digital transformation and changing work models dramatically. But in 2023, the tech industry will likely continue to grapple with issues around supply chains, workforce, and innovationnow exacerbated by considerable macroeconomic and global uncertainties:

Risks, Concerns and Threats:

With the financial reforms likely to add impetus to industry growth and likelihood of stable political environment, the domestic market should pose better opportunities in terms of volume growth.

Achieving sustainable growth can also present challenges. The skills, expertise, the supply chain to develop products, are major threats for sustaining in the long term.

As companies seek business solutions to address remote work, social distancing and the need for in-store alternatives, the demand for developer and engineering talent is likely to increase. Retaining top talent will be essential.

Expect relatively high impact on the smartphone industry because of its labor-Intensive supply chain. Smartphone production is projected to decline by 12% YoY in 1Q20; server revenue is projected to decline by 16% YoY in 1Q20.

Internal Control Systems and Their Adequacy

The Company strongly believes that a robust internal control mechanism is a prerequisite to ensure that an organization functions ethically, complies with all legal and regulatory requirements and observes the generally accepted principles of good corporate governance. To enable this, the Company has established a strong internal control system for the

Company, which is comprised of policies, guidelines and procedures to ensure the orderly and efficient financial and business conduct.

The Company has adopted strong internal control systems backed by constant reviews and up-gradation. Internal Audit, Statutory Audit by external agencies and the Audit Committee, look into the internal control aspects and further advice on the corrective measures as and when required.

Human Resources Developmenl/Industrial Relations

Human resources are valuable assets for any organization. The employees of the Company have extended a very productive cooperation in the efforts of the management to carrying the Company to greater heights. The Company is giving emphasis to upgrade the skills of its human resources and continuous training down the line is a normal feature in the Company to upgrade the skills and knowledge of the employees of the Company

Outlook:

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.

Cautionary Statement:

The statements in this section describe the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other incidental factors.

Date: 11/06/2025	For & on behalf of the Board
Place: Ernakulam	Safa Systems & Technologies Limited

 

Sd/-	Sd/-
Faizal Bavaraparambil Abdul Khader	Sruthi Muhammed Ali
Managing Director	Director
DIN: 07729191	DIN: 09237016