Scanpoint Geomatics Ltd Management Discussions

Global Economy: Global growth appears to be stabilised in 2024 as inflation returned closer to targets, and monetary easing supports activity in both advanced economies and emerging markets and developing economies (EMDEs). Major economies seem to be adjusting well to changing trade trends and policies, opening doors for sustainable and inclusive growth opportunities. While the recovery path is dynamic, these transformations pave the way for a more balanced and adaptive global economy. Growth in advanced economies is estimated at 1.7% in 2024, with strong U.S. activity helping to offset slower growth in other regions. The sustained momentum in the US was driven by robust consumer spending, a strong labour market, and supportive financial conditions. The Eurozone, on the other hand, has a weaker outlook. Its moderate growth will be a mere 0.8% in 2024. Despite a slow growth trajectory, Chinas economy grew by 4.8% in 202

In terms of sectors, service sectors and improved consumer spending post pandemic is forecasted to contribute more compared to industrial output which may remain little sluggish due to continued monitory policy tightening by major central banks across the globe. Among the major economies, India continues to be a bright spot and forecasted to be the fastest growing major economies for foreseeable future.

In 2025-2026, the Indian economy is expected to demonstrate moderate growth compared to the previous financial year, with a projected real GDP growth of 6.3- 6.8%, albeit from a high base. With that, India is poised to strengthen its position as one of the fastest-growing major economies, significantly contributing to global GDP growth. Its leadership in IT services, pharmaceuticals, and renewable energy, along with strategic trade agreements and the Production-Linked Incentive (PLI) scheme, will boost global competitiveness. However, external risks such as a global economic slowdown, geopolitical tensions, tariff wars and trade disruptions could impact Indias future economic outlook. Moreover, a slowdown in urban consumption, a spike in food inflation, and slow growth in capital formation can also influence the growth outcome.

INDIAN GEOSPATIAL INDUSTRY

Geospatial technology is a key enabler of Indias economic growth, hinged on a steady digital transformation. The technology provides a broad array of tools and platforms to derive orderly data out of chaotic information for effective decision-making, implementation, and monitoring of interventions.

Advancements in Geospatial technologies have seen a massive disruption of late with the miniaturization of sensors, increased analytical capabilities, integration of AI/ML capabilities, availability of cloud computing platforms, and so on. The technology unlocks tremendous potential for enhancing productivity, cost and time savings, and resilience across economic sectors. These, supported by progressive policies related to Geospatial Data, Remote Sensing Data, and Drones, are making geospatial data availability and utility ubiquitous.

As per the Department of Science and Technology, Government of India, Indias total domestic Geospatial market is set to reach INR 1 lakh crores by 2030. With the enabling policy environment, and the gradual transition of the industry to offer services and solutions to the worldwide market, more than 1 lakh jobs will be available in both Government and private sectors in the Indian domestic Geospatial market by 2030.

Geospatial technology is a key driver for sustainable development across major economic sectors, in tandem with cutting-edge innovations in Building Information Modelling (BIM), the Internet of Things (IoT), Artificial Intelligence (AI), Machine Learning (ML), Cloud, and Big Data. The wider adoption of the technology supported by policy and mandates, expert partnerships, on-ground training, and encouragement of new systems and technologies is boosting sectoral applications further.

Disclaimer: This information has been given on the basis of external sources and Company is not responsible for any error in data as mentioned above.

COMPANY OVERVIEW

The Company is engaged in design and development of Indigenous Geospatial software known as IGiS (Integrated GIS and Image Processing Software) in joint development partnership with SAC-ISRO. Your Company has developed multitudes of verticalized product and solution based on IGiS for segments like urban, Land records management, agriculture, defense, forest, law enforcement, utilities etc., which caters to the specific business need of respective segments using integrated GIS and remote sensing technology.

Your company has the technical support of Space Application Centre, the premiere R&D laboratory of the Indian Space Research Organisation, Government of India. SAC-ISRO has a long heritage of application of image processing and GIS for its projects and the Company has built further on it to mature IGiS into a world class technology platform.

On technology front, IGiS has a unique proposition of being an integrated technology platform, which enables us to provide end-to-end Geomatics solutions for our customers. Further to this IGiS in conjunction with various emerging technologies enables our customer to have efficient and near real time decision support system. Backed by the domain knowledge and know-how provided by ISRO, we continue to innovate and enhance our products and solutions in line with technological trends and market needs.

Your Company is certified for ISO 9001:2015 for providing geomatics solutions in the area of GIS, IP, CAD and location based services, ISO 27001:2013 for information security management system and CMMi3 for quality and capability maturity standards. Your company is also a technical member if OGC (Open Geospatial Consortium) and its flagship product IGiS is compliant to OGC standards.

PERFORMANCE SNAPSHOT:-

During the year under review the Financial Snapshot is mentioned below:

(Rs. in Lakhs)

Particulars	2024-25	2023-24
Revenue from operations	4871.29	2952.75
Depreciation	867.72	121.56
Profit before tax	145.23	152.80
(-)Tax	4.84	(9.06)
Profit After tax	14.40	161.86

As Company is operating in single segment, hence segment reporting is not applicable.

The financial year 202-2025 has presented both challenges and opportunities to your Company..

In line with “Make in India” initiative of the Government of India, your company has contributed significantly in the field of GIS and Image Processing software technology. Your Company has continued with its research and development activities with regard to its product in partnership with ISRO to strengthen its overall position in the Geospatial software and application market.

Your company has increased its focus on software and application business centred around its flagship platform IGiS which in medium to long term will help drive more operational efficiency, improved margins and free cash flow. Your company would continue to focus on “Customer First” approach to align its solution and offering in line with evolving customer need. This approach has allowed your company to acquire new customers in domains like urban development, defence, Infrastructure, Land Records, E-governance etc.. Our partnership with large MSIs (Master System Integrator) and GIS service providers has further enhanced the reach of your company.

ACCOUNTING TREATMENT

Financial statements has been prepared in accordance the Companies (Indian Accounting Standards) Rules, 2015, as amended, (“Ind AS”) and other accounting principles generally accepted in India.

FUTURE OUTLOOK

Geospatial data and technology is expected to play a significant role for India to not only be a USD 5 trillion economy but to do it sustainably. GIS technology plays important role in Sustainable urban planning, Critical Infrastructure planning, Smart agriculture, Smart health, Disaster early warning, Effective disaster response etc. Collaborative use of GIS technology along with AI/ML, IoT, Bigdata , BIM and Digital etc. has opened up new dimension of addressing the real world problems across multiple domains. Collaborative use of multiple technologies would help emergence of new business model aided by cloud deployment to drive the growth of geospatial technology and solution in times to come.

Your company continues to acquire more customers in urban and smart city domain. We see continued momentum in this domain for medium term as many cities look forward to use GIS to curb leakage of revenue by the way of Geo-enabled property tax management, encroachment monitoring, capital project monitoring and control and 3D GIS for sustainable and resilient city planning.

You company continues its steady and firm inroads into the defence and homeland security through new implementations. Make In India product is the key strategic advantage for us in this segment.

For vibrant rural economy multiple intervention to improve farm productivity and unlocking of value of asset in form of rural land is very important drivers. You company would tap into this opportunity with its offering in form of vertical solutions like IGiS - LIS and IGiS -AIS. Your company has developed its revamped Web based solution to address the need of utility management across domains like water, gas, power and telecom.

Geospatial Data Acquisition Guidelines 2021 and New Geospatial Policy 2022 democratizes the use of Geospatial data to innovate and collaborate among players with complementing capabilities. This coupled with thrust on private sector participation in Indian Space-tech sector through regulatory reforms by Government of India would be the complete game changer for Indian Geospatial Industry. Your company on back of its existing partnership with ISRO is already working on multiple front to seize these opportunities.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS AND RETURN ON NET WORTH

Pursuant to amendment made in Schedule V to the SEBI Listing Regulations, details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios is as below and since there were no changes above 25% as compared to immediately previous financial year, the explanation for the change in financial ratios is not required.

Sr. No.	Ratio	Numerator	Denominator	Current Period	Previous Period	% Varianc e	Reason for variance
1	Current ratio	Current Assets	Current Liabilities	2.67	1.65	61.74%	The improveme nt is mainly on account of a reduction in current liabilities due to repayment of shortterm borrowings and other obligations during the year
2	Debt- equity ratio	Total Debt (Borrowings)	Total Equity	0.09	0.74	-88.50%	The Debt- Equity ratio decreased due to repayment of borrowings and an increase in equity.
3	Debt service coverage ratio	Earning for Debt Service = Net Profit after taxes+ Noncash operating expenses + Interest +Other non-cash adjustments	Debt service = Interest+ Repayments of borrowings	4.72	0.38	1154.82 %	Debt Service Coverage Ratio increased due to higher EBITDA during the year and
							reduction in debt obligations, leading to improved ability to service borrowing
4	Return on equity ratio	Profits after tax	Average Total Equity	1.04%	1.89%	-45.22%	Return on Equity Ratio declined marginally as equity base expanded, reflecting improved long-term stability and capital adequacy.
5	Trade receivabl es turnover ratio	Revenue from operations	Average T rade Receivable	1.27	1.39	-8.67%	-
6	Trade payables turnover ratio	Cost of Materials Consumed+Ot her Expense	Average T rade Payables	2.18	2.16	0.67%	-
7	Net capital turnover ratio	Revenue from operations	working capital (Total current assets - Total current liabilities)	0.77	0.89	-13.57%	-
8	Net profit ratio	Profit after tax	Revenue from operations	2.88%	5.48%	-47.42%	Net Profit Ratio decreased mainly due to higher non-cash expenses during the year; however, core
							operating performanc e and cash flows remain stable.
9	Return on capital employed	Profit before interest and tax	Capital employed = Total Equity + Total Debt (Borrowings)+Defer red tax liabilities	1.34%	2.13%	-37.37%	Return on Capital Employed decreased during the year mainly due to an increase in equity capital; however, the expansion strengthen s the longterm capital base of the Company.
10	Return on investme nt	Income generated from invested funds	Average of investments	4.75%	6.27%	-24.24%	ROI has reduced owing to a fall in fixed deposit returns during the year, while the overall financial position and risk manageme nt remain strong

RISKS AND CONCERNS

As it is normal and prevalent for any business, the Company also is likely to face competition from existing companies. There can be risks inherent in meeting unforeseen situations, not common in the industry. Your

Company also recognizes the risks associated with business and takes adequate measures to address the associated risks and concern.

Except as otherwise stated and the Risk factors mentioned here, the following important factors could also cause the actual results to differ materiality from the expectations:

• Changes in domestic laws, regulations and taxes.

• Failure to obtain and retain certain approvals and licenses.

• Our projects have a long gestation period and our accounting statements reflect the financial performance of the projects undertaken and / or completed in a particular period.

• Termination of customer contracts.

• Our Company has significant business through contracts entered into with entities or organizations owned by or set up by the government for a significant portion of our revenues which may expose us to risks, including additional regulatory scrutiny, delayed receipt of collectibles and pricing pressure.

• Disruption in sources of funding and interest rates could adversely affect the liquidity and financial position of the Company however, the Company meets its funding requirements from diverse sources

i.e. Shareholder funding, secured and unsecured loan and several other credit facilities.

The Company has laid down a well-defined risk management mechanism covering the risk mapping, risk exposure, potential impact and risk mitigation process. The Board periodically reviews the risk and suggests the steps to be taken to control and mitigate the same through properly defined framework.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

Your company has proper and adequate system of internal controls to ensure that all assets are safeguarded, and protected against loss from unauthorized use or disposition, and that transactions are authorized, recorded and reported correctly.

The internal control systems are supplemented by an extensive programme of internal audits, reviews by management, and documented policies, guidelines and procedures. The internal control systems are designed to ensure that the financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of assets.

HUMAN RESOURCES

Being technology Product Company, its human resource is the key enabler of growth for organisations. In Post Covid era, paradigm of employee engagement and motivation has completely changed. In this context the core endeavor of HR team has been to build a flexible and resilient organisation and working environment which foster innovation and high productivity. You company has taken multiple initiative in terms of internal training, workshops and policy intervention for high level of employee engagement and building a core team which is aligned with long term vision of Organisation. As on 31^st March 2024, there are 153 employees appointed on payroll of the company.

Continuing with a strong focus on acquiring the right talent and retaining the potential talent , business partnering role was introduced in Human Resources. Apart from lateral hiring, a large pool was built from select Institutes of repute in every function to on-board and train the academically bright students to build leaders of tomorrow.

The business transformation initiatives across SGL is enabling the decentralised management with professional leadership team responsible for delivering the result aligned with larger organisational objectives. We would continue to focus on strong operational processes and high level of employee engagement for building team with growth mind set.

OPPORTUNITIES AND THREATS

As Geospatial technology is moving to main stream decision support system along with policy-reforms will come up with huge boost for geospatial application innovations and its usage. Furthermore, TAM for application of company likely to grow faster than industry average and in presence of limited vertical solution players, Company can fill the gap.

Fast changing technology land scape and business model can make companys offering redundant and out of sync very fast. In addition, heavy dependence on solution projects for revenue is also hazard for company.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, projections estimates, and exceptions may be "forward looking statements" within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations of future events. Actual results may differ materially from those expressed or implied. Important factor that could make a 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 statutes and other incidental factor. 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.