Shradha AI Technologies Ltd Management Discussions

ECONOMIC OVERVIEW

Amid a challenging global economic landscape and deteriorating geopolitical conditions, India continues to shine as a bright spot. It is the fifth-largest economy in the world and is poised to retain its position as the worlds fastest-growing major economy. Its GDP growth remained buoyant at 7.3% in FY 2023-24 as against 7.2% in FY 2022- 23, supported by robust domestic demand, moderate inflation, a stable interest rate environment, and strong foreign exchange reserves. Furthermore, an accelerated pace of economic reforms and increased capital expenditure paved the way for construction activities and large-scale employment opportunities in the country. The International Monetary Fund (IMF) commended Indias economic resilience, robust growth, and notable progress in formalization and digital infrastructure. India had successfully harnessed inflation in FY 2023-24 which is still plaguing major advanced economies. Indias Consumer Price Index (CPI) inflation rate decreased to 5.69% (provisional) in December 2023 against 5.72% in December 2022. The RBI, in its efforts to control inflation and boost economic growth, decided to keep the policy repo rate unchanged at 6.50%. Furthermore, Indias per capita Net National Income (NNI) at constant (2011-12) prices increased by 6.08% from Rs. 98,374 in F Y 2022-23 to Rs. 1,04,550 in FY 2023-24. Due to increasing disposable income levels, there is a surge in household consumption in both urban and rural regions, boosting the demand across sectors.

Indias economic outlook is optimistic as it reaps the benefits of demographic dividend, physical and digital infrastructure enhancements, increased capital expenditure and the governments proactive policy measures such as Production Linked Incentive (PLI) Schemes. According to the IMF, the Indian economy is expected to expand steadily at 6.5% in 2024.

INDIAN ECONOMIC OVERVIEW

Amid the volatile global economic environment, India emerges as a symbol of optimism, maintaining its position as the worlds fifth-largest economy and expected to continue leading as the fastest-growing major economy. As per the Second Advance Estimates of National Income, 2023-24, Indias GDP growth remained strong at 7.6% in FY 2024 as against 7% in FY 2023, supported by buoyant domestic demand, moderate inflation, a stable interest rate environment, and strong foreign exchange reserves. Additionally, a double-digit growth rate of 10.7% in the construction sector and an 8.5% growth rate in the Manufacturing sector have contributed to the GDP growth in FY 2024. The Index of Industrial Production (IIP) shows that the output of Indias industry grew by 6.1% in the first three quarters of FY 2024 compared to 5.5% in the corresponding period of last year.

INDUSTRY OVERVIEW

The Indian Information Technology/ Software industry is a global powerhouse today, and its impact on India has been incomparable. It has contributed immensely in positioning the country as a preferred investment destination amongst global investors and creating huge job opportunities in India, as well as in the USA, Europe and other parts of the world. In the last decade, the industry has grown many folds in revenue terms, and relative share to Indias GDP is around 7% in FY2023-24. India is the topmost off-shoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. Indian IT/Software industry offers cost-effectiveness, great quality, high reliability, speedy deliveries and, above all, the use of state-of-the-art technologies globally.

The Indian IT/ ITeS industry has a leading position globally and has been progressively contributing to the growth of exports and creation of employment opportunities. Indias IT-BPM industry (excluding e-commerce) is expected to reach at USD 254 billion, including exports of around 200 USD Billion in FY2023-24 (E). The IT-ITeS Industry has also created large employment opportunities and is estimated to employ 5.43 million professionals, an addition of 60,000 people over FY 2022-2023 (E). Women employees account for 36% share in total industry employee base.

SHRADHAS BUSINESS: AN OVERVIEW:

Shradha AI Technologies Limited (Formerly known as Shradha Industries Limited) (SAITL or the Company ) Our Company is engaged into the business of trading of items like Computers, Computer peripherals, Computer Hardware, and Software, data processors, computerized telecommunication system and networks, LAN Products, Networking Material to impart education or computer training, Database integration, database management and integration, networking and system integration, E-commerce, Software development and instruments of every kind and activation for use of industrial, commercial or any other purpose and selling, purchasing, trading, production, distribution, customization, development of applications, programs, software packages, internet programs, software programs, mobile applications, web applications, products, portals, web design, and other related Services/Products and to execute computer related maintenance contracts and to do business of all types of Information Technology and Telecommunication Projects, distribution of IT hardware, software & security products distribution which is broadly categorized into IT consumers & enterprise segment and all other allied facilities of information Technology.

Your Company outperformance is significantly higher over the last decade. The outperformance may be attributed to market share gains resulting from SAITLs strategy on customer centricity, its agile organization structure, and a very stable leadership team; its investments in organic talent development, research and innovation, intellectual property, brand building, and in building newer capabilities that have helped expand wallet share with clients; and better execution resulting in greater customer satisfaction.

SAITL has successfully navigated through multiple technology cycles since its inception, transforming and adapting each time to build relevant new capabilities and helping its clients realize the benefits of that innovative technology. SAITLs responsiveness, agility and adaptability to change have been core to its longevity. Customer-centricity is at the heart of SAITL strategy, organization structure and investment decisions. SAITL has been broadening and deepening customer relationships by continually looking for new opportunities and newer areas in their businesses to add value, proactively investing in building capabilities, reskilling its workforce, and launching innovative services, solutions, products, and platforms to address those opportunities.

Adaptation is the key to survival. SAITL believes in the power of inspiration and invention to build greater futures and help in transforming industries. Over time, this strategy has resulted in deep and enduring customer relationships, a vibrant and engaged workforce, industry leading profitability, a steady expansion of the addressable market, and a proven record of accomplishment in delivering longer term stakeholder value.

RISKS AND CONCERNS:

The only foreseeable risk in this category seems to be the ability to cope up with the dynamics of an evolving market and get the first mover advantage. This needs to be tackled through a range of quality product offerings at competitive prices.

At your Company, the risk management framework sets guidelines for operations so that the Company can continue on the path of sustainable change. These risks are monitored for changes in their exposure and are reported during the course of a year.

The Company places utmost importance on ensuring the safety of its employees, visitors to our premises and the communities we operate in. The Company has been achieving continuous improvement in safety performance through a combination of systems and processes as well as co-operation and support of all employees. The Company has robust training programs and reporting mechanisms in place designed to ensure regulatory compliance and mitigate the risks associated with workplace. The Company has developed programs to promote a healthy and safe workplace, as well as progressive employment policies focused on the well-being of our employees who work in it. These policies and programs are reviewed regularly by the Board of Directors.

The Company has been operating in a competitive environment since its inception. The Company has deep domain knowledge, state of art manufacturing facilities, a skilled workforce, delivery capabilities, efficient sales force, and economies of scale to help retain its competitive positioning amongst peers.

Your Company has a dedicated in-house compliance team that manages these operations. We have knowledgeable consultants who support us in adhering to compliance requirements.

Further, the Company has invested in compliance systems and processes to ensure that all its functions are according to the laws and regulations to comply with and that adequate Monitoring mechanisms are put in place to ensure compliance.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has a robust internal control mechanism in place commensurate with the size and nature of its business. The internal control systems comprising policies and procedures are designed to ensure that operations are efficiently managed and aligned with the strategic objectives of the Company and address various aspects of governance, compliance, audit, control, and reporting. The internal controls are responsible for complying with the regulatory requirements, preventing fraud and errors, safeguarding the Companys assets and finances, and preserving the accuracy and reliability of financial transactions and reporting.

The Companys internal audit committee periodically reviews the adequacy of the internal control systems. Key observations and recommendations are communicated to the management, who takes appropriate corrective measures as deemed fit to maintain the efficiency and effectiveness of the internal controls. Based on its evaluation (as defined in Section 177 of Companies Act 2013 and Regulation 18 of SEBI Regulations, 2015), the audit committee has concluded that, as of March 31,2024, internal financial controls were adequate and operating effectively.

FINANCIAL PERFORMANCE :

Key Highlights of Overall Financial Performance (Rs. In lacs):-

• During the current financial year 2023-2024 ended 31st March 2024, the Companys total Revenue from operation is Rs. 1,727.41/- as against Rs. 520.44/- in the corresponding previous financial year 2022-2023 ended 31st March 2023.

• Income from other sources is Rs. 149.97/- as against Rs. 120.30/- in the corresponding previous financial year 20222023 ended 31st March 2023.

• The Profit after tax (PAT) for the financial year 2023-2024 ended 31st March 2024 is Rs. 639.15/- as against Profit of Rs. 71.01/- of the corresponding previous financial year 2022-2023 ended 31st March 2023.

Key financial ratios:

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

The Company considers its employees as the most important asset and integral to its growth and continued success. Over the past years, the Company has increased its focus on its employee engagement and developement, launching various new initiatives with the goal of attracting, engaging, retaining, and fostering key talent and diversity across the organization. It remains committed to cultivating a future-ready workforce. It continues to nurture a culture that values meritocracy and motivates employees, placing significant emphasis on maintaining high levels of employee engagement, consistent performance, and fostering an innovative mindset to minimize attrition.

ROAD AHEAD:

India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India.

The IT spending in India is estimated to record a double-digit growth of 11.1% in 2024, totalling US$ 138.6 billion up from US$ 124.7 billion last year. Indias public cloud services market grew to US$ 3.8 billion in 2023, expected to reach US$ 17.8 billion by 2027. By 2026, widespread cloud utilisation can provide employment opportunities to 14 million people and add US$ 380 billion to Indias GDP.

As per a survey by Amazon Web Services (2021), India is expected to have nine times more digitally skilled workers by 2025.

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 in 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.

CAUTIONARY STATEMENT:

The Management Discussion and Analysis may contain some statements describing the Companys objectives, plans, projections, estimates, and expectations which may be forward looking statements within the meaning of applicable securities laws and regulations and are based on informed judgments and estimates. Actual results may differ materially from those expressed or implied due to external and internal factors beyond the Companys control. The Company does not undertake any obligation to publicly amend, modify, or revise these forward looking statements based on subsequent developments, information, or events.