Sigma Solve Ltd Management Discussions

INDUSTRY OVERVIEW

The global environment around the world continues to go through significant shifts. Post the pandemic, which resulted in supply chain shocks, there was an economic slowdown especially in developed markets. While initial signs of stability began to emerge, the military conflicts have further intensified this year and continue to impact the global supply chains.

Global energy transition is accelerating, and businesses are making clear commitments towards a sustainable future. The energy requirement of our fast-changing world is enormous. Key is to lower the cost of energy while also transitioning to renewables. This transition requires large investment in technology, electric mobility, renewable power, hydrogen and sustainable fuel.

Geo-political challenges are continuing to alter established supply chains and companies are rebalancing their supply chains to address both resilience and efficiency. New global supply chain ecosystems are being created, with India playing an important role in advanced manufacturing. • Advanced manufacturing, new technologies like AI, new energy, data and business models are changing the future of work and are compelling new skillsets to be built for the future.

Secure networks have become a key necessity as data is the foundation for businesses of today. These networks power everything from predictive analytics and AI to personalized customer experiences. As value of data increases, along with concerns of privacy and protection, it has rightly become a focal point of security for all businesses.

Amid global geo-political tension leading to a more cautious approach for investments and delayed decision making, Indias technology industry revenue (including hardware) is estimated to reach $254 Bn (3.8% y-o-y growth) in FY2024, an addition of over $9 Bn over last year.

COMPANY OVERVIEW

Our Company was incorporated by Our Promoter Mr. Prakash Parikh as "Sigma Solve It Tech Private Limited" at Ahmedabad on April 29, 2010, under the provisions of the Companies Act, 1956 vide Certificate of Incorporation issued by the Assistant Registrar of Companies, Gujarat, Dadra and Nagar Haveli. Later on, the name of our Company was changed to "Presha Software Private Limited" and Certificate of Incorporation pursuant to change of name was issued by the Assistant Registrar of Companies, Registrar of Companies, Ahmedabad on February 18, 2017. Again the name of our Company changed to "Sigma Solve Private Limited" and Certificate of Incorporation pursuant to change of name was issued by the Registrar of Companies, RoC - Ahmedabad on March 7, 2019. Consequent up on the conversion of our Company from Private Limited Company to Public Limited Company, the name of our Company was changed to "Sigma Solve Limited" and fresh Certificate of Incorporation consequent up on the conversion from Private Limited Company to Public Limited Company was issued by the Registrar of Companies, RoC - Ahmedabad on June 17, 2019. Further, shares of our company got listed and traded pursuant to Initial Public Offering on SME Platform of NSE Limited with effect from October 19, 2020 and the Company has after the closure of financial year on June 09, 2023 get migrated to main board of NSE and Directly got listed on BSE main board. Also Company ranks among top 2000 listed entities based on market capitalization at 31^St March, 2024 on NSE and BSE. Company Identification number of our Company is L72200GJ2010PLC060478.

To accelerate the business opportunities and increase the foreign IT rich client base, Sigma invested in the Sigma Solve Inc., a Florida (USA) based IT Company originally floated as LLC jointly owned by Mr. Biren Zaverchand and Mr. Prerak Parikh, who are relatives of our promoters. Since incorporation, our company and Sigma Solve Inc. jointly makes efforts to acquire the business opportunities and execute the work respectively. In the year 2019 Sigma invested and acquired 51.04% stake of Sigma Solve Inc. and made it its Subsidiary Company and during the year under review the said stake was increased by 8.77% and which resulted into Sigmas total holding of approximately 60% in Sigma Solve Inc.

Our company "Sigma" and "Sigma Solve Inc."(Subsidiary Company)having their offices at Florida (USA), Atlanta (Home Office), Australia (Home Office) jointly makes efforts for new business acquisitions. The operation of our company is controlled from our registered office situated at Ahmedabad, (Gujarat) India. Our companys 100% of the revenue is from export of services, and in order to provide hassle free payment facilities to our clients, we channelize our payment through "Sigma Solve Inc.". Our Company do not have any identified customers being almost 100% of sales are booked by Sigma Solve Inc., and subsequently, our company "Sigma" is charging on monthly basis to Sigma Solve Inc. for providing the execution facilities on per man hour basis in conjunction with efficiency level achieved on monthly basis. Moreover, our company "Sigma" also occasionally serves directly to clients.

Our Company "Sigma" and "Sigma Solve Inc. are jointly offering enterprise software development. We offer turnkey consultancy services to our customers in their business domain. We also in association with group entity "Sigma Solve" provide services related to Web & E-commerce Development, Real Time Application development, Business Intelligence Analytics, CRM Development, Digital Marketing, UI & UX Design, Automation Testing and Quality Assurance.

Our Promoters are first generation promoters and their experience in Information technology Industry has been instrumental in determining the vision and growth strategies for our Company "Sigma". We have a dynamic team that empowers us to provide a unique blend of outsourcing experience to our clients.

Sigma endeavours to bring together creativity and knowledge with positive business strategy to furnish the requirements of diverse clients with an inclusive range of our services which are comprehensive and cost effective. Our Company delivers services across all stages of the product life-cycle, which enables us to work with a wide-range of customers and allows us to develop, enhance and deploy our customers software products.

We have been successful in augmenting our portfolio of solutions over time for computers, laptops and mobile software solutions. We take regular feedback from our user base which enables us to understand the needs of our users better and helps us to innovate and design improved solutions. Our sales and marketing activities benefit from word-of-mouth recommendations from our user network to create a viral marketing effect, which is amplified by the speed, ease of use and quality of our solutions, and allows us to gain new customers at a low acquisition cost.

Company had maintained a high growth trajectory in FY24. FY24 was a milestone year for us. During this period, we leveraged cutting-edge technologies across multiple business sectors, resulting in substantial lead generation. We simplified our group structure, giving Sigma Solve Limited shareholders 100% ownership of Sigma Solve Inc., significantly benefiting minority shareholders. We also sponsored golf tournaments and attended trade shows to generate effective leads.

Financially, our revenue from operations grew by 16% year-over-year due to an increased scale of operations, and our bottom line grew by 5%. This financial growth is attributed to an expanded order book and significant deal wins. We developed customized products in the logistics and CRM sectors, with our Q4FY24 order book standing at $325k and an order pipeline of $400k. Additionally, we augmented our project team to enhance expertise, expedite delivery, and achieve quicker launches for faster realization of business benefits.

Looking ahead, we are committed to continuing our journey of innovation and diversification. Our goal is to become a $30 million revenue company within the next 4-5 years, driven by our dedication to growth and advancement."

OUR COMPTETITVE STRENGTHS

• Businesses across the globe have been migrating to Cloud Services

• The growth in cloud adoption is anticipated to be robust due to its ability to facilitate the adoption of emerging technologies like Augmented Reality (AR) and Block chain.

• Cloud transformation is expected to have a longer and stronger cycle as enterprises are still in the early stages, with only 30% of workloads migrated to the cloud.

Mobile Applications are changing the way of doing business.

• Factors such as the expanding consumer base in the e-commerce industry and the widespread adoption of smart phones contribute to the growth of the mobile application market.

• The markets growth is driven by the continued expansion of enterprise applications, increased focus on health and fitness apps, thriving e-commerce, and the high demand for gaming apps with substantial downloads and in-app purchases.

User Experience Design

Human - machine interaction and its design has been a key challenge ever since machines were born. With a comprehensive understanding of how humans interact with computer applications, Sigma provides its clients user experience design services for the mobile and web. Creating a beautiful, yet extremely functional design is a key strength of the Sigma team.

Customer Focus

The company is able to understand its customers complex requirements and translate them into customized solutions on a sustainable basis. Business analysts with extensive software development experience help in understanding our clients business needs. This approach helps us in creating a sticky customer base.

Unique work culture

We believe that our team is a critical asset for the business. Once the team is empowered to deliver with not only the right tools but also the most inspiring work culture, it will automatically deliver the best to its clients. We make extensive efforts to create a flexible operating and employee friendly environment.

OUR STRATERGIES

The primary elements of our growth strategies are set forth below.

Expand our Current Business Relationships

Our Company do not have any identified customers being almost 100% of sales is booked by Sigma Solve Inc., and subsequently, our company "Sigma" is charging on monthly basis to Sigma Solve Inc. for providing the execution facilities on per man hour basis in conjunction with efficiency level achieved on monthly basis. Our goal is to build long-term sustainable business relationships with our customers in association with Sigma Solve Inc. to generate more revenues. We plan to continue in association with Sigma Solve Inc. to expand the scope and range of services provided to customers by continuing to build our expertise in major industries and extending our capabilities into new and emerging technologies. In addition, we and Sigma Solve Inc. jointly intend to continue to develop better solutions and new products for industry sectors which are significantly untapped. We will also seek to support a greater portion of the full product development life-cycle of customers by offering targeted services for each phase of the software product life cycle. We and Sigma Solve Inc. jointly also plans to assist customers as they deploy their products to end-users through consulting and professional services that we jointly offer offsite.

Invest in infrastructure and technology

Our Company believes in making investments for achieving higher levels of excellence in its services and implement dynamic and diverse specifications of our customers. We have invested significantly in equipping our technical team with requisite infrastructure and technology. We want to continue to work towards the up gradation and modernization of our infrastructure and technology.

Optimal Utilization of Resources

Our Company constantly endeavours to improve our technical process, and will increase service activities to optimize the utilization of resources. We have invested significant resources, and intend to further invest in our activities to develop customized systems and processes to ensure effective management control. We analyse our existing policies for our technical and designing process which enables us to identify the areas of bottlenecks and correct the same. This helps us in improving efficiency and putting resources to optimal use.

Expand our Capabilities for Smart phones/ Mobiles Devices

The proliferation of smartphone/ mobile devices has created a diverse computing environment for users. We have in the past, explored and continue to explore opportunities on our own to provide application and software to the user efficient performance of their tasks in computers, laptops and mobiles.

FINANCIAL PERFORMANCE

The Company has considered the possible effects that may result from the pandemic relating to Covid- 19, Russia Ukraine, Inflation, and increase in interest rates in the preparation of its financial statements, including the recoverability of carrying amounts of financial and non-financial assets. In developing the assumptions relating to possible future uncertainties in the global economic conditions because of this pandemic, the Company has, at the date of approval of its financial statements, used internal and external sources of information Including credit reports and related information and economic Covid- 19, Russia Ukraine, Inflation, and increase in interest rates on the Companys financial statements may differ from that estimated as at the date of approval of its financial statements.

Standalone Performance

The following table gives an overview of the standalone financial results of the company:

(Amount in Lakhs)

Consolidated Performance

Our Company Sigma Solve Limited has a foreign subsidiary named Sigma Solve Inc. having registered office at Florida, USA. The Company hold 100% stakes in the said subsidiary.

The following table gives an overview of the Consolidated financial results of the company:

(Amount in Lakhs)

KEY FINANCIAL RATIOS

SOURCES OF FUNDS

Equity Share Capital

We have one class of shares-equity shares of par value Rs.10/-. During the year the changes in the Authorised and Paid Up share capital mainly due to issue of Bonus Shares by the Company. The Authorised share capital is Rs.1050 Lakhs and Paid Up share capital is Rs. 1027.75 Lakhs.

Reserves and Surplus

1. Securities Premium

On a standalone and consolidated basis,the balance as at March 31, 2024amounted to Nil , which is after adjusting the capitalization of amount out of Securities Premium account by issuing Bonus Shares.

2. Surplus

On a Standalone basis, the balance in surplus account under reserve and surplus as at March 31, 2024 after adjusting the amount paid as interim dividend for the F Y 2022-23 and capitalization of reserved by allotment of Bonus shares is 200.77 lakhs.

Whereas on Consolidated basis, the balance in surplus account under reserve and surplus as at March 31, 2024 was Rs.2073.13 Lakhs.

3. Capital Reserve

On a consolidated basis, the balance as at March 31, 2024 amounted to Rs.316.67Lakhs OUTLOOK

With export thrust of the present government along with political stability the outlook of the industry as a whole seems to be positive and your company is well placed to tap this opportunity going forward.

HUMAN RESOURCES

Human resource plays an essential role in developing a companys strategy as well as handling the employee centered activities of an organization. aims to attract, develop, motivate and retain diverse talent, that is critical for its continued success. The companys talent management strategy seeks to maximize the potential of every employee by creating a purpose-driven, inclusive, stimulating, and rewarding work environment, delivering outstanding employee experience, while fueling business growth.

In F.Y. 2023-24, Sigma made the highest ever net addition of 56 employees taking total employee base to 252employees (including over permanent and on call software professionals/technicians). Our man power is a prudent mix of the experienced and youth which gives us the dual advantage of stability and growth. Our work processes and skilled resources together with our strong management team have enabled us to successfully implement our growth plans.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has set up a proper and adequate and sound internal control system to safeguard the Groups assets and to enhance shareholders investment, as well as reviewing its adequacy and effectiveness of the said system. The duty of reviewing the adequacy and effectiveness of the internal control system has been assigned to the Audit Committee ("AC"), to seek assurance on the adequacy and effectiveness of the internal control system through reports it receives from independent reviews conducted by the Internal Auditor. The Company constantly reviews its processes and the systems with an aim to remain competitive and address the changing regulatory and business environment. The Control Systems provide a reasonable assurance of recording the transactions of its operations in all material aspects and of providing protection against misuse or loss of Companys assets. The external auditors as well as the internal auditors periodically review the internal control systems, policies and procedures for their adequacy, effectiveness and continuous operation for addressing risk management and mitigation strategies.

RISKS AND CONCERNS

Like any other corporate, the company is exposed to interest rate risk, currency fluctuations, credit risk and regulatory risks. Currency movement can have significant impact on the operations of the Company. Further, growth of global trade tensions and changes in tax structure will impact the operations of the Company. The company conducts a periodic internal audit that ensures risk management process is in place.

CAUTIONARY STATEMENT

Certain statements under Management Discussion & Analysis describing the Companys objectives, projections, expectations may be forward looking statements within the applicable securities laws and regulations. Although the expectations are based on reasonable assumptions, the actual results could differ materially from those expressed or implied, since the Companys operations are influenced by external and internal factors beyond the Companys control. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, basis any subsequent developments, information or events.