Slone Infosystems Ltd Management Discussions

• PRIMARY BUSINESS OF THE COMPANY

The journey of Slone Infosystems Limited traces back to the year 1999, when Mr. Rajesh Srichand Khanna, our Managing Director and Promoter, commenced operations under his sole proprietorship, M/s SAM Computers, offering IT hardware solutions. In pursuit of a structured and scalable corporate form, the business was incorporated as Slone Infosystems Private Limited on December 29, 2022. The objective was to transfer the entire private limited company structure.

Subsequently, pursuant to a Slump Sale Agreement dated February 1, 2023, our Company acquired the business of M/s SAM Computers as a going concern. Later, by way of a special resolution passed at the Extraordinary General Meeting held on November 9, 2023, the Company was converted into a public limited company. A fresh in the name of Slone Infosystems Limited was issued by the Registrar of Companies, Mumbai on December 12, 2023. Following this, the Company successfully launched its Initial Public Offering(IPO)andgot EMERGE platform of the National Stock Exchange of India Limited on May 10, 2024.

We are an IT hardware solutions provider, engaged in the sale and rental of IT equipment and offering a wide range of IT service in India. Our product portfolio includes laptops, desktops, servers, workstations, and related peripherals. on-site/off-site servicing and IT support to corporate clients. Inaddition, We offer customized, scalable, and cost-effective solutions , enabling clients to procure IT hardware on a sale or rental basis depending on their specific needs. Our rental services are designed to offer maximum operational overburdening our clients IT budgets. We also trade in refurbished and used IT equipment to meet various client requirements.

Indias electronics production is expected to reach USD 300 billion by 2026, indicating a significant upward trajectory

Production, Imports, and Exports of Electronic Goods

	2016-17	2017-18	2018-19	2019-20	2020-21	2021-22
Production	3,17,331	3,88,306	4,58,006	5,33,550	5,54,461	8,40,810
Imports	2.87.559	3,40,901	4,01,450	3,85,0813	3,99,374	5,09,679
Exports	39,980	41,220	61,908	82,929	81,822	109,797

INDUSTRY IN WHICH OUR COMPANY OPERATES

ELECTRONICS HARDWARE INDUSTRY

• EXECUTIVE SUMMARY

The electronics hardware industry is the worlds largest and one of the fastest-growing industries, with applications spanning every major sector. In India, domestic production of electronic items has increased from Rs. 3,17,331 crores) in FY 2016 17 to Rs. 6,40,810 crores in FY 2021 22, growing at a 15% CAGR. The industry is projected to reach USD 300 billion by 2026.

Flagship initiatives like the Production

(PLI) schemes, the India Semiconductor Mission, and

Digital India are shaping the country into a global electronics design and manufacturing hub. Indias emergence as the third-largest startup ecosystem and advancements5G, IoT in AI, cloud computing, , and blockchain are poised to transform the IT and electronics landscape significantly.

• RESEARCH AND DEVELOPMENT (R&D)

Our Company recognizes the value of innovation and has taken steps to build internal capabilities for: i. Exploring alternate IT asset financing models ii. Evaluating new age hardware like thin clients, green desktops, and low-power servers iii. Identifying client pain points and co-developing solutions with technology partners Though currently in the early stages, R&D investment will play a criticalrole in future differentiation and long-term growth.

• GROWTH OF ELECTRONICS SECTOR

The Indian electronics manufacturing sector has been on a strong upward trajectory, driven by: i. Government support through the "Make in India" and "Digital India" initiatives ii. A large domestic market, skilled workforce, and cost-competitive labor omers iii. Increasing demand for localized production, innovation, and reduced import dependency The sector continues to attract both domestic international investment and partnerships, stage for sustainable growth.

• COMPETITIVE STRENGTHS equipments to

1. Wide range of offerings with capability to provide customized and integrated IT Solutions e & integrated o ectiv (i) Cost ff fferings (ii) broad range of products including laptops, desktops, printers, servers and other peripherals like CCTV cameras, projectors, storage devices etc on rental basis.

(iii) maintain a large base of IT hardware including desktops, laptops, printers, scanners etc. (iv) Delivery both off-site and on-site services as part of our service delivery model depending on the nature of the issue and the needs of our customers, which we believe to give us a competitive advantage.

(v) Flexible Tailor-made rental schemes as per Customer requirements to acquire the requisite equipment.

2. Wide presence in domestic of customers

(i) Serving clients across various industries & sectors including the logistics solutions, BPO, pharmaceuticals,e-commerce, education, IT, insurance, research, media & entertainment, recruitment, VFX & Digital solutions and many more.

3. Experienced management & operational team

(i) Qualified and experienced management having experience in different aspects of IT hardware industry (ii) Right Personnel recruitment and training initiatives and quality assurance

4. Strong relationship

(i) Customize d offerings to customers as per their specifications & (ii) Track record of consistent delivery of quality and cost-effective services over the years. (iii) Support maximization ofproductivity without compromising on the IT budget

• GROWTH STRATEGIES

1. Continue to expand customer base

(i) Focus on maintaining long standing relationship withexisting (ii) Focus on the expansion of the customer base

2. Continue to focus on emerging technologies and setting (i) Regularly track new, latest technologies and market trends in the IT market.

(ii) Upgradation of existing serve our clients.

3. Optimal

(i) Constantly endeavour to improve technical process to increase service activates

4. Marketing Strategies:

(i) Focus on providing one stop solutionfor all IT hardware needs (ii) Focus on requirement of Customers (iii) Emphasizing on Services with value addition (iv) Continuous update of Systems and offered (v) Timely service and support to gain customer confidence.

• OPPORTUNITIES AND THREATS

1. OPPORTUNITIES with diverse base

1. Growth in Remote Work and Hybrid Models

• Increased Demand for IT Equipment: With more companies adoptingremote and hybrid work setups, there is a growing need for IT equipment such as laptops, monitors, and networking devices. Renting out this equipment offers businesses a flexible solution that adjusts with their changing workforce needs.

• Short-Term Projects: Businesses often require additional IT resources for short-term projects or temporary teams. Renting help drive employee loyalty, retention allows them to scale up quickly without the need for long-term investments.

2. Technological Advancements withcustomers

• Latest Technology Access: As new technologies like AI, 5G, and virtual reality (VR) emerge, companies need access to cutting-edge Offering the latest tech for rent allows businesses to try out new tools without committing to large

• Specialized Equipment: Certain industries, such as healthcare, education, or media production, require specialized IT equipment. Providing niche products on a rental basis can cater to these specific needs. and market

3. Sustainability and Circular Economy

• Eco-Friendly Practices: Many businesses are prioritizing sustainability and are looking for ways to reduce their environmental footprint. Renting and trading IT equipment supports the circular economy by extending the life of products and reducing electronic waste.

• Refurbishing and Reselling: Trading in and refurbishing used IT equipment for resale can be a profitable avenue. Companies that focus on high-quality refurbishment can attract cost-conscious customers who want reliable, yet affordable, IT solutions.

4. Small and Medium-SizedBusiness(SMB)Market on payments can affect cash flow

• Affordable Solutions for SMBs: Small and enoft havemedium-sized limited businesses ting these budgets for IT investments. Renting allows them to access the technology they need without a t upfront cost, making it easier for them significan to compete with larger companies.

• Flexible Payment Options: Offering flexible payment plans, like monthly subscriptions or lease-to-own options,can make IT equipment more accessible to SMBs.

5. Digital Transformation

• Supporting Digital Initiatives: As businesses across all sectors undergo digital transformation, they require modern IT infrastructure. Renting or trading IT equipment allows companies to upgrade their technology in line with their digital strategies.

The IT trading and renting sector is full of opportunities, driven by technological advancements, changing work patterns, and increasing demand for flexible and sustainable solutions. Companies that can identify and capitalize on these opportunities, while continuously adapting see significant growth and success.

6. THREATS

• Technological Changes: Rapid advancements in technology can quickly make current equipment obsolete.

• Supply Chain Issues: Disruptions chain can affect inventory levels and delivery . times

• Economic Instability: Economic downturns can reduce business investment in new equipment. competition • MarketSaturation:High saturation can drive down prices and reduce gins. mar profit

• Cybersecurity Risks: Threats such as data breaches or hacking can compromise sensitive . businessinformation

• Regulatory Changes: New regulations or compliance requirements can impact how the company operates or increases costs.

• Counterfeit Products: Risk of trading in counterfeit or substandard equipment can harm reputation and lead to legal issues.

• Customer Credit Risk: Issues with customers defaulting financial stability. threats involves diversifying suppliers, staying updated with technological trends, and implementing strong cybersecurity measures

• OUTLOOK

The future of IT trading companies looks promising, fueled by the ongoing digital transformation across industries, a growing emphasis on sustainability, and the rise of new technologies like AI and IoT. As businesses seek cost-effective and eco-friendly IT solutions, demand for refurbished and second-hand equipment is expected to increase. Additionally, global expansion into emerging markets offers new growth opportunities.

However, to stay competitive, IT trading companies must address challenges such as rapid technology obsolescence, supply chain complexities,and stricter data security and environmental regulations. Success will depend on their ability to innovate, offer flexible solutions, and maintain strong customer relationships. Companies that can adapt quickly to these trends and challenges are well-positioned for growth in a dynamic and evolving market. For IT trading and rentingcompanies, the future is bright to markettrends,will likely with several key trends shaping the landscape:

1. Growing Demand for Flexibility: Businesses increasingly prefer renting IT equipment to adapt to changing needs and reduce capital expenses.

2. Sustainability Focus: Theres a rising emphasis on eco-friendly practices, boosting and recycled IT products.

3. Technological Advancements: The continuous evolution of tech, such as AI and 5G, creates opportunities for companies to offer the latest equipment and services.

4. Global Expansion: Emerging markets present new growth opportunities as businesses worldwide modernize their IT infrastructure.

5. Evolving Customer Expectations: Companies must provide personalized, customer service to stay competitive.

6. Regulatory Challenges: Adhering to stricter data security and environmental regulations is crucial for maintaining compliance and avoiding penalties.

In summary, IT trading and renting companies that embrace innovation, market trends will be well-positioned

• RISKS AND CONCERNS

As an IT rental company, your business faces several risks and concerns that can impact operations,profitability, and reputation. Heres an overview of the major ones:

1. Technology Obsolescence:

• Rapid Depreciation: IT equipment tends to lose value quickly as new technology is released. If a company holds onto inventory for too long, it may become obsolete and harder to sell, leading to potentiallosses controls, and a proactive

• Changing Customer Preferences: As new products and innovations hit the market, customer demand can shift inventory will be in demand.

2. Market

• Intense The IT trading market is

customers. This can lead to price wars, which can mar squeezeprofit

• New Entrants: The barrier to entry is relatively low in some segments of IT trading, leading to the constant threat of new competitors entering the market.

3. Supply Chain Disruptions: nt • Supplier Reliability: Dependence on a few key production suppliers can be risky if they face delays, quality issues, or financial problems. This can disrupt your supply chain and delay your ability of its to fulfill customer orders.

• Global Events: Events like natural disasters, political global supply chain, making it harder to source IT equipment.

4. Regulatory Risks:

• Environmental Regulations: Stricter laws on electronic waste (e-waste) disposal and sustainability could increase operational costs, especially if the company deals with large volumes of outdated equipment.

5. Environmental and Ethical Risks:

• E-Waste Disposal: Improper disposal of solutions and excellent electronic waste can lead to legal penalties harm the environment. Companies must ensure they follow proper e-waste disposal protocols.

• Ethical Sourcing: There is increasing scrutiny on where and how IT equipment is sourced. Trading in equipment that was manufactured under unethical conditions can lead to reputational sustainability, and adapt to global damage. success.

6. Legal and Contractual Risks:

• Contract Disputes: Misunderstandings or disagreements with suppliers or customers over contract terms can lead to costly legal disputes.

• Intellectual Property: Selling counterfeit or unauthorized IT products can lead to legal action from original manufacturers.

Conclusion

Managing these risks requires careful planning, strong operational to compliance and customer service. Companies that effectively mitigate business and ensure long-term success rapidly,makingitdifficult in the IT tradingto predict industry.

Addressing these risks through robust risk management strategies, insurance, and operational essential for sustaining with

• INTERNAL FINANCIAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has robust and comprehensive Internal Financial Control system commensurate with the size scale and complexity of its operations. The system encompasses the major processes to ensure reliability of financial reporting, compliance with policies, procedures, laws, and regulations, efficie safeguardingofassetsandeconomicaland use of resources.

The policies and procedures adopted by the company toensurestheorderlyand business and adherence to the companys policies, prevention and detection or pandemicscandisruptthe accuracy and completeness of the records and the timely preparation of reliable financial information.

The Internal Auditors and the Management continuously monitors the Financial Control system with the objective of providing to the Audit Committee and the Board of Directors, an effectiveness of the organizations risk management with regard to the Internal Financial Control system.

Audit Committee meets regularly to review reports submitted by the internal auditors. The Audit Committee also meet the Companys Statutory Auditors to ascertain their views on the financial statement, including the and compliance to accounting policies and procedures followed by the Company. In additionto the above, the Company has formulated a Vigil Mechanism (Whistle Blower Policy) for its Directors and Employees for reporting and suspected malpractices.

• DISCLOSURE OF ACCOUNTING TREATMENT

The financial prepared in accordance with generally accepted accounting principles in India (Indian GAAP). The company has prepared these financialstatements to comply in all material respect with the accounting standards notified under the Companies (Accounting

Standards) Rules, 2006 and the relevant provisions of the Companies Act, 2013. The financial statements have been prepared on an accrual basis and under the historical cost convention.

• DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company has reported total revenue of Rs. 21,064.22 Lakhs for the current year as compared to Rs. 6,106.52 Lakhs in the previous year. The Net Profit for the year under review amounted to Rs. 740.73 Lakhs in the current year as compared to Profit reporting incurred in last year amounting Rs. 418.69 Lakhs.

• MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED genuine concerns about unethical practices We believe that our employees are key contributors to our business success and thus we focus on attracting and retaining the best possible talent. Our Company looks for specific statements of the company have been that would be an asset for its kind of business. As on March 31, 2025, our Company has employed 24 employees at various levels of the Organization which is commensurate with the size, nature and operations of the Company.

• DETAILS OF KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFORE

Ratios	As at 31.03.2025	As at 31.03.2024		Variance		Explanation for any change in the ratio by more than 25% as compared to the preceding year.
Interest Coverage Ratio	29.54	19.88		49%		The business has significantly grown in current year and hence there is an increase in EBITA, hence the variance
Current ratio	2.76	3.11		(11)%		The business has significantly grown in current year. Hence the slight variance
Debt- equity ratio	0.10	0.12		(16%)		During the year the company has raised equity share capital through SME IPO and preferential issue (convertible warrants); even though there is an increase in debt, there is a slight improvement in the ratio.
Operating Profit Margin (%)	0.05	0.10		(46)%		The business has significantly grown in current year. Even though there is an increase in sales, the margins are less than the previous year, hence the variance
Debt service coverage ratio	14.08	16.33		(14)%		Even though there is improvement in EBITA in current year; there is a significant increase in CAPEX in current year, hence the variance.
Return on equity ratio	28.35%	54.66%		(48)%		During the year even though there is increase in profit after tax; there is a significant increase in share capital due to which there is overall increase in shareholders equity, hence the variance.
Inventory turnover ratio	16.57	29.87		(45) %		During the year there is significant increase in business activity including purchases and closing inventory; hence the variance.
Trade receivables turnover ratio	15.21	8.36	82%		During the year there is significant increase in business activity and sales; and better management of debtors, hence the variance significant increase in business Duringtheyearthereis activity including purchases; and better management of creditors, hence the variance
Trade payables turnover ratio	24.86	11.44	117%
Net Capital turnover ratio	6.61	4.75	39%		During the year there is significant increase in business activity and hence improvement in the ratio
Net profit ratio	4.99%	9.12%	(45)%		During the year there is significant increase the company, but the profit margins have reduced, hence the variance
Return on capital employed	27.53%	39.84%	(31)%		During the year the company has raised equity share convertible ( capitalthroughSMEIPOandprefrentialissue warrants); hence the variance -
Return on investment	-	-	-

• DISCLOSURES

During the year the Company has not entered into any nature with its promoters, the transaction Directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interest of the Company at large.

• FORWARD-LOOKING STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, others may within the meaning of applicable laws and regulations. Actual results may differ from such expectations, whether expressed or implied. Several factors could make a significant difference to our operations.These include climatic and economic conditions affecting demand and supply, government regulations and taxation, any epidemic or pandemic, and natural calamities over which we do not have any direct/ indirect control.