Springform Technology Ltd Management Discussions

Your Company being in the field of Information Technology develops applications as per requirement and are tailor-made. Your Company has taken more projects of training and setup of server and networking systems given the GAP observed in the industry for talents in this area. Engineering-based services are also being rendered by your Company as a new initiative.

There is a major shift in the software market requirements and generic solutions are now a crowded competitive market. Also, artificial Intelligence has further diluted the bottom segment resulting in an edge only to specialization and cross-platform integrated solutions. Specialized business models for specific segments have to be promoted as products with feature-rich applications.

Digitization driven both by the Government and private enterprises has been a driving force and is still a big market in India. Further, integrating solutions with engineering resources and equipment is a potential market and is a special niche segment. Opportunities in this segment are vast and with new Quality and systems requirements both national and global these requirements ask for such kinds of solutions. This new emerging segment requires immense study and initial work, seeking a lot of investment at the initial stage with a return starting only after a period of 8 to 12 months. Further, since the cost of operations has gone up this will require a lot of man days of study and development.

Your Company has diversified in engineering services and other data services, Currently, your Company does not focus on the product segment since the big players have a larger coverage and only specialized products can survive the competition. Your Company is now focusing on developing engineering-based add-on solutions that require a lot of investment and pre-work.

With the emergence of Artificial Intelligence (AI) and online basic solutions, your company has the following concerns that are being mitigated:

a) Identifying a niche product focus segment is taking time

b) Developing engineering-based solutions though being a good market will require much investment and no returns at the initial stage.

c) The cost of statutory compliance has gone up

d) Skill sets for engineering-based solutions are very costly.

Your Company has a tight financial control system which is compliant enough for the operations being conducted currently.

Your Company incurred loss during the financial year under review which is Rs. 10.05 thousand as compared to a Net Profit of Rs. 7.95 thousand for the previous FY 2023-24 due to the takeover/ acquisition of the Company vide an Open Offer dated 10^th April, 2024 and hence the expenditure increased by way of Compliance Cost, Training, Engineering, and Data Services mainly. The services have lower returns compared to solutions. Your Company currently putting its resources into engineering solutions development, the initial efforts have an investment and cost but no returns till it is developed.

Your Company requires talent with Mechanical, Electrical, and Electronics Engineering understanding and technical approach.

Human Resources

Human resources being a core asset of the organization in IT, your Company has been successful in retaining talent by motivation, upgradation, and incremental advantage. Your Company is also fetching new resources and talent for developing specialized solutions, The existing resource having a neck on the understanding of what your Company requires is a big plus factor.

Training and Development

Training is required essentially to provide Mechanical and Electrical Engineering know-how to blend in the IT circumference. Regular small training programs are arranged internally to elevate their understanding of linking multiple technologies. Development activities are in full gear for incubating solutions which are multi-platforms and can bring the on-floor activities in synchronization with the management, monitoring, control, and financial activities.

Motivation

Motivation though linked with your Companys progress, is also linked with the individual talent update, performance, and throughput delivered.

(a) Debtors turnover - 0.66

(b) Inventory turnover — 3.07

(c) Interest coverage ratio — 1.02

(d) Current ratio — 4.73

(e) Debt-equity ratio — --

(f) Operating profit margin — (7.28) (Though catering to the service segment, your company having chosen to venture into Engineering services has paid off and yielded good results. Venturing into a new arena has some difficulties bundled with it, which is impacted on sales. But, overall, a strategy to get into Engineering-based services has been positive).

(g) Net profit margin — (728.41) (Due to heavy investment in development of Engineering- based solutions have resulted in cost being pumped in at this stage initially without returns. However, as the solutions mature and complete their build, the results will be fairly glowing. This trend however will continue for another 6 to 12 months given the manpower investment made for developing the solutions).

(h) Sector-specific equivalent ratio — N/A.

The Return on Net worth of your Company has reduced from the immediately previous financial year due to an increase in cost of operations on account of new business ventures and development of solutions.