Swiss Military Consumer Goods Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

GLOBAL ECONOMIC REVIEW

After a spectacular bounce back in 2021 from a low base, the world economy returned to the growth trajectory (3.4%) by the end of 2022 notwithstanding setbacks that pushed the global financial and economic system into instability. However, this renewed growth is not yet boisterous. The Russia-Ukraine war still is a major concern for the global economy but despite that, consumer demand seems to be picking up, and major economies are getting adjusted to high energy prices. Furthermore, retail inflation has subsided substantially even though core inflation remains sticky.

Easing price rise is most likely to be the direct result of the policy rate tightening all over the globe by the central banks.

But commodity prices remain volatile throughout the year. In terms of growth emerging economies surprisingly fared better than most developed nations. Global trade hit a record high of US$ 32 trillion in 2022 amidst adverse geopolitica conditions and tight financial conditions in advanced economies.

Global economic growth forecasts in 2023 are being revised downwards (2.8%) due to high energy prices, rising interest rates, sustained inflation in many economies, and negative global spillover from Russia-Ukraine war. Yet, rising global trade volumes indicate resilient global demand. Global inflation is still moderating and is likely to mellow down to a much lower level by the end of 2023. However, advanced economies are likely to face a prolonged downturn in CY23. But with investment in digital tools, better integration with suppliers, improving productivity, and easing supply-chain constraints, the global economy may think of a better future ahead

INDIAN ECONOMIC REVIEW

Indian economy continues to be resilient and growing faster than many developed and emerging countries despite severe global uncertainties since 2022. In the last fiscal, growth was expected to be constrained by several macroeconomic factors such as high inflation, monetary tightening, and global slowdown. But despite all the challenges Indian economy registered a growth of 7.2% on a y-o-y basis.

Expansion in agriculture, construction, and service sectors and a rebound in manufacturing in the March quarter (4.5% in FY23) are reasons for this growth. Apart from that, the governments capex push and buoyant private consumption also paved the way. But reports further suggest, a large portion of consumers are staying away from non-essential spending, as inflation was high throughout the year. But by the end of the fiscal, monetary tightening by the RBI caused a dip in the inflation level that provided some relief to the consumers.

The total GST collection in FY23 exceeded Rs.18 lakh crore with over 22% growth on a y-o-y basis indicating resilience in the Indian economy. Indias per capita net national income (at current prices) for 2022-23 stands at Rs.172,000, according to estimates from the National Statistical Office (NSO). This marks an almost 100% increase from the per capita income in 2014-15-Rs.86,647, before dipping significantly during the Covid pandemic.

Going forward, Indias growth prospects seem to be bright. According to the experts, the recent trend suggests that private final consumption expenditure is likely to reach the pre-pandemic level in the near future. A sharp increase in public sector capex is also likely to contribute to gross capital formation in the coming years. But Indias GDP growth could moderate to 6.1% in FY24 because of subdued external demand and financial uncertainties owing to global geopolitical tensions that are likely to affect overall optimism.

LUGGAGE AND TRAVEL GEAR MARKET

Like many other industries, the pandemic impacted the global travel industry adversely. But the effects of Covid-19 restrictions on travelling were harder than in any other industry because of mobility restrictions. But now that the restrictions have been lifted and the daily lives of people are being normalized all over the world, travelling is on resumption.

Naturally, travel bags seem like a kind of travel gear that is useful for all travellers alike. They may be hobby tourists, they may be busy office executives or they may very well be explorers or trekkers. Types of bags also change with the kind of travelling someone is engaged in. Duffel bags, wheeled backpacks, rolling luggage, weekenders, totes and travel packs are some of the most common types of travel bags available in the market.

And with the types of bags change the material they are built with. For example, the hard-side models are manufactured using tough materials like polypropylene, polycarbonate and acrylonitrile-butadiene-styrene (ABS) that are appropriate for carrying gadgets and other fragile products. However, the durable and lightweight soft-side variants are manufactured using nylon, polyester, cotton, leather and vinyl. Further, the bags can also vary both in size and colour.

Global market: In the travel bag industry, backpacks dominated the segment with a 46.64% share in 2022 because of their multi-purpose, lightweight, and spacesaving features. The trolley bag segment on the other hand is growing very fast because of high consumer preference, mobility, compactness, and ease of rolling the whole bag through different surfaces.

In 2022, most bags were sold via offline routes to the extent of 66.49%. This channel is preferred by consumers because of a wide range of products within different price ranges, materials, luggage types, and designs. However, the E-commerce segment is likely to grow faster in the future because of the ease of payment, eye-catching discounts, and home delivery.

Key growth drivers

• The growing tourism industry, rapid urbanization, and shift in recreational patterns across the globe are driving the growth in the travel bag industry.

• Increasing ability of the consumers to invest in premium and luxury travel bags to meet their ever-changing needs. Coupled with that, innovations in visually appealing and creative products are creating an upsurge in demand in the industry.

• The rise of several domestic brands and the availability of local and regional players in emerging economies are expanding the growth in the travel bag industry. The products offered by these local companies are usually of high quality, affordable, and easily available both through online and offline markets.

Key trends

• The rising demand for ultra-lightweight travel bags is one of the most important trends in the market. These bags are easy to carry and travel with, with the outer surface being hard and water resistant. Materials like polycarbonate are used to manufacture these bags.

• Luggage companies around the world are unveiling new sustainable bags that are not just durable and stylish but also attempting to be earth-friendly. Many such travel bag companies these days are manufacturing products from recycled and repurposed materials. Some companies are using an innovative eco-dyeing process that requires less water, energy, and chemicals.

• Smart luggage or smart bags are any type of luggage that contains high- tech capabilities such as Bluetooth connectivity, Wi-Fi connectivity, GPS tracking, electronic locks, and much more. The ongoing demand for travel and proper awareness of smart luggage can create viable growth opportunities in the market.

Indian market:

Indian luggage and backpack market is worth Rs. 10,000 crores in 2023 and is expected to grow at a CAGR of 15% in the next 3-5 years. According to a local brokerage Anand Rathi report, the industry grew from 45% in FY20 to 56% in FY23. In pre-pandemic years (FY15-FY19) the growth was 14.2%.

In the past, the industry was dominated by non-branded players. But recent supply chain issues across the globe benefited the branded players because of high freight rates which made the operations of the small companies extremely difficult. The reason being that the consumers guickly transitioned to the branded segments.

Travel, the mega trend: Two years of mobility restrictions due to Covid has created an enormous tailwind for the sector. It generated massive travel demand which is driving the sector. Coupled with that, rising income, rapid urbanization, and a shift towards branded goods are driving the growth for the industry. Further, demand for premium luggage, frequent holidaying, need for multiple bags, short replacement cycles, rise in spending during the wedding season, and travelling for education and jobs are also expanding the market.

Opportunities: The number of domestic air traffic passengers picked up significantly since Covid exceeded FY21 and FY22 levels and almost touched the pre-pandemic levels. From Apr-22 to Feb-23, domestic air-passenger traffic hit -122.7 million -44% growth from FY22.

Only 985 million passengers travelled in 2020-21 in Indian Railways because of Covid restrictions. The figure increased to about 3.063 billion in 2021-22 and 5,858 million in 2022-23, but it is still roughly 24% lower than in 2019-20.

https://www.niaximizemarketresearch.com/market-report/global-travel-bag-markety26844/

https://www.statista.com/statistics/564/69/airiine-industry-number-of-flights/

https://www.verifiedmarketresearch.com/product/smart-iuggage-market/

https://www.moneycontrol.com/news/business/stocks/revenge-travel-formalisation-to-boost-luggage-sector-should-investors-look-at-vip-safari- industries- i 047058l.html

https://www.businessworld.in/article/Post-pandemic-More-indians-Are-Fiying-Fewer-Peopie-Prefer-Train-To-Travei/i5-04-2023-472952/

HOME APPLIANCE MARKET

Domestic appliances commonly known as home appliances are small or large size electrical instruments that help in household functions such as cooking food, chopping food, heating food, entertainment and many more. Some examples of these appliances are earbuds, microwave ovens, mixer grinders, food processors, irons, etc.

Global market: Today some home appliances have become essential parts of the household. Further, annual energy consumption, efficient functioning, insulation and other features are taken into consideration while purchasing home appliances. Thus, manufacturers always invest in R&D to make the product efficient and cost-effective which ultimately contributes to the demand for the products. And this is true for every other home appliance.

In terms of distribution, the global home appliances market is divided into supermarkets/hypermarkets, speciaIty stores, E-commerce, and others. During and after the Covid pandemic, the E-commerce segment saw rapid growth owing to high penetration of the internet and smartphones. Flowever, the specialty store segment still contributes a significant portion of the sale because customers like to analyze and evaluate the product before the purchase.

Globally, user penetration for home appliances will be 28.9% in 2023 and is expected to reach 41.0% by 2027.

Key growth drivers:

• Technological advancements have led to the development of intelligent appliances and are anticipated to drive growth in the market. Todays tech-sawy consumers are not hesitant to invest in appliances that improve their living standards, save time, and provide comfort on a day-to- day basis.

• Growth in the home appliances market is attributable to rising levels of disposable incomes, growing global population, and improving standards of living around the world. The growing spending power of the general consumers is causing an explosion in the demand for home appliances market.

• The rise of organized retail, growing E-commerce, and the increasing popularity of online payment systems are bridging the gap between the consumer and manufacturers. Thus, the easy availability of home appliances in stores, both online and offline, is causing huge positive growth in the home appliances market.

• Further, to realize profitable growth, consumer appliance companies are focusing on sustainability and smart energy-saving features for any appliance, it is expected, as time passes on, these types of products will contribute more and more to both the top line and the bottom line.

Key risk:

The global chip shortage that began before the pandemic disrupted almost all industries worldwide negatively. The overall electronic industry and home appliances market are no different. The chip shortage delivered a jolt in the electronic industry supply chain which had thrown the home appliances market into a tailspin. Recent reports suggest that the global chip crunch is not over yet in 2023 and it is likely to last this year and beyond.

Indian market:

The home appliances market is one of the fastest growing industries in the Indian market where both large and small appliances are in great demand. The emerging economy and changing lifestyles of local consumers are leading to the growth in the number of nuclear families, single-person households, and the migration of the job population. Thus, developing households have an increasing need for accessibility and always look for products that offer both convenience and considerably reduce the time and effort spent on everyday chores.

As per a Deloitte report, the Indian consumer appliances market is expected to boost an aggregated consumer spending of US$13 trillion by 2030. However, the consumer electronics and appliances market, which was valued at US$9.84 billion in 2021, is anticipated to grow to US$21.18 billion, by 2025.

Key growth drivers:

• The main growth driver in the industry is the introduction of cutting-edge technology like Al and the Internet- of-things. Moreover, increasing digital penetration, focus on energy-efficient products, growing affordability and rise in aspirational lifestyles are also driving the growth of the home appliances market in India.

• The growth in consumer appliance demand is also fuelled by the rising disposable income of Indian households and easy access to credit which enhances the purchasing power.

• Increasing urbanization and improvements in connectivity in rural areas are driving the overall demand for home appliances in India. Because now, these appliances are easily available everywhere and widely adopted both in urban and rural settings.

• Further, increasing electrification in villages, the influence of social media, and growing E-commerce sales are driving the home appliance sales growth in the country.

Opportunities in the home appliances market:

A 2018 study suggests, compared to various neighbouring countries, there is low penetration of home appliances in the country. For example, the penetration rate of basic household appliances in China in tier 1 and 2 cities has reached 85%. On the other hand, the penetration rate of household appliances in China in tier 3 and 4 cities is less than 50%.

However, according to a survey, in 2020, in India, even small appliances like mixer/grinders which had the highest penetration rate among rural electrified households, the penetration rate was only 24%, while in an urban area, it stood at around 48%. Thus, the market for such white goods is largely untapped. Naturally, major consumer appliance companies are jumping on the bandwagon to capitalise on the opportunity.

The Government of India recently approved 100% foreign direct investment (FDI) for single-band retail and 51% FDI for multi-brand retail chains.

The Indian Kitchen Appliances BB Market Size was US$ 1,916.8 million in 2021 and is predicted to grow with CAGR of 15.1%, by generating a revenue of US$ 3,829.8 . million by 2026.

During the forecast period between 2023 and 2029, the India room heater market size is projected to grow at a significant CAGR of 8.1% reaching a value of US$ 151.8 million by 2029

MENS INNERWEAR MARKET

Mens innerwear or underwear is critical to their health and personal hygiene. Some of the types of innerwear are briefs, trunks, boxers and briefs. These are manufactured using several materials such as cotton, polyester, modal, and nylon.

Global Market: The global mens underwear market has been negatively impacted during the Covid pandemic. Both in North America and Asia Pacific, the revenue and the profitability were in decline. However, the market is expected to gradually return to pre-pandemic levels as people resume normal life and the demand for mens underwear is likely to grow.

The boxer brief type segment seems to have the largest market share in recent times because of their better fit, support, and comfort. This type of product is designed to imitate tapered boxers with a snug fit while offering the comfort of briefs. Trunks on the other hand are the fastest-growing categories in the mens innerwear market because of their appeal amongst millennials and Gen X as they are versatile and suitable for everyday wear.

The global mens underwear market is valued worth US$ 38.96 billion in 2023 and is anticipated to surpass US$ 65.3 billion in 2033 at a CAGR of 5.3%.

Key Growth drivers:

• Increasing awareness for health, best fit, style, comfort, and personal hygiene is expected to drive the growth.

• Several companies offering a wide range of products and designs suitable for multiple purposes including sports, regular wear, and functional wear are expected to fuel the demand.

• The variety of fabrics used for innerwear such as cotton, polyester, nylon, rayon, silk, etc. also have a big impact on the product demand.

• Evolving fashion trends, rise in disposable income, and changing consumer lifestyles are also factors expected to boost the market growth.

• The expansion of organized retail, e-commerce, and digital payment system is providing manufacturers with new opportunities to reach a wider demographic.

Key trends:

• Increasing demand for cotton-based undergarments is on the rise because these products are lightweight, soft, breathable, and comfortable.

• Growing investments in innovation with new fabric types such as modal, viscose or merino wool which help reduce moisture and regulate temperature. Coupled with that new brands are coming up with unconventional and stylish designs.

• Functionality and eco-friendliness are becoming important aspects of innerwear brands today. Innovative brands are offering not just style and comfort, but also sustainability.

Indian Market:

The Indian market can be divided into different price segments. Most of the lower-price segments are served by unorganized players who are thriving on unaware consumers. This means there is

a huge untapped potential in the Indian market.

These days, urban India aspires to wear global well-reputed brands whereas rura India wants to wear whatever comes their way. The reason is that some popular brands played the value and volume game and shifted from the informal to formal innerwear market.

The Indian Night & Underwear (men) eCommerce market is predicted to reach US$200.9 million by 2023 which accounts for 9.1% of the Mens Apparel eCommerce market in India. By 2027, the projected value of the said market is anticipated to grow to US$267.6 million with a CAGR of 7.4%.

Key risks & challenges:

• Most Indian men use their undergarments well past their shelf lives, unaware of any rips, tears or loss of elasticity. Ideally, innerwear should not be used for more than 30 washes.

• By and large, the Indian industry has been quite conventional in terms of innovations in colours and designs except for some increased accessibility to premium fabrics.

• Low level of awareness among consumers about what one should wear that last for a good life span and wash care instructions. Also, the general populace is not aware of the value or existence of superior quality fabrics such as Modal,Tencel, Supima fabric, etc.

• Advertising, packaging, and marketing campaigns are very generalised and similar across brands; they dont create a sense of aspiration thereby limiting the products to necessity rather than a craving. For instance, there is only one aspirational brand in India as far as innerwear is concerned.

Future prospects: Indias fashion has witnessed a paradigm shift and is moving towards clothing for comfort. This has led to the evolution of athleisure — a trendy extension of sportswear with a hint of function, comfort, and style - all incorporated into one. With the increasing fitness mania, people are increasingly seeking athleisure rather than casual dressing and most experts suggest that the trend is here to stay.

Post-pandemic innerwear appears to be a potential growth category in the long run. With growing personal income, higher discretionary spending and rising fashion consciousness, the mens innerwear segment is expected to deliver solid growth in the future.

While brick-and-mortar stores will remain , online platforms will contribute the majority portion of the growing demand as brands are choosing more and more to grow through e-commerce and omnichannel distribution models.

All the government initiatives that benefit the textile sector will aid the growth of the mens innerwear industry. Schemes like PM-MITRA, the Make-in-lndia initiative, PLI schemes for textiles or the programs like SAMARTH will help the innerwear industry in terms of building capacity, upgrading to the latest technology, upskilling the workforce, creating new kinds of products and/or attracting new investments, making these long-term growth drivers for the industry.

COMPANY OVERVIEW

Headquartered in New Delhi, India and incorporated in January 1989, Swiss Military Consumer Goods Limited (formerly Network Limited) had been taken over by the present promoters in September 2020. Today, it is involved in the trading and marketing of diversified lifestyle products including but not limited to mens innerwear, home appliances, and various luggage & travel gear. The Company achieved enormous success in its short period of existence. Most of this credit goes to its 100+ people strong team which is headed by our Honble Chairperson Mr Ashok Kumar Sawhney.

To stay close to our customers we maintain a strong distribution network of 1000+ dealers. We also have a very strong presence across the retail space where our products are displayed and sold in more than 3000 retail shops (MBOs and Modern Trade Stores) across India under the brand name ofSwiss Military! Along with a vibrant physical presence in the market, we also have a very healthy digital presence in the E-commerce segment. Here, we sell our products through the websites of all the popular online retail brands and from our own portal as well.

Among all our products, mens underwear is one of the high-growth categories in our business. Despite stiff competition in this market, technological innovation and advancement further optimize the performance of our Company in the innerwear space. It also makes our products one of the most widely used brands in the market. Further, we focus more and more on customer behaviour a na lysis a nd market dynamics that provide crucial information about the market.

We are also engaged in the business of home appliances that include devices used for entertainment like TV. We also trade with devices like iron, de-humidifiers, blenders, OTG, electric kettles, ceiling fans and much more. Like other categories, we work on an asset-lite model here as well, where the products are primarily sourced from the OEMs (Original Equipment Manufacturers) who work with us on a contractual basis. These OEMs have a proper understanding of our values & visions and thus efficiently provide finished products according to the specifications and quality standard input from our end.

Our third category is the luggage and travel bag segment where the Company is offering products that cater to the young demographics, corporate & leisure travellers, tourists, pilgrims and all other groups. In this category, we always focus on launching new innovative products to satisfy the evolving demands of different types of customers according to their lifestyles. Further, to achieve reliable performance these products go through rigorous testing which is complemented by a robust after-sales service.

KEY BUSINESS INITIATIVES

New agreement with E-commerce giant: We recently got into an exclusive agreement with E-commerce giant Flipkart to enhance our access to the masses for our SKY SCAPE brand in the travel gear vertical. This agreement has enormous growth potential as it can catapult the abovementioned brand to a new height in terms of growth in FY24.

IT upgradation: In FY23, on the technological upgradation front, we installed and implemented SAP as our enterprise resource solution. With that, we also installed a new data management system or DMS to help collect, retrieve and extract value from the data in an efficient and cost-effective way which in turn helps people organize and connect things so that they can make informed decisions that benefit the Company.

Overhauling of the marketing strategies:

With our expanding business and changing business environment a new marketing approach is imminent in nature. Thus, last year we remodelled our entire marketing and brand promotion strategy which delivered an image of the dynamic spirit of the brand we want to convey to the masses. We did that through a massive social media campaign and strategically enhance the brand perception to penetrate deeper into the market. These campaigns also highlight the benefits of buying our products in terms of how they enhance the quality of life and offer durability in the most cost-effective way.

SWOT ANALYSIS

Strengths	A debt-free company, resulting in long-term business sustainability
	Strong reach in the market through the omnichannel presence Cater to a wide range of customers both in terms of affordability and lifestyles
	Long and diverse business expertise in three verticals and more Work in an asset-light model where manufacturing is outsourced to the partner organisations
Weakness
	Disruption in the supply chain can cause volatility in the operations of the Company and thus hinder growth
	Greater exposure to E-commerce can cause a high number of refunds
Opportunities
	The emergence of organized retail and E-commerce in India have opened a new horizon of opportunities for the Company
	Many categories of quality products with competitive pricing created large demand for branded products in the market
	Growing purchasing power of the Indian middle class and rapid urbanization
	Association with a reputed globally recognized brand provides Company an easy access into the market and helps build a presence in the country
Threats
	Most industry leaders and manufacturers in all the three divisions the Company operates in have their own retail and E-commerce presenceinth.

FINANCIAL PERFORMANCE

Particulars 1	For the year ended 31-03-2023	For the year ended j 31-03-2022 1	Y-o-Y growth (%)
Revenue from Operations	12,220.81	5,549.68	120.21%
Other Income	82.65	20.27	307.75%
Total Revenue	12,303.47	5,569.95	120.89%
Earnings before interest,
taxes and Depreciation & Amortization	667.72	278.37	139.87%
Earnings before Interest &Tax	652.80	274.55	137.77%
Profit before Taxation	652.80	274.55	137.77%
Current Tax	134.69	-	-
Deferred Tax	0.29	(0.16)	-
Net Profit/(Loss) for the year	517.82	274.71	88.50%

Following are important ratios for FY 2022:

Particulars	FY 2021	FY 2022	FY 2023
Profitability Ratios
EBITDA Margin	0.60%	5.02%	5.46%
EBIT Margin	0.49%	4.95%	5.34%
Net Profit Margin	0.49%	4.95%	4.24%
Growth Ratios
Total Revenue	28.93%	963.13%	120.89%
Ebitda	115.30%	8822.12%	139.87%
Ebit	113.09%	10624.61%	137.77%
Net Profit	113.09%	10630.86%	88.50%
Net Worth	0.63%	308.75%	296.76%
Liquidity Ratios (Times)
Current Ratio	46.60x	2.19x	10.70X
Return Ratios
Return on Equity	0.63%	16.50%	7.84%
Return on Capital Employed	0.63%	16.49%	9.88%
Return on Assets	0.62%	10.29%	7.16%
Efficiency Ratios
Asset Turnover (Times)	1.27x	2.09x	1.70x
Receivable Turnover (Times)	5.44x	7.66x	8.56x
Receivable Days	67	48	43
Inventory Turnover (Times)	10.24X	11,65x	7.07x
Inventory Days	36	31	51
Payables Turnover (Times)	335.97X	21.55X	22.5 lx
Payable Days	1	17	16
Cash Conversion Cycle	101	62	78

RISK MANAGEMENT

Operational Risk:

Because we are mostly dependent on entities outside our Company for our manufacturing needs, any conflict with the manufacturing partners or any disruption at their end for reasons known or unknown put our operation at risk.

Mitigation: Our Company strategically divided the entire manufacturing operations among several vendors across India, thus problems in one facility are unlikely to affect the entire operation. As of 2022-23, we have ten such outsourcing partners, but we are planning to double the number in FY24.

Competition Risk:

The Company faces stiff competition in the market both from unorganized and organized players alike in all the three divisions the Company operates. And if the risk cant be met with the right countermeasures, it can affect both the top line and bottom line negatively.

Mitigation: The Company stay equally competitive in the market among the giant players in the segment through better product quality, cost optimization, prompt delivery, a robust distribution network and a strong online presence.

Market penetration Risk:

In the presence of a large number of retail players both online and offline, gaining market share, sustaining the same, and further penetrating deeper into the market can prove extremely difficult with a possibility of impeding the Companys growth in the long term.

Mitigation: The Company wisely invests in brand promotion and social media campaigns which strategically enhance our brand value in the market. We also emphasize the benefits of our products to the customers about how those products can improve their guality of life. It helps us keep our existing market share and gain new market share at the same time.

Technology Risk: In this day and age, technology can be a very big differentiator in a companys overall performance. Outdated technology can obstruct innovation, hinder the flow of information within the organization, result in poor data security, cause loss in productivity and much more.

Mitigation: Our Company always stays at the forefront of cutting-edge technology. It aids us in developing new products with better guality, enhancing productivity, improving staff coordination, financial savings, improved data security and better storage solutions. Case in point, last financial year we implemented SAP as our ERP solution along with a data management system. We also invested a subseguent amount in the automated storage facility for smooth logistics operations and we will continue to do so in the future.

Financial Risk: Credit risk, investment risk, liguidity riskare some of the financial risks that can lead to loss of capital and eventually impact the operations of the Company negatively. Some of these risks arise from defaulting customers, loss of profitability, decline in revenue etc.

Mitigation: Financial discipline is in our

DNA and we always believe in diligently keeping a close watch on financial matrices such as cash flow, profitability ratio, etc. and analyse them to get a grasp on the actual financial situation of the Company. To perform these tasks on a regular basis we depend on highly skilled employees and our qualified & eligible management team, these people collectively take immediate action in case there is an anomaly which results in a stable financial position year after year while the Company focuses on growth.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company considers that internal control is one of the key support of governance which provides freedom to the management within an outline of appropriate checks and balances.

Our Company has a strong internal control framework which was instituted considering the size, nature and risk of the business.

The Companys internal control environment provides assurance on the efficient conduct of operations, security of assets, prevention and detection of frauds/errors, accuracy and completeness of accounting records, timely preparation of authentic financial information and compliance with applicable laws and regulations.

The Internal Auditor is responsible to conduct a regular Internal Audit and report to the management on the lapses, if any, and submitting the Report on a periodic basis to the Board of Directors for their review and comments. Fully professional and experienced boards, as mentioned in the corporate overview section, ensure efficient internal control.

To warrant an efficient internal control system, the Company has a well constituted Audit committee that at its periodical meeting, reviews the competence of the internal control system and Procedures thereby suggesting improvement in the system and process as per the changes of Business dynamics.

The system and process are continuously improved by adopting best-in-class processes, automation and implementing the latest IT tools.

Cautionary Statement

The above Management Discussion and Analysis contains certain forward-looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward-looking statements. The risks and uncertainties relating to these statements include but are not limited to, risks and uncertainties, regarding fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost overruns on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future or update any forward-looking statements made from time to time on behalf of the Company.