Trejhara Solutions Ltd Management Discussions.

1. OVERVIEW:

Trejhara Solutions Limited ("Trejhara") financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) as prescribed under section 133 of the Companies Act, 2013 ("the Act"), read with the Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time and other provisions of the Act to the extent notified and applicable. The management of Trejhara accepts responsibility for objectivity and integrity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner, the state of affairs and operations. The forward looking statements contained herein are subject to certain risks and uncertainties, including but not limited to, the risks inherent in Companys growth strategy, external economic and business environment and other risk factors stated in this report. The readers are cautioned not to place undue reliance on the forward looking statements, which reflects Trejhara managements analysis only as on date hereof.

2. industry trends and developments:

According to the latest forecast by the Gartner Inc, the worldwide IT Spending is expected to decline by 7.3% compared to 2019. The sharp decline is witnessed due to the economic disruptions caused due to the sudden outbreak of the COVID-19 pandemic. Overall IT spending is still expected to sharply decline in 2020 but will recover in a faster and smoother manner than the economy. The uncertainties posed by the pandemic has forced companies to preserve budgeted funds to meet contingences. However, as soon as economies begin to recover, the backlog of the spending is expected to be made up and the companies will resume spending during the year 2021. The companies are expected to gravitate towards spending on subscription products and cloud services to lower upfront costs. The pandemic has forced the organizations to rapidly adopt digital technologies which has accelerated the momentum towards digitization and cloud based services.

3. trejhara business offerings:

Trejhara is a technology products and solutions provider that helps enterprises Accelerate Digital Innovation, Securely and Efficiently. Our products are focused to help organizations accelerate their digital footprint and customer experience through interactive presentation and offline analytical capabilities. We target our customers, partners, dealers and agents for their needs and goals.

Interact Dx - Our Customer Communication Management product suite is an innovative platform in the digitization domain, which satisfies ever-evolving demand for technology. It provides comprehensive interactive personalized communication including audio video Technology across multiple segments such as Banking, Insurance, Telecom, Utility and Retail globally.

Multilingual communications such as bills, statements, targeted advertisements, policy kits, welcome kits, receipts, loyalty/rewards, KYC forms, advisory and notifications are delivered through this platform across multiple channels such as email, web, mobile, print and kiosk.

SCM Profit - Our logistic solution allows to streamline and enhance logistics operations by improving efficiency and optimizing working capital. Take control of supply chain by streamlining and enhancing logistics operations and gain an unfair edge over competitors.

We provide our service and solutions in different segments such as warehousing, freight forwarding, project logistics, manufacturing, distribution, Supplier Collaboration & Visibility, etc.

4. opportunities and threats:

The IT industry is fiercely competitive and Trejhara, like all vendors in the market, is subject to the inherent challenges, risks, and uncertainties over the normal course of business. A fluctuating geographic demand and constantly changing economic conditions, the company is susceptible to variations in our operational results and our financial performance. To limit the companys exposure to unavoidable and unforeseen factors, the Trejhara Executive Management team has employed disciplined risk management strategies to deliver the highest returns possible to our shareholders and customers.

The outbreak of Coronavirus (COVID- 19) pandemic is causing significant disturbances leading to slowdown of economic activities globally. However, the same has not majorly impacted the businesses of the Company. We are able to continue our operations by enabling resources to work from home. The extent of impact on the future operational and financial performance will depend on certain developments, including duration and spread of the pandemic, the impact on customers, vendors, employees, all of which are uncertain and cannot be predicted. The management remains watchful of the evolving situation and will keep evaluating challenges and opportunities posed to us.

5. RISKS AND CONCERNS:

The chief risks and uncertainties facing the companys business include:

The COVID-19 pandemic has delivered an unprecedented shock to the global economy. The nationwide lockdowns, travel restrictions have paralyzed global trade. The world is still grappling with the pandemic and in the absence of vaccine in sight, the world will have to learn to strike the difficult balance between health of the citizens and the economic activities. Amid these uncertainties, businesses may turn conservative in its investment plans and tend to postpone discretionary spending. This may result in prolonged phase slowdown and the same may impact businesses of the Company.

The world is changing fast, particularly after COVID-19 crisis. The broken global supply chains, intensified trade wars amongst large economies, rising protectionism amid economic uncertainties due to COVID-19 shock are adding to the economic disruptions. The businesses may have to be watchful of these developments and will have to be resilient to adapt to these dynamics and revise strategies to quickly respond thereto.

Keeping pace with a rapidly advancing technology landscape: The technology landscape is evolving at a rapid pace and digital technologies are fast gaining adoption. The digital consumer is leading this change. For Trejhara to maintain its ability to stay competitive in the marketplace, we need to invest significantly to keep our offerings and talent in alignment with market and client expectations. All industry players face the same challenges. Customer attrition and failure to attract new business may result if Trejhara is not able to maintain its current level of innovation and product and service level execution. Trejhara aims to adopt a positive and proactive stance by doing two things - firstly, to launch newer, more relevant product offerings to market and secondly, by improving upon its customer-centricity to be the partner of choice in areas such as digital innovation and Cybersecurity.

Increasing competition: Trejhara faces strong competition in the markets and industries it serves. Its biggest vertical of focus - Financial Services has strong competitors who seek to win over Trejhara share of customers budget. The most effective strategy has been to focus on providing exceptional customer experience and adopt a model of co-owing the customers business objectives and rally to deliver, exceed them.

Dependence on key personnel: Trejhara operations are dependent upon the companys ability to attract and retain highly skilled individual contributors and managers. The loss of key individuals, especially to one of our competitors, could materially impact our business. We adopt a risk-reward model for all our top management and managers thereby creating additional incentives for them to drive the companys objectives forward.

6. OUTLOOK:

Cloud computing a computing model in which users purchase IT resources as a service, allowing them to take a pay-as-you-go approach has deservedly garnered a lot of attention recently in both the private and public sector. Often referred to as simply "the cloud" cloud computing allows users to access IT resources at any time and from multiple locations, track their usage levels, and scale up their IT capacity as needed without large upfront investments in software or hardware. This increased flexibility and efficiency, and hence 20-30% saving in IT budgets, has been driving the growth of cloud and platform opportunity globally.

An easy way to categorize cloud computing is by the type of service provisioned as under. Note that the specific firms may offer a range of services falling across multiple categories, and that many other cloud providers offer similar products.

Software-as-a-service (SaaS) enables a user to remotely access software applications from a cloud provider. The client may do so from different locations or devices, and the experience in this instance generally involves logging in and gaining access to some form of software interface. Prominent examples include Microsofts Office 365 web- based e-mail and scheduling products, or Salesforce.coms customer relationship management offerings.

Users of platform-as-a-service (PaaS) solutions gain virtual access to programming resources and tools, provided and controlled by the cloud vendor that enables them to develop their own web applications. These applications are hosted through the vendors cloud infrastructure. Googles App Engine and Red Hats Open Shift are examples.

Finally, infrastructure-as-a-service (IaaS) enables users to virtually access more foundational computing resources to support their operations. Among other potential IaaS offerings, a vendor may provide file storage, processing power, or networking-related services. Some examples would be Amazon Web Services Elastic Compute Cloud (EC2), VMwares vCloud Air, or IBMs Soft Layer.

With most of the Global organizations going for "Cloud First" strategy, all the above listed cloud offerings are shaping the IT industry globally. In such a scenario, traditional IT services companies which are able to transition their offerings to cloud based services stands good chance of riding the growth wave.

Trejhara has well established Cloud product lines and established customers, Trejhara stands a good chance of riding the wave of Cloud Adoption across the world. Trejharas Cloud business already has an access to many fortune 500 customers through various product portfolio. Key industries to target for this business will be Telecom, Banks and Financial Institutions, Manufacturing, Utility and Logistics industry. With a focused approach in these industry, we are confident of gaining this opportunity.

discussion on consolidated financial performance with respect to operational performance

Revenue from Operation

Our revenues are derived from information technologies & consultancy services and sale of software licenses. During the year, the total revenue from operations was Rs 5,848.94 Lakhs against Rs 7,722.93 Lakhs for the previous year.

Operating and Other Expense

Our operating and other expense comprises of Software licenses and material costs, Administration and other general functions, travelling, communication, legal and professional charges, rent, repairs and maintenance, recruitment and training and other allocated infrastructure expenses.

During the year, the operating and other expense were Rs 2,148.02 Lakhs as against Rs 3,859.18 Lakhs in the previous year.

Employee Benefit Expense

During the year, employee cost was Rs 2,690.73 lakhs as against Rs 2,249.09 lakhs in the previous year.

Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA) excluding Other Income

During the year, our operating Profit was Rs 1,010.19 Lakhs as against Rs 1,614.66 Lakhs on 31 March, 2019.

Depreciation and Amortisation Expense

Depreciation on Property Plant & Equipment(PPE) and Intangible Assets was Rs 97.60 Lakhs for the year as against Rs 95.62 Lakhs during the previous year. As percentage of revenue, depreciation was 1.67% and 1.24% for the year and previous year respectively.

Other Income

Other Income primarily consists of interest income, dividend income, Foreign exchange fluctuation gain and other miscellaneous income. Other income for the year was Rs 399.03 Lakhs compared to Rs 621.55 Lakhs for the previous year.

Tax Expense

Current tax expense was Rs 140.65 Lakhs as against Rs 246.27 Lakhs for the previous year and Deferred tax (credit)/charge was Rs (12.74) lakhs as against Rs 73.87 lakhs for the previous year.

Profit Before Tax (PBT)

Net Profit/(Loss) before tax from Continue Operations for the year was Rs 821.88, Lakhs i.e.14.05 % of revenue, Rs 1,546.75, lakhs, i.e. 20.03% of Revenue for the previous year.

Profit After Tax (PAT)

Net Profit/(Loss) after tax for the year was Rs 693.97 Lakhs, i.e.

11.86% of revenue, Rs 1,229.23, i.e. 15.92% of Revenue for the previous year.

Equity

Equity as at 31 March, 2020 increased to Rs 45,275.77 Lakhs as compared with Rs 40,613.24 Lakhs as at 31 March, 2019.

Short-Term and Long-Term Borrowing including Current maturities of Long-Term Borrowings

The total short-term and long-term borrowing as at 31 March, 2020 was Rs 3,365.24 Lakhs as against Rs 5,558.59 as at 31 March, 2019.

Trade Payable and Other Current Liabilities excluding Current Maturities of Long-Term Borrowings

The total Trade Payable and other current liabilities (financial and Non-Financials) increased by Rs 4,000.23 Lakhs from Rs 6,239.51 lakhs on 31 March, 2019 to 10,239.74 Lakhs on 31 March, 2020.

Property, Plant and Equipment (PPE), Intangible Assets and Intangible Assets under Development

The Net Block of PPE, Other Intangible Assets and Intangible Assets under development increased by Rs 3,141.28 Lakhs from Rs 11,698.12 Lakhs as on 31 March, 2019 to Rs 14,839.40 Lakhs on 31 March, 2020.

Non-Current Investments (Net)

There was no movement in non current investments.

Other Non-Current Assets (Financials and Non Financials)

There was an increase in Long-term loans and advances from Rs 9,836.81 on 31 March, 2019 to Rs 10,503.75 Lakhs on 31 March, 2020.

Trade Receivables

Trade receivables as on 31 March, 2020 was Rs 2,656.74 Lakhs against Rs 2,969.86 Lakhs on 31 March, 2019. In the opinion of management, all the Trade receivables are good, recoverable and necessary provision has been made for debts considered to be bad and doubtful. The level of receivables is normal and is in tune with business requirements and trends.

Cash and Cash equivalents

The cash and bank balances lying with the company as on 31 March, 2020 were Rs 126.66 Lakhs as against Rs 64.29 Lakhs in the previous year.

Key Financial Ratios

Sr no. Ratio 31 March, 2020 31 March, 2019
1 Debtors Turnover Ratio 2.08 2.17
2 Current Ratio 3.07 2.96
3 Debt Equity Ratio* 0.07 0.14
4 Interest Coverage Ratio 2.06 2.56
5 Operating profit margin 31.58% 29.45%
6 Net Profit Margin* 11.9% 15.9%
7 Return on Net Worth* 1.5% 3.0%

([*] [**] Considered Significant, as defined under the amended SEBI (LODR) Regulations i.e. over 25% compared to previous year.)

* This is on account of decrease in debt resulting to lower interest expense.

** This is on account of decrease in sale of product licence as compared to previous year.

7. Internal control systems and their adequacy.

Your Company has placed considerable emphasis and efforts on internal control systems. On the Finance part, the internal checks and balances are augmented by a formal system of internal audit. The Audit Committee of the Board reviews and will continue to review the adequacy and effectiveness of the internal control systems and suggest improvements for strengthening them. We also have a well-defined delegation of power with authority limits for approving revenue as well as expenditure. The Company has re-appointed M/s D. Kothary & Co. Chartered Accountants to oversee and carry out internal audit of the Companys activity. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditors (Bajrang Paras & Co, Chartered Accountants) and the audit committee. The planning and conduct of internal audit is oriented towards the review of controls in the management of risks and opportunities in our Companys activities. The internal audit process is designed to review the adequacy of internal control checks in the system and covers all significant areas of our operations such as software delivery, accounting and finance, procurement, employee engagement and IT process. Safeguarding of assets and their protection against unauthorized use are also a part of these exercise.

We have an audit committee, the details of which are provided in the Corporate Governance Report which reviews audit reports submitted by the auditors of our Company. The committee also meets our Companys statutory auditors to ascertain their views on the adequacy of internal control system in the Company and keeps the board of Directors informed of its major observation from time to time.

8. Material developments in Human Resources / industrial Relations front, including number of people employed.

The Employees being our critical asset for any organization specially an IT company. Trejhara has built a strong team consisting of domain experts. Our personal policies are focused on creating an environment which will derive best returns for the organization as well as the concerned employees. The Company had strengthened its workforce by employing 203 permanent employees as compared to 193 employees in the preceding year.