Visesh Infotec. Management Discussions


Industry Overview

The Indian economy is estimated to have recorded a growth of 8.9% in FY 2021-22 as per the second advance estimates of the National Statistical Office (NSO). India has been one of the few economies in the world to witness growth across five consecutive quarters starting from Q3 of FY 2020-21 post the pandemic-induced contraction. Indias broad range of fiscal, monetary and health responses to the crisis and economic reforms have helped mitigate a protracted adverse impactand supported its recovery.

The global economy recovered strongly in CY 2021 even as new variants of the COVID-19 virus fueled additional waves of the pandemic. Robust policy support in advanced economies, availability of vaccines and relaxation of pandemic restrictions helped economies bounce back, collectively expanding world output by an estimated 6.1%. yoy. But an intense second wave of COVID-19 pandemic, which resulted in localized lockdowns, derailed this growth and dampened consumer sentiment. The successful rollout of the worlds largest vaccination drive, pick-up in government expenditure and better preparedness compared with the first wave limited the negative economic impact.

The 21st century is earmarked as Information Technology driven and India is at the Centre of global attraction and considered as a knowledge powerhouse. The IT industry covers IT services, IT-enabled services (ITES), e-commerce (online business), Software and Hardware products. IT based services are indispensable for any organization to increase productivity, ease of doing business, and grow efficiently and economically in this competitive world. Information Technology not only contributed to the economic growth of the country but it has also made governance more competent and approachable. It has made access to government services and information easier and inexpensive. The IT industry is the backbone for our economy to prosper exponentially and to generate millions of jobs.

In the present time, when the COVID-19 pandemic has grappled the whole world and economies have been hard hit. The Indian IT industry is still showing positive signs and has the ability to overcome this exceptional catastrophe. It has arisen as a global economic force and a major contributor to the Indian economy in particular and the world in general.

India is expected to have a digital economy of $1 Trillion by 2025

One of the largest electronics markets in the world is anticipated to reach $400 billion by 2025.

Indian Electronics Manufacturing Service (EMS) Industry is expected to grow 6.5x from $23.5 billion to reach $152 billion by 2025 100% FDI is allowed under the automatic route in the IT Sector.

India is regarded as the back office of the world owing mainly to its IT and ITES industry. Information Technology in India is a vast industry which comprises information technology services, consulting, and outsourcing. FY2022 is expected to be a breakthrough year for Indias technology industry - total industry revenue is set to reach $227 billion in FY2022 (15.5% y-o-y growth). FY2023 growth estimates for the industry reflect the optimism of FY2022 with 70% technology CEOs indicating FY2023 tech spend to be in line with FY2022. R&D investments are expected to grow between 10% and 20% over last year for over one-third of the technology firms as they explore opportunities for innovation & build new products and services.

Software and computing technology are transforming businesses in every industry around the world in a profound and fundamental way. Companies are rapidly adopting digital technologies to reimagine their cost structures, increase business resilience and agility, personalize experiences for their customers and employees, and launch new and disruptive products and services. While these trends have been unfolding for a few years now, they have been accelerated because of the COVID-19 pandemic and resulting shifts.

Technology has rapidly evolved for the past decade and so is the demand for Information Technology services and products leading to the industrial revolution in the Indian market. IT helped represent India as a big player in the global market is one of the finest growing economies in the world providing the high-end business solution and opening new export verticals. Indian ITs core competencies and strengths have attracted significant investment from major countries.

Even after all this, compared to many other industries, the IT industry is expected to have an enormous market boom from US$ 131 Billion in 2020 to US$ 295 Billion in the next five years by 2025. The main reason for this increase in the economy for this industry is the increased demand for software and social media platforms such as Google Hangouts, WhatsApp Video call, Zoom, and Microsoft Teams. Due to the coronavirus, a lot of opportunities opened up in the IT industry, such as the growing need for the 5th generation (5G) technology. This will help increase connections that support the primed remote interactions. This has become the top priority for many organizations due to the pandemic.

Company Overview

MPS is focused on providing our customers with Solutions that actually solve their business issue & assist their growth through innovative application of technology & information management in an easy to use manner. MPS is presently engaged in IT Solutions & products, IT Enabled Services and Telecommunication Sector.

Presently the Companys revenue is generated only form one sector i.e., IT Enabled Services. The reasons for under performance in IT Solutions & Products sector low credit periods, purchase of products in case and sale on credit, Low Margins, tough competition from the organized and unorganized sector. Further as Telecommunication sector had considerably declined, the Companys management started exploring new areas/avenues to generate revenues for long terms. With this intent in mind, the Company has ventured in the field of Mobile Phones in the domestic as well as in the International market.

The main reason for no operations in other sectors is non-availability of credit/financial assistance from Banks and Financial Institutions as Companys Accounts being frozen on account of Statutory Authorities. MPS Accounts being declared NPA, though the promoters of the Company had settled dues of the Banks. Despite the fact that the Company is facing stiff competition and non-availability of Funds, yet the Company is exploring new avenues to increase its market share in the area in which it operates and also trying to explore the possibility of providing consultancy in Solar Energy.

Company Profile

THE COMPANY IS PRESENTLY ENGAGED IN THE FOLLOWING AREAS:

IT Solutions & Products, which comprise of:

• Computer Hardware and peripherals

• System Integration and Networking Solutions (Including Hardware)

• Enterprise Software

The entire business has three modes of execution of business i.e. Trading of Hardware and Peripherals; Establishing IT Infrastructure and Customization and up-gradation. The Company procures material from leading Dealers and Distributors of leading brands of IT and IT Infrastructure product manufacturers like HP, Samsung, LG, Lenovo, Dell, Acer, etc. Based on the orders, the company procures the goods from leading manufacturers and thereafter the same are supplied. Your Company do not store inventory. The goods are purchased when your Company has orders to execute. However, during the year under review, there are no operation, which is mainly due to the Companys Accounts being frozen on account of Statutory Authorities, non-availability of credit/financial assistance from Banks and Financial Institutions. The Companys Accounts being declared NPA, though the Promoters of the Company had settled dues of the Banks.

During the year under review your company did not generate any revenue in this segment.

The reasons for under performance in this sector as the same was considered unviable due to low credit periods, purchase of products in case and sale on credit, Low Margins, tough competition from the organized and unorganized sector.

IT Enabled Services comprising of:

• Domain registration

• Web hosting

• Value Added Services

• Site Builder Tool

• Site Design

• Consulting Services

• Infrastructure Services

• Domain Registration & Web Hosting Seivices

• VAS & IT Enabled Services

Sign Domains™ is Indias first ICANN Accredited domain registrar which offers on-line domain registration of top level domains (TLD) including .com .net .org .info .biz .in etc. Catering to a global client base through its on-line presence and secure payment gateway. Sign Domains™ has several corporates, large portals, resellers and end-users as its clientele.

The Company has tied up with various top level TLDs and offer these TLDs to our clients through its network of over 400 Re-sellers as well as directly by the Company. Sign domains have several corporates, large portals, resellers and end-users as its clientele. MPS offers web-hosting solutions on MPS dedicated servers located at server farms and data centers located in US.

MPS also offers web-hosting solutions on MPS dedicated servers located at server farms and data centres located in US. Presently, the Company is hosting around 250 websites which includes websites of Corporates, individuals, corporates, firms etc

During the year under review, the revenue generated from the segment was Rs. 48.97 lacs the breakup of which is as under:

Web-Hosting Rs. 4.98 Lacs
Domain Registration Rs. 42.70 Lacs
Commission on Promo Sales Rs. 1.29 Lacs

Value added services like SMS, payment gateways, messaging, e-identity management, e-commerce are available for corporate clients and other businesses.

The business of the company has considerably declined in all the sectors / areas in which it is engaged in. The main reason for the decline in the companys business is due to stiff competition not only from the organised sector but also from un-organised sector; various e-commerce portals are providing their goods and services, along with lucrative schemes and that too on payment of cash; the companys business has suffered as the company has to procure goods and services on cash and selling them on credit; there are

number of mobile application available, which again provides their goods and services with lucrative discounts and schemes.

Since the company is facing stiff competition in the sectors in which it is operating, Your Company started exploring new avenues to increase its market share in the areas in which it operates. With this vision in mind your company has ventured into trade in mobile phones, where not much investment is required and in case it is required, the investment can be recovered in short span of time.

With the above background the company has on a trial basis started exporting mobile phones since June 2019 to Taiwan and Hong Kong as well as sold mobile handsets in the Domestic Market Your Company could not export mobile phones since December 2019 due to outbreak of COVID-19 pandemic. However, the Company is hopeful of regaining the lost ground once the pandemic is over and normal economic activities resume. Your Company is optimistic and expects to generate revenues in the times to come.

Your Company also expects to trade mobile phones in the domestic market.

Apart from trading in Mobile phones your company is also exploring to provide consultancy and advisory services to entities in the field of Solar Power, which would include but not limited to setting up of Solar Power Plants, its management, supervision, development & hading of software, control the business of transmission of solar power, manufacturing and/or trading in parts of Solar Power Plants, supplying, generation, distribution, and dealing in electricity. The management of the company is in the process of negotiating with various strategic partners.

• Telecommunication

As the overall business in this sector had considerably declined, the Companys management started exploring new areas/avenues to generate revenues for long terms. With this intent in mind, the Company has ventured in the field of Mobile Phones in the domestic as well as in the International market.

Smartphones have been taking the world by storm. Earlier mobile phone advertisements talked only about the product however, these days they paint a picture of society. People can find directions on Google Maps instead of asking people. The mobile phone market in India has grown exponentially in the past decade, and with the emergence of smartphones, the growth has increased substantially. The Indian economy is also affected by smartphone sales, with the smartphone market accounting for a significant portion of the GDP.

India is the second-largest country in terms of internet subscribers. India is one of the biggest consumers of data worldwide. Gross revenue of the telecom sector stood at Rs. 64,801 crore (US$ 8.74 billion] in the first quarter of FY22. Strong policy support from the Government has been crucial to the sectors development. Foreign Direct Investment (FDI) cap in the telecom sector has been increased to 100% from 74%. By 2025, India will have 700 million internet users, with the telecom market touching Rs. 10 trillion. The India government has been playing a vital role in making the country tech-savvy. As 5G Network is entering the market, there networks offer the potential to transform industrial sectors and deliver significant social and economic benefits in India. Over the period 2023-2040, we (According to GSMA] forecast that 5G technologies will make an overall contribution of approximately $450 billion to the Indian economy (0.6% of GDP by 2040). The manufacturing sector is set to benefit the most from 5G applications (accounting for 20% of the total benefit), followed by retail (12%) and ICT (11%).

The mobile phones exports are expected to grow further as Chinese investments in the Indian mobile phone market is likely to come in the near future, he added. As per the reports Chinese brands controlled 75% of the Indian smartphone market.

The company has now diversified into export of telecommunication equipments and as well as sale of Mobile Handsets in the domestic market and exported Blackberry mobile to Hong kong and Taiwan. Though there was no revenue generated during the year under review from Telecommunication segment due to impact of pandemic COVID-19. Since December, 2019, COVID 19 when for the first time was detected in China and after that COVID-19 First wave spreads all over the world due to which your Company were not able to export Blackberry Mobile Phones. However, the management of your Company is hopeful of regaining the lost ground once the pandemic is over and normal economic activities resume.

Opportunities and Challenges:

The changing economic and business conditions, rapid technological innovation, proliferation of the internet and globalization are creating an increasingly competitive environment. The role of technology has evolved from supporting corporations to transforming them. Global companies are increasingly turning to offshore technology service providers in order to meet their need for high quality and cost competitive technology solutions.

We understand that being in the IT and ITES industry, your company can encounter a wide variety of risks and challenges in their endeavor to create and maintain a seamless, successful, sustainable and scalable business.

We are currently engaged in IT Solutions & Product, which comprise of System Integration and Networking Solutions (including Hardware], Enterprise Software, IT Enabled Services which comprising of Domain Registration & Web Hosting Services, VAS & IT Enabled Services, Software Development and Telecommunication which includes telecom services to customers ranging from prepaid mobile top-up, post-paid mobile bill payment, bulk sms, mobile application and software application. There was no revenue generated due to stiff competition both from the organized sector as well as unorganized sector, low margins, long credit periods, purchase of stock in cash and sale on credit and various other factors in IT Solutions & Product and Telecommunication segment. The management is of the view that with better utilization of resources, operations of the Company will improve. The Company is also exploring other avenues of increasing its market share consequently increasing the stakeholders value.

Whereas IT Enabled & Services segment has been underperforming, which is again mainly due to tough competition an low margins yet our Company is taking stern steps to increase its market share in IT Enabled Services and is optimistic of a steady growth in this sector in the coming years.

Health and safety

MPS is a people-centric organization and considers its employees a key asset for sustained business growth and development. The Companys primary focus is on its human capital, thus it considers the health and safety of its employees and stakeholders to be of utmost importance and their wellbeing is critical to the Companys efficiency and productivity. The Company also assesses its safety procedures through internal and external audits and works towards continuous improvement.

Human Resources

The Human Resource management went through a paradigm shift owing to the pandemic. Changing work conditions required flexible and innovative processes ensuring productivity while maintaining high morale of employees. As the pandemic started waning, new opportunities and challenges in HR functions became clearly evident in terms of restructuring and strategizing required to implement "back to office" working while ensuring strict conformance and compliance to Covid protocols. The HR function has been the epicenter of numerous changes implemented to ensure work alignment with the dynamic environment with equal focus on being agile, culture driven and responding to the needs of employees with empathy.

Risk Management

MPS Infotecnics Limited is a company operating in an increasingly volatile and challenging business environment. The Companys ability to create and sustain value for its stakeholders is dependent on identifying, monitoring, and effectively addressing key risks within the enviromnent that it operates.

The Company has a Risk Management policy which has been approved by the Board. The policy lists out objectives and principles of risk management along with an overview of the risk management process, procedures and related roles and responsibilities of individuals forming part of the committee.

Internal control systems and their adequacy

The Company has implemented necessary internal control systems in line with the business requirements, scale of operations and applicable statutes.

This Internal Controls Framework has been designed to meet the Companys objectives of efficiency and effectiveness of operations, reliability of financial controls, accuracy and timely reporting and compliance of regulatory requirements, statutes, policies and SOPs.

The Companys control environment demonstrates a commitment to integrity and ethical values. The Board of Directors and the Audit Committee demonstrate independence from the Management and exercise oversight on the Companys internal controls adequacy and effectiveness. The Company and its management have established a well-defined organization structure, delegation of authority (DOA) and reporting lines with appropriate authorities, responsibilities, and accountabilities in the pursuit of objectives.

The Company specifies objectives with sufficient clarity to enable identification and assessment of risks relating to the objectives.

The Company has put in place control mechanisms that contribute to the mitigation of identified risks. Such controls are deployed through policies, SOPs and Internal Financial Control (IFC) risk and control matrices that cover all business processes across locations and functions.

The Companys comprehensive Fraud Risk Framework helps detect and prevent fraudulent activities, ensuring effective business-driven fraud risk management. The Company seeks to build strong processes and controls, integrating prevention, detection and response. To add to this, the Companys Whistle Blower policy provides a platform for various stakeholders to report and help the organization in averting and preventing any suspicious activity or behaviour. The whistle-blower mechanism then investigates allegations of violations in a comprehensive manner. Appropriate recommendations are followed for rigorous implementation. The whistle-blower Is provided complete confidentiality and protection against any attempted harassment.

SEGMENT WISE PERFORMANCE

The company is mainly operating in three segments:

• IT Solutions & Products

• IT enabled Services

• Telecommunication

The segment wise revenues and profits / (loss) are tabulated hereunder:

Amount (Rs. in Lacs)
Segment

Standalone

Consolidated

2021-22 2020-21 2021-22 2020-21
IT Solutions & Products 0 0 0 0
IT Enabled Services 48.97 41.48 48.97 41.48
Telecommunication -
Total 48.97 41.48 48.97 41.48
Segment results - Profit / (loss) (before Interest & Tax)
IT Solutions & Products 0 0 0 0
IT Enabled Services (141.43) (127.86) (141.43) (127.86)
T elecommunication - - - -
Total (141.43) (127.86) (141.43) (127.86)
Less: Interest 26.77 63.47 26.77 63.47
Less: Other un-allocable Expenditure net off. 372.07 373.07 372.07 373.07
Add: Un-allocable Income 84.99 8.54 84.99 8.54
Profit before Tax (454.98) (555.87) (454.98) (555.87)

Exciting Future

The business of mobile phone assembly is a rare Make-in-India success story. India had two mobile manufacturing units in 2014. By 2019, there were over 200. The number of mobile handsets produced shot up from 60 to 290 million in the same period; the value of handsets produced jumped 10 times to $30 billion. Moreover, rise in mobile-phone penetration and decline in data costs will add 500 million new internet users in India over the next five years. Fast Track Task Force (FTTF), under the Indian Ministry of Electronics and IT, estimates a 500 million mobile phones production in India by 2019, valued at USD 46 billion. The factors that will ensure the market remains on an upward curve, including low smartphone penetration, ease of foreign investment in India, and the ascendency of Long-Term Evolution.

With the above background the company has on a trial basis started exporting mobile phones since June 2019 to Taiwan and Hong Kong. The exports sales made during the year 2019 aggregates to Rs. 761.61 lacs. Though in the initial export trades, Your company had incurred losses, however, The Company hopes to recover the losses and make good profit on continued supplies to these countries on account of better purchase prices on quantity buying.

The efforts of your company in reviving its operation in the Telecom sector got a dent due to outbreak of COVID-19 Corona Virus pandemic as your company could not generate revenues since December 2019. The Company hopes to recover as soon as pandemic is over and the economic situation normalizes.

Under IT Enabled Services Sign domains is Indias first ICANN Accredited domain registrar which offers online domain registration of top level domains (TLD) including .com, .net, .org, .info, .biz, .in etc. to name a few. The Company has tied up top level TLDs and offers these TLDs to our clients through its network of over 500 re-sellers as well as directly by the Company.

MPS catering to a client base of over 6500 clients, through its on-line presence and secure payment gateway. Sign domains have several corporates, large portals, resellers and end-users as its clientele. The Company hopes to increase their client base and make good profits by providing domain facilities to their clients.

MPS also offers web-hosting solutions on MPS dedicated servers located at server farms and data centers located in US. Presently, die Company is hosting around 250 websites which includes websites of Corporates, individuals, corporates, firms etc.

Despite the fact that the company is facing stiff competition, yet, the Company is exploring new avenues to increase its market share in the areas in which it operates and also trying to explore the possibility of providing consultancy in Solar Energy. The company expects to gain substantial amount of the market share in the times to come.

INTERNAL CONTROL SYSTEM & THEIR ADEQUACY

Your Company has a proper and adequate system of internal controls to ensure that its assets are safeguarded and protected against loss. We have an audit committee which oversees the financial and operating reporting processes and disclosure of financial information to ensure that the financial statements are correct, sufficient and credible.

The audit committee also reviews with management and statutory auditor the adequacy of internal control systems, compliance, etc. The Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. The systems and the procedures are constantly upgraded to suit the requirements.

HUMAN RESOURCE AND DEVELOPMENT

The human resources strategy enabled the Company to attract, integrate, develop and retain the best talent required for driving business growth.

The Company has created a performance driven environment where innovation is encouraged, performance is recognized and employees are motivated to realize their potential. Our relentless pursuit to connect with employees on a regular basis, communicate in an open and transparent manner, provide opportunities to learn and grow within the organization are yielding desired results as is evident from the high retention rates and the motivation and engagement levels of our employees. The Company considers the quality of its human resources to be its most important asset and fosters an environment that encourages and values diversity and promotes personal and professional development of employees.

Your company is privileged to have the right blend of professionals both in field of technical & other professional areas. Dedication, a positive attitude, skills and professionalism have always been the feature of our workforce at all levels of organization.

The computer has been called the machine that changed the world. We believe that Information Technology has and will continue to revolutionize all aspects of human life. The Information Technology Sector in India has to take care of threats and should trap the bundle of opportunities into its basket in order to take maximum benefits of its Information Technology competitive advantage.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing company objectives, projections, estimates may be ‘forward looking statements within the meaning of the applicable security laws and regulations. Actual results could differ materially from those expressed or implied, depending upon economic conditions, changes in Government regulations and policies, demand, supply and price conditions, political and economic developments within and outside the country and various incidental factors.

The company assumes no responsibility to publicly amend, modify, or revise any forward looking statements, on the basis of any subsequent developments, information or events.

For and on behalf of the Board
SD/-
Peeyush Aggarwal
Chairman & Managing Director
DIN:00090423
Place: New Delhi
Date: 30th May, 2022