All E Technologies Ltd Management Discussions

Global economic overview

Businesses and economies worldwide are grappling with several headwinds, including soaring inflation, tight financial conditions in most parts of the world and a surge in commodity prices. The Russia-Ukraine conflict has further exacerbated the problem, as has the resurgence of COVID in China.

Muted consumer demand following the pandemic, coupled with rising prices, continues to weigh on future growth prospects. Policy paths in the advanced economies could continue to diverge, resulting in further US dollar appreciation and cross-border conflicts in the near term. Energy and food price shocks might also increase inflationary pressures. Central Banks around the world are closely monitoring liquidity positions and aiming to boost consumer sentiment.

Emerging markets and developing economies (EMDEs) are experiencing growth across various sectors, fuelled by their respective governments emphasis on developing both their infrastructure and manufacturing sectors.

Global inflation is anticipated to drop from 8.7% in 2022 to 6.8% in 2023 and further to 5.2% in 2024. According to the International Monetary Funds World Economic Outlook (July 2023), the global economy is estimated to clock a growth rate of 3.0% in CY23.¹

Indian economic overview

Despite concerns about a global recession, Indias economy has reaffirmed its position as one of the worlds fastest-growing major economies. Remaining relatively shielded from several challenges such as high inflation, escalating commodity prices and disruptions in global trade due to ongoing geopolitical conflicts in Europe, the economy is projected to have grown by 7.2% during FY23 [Source: National Statistical Office]. The Government and the Reserve Bank of India (RBI) have implemented several measures to address these headwinds and recent declines in global commodity prices suggest that these efforts have started to bear fruit in terms of reining in inflation.²

India has emerged as the 3rd largest economy in terms of purchasing power parity

Increased disposable income and continuous investments in infrastructure development are expected to make India an attractive investment destination. Moreover, economic indicators, such as the Index of Industrial Production (IIP) and the Purchasing Managers Index (PMI) for the manufacturing sector, indicate potential growth and heightened activity in the industrial and manufacturing sectors.

Additionally, governmental initiatives such as the ‘Atmanirbhar Bharat (Self-Reliant India) initiative and the Production-linked Incentive (PLI) scheme are expected to contribute to economic expansion by boosting domestic production. Easy access to credit and declining interest rates, along with a stabilising inflation trajectory, are expected to bode well for the domestic economys growth going forward.

According to the NSOs final estimates, Indias GDP grew by 7.2% during FY23.

Industry overview

Global Microsoft Business Applications market

The global Microsoft business application market is currently estimated to be over USD 35 billion - including products and services and is growing rapidly. It is estimated to become over USD 50 billion in the next couple of years. The Microsoft Business Applications includes Microsoft Dynamics 365 ERP & CRM solutions and the Power Platform suite of products. Other solutions that are almost an integral part of solutions built on Microsoft Business Applications are - the Microsoft Intelligent Cloud components including Azure (infrastructure, platform & services), and the Microsoft 365 productivity suite. This solution segment is growing faster than the market and plays a pivotal role in preparing businesses of all sizes, and across various sectors, to performance optimise their operations, enhance customer experiences, and do more. The rapid rise in demand has heightened the need for skilled Microsoft Dynamics Services providers who are capable of building solutions, implementing, customising and maintaining these advanced systems.

Global enterprise software market

The global enterprise software market was estimated to be around USD 201 billion in 2022. It is expected to reach approximately USD 610 billion by 2032, growing at a CAGR of about 11.74% from 2023 to 2032.⁴

Enterprise software have become critical for businesses to survive in this competitive business environment. Business across industries, and of varying sizes, have increased the pace of adaption of these solutions. These include large corporations, mid-sized entities and small businesses.

Global IT Industry

The global IT services market was valued at USD 1,045 billion in 2022. By 2028, it is projected to grow at an annual rate of 8.38%, reaching roughly USD 1,665 billion. This growth can be attributed to higher investments in IT, the widespread use of software-as-a-service models and the increasing availability of cloud-based solutions.

Simultaneously, the improvement of IT infrastructure has led to a corresponding rise in cybersecurity threats, especially data breaches. This necessitates the need for advanced security solutions that go beyond traditional methods. Businesses today are directing their efforts towards implementing more rigid security measures.

Emerging trends, including 5G, Blockchain, Augmented Reality (AR) and Artificial Intelligence (AI), are set to substantially influence IT services. With the launch of 5G technology, businesses will be able to set up their own networks on their premises. Further, the ongoing process of digital transformation is expected to establish new networks based on local frequencies or improve existing networks that rely on LTE technology. This, in turn, requires the creation of IT centres to support the automation and independent operations of complex systems.

Moreover, the volume of data being generated worldwide is rapidly increasing. It is projected that the amount of data created globally will rise to 163 zettabytes in 2025, a considerable jump from 12 zettabytes in 2015. IT service providers must offer intelligent IT services and platforms capable of efficiently reviewing and analysing data to obtain useful insights in order to properly use these vast data reservoirs.

The use of IT cloud services is also on the rise due to the widespread adoption of cloud technology across various industries. Amid widespread remote work, service providers faced the imperative of furnishing essential business clients with adept tools and technologies, ensuring swift, secure and efficient services. As a result, post-pandemic, organisations have escalated their investments in the IT Services sector. The increasing reliance on digital infrastructure and the need for robust cybersecurity measures have further driven the demand for IT services.⁵

Indian IT industry

During FY 2022, the Indian IT sector witnessed remarkable growth and remained focused on fortifying its foundational elements. The prevailing instability within the global economy, coupled with the potential anticipation of an impending economic downturn, continues to necessitate the adoption of technology and the acceleration of digital transformations. Consequently, technology remains a vital asset for enterprises, facilitating innovation, reshaping business methodologies and enhancing operational efficiency while curbing operational costs.

It is estimated that Indias IT industry will exceed USD 245 billion in revenue during the current year. Meanwhile, the domestic technology sector is anticipated to achieve USD 51 billion in revenue, showcasing a year-on-year growth rate of 4.9%. Domestic tech revenues are estimated to surge by 13% year-on-year, driven by ongoing investments from businesses and the Government.

Additionally, the industry is actively recruiting, adding roughly 300,000 new employees. This brings the total employee count to approximately 5.4 million, showing a year-on-year growth of 5.7%.⁶

Government initiatives

• The Cabinet has approved the PLI Scheme – 2.0 for IT Hardware, allocating a budget of H 17,000 crore (equivalent to USD 2.06 billion).⁷

• In the Union Budget 2023-24, the amount allocated for the IT and telecom sector was H 97,579.05 crore (approximately USD 11.8 billion).

• In September 2022, the Ministry of Communications released the new Telecommunications Bill 2022 for public feedback. This step was taken to establish a fresh framework for telecommunications in India.⁸

• The Government is executing the Software Technology Parks of India (STP) Scheme through STPI. This scheme is focused on exports and is designed for the growth and export of computer software. It involves the export of professional services that utilise communication links or physical media.⁹

Company overview

Founded in 2000, All E Technologies Limited (Alletec) has emerged as a dominant player in the Microsoft Business Applications and Digital Transformation space. Alletec enables clients stay competitive with Intelligent Business Applications. By leveraging Microsoft Dynamics 365, Power Platform, Data & AI and Azure, along with collaboration platforms - its industry specific solutions empower clients to succeed in a rapidly evolving business environment.

The scope of Companys services comprises of – IT and digital transformation consulting, solution assessments, provisioning of essential product licences, meticulous execution of solution implementations, ongoing solution enhancements and post-implementation support. The Companys services also include providing offshore services to some leading Microsoft Business Applications partners.

D365 Business Central – Implementation and Support

The Company has over 700 successful implementations of NAV : Business Central projects in 30+ countries, showcasing its adeptness in work processes, functional and technical proficiency. It has also developed industry specific solutions for Travel, eCommerce, Education, Green Energy, and Manufacturing.

The Company has created robust extensions, namely Cyborg and ProActivate to execute Business Central implementations and transition from traditional customisation to more streamlined configurations. The Company has successfully executed upgrade projects, helping clients transition from on-premises NAV, GP, and SL to the cloud-based D365 Business Central environment.

D365 Finance : SCM – Implementations and Support

The Company has successfully executed Dynamics 365 Finance and Supply Chain Management solutions across diverse industries. It specialises in aiding clients in the migration of their on-premises AX solutions to the cloud-based D365 Finance and SCM platform. Additionally, the Company extends its expertise by collaborating with prominent global dynamics partners on various projects. These partners entrust specific segments of their projects to the Companys Indian team for proficient execution.

D365 Project Operations

The Company has achieved a series of Project Operations implementations. These include organisations from IT & ITeS segment, and some other enterprises in projects business.=

D365 Sales

The Company has implemented D365 Sales for both Indian and international clients.

D365 Customer Service

The Company has a track record of several successful projects with D365 Customer Service. Some of these include Banks and Financial Services organizations.

Power BI

The Company utilises Power BI, a leading data analysis tool, to help enterprises gain business clarity through data-driven insights. By integrating data from various sources, it transforms data into meaningful insights, conveyed through intuitive info graphic formats, directing teams towards actionable solutions.

Power Apps

The low-code : no-code platform of Microsoft Power Apps has redefined the approach to applications development. The versatility of Power Apps allows our business users to take the reins in swiftly fashioning custom apps, offering a transformative tool to digitize and automate operations. These apps harmoniously integrate with existing systems, fostering seamless collaboration across our organization.

Power Automate

The Company assists enterprises in enhancing their operational efficiency by streamlining and automating recurring tasks through the use of Microsoft Power Automate. This not only helps eliminate manual errors but also redirects focus to critical areas where it is most essential. Additionally, the implementation of Power Automate (and Power Apps) contributes to the transition towards paperless processes, further aligning with modern organisational sustainability practices.

Power Virtual Agents (Chatbots)

The Company helps businesses implement AI-driven conversational bots, using Microsofts BOT framework and

Power Platform Virtual Agents (VA). The Companys expertise extends to the seamless integration of Power Virtual Agents with commonly utilised products and services, accomplished through an array of prebuilt connectors. This integration is further augmented by the creation of tailored workflows utilising Power Automate, or by developing intricate scenarios via the Microsoft BOT framework. Through the utilisation of power automate, the organisation can effectively link these chatbots with other systems within the enterprise. Triggered workflows enable the acquisition of necessary information or the efficient transmission of provided information to pertinent systems, thereby elevating the standards of customer service.

Low-Code No-Code Custom Applications

The Company uses Low-Code No-Code platforms to provide custom applications development to enterprises for point solutions automation, and even function rich applications. The company also undertakes modernisation of existing applications.

The Company possesses extensive technological expertise, utilising Microsoft stack and open-source development tools. While established development platforms like the .NET framework, Flutter, and React Native continue to hold significance, the Company has embraced modern trends by increasingly leveraging platforms such as Power Apps and Code On Time

IP Led Solutions

Our IP led offerings, including EdTech365, Travel365, Green Power, Engineer To Order Manufacturing, CEKonnect, ProActivate, Cyborg, and DIMIST, stand as a testament to our commitment to cutting-edge technology and transformative ideas. With these solutions, we empower our clients to embark on a journey of digital evolution, harnessing the power of our intellectual property solutions to minimize risk and reduce time to market. From revolutionizing education and travel experiences to driving sustainable energy solutions and engineering excellence, we weave innovation into every facet of our offerings. Our IP-led solutions encapsulate our vision of a dynamic future, where technology not only meets needs but also anticipates possibilities.

Microsoft Azure - IaaS and PaaS

The Company assists clients in seamlessly transitioning to Microsoft Azure to start experiencing the transformative power of cloud. It encourages the use of cloud-based computing resources rather than large upfront investments. Along with its core computing capabilities (Infrastructure as a Service, or IaaS), Azure also provides a plethora of applications and services that are managed effectively via automated processes.

Azure infrastructure services include proactive counselling for critical decisions, meticulous planning for cloud migration, experienced administration of application deployment and hosting, expert handling of mixed cloud setups, and smart cost-saving approaches.

Managed Services

Operating as a distinguished Tier-I Cloud Solution Provider (CSP), the Company offers expert guidance and comprehensive assistance facilitating the transition of both IT infrastructure and Business Applications to cloud. This specialised role is complemented by our Cloud Managed Services, a vital aspect involving the management of public, private and hybrid cloud models. The Company ensures continuous monitoring of an extensive spectrum of resources, including networks, servers, storage, applications, and data. The Companys cloud management services include a comprehensive suite of offerings like proficient cloud support and monitoring services, meticulous database management, strategic mail management, adept migration services and robust support services.

Cloud Architecture and Consulting Services

Business scenarios vary from organization to organization, and no one solution fits all uniformly. Alletec helps Customers evolve clarity from the maze of confusing acronyms and options – cloud, managed, hosted, public, private, hybrid, SaaS, IaaS, PaaS – to arrive at investment decisions best suited for their organizations.

Our Architecture consulting services engage with customers to define the roadmap of your cloud adoption journey. Our team monitors the entire infrastructure, productivity tools, and business applications you run to evaluate, guide, build, and manage IT infrastructure capable of supporting your business.

Data Engineering

The data engineering solutions help customers to harness the power of data for insightful decision-making and innovation. The data engineering team excels in designing and implementing robust data pipelines, aggregating, transforming, and optimizing data from diverse sources. Through cutting-edge technologies and best practices, it ensures seamless flow of data, enabling advanced analytics, machine learning, and business intelligence solutions.

Human Resources

Microsoft Dynamics 365 Human Resources helps streamline many routine Human Resource record keeping tasks and automate a number of processes. It helps simplify leave & absence reporting, create compensation programmes and benefits administration, perform functions to facilitate recruitment and help with payroll & budgets. It enables you to transform employee experiences, optimize HR programmes, increase organizational agility and discover workforce insights.

Alletec uses the Dynamics 365 Human Resource application, as well as some other specialized 3rd party HR software to help customers implement robust HR applications.

Opportunities

Digital Transformation

Urgency for businesses to embrace digital transformation will result in enhanced momentum for adoption of world class ERP and CRM solutions. Adoption of Microsoft Dynamics 365 is growing faster than the market.

Intelligent Data Platforms

Demand from businesses for Intelligent Data Platforms which enable them bring together operational databases, analytics and governance to integrate the diverse data estate within the enterprise is on the rise. This demand is an opportunity for Alletec to grow business in this segment.

Modernization of Legacy Applications

Legacy systems exist in most organizations, that they can not easily or quickly replace. Modernization of these applications by leveraging Cloud, Azure Cognitive Services, Analytics and AI is a rising trend.

Strong Microsoft growth

Microsofts robust suite of products, and its ability to keep these products at the cutting edge of technology, has enabled it to grow faster than the market. This accelerated growth also enables Microsoft Partners to keep growing and taking market share from competition.

Infusion of AI

Microsofts strategic infusion of Artificial Intelligence (AI) across all product lines has marked a transformative era of innovation. With the dedication to harnessing the potential of AI, Microsoft has seamlessly integrated intelligent capabilities into its diverse range of offerings. From productivity tools to business applications and cloud services, AIs presence is palpable, empowering users with enhanced insights, automation, and personalized experiences. The Company can leverage its capabilities in data and AI to develop advanced solutions that enable clients to do more.

Industry solutions & IP

Industry solutions like EdTech365, Travel365, GreenPower, and the cross-industry solutions of ProActivate, Cyborg, P2P365 and CEKonnect have enabled Alletec to stay at the forefront of competition. The company continues to enrich these solutions and assess market needs to conceptualize other possible IP development.

Indias emergence as a global economic powerhouse

With India solidifying its global position as a leading economic power, opportunities open up for digital transformation businesses like Alletec – both within the country and internationally. The Company aligns its business strategies with Indias economic trajectory, forging strategic partnerships, and capitalizing on the countrys technology sector.

Alletecians – the Enablers

Our people define who we are. People are the key to organizational success.

To maintain a competitive edge, the company continually makes investments in the professional development of its team members. Alletec consistently offers its personnel training to make them future-ready and help them excel in their respective roles. The Companys hiring and retention policies are also aimed at creating a team of experts that can further aid Alletec to stay ahead of the curve.

As constituents of the Company our endeavour always is to make the workplace vibrant, reassuring, and conducive. This helps foster a work culture where every member of the organization feels valued and empowered. Our teamwork and mutual trust has earned the company the recognition of Great Place to Work.

~ 350

Team strength

GREAT PLACE TO WORK CERTIFIED

Feb 2023-Feb 2024

Corporate Social Responsibility

The Companys Corporate Social Responsibility (CSR) initiatives are primarily focused on ensuring the well-being of underserved communities and the advancement of childrens education. It has affiliations with esteemed organisations such as The Earth Saviours Foundation, Gurugram, renowned for its commitment to aiding destitute individuals.

Additionally, the Company contributes to the C. R. Kothari Memorial Charitable Trust, an entity that is engaged in making education accessible to students hailing from economically disadvantaged backgrounds. The CRKMC Trust undertakes various initiatives, encompassing mentorship, beneficiary counselling, distribution of essential items such as clothing and stationery, the facilitation of education loans through banking channels, as well as application assistance for government-sponsored scholarship programmes and other relevant schemes intended for the betterment of students and their families.

The company sponsored a project in Orissa with Sight Savers India for the restoration of eyesight to hundreds who were visually impaired. The project won rich accolades.

The company also assists ‘Books For All organization to facilitate education to the urban poor.

Financial highlights

The table summarises the consolidated financial outcomes of the Company.

Particulars	FY 2022-23	FY 2021-22	Change (%)
Total Revenue	9,150	7,234	26.48%
EBITDA	1,596	1,309	21.93%
EBITDA margin (%)	17.44	18.09	-66 bps
PBT (before Extraordinary Costs)	1,527	1,245	22.65%
PBT	1,527	1,145	33.36%
PAT	1,159	859	34.92%
PAT (before Extraordinary Costs)	1,208	1,027	17.6%
EPS (in I)	7.24	6.94	4.32%

Geographical revenue breakup

Particulars	FY 2022-23	FY 2021-22	FY 2020-21
India sales	4369.67	3799.67	3293.77
International sales	4398.76	3205.23	2827.75
Total	8768.43	7,004.90	6,121.52

Top customers contribution to revenue

	FY 2022-23		FY 2021-22
Particulars	Amount (K Lacs)	% Of Revenue from Operations	Amount ( K Lacs)	% Of Revenue from Operations
Top 5 customers	1831.07	20.88%	1437.37	20.52%
Top 10 customers	2620.54	29.89%	2078.90	29.68%

Key ratios

Particulars	FY 2022-23	FY 2021-22	Change (%)
Debtors Turnover	8.20	8.04	2.00
Interest Coverage Ratio	1,392.01	1,607.12	-13.39
Current Ratio	5.48	3.47	57.94
Debt Equity Ratio	NIL	0.001	-100.00
Net Profit Margin (%)	13%	12%	7.82%
Return on Net Worth	15%	24%	-38.72%

Risk management

Alletec has implemented a robust and comprehensive approach to risk management that underscores its operational resilience and strategic decision-making. Recognising the dynamic nature of the digital business landscape, the Company identifies, assesses and mitigates potential risks that could impact its business operations, reputation and stakeholder interests. The Company employs a systematic risk assessment process to evaluate both internal and external factors, taking into account market trends, regulatory changes, technological advancements and potential vulnerabilities.

The Board of Directors regularly reviews the business risks of the Company and takes appropriate initiatives to mitigate them as early as feasible. The Senior Management Team, led by the Managing Director, is primarily responsible for the management of risks through the proper implementation of mitigation measures.

Internal control and adequacy

The Company places a strong emphasis on internal control and adequacy to ensure the efficiency, accuracy and security of its operations. With a commitment to maintaining the highest standards of corporate governance, Alletec has implemented robust internal control mechanisms to safeguard its financial, operational and data-related processes. These controls encompass various aspects of the organisation, including financial transactions, data access and security, compliance with industry regulations and risk management. By consistently evaluating and enhancing these controls, Alletec strives to mitigate risks, prevent errors and detect any irregularities promptly. This proactive approach not only ensures the reliability of the Companys operations but also instils confidence in clients, stakeholders, and partners by demonstrating Alletecs dedication to maintaining a transparent and well-regulated business environment.

Outlook

Alletecs core business, which comprises of both products and services, has consistent growth inherent in the business model. The solutions we deliver to our customers are mission critical for the businesses of our customers to run, making our customer relationships long term and strong. Alletec will continue to grow through a combination of organic and inorganic initiatives in the short, mid and long term.

Organic

The rapid adoption of cloud is resulting in customers preferring SaaS model over the on-premise model of a onetime product purchase. This results in all SaaS customers paying the product fee in a recurring manner. All enterprise applications (ERP, CRM, and others) require ongoing support and enhancements. This results in Alletec having multi-year relationships with its customers. These engagements increase the opportunities for cross-selling and up-selling. A good number of ERP and CRM customers, for example, are now exploring Data Engineering projects with us.

Alletec is continuing to make investments to increase its global foot print. Investments are increasing in the Americas and

African market, as well as in some other geographies. The investments are in strengthening sales, marketing as well as in building partnerships.

Alletec is investing heavily in strengthening the Intellectual Property assets like EdTech365, Travel365, Green Power and others, and at the same time also working on building new IP. These IP give us tremendous competitive advantage in the market and will also be a constant revenue stream.

Along with the investments to build business opportunities, we also continue to invest in strengthening our delivery capabilities. Our team continues to grow, and the company keeps investing in their training and development. With market focus on Data Engineering and AI building up, our training focus on these areas has also strengthened.

Inorganic

Alletec has a clear inorganic growth strategy in place, supported by a healthy cash position and a strong desire to pursue this track along with the organic growth. The two together will enable us meet the growth goals we have set for ourselves.

We are confident in our ability to stay in a market leadership position for the years to come. Our sharp focus on what we do, our investments in innovation, training & IP, along with the ever deepening experience with every customer engagement, the geographical spread of our customers will all enable us compete well with the largest and the best in the industry. Alletec will continue to experience a healthy growth and sustain well any possible disruptions caused by challenges like geopolitics, macroeconomic changes, supply chain disruptions and inflation. The coming years are going to experience significant strengthening in the demand for Digital Transformation, eventually leading to AI Transformation. Alletec is well positioned to leverage these opportunities.

Disclaimer

This document contains forward-looking statements regarding anticipated future events and the financial and operating outcomes of the Company. As such, these statements necessitate the Company to make assumptions and are subject to inherent risks and uncertainties. There exists a significant risk that the assumptions, predictions, and other forward-looking statements may not materialise accurately. Readers are advised to exercise caution and avoid placing undue reliance on these forward-looking statements, as various factors could cause actual future results and events to differ significantly from those expressed in such statements. Consequently, this document is subject to a disclaimer and is qualified in its entirety by the assumptions, qualifications, and risk factors outlined in the managements discussion and analysis presented in All E Technologies Ltd.s annual report for FY 2022-23.