Quick Heal Tech Management Discussions

GLOBAL ECONOMIC OVERVIEW

Building sustainable economies, one transformation at a time

The global economy demonstrated remarkable resilience throughout 2022 and continues to forge ahead with a positive and optimistic outlook for the future. Even though the inflation and geopolitical conflicts at the beginning of 2022 slowed the GDP growth rate, the economy remained progressive. Governments around the world tightened monetary policies, undertook structural reforms, and increased capital expenditures to encourage economic activity and enhance the future of the global economy.

Inflation has been steadily on the rise, leading to a sluggish pace of progress in both developed and developing economies. Central banks and governments worldwide have implemented various policy changes in response. The primary focus for many economies is to achieve sustained disinflation as a top priority.

OUTLOOK

The economic forecast for 2023 is expected to remain steady with the International Monetary Fund (IMF) predicting a global growth rate of 2.8% in 2023, rising to 3.0% in 2024, as per the World Economic Outlook April 2023 forecast. A stronger boost in economic activity is expected to arise primarily from pent-up demand across several economies with a considerable fall in inflation, from 8.7% in 2022 to 7% in 2023.

iNDiAN ECONOMiC OVERVIEW

Embracing sustainable growth through higher resilience

The Indian economy has persevered the economic stress following the Covid-19 pandemic. The reduction in capital formation growth rates, the slow expansion of credit, and the rise in non-performing assets brought on by excessive lending during the preceding ten years are clear indicators of the recovery. The Government has enhanced the budgeted capital spending by 2.7 times between 2016 and 2023 to accelerate the capex cycle.

Indias economy is being driven by strong fundamentals, wherein key industries like manufacturing, infrastructure, and healthcare are expected to experience growth. As a result of the proactive policies and measures implemented by the Indian Government to promote economic growth, such as the National Infrastructure Pipeline and the Production-Linked Incentive plan, the cyber security market is expected to experience a notable upturn in the near future. These initiatives are anticipated to indirectly contribute to the positive trajectory of the cyber security sector, paving the way for significant growth in the coming years.

OUTLOOK

Although the Reserve Bank of India (RBI) has maintained a tighter economic policy, its inflationary outlook shows a ray of hope, given the current circumstances. The RBI anticipates inflation to be closer to a moderate level in the first half of 2023-24, owing to a possible revival of demand. It had projected a headline inflation rate of 6.8% for 2022-23, i.e., outside its target range. However, it is expected to gradually decrease with the implementation of higher interest rates.

The Economic Survey projects growth rates of 6.5% in 202324, while in nominal terms, the GDP growth is predicted to reach 11% in the upcoming fiscal year. India is expected to benefit from sustained low oil prices and a projected decrease in the current account deficit. The International Monetary Fund (IMF) has maintained its fiscal growth forecast of 6.8% for India. The Union Budget 2023-24 outlines an increase in government spending, which, combined with heightened private consumption and investment, is anticipated to bolster demand and foster economic growth.

INDUSTRY Overviews

GLOBAL CYBER SECURITY MARKET OVERVIEW

Securing cyberspace through better adaptation and solutions

The field of cyber security is both complex and essential in todays world. It plays a critical role in safeguarding the confidentiality, integrity, and availability of information systems. It encompasses various areas such, as Critical Infrastructure Security, Application Security, Network Security, Mobile Application Security, Cloud Security, and Internet of Things (IoT) Security.

A majority of cyber security firms agree that the range of attacks has significantly expanded compared to the previous year, and their impact extends beyond a single entity or sector. Cyber threats have evolved, and the growing global geopolitical instability has underscored the criticality of managing cyber risks. Geopolitical fragmentation is now influencing business operations and investments, driven by concerns over data protection and cyber security.

Besides, cyber executives have witnessed a notable shift in perception regarding the efficacy of data privacy laws and cyber security regulations in mitigating cyber risks across various sectors. While compliance challenges persist, they now acknowledge that regulations serve as a crucial incentive for proactive cyber security measures and actions.

Investing in cyber security is vital for countries to safeguard their digital and critical infrastructures, enabling greater participation in the global economy and progress towards long-term development goals. The United Nations recognizes cyber security as a key driver for sustainable development, as highlighted in the 2030 Agenda. Prioritizing cyber security not only protects infrastructures, but also promotes inclusive growth and sustainable development.

(Source: World Economic Forum 2023 Outlook)

GLOBAL CYBER SECURITY MARKET SEGMENTATION

The global landscape is formed by a mosaic of various segments, encompassing network security, data protection, end-user education, and regulatory compliance. Together, these segments span a wide breadth and depth,

creating a comprehensive framework for cyber security

The diversity and complexity of these domains reflect the multifaceted nature of cyber security , necessitating a segmented approach to effectively understand and manage it.

(Source: Globe Newswire)

Industry-wise Most Prevalent Malware 2022

The symbiotic relationship between the advancement of technology and the evolution of malware has resulted in an array of malicious programs with diverse targets and impacts. From ransomware crippling healthcare systems to spyware infiltrating corporate networks, each industry has faced unique challenges based on its technological footprint and vulnerability profiles.

Industry	Malware
Power & Energy	Trojan.Meterpreter
BFSI	W32.pioneer.CZ1
Telecom	Nsis.Bitmin
Transport	Trojan.Convagent
Government	Worm.Autoit.Sohanad.S
Strategic & Public Enterprises	W32.Pioneer.CZ1
Automobiles	Trojan.NSIS.Miner.SD
Education	W32.Neshta.C8
Hospitality & Healthcare	LNK.Browser.Modifier
IT/ITES	W32.Brontok.Q
Manufacturing	PIF.StucksNet.A
Media & Entertainment	Worm.Tupym.A5
Professional Services	Trojan.injectPyinc.P86
Logistics	Trojan.GenericPMF. S1033697

DETECTION METHODS

CYBER SECURITY DETECTION METHODS ARE ESSENTIAL IN PREVENTING AND MITIGATING CYBER ATTACKS.

DETECTION TYPES FOR IDENTIFYING VULNERABILITY

etwork _Securitv _Scan A

Refers to using IDS/IPS to analyze network traffic, detect known cyber attacks, and prevent malware from damaging the system.

Examines the systems memory for any malicious programs running and removes them.

Involves scanning data at rest or files that are not currently in use.

Web Security Scan

Detects potentially harmful and unsafe websites and blocks access to them automatically.

Involves checking files for malware or viruses every time they are accessed, opened, downloaded, copied, or altered.

Scan method that identifies abnormal behavior patterns in the system that may be indicative of a potential cyber attack.

Involves blocking emails that carry infected attachments or links to compromised, fake, or phishing websites.

CHALLENGES & EMERGING TRENDS

Driving change while emphasizing sustainable progress

Given the multitude of challenges and threats faced by the cyber security industry, investing in advanced cyber security training and solutions has become imperative for companies. The average global cost of a data breach has increased by 2.6%, rising from US$ 4.24 million in 2021 to US$ 4.35 million in 2022. By 2025, the annual expenses associated with cybercrime damages are projected to reach US$ 10.5 trillion, marking a substantial escalation from the US$ 3 trillion recorded in 2015.

(Source: Indiatimes)

LockBit and Goodwill ransomware, Maggie malware, Cuba ransom ware, Follina, and Atlassian OGNL Injection Zero-Day Vulnerability were among the high-profile breaches that dominated the cyber security landscape of 2022. The China-affiliated attackers used the ShadowPad modular backdoor to target Indian power grid organizations, posing a significant threat to national security.

INVESTMENT IN CYBER SECURITY START-UPS:

In terms of the cyber security transformation, 2021 stood out as a significant year for start-ups in this space. Momentum Cyber, a financial advisory firm for the cyber security industry, reported that start-ups in this space received an unprecedented US$29.5 Billion in venture capital, surpassing the total raised in the previous two years combined. This significant funding was channelled into over 1,000 deals, with 84 deals exceeding US$100 Million. The industrys innovation and the pandemics increase in cyber threats drove this record investment volume, leading to more than 30 security start-ups becoming unicorns in 2021.

TRENDS:

Human-Centric Security Design: Prioritizing employee experience to minimize cyber security -induced friction and maximize control adoption

Enhancing People Management for Security Program Sustainability: Shifting towards internal talent markets to address cyber security and recruitment challenges m Transforming the Cyber security Operating Model to Support Value Creation: Connecting cyber security to business value and integrating work practices rn Threat Exposure Management: Implementing continuous threat exposure management programs to reduce breaches

Identity Fabric Immunity: Strengthening identity infrastructure to prevent attacks and reduce financial impact

Cyber security Validation: Validating how potential attackers exploit threat exposures through automated assessment tools

Cyber security Platform Consolidation: Consolidating platforms to streamline operations and eliminate redundancy

Composable Security for Composable Businesses:

Integrating cyber security controls into modular applications

Boards Expand Competency in Cyber security

Oversight: Increased board focus on cyber security and accountability for governance activities

(Source: Gartner)

TRANSFORMATION:

The World Economic Forums Global Cyber security Outlook 2023 report clearly highlights that business leaders are more aware of their organizations cyber security needs than they were a year ago. Some of the emerging trends that would drive this higher demand and investment in better cyber security solutions are as follows: m The pandemic has exposed vulnerabilities that cyber criminals are exploiting, leading to substantial economic and productivity losses. Despite efforts to address these issues, the high costs of implementing cyber security solutions and a shortage of skilled professionals hinder effective protection

m As employees return to the office, IT security teams must identify and address network security gaps to prevent cyber attacks and secure the work-from- anywhere model

(Source: BW Businessworld, Moneycontrol, Indiatimes)

OUTLOOK

The cyber security landscape is set to undergo significant changes in the coming years. Gartner predicts that by 2027, 50% of CISOs will adopt human-centric design practices to minimize operational friction and maximize control adoption. Privacy regulations will blanket the majority of consumer data, but less than 10% of organizations will successfully leverage privacy as a competitive advantage. By 2026, 10% of large enterprises will have comprehensive Zero Trust programs in place, while employee technology usage outside of ITs visibility will rise to 75% by 2027. Additionally, 50% of cyber security leaders will face challenges using

cyber risk quantification for enterprise decision-making. High turnover rates are anticipated in the cyber security field, with nearly half of leaders changing jobs by 2025. By 2026, 70% of boards will include members with cyber security expertise. Lastly, over 60% of threat detection, investigation, and response capabilities will rely on exposure management data to validate and prioritize threats. These predictions provide insights for cyber security leaders to navigate the evolving landscape and build effective programs for their organizations.

(Source: Gartner)

iNDiAN CYBER SECURITY MARKET

Sustaining advancement and growth across cyber security space

In the modern world, cyber resilience is crucial beyond IT (information technology), ensuring the sustainability and continuity of critical infrastructures (i.e., operational technologies). Cyber security has been, therefore, designated a national policy priority by the Indian Government, with the establishment of task forces and engagement with global nationalities.

To foster innovation and drive transformation in the Indian cyber security market, the Indian Government has partnered with the Data Security Council of India (DSCI) to establish a National Center of Excellence. As India adjusts to a post-Covid-19 pandemic era, it is expected that the Government and businesses will increase their focus on digitization and IT across all sectors.

INDIAN CYBER SECURITY OVERVIEW 2022

During the first quarter of 2022, India encountered a staggering 18 Million cyber attacks and 2,00,000 threats per day, as disclosed by Google. According to Royal Hansen, the high level of activity means it is not a matter of vulnerability but how prepared they are to deal with it.

INDIAS CYBER SECURITY ARCHITECTURE

The threat of malware looms over all computer systems, and as the boundaries between the physical and digital realms become increasingly indistinct, critical infrastructures like transportation, power, and banking systems face growing vulnerability to attacks from both hostile state and non-state actors. Regrettably, the incidence of cyber security breaches is projected to rise with the introduction of new technologies such as 5G and quantum computing, providing fertile ground for the emergence of more sophisticated malware and opening up new avenues for digital security breaches.

• Under the National Cyber security Policy 2013, the National Critical Information Infrastructure Protection Centre (NCIIPC) was established to improve the protection and resilience of the countrys critical infrastructure information and create an enhanced workforce of professionals in cyber security

• In 2022, CERT-In, introduced a set of guidelines for organizations to follow when connected to the digital realm. The guidelines mandate the prompt reporting of cyber attack incidents within hours of their detection and require organizations to designate a domain- knowledgeable points person to interact with CERT-In. m Indias draft Digital Personal Protection Bill 2022 proposes a penalty of up to 500 Crores for data breaches.

•Cyber Surakshit Bharat Initiative was launched in 2018 to spread awareness about cybercrime and build capacity for safety measures for Chief Information Security Officers (CISOs), and frontline IT staff across all Government departments.

• Indias armed forces recently established the Defence Cyber Agency, which can engage in both offensive and defensive maneuvers. All Indian states have their cyber command and control centers. m The Ministry of Home Affairs established the Indian Cybercrime Coordination Centre (I4C) to coordinate with state police forces across the country in responding to cybercrime. It also facilitates the implementation of mutual legal assistance treaties (MLAT) with other countries.

• The Cyber Crisis Management Plan (CCMP) has been implemented to address and combat the increasing cyber-terrorism and other cyber-related threats.

• The National Cyber Coordination Centre (NCCC) is responsible for generating situational awareness of existing and potential cyber threats. The National Cyber security Coordinator (NCSC), under the National Security Council Secretariat (NSCS), coordinates with different national agencies to address cyber security matters.

• Cyber Swachhta Kendra platform serves as a resource for individuals to clean their computers and devices and ensure their online safety.

• Another initiative, the Information Security Education and Awareness Project (ISEA), focuses on training personnel to raise awareness and provide research, education, and training in Information Security.

•The Ministry of Electronics and Information Technology (Government of India) withdrew the Personal Data Protection Bill, 2019 in August 2022 after receiving various recommendations through public consultation. In lieu of that, the Government introduced the Digital Personal Data Protection Bill on November 18, 2022, as an updated version. This marks a crucial beginning for Indias data protection regime, placing greater emphasis on and promoting the digitization of personal data by organizations.

• Bluebugging is a hacking technique that enables attackers to gain access to a device through its discoverable Bluetooth connection. Once a device or phone is blue-bugged, the hacker can eavesdrop on calls, read and send messages, and steal and modify contacts. Initially, this technique posed a threat to laptops with Bluetooth capability. However, hackers have since used it to target mobile phones and other devices.

CHALLENGES

• Many organizations do not have the necessary tools to identify, let alone prevent, cyber attacks.

• India is also facing a severe shortage of cyber security professionals, with a projected workforce of only around 3,00,000 people in contrast to the 1.2 Million people in the United States.

• Despite the predominance of private sector organizations in India, their level of participation in the countrys cyber security structures remains limited.

OUTLOOK

Harnessing potential for building a secure future in the cyber arena

A joint study by PwC India and DSCI revealed that the cyber security market in India, is projected to increase from US$ 1.97 Billion in 2019 to US$ 3.05 Billion by 2022, with

a CAGR of 15.3%. The study identified Banking, Financial Services and Insurance (BFSI), IT, and Government as the top three sectors in India with the largest market share in cyber security expenditure. However, the predicted growth of the cyber security market may be underestimated in light of the Covid-19 pandemic if the digital economy experiences a boom in the post-pandemic era. The demand for cyber security solutions in India is driven by the countrys thriving digital economy, which is a priority under the nations Digital India initiative. As per the recently announced Union Budget 202324, The Ministry of Electronics and Information Technology (MeitY) has been allocated a sum of 625 Crores, to improve the countrys cyber security infrastructure.

(Source: Cnbctv18)

Going ahead, the upcoming G-20 summit at Delhi in September 2023, is expected to witness the participation of all key stakeholders who hold the reins of global power. It presents a rare opportunity to convene domestic and international engagement groups across various sectors and guide the trajectory of these vital discussions. India has the potential to take the lead in conceptualizing a global framework of common minimum acceptance for cyber security

This endeavor would mark one of the most substantial contributions made by any nation towards collective security in contemporary times.

BUSINESS OVERViEW

Simplifying cyber security solutions, integrating sustainability, driving transformational growth

Incorporated on August 07, 1995, Quick Heal Technologies Limited is Indias first publicly traded cyber security firm. The Company provides cyber security solutions to the retail and corporate domain. We streamline IT security management through a wide range of devices and platforms. Quick Heal has established itself as the undisputed leader in the cyber security enterprise solutions space in India, capturing over 30% market share. This leadership extends across both the retail segment and the enterprise solutions division, enabling Quick Heal to effectively serve and secure nations, cities, and businesses.

The Companys success is majorly led by extensive sales and a pan-India strong distribution network across India. Quick Heals enterprise security brand SEQRITE, further offers

security products and other state-of-the-art cyber security solutions to safeguard the IT assets of businesses, respond against cyber attacks, while complying with regulatory and compliance frameworks.

Business Verticals

• Retail Segment: The Company is a global leader in this space, with a market share of over 35% in India, serving millions of clients. Its strong nationwide distribution network includes over 35,000 dealers being serviced through 300+ strong distributors, spread across length & breadth of the country. This has significantly assisted the Company in increasing brand awareness and recognition, driving the growth of this segment. m Enterprise and Government Segment: The cyber world is evolving and becoming more complex with trends, including digital payment networks, remote working, big data, AI & ML, virtual reality, and the metaverse. The rapid pace of technological advancements and innovation presents organizations with numerous opportunities for growth and expansion. However, it also exposes them to concerns regarding disruption from cyber attacks, compromising the security and privacy of critical data. Therefore, the Companys goal is to provide a straightforward yet comprehensive solution to meet the cyber security requirements of every organization. SEQRITE is dedicated to empowering CISOs and IT leaders to gain complete visibility into the organizations cyber security , obtain actionable intelligence, and strengthen an organizations defense against the next wave of cyber attacks across endpoints and mobile devices, enterprise data infrastructure, and cloud-based network security. Quick Heals new range of products is simple to use, lightweight and can be installed in a matter of minutes thanks to AI, cloud, and patent-powered technologies.

Excellence Drivers for Transformational Growth

RESEARCH AND DEVELoPMENT (R&D)

We have been undertaking strategic investments in R&D to keep up with industry advancements and maintain the leading position in the market. In 2022-23, the Companys R&D spending climbed by 33.6%, accounting for 43.6% of the sales. The focus was on developing next-generation cyber security technologies tailored for customers in the global enterprise market. The roadmap for the forthcoming years appears robust, with the R&D team persistently striving to enhance existing products with innovative functionalities, thus ensuring the Company maintains its position at the forefront of the industry.

strong and diversified channel network

In nearly three decades, Quick Heals network has grown stronger to over 35,000 distribution channel partners

throughout India. This helps drive an efficient distribution network and supply chain to promptly act upon the demands of clients through effective cyber security solutions. This is what makes the Companys retail channel partners network one of the largest in India.

The internal sales and marketing team actively collaborates with clients and channel partners to deliver active post-sale support. The team also undertakes appropriate training and development to comprehend and use new products and features consistently. This enables the Company to penetrate the Retail and Enterprise divisions deeper. It helps the business channel partners stay prepared to provide technical advice, relevant sales support, and after-sales support services to all of their customers.

Quick Heal excels in customer support by providing unmatched expertise and genuine care, redefining cyber security assistance. Their commitment to exceptional service cultivates a loyal client base while attracting new customers who trust the brand for their cyber security needs. With a human touch, Quick Heal combines knowledge and empathy to deliver personalized solutions and build lasting relationships. Through the following measures, the Company ensures to offer top-notch customer service: m ISO 20000-certified customer service process that offers end-user support in multiple languages, including English, Hindi, and various other important regional Indian languages provided by a strong team of security experts.

• Multi-channel support services, including onsite and remote access assistance in India. m Accessibility of technical requirements, installation instructions, and upgrade methods information in data sheets, product videos, and manuals on the website.

Leveraging its extensive market presence and deep industry expertise, the Company has been at the forefront of cyber security solutions since 1995. With a steadfast commitment to maintaining a robust market share, the Company has also focused on raising consumer awareness in the field of cyber security

As a testament to our recent accomplishments, we were honored with the prestigious Cyber security Transformation Award in 2023 at The Big Impact Awards 2023. Additionally, we take pride in being the first Indian company to collaborate with NIST-NCCOE on their Data Classification Project, further solidifying our position as a pioneering force in the industry.

Integrating Sustainability-driven Products and Processes

We are dedicated to reducing our carbon footprint, and as part of this commitment, we have recently unveiled our latest product line, Version 23. This new range showcases various eco-friendly features, including our packaging, which has undergone a significant transformation. With a reduction in size by 38% and its composition now made entirely of 100% biodegradable and reusable materials, our packaging

exemplifies our ongoing efforts to prioritize sustainability. It contributes towards reducing our use of natural resources for packaging materials. This version is CD-less, eliminating the usage of compact discs and resulting in a reduction in e-waste and our overall carbon footprint.

We are also among the very few in this industry to proactively adopt, implement and publish the Extended Producer Responsibility (EPR) report. The report adheres to the guidelines formulated under the E-waste management rules 2022, wherein, we take 100% ownership of disposing of our e-waste through authorized E-waste recyclers. This is achieved through setting up of centers that are easily accessible to our customers and partners.

Taking a step ahead in conserving electricity usage across our offices, operations and R&D facilities, we have opted for efficient lighting. Moreover, we also use renewable energy to service 3% of our total power requirements and 9% of our R&D power requirements.

HUMAN RESOURCES

Strengthening workforce for offering secure services

Quick Heals workforce, as on March 31, 2023, stood at 1,043. It prioritizes people as integral to success and longterm growth. The Company values and upholds the principle of equal opportunity, ensuring that its workforce comprises individuals from diverse racial and cultural backgrounds.

To regulate and induce harmony in the workplace, the Company has an effective and inclusive human resources policy. This helps assure employee well-being. The Company prioritizes providing its employees with a safe, healthy, and pleasant working environment, as well as opportunities for career growth and personal development. With a strong focus on client satisfaction, the Company ensures that customers enjoy a seamless experience through well- trained employees.

To keep our team aligned with the evolving industry trends, we uphold the following values to ensure consistent progress towards the Companys goals: m Driving Customer Centricity rn Fostering Innovation

• Empowering Diverse Learning Programs

The Company introduced the Employee Value Proposition (EVP) to enable employees to realize their full potential. It ensures that employees receive pay and performance- based bonuses as per industry norms. Frequent trainings are conducted to improve their professional and personal skills. With normalcy returning following the Covid-19 outbreak, the transition from work-from-home to work- from-office and hybrid work culture has gone well with minimal adverse effects on the productivity.

FiNANCiAL OVERVIEW

Achieving optimal financial performance for sustainable prosperity

Revenue from operations stood at 278.09 Crores during 2022-23. The Enterprise segment recorded 106.9 Crores while the Retail sector recorded 197.5 Crores.

Other Income: Miscellaneous revenues stood at 22.13 Crores.

Operating Expenses: The procurement of security software products, benefit plan costs, amortization, and other costs are the principal charges listed under the heading Operating Costs expenses.

Employee Benefits Expenses stood at 154.90 Crores.

Web Publishing Charges stood at 0.50 Crores as compared to 1.12 Crores in 2021-22.

Technology Subscription Charges and Fees for Technical Services stood at 8.78 as compared to 7.09 Crores in 2021-22.

Rent expenses were at 1.38 Crores as compared to 1.49 Crores in 2021-22.

Rates and taxes were 1.17 Crores as compared to 0.88 Crores in 2021-22.

Insurance: The Company covers various risks to safeguard and protect its assets. These include liability risk, such as D&O, E&O and other liability insurance. The asset insurance covers all offices, fit-outs, furniture and other accessories. During the year, the insurance cost amounted to 0.43 Crores in 2022-23, as compared to 0.41 Crores for 202122, depicting an increase of 5.73%.

Repairs and Maintenance: The Companys overall repairs and maintenance costs were at 2.89 Crores as compared to 2.92 Crores in 2021-22.

Business Promotion, Advertising, and Sales Promotion Expenses: For 2022-23, the Advertising and Sales Promotion costs stood at 29.94 Crores, while our business Promotion costs stood at 4.36 Crores.

Travelling and Conveyance Expenses: The volume of travel and transportation stood at 4.39 Crores as compared to 3.16 Crores in 2021-22.

Communication Expenses: The cost of communication stood at 14.90 Crores as compared to 9.78 Crores in 2021-22.

Office Expenses: The office expenses were 3.17 Crores, as compared to 2.78 Crores in 2021-22.

Legal and Professional Fees: The Companys legal and professional fees reached 26.30 Crores in 2022-23, as compared to 14.78 Crores in 2021-22.

Provision for Doubtful Debts And Advances/Bad Debts Written off: During the year, the provision for doubtful debts and bad debts was 5.15 Crores, as compared to 3.44 Crores for 2021-22. The increase is on account of provisions made for few debtors which are overdue for more than180 days as per internal provisioning policy. However, this is not necessarily considered bad debts basis our past collection trends.

Miscellaneous Expenses: During the year, the miscellaneous expenses stood at 1.60 Crores in 2021-22, as compared to 1.48 Crores in 2021-22.

Earnings Before Interest, Tax, Depreciation and Amortization (EBITDA): EBITDA (excluding other income) was 1.88 Crores for 2022-23, as compared to 106.86 Crores for 2021-22, a decline of 98.24% on YoY basis. The overall decrease in EBITDA was primarily on account of higher investments in R&D and S&M. As per prudent accounting policy, we do not capitalize our R&D investments and charge it to the P&L.

Interest: The Company does not have interest expenses, as it does not have any debt on its balance sheet.

Depreciation: Depreciation expense amounted to 15.99 Crores for 2022-23, as compared to 17.38 Crores for 2021-22, a decline of 8.00%. The reduction was mainly on account of reduction in gross blocks.

Profit After Tax: Profit After Tax amounted to 6.40 Crores for 2022-23, as compared to 83.19 Crores in 202122 registering a decline of 92.31% owing to increased investment towards R&D and S&M.

Equity: Total equity remained at 53.07 Crores as on March 31,2023, as against 58.01 Crores, as on March 31,2022.

Retained Earnings: During the year, Retained Earnings decreased to 299.71 Crores, as on March 31, 2023, as compared to 502.90 Crores, as on March 31, 2022 on account of Buyback.

Property, Plant and Equipment (PPE) and Intangible Assets: During the year, PPE (excluding CWIP and including investment property) balances decreased to 121.68 Crores, as of March 31, 2023, from 131.30 Crores, as of March 31,2022. The reduction was on account of disposal of fixed assets. Intangible assets decreased to 12.77 Crores, as of March 31,2023, from 5.74 Crores, as of March 31,2021.

Non-current Financial Assets: The investment under noncurrent financial assets as on March 31, 2023, stood at 21.49 Crores, as compared to 27.46 Crores, as on March 31, 2022. This is mainly on account of maturity of mutual funds.

Income Tax Assets: It stood at 22.33 Crores, as compared to 15.80 Crores on March 31,2022.

CURRENT FINANCIAL ASSETS

Investments: Investments are a reflection of the Companys cash flow and are made in generally conservative assets while the money is still being used for the Companys operations. As on March 31, 2023, the total current investment stood at Rs. 176.20 Crores, as compared to Rs. 290.07 Crores as on March 31,2022.

Trade Receivables: The trade receivables stood at Rs. 122.65 Crores, as on March 31,2023, compared to Rs. 171.96 Crores, as on March 31,2022. The receivables days changed to 143 days, as on March 31,2022, as compared to 170 days as on March 31,2022. other Current Assets: The Companys other current assets amounted to Rs. 6.78 Crores as of March 31, 2023, as compared to Rs. 3.58 Crores as on March 31,2022.

Dividend: Total dividend paid in 2022-23 was Rs. 26.11 Crores, however, for 2021-22 it was Rs. 23.17 Crores.

RISKS AND MiTiGATiON

Proactive risk management for sustainable growth and resilience

Risks

Risk of infringement of intellectual property rights and proprietary technology

Definition

Depending on the laws of the nation binding on the business, the level of protection for the Companys patents, copyrights, trade secrets, and other intellectual property rights may vary.

Mitigation

The Company has a registered trademark, Quick Heal? and benefits from the legal protection given to its trademark. The Company has trademark registrations for Quick Heal, Guardian, Security Simple, Aapke PC mein kaun rehta hai, Virus ya Quick Heal?, and Surf Canister? in India. It has also been granted four patents in the United States. In the European Union, the Companys trademark registrations for the terms Quick Heal? and SEQRITE?. Also, in several nations where it presently does business or intends to do business, including Australia, Japan, and the United States, it has secured trademark registration for Fast Heal?.

Risks

Channel partner dependency risk

Definition

For the sale and maintenance of its solutions, the Company relies heavily on its channel partners. Service providers, system integrators, resellers, and distributors are a few of its channel partners. The channel partners are permitted to sell clients software security products from other firms, including those that compete with its solutions, as per the non-exclusive nature of its agreements with them.

The Companys operations will suffer if channel partners opt to put more effort into marketing and to sell their own solutions or of competitors instead of effectively marketing and selling the Companys solutions.

Mitigation

Quick Heals SEQRITE has established a robust position in the SMB market segment, and based on this success, the Company aims to expand its presence into the midsized business market. The Companys competencies are driven by factors like 27+ years of rich industry experience, extensive product assortment, local R&D presence, in-depth threat intelligence, distributed sales, and technical support. It has significantly expanded its partner network across India. So, to ensure proper distribution and risk minimization, the Company has created a two-tier distribution model. The sales workforce works directly to maximize product availability throughout the channel and offer technical and sales support. The Company emphasizes giving channel partners continual training (coordinated with technical support centers), so they may offer support services to end users.

The Companys Enterprise segment is transitioning to a very customer-centric strategy. This is mainly led by direct interactions with consumers and the structure of every contract with them. In fact, with this methodology, partners are working with the Company with better cooperation to improve agreements and deal sizes. One of the most important aspects of a developing partner ecosystem, is to update new technologies in line with what the client wants and to give them disruptive technologies before the competition.

Risks

Credit Risk

Definition

The Retail sector for antivirus and cyber security products, primarily uses the stock-and-sell business model. Extensive inventory at all levels is required by the industrys intensely competitive business environment and is essential for gaining market dominance. The channel partners are primarily responsible for the Companys sales and revenues. It is impacted by any general market or economic situation that affects their cash flow.

Mitigation

The Company normally extends a credit period of 30-6090 days to our channel partners. To lessen this risk, the Company keep a tight rein on its credit exposure and take all necessary measures when evaluating the creditworthiness of partners. To guarantee quicker sales turnover and prompt collection, the sales workforce regularly collaborates closely with the partner ecosystem. The Company has strengthened Tier I Distributor infrastructure by appointing 300+ distributors dispersed nationwide servicing 35,000+ dealers across the countrys rural and urban regions. This will assist the Companys expanding its direct reach, generating more investment, and further reducing risk.

Presently, on a credit facility of 30-60-90 days, 90%+ of the business payments are made within the credit limit granted to them. Moving up to high-value projects puts mid-segment partners at some risk because execution and customer payments may take longer than 90 days, even though these partners have the financial wherewithal to support such value added deals. These serve as aggregators and every Tier II partner has credit terms with distributors, thus, the Company seeks national distributors help to lower this risk. This same methodology is undertaken by the Company for worldwide markets and partners.

Risks

Competition Risk

Definition

The benefits presented by the solutions and services of industry competitors may seem to be as efficient as the Companys for less money or for free, as part of a bigger product bundle, or only in exchange for maintenance and service payments. This can significantly impact the average realization per unit of the product sold by the Company.

Mitigation

In addition to metro areas, Quick Heal is currently the market leader in the retail sector and has a significant presence

in Tier II and Tier III cities. With an extensive distribution network, the Company has a strong reach in India than other international players. Unlike other brands, it has created a strong presence with direct distributors and T1 partners across the nation.

Additionally, the Company strives to convert and draw in new customers through regular marketing initiatives, influence from partners and retailers, and promotional events. The biggest differentiator is its excellent customer service. Alongside, the Company offers users multimedia support by phone, email, SMS, online chat, support forum, network access, and multilingual end-user support in Hindi, English, and numerous other important regional Indian languages.

The Companys R&D expenditures in 2022-23 stood at ? 121.3 Crores as on March 31,2023. The team is focused on discovering emerging risks and developing innovative features for the retail, corporate, and Government markets.

Another potential impediment is getting the Companys products listed on several analyst evaluations, such as the Gartner Magic Quadrant and NSS labs/EAL certifications. Vendors may find it difficult if there is lack of visibility, particularly in international markets like MEA, Europe, and APJ where there are newcomers and need to gain legitimacy.

Risks

Risk of Obsolescence

Definition

The intelligence and intricacy of cyber attacks appear to be increasing with each passing year. This menace is made worse by the fact that it involves destructive forces functioning on a global scale and endangers the security of sovereign states.

Mitigation

Quick Heals competitive position, brand reputation, and future business opportunities could all be impacted by any delays in the implementation of new features, updates, enhancements, and solutions, that successfully protect end users from emerging security risks. Quick Heal functions with diverse hardware, software applications, operating systems, and network functions by investing in research and development. Additionally, it also ensures prompt updates and additions that are made available to the users.

Certifications

• SEQRITE Endpoint Security - Certified and approved by ICSA Labs in 2021 m SEQRITE Endpoint Security - Certified with Advanced Approved Endpoint Protection by AV-Test 2021

• SEQRITE Endpoint Security - Certified as Top Product for enterprises by AV-Test in 2021 m AV Test - Approved Corporate Endpoint Protection a AV Test - Top Product a ICSA Labs Certified Endpoint Security

Patents

• USPTO 1,03,87,649 - Signatureless Behaviour- based Detection Technology m USPTO 1,03,11,234 - Anti-Ransomware Technology

• USPTO 89,73,136 - System and method for protecting computer systems from malware attacks

• USPTO 89,14,908 - A completely automated computer-implemented system and method for piracy control based on update requests m USPTO 83,47,389 - System for protecting devices against virus attacks m USPTO 79,45,955 - Virus detection in mobile devices having insufficient resources to execute virus detection software

Normally, customers who license the Companys goods, do not provide signed license agreements. In these situations, the Company provides a printed license along with the business products that are distributed in boxes and an electronic version of an end-user license for all software distributed electronically. Even though the standard practice for software vendors is to have licenses that the licensee does not sign, some legal experts think that many jurisdictions may not have the ability to enforce such agreements.

INTERNAL CONTROL AND SYSTEMS

Reinforcing internal controls for a secure and responsible future

A comprehensive set of rules, regulations, and procedures that support the Companys operations, boost efficiency and reinforce conformity to policies make up its internal control systems. These systems and controls were created with Quick Heals nature, size, and complexity in mind. To prevent errors and maintain a smooth flow of its business activities, the statutory and internal auditors periodically evaluate the operations and processes. All relevant observations are instantly taken into consideration. The Audit Committee meets and extensively examines the reports of the same.

• AUDIT COMMITTEE: The Audit Committee is in charge for assessing the effectiveness of our Companys internal control systems and making recommendations for improvements. Alongside, All Related Party Transactions also require prior approval of the Audit Committee. Audit Committee is constituted by the Board of Directors of the Company in accordance with Section 177 of the Act and Regulation 18 of the SEBI (LODR), 2015.

• CODE OF CONDUCT: We follow a Code of Conduct outlining the ethical and legal standards that all employees, directors, and vendors must follow. The code covers areas such as conflicts of interest, bribery and corruption, data protection, and intellectual property rights.

• WHISTLE-BLOWER POLICY AND VIGIL MECHANISM: We

believe in conducting the business in a fair and transparent manner by adopting the prudent business practices based on the principles of professionalism, honesty, integrity and ethical behavior. We strive to empower our employees to feel supportive of voicing their genuine concerns about any unethical or unacceptable business practice or any event of misconduct. m VULNERABILITY DISCLOSURE POLICY: In accordance with our commitment to good corporate governance, we adhere to a robust set of policies, procedures, and guidelines rooted in sound ethics.

• IT SECURITY CONTROLS: We have implemented robust IT security controls to protect our own systems and those of our clients. Within our IT security policies, we cover areas such as access control, data protection, and incident response.

CAUTIONARY STATEMENT

Forward-looking assertions about Quick Heal Technologies Limiteds financial performance and operations outcomes can be found in this paper. Forward-looking statements are, by their very nature, subject to risks and uncertainties and demand assumptions from the Company. The likelihood that the assumptions, forecasts, and other forward-looking statements will turn out to be incorrect is rather high. Readers are advised not to put undue faith in forward-looking statements since a number of variables might lead to assumptions, actual results, and events diverging considerably from those predicted in the statements. As a result, the conclusions, limitations, and risk factors mentioned in the Managements Discussion and Analysis of the Companys Annual Report 2022-23 apply to this document in their entirety and are subject to the cautionary note.