Trust Fintech Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

(A) INDUSTRY STRUCTURE AND DEVELOPMENTS:

Trust Fintech Limited, a company listed in the SME Platform of National stock exchange is the software development company and also provides consultancy services, IT solutions with its presence in USA and UK, Africa. The company offers a comprehensive range of solutions including advanced banking software, ERP implementation, customized software development, SAP Business One (SAP B1) services, and offshore IT services.

Organisational Structure:

(i) Development Teams: Typically organized into various teams, including frontend, backend, and developers.

(ii) Project Management: Product Managers & Project Managers, play a crucial role in overseeing development processes, ensuring that projects align with business goals, and managing timelines.

(iii) Quality Assurance (QA): Dedicated teams focus on testing and quality control to ensure software is bug-free and meets user requirements.

(iv) Development Team: Integration of Development and Operations teams to streamline the software delivery process, enhance collaboration, and improve deployment efficiency.

(v) Support and Maintenance: After deployment, support teams handle customer issues and maintenance to ensure software continues to perform well.

(B) OPPORTUNITIES AND THREATS:

Opportunities:

Indias IT industry is expanding rapidly, driven by the increasing demand for digital transformation services globally. This provides ample opportunities for the company to grow and diversify its service offerings.

India has a large pool of skilled IT professionals and engineers, which can be leveraged to deliver high-quality services at competitive costs.

With the increasing adoption of technology in various sectors within India, there is a growing domestic market for IT services. The subsidiary companies in UK & USA have also started its operations and looking forward to attract more international clients for their software & development needs. The company is totally debt-free and now being run by well experienced promoters with having two decades of insightful knowledge of this industry. There is a good scope for future growth and profitability.

Some of the important areas where the company is working is as under:

• Digital Banking Solutions: The demand for advanced digital banking solutions is growing, fuelled by technological advancements and evolving regulatory requirements. Financial institutions are increasingly seeking solutions that offer enhanced functionality and improved customer experiences.

• ERP Systems: The trend towards integrated ERP systems continues to gain momentum as businesses strive to enhance operational efficiency and streamline processes. Companies are investing in ERP solutions to achieve better data integration and decision-making capabilities.

• Custom Software Solutions: The market for customized software solutions remains strong, with businesses seeking tailored solutions to address specific operational needs. This trend highlights the increasing importance of software development in meeting unique client requirements.

• SAP B1 Adoption: The adoption of SAP B1 among SMEs is on the rise, driven by the need for scalable and flexible ERP solutions. Businesses are recognizing the value of SAP B1 in supporting growth and operational efficiency.

• Artificial Intelligence (AI): The company is working in the areas of AI Knowledge BOT, AI Database BOT, Credit Risk Analysis using AI (ML driven scoring models)

• AML (Anti-Money Laundering) Module

• RBI Compliance

Reporting Automation

• UPI/IMPS/Switch

• Audit & compliance Threats:

The IT sector in India is highly competitive, with many players ranging from large multinational corporations to numerous small and medium enterprises. This intense competition can lead to pricing pressures and reduced profit margins. While India has a large pool of skilled professionals, retaining top talent can be challenging due to high demand and frequent job switching within the industry. Finding and retaining skilled developers and IT professionals can be difficult, leading to potential delays and increased costs. This can impact the continuity and quality of projects. High employee turnover rates can disrupt projects and increase recruitment and training expenses.

The fast pace of technological advancements can be challenging, requiring constant learning and adaptation. Technologies and tools can quickly become outdated, necessitating frequent updates and innovations.

Changes in government regulations, including data protection laws and taxation policies, can pose challenges for IT companies.

With increasing digitization, cybersecurity threats are also on the rise. IT companies need to constantly invest in robust security measures to protect their data and systems, which can be costly and complex. Rapid advancements in technology require continuous upskilling and adaptation. Companies that fail to keep pace with technological changes risk becoming obsolete. Despite improvements, there are still infrastructure challenges in certain regions of India, such as inconsistent power supply and internet connectivity. These issues can affect the efficiency and reliability of IT services.

(C) OUTLOOK:

Established in 1998, Trust Fintech Limited has been involved in providing software solution and services in the field of banking, ERP Implementation, Customized Software solutions Development and offshore IT services. Looking ahead, the company is well-positioned to capitalize on the growing demand for sophisticated software solutions and IT services. The company has established itself as a trusted partner for banks and financial institutions globally.

We anticipate continued growth driven by several key factors:

• Increased Adoption of Digital Banking Solutions:

We will leverage our expertise to address emerging needs in the banking sector, focusing on developing innovative solutions that enhance digital banking experiences.

• Expansion of ERP Solutions:

Our strategy includes strengthening our presence in the ERP market through enhanced offerings and expanded consulting services. We aim to capture a larger market share and support businesses in achieving operational excellence.

• Growing Need for Custom Solutions:

We will continue to focus on providing tailored software solutions to meet specific client requirements. Our commitment to customization will help us capitalize on this growing trend and deliver value to our clients.

• SAP B1 Market Growth:

We are committed to enhancing our service portfolio to support SAP B1 clients more effectively. Our goal is to help SMEs leverage SAP B1 to drive growth and operational efficiency.

• Global Offshore IT Services: We will further develop our offshore capabilities to support global clients with scalable and cost- effective solutions. Our focus is on improving service delivery and expanding our international presence.

• Credit Union -USA (CBS & LOS)

• ONDC Buyer & Seller Apps, PMEGP Portal We remain committed to innovation, operational excellence, and strategic growth, ensuring that we are well- positioned for continued success in the coming years.

We are guided by our value system which motivates our attitudes and actions. Our core values are Client Value, Leadership, Integrity and Transparency, Fairness, and Excellence. Our strategic objective is to build a sustainable organization that remains relevant to the agenda of our clients, while creating growth opportunities for our employees, generating profitable growth for our investors and contributing to the communities that we operate in.

We strive to create new avenues for adding more value for the "stakeholders" being investors, business partners, employees, consumers, and communities as well.

(D) RISK AND AREAS OF CONCERNS:

(i) Technological Risks:

• Technological Changes:

The rapid pace of technological advancements presents a risk of obsolescence. To mitigate this risk, we are committed to continuous investment in research and development, ensuring that our solutions remain competitive and relevant.

• Integration Challenges: Incorporating new technologies or integrating with existing systems can be complex and may lead to unforeseen issues or compatibility problems.

• Cybersecurity Threats:

As software becomes more integral to business operations, the risk of cyberattacks, data breaches, and other security incidents increases. Ensuring robust security measures and compliance with data protection regulations is essential.

(ii) Operational Risks:

• Project Management: Mismanagement of projects, missed deadlines, and budget overruns, can negatively affect client satisfaction and company profitability. Effective project management practices and tools are critical.

• Resource Allocation: Inefficient allocation of resources, including personnel and technology, can lead to delays, reduced productivity, and increased costs.

• Quality Assurance: Inadequate testing and quality assurance can result in software defects, poor user experience, and overall customer dissatisfaction.

(iii) Market Risks:

• Intense Competition: The software development industry is highly competitive, with numerous players ranging from large corporations to startups. Maintaining a competitive edge in the present market scenario is crucial.

• Client Dependence: Heavy reliance on a few major clients can be risky if those switch to competitors, or change their products or face financial difficulties.

• Changing Customer Needs: Rapid changes in customer preferences and market demands require software companies to adapt quickly to the changing demands so as to avoid losing relevance.

(iv) Financial Risks:

• Cash Flow Management: Software development companies may face cash flow issues, especially if they rely on long sales cycles, delayed payments, or large upfront investments in development.

• Cost Overruns: Unforeseen expenses, such as additional development costs or higher-than-expected maintenance needs can impact profitability.

• Economic Downturns: Economic fluctuations or recessions can lead to reduced IT budgets, postponed projects, and financial instability for clients, affecting revenue

(v) Legal and Compliance Risks:

• Intellectual Property (IP) Issues: Protecting proprietary technology and dealing with potential IP theft or infringement claims can be costly and complex.

• Regulatory Compliance: Compliance with data protection laws and other regulations is essential to avoid legal penalties and maintain client trust.

To manage risks with the ultimate goal of maximising stakeholders value, the company has an integrated and organised enterprise risk management process. At Trust Fintech Limited, the risk management process typically entails risk identification, assessment, prevention, prioritisation, and monitoring.

With the aid of this technique, the company is better able to take informed decisions about the creation of opportunities, effectively manage risks to acceptable levels, and enhance confidence in the accomplishment of its desired goals and objectives. The Risk Management Policy approved by the Board, is placed on the website of the company www.softtrust.com

(E) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Internal financial control systems are essential for managing a software companys financial health, ensuring compliance, and maintaining operational efficiency. They involve a set of processes, procedures, and controls designed to safeguard assets, ensure accurate financial reporting, and prevent fraud.

The company has adequate internal control procedures commensurate with the size and nature of business. These procedures ensure efficient use and protection of the resources and compliance with policies, procedures and statutes. There is a periodical review mechanism for ensuring the sustenance and up-gradation of these systems.

(F) SEGMENT WISE PERFORMANCE OR PRODUCT WISE PERFORMANCE:

The company is presently engaged in single segment of software development and also provide consultancy services and technology innovation.

The performance of the company for the F.Y. 2024-25 is summarized below:

	(Amount IN Rs. 000)
	Standalone		Consolidated
Particulars	FY 2024-25	FY 202324	FY 2024-25
Net Sales/ Income from business operations	312611.03	350437.54	312611.03
Other Income	43727.16	2324.73	43753.15
Total Income	356338.19	352762.27	356364.18
Profit before Depreciation	141188.84	179245.25	131248.03
Less: Depreciation	19626.49	12334.54	19626.49
Profit After Depreciation but before Tax	121562.35	166910.71	111621.54
Less: Current Income Tax	30594.81	41446.37	30594.81
Less: Deferred Tax	971.72	438.77	971.72
Earlier year	-	8.61	-
Net Profit After Tax	89995.81	125016.96	80055.00
Amount transferred to General Reserve	89995.81	125016.96	80055.00
Earnings per share (in Rs)
Basic	3.78	7.13	3.36
Diluted	3.78	7.13	3.36

Key observations:

1. Revenue: Revenue from operations and other income is Rs. 35,63,38,190 as compared to 35,27,62,270 in the previous financial year.

2. Profitability: During the year, Net Profit After Tax was Rs 8,99,95,810 as compared to Rs. 12,50,16,960 in the previous year.

3. Depreciation: Depreciation and amortization expenses in the current year is Rs 1,96,26,490 as compared to Rs. 1,23,34,540 in the previous year.

4. Tax Impact: The current tax expense decreased to 3,05,94,810 as compared to Rs 4,14,46,370 in the previous year.

5. Earnings Per Share: Both basic and diluted earnings per share is Rs. 3.78 as compared to Rs. 7.13 in the previous financial year.

(G) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE for F.Y. 2024-25:

(i) Revenue from operations and other income is Rs. 35,63,38,190 as compared to 35,27,62,270 in the previous financial year.

The company achieved modest revenue growth during the year.

(ii) Profitability: During the year, Net Profit After Tax was Rs 8,99,95,810 as compared to Rs. 12,50,16,960 in the previous year.

Net Profit After Tax decreased during the year as compared to the previous year.

(iii) Depreciation: Depreciation and amortization expenses in the current year is Rs 1,96,26,490 as compared to Rs. 1,23,34,540 in the previous year

The expenses for Depreciation increased during the current year as compared to the previous year.

(iv) Tax Impact: The current tax expense decreased to 3,05,94,810 as compared to Rs 4,14,46,370 in the previous year.

The decrease in current tax expense indicates either lower taxable income or more effective tax planning.

(v) Earnings Per Share: Both basic and diluted earnings per share is Rs. 3.78 as compared to Rs. 7.13 in the previous financial year.

There was decrease in the earnings per share during the year as compared to the previous year due to lower profit.

(H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

Human capital is viewed as a valuable resource and an integral part of the companys success and your company strongly believes that its employees are the key pillar of your companys success. The company recognizes that its employees are its principal assets and that its continued growth is dependent upon the ability to attract and retain quality people.

The experienced and talented employee plays a key role in enhancing business efficiency, devising strategies, setting up systems and evolving business. We invest in training human resources that we hire to perform the services we provide. The performance of our company will benefit from the continued service of these persons or the replacement of equally competent persons from the domestic or global markets.

As on 31^st March 2025, the company has total 290 number of employees.

The company gives a lot of importance to Human Resource activities. These activities have helped to retain and motivate employees of the company. We have maintained very cordial Industrial relations throughout the year. Measures for the welfare of employees, Training & Development were given great importance by the management.

(I) FINANCIAL RATIOS:

Sr. No.	Ratios	Numerator	Denominator	F.Y. 2024-25	F.Y. 2023-24	% Change	Reason for variance
1.	Current Ratio	Current Assets	Current Liabilities	10.80	3.66	195.08%	Sub note. a
2.	Return on Networth Ratio	PAT	Equity Share Capital + Reserves And Surplus	0.08	0.28	(71.43%)	Sub note. b
3.	Net Profit Ratio	PAT	Total Sales	0.29	0.35	(17.14%)
4.	Return on Investment	PAT	Total Assets	0.07	0.24	(70.83%)	Sub note. c
5.	Trade Receivable Turnover Ratio	Total Sales	Average Accounts Receivable	2.06	2.94	(29.92%)	Sub note. d
6.	Net Capital Turnover Ratio	Total Sales	Average Working Capital	0.42	1.81	(76.80%)	Sub note. e

Sub note. a : Increase in cash balance due to IPO funds infusion

Sub note. b : Equity increased due to IPO and funds were yet to be deployed for usage

Sub note. c : funds were yet to be deployed for usage

Sub note. d : Decrease in Trade Receivable Turnover Ratio indicates better realization of funds from Debtors

Sub note. e : funds were yet to be deployed for usage

(J) DISCLOSURE OF ACCOUNTING TREATMENT:

The companys audited financial results have been prepared in accordance with Companies (Accounting Standards) Rules 2006 (As) as amended, prescribed under section 129 & 133 of Companies Act 2013 read with relevant rules.

(K) CAUTIONARY STATEMENT:

Estimates and expectations stated in this Management Discussion and Analysis may be "forward-looking statement" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your companys operations include economic conditions affecting demand/supply and price conditions in the domestic and international markets, changes in the Government regulations, tax laws, other statutes and other incidental factors.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
TRUST FINTECH LIMITED
Sd/-	Sd/-
HEMANT CHAFALE	MANDAR DEO
MANAGING DIRECTOR	WHOLETIME DIRECTOR
DIN:01590781	DIN:01590926
Date: 23-08-2025
Place: Nagpur