Xelpmoc Design and Tech Ltd Management Discussions

<dhhead>Management Discussion and Analysis</dhhead>

GLOBAL ECONOMY ¹

The global economy recorded 6.1% GDP growth rate in 2021 led by easy liquidity, improved capital flows and a resurgence in trade and commerce amid gradual reopening of lockdowns. However, it is expected to moderate in 2022 and 2023 to 3.6% each. This is due to significant inflationary pressures caused by the Ukraine conflict and supply chain disruptions. Overall economic risks have risen dramatically, making policy trade-o s more difficult to achieve.

Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are the key essential areas to be looked upon.

INDIAN ECONOMY ²

India is the world’s fastest growing major economy in the world, according to the Gross Domestic Product (GDP) growth estimates in the FY22 by the International Monetary Fund (IMF).

Higher inflationary pressures and an uneven labour market recovery are expected to slow India’s growth to 6.4% in 2022, down from 8.8% in 2021 as higher oil prices are expected to weigh on private consumption and investment.

INFORMATION TECHNOLOGY IT INDUSTRY

The post pandemic recovery continues to accelerate Information Technology (IT) Industry and investment. The disruptive years of 2020 and 2021 have paved way for the integration of IT throughout every industry globally. Today’s workplaces are gradually using digital tools and solutions and are willing to experiment with cutting-edge technologies. The Internet of Things, Artificial Intelligence, Blockchain Technologies, Cloud Adoption, and Data

Security & Cyber Protection are the principal technological trends that will continue to revolutionise the Indian IT business in the current year.

Worldwide IT spending is projected to total $4.4 trillion in 2022, an increase of 4% from 2021. Price and wage inflation, combined with talent shortages and other delivery uncertainties, are unlikely to deter the expected technology investment led by the increasing adoption of digital technologies.

INDIA IT SPENDING FORECAST

India is amongst the world’s leading computer hardware and software supplier. India’s IT and commercial sectors contribute significantly to the country’s economy. India’s IT spending is expected to reach $101.8 billion in 2022, an increase of 7% over the previous year.

In 2022, all areas of IT spending in India are expected to grow, with software spending growing at the fastest rate. Software spending is expected to hit $10.5 billion in 2022, up

WORLDWIDE IT SPENDING FORECAST ³

US$ BILLION	SPENDING	GROWTH %	SPENDING	GROWTH %	SPENDING	GROWTH %
	2021		2022		2023
Data Centre Systems	207.3	6.7	218.6	5.5	230.3	5.4
Software	614.4	15.9	674.8	9.8	754.8	11.8
Devices	809.4	16.1	824.6	1.9	837.8	1.6
IT Services	1,185.1	10.6	1,265.1	6.8	1,372.8	8.5
Communications Services	1,443.4	3.4	1,448.3	0.3	1,477.7	2.0
OVERALL IT	4,259.7	9.5	4,431.6	4.0	4,673.7	5.5

 

14.4% from 2021. While software spending is expected to increase four times in 2022 compared to pre-pandemic levels, it will grow at a slower rate than in 2021.

INDIA IT SPENDING FORECAST ⁴

US$ MILLION	SPENDING	GROWTH %	SPENDING	GROWTH %
	2021		2022
Communication Services	24.0	4.4	24.5	2.3
Data Centre Systems	2.7	5.7	2.8	3.4
Devices	41.0	14.0	44.1	7.5
IT Services	18.1	10.8	19.7	9.1
Software	9.1	17.0	10.5	14.4
OVERALL IT	95.1	10.8	101.8	7.1

 

EMERGING TRENDS IN INFORMATION TECHNOLOGY INDUSTRY

The pandemic has accelerated the pace of technological change across governments, corporates and individuals alike. This means that the digitization and virtualization of business and society will continue to accelerate.

As the focus shifts from merely surviving in a changing world to thriving in it, firms will continue to harness this newfound openness to flexibility, agility, and innovative thinking as a society.

Broadly, the trends signifying transformation are mentioned herein:

ARTIFICIAL INTELLIGENCE AS A SERVICE AIAAS

AIaaS is a third-party offering of artificial intelligence (AI) outsourcing. AI as a service enables people and businesses to experiment with AI for a variety of uses with lower risk and a smaller initial investment. Multiple public cloud platforms can be sampled through experimentation in order to evaluate various machine learning algorithms.

AIaaS is recognized as including a variety of offerings and delivery models, including the following:

1. Commercially available tools for building, deploying, and scaling AI/ML models, including unique features or specialised developer services

2. Providing vertical services, such as Inference-as-a-service, Annotation-as-a-service, or annotation-as-a-stage in the AI deployment process. Machine Learning as a Service (MLaaS)

3. Completely outsourced or managed service models that resemble cloud-based or standard ADM contracts

GLOBAL MARKET SIZE OF AI AND AIAAS

The Global market for AI is expected to grow by 39% CAGR to US$ 219.2 billion by 2025. Within the same, the AIaaS is expected to grow at a faster pace of 48% CAGR to US$ 41.7 billion. North America has the highest share at 53% of the AIaaS market, Asia is expected to have the fastest growth at 50% CAGR.

AI & AIAAS MARKET SIZE BY END USER SEGMENTS

(in %)

Initial traction has been predominantly observed in task automation use cases in the IT, Telecom, and BFSI sectors. The manufacturing, retail, and healthcare industries are witnessing an increasing growth trend.

Currently, there is fragmented competition, and the majority of businesses are concentrating on building solutions in silos. AI will become more integrated into various systems, applications ranging from data administration to online retail. Many competitors in the fragmented industry are working to expand their market share by focusing on product diversity and development. The market concentration is anticipated to develop and mature as adoption levels rise.

ANALYTICS ⁵

The COVID-19 pandemic has accelerated the adoption of data analytics solutions and services. Various organisations can use data to improve their marketing strategies, increase their bottom line, personalise their content, and gain a better understanding of their customers. The science of analysing raw data to extract meaningful insights is known as data analytics. Many data analytics techniques and processes are automated into algorithms and mechanical processes to operate on raw data for better decision-making. Data analytics is a broad term that encompasses a variety of data analysis techniques. It is the process of analysing data sets to draw conclusions about the information contained within them.

The analytics market value in 2022 is estimated to be US$ 40.88 billion. It is expected that the market will expand by 21.1% by 2030 to US$ 189.56 billion.

HYPER AUTOMATION ³

Hyper-automation is the idea of automating everything that can be automated in a company. Organizations that use hyper-automation aim to use Artificial Intelligence (AI), Robotic Process Automation (RPA), and other technologies to run processes across their business without human intervention. Hyper- automation is considered as a strategic tool due to its ability to automate as many different businesses and IT processes, using tools like Artificial Intelligence, machine learning, event-driven software, robotic process automation (RPA), and other types of decision-making processes, as well as task automation tools.

According to Gartner, the global market for hyper-automation technology will reach $596.6 billion in 2022. This compares to $481.6 billion in 2020 and $532.4 billion in 2021.

DECISION INTELLIGENCE ⁶

Multiple experiences and biases can affect judgments, but in a world of rapid change, organisations need to make better decisions faster.

By modelling decisions using a framework, decision intelligence enhances organisational decision making. Based on lessons learned and user input, fusion teams may manage, assess, and improve decisions.

The development of decision intelligence platforms to support, amplify, and automate judgments is made possible by integrating data, analytics, and AI.

The Global Decision Intelligence Market size was estimated at $9.78 billion in 2021 and is expected to reach $17.15 billion by 2027.

METAVERSE ⁷

The metaverse is a seamless integration of our real and digital lives, resulting in a unified, virtual society where users can work, play, relax, transact, and interact. The metaverse is still in its early stages of development, and there is no one, all-encompassing description to which people may refer. However, themes of the metaverse’s nature and potential are starting to emerge. The fact that there are many virtual worlds developing to enable people to deepen and extend social connections virtually is a crucial factor. This is accomplished by enhancing the web with a three-dimensional, immersive overlay to produce experiences that are more authentic and natural.

Various commercial opportunities exist within the Metaverse ecosystem. Every year, US$54 billion is spent on virtual goods. In-game ad spending is expected to reach US$18.41 billion by 2027. It is expected that the metaverse will likely infiltrate every sector in some way in the coming years, with the market opportunity estimated at over $1 trillion in yearly revenues in future.

OPPORTUNITIES IN THE HEALTH, EDUCATION, AGRICULTURE AND LIVELIHOOD SECTORS

HEALTH ³

The healthcare industry has changed dramatically since the pandemic. In 2022, software development companies are expected to assist the healthcare industry in implementing digital technologies. New entrants and delivery models are expected to change the model of healthcare practice.

Healthcare is improving and arising from a growing and ageing population, despite the tidal wave of chronic diseases and challenging times. Following COVID, medicine delivery and other moving care delivery models are in high demand. A surge of clinical content has been noted as a key healthcare technology trend for 2022.

However, with the help of software outsourcing companies, the healthcare sector is successfully growing online. Healthcare technology is gaining traction, in domain areas of online appointments, hospital and organisational productivity.

From 2022 to 2030, the global digital health market is expected to grow at a compound annual growth rate (CAGR) of 27.7%, from a base of US$ 175.6 billion in 2021. The market growth is expected to be driven by rising advanced healthcare IT infrastructure, rising healthcare expenditure, rising prevalence of chronic diseases, increasing demand for remote patient monitoring services, and increasing accessibility of virtual care.

Within the larger healthcare sector, HealthTech is a rapidly expanding industrial vertical that presently only makes up a fraction of the overall market. It is projected to increase to US$ 5 billion by 2023 at a rate of 39% CAGR. It is primarily comprised of technologically enabled healthcare products and services that are provided to and/or consumed by patients both inside and outside of a hospital or doctor’s office, such as teleconsultation, e-pharmacy, e-diagnostics, B2B health technology, B2B medical supplies, and other healthcare solutions like personal health management, online home healthcare, etc.

EDUCATION

The education industry is going through a forced innovation era that is changing the old educational attainment model from one that is more static to one that is more dynamic. This forced innovation is affecting all dimensions and areas of the education industry. The more dynamic model adapts the aforementioned traits by removing artificial restraints like time-bound processes that involve a change from adherence to rigid curricula to a more fluid and broader framework informed by supply and demand factors. It also removes structural boundaries from physical to virtual, from receiving and giving to acquiring and mastering. This further implies that students are demanding relevant information in direct relation to the skills required in the real world.

EMERGING TRENDS IN THE EDUCATION INDUSTRY:

 

Gamification

Gamification is the application of game characteristics in situations that are not game- related19. Gamification can encourage students and increase engagement within the context of education and learning by providing the following advantages.

1. Creating an entertaining and stimulating learning environment

2. Engaging students with real-world applications

3. Providing real-time feedback

 

Personalized and adaptive learning

Personalized learning is defined as training when the learning objectives, pace of learning, instructional strategy, and instructional content are all tailored to the individual needs of each learner. Research suggests that individualised learning can improve accomplishment for students over a period of time, regardless of their beginning level of achievement.

EdTech can help to create a fully tailored learning journey using AI, machine learning, and predictive analytics, as well as convincingly demonstrate better learning results, both quantitatively and qualitatively.

 

Immersive learning (AR/ VR)

Immersive learning is the technique of learning using a simulated or artificial environment that enables learners to experience a simulated physical learning environment. Immersive learning encourages personalised learning since it is based on the learner-centered approach, which allows learners to develop at their own speed and receive guided rehearsals to achieve the necessary degree of proficiency. Additionally, it is expected to lessen interruptions, increase engagement and memory retention, and produce greater learning gains. It is also a differentiated approach to teach students who have difficulties. Virtual reality (VR) and augmented reality (AR) can be used to implement immersive learning (VR).

EdTech is creating a niche for itself by using new delivery methods rather than upending traditional educational networks. This is effective because it creates –

1. a sizable pool of professors in many professions who might previously have relied primarily on local student networks, and

2. a sizable worldwide pool of students based on the cost arbitrage concept.

The global Edtech market was valued at around USD 85 Billion in 2021 and it is expected to grow at a Compound Annual Growth Rate (CAGR) of around 17% to reach approximately USD 218 Billion in 2027. ⁵

India’s Edtech market is broadly classified as (i) Pre-K12 (ii) Post K-12 and (iii) Others.

Pre-K12 market is estimated at US$ 1.7 billion and the post K12 market is estimated at US$ 1.8 billion in CY2022. The K12 market comprises of grades 1-12 and the post K12 segment comprises of Higher education (60% share), Government test preparation (14%), technical skilling (19%) and other professions test preparation (7%). India is estimated to have 110.5 million Edtech users in 2022 and Edtech user base is expected to increase driven by increased internet penetration and increase in user spends and the need for continuous upskilling and reskilling. ⁸

India’s EdTech industry has experienced rapid growth and innovation in recent years, and is projected to increase by 3.7 times over the next five years, from $2.8 billion today to $10 billion in 2025. ⁹

AGRICULTURE

Agricultural technology, or agtech, is a subcategory of the technology industry that includes services and products that help farmers. Agtech is booming because of several key factors, including rising demand for efficient food production, economic stability, and agricultural sector expansion.

The agriculture industry is gradually transforming into the next high-tech sector. Technologies like blockchain, artificial intelligence, and computer vision are being leveraged to improve crop yields, supply chains, and sustainability.

Some of the agtech solutions are in the areas of farm management, data analytics, agri-input marketplaces, Agri–output marketplaces, Agri Financing, Livestock management and farm mechanization.

 

Some of ways in which agtech is expected to deliver value addition are as follows:

REQUIREMENT	DATA REQUIRED	AGTECH OFFERINGS
Income & crop profile for financing	Details of current and previous income: Farm and non-farm income	• Data based on proximity to the nearest mandi
	• Crop name	• Historical data on the type of crops and their quality
	• Seasonal or annual	• Weather forecasting
	• Irrigated or Unirrigated	• Tracking irrigation facilities
	• Proposed crop for the next financial year	• Assessment of soil quality
	• Arrangements for cultivation, inputs procurement, marketing, storage, and transportation of the produce	• Price prediction tools
		• Agri-inputs purchased online, personal profiles
		• Historical data on outputs sold
Credit history profile	• Deposit and loan account	Sourcing information from the credit bureau
	• PMJDY overdraft
	• Amount of loans sanctioned and outstanding
	Nature of land
	• Owned as opposed to leased
	• Irrigation facilities
Particulars of agri land holdings and crops	• Percentage of land irrigated	Develop solutions to digitize land records with beneficial ownership
	• Market rate per acre
	• Number of owners, among other factors
	• Access to the mandi
	• Distance from the farm to home
	• Type of crop sown, yield estimates, past performance, availability of input
Movable assets or properties	• Types of assets like irrigation pump sets, tiller, tractor, transport vehicle, etc.	Tap into existing networks to source information
	• Livestock	• Crop monitoring to predict NPAs
Output profile	• Sowing and harvest estimates	• Yield estimation
	• Current and historical cropping frequency	• Visibility of usage of credit
		• Demand forecasting
Actual collection	Visibility on crop harvest and prices	• Market linkages for farmers
		• Partnerships with warehouse owners and support to grade and sort the output

 

LIVELIHOOD ¹¹

Achieving sustainable livelihoods through basic education, knowledge transfer and skills development in agriculture, agroforestry and natural resource management remains a challenge. The challenge is not only to develop technologies that are appropriate and that respond to local needs, but also to ensure that the uptake pathways for these technologies are created and function effectively.

Some of the areas where LivelihoodTech is expected to mark are covered below:

LOGISTICS

India has roughly 10 mn trucks on the roads (small and large) owned by around 3 mn truck owners. The Industry is highly fragmented with most truck owners based out of smaller cities and towns and having low digital literacy. Key issues in the industry are:

(1) presence of middlemen (brokers),

(2) largely cash-based transactions, and

(3) credit availability is mostly through informal channels.

Increasing digitalization is helping address these issues. Overall, the opportunity size in India is huge at US$ 35 billion of net revenue pool made up of:

1. US$ 15 billion market for loads: matching of loads between truckers and transporters and value added services

2. US$ 2 billion+ for payments: fuel, toll cards, etc.,

3. US$ 1 billion+ for telematics : equipment such as GPS, dash-cams, fuel sensors which can help owners monitor the fleet and

4. US$ 12 billion+ for financing of used trucks and working capital financing. The market is expected to grow to US$ 50 billion by 2025.

THIRD PARTY LOGISTICS AS A % OF GDP ¹²

Further, currently Indian third-party logistics is a smaller portion of GDP compared to other markets. As the Indian economy develops, this is expected to commensurately grow in size and giving rise to greater logistics opportunities.

Some of the key areas and their benefits where technology is spent in the logistics industry is as follows: ¹³

Internet of Things (IoT)

Improves efficiency, transparency and aids in real-time visibility of goods, condition monitoring, and fleet & inventory management

 

Robotics

Increases the speed and accuracy of supply chain processes and reduces human error

 

Warehouse automation

Increased efficiency, speed, and productivity by reducing human interventions, using technologies such as robotic picking, automated storage and retrieval (ASRS), and put-wall picking, automated guided vehicles, etc

 

Blockchain

O ers security through decentralized ledger system and addresses traceability and related challenges

 

AI

AI/ML technologies help companies to deal with demand fluctuations and allow better supply chain planning

 

Last mile delivery

This is ine cient and is a major contributor of total logistics costs but is the crucial part of supply-chain as it is directly impacts customer experience

 

Data analytics

Provide insights for the improvement of warehouse productivity, performance management, and optimal utilization of logistical resources

 

Cloud computing

Allow for pay-per-use models requiring low capital investment, minimizing the risk and cost of IT infrastructure Maintenance

 

Autonomous vehicle

Improve vehicle safety and helps in increasing the efficiency in first and last mile delivery

 

Elastic logistics

Enables companies to handle supply chain operations with more efficiency during demand fluctuations

FINANCE MANAGEMENT

The 63 million MSME businesses in India account for approximately a quarter of all employment possibilities and 29% of the country’s GDP. By 2050, it’s anticipated that this contribution will reach 50% of GDP. The Indian economy is still modernising quickly, which is fuelling a push for business formalisation. MSMEs have typically functioned in an informal environment, but there is a multi-decade trend that suggests that for small enterprises to thrive and remain relevant, they must formalise and go digital. The number of GST taxpayers has increased significantly since the introduction of the tax, from 7.0 million in 2020 to 13.7 million in 2022 ¹⁵. This increase is fuelling a demand for automation of financial management tools.

A rise in demand for Fintech SaaS solutions for app-based accounting and bookkeeping and no-code payment aggregation can be attributed to the Covid-19 pandemic’s increasing acceptance of digital financial products and services among Indian SMEs. To support this transformation, the Fintech- SaaS sector has been creating cutting-edge solutions including app-based bookkeeping and zero-code payment options. As a result, it is expected that India’s Fintech SaaS market will increase by 2.7 times over the next three years, from US$ 4.6 billion in 2022 to US$ 12.6 billion in 2025 ¹⁴.

OTHERS

 

Social Commerce

Social commerce meets a distinct set of needs while supplementing platform e-commerce. In addition to fostering trust, social commerce satisfies rising consumer demands for: greater product variety and customizability; a sense of belonging to and trust in the community; convenience; the ability to negotiate prices similar manner to offine purchases; and an enjoyable and engaging shopping experience.

In India, social commerce has the potential to support more than 40 million small business owners. Currently, local, offine merchants make up 85% of social commerce sellers. Many of these are first time entrepreneurs who are banking on these online platforms for growth in addition to their existing social networks.

Tier 2+ markets drive retail in India, accounting for 65% or more of the retail sector. The social commerce channel, which focuses on Tier 2+ markets, has witnessed strong growth as a result of the extremely limited organised channel mix in these regions.

Social commerce is developing at a quicker pace of 55-60% CAGR than traditional eCommerce which is growing at 30% CAGR. The social commerce market, which is estimated to be $1.5-2.0 billion in 2020, is anticipated to reach $16–20 billion by 2025.

MARKET OPPORTUNITY OF ~$ 16 20 BN BY 2025 ¹⁶

The most popular category for purchases is fashion (50% of GMV), followed by beauty and personal care (15-20 percent). ¹⁶

COMPANY OVERVIEW

We provide technical and professional consulting services to startups, corporates and government. Artificial Intelligence and Machine Learning combined with Natural Language Processing, Data science and analytics form the cornerstone of its solutions. We serve clients in a variety of industries, including e-commerce, transportation, logistics, recruitment, financial services, and social networking.

We facilitate innovation across our service clientele as we expect that they may either be unable to a ord it or have an economically unviable model internally. We primarily focus on the basic sectors of Health, Education, Agriculture and Livelihood (HEAL). We serve these sectors as these are vital needs of our target geographies and such innovation will facilitate the said geographies next leg of growth.

OUR COMPETITIVE STRENGTHS A COMPREHENSIVE SERVICES AND SUPPORT

Our end-to-end technology-based products, services, and solutions include managed services, integration solutions, and technology platforms. Since our inception, we have added data science, query optimization, and swift iteration services to our list of offerings. We assist entrepreneurs in starting and building their enterprises as well as government bodies in modernizing their technical applications.

B ACCESSIBILITY TO SUBJECT MATTER EXPERTS

We draw on the knowledge and expertise of our founders and senior executives from a range of sectors, including financial services, retail, media, and entertainment. This is

THE SCIENCE BEHIND PROVIDING OUR OFFERINGS

1. PROBLEM RECOGNITION

We view a problem from several different angles in order to derive a better understanding of the same.

2.EXTENSIVE RESEARCH

We examine the underlying data points in order to identify the statistical patterns that underpin them.

3.MACHINE LEARNING MODEL

We emphasize the data collection points, quality and type of data to arrive at the Machine Learning model complemented by subject matter experts from various sectors sharing their expertise. We have established a network of independent subject matter experts who collaborate with us as consultants in a variety of industries. These experts advise our clients on the necessity of particular technology and data-driven services as well as our capacity to provide such services.

C ORGANISATION STRUCTURE THAT ENHANCES THE CLIENT EXPERIENCE

Our business is organised around solution offerings. Clients have access to the full range of services we provide as well as the expertise within those service verticals, regardless of the location of the project. We concentrate on creating relationship-based interactions between our key staff and our clients in order to forge long-lasting customer relationships. Our integrated platform of services enables us to keep development and maintenance expenses for our clients low because we can pool our resources and expertise to offer a variety of services to each customer.

D SKILLED MANAGEMENT AND AN ENTREPRENEURIAL APPROACH

Our leadership team has held top management positions in reputable companies in a range of industries, and they are instrumental in fostering an environment that values creativity, initiative, and cooperation within our company. Initiatives to find and groom future leaders from within our organisation have also been developed.

OUR GROWTH STRATEGIES A PARTNERING WITH GOVERNMENT AND CORPORATES

We have recently completed projects for various corporations and government agencies in the areas of fraudulent data identification, website and app optimization, and supply chain management. We expect to leverage on our successes and continue to engage with such clients for higher value added projects.

B COLLABORATION WITH LIKE MINDED, HIGH QUALITY ENTREPRENEURS

We act as a Technology co-founder for the startups that we partner with. We work with them to create and develop the technological features and capabilities of their products. We also help in reaching out to large enterprises for marketing their products as we expect that most of our startups have the capability to serve the needs of the next 2.5 billion of the global populace. We have had significant success stories in the past, and we anticipate collaborating with more of such like minded entrepreneurs going forward.

C FOCUS ON THE HEALTH, EDUCATION, AGRICULTURE AND LIVELIHOOD HEAL STACK

The HEAL sectors have been highlighted as India’s development engine. Due to the pandemic, these sectors, which are the backbone of the Indian economy, are experiencing a lot of fresh attention. We anticipate that technology will be essential in maximising the potential of these industries.

D EXPAND OUR DOMAIN EXPERTISE AND IMPROVE OUR TECHNOLOGY CAPABILITIES

We continually make investments in data science, deep learning, and AI. By identifying businesses with significant growth potential and hiring people in those fields who can add value to our products and solutions and help us establish credibility in the market, we intend to strengthen our domain expertise and technological capabilities.

E ENHANCE OUR BUSINESS INTO NEW MARKETS

We expanded our business by incorporating our wholly owned UK subsidiary. We have already started working on a few UK based projects. Further, we are in process of expanding our senior management team in UK to accelerate our business. We have a presence in Singapore which is focused on African and Latin American markets. All our international locations are poised to enter the next leg of growth in future.

OPERATIONAL PERFORMANCE

At the end of FY22 we had served 53 clients as compared to 47 clients in FY21. Our team strength was 91 as at the end of March 2022. We opened our Hyderabad branch and incorporated our wholly owned foreign subsidiary for international expansion in UK.

Portfolio value of our investments increased to 623.6 million as on March 31, 2022 compared to 476.7 million as on March 31, 2021. During the year, we undertook new investments in Naik TechXP, First Sense Technologies, Graposs Edutech. We made additional investments in One Point Six Technologies and Rype Fintech. Our wholly owned subsidiary, Signal Analytics, raised 52.4 million by way of preferential allotment of Pre Series A CCPS to new investors thereby Xelpmoc shareholding in Signal has changed to 91.95% on fully diluted basis. Subsequent to the year-end Signal Analytics acquired 54.57% stake in Soultrax Studios.

We raised 270.0 million through preferential allotment to Newport Asia Group amounting to 4.99% of post issue paid up capital for augmentation of senior management personnel and expansion of our international operations.

 

Mr Madhu Poomalil joined Xelpmoc as Group President - Strategic Initiatives. Madhu has over three decades of experience in the Finance & IT industry, and has held senior leadership & Board positions with several blue chip multinational corporations. He will be working on the expansion of Xelpmoc’s business both nationally and globally.

 

Mr. Srinivas Kollipara joined Xelpmoc as Group President - Startup Ventures. Srinivas has over 30 years of international experience in product strategy, product management & Business Development, and is one of India’s top startup ecosystem builders. He will be scaling the value of Xelpmoc’s portfolio companies, and catalyzing corporate innovation for Xelpmoc.

For the full year FY22 our operating revenue was 80.5 million as compared to 140.5 million in FY21. Xelpmoc is largely a startup focused Company rather than service contract based. We had certain service contracts which got completed during the first half of the FY22 leading to the said revenue changes. However, our revenue momentum has picked up in the latter part of the FY22 and we expect the same to continue going forward. Operating EBITDA adjusted for ESOP was (-63.9) million compared to a (+ 46.0) million for the reasons discussed. The net loss for the year was 128.3 million compared to a profit of 40.8 million in FY21, partially on account of increased ESOP expenses of 82.4 million.

Growth

 

We expect our investments including FortiGo, Mihup, Woovly, Signal to expand their access and reach and enter the next generation of growth.

OUTLOOK

We see the promising growth in our portfolio companies given that they are focused on the unaddressed area of the economy. We expect our investments including FortiGo, Mihup, Woovly, Signal to expand their access and reach and enter the next generation of growth. Our dual focus on our start-ups as well as our services segment makes us makes us fairly confident of achieving Adjusted EBITDA level profit by Q4FY23.

FINANCIAL PERFORMANCE

PARTICULARS	STANDALONE		INCREASE /	CONSOLIDATED		INCREASE /
			DECREASE %			DECREASE %
	FY22	FY21		FY22	FY21
Net sales	80,548.23	1,40,489.02	-42.7%	80,548.23	1,40,489.02	-42.7%
Other income	12,067.66	11,386.35	6.0%	12,676.06	11,386.35	11.3%
Finance cost	-	470.57	NA	-	470.57	NA
Profit before tax	(1,34,927.61)	40,992.81	NA	(1,34,590.57)	41,319.61	NA
Profit after tax	(1,28,580.48)	40,460.65	NA	(1,28,343.22)	40,787.45	NA
EPS- Basic (in )	(9.08)	2.95	NA	(9.07)	2.98	NA
EPS – Diluted (in )	(8.82)	2.94	NA	(8.80)	2.97	NA

 

KEY FINANCIAL RATIOS

PARTICULARS	FY22	FY21
Operating profit margin (%)	NA	31.21%*
Net profit margin (%)$	NA	26.86%
Interest coverage ratio	NA	NA
Debtors turnover days#	106	51
Current ratio	16.94	13.86
Debt equity ratio	0.00	0.00
	NA	10.70%
Return on net worth (%)

 

* Adjusted Operating profit margin is after excluding ESOP of 104 lakhs

 

# Based on average debtors

 

$ Based on total income

1. Company has no outstanding loans. Accordingly, Interest Coverage Ratio is not applicable.

2. Mainly due to significant reduction in Revenue during the year.

3. Increase in Current Ratio is due to increase in current investments and cash and cash equivalents. Cash and cash equivalents increased due to preferential allotment.

4. Debt Equity Ratio is not applicable since there is no debt.

RISK MANAGEMENT

The Board of Directors reviews the Company’s business risks and formulates strategies to mitigate those risks. The Senior Management team, led by the Managing Director, is responsible to proactively manage risks with appropriate mitigation measures and implementation thereof.

Below are some of the key threats, risks and concerns in our business:

MARKET RISK

Volatility in the local and global economy, political uncertainty, and changes in government regulations could all have an impact on the technology business. A downturn in the industry could have a negative influence on the Company’s operations. The Company intends to extend its footprint and client base across numerous geographies and industries in order to mitigate market-specific risks.

COMPETITION RISK

The company competes in a highly competitive industry with a rapidly growing number of players. Companies must adopt new technologies and build enriching applications for clients to stay ahead of the competition. The Company’s activities are characterised by strong subject expertise, innovative technology capabilities, and compelling customer-focused solutions, allowing it to outlive the competition.

TECHNOLOGY RISK

Organizations will be driven to embrace futuristic technology to promote efficiencies as a result of rapid technical advancements, altering business models, and newer software and product launches. The ability of a technology service organisation to provide significant solutions for its customers will determine its success. To mitigate this risk, the Company is working to improve its services and offerings in response to changing industry demands.

TALENT RISK

The technology industry may face a significant workforce shortfall. Human capital is the Company’s most valuable asset at Xelpmoc. Recognizing its critical role in achieving success, the Company aims to create a pleasant and inclusive atmosphere while also providing benefits to its employees. fosters an environment of creativity and entrepreneurship within the company and provides training and development opportunities for employees.

HUMAN RESOURCES

People excellence, according to Xelpmoc, is powerful enabler of corporate growth. As a result, the Company is dedicated to fostering an environment that promotes employee growth while also achieving the organization’s goals. Employees can get the necessary skills and knowledge through a variety of learning and development programmes. The Company’s HR policy is focused on attracting, hiring, training, and retaining the best employees possible to ensure best-in-class performance. A strong emphasis is placed on cultivating a culture that values diversity, inclusion, innovation, compassion, and respect. Furthermore, through employee engagement events and competitive incentives, the Company aims to grow passion in its employees and keep them engaged.

The company had a total 91 team members including employees, interns, consultants as of 31st March 2022. We strengthened our senior management team during FY22 by hiring Group President - Strategic Initiatives and Group President - Startup Ventures.

INTERNAL CONTROLS

Internal control systems and a systematic internal audit process have been implemented with the goal of safeguarding the organization’s assets and ensuring the integrity and reliability of accounting and other operational data. The internal audit will be carried out and conducted by a firm of Chartered Accountants. The Audit Committee of the Board of Directors receives reports from the external Chartered Accountant firm. Similarly, as a crucial operational control, we maintain a monthly business review system in which the performance of units is evaluated and corrective action is taken. We also have a capital expenditure control mechanism in place to authorise the investment in new assets and projects. The responsibility for completing the projects on time and within the specified budget is established.

The Audit Committee and Top Management are kept informed of the internal audit findings on a regular basis, and Top Management is kept informed of the actions taken in response to the internal audit reports.

The Audit Committee examines the Company’s financial accounts on a quarterly, half-yearly, and annual basis.

The section on corporate governance in the Annual Report includes a thorough remark on the functioning of the Audit Committee and the other Board Committees. Throughout the year, we conducted a thorough examination of internal financial controls. The findings were satisfactory, and suggestions for improvement were taken into consideration and implemented. Policy guidelines and Standard Operating Procedures (SOPs) are modified as needed to stay up with changing corporate needs.