Saksoft Ltd

At Saksoft, we see the Company at the cusp of a larger value- creation journey.

In one of the world's largest and most admired retail companies, there is a term called 'Day One'.

This concept means coming to work with the same passion as one did on the first day at work.

am pleased to communicate that it is this passion with which Saksoft was grown across the last few decades and it is this enthusiasm that empowered the Company to pivot with speed when it noticed a disruptive transformation in its operating environment.

During the last financial year, the Company encountered what is possibly an inflection point in its existence. Never in the previous 25 years of its existence did the Company encounter as dramatic a break in its business landscape as it did in FY 24-25.

The emergence of Al does not promise to transform the conventional software business landscape; it already has.

What has made this different from most disruptions one has encountered in the Company's existence is the speed and suddenness of change. During the last financial year, the emergence

of Artificial Intelligence disrupted the conventional approach to the software services sector. There was a priority on questioning every paradigm; there was a need to holistically rethink the business.

As a future-facing company, Saksoft pivoted its business model away from what had succeeded during the last 25 years. In the past, the Company had focused on the delivery of businessstrengthening software services for customers where software solutions were provided to strengthen business processes in exchange for superior profitability.

During the last financial year, Saksoft responded with a game-changing positioning as an Al-led product engineering company. We believe that decisive re-pivoting represents an effective response to a vastly altered business reality of the day and the foreseeable future.

The Company's redirected focus on Al- based product engineering is expected to reorient the Company's brand, enhance competitiveness, increase sustainably and reinforce stakeholder value.

The emergence of Artificial Intelligence has disrupted conventional technology services. The perspective of the conventional data warehouse has altered. The result is that process flows within software companies need to be rethought and recast. What used to be addressed manually by our engineers is now completed better and in a fifth of the conventional tenure.

This complement - better and quicker - is transforming the world of software services as we knew it. As I see it, the market size of conventional software services will decline as Al infusion into proposed solutions will reduce costs and hence, realisations.

This decline in the market size could well prove temporary. We see software services being replaced by software products. The reduction in costs and realisation could enhance the affordability of these products. This is expected to enlarge the technology market; interventions long postponed on account of budget constraints could now become a reality.

This could explode the market for Al-driven technology interventions and there could soon come a time when Al-driven interventions become as ubiquitous as renewable energy in defining the world of tomorrow.

One of the positive positioning spinoffs of Al is that it is likely to be perceived as a waste destroyer, shrinking redundant processes, moderating costs, countering inflation and empowering humankind to produce more from less.

Two realities are expected to emerge as a result. A decline in costs is expected to lead to sharp volume growth; this could translate into a superior volume- value proposition. Besides, there is the possibility of a third catalyst in the form of value-addition in Al-based engineered products. The three-way combination could help reinvent realities and upsides for nifty first- movers in what is likely to be one of the most exciting developments in the world of technology.

At Saksoft, we are passing through an unprecedented change in our understanding of the market, customers, processes, talent and brand.

In one way, we are still the same company in terms of our values, passion and nimbleness. We are also a new company in the kind of business we are engaged in.

In the past, we wrote software code for our customers based on their desired realities as identified by our business analysts. This approach will become progressively irrelevant as we transition to become an independent software vendor to large software product building companies.

The result is that the reinvented Saksoft will position itself as a product engineering company for the largest software product companies in the world. The Company will build, enhance, sustain and support products. In doing so, the Company intends to transform from a code-based services company into an Al-based products engineering company.

In the reinvented Al-driven Saksoft, the framework has emerged as the building block. At our company, God lies in the successful development of frameworks. How we build frameworks, how fast we build frameworks, how effectively we integrate these frameworks and the range of frameworks we build will influence our competitiveness.

There is one difference in building frameworks that will be different from the way code was written in the past at our company. Building these frameworks is likely to take 40% less time than corresponding or equivalent conventional software. This will empower a company like ours to generate more frameworks, accelerate the re-pivoting and do so at a lower cost.

Our success is likely to come from the ability to moderate the cost of building frameworks and enhance the value generated from these frameworks. This should enrich our overall price-value proposition, transformative market-side outcomes and profitability.

At Saksoft, we foresee the increased adoption of Al-based products by customers. Until not too long ago, SaaS products were considered the next big thing as they provided the option of affordable renting of software products over outright purchase.

There has been a change in the value proposition since. Two decisive realities have transformed this reality: The rising cost of cloud has translated into a higher cost of SaaS products that were not too long ago considered a modern way to access superior inputs for a reasonable cost. The advent of Al promises to transform the pricing proposition by making it quicker, simpler and cheaper for companies to build their own Al-driven proprietary solution that rent SaaS products.

This is how I see it: the emergence of the proprietary ownership of competitively priced software products could result in an extensive use across organisations because there could be only a negligible cost for each additional software product user (as distinct from a SaaS product where each additional workstation can increase rentals payable by the client company).

At Saksoft, we see the emergence of a new age of software products. As more companies create proprietary software products, they will need to engage companies like ours that can build and supply frameworks - frameworks that are effective and competitive.

That is where a focused company like Saksoft will come in.

At Saksoft, we remain committed to make our customers successful in their respective competitive spaces.

Our company will be driven by a focus to make proprietary software products more competitive - quicker, and more effective - than SaaS products.

Our company will respond with relevant solutions to the demanding and evolving needs of our software product customers.

Our software product solutions will be directed to empowering our customers to disrupt their market realities.

The modern-day reality at Saksoft is 'How extensively can we rethink our business?'

At our company, there is a priority to reinvent the business ground level up. The priority lies in making upfront business investments in competencies that build more and better frameworks. The competence will lie in understanding the open- source landscape, prudent components selection, curation of creative products and providing a disruptive customer solution. This will warrant a complete unlearning, relearning and retraining programmes.

At Saksoft, we recognise that the speed of our transformation could influence our competitiveness in the new Al era. We are committed to accelerate the creation of proof of frameworks. Frameworks play a critical role in the creation of Al-based products by providing structured, reusable, and efficient foundations for development. Frameworks offer pre-built functions and tools for model building, training, evaluation, and deployment, reducing Al-based product development time and effort. They enforce a consistent architecture and workflow across projects, which makes it easier to collaborate, maintain and grow Al products. Besides, they provide APIs and tools for seamless integration with cloud platforms, databases, web services, and edge devices, empowering end-to-end product development.

Our priority is to demonstrate framework effectiveness and enhance customer wins. Over time, this is expected to strengthen the proportion of revenues we derive from Al-assisted product engineering, strengthening overall profitability.

A big change that transpired during the last financial year was the way the Company began to market its Al proposition to customers from domain-driven to product engineering-driven. We repositioned from a conventional vertical-focused software services organisation to a horizontally focused Al product engineering company. We now train and engage , professionals with data understanding and data management capabilities. There is a premium on engineering skills at Saksoft than ever before over domain (BFS, logistics etc.) understanding.

Our success from this point will be determined by the recruitment of competent data architects over computer engineers. The Company will sweat the combination of LLM and Gen Al, knowing when to use what, underlining human engagement in the solution loop. There will be renewed focus on evangelising the role of Al- driven products across prospective customers, how we market our role as business partners and how we strengthen our cybersecurity.

During the last couple of decades, we saw most companies evolve into technology-intensive companies. There is now a growing traction for Al-based products, widening our addressable landscape. We believe that the core proposition of Al is to enhance the user's competitiveness, deepening the rationale of our existence. In view of this, we see the scope of Al-based product engineering solutions only get arger, influencing user profitability and sustainability.

Saksoft is attractively placed to capitalise. The Company comes with no legacy technology baggage that may have needed large retrospective expenses to be written off the Balance Sheet. Besides, we are responsive to the nature of this inflection point. The turning of our ship will take quicker.

Going ahead, Saksoft is likely to report a sustainable growth over a period of time. We expect to hold our EBITDA margins even after expensing the investment we make in developing the Al side of our business. In view of this, we see the Company at the cusp of a larger value- creation journey.

Our time starts now.

Chairman