Dove Soft Ltd Management Discussions

OF OPERATIONS

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the Year ended on March 31, 2021, March 31, 2022, March 31, 2023 and for the period ended on July 31, 2023. You should read the following discussion of our financial condition and results of operations together with our restated consolidated financial statements included in the Draft Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 28 of this Draft Red Herring Prospectus, which discusses several factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and is based on our restated consolidated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year") are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Dove Soft Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Consolidated Financial Statements " for Financial Year ended on March 31, 2021, March 31, 2022, March 31, 2023 and for the period ended on July 31, 2023 included in this Draft Red Herring Prospectus beginning on page 148.

BUSINESS OVERVIEW

Our Company was incorporated as private limited Company under the name "Dove Soft Private Limited", under the provisions of the Companies Act, 1956 and Certificate of Incorporation was issued by the Registrar of Companies, Maharashtra, Mumbai on August 19, 2011. Subsequently, our Company was converted into a public limited company pursuant to shareholders resolution passed at the general meeting of our Company held on August 17, 2022, and the name of our Company was changed to "Dove Soft Limited" and a fresh certificate of incorporation dated September 19, 2022, was issued by the Registrar of Companies, Mumbai. The Corporate Identification Number of our Company is U74900MH2011PLC221087.

We are an integrated cloud communications solutions providers giving services via SMS, Voice, Whatsapp and Email. We provide services to various enterprises and over-the-top (OTT) players. Our range of services include Short Message Service (SMS), WhatsApp, Voice, Interactive Voice Response (IVR), Outbound Dialer (OBD) solution, E-mail and Digital Products. We cater to clients from various industries such as Telecom, Information Technology, Travel Tourism, Entertainment, Media, Advertising and Events, Retail, Real Estate, Healthcare and cosmetic, Banking, Financial Services, and Insurance, Automobile, E-commerce and Food and Beverages.

Our sales team approaches our clients and potential clients to promote their existing products/ services. After understanding the customers marketing needs for their product or service, our company presents its existing range of offerings. Based on the clients requirements, our company tailors a custom plan. Once the client approves the proposed plan, our company proceeds to implement and execute the plan accordingly. We are committed to provide quality services to help grow and maintain the clients specific requirements. We have dedicated team comprising of skilled technicians.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

In the opinion of the Board of Directors of our Company, there have not arisen, since the date of July 31, 202 as disclosed in this Draft Red Herring Prospectus, any significant developments or any circumstance that materially or adversely affect or are likely to affect the profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

Our Companys future results of operations could be affected potentially by the following factors:

1 77

1. General economic conditions in India, changes in laws and regulations.

2. Changes in revenue mix, including geographic mix of our revenues.

3. Changes in Fiscal, Economic or Political conditions in India.

4. Increased market fragmentation.

5. Competition with existing and new entrants

6. Disruptions in the supply chain management

7. Technology System and Infrastructure Risks

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under Chapter titled "Financial Information of our Company" beginning on page 148 of the Draft Red Herring Prospectus.

RESULTS OF KEY OPERATIONS

The following table sets forth select financial data from our restated financial statement of profit and loss for the period ended on July 31, 2023 and financial years ended March 31, 2023, 2022 and 2021 the components of which are also expressed as a percentage of total revenue for such period and financial years

(Rs in lakhs)

Particulars	For the period ended July 31, % of March 2023 Total 31, Income 2023			on % of Total Income	March 31, 2022	For the year ended on % of March Total 31, Income 2021	% of Total Income
Revenue from operation	2,923.8 3	99.80	7,559.8 8	99.60	3,558.0 4	93.87	2,265.6 4	99.28
Other income	5.72	0.20	30.49	0.40	232.48	6.13	16.53	0.72
Total Revenue	2,929.55	100.00	7,590.3 7	100.00	3,790.5 3	100.00	2,282.17	100.00
Operating Expenses	2,299.7 6	78.50	6,004.5 8	79.11	2,897.4 0	76.44	1,736.8 2	76.10
Employee Benefits Expenses	146.46	5.00	367.17	4.84	242.78	6.41	164.58	7.21
Finance Cost	14.51	0.50	57.40	0.76	57.93	1.53	62.67	2.75
Depreciation and Amortisation Cost	25.42	0.87	110.63	1.46	62.05	1.64	115.78	5.07
Other Expenses	113.23	3.86	403.92	5.32	197.74	5.22	117.46	5.15
Total Expenses	2,599.3 8	88.73	6,943.6 9	91.48	3,457.9 0	91.22	2,197.3 1	96.28
Profit Before Tax	330.17	11.27	646.68	8.52	332.63	8.78	84.85	3.72
Tax Expenses	70.62	2.41	200.10	2.64	83.50	2.20	18.55	0.81
Profit (Loss) for the Year	259.55	8.86	446.58	5.88	249.13	6.57	66.31	2.91

Review of Restated Financials

Revenue from Operations: Revenue from operations mainly consists of sale of integrated cloud communications solutions services via SMS, Voice, Whatsapp and Email to Telecom, Information Technology, Travel Tourism, Entertainment, Media, Advertising and Events, Retail, Real Estate, Healthcare and cosmetic, Banking, Financial Services, and Insurance, Automobile, E-commerce, Food and Beverages.

Other Income: Other income includes interest income on fixed deposits and other interest, profit from sale of shares, foreign exchange fluctuation, sundry balance written back, and Other non-operating income.

Total Income: Our total income comprises of revenue from operations and other income.

Total Expenses: Companys total expenses consist of Operating Expenses, employee benefit expenses, finance costs, depreciation and amortization expenses, other expenses.

Operating Expenses: Operating expenses mainly consist of SMS, Email, Voice call, Digital marketing and Commission Paid expenses.

Employee Benefits Expense: Employee benefit expense includes Salary Wages and Bonus, Director remuneration, Staff Welfare Expenses, gratuity, contribution to provident fund and ESIC.

Finance Cost: Finance cost includes bank charges, processing charges and interest on loan/OD.

Other expenses: Other administrative expenses mainly consist of rent, rates and taxes, legal and professional charges, advertisement and business promotion, ROC fees and miscellaneous expenses.

REVIEW OF OPERATION FOR THE PERIOD ENDED July 31, 2023

Revenue from Operations

The revenue generated during the period ending on July 31, 2023, totalled ^2,923.83 lakhs, representing 99.80% of the total income. The main source of their income came from offering comprehensive cloud communication solutions and services, such as SMS, Voice, WhatsApp, and Email, to a variety of sectors, with a significant focus on Telecom, Information Technology, Travel and Tourism, Entertainment, Media, Advertising, and Events.

Other Income

Other income for the period ended July 31, 2023, amounted to Rs 5.72 lakhs constituting 0.20 % of total income of which the profit on sale of shares Rs 5.24 lakhs and other interest Rs 0.47 lakhs.

Operating Expenses

The operating expense for the period ending on July 31, 2023, totalled ^2,299.76 lakhs, making up 78.50% of the total revenue. Within these expenses, spending on SMS, email, and voice call services, digital marketing expenditures, and commissions paid amounted to ^2,226.76 lakhs, ^17.87 lakhs, and ^55.13 lakhs, respectively.

Employee Benefits Expenses

The costs associated with employee benefits for the period that concluded on July 31, 2023, totalled ^146.46 lakhs, making up 5.00% of the total revenue. These employee benefits expenses primarily included salary wages and bonuses, amounting to ^102.11 lakhs, as well as Provident Fund (PF) and Employees State Insurance Corporation (ESIC) expenses totaling Rs 1.85 lakhs. Additionally, director remuneration accounted for ^35.94 lakhs, staff welfare expenses amounted to Rs 2.33 lakhs, and there were expenses related to gratuity.

Finance Costs

The financial expenses for the period that concluded on July 31, 2023, totalled ^14.51 lakhs, accounting for

0.50% of the total revenue. These expenses primarily consisted of bank charges amounting to Rs 0.06 lakhs and interest on loans/overdrafts, which amounted to Rs 1.88 lakhs.

Depreciation and amortization expenses

Our depreciation and amortization expenses for the period ended July 31, 2023 amounted to Rs 25.42 lakhs constituting Rs 0.76% of total income.

Other Expenses

Our other expenses for the period ended July 31, 2023, amounted to Rs 113.23 lakhs constituting 3.86 % of total income which primarily comprised of Rent, Rates And taxes of Rs 48.75 lakh, Legal and Professional Charges of Rs 22.15 lakhs, Advertisement & Business Promotion of Rs 11.90 lakhs, Server & Domain Charges Rs 8.96 lakhs, miscellaneous expenses of Rs 4.12 lakhs.

Profit before tax

Our profit before tax for the period ended July 31, 2023, amounted to Rs 330.17 lakhs constituting 11.27 % of total income.

Tax Expenses:

Our tax expenses for the period ended July 31, 2023, were Rs 70.62 lakhs. Our tax expenses were 2.41 % of our total income.

Profit after Tax:

Our profit after tax for the period ended July 31, 2023, amounted to Rs 259.55 lakhs constituting 8.86 % of total income.

COMPARISON OF F.Y. 2023 WITH F.Y. 2022:

Revenue from Operations

The Companys revenue from operations the financial year 2022-23 is Rs 7,559.88 lakhs. This represents Rs 4,001.84 lakhs or 40.54% increase compared to the previous financial years total income of Rs 3,558.04 lakhs. The sales growth can be attributed to an increase in demand for their services, which are a result of providing extensive cloud communication solutions. These solutions encompass SMS, Voice, WhatsApp, and Email services and are targeted at a diverse range of industries, with a particular emphasis on Telecom, Information Technology, Travel and Tourism, Entertainment, Media, Advertising, and Events.

Other Income

In the financial year 2022-23, the other income recorded a decrease of 86.9%, amounting to Rs 30.49 lakhs, as compared to Rs 232.48 lakhs in financial year 2021-22. This decline was primarily due to decrease in profit from sale of shares Rs 201.82 lakhs.

Operating Expenses

The Operating Expenses rose from Rs 2,897.40 lakhs during the fiscal year 2021-22 to Rs 6,004.58 lakhs in the fiscal year 2022-23. This represents an increase of approximately Rs 3,107.17 lakhs, which is equivalent to a 107.2% increase. This uptick can be attributed to higher costs related to SMS, email, and voice call expenses, as well as digital expenses amounting to Rs 3,091.75 lakhs and Rs 32.04 lakhs, respectively. However, its important to note that this increase was partially offset by a commission payment of Rs 16.62 lakhs.

Employee Benefits Expenses

Employee benefit expenses in the Financial Year 2022-23 surged by 51.2%, reaching Rs 367.17 lakhs in comparison to the Rs 242.78 lakhs incurred in the Financial Year 2021-22. This rise in employee expenses

primarily stemmed from increases in salary wages and bonuses, which went up by Rs 56.73 lakhs, as well as direct remunerations, which saw Rs 51.51 lakhs increase, and gratuity expenses, which grew by Rs 11.37 lakhs.

Finance Cost

The Finance cost decrease by 0.9 % to Rs 57.40 lakhs in the Financial Year 2022-23 against that of Rs 57.93 lakhs in Financial Year 2021-22. The decrease of the Finance Charges is on account decrease in processing charges by Rs 0.90 lakhs in the FY 2022-23.

Depreciation and Amortisation Expenses

Depreciation and amortization expenses rose by Rs 48.59 lakhs to reach Rs 110.63 lakhs during the financial year 2022-23, compared to the Rs 62.05 lakhs recorded in the financial year 2021-22. This increase in depreciation was a result of acquiring fixed assets and capital work-in-progress software that were put into use.

Other Expenses

Other expenses saw an increase of 104.3%, totaling Rs 403.92 lakhs during the financial year 2022-23, as opposed to the Rs 197.74 lakhs incurred in the financial year 2021-22. This rise in other expenses was primarily attributed to several factors, including Rs 36.06 lakhs increase in Rent, Rates, and Taxes, Rs 40.01 lakhs increase in miscellaneous expenses, a Rs 67.92 lakhs increase in Legal and Professional Charges, a Rs 36.79 lakhs increase in ROC fees, and a Rs 10.22 lakhs increase in traveling expenses.

Tax Expenses:

Tax expenses increased by 139.6%, reaching a total of Rs 200.10 lakhs in the financial year 2022-23, in contrast to the Rs 83.50 lakhs in the financial year 2021-22. This notable increase in tax expenses can be primarily attributed to Rs 111.46 lakhs rise in current tax payments.

Profit after Tax (PAT)

As a result of the factors mentioned earlier, the profit showed an increase, primarily due to the growth in total income. The Profit After Tax (PAT) for the financial year 2022-23 amounted to Rs 446.58 lakhs, in contrast to Rs 249.13 lakhs in the financial year 2021-22. In the financial year 2022-23, the PAT represented 5.88% of the total revenue, as opposed to 6.57% of the total revenue in the financial year 2021-22.

COMPARISON OF F.Y. 2022 WITH F.Y. 2021:

Revenue from Operations

The Companys revenue from operations the financial year 2021-22 is Rs 3,558.04 lakhs. This represents Rs 1,292.41 lakhs or 57.0% increase compared to the previous financial years total income of Rs 2,265.64 lakhs. The growth is attributed to an uptick in service sales resulting from the provision of extensive cloud communication solutions and services, which include SMS, Voice, WhatsApp, and Email, across various industries, with a notable emphasis on Telecom, Information Technology, Real Estate, Banking, Financial Services, and Insurance and Automobile.

Other Income

Other income increased from Rs 16.53 lakhs in the fiscal year 2020-21 to Rs 232.48 lakhs in the fiscal year 2021-22. This notable increase was mainly attributable to a rise in profit resulting from the sale of shares, amounting to Rs 231.98 lakhs.

Operating Expenses

The Operating Expenses rose from Rs 1,736.82 lakhs during the fiscal year 2020-21 to Rs 2,897.40 lakhs in the fiscal year 2021-22. This represents an increase of approximately Rs 1,160.58 lakhs, which is equivalent to a 66.8% increase. This uptick can be attributed to higher costs related to SMS, email, and voice call expenses amounting to Rs 1367.93 lakhs. However, its important to note that this increase was partially offset by a commission payment and digital marketing of Rs 16.62 lakhs and Rs 32.04 lakhs, respectively.

Employee Benefits Expenses

During the Financial Year 2021-22, employee benefit expenses increased by 47.5%, reaching Rs 242.78 lakhs, compared to the Rs 164.58 lakhs in the Financial Year 2020-21. This increase in employee costs was mainly driven by salary wage and bonus increments, amounting to a total of Rs 71.01 lakhs, along with Rs 14.10 lakhs increase in direct remuneration. Its worth noting that this growth was partially offset by a reduction of Rs 8.76 lakhs in gratuity expenses.

Finance Cost

The Finance cost decrease by 7.6% to Rs 57.93 lakhs in the Financial Year 2021-22 against that of Rs 62.67 lakhs in Financial Year 2020-21. The decrease of the Finance Charges is on account decrease in interest by Rs 6.25 lakhs in the FY 2021-22.

Depreciation and Amortisation Expenses

Depreciation and amortization expenses declined by Rs 53.74 lakhs, bringing the total to Rs 62.05 lakhs in the financial year 2021-22, as opposed to the Rs 115.78 lakhs reported in the financial year 2020-21. This drop in depreciation expenses was a consequence of a reduced base of fixed assets and intangible assets.

Other Expenses

Other expenses saw an increase of 68.3%, totaling Rs 197.74 lakhs during the financial year 2021-22, as opposed to the Rs 117.46 lakhs incurred in the financial year 2020-21. This rise in other expenses was primarily attributed to several factors, including Rs 28.92 lakhs increase in Rent, Rates, and Taxes, Rs 67.92 lakhs increase in Legal and Professional Charges, Rs 38.00 lakhs increase in Advertisement & Business Promotion, Rs 3.61 lakhs increase in Repairs & Maintenance Expenses.

Tax Expenses:

Tax expenses increased by 350.2%, reaching a total of Rs 83.50 lakhs in the financial year 2021-22, in contrast to the Rs 18.55 lakhs in the financial year 2020-21. This notable increase in tax expenses can be primarily attributed to Rs 33.30 lakhs rise in current tax payments and Rs 31.65 lakhs in deferred tax.

Profit after Tax (PAT)

As a result of the factors mentioned earlier, the profit showed an increase, primarily due to the growth in total income. The Profit After Tax (PAT) for the financial year 2021-22 amounted to Rs 249.13 lakhs, in contrast to Rs 66.31 lakhs in the financial year 2020-21. In the financial year 2021-22, the PAT represented 6.57% of the total revenue, as opposed to 2.91% of the total revenue in the financial year 2020-21.

Cash Flow

The table below summaries our cash flows from our Restated Consolidated Financial Information for the period ended July 31, 2023 and for the financial years ended on 2023, 2022, and 2021:

Particulars	For the period ended July 31,2023	FY 2023	FY 2022	FY 2021
Net cash (used in)/ Generated from operating activities	7.94	169.59	95.07	182.14
Net cash (used in)/ Generated from investing activities	68.05	(910.74)	(479.38)	(96.57)
Net cash (used in)/ Generated from finance activities	(77.73)	740.19	396.83	(85.45)
Net increase/ (decrease) in cash and cash equivalents	(1.74)	(0.96)	12.51	0.13
Cash and Cash Equivalents at the beginning of the period	16.28	17.24	4.73	4.60
Cash and Cash Equivalents at the end of period	14.54	16.28	17.24	4.73

Cash Flow from/(used in) Operating Activities

For period ended July 31, 2023, to net cash from operating activities was Rs 7.94 lakhs as compared to Profit Before Tax of Rs 330.17 lakhs.

For fiscal 2023, net cash from operating activities was at Rs 169.59 lakhs as compared to Profit Before Tax of Rs 646.68 lakhs while for fiscal 2022, net cash from operating activities was at Rs 95.07 lakhs as compared to Profit Before Tax of Rs 332.63 lakhs. For fiscal 2021, net cash from operating activities was at Rs 182.14 compared to Profit Before Tax of Rs 84.85 lakhs.

Cash Flow from/(used in) Investing Activities

For the period ended July 31, 2023, to net cash from investing activities was Rs 68.05 lakhs as compared to Profit Before Tax of Rs 330.17 lakhs.

For fiscal 2023, net cash used in investing activities was Rs 910.74 lakhs due to purchase of tangible and intangible assets, while for fiscal 2022, net cash used in investing activities was Rs 479.38 lakhs due to purchase of tangible and intangible assets and net purchase of investment. For fiscal 2021, net cash used in investing activities was Rs 96.57 lakhs due to purchase of tangible and intangible assets and purchase of investment.

Cash Flow from/(used in) Financing Activities

For the period ended July 31, 2023, to net cash used in financing activities was Rs 77.73 lakhs as compared to Profit Before Tax of Rs 330.17 lakhs

For fiscal 2023, net cash from financing activities was Rs 740.19 lakhs due to proceeds of short-term borrowing and issue of share capital. For fiscal 2022, net cash from financing activities was Rs 396.83 lakhs due to payment of finance cost and repayment of borrowings. For fiscal 2021, net cash used in financing activities was Rs 85.45 lakhs due to payment of long term borrowing.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

1. Unusual or infrequent events or transactions

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years other than shut down of business due to COVID-19.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "RiskFactors" beginning on page 28 of this Draft Red Herring Prospectus. To our knowledge, except as we have described in this Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Income and Sales on account of major product/main activities

Income and sales of our Company on account of major activities derives from sale of various cloud communication services to Banking, Financial Services, and Insurance (BFSI), Media and Entertainment, Tourism, Retail, Fast-Moving Consumer Goods (FMCG), E-commerce, Logistics, Healthcare, Hospitality, and pharmaceuticals companies.

4. Whether the company has followed any unorthodox procedure for recording sales and revenues

Our Company has not followed any unorthodox procedure for recording sales and revenues.

5. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page 28 in this Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

6. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices.

Increases in revenues are by and large linked to increases in volume of business.

7. Total turnover of each major industry services in which the issuer company operated.

The Company is in the business of, the relevant industry data, as available, has been included in the chapter titled "Industry Overview " beginning on page 93 of this Draft Red Herring Prospectus.

8. Status of any publicly announced new products or business services.

Our Company has not announced any new services or business services.

9. The extent to which business is seasonal.

Our Companys business is not seasonal.

10. Any significant dependence on a single or few suppliers or customers.

Our company does not rely on a single or a few suppliers, but it does have a dependence on a few numbers of customers.

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled "Industry Overview " and "Our Business" beginning on pages 93 and 101, respectively of this Draft Red Herring Prospectus.