EverestIMS Technologies Ltd Management Discussions

(9) & ⁽¹⁰⁾ Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as Networth + deferred tax liabilities (net) + total borrowings - intangible assets.

Explanation for KPI metrics:

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to "Restated Financial Statements" beginningon page 230 of this Draft Red Herring Prospectus.

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 34 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies;

2. Our ability to respond to technological changes;

3. Adverse natural calamities having significant impact on regions where we operate;

4. Our ability to attract and retain qualified personnel;

5. Inability to promptly identify and respond to changing customer preferences or evolving trends;

6. Any change in government policies resulting in increases in taxes payable by us;

7. Changes in laws and regulations that apply to the industries in which we operate.

8. Our ability to grow our business;

9. General economic, political and other risks that are out of our control;

10. Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

11. Companys ability to successfully implement its growth strategy and expansion plans;

12. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;

13. Inability to successfully obtain registrations in a timely manner or at all;

14. Occurrence of Environmental Problems & Uninsured Losses;

15. Conflicts of interest with affiliated companies, the promoter group and other related parties;

16. Any adverse outcome in the legal proceedings in which we might get involved; and

17. Concentration of ownership among our Promoters.

OUR RESULT OF OPERATIONS

The following discussion on results of operations should be read in conjunction with the Restated Consolidated Financial Statements for the financial years ended on March 31, 2025, March 31, 2024 and March 31, 2023.

( in lakhs)

OVERVIEW OF REVENUE AND EXPENSES INCOME: Revenue from operations:

Revenue from operations mainly consists of revenue from sale of software products and sale of services.

Other Income:

Our other income primarily comprises of interest received from banks, profit on redemption of mutual funds, interest on IT refund, forex exchange gain, sundry balances written off and miscellaneous income.

EXPENSES:

Our other income primarily comprises of interest received from banks, profit on redemption of mutual funds, interest on IT refund, foreign exchange gain, sundry balances written back, miscellaneous income and reversal of leave encashment provision.

Direct Operating Expenses:

Our Direct Operating Expenses comprises of Purchases of goods and services.

Employee benefits expense

Our employee benefits expense primarily comprises of salaries, contribution to PF & ESIC, gratuity expense, leave encashment expense, staff welfare expense and ESOP perquisite expenses.

Finance costs

Our finance cost includes LC discounting charges and interest on late payment of taxes.

Depreciation and amortization expense

Depreciation and amortization expense includes depreciation on assets other than leasehold assets and amortization on intangible assets.

Other expenses

Our other expenses include audit fees, onsite services & travelling expenses, marketing expenses, lease rentals, power & electricity charges, professional charges, postage & courier, printing & stationery, office expenses, local travelling, rates & taxes, telephone charges, repairs & maintenance, bank charges, loss (gain) on foreign currency fluctuation, bad debt written off and CSR expenses.

Revenue from Operations:

During the Financial Year ended March 31, 2025, the revenue from operations were 5,654.30 Lakhs. Revenue from Operations for the financial year ended March 31, 2024 stood at 4,522.80 Lakhs representing an increase of 25.02%. The increase is primarily attributed to rise in sale of software products with an increased contribution from services rendered.

Other Income:

During the Financial Year ended March 31, 2025, the other income of 123.79 Lakhs representing a significant increase of 218.55% compared to 38.86 lakhs in the previous year. This notable growth in other income was primarily driven by higher gain from the redemption of mutual funds, reversal of leave encashment provision and increased interest received from banks, as well as a rise in miscellaneous income. These factors collectively contributed to the substantial rise in other income.

Total Expenses:

The total expenses for the Financial Year ended March 31, 2025 amounted to 3,892.66 Lakhs represented an increase of 26.50% as compared to 3,077.26 Lakhs in the previous financial year. This increase in total expenses was primarily driven by higher direct operating costs, an increase in employee benefit expenses, elevated depreciation and amortization charges, as well as a rise in other operating expenses. The overall growth in expenses is in line with the Companys expanded scale of operations during the year.

Direct Operating Expenses:

For the financial year ended March 31, 2025, the Company incurred 283.72 lakhs as direct operating expenses, reflecting a significant increase of 57.65% compared to 179.97 lakhs in the previous year. This rise was primarily attributable to higher purchases of goods and services, in line with the Companys expanded business activities.

This includes increased costs related to IT consulting and support services, as well as commission and service fees.

Employee benefits expense:

Our Company has incurred 2,337.96 Lakhs towards Employee benefits expense for the Financial Year ended March 31, 2025, representing an increase of 24.56% compared to 1,876.90 lakhs in the previous financial year.

The increase was primarily driven by higher salary payouts, increased contributions to Provident Fund (PF) and Employees State Insurance Corporation (ESIC), elevated staff welfare expenses, and the recognition of ESOP perquisite expenses during the year.

Finance costs:

Finance costs for the Financial Year ended March 31, 2025, was 2.45 Lakhs reflecting a substantial decrease of 90.76% compared to 26.52 lakhs in the previous financial year. This sharp decline was primarily due to a significant reduction in Letter of Credit (LC) discounting charges and lower interest expenses arising from delayed tax payments during the year.

Depreciation and Amortization Expenses:

Depreciation and amortization expense for the Financial Year ended March 31, 2025, was 378.25 Lakhs representing an increase of 46.91% compared to 257.47 lakhs in the previous financial year. This increase was primarily attributable to higher depreciation on property, plant and equipment (excluding leasehold assets), as well as increased amortization of intangible assets during the year.

Other Expenses:

Other Expenses for the Financial Year ended March 31, 2025, stood at 890.28 Lakhs. For Financial Year ended March 31, 2024, other expenses were 736.40 Lakhs. The increase of 20.90% was due to increase in audit fees, lease rentals, professional charges, postage & courier, printing & stationery, office expenses, local travelling, rates & taxes, repairs & maintenance and CSR expenses.

Restated Profit/ (Loss) after tax:

As a result of the foregoing factors, the Companys profit for the Financial Year ended March 31, 2025 increased by 29.97% to 1,407.70 Lakhs compared to 1,083.08 Lakhs in the Financial Year March 31, 2024.

Revenue from Operations:

Revenue from operations for the financial year ended March 31, 2024, stood at 4,522.80 lakhs, reflecting a significant increase of 32.37% compared to 3,416.70 lakhs recorded in the previous financial year. This growth was primarily driven by a rise in the sale of software products and an increase in revenue from services, indicating strong demand and continued expansion of the Companys core business offerings.

Other Income:

During the financial year ended March 31, 2024, other income was 38.86 Lakhs, representing an increase of 33.45% compared to 29.12 Lakhs for the financial year ended March 31, 2023. This growth was primarily driven by higher gains from the redemption of mutual fund investments, interest received on income tax refunds, and miscellaneous income earned during the year.

Total Expenses:

The total expenses for the financial year ended March 31, 2024 amounted to 3077.26 Lakhs reflecting an increase of 13.98% as compared to previous year which was 2699.86 Lakhs. The rise in total expenses was mainly due to higher employee benefits expenses, increased finance costs, depreciation & amortization expenses as well as a rise in other expenses.

Direct Operating Expenses:

Our Company has incurred 179.97 Lakhs as direct operating expenses for the financial year ended March 31, 2024 representing a decrease of 17.97% compared to 219.39 lakhs in the previous financial year. This decline was primarily due to a reduction in the Commission/ fees on Services received.

Employee benefits expense:

Our Company has incurred 1876.90 Lakhs as employee benefits expense for the financial year ended March 31, 2024, compared to 1635.28 Lakhs during the financial year ended March 31, 2023, representing an increase of 14.78%. This increase was primarily due to higher salaries payouts, increased contribution to Provident Fund (PF) & Employees State Insurance Corporation (ESIC), as well as higher provisions for gratuity expense, leave encashment expense and staff welfare expense.

Finance costs:

Finance costs for the financial year ended March 31, 2024 was 26.52 Lakhs compared to NIL in the financial year ended March 31, 2023. This rise was mainly due to an increase in LC discounting charges and interest on delayed tax payments during the year.

Depreciation and Amortization Expenses:

Depreciation and amortization expense for the financial year ended March 31, 2024 amounted to 257.47 Lakhs representing an increase of 43.02% compared to 180.03 Lakhs for the financial year ended March 31, 2023. This increase was due to higher depreciation on assets other than leasehold assets and amortization of intangible assets.

Other Expenses:

Other Expenses for the financial year ended March 31, 2024 stood at 736.40 Lakhs compared to 665.16 Lakhs for the financial year ended March 31, 2023. The increase of 10.71% was due to increase in audit fees, onsite services & travelling expenses, marketing expenses, lease rentals, power & electricity charges, postage & courier, printing & stationery, office expenses, local travelling, rates & taxes, telephone charges, repairs & maintenance, bank charges, loss on foreign currency fluctuation and CSR expenses.

Restated Profit/ (Loss) after tax:

As a result of the foregoing factors, our profit for the Financial Year March 31, 2024 increased by 96.81% to 1,083.08 Lakhs compared to 550.31 Lakhs in the Financial Year March 31, 2023.

1. Unusual or infrequent events or transactions

Except as disclosed in this Draft Red Herring Prospectus, there are no unusual or infrequent events or transactions in our Company.

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

There have been no significant economic changes that have materially affect or are likely to materially affect income from continuing operations.

3. 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 chapter titled "Risk Factors" beginning on page 34 of this Draft Red Herring Prospectus, to the best of our knowledge 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.

4. Future changes in relationship between costs and revenues

Except as disclosed in the chapters titled "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Conditions and Results of Operations" on pages 34, 149 and 271respectively, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

5. Total turnover of each major industry segment in which our Company operates

The Company operates in a single industry segment, i.e. software products and services, offering both Software as a Service (SaaS) and on-premise solutions. Accordingly, the total turnover pertains to this single segment, and no separate segment-wise disclosure is applicable.

6. Status of any publicly announced New Products or Business Segment

Except as disclosed in the Chapter "Our Business" beginningon pages 149, our Company has not announced any new product or service.

7. Seasonality of business

Our business is not subject to any seasonality. For further information, see "Our Business" beginningon pages 149.

8. Dependence on single or few customers

Our business does not rely on any single customer or vertical. We serve a diverse customer base spread across multiple industries and geographies. For further details, refer "Risk Factors" beginningon page 34 of this Draft Red Herring Prospectus.

9. Competitive conditions

Competitive conditions are as described under the Chapter titled "Our Business" beginning on page 149 of this Draft Red Herring Prospectus.

10. Details of material developments after the date of last balance sheet i.e. March 31, 2025.

Except as mentioned in this Draft Red Herring Prospectus, no circumstances have arisen since the date of last financial statement until the date of filing this Draft Red Herring Prospectus, which materially and adversely affect or are likely to affect the operations or profitability of our Company, or value of its assets, or its ability to pay its liability within next twelve months. Our Company has approved the Draft Red Herring Prospectus vide resolution in the Board Meeting dated September 15, 2025.