Fone4 Communications India Ltd Management Discussions

Overview

Your Directors are pleased to present the Management Discussion and Analysis Report for the year ended 31st March, 2026.

The Management Discussion and Analysis have been included in consonance with the Code of Corporate Governance as approved by the Securities and Exchange Board of India (SEBI). Investors are cautioned that these discussions contain certain forward-looking statements that involve risk and uncertainties including those risks which are inherent in the Companys growth and strategy. The company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this report consequent to new information or developments, events or otherwise. The main business of the Company is E-commerce and E-retail.

Industry Structure & Development

The Indian e-commerce industry continues to be one of the fastest-growing sectors of the economy, driven by increasing internet penetration, smartphone adoption, digital payments, and improved logistics infrastructure. The rapid expansion of online shopping, quick commerce, social commerce, and omnichannel retailing has transformed consumer purchasing behaviour. Government initiatives such as Digital India, Unified Payments Interface (UPI), and the Open Network for Digital Commerce (ONDC) have further accelerated the growth of digital commerce.

The industry remains highly competitive, with major players such as Amazon, Flipkart, Meesho, Myntra, Ajio, and Tata Neu continuously investing in technology, logistics, customer experience, and seller ecosystems.

Opportunities and Threats

E-Commerce Industry: The growing internet user base in India due to affordable data prices offered by telecom companies represents one of the key factors driving the market. Moreover, there is a rise in the advancement of technologies, such as digital payments, hyper-local logistics, analytics driven customer engagement, and digital advertisements across the country. This, along with the rapid digitalization in the country, is propelling the growth of the market. In addition, several initiatives undertaken by the Government of India, such as digital India, skill India, startup India, and make in India, are contributing to the growth of the market. Besides this, the introduction of Paytm payment bank in India with zero charges on online transactions, no minimum balance requirement, and free virtual debit card is positively influencing the market. Apart from this, key market players are extensively investing in research and development (R&D) activities to introduce offline retail stores for promoting private labels in fashion and electronics, which is bolstering the growth of the market in the country.

Segment-wise or product-wise performance.

During the year under review, since company is being working in a single segment therefore the specific performance does not stand eligible.

Risk and Concerns

E-Commerce Industry: Since the transactions happen online, the buyer cannot physically touch or feel the product. This of course makes the transaction riskier. Pictures, although often are representative of the product, dont always depict the exact product. Along with this, there is no way to make sure if the item being shipped to you is free from defects or not.

Online transactions are heavily dependent on payment methods like credit and debit cards etc. These details are extremely sensitive and can have precarious consequences if not used securely. Phishing sites are sites which pretend to be a website which it is not and these are extremely common nowadays.

They have the primary aim to steal sensitive information like CVV numbers, passwords, bank details, etc.

A general theory in microeconomics tells us that consumers always try to maximise their utility. However, behavioural economics tells us that this is not always the case and transactions by consumers do not always maximise their utility.

Adequacy of Internal Control System

To provide reasonable assurance that assets are safeguarded against loss or damage and that accounting records are reliable for preparing financial statements, management maintains a system of accounting and controls including an internal audit process. Internal controls are supported by management reviews.

The Board of Directors have an Audit Committee that is chaired by an Independent Director. The Committee meets periodically with Management, Internal Auditor, Statutory Auditors to review the Companys program of internal controls, audit plans and results, recommendations of the auditors and managements responses to those recommendations.

Human Resources Development/Industrial Relations

Human resources are valuable assets for any organization. The employees of the Company have extended a very productive cooperation in the efforts of the management to carrying the Company to greater heights. The Company is giving emphasis to upgrade the skills of its human resources and continuous training down the line is a normal feature in the Company to upgrade the skills and knowledge of the employees of the Company.

Details of significant changes in key financial ratios, along with detailed explanations therefore

Ratio	Numerator	Denominator	For the year ended 31 March 2026	For the year ended 31 March 2025	Variance %	Reason for changes by more than 25%
Current ratio (in times)	Total current assets	Total current liabilities	0.90	0.65	38.94%	Increased due to decrease in current liabilities
Debt equity ratio (in times)	Total debts	Shareholders Equity	0.25	0.72	-65.60%	Increased due to decrease in shareholders equity
Debt service coverage ratio (in times)	Earnings available for debt service (Net profit before taxes + Non- cash operating expenses like depreciation and other amortizations + Interest + other non-	Debt service (Interest & lease payments + principal repayments)	(13.83)	(3.91)	253.52%	Decreased due to increase in operating losses during the year.
	cash adjustments)
Return on equity ratio (in %)	Profits for the year less preference dividend (if any)	Average shareholders equity	-43.99%	-57.72%	-23.80%	NA
Inventory turnover ratio (in times)	Revenue from operations	Average inventory	6.89	5.41	27.33%	Increase due to increase in revenue during the year
Trade receivables turnover ratio (in times)	Revenue from operations	Average trade receivable	21.10	29.03	-27.33%	Decreased due to increase in Revenue from operation during the year
Trade payables turnover ratio (in times)	Cost of traded goods and other expenses	Average trade payables	2.31	2.15	7.09%	NA
Net capital turnover ratio (in times)	Revenue from operations	Average working capital	(8.57)	(6.47)	-32.48%	Decreased due to increase in average working capital
Net profit ratio (in %)	Profit for the year	Revenue from operations	-6.91%	-5.46%	26.48%	Decreased due to decrease profit for the year
Return on capital employed (in %)	Profit before tax and finance costs	Average Capital employed	-28.81%	-33.24%	-13.35%	NA
Return on investment (in %)	Income generated from invested funds	Average invested funds	-43.99%	-57.72%	-23.81%	NA

Cautionary Statement

The Statement in this Management Discussion and Analysis report, describing the Companys outlook, projections, estimates, expectations or predictions may be “Forward looking Statements” within the meaning of applicable securities laws or regulations. Actual results could differ materially from those expressed or implied

Place: Ernakulam		For & on behalf of
Date: 07.08.2026	Fone4 Communications (India) Limited
	Sd/-	Sd/-
	Sayyed Imbichi Haris Sayyed	Sayyed Hamid
	Managing Director	Director
	DIN- 08395581	DIN- 05167876