Tera Software Ltd Management Discussions

(For the Financial Year 2025-26)

1. Industry Structure and Developments

The Information Technology (IT) and e-Governance sector in India continued to witness steady growth during the Financial Year 2025-26, supported by the Governments continued emphasis on digital transformation, enhancement of public service delivery and development of digital infrastructure. Various flagship programmes, including Digital India, BharatNet, Smart Cities Mission and digital governance initiatives across Central and State Governments, have accelerated the adoption of technology-driven solutions.

Increasing investments in broadband connectivity, digital public infrastructure, smart utility management, revenue administration, citizen-centric services and data digitization have created significant opportunities for technology companies with proven project execution capabilities. The growing focus on transparency, operational efficiency and digital inclusion continues to drive demand for integrated IT solutions and e-Governance services across the country.

Leveraging its extensive experience in executing large-scale Government projects, Tera Software Limited (TSL) continues to strengthen its position as a trusted technology partner in the areas of e-Governance, digital infrastructure, system integration and managed IT services. The Companys diversified presence across multiple States and strong domain expertise provide a solid platform for sustainable growth.

2. Business Overview

During the Financial Year 2025-26, the Company further strengthened its business portfolio through successful execution of ongoing projects and the securing of new contracts across its core business segments, including e-Governance, BharatNet, Smart Cities, utility automation and digital transformation initiatives.

Some of the major projects executed and secured during the year include:

• BharatNet Projects: Successfully completed the Odisha BharatNet Phase-II Project and secured the BSNL BharatNet Phase-III Middle Mile Network Project with a total contract value of 7,005.55 Crores, of which the Companys share is 3,502.78 Crores.

• Smart Cities: Continued implementation of the Davangere Smart City ICT Project, including the establishment of Integrated Command and Control Centres (ICCC) and deployment of integrated ICT infrastructure.

• Spot Billing Projects: Successfully completed major spot billing projects for PVVNL and DVVNL and secured fresh orders from PUVVNL, DVVNL and MVVNL aggregating 273.11 Crores for the period 2025-27.

• Digitization and Modern Record Rooms: Successfully completed projects for the Revenue Department, Government of Jharkhand, and continued execution of the e-Mahabhoomi Project in the State of Maharashtra.

With operations spanning more than 22 States across India, the Company continues to expand its presence in the e-Governance and digital infrastructure space while focusing on operational excellence, timely project execution and longterm value creation for its stakeholders.

3. The financial performance of the Company is summarized below: (Rs. in Lakhs)

PARTICULARS	Standalone		Consolidated
	Financial Year 2025-26	Financial Year 2024-25	Financial Year 2025-26	Financial Year 2024-25
Income from Operations	23804.53	10764.38	23804.53	10764.38
Oher Income	392.99	406.11	392.99	406.11
Total Income	24197.52	11170.49	24197.52	11170.49
EBITDA	4063.43	1634.97	4063.04	1634.38
Less: Finance Cost	744.57	379.18	744.57	379.18
EBTDA	3318.86	1255.79	3318.47	1255.2
Less: Depreciation	70.83	13.59	70.83	13.59
EBT	3248.03	1242.20	3247.64	1241.61
Less: Exceptional Items	0.00	4.26	0.00	4.26
Less: Tax Expenses	767.56	295.86	767.56	295.86
EAT (Earnings After Tax)	2480.47	942.08	2480.07	941.49
Profit/Loss carried to B/S	2477.67	995.89	2477.28	995.30
EPS (Basic & Diluted)	19.82	7.53	19.82	7.52

Financial Highlights

• Revenue from Operations increased to 23,804.53 Lakhs from 10,764.38 Lakhs in the previous year, registering a growth of 121.14%.

• EBITDA increased to 4,063.43 Lakhs as against 1,634.97 Lakhs in FY 2024-25, reflecting improved operating performance.

• Profit After Tax (PAT) stood at 2,480.47 Lakhs, compared to 942.08 Lakhs in the previous year, representing a growth of approximately 163.29%.

• Earnings Per Share (EPS) increased from 7.53 to 19.82, reflecting enhanced profitability and value creation for shareholders.

4. Opportunities and Threats

Opportunities

The Company continues to operate in a sector that offers significant long-term growth potential, driven by the Government

of Indias continued focus on digital transformation and infrastructure development. The key opportunities for the

Company include:

• Growing investments in Digital India, BharatNet, Smart Cities, and other e-Governance initiatives by Central and State Governments.

• Increasing demand for fiber network infrastructure, system integration, digital public services, smart utility solutions, and citizen-centric technology platforms.

• Expansion opportunities in digital transformation projects across sectors such as utilities, revenue administration, healthcare, education, urban development and public service delivery.

• Strong order book and execution capabilities, providing sustained revenue visibility and opportunities for business growth.

• Increasing adoption of emerging technologies such as cloud computing, IoT, GIS-based solutions, data analytics and artificial intelligence in Government and enterprise projects.

Threats

While the Company is well positioned to capitalize on emerging opportunities, it continues to face certain business risks and challenges, including:

• Dependence on Government and Public Sector projects, where project execution and revenue realization may be affected by administrative approvals and procedural delays.

• Lengthy receivable cycles and working capital requirements associated with large infrastructure and e-Governance projects.

• Intense competition from established domestic and multinational IT companies, leading to pricing pressures and competitive bidding.

• Rapid technological advancements requiring continuous investments in technology, innovation and skilled human resources.

• Changes in Government policies, regulatory framework, contractual terms or project implementation schedules that may impact business operations and project timelines.

The Company continuously reviews these risks through an established risk management framework and remains focused on strengthening operational efficiency, financial discipline, project execution capabilities and customer satisfaction to achieve sustainable long-term growth.

5. Outlook

The Company remains optimistic about its future growth prospects, supported by a healthy order book, expanding opportunities in the e-Governance, Digital Infrastructure, Telecom and IT Services sectors, and continued Government focus on digital transformation initiatives.

With ongoing execution of major BharatNet Phase-III projects, strengthening presence in smart infrastructure, utility automation and digital governance solutions, the Company is well positioned to capitalize on emerging business opportunities. The management remains focused on improving operational efficiency, timely project execution, prudent financial management and sustainable long-term value creation for all stakeholders.

6. Risks and Concerns

The Company continues to operate in a dynamic business environment where project execution, regulatory developments and economic conditions may influence business performance. Key risks include dependence on Government projects, delays in customer approvals and payments, technology changes, and competitive market conditions.

To address these risks, the Company has implemented appropriate risk management practices, strengthened internal monitoring mechanisms, and continues to focus on efficient project execution, financial discipline and effective compliance systems.

7. Internal Control Systems and Their Adequacy

The Company has established an adequate system of internal financial controls commensurate with the size, nature and complexity of its business operations. These controls are designed to ensure the safeguarding of assets, accuracy and reliability of financial reporting, compliance with applicable laws and regulations, operational efficiency and adherence to established policies and procedures.

The Company has an independent Internal Audit function, and the internal audit programme covers all significant operational and financial areas based on a risk-based audit approach. The observations and recommendations of the Internal Auditors are periodically reviewed by the management, and corrective actions are implemented wherever necessary.

The Audit Committee of the Board regularly reviews the adequacy and effectiveness of the internal control systems, internal audit findings, risk management framework and compliance mechanisms. Based on such reviews, the management believes that the Companys internal control systems are adequate and operating effectively.

8. Human Resources Development

The Company firmly believes that its employees are its most valuable asset and continues to invest in building a competent, motivated and performance-driven workforce. Human resource initiatives are focused on enhancing employee capabilities, strengthening leadership, fostering innovation and promoting a collaborative work culture.

The Company continues to emphasize:

• Continuous learning, technical skill enhancement and professional development programmes.

• Employee engagement, performance management and career development initiatives.

• A safe, inclusive and ethical work environment that encourages teamwork, innovation and accountability.

• Talent acquisition and retention strategies to support the Companys expanding business operations.

As on March 31, 2026, the Company had a dedicated team of professionals comprising technical experts, project management personnel and support staff who continue to contribute towards the successful execution of the Companys projects and achievement of its business objectives. The industrial relations during the year remained cordial.

9. Cautionary Statement

Statements made in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may constitute forward-looking statements within the meaning of applicable

securities laws and regulations. These statements are based on certain assumptions and expectations of future events and are subject to various risks and uncertainties.

Actual results may differ materially from those expressed or implied in such forward-looking statements due to factors including, but not limited to, changes in economic conditions, Government policies, regulatory developments, competitive environment, project execution schedules, customer requirements and other factors beyond the Companys control.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required under applicable laws.

10. Key Financial Ratios and Analysis

As required under Regulation 34(3) read with Schedule V(B) of SEBI (LODR) Regulations, 2015, the details of significant changes in key financial ratios (i.e., 25% or more compared to the previous year) are given below:

Particulars	Numerator	Denominator	31.03.2026	31.03.2025	Variance
a) Current Ratio	Current assets	Current liabilities	1.69	2.01	-16%
b) Debt-Equity ratio	Total Debt	Shareholders\u2019 equity	0.27	0.16	66%
c) Debt service coverage ratio	Earnings available for debt service	Debt service	5.46	4.31	27%
d) Return on equity ratio	Net Profit after taxes	Equity	0.17	0.08	121%
e) Inventory turnover ratio	Turnover	Closing Inventory	-	-	0.00%
f) Trade receivable turnover ratio	Turnover	Closing Receivables	1.50	0.79	90%
g) Trade payable turnover ratio	Purchases	Closing Payables	-	-	0.00%
h) Net capital turnover ratio	Net Sales	Working Capital	2.04	1.21	68%
i) Net profit ratio	Net profit after Tax	Net Sales	0.10	0.09	19%
j) Return on capital employed ratio	Earnings Before Interest & Taxes	Capital employed	0.22	0.11	89%
k) Return on Investment	Net income	Value of equity at the beginning	0.20	0.08	142%

Current Ratio (-16%)

The Current Ratio declined from 2.01 to 1.69, primarily driven by an increase in current liabilities. This rise in working capital liabilities supported expanded business operations and project execution during the year, which ultimately led to a 121% increase in turnover. Despite the decline, the ratio continues to indicate adequate liquidity to meet the Companys short-term obligations.

Debt-Equity Ratio (+66%)

The Debt-Equity Ratio increased from 0.16 to 0.27 mainly due to higher utilization of borrowings to support working capital requirements and execution of large-value projects awarded during the year. Despite the increase, the Companys leverage remains at a comfortable level.

Debt Service Coverage Ratio (+27%)

The Debt Service Coverage Ratio increased from 4.31 to 5.46 mainly due to the Company received additional loans from the Directors, resulting in an increase in debt. Consequently, the finance cost increased due to the interest expense on these fresh borrowings, which led to an increase in the Debt Service Coverage Ratio.

Return on Equity (+121%)

Return on Equity improved significantly owing to substantial growth in profit after tax during the year, supported by higher revenue from operations and improved operating margins.

Trade Receivable Turnover Ratio (+90%)

The Trade Receivable Turnover Ratio improved considerably due to higher revenue generation and more efficient collection of trade receivables during the year, reflecting improved receivables management.

Net Capital Turnover Ratio (+68%)

The Net Capital Turnover Ratio improved due to better utilization of working capital and increased revenue from operations, indicating improved operational efficiency.

Net Profit Ratio (+19%)

The Net Profit Ratio improved as a result of higher revenue, better project execution, effective cost management and improved operational efficiencies during the year.

Return on Capital Employed (+89%)

The Return on Capital Employed improved significantly owing to higher earnings before interest and tax (EBIT) generated from improved business performance and efficient utilization of capital employed.

Return on Investment (+142%)

The substantial increase in Return on Investment is primarily attributable to significantly higher net earnings during the year compared to the previous year, resulting in improved returns on the investments made by the Company.