Tera Software Ltd Management Discussions

(For the Financial Year 2024-25)

1. Industry Structure and Developments

The Indian IT and e-Governance sector continues to play a pivotal role in driving the digital transformation of government services. With flagship initiatives like Digital India, BharatNet, Smart Cities Mission, Aadhaar, and land record digitization projects, the demand for large-scale IT-enabled services (ITES) and digital infrastructure has significantly grown.

Government focus on transparency, efficiency, and citizen-centric governance has accelerated projects in public distribution systems, revenue and taxation automation, fiber connectivity, smart metering, and digital record management.

In this environment, Tera Software Limited (TSL) has positioned itself as a specialized and dedicated e-Governance solutions provider, with strong execution capabilities across multiple states of India.

2. Business Overview

During FY 2024-25, TSL strengthened its presence across e-Governance, Smart Cities, FiberNet, and Energy Distribution automation projects. Key projects executed or under execution include:

• BharatNet Projects - Successful completion of Odisha BharatNet Phase-II and award of BSNL BharatNet Phase-III Middlemile Network projects worth Rs. 7005.55 Crores (TSL Share Rs. 3502.78 Crores).

• Smart Cities - Implementation of Davangere Smart City ICT Project with Command & Control Centres and integrated ICT infrastructure.

• Spot Billing Projects - Completed major billing projects with PVVNL, DVVNL and secured fresh orders from PUVVNL, DVVNL, MVVNL totaling Rs. 273.11 Crores for 2025-27.

• Digitization & Modern Record Rooms - Successful completion of Jharkhand Revenue Department projects and ongoing e-Mahabhoomi Project in Maharashtra.

With operations in over 22 Indian states, TSL continues to be a leading Indian e-Governance solutions provider.

3. Financial Performance (Rs. in Lakhs)

PARTICULARS	Standalone		Consolidated
	Financial Year 2024-25	Financial Year 2023-24	Financial Year 2024-25	Financial Year 2023-24
Total Income	11170.49	8841.13	11170.49	8841.13
EBITDA	1634.97	1053.53	1634.38	1053.03
Less: Interest	379.18	285.86	379.18	285.86
EBTDA	1255.79	767.67	1255.20	767.17
Less: Depreciation	13.59	14.98	13.59	14.98
EBT	1242.20	752.69	1241.61	752.19
Less: Exceptional Items	(4.26)	139.47	(4.26)	139.47
Less: Tax Expenses	295.86	221.27	295.86	221.27
EAT (Earnings After Tax)	942.08	391.95	941.49	391.45
Profit/Loss carried to B/S	995.89	462.26	995.30	461.76
EPS (Basic & Diluted)	7.53	3.13	7.52	3.13

• Achieved a growth of 27% in operation performance.

• Earnings After Tax (EAT) and Earnings Per Share (EPS) recorded a significant increase of 140%.

Highlights:

• Total Income grew by 27% from Rs. 8,448.25 Lakhs in FY 2023-24 to Rs. 10,764.38 Lakhs in FY 2024-25.

• Profit After Tax increased by ~140%, reflecting improved operational efficiency and execution.

• EPS more than doubled from Rs. 3.13 to Rs. 7.53.

4. Opportunities and Threats Opportunities:

• Rising demand for digitization of government records, smart metering, and fiber connectivity.

• Strong pipeline in Digital India and Smart City initiatives.

• Expanding presence across new states and sectors (healthcare, utilities, and financial services).

Threats / Risks:

• High dependence on government projects and long receivable cycles.

• Increasing competition from large IT players and global firms.

• Regulatory and policy delays impacting project execution timelines.

5. Outlook

TSL remains confident of sustaining growth in the coming years, driven by:

• Execution of large-scale BharatNet Phase-III projects.

• Expansion of spot billing and IT infrastructure management solutions.

• Entry into smart metering and smart city expansion projects.

The company expects steady revenue growth with improved margins through operational excellence and digital transformation initiatives.

6. Risks and Concerns

• Receivables and cash flow management remain a challenge in government projects.

• Technology disruptions require continuous upgrades.

• Dependency on public sector spending exposes the company to budgetary constraints.

• The Company has put in place a strong risk management framework to mitigate these risks.

7. Internal Control Systems and Their Adequacy

TSL has established robust internal control systems aligned with its operations. Regular internal audits, statutory audits, and management reviews ensure compliance, transparency, and efficiency. The Audit Committee of the Board periodically monitors the adequacy and effectiveness of these controls.

8. Human Resources Development

TSL recognizes human capital as a key driver of success. The Company continues to:

• Invest in skill development and training.

• Encourage a culture of teamwork, innovation, and accountability.

• Retain talent through career development and employee engagement initiatives.

As on March 31, 2025, the Company has a dedicated team of professionals across technical, project management, and support functions.

9. Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, expectations, or projections may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied, depending on economic conditions, government policies, and other incidental factors.

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:

Ratios for the years ended March 31, 2025 and March 31, 2024 are as follows:

Particualrs	Numerator	Denominator	31.03.2025	31.03.2024	Variance
a) Current Ratio	Current assets	Current liabilities	2.01	1.95	2.94%
b) Debt-Equity ratio	Total Debt	Shareholders equity	0.16	0.30	-45.29%
c) Return on equity ratio	Net Profit after taxes	Equity	0.08	0.03	120.81%
d) Inventory turnover ratio	Turnover	Closing Inventory	-	1,789.88	-100.00%
e) Trade receivable turnover ratio	Turnover	Closing receivables	0.75	0.65	16.74%
f) Net profit ratio	Net profit after tax	Net Sales	0.09	0.05	88.64%
g) Interest coverage ratio	EBITDA	Interest expense	3.99	4.17	-4.21%
h) Operating profit margin ratio	Operating profit	Net Sales	0.09	0.07	38.64%

Debt-Equity ratio

This variance in current year is due to the repayment of long-term borrowing i.e. payments made to directors and short-term loans i.e. clearing of cash credit

Return on equity ratio

This variance is a result of increased profit, mainly due to rise in revenue from operations and a notable reduction in expenditure during the year.

Inventory turnover ratio

This variance is attributable to the total decline in the value of closing stock in the current year compared to the previous year

Net profit ratio

This variance is a result of increased profit, mainly due to rise in revenue from operations and a notable reduction in expenditure during the year.

Operating profit margin ratio

This variance is a result of increased profit, mainly due to rise in revenue from operations and a notable reduction in expenditure during the year.