Tera Software Ltd Management Discussions.

Commemorating the 25th year of TERA Software Limited, your directors take pride to share with you that the Company has won projects having total value more than Rs. 1200 Crores. Your directors anticipate a huge success and a positive outlook for the coming years. Your Company implements the projects as System Integrator, Public Private Partnership model (BOOT, BOO, BOMT), infrastructure and maintenance services. The Company had its operational presence in 22 states in India. Over the years, the Company has been offering innovative, flexible and affordable software solutions to customers across the globe.

ECONOMIC SCENARIO AN D OUTLOOK

India has become the digital capabilities hub of the world with around 75 per cent of global digital talent present in the country. Indias IT & ITeS industry grew to US$ 181 billion in 2018-19. The contribution of core digital sectors like information technology-business process management (IT-BPM), digital communications, and electronics manufacturing to Indias gross domestic product (GDP) may increase 8 to 10 percent in 2025, says a new report from McKinsey Global Institute. The government has identified Information Technology as one of 12 champion service sectors for which an action plan is being developed.

With an aim of achieving the vision of DIGITAL INDIA, the Governments services are made available to citizens electronically by improved online infrastructure and by increasing Internet connectivity and by making the country digitally empowered in the field of technology. Digitize India Platform (DIP) provides an innovative solution by combining machine intelligence and a cost-effective crowd sourcing model.

GOVERNMENT INITIATIVES

The Government aspires to transform India into a knowledge society and spread of growth of IT sector to the last mile of the state, (i.e. gram panchayat) . To enable lndias transition into a digital economy, Ministries have fully leveraged the Common platform, laid down the standards and policy guidelines and Support ICT Infrastructure established by Gol. The existing e-Governance initiatives have been suitably revamped to align them with the principles of Digital India. Scope enhancement, Process Reengineering, use of integrated & interoperable systems and deployment of emerging technologies like cloud & mobile have been undertaken to enhance the delivery of Government services to citizens.

To extend the reach of the mobile network, broadband services & high-speed digital connectivity to rural India at affordable price, the following initiatives have been taken:

• Under Bharat Net Phase-1 programme, 2,82,054 Kins of PLB Duct (pipe) were laid, 2,92,686 Kms Optical Fibre were laid & 3,41,568 Kms of Optical Fibre Cable were Delivered on site by the end of calander year 2018.

• Implementation of the programme has been ramped up under BharatNet Phase-ll project where Balance GPs using optical mix of underground/aerialOFC, radio and satellite to be used. This programme was to be executed by 3 PSUs and State Govts through their Discoms or any other agency. Where your Company is engaged in two states Orisha and Andhra Pradesh.

• The Ministry of Housing and Urban Affairs (MoHUA), Government of India (Gol) has initiated a Smart Cities Mission (SCM), under which selected cities will be developed as smart cities with a focus on improving citizen services.

• Ensuring mobile access in around 44,000 uncovered villages in the country and government is taking steps to ensure that all villages are covered through mobile connectivity.

• Business process re-engineering is being undertaken to improve processes and service delivery. Services will be integrated with UIDAI, payment gateway and mobile platform.

• To achieve this, the government has been promoting IT and ITeS units in Tier-ll cities and rural areas that will not only provide gainful employment but also ensure overall socio-economic development of the state.

OPPORTUNITIES

With the introduction of the DIGITAL INDIA PROGRAM, both the Central and State Governments are opening the door for non-government companies to work on Public Private Partnership for execution of their projects.

The Company has embarked Four new projects under Digital India Programme for optical fiber grid network connectivity in the state of Andhra Pradesh. We have successfully bagged one PAN City ICT project under SMART City mission in Davangere city and One work order for survey, design, planning, supply (including free spares supply items) and installation, end to end integration, testing and commissioning of OFC (Aerial) GPON network in the state of Odisha under BharatNet Phase-ll. Further, the company is expected to enterfew more states in the next Financial Year. The company has a long road to go and we believe to complete the milestones within the stipulated timeframe and get more extensive projects in future.

RISKS & CONCERNS

Over the past decade, the Indian IT-ITeS sector has grown rapidly and achieved significant milestones in terms of revenue, employment generation and value creation. In the given scenario, the omnipresent threat grew even faster than anticipated. New risks emerged as the severity; volatility and pace of change fostered opportunities and incentives for security. If you need to develop something large, it has to have massive demand scale, and that can be very difficult to bootstrap as a business. Thus, the industry is facing a lifecycle that requires small things that minimal features and mass market popularity, with low prices, with a vague and fickle future possibility of adding more capabilities.

Software industry may be in for the same economic problems that the traditional news and media industries face now: high costs, diminished traditional revenue streams, and reliance on things other than the product itself to make money. These are different challenges than the software itself as a set of technical and project management problems:

• Low budgeted value of projects:

Government projects are sometimes very low budgeted. It becomes difficult to get award of contracts due to high impact cost of project. The company has its dedicated team to analyse, budget and quote reasonable value to meet the levels of bidding.

• Delayed revenue:

Receipt of revenue is slightly slower than expected, as government payments are subject to various clearances by government officials. The company is making adequate provisions to cater the requirement of new projects.

• Less finance available:

Some projects may be easier to finance than others (if there is proven technology involved and/ or the extent of the private sectors obligations and liability is clearly identifiable). Seeing the slow realisation of profits, Banks and Financial institutions are reluctant to fund the projects. The management is aware of this and has taken the necessary initiatives to mitigate the risk.

• Technology Obsolescence

These are the days when technology takes no time to become obsolete. Thus, to be on par with the competitors your Company is continually making effort to ensure that it constantly updates and upgrades its technology.

• Increasing Competition

The entry of large players will result in fierce competition and raising the bar for eligibility. This will impact the business of the Company. The Companys management is continuously making efforts to mitigate this risk.

COMPANYS OUTLOOK

As your Company has completed 25 years, we can consider ourselves an established, mature and reputable Company. A detailed review of all the projects is given hereunder:-

1. OPTCL BHARATNET PHASE-II TURNKEY PROJECT: A

work contract worth Rs. 486.39 Crores from Odisha Power Transmission Corporation Limited (OPTCL) for which the Company was the L1 bidder. Further, to inform you that the Company has signed an agreement with OPTCL for the aforesaid work contract for survey, planning, design, engineering, manufacturing, insurance, supply (including spares supply items) and installation, delivery at site, end to end integration, testing & commissioning of OFC (Aerial) GPON Network and Technical Specification evaluation work in the state of Odisha.

2. APSFL OPTICAL FIBRE GRID NETWORK: A milestone work order worth of Rs. 324.89 Crores from Andhra Pradesh State FiberNet Limited (APSFL) and the company has signed an agreement with APSFL to act as Project Implementation Agency for BharatNet Phase-ll works to establish Optical Fibre Grid Network (Supply, installation and Commissioning) in 3394 Gram Panchayats in the state of Andhra Pradesh to be commissioned in 12 months and further O&M for the period of 7 years.

3. AP FIBER GRID PHASE-1 O&M A very prestigious project of AP Fiber Grid Phase-1 for Operation and Maintenance of the same for Andhra Pradesh State Fiber Grid Network Phase-1 for a period of five years from Andhra Pradesh State Fiber Net Limited (APSFL). The value of this project is Rs. 286.49 Crores.

4. DAVANAGERE SMART CITY PROJECT: a work order worth of Rs. 88.32 Crores as a part of Smart City Mission (one of the Governments bold and new initiative to promote cities with core infrastructure and to give a decent quality of life to its citizens, a clean and sustainable environment and application of Smart Solutions) an emerging domain of Information and Communications Technology (ICT) to act as System Integrator for implementation of PAN City lCT project in Davanagere City, State of Karnataka from Davanagere Smart City Limited, Government of Karnataka to implement and integrate City Surveillance System, Smart Health Management, Solid Waste Management System, Water supply system, Underground Drainage, Intelligent Traffic Management System, Smart Parking, Intelligent Transport System, City Wi-Fi, Environment Sensors, e-Learning Centres, Smart energy/Roof Top

Solar System, Smart Street Lighting and Quality Monitoring System.

5. AP FIBER GRID PHASE-1 PT EQUIPMENT AMC - The

Company got the project work of Rs. 33.75 Crores for Annual Maintenance Contract (AMC) services of PT Equipment viz. OLTs, Agora Software, and Software for AAA server for AP Fibergrid Project for 5 years across 13 districts of Andhra Pradesh from APSFL. AMC includes comprehensive services, repairs, resolve, replacements, maintenance of software, license, hardware and equipments etc.

6. AP LAST MILE CONNECTIVITY PROJECT The Company has bagged a Work Order of Rs 4.02 Crores from APSFL for last mile Optical Fiber Connectivity upto 982 connections to Education institutions from APSFL POP. Last mile connectivity includes installation and configuration of Optical Fiber Connectivity to deliver the services of AP Fiber Grid viz., Cable TV, high-speed Broadband, Telecom and other value-added services.

INTERNAL CONTROL SYSTEMS AND ADEQUACY

Companys internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. Processes for formulating and reviewing annual and long-term business plans have been laid down.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

The Company constantly reviews the man power requirements and has a properly equipped department to take care of the requirements. The total number of people employed by the Company as on 31.03.2019 is 1295.