Tera Software Ltd Directors Report

DEAR MEMBERS,

The Board of Directors are pleased to present the 30th Annual Report along with the Audited Financial Statements of Tera Software Limited (‘TSL? or ‘the Company?) for the year ended 31st March, 2024.

ADEQUACY INTERNAL FINANCIAL CONTROLS:

The Company has an Internal Financial Control System to commensurate with the size and scale of its operations. The scope of the internal audit is decided by the Audit Committee and the Board. To maintain its objectivity and independence, the Board has appointed an internal auditor, who reports to the Audit Committee and the Board on a periodic basis. The internal auditor monitors and evaluates the efficacy and adequacy of internal control systems in the company, its compliance with operating systems, accounting procedures and policies for various functions of the Company, Audit observations and actions taken thereof are presented to the Audit Committee.

ANNUAL RETURN:

Pursuant to section 134(3)(a) and section 92(3) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return, in form MGT 9 for the financial year 2023-24 is available on the website of the Company at https://terasoftware.com/annual-return/.

AUDIT COMMITTEE:

The Company has in place an Audit Committee in terms of the requirements of Section 177 of the Act read with the Rules made thereunder and Regulation 18 of the SEBI Listing Regulations.

The details pertaining to the same have been provided in Annexure ‘A? - Report on Corporate Governance forming part of this Board?s Report.

AUDITORS REPORT:

The Auditors? report to the shareholders does not contain any qualification, observation or comment or adverse remark(s). BOARD, COMMITTEE AND GENERAL MEETINGS:

During the financial year under review, 6 (Six) meetings of the Board of Directors were held.

1 (One) Annual General Meeting of the Company was held on 17th August, 2023.

Also, a separate meeting of Independent Directors as prescribed under Schedule IV of the Act was held on 10th February, 2024.

The details of the meetings are provided in "Annexure - A" Report on Corporate Governance forming part of this Board?s Report.

The Board of Directors affirms that the Company has complied with the applicable Secretarial Standards (SS) issued by the Institute of Companies Secretaries of India (SS1 and SS2) respectively relating to Meetings of the Board and its Committees and the Shareholders, which have mandatory applicable.

CORPORATE GOVERNANCE REPORT:

Pursuant to Regulation 34 read with Schedule V of the SEBI Listing Regulations, a report on Corporate Governance is annexed as "Annexure - A" and forms part of the annual report.

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS:

In accordance with the Listing Regulations, a certificate has been received from M/s C.V. Reddy K & Associates, Practicing Company Secretaries, that none of the Directors on the Board of the Company has been disqualified to act as Director. The same is annexed as "Annexure - B".

CHANGES IN DIRECTORS & KEY MANAGERIAL PERSONNEL (KMP):

Sri. O. Babu Reddy, Chief Financial Officer resigned w.e.f. 30-06-2023 from the Company.

Smt. T. Pavana Devi (DIN: 00107698), retired by rotation in the 29th Annual General Meeting held on 17th August, 2023 and not re-appointed as per her desire.

Sri. T. Madhu Mitra (DIN: 07124242) appointed as a Director (Marketing) in the capacity of Whole time Director in the 29th Annual General Meeting held on 17th August, 2023.

Kum. D. Pravallika appointed as the Chief Financial Officer w.e.f. 31st December, 2023.

The second term of five years tenure of Independent Directors Dr. T. Hanuman Chowdary and Smt. T. V. Lakshmi is to be completed on 30/09/2024 and not eligible for re-appointment as per Companies Act, 2013 and rules made thereunder,

but such independent director shall be eligible for appointment after the expiration of three years of ceasing to become an independent director.

Pursuant to the recommendation of the Nomination & Remuneration Committee (NRC), the Board at its meeting held on 3 August, 2024 appointed Smt. Vemuri Usha Rani as an Additional Director in the capacity of Non-Executive Independent Director and recommended the appointment of her as an Independent Director of the Company for a period of five years w.e.f. 3 August, 2024 to 2 August, 2029, for approval of the members at the ensuing Annual General Meeting.

Sri. T. Bapaiah Chowdary, Non-Executive Director, is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Notice convening the Annual General Meeting includes the proposal for appointment/re-appointment of Directors.

The Board opines that all the Independent Directors on the Board possess integrity, necessary expertise and experience for performing their functions diligently.

COMPANY POLICY ON DIRECTOR?S APPOINTMENT AND REMUNERATION:

The Company has formulated a Nomination and Remuneration Committee in accordance with the requirements of Section 178 of the Act read with Rules made thereunder and Regulation 19 of SEBI Listing Regulations.

The details of the same are given in "Annexure - A" - Report on Corporate Governance forming part of this Board?s Report.

The NRC has formulated a policy on Director?s appointment and remuneration including recommendation of remuneration of the key managerial personnel and senior management personnel and the criteria for determining qualifications, positive attributes and independence of a Director. The NRC Policy is also provided in Annexure ‘A? - Report on Corporate Governance forming part of this Board?s Report.

COMPLIANCE WITH SECRETARIAL STANDARDS ON THE BOARD AND GENERAL MEETINGS:

The Company has complied with Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.

COMPLIANCE CERTIFICATE BY AUDITORS ON COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE:

Compliance Certificate by Auditors on Compliance of conditions of Corporate Governance as per Part E of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015) for the year ended 31st March, 2024, is annexed as "Annexure - C."

COMPLIANCE CERTIFICATE SIGNED BY CEO & CFO:

Compliance Certificate signed by CEO & CFO for the financial year ended 31st March, 2024 under Regulation 17(8) as specified in Part B of Schedule II of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed as "Annexure - D".

CONSOLIDATED FINANCIAL STATEMENTS:

Your Directors have pleasure in attaching the Consolidated Financial Statements pursuant to Section 129(3) of the Act and Regulation 34 of the SEBI Listing Regulations prepared in accordance with the applicable Accounting Standards prescribed by the Institute of Chartered Accountants of India (ICAI), in this regard.

CONSERVATION OF ENERGY, TECHNOLOGY, ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The details of conservation of energy, technology absorption, foreign exchange earnings and outgo are as follows:

A) Conservation of energy

The operations of the Company are not energy intensive and every effort has been made to ensure the optimal use of energy, avoid waste and conserve energy by using energy efficient computers and equipment with latest technologies.

(B) Technology absorption

The Company is constantly upgrading its technological excellence with emerging technologies. It has not incurred any expenditure on Research and Development.

(C) Foreign exchange earnings and Outgo

Foreign Exchange Earnings during the year: NIL Foreign Exchange outgo: NIL

CORPORATE SOCIAL RESPONSIBILITY (CSR):

The Corporate Social Responsibility (CSR) Policy and CSR Committee formed pursuant to section 135 of Companies Act, 2013 and Rules made there under. The CSR Committee details are mentioned in the Corporate Governance Report.

There is no requirement to spend on CSR activities in the financial year 2023-24 as the average net profit of the preceding three financial years are in negative.

Full details of the above CSR Activities/expenditure mentioned in the disclosure as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 which is enclosed as "Annexure - E" to this report.

DECLARATION BY CEO ON CODE OF CONDUCT OF DIRECTORS & SENIOR MANAGEMENT:

Declaration by the Chairman and Managing Director in accordance with Part D of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, confirm that all the Members of Board of Directors and Senior Management Personnel of the Company have affirmed compliance with the Code of Conduct, as applicable to them is annexed as "Annexure - F."

DECLARATION OF INDEPENDENCE OF INDEPENDENT DIRECTORS:

The Company has received Declarations of Independence from Independent Directors as stipulated under Section 149(7) of the Act and Regulation 25(8) of the SEBI Listing Regulations, confirming that he/she is not disqualified from appointing/continuing as Independent Director as per the criteria laid down in Section 149(6) of the Act and Regulation 16(1)(b) of SEBI Listing Regulations. The Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Companies Act, 2013.

DEPOSITS:

During the year under review, the Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Act and the Rules framed thereunder. Hence, the Company does not have any unclaimed deposits as on the date of the Balance Sheet. The Company complies with the requirement of filing the requisite return with respect to amount(s) not considered as deposits.

DEPOSITORY SYSTEM:

As the members are aware, the Company?s shares are compulsorily tradable in electronic form only. As on 31 March, 2024, 99.62% of the Company?s total paid-up capital representing 1,24,64,427 shares are in dematerialized form. In terms of Regulation 40(1) of SEBI Listing Regulations, requests for effecting transfer of securities shall be processed only if the securities are held in the dematerialized form.

Pursuant to SEBI circular dated January 25, 2022, all requests for transmission, transposition, issue of duplicate share certificate, claim from unclaimed suspense account, renewal/exchange of securities certificate, endorsement, sub-division/splitting of securities certificate and consolidation of securities certificates/folios will be processed only in demat form. A letter of confirmation will be issued, which needs to be submitted by the shareholder to Depository Participant to get credit of these securities in dematerialized form. Shareholders desirous of using these services are requested to contact the RTA of the company, the contact details of RTA are available on the website of the Company at www.terasoftware.com.

Further in adherence to SEBI?s circular to enhance the due diligence for dematerialization of the physical shares, the Company has provided the static database of the shareholders holding shares in physical form to the depositories which would augment the integrity of its existing systems and enable the depositories to validate any dematerialization request.

In view of the numerous advantages offered by the Depository System as well as to avoid frauds, members holding shares in physical mode are advised to avail of the facility of dematerialization from either of the depositories.

DIRECTORS? RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013 the Board of Directors to the best of their knowledge and ability confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; if any

b) Appropriate accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

c) Proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The annual accounts have been prepared on a going concern basis;

e) Appropriate internal financial controls have been laid down and that such internal financial controls are adequate and are operating effectively; and

f) Proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DISCLOSURE OF REMUNERATION:

The details of remuneration as required to be disclosed under the Section 197(12) of the Act and Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given in Annexure ‘G? forming part of this Board?s Report.

The information in respect of employees of the Company required pursuant to Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is not applicable during the year under review, as no employee is drawing the aggregate limits as specified in the above said Rules.

DIVIDEND:

Your directors have not recommended the payment of dividend for the F.Y. 2023-24 to manage the cash flows of the Company Business operations.

FINANCIAL RESULTS: (Rs. in Lakhs)

PARTICULARS	Standalone
	Year Ended 31.03.2024	Year Ended 31.03.2023
Gross Income	8841.13	15595.96
Expenditure	7787.60	14070.71
Profit before Finance Cost, Depreciation & Tax	1053.53	1525.25
Less: Finance Cost>	285.86	636.20
Depreciation	14.98	23.49
Profit/Loss Before Tax (PBT)	752.69	865.56
Less: Provision for Current tax	205.72	190.37
Tax Expense relating to earlier years	(31.76)	276.53
Deferred tax	94.61	52.08
Exceptional Items	139.47	--
Profit/Loss After Tax (PAT)	344.65	346.58

LISTING OF SHARES ON STOCK EXCHANGES:

The Equity Shares of your Company are listed on the BSE Limited (BSE) and National Stock Exchange of India Ltd (NSE). The Annual listing fees of both the stock exchanges have been paid.

MATERIAL CHANGES & COMMITMENTS:

There are no material changes and commitments affecting the financial position of the Company between the end of the current financial year and the date of this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

The Management?s Discussion and Analysis Report as required under Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed hereto as "Annexure - H" and forms part of Board?s Report.

PARTICULARS OF LOANS GIVEN, INVESTMENTS MADE, GUARANTEES GIVEN OR SECURITY PROVIDED BY THE COMPANY:

The Company has disclosed the full particulars of the loans given, investments made or guarantees given or security provided as required under Section 186 of the Act and Regulation 34(3) read with Schedule V of the SEBI Listing Regulations and forms part of the financial statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 is prescribed in form AOC-2 and is appended as "Annexure - I" to the Board?s Report.

There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large.

The Audit Committee has approved all the Related Party Transactions for the FY 2023-24. Omnibus approval of the Audit Committee is obtained before the commencement of financial year for all the transactions for FY 2024-25 as required under the provisions of Section 177 of the Act.

The revised policy on Related Party Transactions as approved by the Board is uploaded on the Company?s website. PERFORMANCE OF THE COMPANY:

The gross income for the financial year under review were Rs. 8,841.13 lakhs as against Rs.15,595.96 lakhs for the previous year. The Company has registered a net profit of Rs. 344.65 lakhs as compare to previous year?s net profit of Rs. 346.58 lakhs.

PERFORMANCE EVALUATION OF BOARD, ITS COMMITTEES AND DIRECTORS:

Pursuant to applicable provisions of Schedule IV of Companies Act, 2013, read with Securities Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations, 2015, the Board has carried out annual evaluation of its own performance, performance of the Directors including Chairman assessment as well as the evaluation of the working of its committees.

During the year, feedback was sought by way of structured questionnaires and evaluation was carried out based on various criteria and the responses received from the Directors.

The criteria for performance evaluation of the Board included aspects such as Board composition and quality, setting strategy, overall direction, effectiveness of Board processes, Board and management relations, contribution, board development, timeliness of information etc., The criteria for performance evaluation of the Committees included aspects such as structure and composition of Committees, effective participation of member of the Committees, deliberations and suggestions made by the Committee, effectiveness of the Committee?s recommendation for the decisions of the Board, etc., A separate peer review exercise was carried out to evaluate the performance of Individual Directors. The performance evaluation of the Chairman of the Board was also carried out, considering the views of all the remaining Directors.

Further, the Independent Directors, at their exclusive meeting held during the year, reviewed the performance of the Board, its Chairman and Non- executive Directors and other items as stipulated under the Listing Regulations.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

The Company always believes and endeavours to provide safe and healthy environment, which is free from discrimination and harassment including sexual harassment. During the year, there were no complaints filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder.

PROCEEDINGS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 (31 OF 2016):

During the financial year, The Company has neither filed any application, nor any proceeding is initiated against the Company under the Insolvency and Bankruptcy Code, 2016.

REPORTING OF FRAUD:

During the year under review, the Statutory Auditors, Internal Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its Officers or Employees, to the Audit Committee under Section 143(12) of the Act, details of which need to be mentioned in this Report and rules made thereof. Therefore, no details are required to be disclosed under Section 134 (3) (ca) of the Act.

RISK MANAGEMENT:

The provisions related to the Risk Management Committee as stated in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable to the Company. The Audit Committee oversight the framework to identify, evaluate, mitigate and monitor the risk management, financial risk and controls in the Company.

SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. C.V. Reddy K & Associates, Practising Company Secretaries as Secretarial Auditors. The Secretarial Audit report for the financial year 2023-24 in Form No.MR-3 and Annual Secretarial Compliance Report is annexed herewith as "Annexure - J" to this Report and the Secretarial Audit Report does not contain any reservation, qualification or adverse remarks.

SHARE CAPITAL:

The Company?s total paid-up equity share capital is Rs.12,51,18,750/- consisting of 1,25,11,875 equity shares of Rs.10/- each, fully paid up as on 31st March, 2024. During the year under review, there was no change in share capital of the Company.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS:

During the year under review, there were no material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Company?s operations in future.

STAKEHOLDERS? RELATIONSHIP COMMITTEE:

The Company has in place a Stakeholders? Relationship Committee in terms of the requirements of Section 178 of the Act read with the Rules made thereunder and Regulation 20 of the SEBI Listing Regulations.

The details of the same are given in "Annexure - A" Report on Corporate Governance forming part of this Board?s Report. STATUTORY AUDITORS:

Pursuant to the provisions of Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014 M/s. Narven Associates, Chartered Accountants (Firm Registration No. 005905S), Hyderabad has been appointed as the Statutory Auditors, for a term of five years i.e. to hold office from the conclusion of 28th AGM held on 24-09-2022 till the conclusion of 33rd AGM of the Company to be held in the year 2027.

The Auditors have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.

Further, in compliance with Section 146 of the Act, the notices of the general meeting of the Company are also forwarded to the Statutory Auditors of the Company to ensure their attendance at the AGM of the Company.

The details of the total fees paid by the Company and its subsidiaries and other relevant details are provided in "Annexure - A" Report on Corporate Governance forming part of this Board?s Report.

SUBSIDIARY / ASSOCIATE / JOINT VENTURE COMPANIES:

The Company entered into a Joint Venture Agreement with Sitra Infotech Private Limited in the ordinary course of business and incorporated a subsidiary company under the name of ‘TS Innovations Private Limited? (TSIPL) w.e.f. 18/07/2023 and participated in e-tender invited by ONGC for award of contract for "Survey, Engineering, Supply, Installation & Commissioning of CCTV System during the year under review. But the contract has not awarded for TSIPL.

The Company has formulated a policy on the identification of material subsidiaries in line with Regulation 16(c) of the Securities & Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015 ("SEBI

Listing Regulations"), as amended, and the same is placed on the website at https://www.terasoftware.com/investors. The Company has not having any material subsidiary. Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Company?s subsidiaries in Form AOC-1 is annexed as "Annexure - K" to the Board?s Report.

TRANSFER TO RESERVES:

The Company has not transferred any amount to the reserves during the current financial year.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF):

Pursuant to the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), the Company has appointed the Company Secretary as the Nodal Officer for carrying out the necessary functions under the applicable provisions of the Act and the rules made thereunder.

Pursuant to the provisions of Section 124 of the Act read with IEPF Rules and relevant circulars and amendments thereto, the amount of dividend remaining unpaid or unclaimed for a period of seven years from the due date is required to be transferred to IEPF, constituted by the Central Government. Further, pursuant to the provisions of IEPF Rules, all equity shares in respect of which dividend has not been paid or claimed for last seven consecutive years are required to be transferred by the Company to the designated demat account of the IEPF authority within a period of thirty days of such shares becoming due to be transferred.

The Company sends advance communication to the concerned shareholders at their address registered with the Company and also publishes notices in the newspapers for taking appropriate action to claim unclaimed dividend and the shares due for transfer to IEPF.

Despite these efforts, an amount of Rs. 2,43,264/- which remained unclaimed for a period of seven years from the financial year 2015-16, was transferred to the IEPF in accordance with the provisions of the Act.

Subsequent to the transfer, the concerned shareholders can claim the said shares along with the dividend(s) by making an application to IEPF Authority in accordance with the procedure available on www.iepf.gov.in and on submission of such documents as prescribed under the IEPF Rules.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

As per the provisions of Section 177(9) of the Act, the Company is required to establish an effective Vigil Mechanism for Directors and Employees to report genuine concerns. The Whistle Blower Policy of the Company meets the requirement of the Vigil Mechanism framework under the Act and Regulation 22 of SEBI Listing Regulations.

Employees are encouraged to report any wrongdoings having an adverse effect on the Company?s financials/image and instances of leak of unpublished price sensitive information. An employee can report any wrongdoing in oral or written form. Whistle blowers are assured by the management of full protection from any kind of harassment, retaliation, victimization, or unfair treatment.

The whistle Blower Policy is available on the Company?s website at the link: http://terasoftware.com/investors/. There were no complaints received during the year under review.

OTHER DISCLOSURES:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions / events on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Issue of Shares (including Sweat Equity Shares) to employees of the Company under any Scheme.

3. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Act).

4. There has been no change in the nature of business of your Company.

5. The Company has not made any one-time settlement for loans taken from the Banks or Financial Institutions.

6. There was no revision of financial statements and Board?s Report.

ACKNOWLEDGMENTS:

Your Directors take this opportunity to thank the customers, vendors, Financial Institutions, Regulatory Authorities, Stock Exchanges and all the various stakeholders for their continued co-operation and support to the Company. Your Directors also acknowledge the support and co-operation from the Government of India, the concerned State Governments, other Government Departments and Governmental Agencies. The Directors appreciate the significant contributions made by the employees of the Company and its subsidiaries during the year under review and value the contributions made by every member of the Tera family.