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, 2023.

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

E-Commerce Industry: The e-commerce market in India has enjoyed robust growth of almost 55 per cent for the last six years. Though e-commerce has been around since fifteen years, the pertinent environs are now finally in place to drive such market ahead. The Indian e-commerce industry has been on an upward growth trajectory. After a surge in digital adoption during COVID-19, the Indian e- commerce market is estimated to be worth over $55 Bn in Gross Merchandise Value in 2021. By 2030, it is expected to have an annual gross merchandise value of $350 bn. Further, as of 2021, more than 348 Mn users were conducting online transactions, and nearly 140 Mn were shopping online.

Young demography, increasing internet and smart phone penetration, and relatively better economic performance are some key drivers of this sector. With 830 Mn users, India is currently the 2nd largest internet market. In 2021, digital wallets were the leading payment method for e-commerce transactions with a share of 45.4%

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.

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.

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

Sd/-

Sayyed Hamid Managing Director DIN-05167876

For & on behalf of Fone4 Communications (India) Limited

Sd/-

Sayyed Imbichi Haris Sayyed Director DIN-08395581

Date: 05-09-2023 Place: Kerala

SECRETARIAL AUDIT REPORT

For the Financial Year Ended On 31^st March, 2023 (Pursuant to section 204(1) of the Companies Act, 2013 and Rule No. 9 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014)

To,

The Members,

Fone4 Communications(India) Limited Poovathum Arcade, Koothapady Temple Road,

Thammanam, P.O. Ernakulam 682032, Kerala India

We have conducted the Secretarial Audit of the Compliance of applicable statutory provisions and the adherence to good corporate practices by Fone4 Communications(India) Limited (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing our opinion thereon.

Based on our verification of the Companys books, papers, minutes book, forms and returns filed and other records maintained by the Company and also information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, We hereby report that in our opinion, the company has, during the audit period covering the financial year ended on 31^st March, 2023, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by Fone4 Communications (India) Limited for the financial year ended on 31^st March, 2023 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 (SCRA) and the rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings;

The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI Act) viz.:

• The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

• The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015;

• The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009

• The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; (Not applicable as the Company has not issued securities under Employee Stock Option Scheme and Employee Stock Purchase Scheme during the financial year under review)

• The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008(Not Applicable as the neither Company has existing Debt Securities nor have issued any fresh securities during the year under review);

• The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client

• The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009;(Not Applicable as the securities of the Company have not been delisted from any Stock Exchange during the year under review)

• The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998(Not applicable as the Company has not bought back any of its securities during the financial year under review)

• The Securities and Exchange board of India (Listing obligation and Disclosure requirement) Regulation, 2015.

We have also examined compliance with the applicable clauses of the following:

• Secretarial Standards issued by The Institute of Company Secretaries of India.

• The Listing Agreements entered into by the Company with Stock Exchange BSE Limited.

During the period under review as per explanation and clarification given to us and the representation made by management, the company has generally complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above except as follows:

(i) The company had initiated the process of software migration, during the last financial year, for its accounting database from its existing legacy package to tally package (desktop version) for which updation /reconciliation is in process.

(ii) the Company is in process of reconciliation of GST input tax credit between credit lying in books and credit available in GSTR-2A at GST portal. Any discrepancies out of such reconciliation, if any, is presently not ascertainable

(iii) the Company has registered under the Employees Provident Fund Act, 1952 and Employees State Insurance Act, 1948, however, the same has not been deducted and deposited on the eligible employees. The impact of the same is not ascertainable.

We further report that,

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors and Independent Directors. The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda.

Majority decision is carried through while the dissenting members views are captured and recorded as part of the minutes.

We further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines.

We further report that during the audit period the company has made a Public Issue of 68,00,000 equity Shares of face value of Rs. 10 each of the Company for cash at a Price of Rs. 10 per Equity Shares.

The Company has passed the special resolution in Extra Ordinary General Meeting dated 16^th March 2022 and allotted the share vide Board Resolution dated 02^nd May 2022

The Shares of the Company listed on SME Limited of BSE Limited with effect from May 06^th 2022

The issue opens on April 25, 2022 and closed on April 27^th, 2022.

For Vikas Verma and Associates, (Company Secretaries)

Sd/-

Vikas Kumar Verma Managing Partner FCS: 9192 C. P No:10786

Place - Delhi

Date:03/08/2023

UDIN:F009192 E000732530

To,

The Members,

Fone4 Communications(India) Limited Poovathum Arcade, Koothapady Temple Road, Thammanam, P.O. Ernakulam 682032, Kerala India

Our report of even date is to be read along with this letter.

Maintenance of secretarial record is the responsibility of the management of the Company. Our responsibility is to express an opinion on these secretarial records based on our audit.

We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the secretarial record. The verification was done on test basis to ensure that the correct facts are reflected in secretarial records. We believe that the practices and processes, we followed provide a reasonable basis for our opinion.

We have not verified the correctness and appropriateness of financial records and Books of Accounts of the company.

Where ever required, we have obtained management representation about the compliance of laws, rules, regulations, norms and standards and happening of events.

The compliance of the provisions of Corporate and other applicable laws, rules, regulations, norms and standards is the responsibility of management. Our examination was limited to the verification of procedure on test basis.

The secretarial audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

We have reported, in our audit report, only those non-compliance, especially in respect of filing of applicable forms/documents, which, in our opinion, are material and having major bearing on financials of the Company.

For Vikas Verma and Associates, (Company Secretaries)

Sd/-

Vikas Kumar Verma Managing Partner FCS: 9192 C. P No:10786

Place - Delhi

Date:03/08/2023

UDIN:F009192E000732530

To,

The Members of

Fone4 Communications (India) Limited

This is to certify that the Company has laid down a Code of Conduct (the Code) for all Board Members and Senior Management Personnel of the Company and a copy of the Code is put on the website of the Company viz www.fone4.in.

It is further confirmed that all Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for Board of Directors and Senior Management Personnel, as approved by the Board, for the financial year ended on March 31, 2023.

By Order of the Board For Fone4 Communications(India) Limited

Place: Kerala Date: 05.09.2023

Sd/-

Sayyed Hamid Managing Director DIN-05167876

CHIEF FINANCIAL OFFICER (CFO) CERTIFICATION

To,

The Board of Directors,

Fone4 Communications (India) Limited

Poovathum Arcade, Koothapady Temple Road,

Thammanam, P.O. Ernakulam 682032, Kerala - 682032, India

Dear Members of the Board

I, Sayyed Imbichi Haris Sayyed, Chief Financial Officer of Fone4 Communications (India) Limited, to the

best of my knowledge and belief hereby certify that:

(a) We have reviewed financial statements and the cash flow statements for the year ended 31^st March, 2023 and that to the best of my knowledge and belief;

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) These statements together present a true and fair view of the Companys affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) There are no transactions entered into by the Company during the year that are fraudulent, illegal or violative of the Companys Code of Conduct;

(c) We accept responsibility for establishing and maintaining internal controls for financial reporting and have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design and operations of such internal controls, if any, of which I am aware and the steps we have taken or propose to take to rectify these deficiencies.

(d) We have indicated to the auditors and the Audit Committee:

(i) Significant changes in the internal control over financial reporting during the year under reference;

(ii) Significant changes in the accounting policies during the year and that the same has been disclosed in the notes to the financial statements; and

(i) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Companys internal control system over financial reporting.

By the Order of the Board For Fone4 Communications (India) Limited

Place: Kerala Date: 05.09.2023

Sd/-

Sayyed Imbichi Haris Sayyed Chief Financial Officer