Kandarp Digi Smart BPO Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Prospectus. You should also read the section entitled "Risk Factors" beginning on page 20 and "Forward Looking Statements" beginning on page 14, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our restated financial statements for the years ended March 31, 2022, 2021, March 31, 2020 and 2019 including the schedules and notes thereto and the reports thereto, which appear in the section titled "Financial Information of our company" on Page No. 134 of the Prospectus. The financial statements presented and discussed herein have been prepared to comply in all material respects with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended), the relevant provisions of the Companies Act and SEBI (Issue of Capital and Disclosure Requirements) Regulations. Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year/financial year are to the twelve-month period ended on March 31 of that year. The forward-looking statements contained in this discussion and analysis is subject to a variety of factors that could cause actual results to differ materially from those contemplated by such statements

Overview

Kandarp Digi Smart BPO Limited is engaged in BPO services specializing in the area of support services solutions. Our Company provides wide ranges of support services such as Call Centre, Contact Point Verifications, Site Visits, Document check/Pickup, E-KYC, Skip Tracing, Employee Back Check, Staffing Solutions, Payroll Management, Payment Collections (soft), AMC Booking Services etc. to its clients and specializes in providing End to End solutions to customers/clients. We believe in providing efficient and accurate services which is core value of the organization. Our services are focussed towards delivering outstanding results for our clients. We adapt our outstanding services to cater to the specific needs of business and assist in achieving your business goals.

Our Company was originally incorporated on February 07, 2001 as "Dynamic Restructuring Management Services Private Limited" under the provisions of the Companies Act, 1956 with the Registrar of Companies, N.C.T of Delhi & Haryana. The name of our company was changed from "Dynamic Restructuring Management Services Private Limited" to "Kandarp Management Services Private Limited" and fresh certificate of incorporation dated March 23, 2010 was issued by Registrar of Companies, National Capital Territory of Delhi and Haryana. Further the name of our company was changed from "Kandarp Management Services Private Limited" to "Kandarp Digi Smart BPO Private Limited" and fresh certificate of incorporation dated December 09, 2021 was issued by Registrar of Companies, Delhi. Subsequently our Company was converted into Public Limited Company and name of company was changed from "Kandarp Digi Smart BPO Private Limited" to "Kandarp Digi Smart BPO Limited" vide fresh certificate of incorporation dated March 22, 2022 issued by the Registrar of Companies, Delhi.

Our Company operates from its Registered Office situated at GF-22 Hans Bhawan, Bahadur Saha Zafar Marg, New Delhi-110002, Delhi, India, Corporate Office at C- 69, C Block, Sector 2, Noida - 201301, Uttar Pradesh, India and Branch office at Old No. 7, New No. 13, First Street, Nandanam Extention, Chennai 600035, Tamil Nadu, India

Our Company is an ISO 9001:2015 certified company for Quality Management Services in field of Banking Verifications, Credit and Risk Control/ Pick-Up Activities, Call Center and Audit.

We are always committed to fulfil the requirements of our clientele according to their needs. In order to meet these requirements, we have adapted to best measure in the industry for support services. We believe that we carry out extensive research, training and upgradation of technology to maintain the standard and quality of our services We are providing services that ensures customer satisfaction. We believe that we have long-term and stable relationships developed over the years with our key customers through the quality of services we provide.

Our company is in the current line of business for more than 20 years and the client lists includes various banks, insurance companies, financial service companies, etc. Also, we help our clients with our voice support services, field support services and Back Office Processing Services to provide a comprehensive range of services across all industry sectors to clients who are in need of specialist assistance. Our services can be tailored to meet the needs of each client. We make sure that we give our clients with the best so that they can meet the different challenges presented by business environment. We strive to use innovative strategies in order to ensure our client is exposed to the top-tier talent.

Our company is subsidiary of our promoter company Reliable Data Services Limited which is listed on SME Platform of National Stock Exchange of India Limited (NSE EMERGE). Kandarp Digi Smart BPO Limited is a Reliable Group Company driven by highly innovative team of professionals.

Our Companys aims to be within the best companies in its line of business and is accordingly continuously investing in state of art technology conducive to realize this aim. Our Company with its team is committed to offer the most varied range and latest technology for our services. To achieve the above stated aim, our Company is continuously investing in development of technologies.

Our Promoter Mr. Sunil Kumar Rai who has been instrumental in the growth of our business and actively advise us on finance, corporate strategy and planning. We have a strong management team with significant industry experience. Our Chairman and Managing Director, Mr. Sunil Kumar Rai has 27 years of experience in BPO industry thus vast experience of the Promoter has been instrumental in determining the vision and growth strategies for our Company. We further believe that our market position has been achieved by adherence to the vision of our Promoters and senior management team and their experience of over a decade in the industry in which our Company operates.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to Annexure IV of Restated Financial Statements under chapter titled "Restated Financial Statements" beginning on page 134 of this Prospectus.

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 20 of this Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. Uncertainty in relation to continuing effect of the COVID-19 pandemic on our business and operations.

2. Our ability to successfully implement our strategy, our growth and expansion, technological changes.

3. Fail to attract, retain and manage the transition of our management team and other skilled & unskilled employees;

4. Our ability to protect our intellectual property rights and not infringing intellectual property rights of other parties;

5. Ability to respond to technological changes;

6. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;

7. Inability to successfully obtain registrations in a timely manner or at all;

8. General economic and business conditions in the markets in which we operate and in the local, regional and national economies;

9. Our ability to effectively manage a variety of business, legal, regulatory, economic, social and political risks associated with our operations; 10. Recession in the market;

11. Changes in laws and regulations relating to the industries in which we operate; 12. Effect of lack of infrastructure facilities on our business;

13. Our ability to successfully implement our growth strategy and expansion plans; 14. Our ability to meet our capital expenditure requirements;

15. Failure to obtain any approvals, licenses, registrations and permits in a timely manner;

16. Changes in political and social conditions in India or in countries that we may enter, the monetary and interest rate policies of  India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices; 17. Occurrence of natural disasters or calamities affecting the areas in which we have operations;

18. Conflicts of interest with affiliated companies, the promoter group and other related parties; 19. The performance of the financial markets in India and globally;

20. Any adverse outcome in the legal proceedings in which we are involved; 21. Our ability to expand our geographical area of operation;

22. Concentration of ownership among our Promoters.

RESULTS OF OUR OPERATION

(Rs. in Lakhs)

	For the year ended		For the year ended			For the year ended
Particulars	March 31, 2022	% of Total Income	March 31, 2021	% of Total Income	March 31, 2020	% of Total Income	March 31, 2019	% of Total Income
INCOME
Revenue from Operations	1280.45	99.43	1041.19	98.83	999.73	98.73	1103.85	99.75
Other Income	7.39	0.57	12.36	1.17	12.86	1.27	2.81	0.25
Total Income (A)	1287.84	100.00	1053.55	100.00	1012.59	100.00	1106.67	100.00
EXPENDITURE
Cost of Material Consumed	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Purchase of stock in trade	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Changes in inventories of finished goods work-in- progress and Stock-in- Trade	0.00	0.00	0.00	0.00	0.00	0.00	0.00	0.00
Employee benefits expense	164.81	12.80	192.40	18.26	249.59	24.65	301.76	27.27
Finance costs	23.56	1.83	23.83	2.26	26.49	2.62	23.54	2.13
Depreciation and amortization expense	5.44	0.42	9.03	0.86	22.61	2.23	12.95	1.17
Other expenses	968.36	75.19	812.94	77.16	563.71	55.67	571.43	51.64
Total Expenses (B)	1162.17	90.24	1038.20	98.54	861.86	85.11	909.68	82.20
Profit before Exceptional Items(A-B)	125.67	9.76	15.35	1.46	150.73	14.89	196.99	17.80
Exceptional Items	-	-	-	-	-	-	-	-
Profit Before Tax	125.67	9.76	15.35	1.46	150.73	14.89	196.99	17.80
Tax expense :
(i) Current tax	26.66	2.07	5.66	0.54	40.96	4.05	52.66	4.76
(ii) Deferred tax	4.97	0.39	(0.87)	(0.08)	(1.77)	(0.17)	(3.76)	(0.34)
Total Tax Expense	31.63	2.46	4.79	0.45	39.19	3.87	48.9	4.42
Profit for the year	94.04	7.30	10.56	1.00	111.54	11.02	148.09	13.38

Review of Restated Financials,

Key Components of Companys Profit and Loss Statement

Revenue from Sale of Services: Revenue from operations mainly consists from Sales of Services.

Other Income: Other Income Consist of Profit on Sale of Assets, Interest Income etc.

Expenses: Companys expenses consist of Employee benefit expenses, Finance Cost, Depreciation and Amortization expenses & Other Expenses.

Employee Benefits Expense: Employee benefit expenses includes Salaries and Wages, Directors Remuneration & Contribution to Statutory Funds etc.

Depreciation and Amortization Expense: We recognize Depreciation and Amortization expense on a WDV Basis as per the rates set forth in the Companies Act, 2013/ Companies Act, 1956, as applicable.

Other Expenses: Other expenses includes Retainership Expenses, Outsourcing Expenses, Facility Expenses & Travelling Expenses etc.

Financial Performance Highlights for the year ended 31st March, 2022

Total Income:

The companys total income which includes from Sale of Services during the year ended on March 31, 2022 was Rs. 1287.84 Lakhs.

Total Expenses:

The total expenditure during the year ended on March 31, 2022 was Rs. 1162.17 Lakhs. The total expenditure represents 90.24% of the total revenue. The total expenses are represented by Employee benefit expenses, Finance Cost, Depreciation and Amortization expenses & Administration & Other Expenses. The main constituent of total expenditure is Other Expenses.

Profit/ (Loss) after tax:

The restated net profit during the year ended on March 31, 2022 was Rs. 94.04 Lakhs representing 7.30% of the total revenue of the Company.

Fiscal 2022 compared with Fiscal 2021

Revenue from Operation

Revenue from operations had increased by 22.98% from 1041.19 lakhs in Fiscal 2021 to 1280.45 lakhs in Fiscal 2022. The change was primarily due to increase in sales.

Other Income

Other income had decreased by 40.23% from 12.36 lakhs in Fiscal 2021 to 7.39 lakhs in Fiscal 2022 due to decrease in interest income in Deposits.

Employee Benefit Expenses

Employee benefit expenses had decreased by 14.34% from 192.40 lakhs in Fiscal 2021 to 164.81 lakhs in Fiscal 2022. This decrease was primarily due to lower salary expenses since the company has outsources some of its operations instead of in-house activities.

Finance Costs

Finance Costs had decreased from 23.83 lakhs in Fiscal 2021 to 23.56 in Fiscal 2022. This was primarily due to lower interest paid during the financial year.

Depreciation and Amortization Expenses

Depreciation had decreased by 39.71% from 9.03 lakhs in Fiscal 2021 to 5.44 lakhs in Fiscal 2022 due to decrease in depreciation on computers.

Other Expenses

Other expenses had increased by 19.12% from 812.94 lakhs in Fiscal 2021 to 968.36 lakhs in Fiscal 2022 majorly due to increase in outsourcing expenses as company has shifted its in-house activity to third parties.

Tax Expenses

The Companys tax expenses had increased by 560.05% from 4.79 lakhs in the Fiscal 2021 to 31.63 lakhs in Fiscal 2022. This was primarily due to higher profit before tax during the financial year.

Profit after Tax

After accounting for taxes at applicable rates, our Company reported a net profit of 94.04 lakhs in Fiscal 2022 as compared to a net profit of 10.56 lakhs in Fiscal 2021. The increase in Profit is due to increase in Revenue.

Fiscal 2021 compared with Fiscal 2020

Revenue from Operation

Revenue from operations had increased by 4.15% from 999.73 lakhs in Fiscal 2020 to 1041.19 lakhs in Fiscal 2021. The change was primarily due to increase in sales.

Other Income

Other income had decreased by 3.89% from 12.86 lakhs in Fiscal 2020 to 12.36 lakhs in Fiscal 2021due to decrease in interest income in Deposits.

Employee Benefit Expenses

Employee benefit expenses had decreased by 22.91% from 249.59 lakhs in Fiscal 2020 to 192.4 lakhs in Fiscal 2021. This decrease was primarily due to lower salary expenses since the company has outsources some of its operations instead of in-house activities.

Finance Costs

Finance Costs had decreased from 26.49 lakhs in Fiscal 2020 to 23.83 in Fiscal 2021. This was primarily due to lower interest paid during the financial year.

Depreciation and Amortization Expenses

Depreciation had decreased by 60.06% from 22.61 lakhs in Fiscal 2020 to 9.03 lakhs in Fiscal 2021 due to decrease in depreciation on computers.

Other Expenses

Other expenses had increased by 44.21% from 563.71 lakhs in Fiscal 2020 to 812.94 lakhs in Fiscal 2021 majorly due to increase in outsourcing expenses as company has shifted its in-house activity to third parties.

Tax Expenses

The Companys tax expenses had decreased by 87.78% from 39.19 lakhs in the Fiscal 2020 to 4.79 lakhs in Fiscal 2021. This was primarily due to lower profit before tax during the financial year.

Profit after Tax

After accounting for taxes at applicable rates, our Company reported a net profit of 10.56 lakhs in Fiscal 2021 as compared to a net profit of 111.54 lakhs in Fiscal 2020. The decrease in Profit is due to increase in other expenses which majorly includes outsourcing expenses.

Cash Flows

				(Rs in lakhs)
Particulars	For the year ended March 31, 2022	For the year ended March 31,
		2021	2020	2019
Net Cash from Operating Activities	202.19	164.75	63.68	88.79
Net Cash from Investing Activities	(192.90)	(272.58)	(132.69)	(135.61)
Net Cash used in Financing Activities	(14.96)	95.84	26.04	67.13

Cash Flows from Operating Activities

Net cash from operating activities for fiscal 2022 was at 202.19 lakhs as compared to the Profit Before Tax at 125.67 lakhs while for fiscal 2021 Net cash from operating activities was at 164.75 lakhs as compared to the Profit Before Tax at 15.35 Lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital.

Net cash from operating activities for fiscal 2021 was at 164.75 lakhs as compared to the Profit Before Tax at 15.35 lakhs while for fiscal 2020 Net cash from operating activities was at 63.68 lakhs as compared to the Profit Before Tax at 150.73 Lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital.

Net cash from operating activities for fiscal 2020 was at 63.68 lakhs as compared to the Profit Before Tax at 150.73 lakhs while for fiscal 2019, net cash from operating activities was at 88.79 lakhs as compared to the Profit Before Tax of 196.99 lakhs. This was primarily due to adjustments against, changes in Working Capital. Net cash from operating activities for fiscal 2019 was at 88.79 lakhs as compared to the Profit Before Tax at 196.99 lakhs.

Cash Flows from Investment Activities

In fiscal 2022, the net cash invested in Investing Activities was (192.90) lakhs. This was mainly on account of Purchases of Fixed Assets.

In fiscal 2021, the net cash invested in Investing Activities was (272.58) lakhs. This was mainly on account of Purchases of Fixed Assets.

In fiscal 2020, the net cash invested in Investing Activities was (132.69) lakhs. This was mainly on account of Purchases of Fixed Assets.

In fiscal 2019, the net cash invested in Investing Activities was (135.61) lakhs. This was mainly on account of Purchases of Fixed Assets.

Cash Flows from Financing Activities

In fiscal 2022, the net cash from financing activities was (14.96) lakhs. This was on account Interest on borrowings.

In fiscal 2021, the net cash from financing activities was 95.84 lakhs. This was on account proceeds from borrowings. In fiscal 2020, the net cash from financing activities was 26.04 lakhs. This was on account of Proceeds from Borrowings.

In fiscal 2019, the net cash from financing activities was 67.13 lakhs. This was on account of Proceeds from Borrowings

Information required as per Item (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

1. Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. There are no Unusual or infrequent events or transactions in our Company. The transactions are as per usual business operations.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Except for any change in economic policy affecting BPO industry in India, there are no other significant economic changes that may materially affect or likely to affect income from continuing operations.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 20 in the Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues

Our Companys future costs and revenues will be determined by growth of industry in which we operate.

5. Increases in net sales or revenue and Introduction of new services or increased sales prices

Increases in revenues are by and large linked to increases in volume of our business.

6. Status of any publicly announced New Service or Business Segment

Our Company has not announced any new Service.

7. Seasonality of business

Our Companys business is not seasonal in nature as it is BPO industry.

8. Dependence on few customers/ clients

The percentage of contribution of our Companys Top Customers/Clients for the year ended March 31, 2022 is as follows:

Particulars	Customers
Top Ten (%)	84.71%

9. Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Business Overview" beginning on pages 78 and 88, respectively of the Prospectus.

10. Details of material developments after the date of last balance sheet i.e. March 31, 2022

After the date of last Balance sheet i.e. March 31, 2022, the following material events have occurred after the last audited period:

a. We have changed the designation of Mr. Sunil Kumar Rai as Chairman cum Managing Director with effect from April 11, 2022 b. Mrs. Meenakshi Pathak is appointed as Whole-Time Director of the Company with effect from April 11, 2022. c. We have appointed Mr. Pramod Kumar Tiwari as Independent Director with effect from April 11, 2022.

d. Our Company has passed a Board Resolution for Initial Public Issue in Board Meeting held on April 01, 2022 and Shareholders Resolution in Extra-Ordinary Meeting held on April 11, 2022.

e. We have appointed Mr. Parbind Kumar Jha & Ms. Niharika Gupta as Chief Financial Officer and Company Secretary respectively of the Company with effect from April 20, 2022.

f. Our Company has re-constituted an Audit Committee ("Audit Committee") and Nomination and Remuneration Committee and constitute Stakeholders Relationship Committee vide Board Resolution dated April 20, 2022, as per the applicable provisions of the Section 177 of the Companies Act, 2013 and also to comply with SEBI (Listing Obligations and Disclosure 221 Requirements) Regulations, 2015 applicable upon listing of the Companys Equity shares on SME platform of NSE.