Kore Digital Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENT, OPPORTUNITIES AND THREATS

Kore Digital Limited (KDL) was set up with an object to provide high-end communication solutions to corporate and Telecom Network Operators. We are a growing passive telecommunication infrastructure provider in Maharashtra, engaged primarily in the business of installing and commissioning of Poles, Towers and Optical Fibre Cable ("OFC") Systems in Maharashtra. "Passive infrastructure" refers to the telecommunication towers for wireless Telecommunication services and "OFC" is used for the purpose of hosting and assisting in the operation of the active infrastructure used for transmitting telecommunications signals or transporting voice and data traffic. Being a passive communication infrastructure Company, we are focused towards providing passive ommunication infrastructure services mainly to the Telecom Network Operators, Broad Band Service Operators and Internet Service Providers ("ISPs") in Maharashtra, especially in locations in and around Mumbai.

Our company has been licensed by Department of Telecommunications (DoT) with the Infrastructure Provider (IP)-I License in the year 2009, under which we can establish and maintain assets Dark Fibres, right of way, duct space and tower for the purpose to grant on lease or rent or sale basis to the licensees of Telecom Network Operators, Broad Band Service Operators and ISPs. We also provided support services such as includes project management for laying of the duct and optic fibre cables, construction of basic transmission and telecom utilities, dark fiber leasing, optical fiber network construction, maintenance of duct and optic fibre and optical fibre project turnkey services to various, Telecom Network Operators & Broad Band Service Operators and ISPs across Maharashtra. Apart from laying the network under the Vendor project or own network, we are also engaged in the operations & maintenance activity of the fibre network and preventing the underground optic fiber therein from getting cut due to activities like road repairs, digging and expansion works by various authorities.

Under the IP-I License, last 14 years (from incorporation till 2023), we have commissioned more than 600 pole-based cell sites in and around Mumbai, developed our own network of around 700 kms during the last 5 years and in 2 years, our Company has developed and delivered underground fiber optic backbone covering 600 kms in and around Mumbai. With our experience in telecom for the last decade, we understand telecom market and the requirement of the Telecom companies where they want the infrastructure to be built. We identify such strategic routes where the operators do not have their presence and build our network there. This network is then leased to telecom operators either by duct lease or by fibre lease. In some cases, where the telecom operators are unable to build network by their own on particular routes due to constraints like: High ROW Challenges, overall project cost viability, Local issues etc. they ask us to execute the route. In such case we execute the route either on our own but the requisite permission for the route is on our name. Once the execution is completed the network is then leased to the telecom operator. For the projects executed under the IP-1 License, the right to use the network is given to the vendors on irrefutable basis for a specific period of time as agreed between the company and the vendors and the ultimate ownership of the network is with our company.

Our top customers in Telecom Network Operators are Bharti Airtel, Vodafone Idea, Reliance JIO, Tata Teleservices, in Lio ducts/Duct rove/Sterlite and Usha Martin, in Broad Band Service Operators are Dvois SSV, Intech, Trunet and in ISPs are Dvois Communication, Trunet , & star.

Significant Developments Subsequent to the Last Financial Year

After the date of last audited accounts i.e. March 31, 2022, the Directors of our Company confirm that, there have not been any significant material developments which materially and adversely affect or is likely to affect within the next twelve months for the trading or profitability of the Company, the value of its assets or its ability to pay its liability. The telecom industry will, very quickly, need to understand the impact of this change and realise the opportunities that the new era will usher in. Many traditional touch points have vanished and new ones have emerged. Reinventing communication planning across this new customer path will be one of the biggest challenges and agencies who adopt the same will succeed in the years to come.

THE FUTURE OUTLOOK

In keeping with the challenges of change, your Company was looking at ways to take advantage of the emerging situation. In this context, the Companys decision to geographical expansion is underway, this will not only ensure that your company is on a fast-track growth path, but also add tremendous value to your investment in the Company.

Key factors affecting our results of operation:

Our results of operations and financial conditions are affected by numerous factors including the following:

General economic and demographic conditions;

Fluctuations in foreign and Indian currency;

Periods of disease outbreaks and the impact of COVID-19 pandemic;

Depreciation, repairs and maintenance of our equipment;

Significant developments in India‘s economic and fiscal policies;

Our ability to obtain the necessary licenses in timely manner;

Our ability to attract and retain its consumers;

Our ability to expand its existing retail network;

Our ability to attract and retain distributors, wholesalers;

Demand, Supply and pricing for heavy machinery;

Age and condition of heavy machinery;

Changes in laws or regulations that affect the usage of heavy machinery;

Changes in Segment Contribution to Revenue;

SEGMENTWISE PERFORMANCE

The Company does not have more than one business segment and hence segment reporting is not applicable

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company always strives to strengthen Internal Control Systems and processes for smooth and efficient conduct of business and complies with applicable relevant laws and regulations. A comprehensive delegation of power exists for smooth decision making. Elaborate guidelines for preparation of accounts are followed for uniform compliance. Further, all the key functional areas are governed by respective operating manuals. In order to ensure that all checks and balances are in place and all Internal Control

Systems are in work, experienced firm conducts regular and exhaustive internal audits if accountants in close co-ordination with the companys concerned accredited officials. The Internal Financial Control are reviewed periodically and in particular the Internal Auditors ensure that the company as in all material aspects, laid down Internal Financial Controls including operational controls and that such controls are adequate and operating efficiently.

HUMAN RESOURCES

Industrial Relations with staff and workmen at Head Office and across all the plants, continued to be cordial. Your Company has successfully aligned human capital with business and organizational objectives. The emphasis has been on teamwork, skill development and development of leadership and functional capabilities of the employees. As on 31st March, 2023, there were full time 9 employees recorded on the payroll of the Company.

FINANCIAL PERFORMANCE

The financial statements have been prepared in accordance with the requirement of the Companies Act 2013, and applicable accounting standards issued by the Institute of Chartered Accountants of India. The details are mentioned below:

Revenue from Operations:

During the year 2022-23 the total revenue of our company has increase from Rs 2,127.45 as against Rs 1694.45 in year 2021-22.

Total Expenses (INR in Lakhs)

Total expenses consist of Material consumed, Cost of trading goods, change in value of stock of Finished Goods/Work-in-process, Employee Benefit Expenses, Finance cost, Depreciation & Amortization expenses, and other expenses. During the year 2022-23, the total expenses were increased from Rs 1695.93 from Rs 1392.19 as compared to year 2021-22.

Employee benefit expenses (INR in Lakhs)

Expenses incurred on directors remuneration, employee remuneration and employee welfare expenses duringthefinancial year 2022-23 was Rs 31.24 and in 2021-22 it was Rs 19.22

Finance Cost (INR in Lakhs)

Expenses incurred on finance and interest cost during the financial year 2022-23 increases to Rs 17.91 from Rs 2.35 in financial year 2021-22.

Depreciation & Amortization expense (INR in Lakhs)

During the year, 2022-23 depreciation and amortization expense of our company has increased to Rs 25.15 as against Rs 8.44 in year 2021-22 showing an increased.

Profit after Tax (INR in Lakhs)

The PAT is increased in Financial Year 2022-23 is Rs 322.18 as compared to Rs 217.97 in Financial Year 2021-22.

CAUTIONARY STATEMENT

Statement in this report, particularly those which relate to Managements Discussion and Analysis detailing the Companys objectives, projections, estimates, expectations, or predictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the

Companys operations include global and Indian demand-supply conditions, stock availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations.