raghuvir exim ltd Management discussions

You should read the following discussion and analysis of our financial condition and results of operations, and our assessment of the factors that may affect our prospects and performance in future periods, together with our Restated Financial Statements for the six month period ended September 30, 2023, Fiscals 2023, 2022 and 2021 including the notes thereto and reports thereon, each included in this Draft Red Herring Prospectus. Unless otherwise stated, the financial information used in this section is derived from the Restated Financial Statements.

While we have historically prepared our financial statements in accordance with Indian GAAP, in accordance with applicable law, we have transitioned our financial reporting from Indian GAAP to Ind AS, with April 1, 2021, as the transition date. This section includes a discussion of financial results the for the six month period ended September 30, 2023, Fiscals 2023, 2022 and 2021 which were prepared under Ind

AS. For the purposes of transition to Ind AS, we have followed the guidance prescribed in "Ind AS 101 - First Time adoption of Indian Accounting Standard". The Restated Financial Statements, prepared and presented in accordance with Ind AS and in accordance with the requirements of Section 26 of the Companies Act, 2013, the SEBI ICDR Regulations and the "Guidance Note on Reports in Company Prospectus (Revised 2019)" issued by the ICAI.

Ind AS differs in certain material respects from Indian GAAP, IFRS and U.S. GAAP. Accordingly, the degree to which our financial statements will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Ind AS. As a result, the Restated Financial Information Statements may not be comparable to our historical financial statements.

This discussion and analysis contain forward-looking statements that reflect our current views with respect to future events and our financial performance, which are subject to numerous risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. You should also read "Forward-Looking Statements" and "Risk Factors" on pages 25 and 42, respectively, which discuss a number of factors and contingencies that could affect our business, financial condition and results of operations. Our Fiscal ends on March 31 of each year and accordingly, references to Fiscal, are to the 12-month period ended March 31 of the relevant year.

Unless the context otherwise requires, in this section, references to "we", "us", or "our" refers to Raghuvir Exim Limited and references to "the Company" or "our Company" refers to Raghuvir Exim Limited.

Unless stated otherwise, industry and market data used in this Draft Red Herring Prospectus is derived from the report titled, "Cotton Yarn and Home Textiles Industry" released in March, 2024 ("CARE Report") prepared by CARE Analytics and Advisory Private Limited, appointed by our Company pursuant to an engagement letter dated November, 2024 and such CARE Report has been commissioned by and paid for by our Company, exclusively in connection with the Offer. For further information, see "Risk Factors 37- Certain sections of this Draft Red Herring Prospectus disclose information from the industry report which has been commissioned and paid for by us exclusively in connection with the Offer. There can be no assurance that such third-party statistical, financial and other industry information is either complete or accurate. " on page 66. Also see, "Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation Industry and Market Data" on page 17. The CARE Report is available on the website of our Company at https://www.raghuvirexim.com. Unless otherwise indicated, financial, operational, industry and other related information derived from the CARE Report and included herein with respect to any particular year refers to such information for the relevant calendar year.

BUSINESS OVERVIEW

Our Company is engaged in the business of processing semi-finished fabrics into finished fabrics. Our Company has been in existence for over three decades and manufactures home textiles products such as bedsheets, pillowcase, duvet cover, comforter, quilts, curtains, which are sold to our customers in the form of pack sets. We are also involved in trading of grey cloth and finished fabrics. Our product are made using wide range of fabrics such as polyester, cotton, cotton/polyester blended, cotton modal, cotton tencel and poly cotton.

Major portion of our revenues are derived from exports. Our Company has been recognised as a "Star Export House" by the Directorate General of Foreign Trade, Ministry of Commerce and Industry in the year 2011 and "Two Star Export House" in the year 2021. Our Exports accounted for 87.76%, 73.80%, 88.98% and 85.87% of revenue from operations for the six-month period ended September 30, 2023 and for Fiscals 2023, 2022 and 2021, respectively. For the period ended September 30, 2023, our Company exported its products to 26 countries with more than 80% of our revenues from export sales being sourced from United States of America, Canada, United Kingdom, Israel and Australia. As on February 29, 2024, we had more than 80 overseas distributors and about 5 distributors in India. Such a global distribution network plays an instrumental role in our supply-chain management as well minimizes risks that may emanate from any geographical concentration.

Our revenue from operations have grown from 2,089.96 million in Fiscal 2021 to 2,475.61 million in

Fiscal 2023, registering a CAGR of 5.81% in last three fiscal years. For the period ended September 30, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021, our PAT was 119.52 million, 193.23 million, 71.07 million and 89.27 million, respectively. Our PAT has grown from 89.27 million in Fiscal 2021 to

193.23 million in Fiscal 2023, registering a CAGR of 29.36% in last three fiscal years. Further, our EBIDTA have grown from 214.98 million in Fiscal 2021 to 362.13 million in Fiscal 2023, registering a CAGR of

29.79% % in three years.

Our Company is also involved in trading of products which includes grey cloth, finished fabrics, printed & dyed fabrics, and job work of fabrics. For carrying out job work operations, we have a cutting, stitching, finishing and packing facility with requisite machinery and facilities for servicing the order requirements.

The table below sets forth certain key operational and financial metrics for the periods indicated:

Metric	As of and for the six-month period ended September 30, 2023*	2023	As of and for the Fiscal 2022	2021
Revenue From operations ( in Millions)	1,513.69	2,475.58	2,668.21	2,089.96
Total revenue ( in Millions)	1,552.52	2,507.89	2,722.79	2,133.82
EBITDA ( in Millions)	224.31	362.13	192.61	214.98
EBITDA Margin (%)	14.82%	14.63%	7.22%	10.29%
Profit after tax ( in Millions)	119.63	192.38	70.46	89.18
PAT Margin (%)	7.90%	7.77%	2.64%	4.27%
Return on Equity (ROE) (%)	13.22%	25.70%	11.43%	16.63%
Debt To Equity Ratio	1.31	1.14	1.54	1.50
Interest Coverage Ratio	5.96	5.39	3.12	3.91
Return on Capital
Employed (ROCE)	9.59%	18.78%	9.42%	12.10%
(%)
Current Ratio	1.25	1.40	1.33	1.31

 

Net Capital Turnover
	4.49	7.40	9.27	14.10
Ratio
Inventory Turnover	4.31	7.23	7.31	8.89
Ratio
Trade Receivable	6.40	10.01	8.33	8.20
Turnover Ratio
Trade Payable	52.07	39.53	41.06	42.23
Turnover Ratio

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

In the opinion of the Board of Directors of our Company, there have not arisen, since the date of September 30, 2023 as disclosed in this Draft Red Herring Prospectus, any significant developments or any circumstance that materially or adversely affect or are likely to affect the profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

SIGNIFICANT FACTORS AFFECTING OUR FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 42 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

Our Companys future results of operations could be affected potentially by the following factors:

1. General economic conditions in India, changes in laws and regulations.

2. Changes in revenue mix, including geographic mix of our revenues.

3. Changes in Fiscal, Economic or Political conditions in India.

4. Increased market fragmentation.

5. Competition with existing and new entrants

6. Technology System and Infrastructure Risks

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under Chapter titled "Financial Information of our Company" beginning on page 236 of the Draft Red Herring Prospectus.

RESULTS OF KEY OPERATIONS

RESULTS OF REVENUE FROM OPERATIONS

The following table sets forth detailed revenue from operations data from our restated statement of profit and loss for the Fiscals 2023, 2022 and 2021 and for the six-month period ended on September 30, 2023, the components of which are also expressed as a percentage of revenue from operations for such years.

Particulars	As of and for the six month period ended September 30, 2023*			Fiscal 2023		Fiscal 2022		Fiscal 2021
	Rs. in Millions	%	Rs. in Millions	%	Rs. in Millions	%	Rs. in Millions	%
i. Sale of Product: Manufactured Products
- Packsets	1078.39	71.24	1,722.31	69.57	2,074.72	77.76	933.87	44.68
- Fabrics	14.83	0.98	28.45	1.15	1.39	0.05	43.83	2.10
Trading
- Packsets	251.41	16.61	132.12	5.34	331.50	12.42	860.68	41.18
- Grey	0.00	0.00	369.05	14.91	0.00	0.00	0.00	0.00
- Cotton Yarn	2.37	0.16	11.86	0.48	0.00	0.00	0.00	0.00
ii. Other Operating Revenues
Export benefits	139.49	9.22	179.92	7.27	224.29	8.41	188.69	9.03
Sales of Fent & Rags	15.94	1.05	20.83	0.84	24.42	0.92	20.35	0.97
Stitching charges received	11.26	0.74	11.05	0.45	11.89	0.45	42.54	2.04
Total Revenue from Operations (i+ii)	1513.69	100.00	2475.58	100.00	2668.21	100.00	2089.96	100.00

Our Companys revenue from operations for the period ended September 30, 2023, is 1513.69 million and revenue from operations increased to 2475.59 million in Fiscal 2023 from 2668.21 million in Fiscal 2022 and 2089.96 million in Fiscal 2021. The decrease in Fiscal 2023 over Fiscal 2022 is 7.22%, while the growth in revenue from operations in Fiscal 2022 over Fiscal 2021 is 27.67%.

The following table sets forth a breakdown of our revenue from operations from Domestic and International market, in absolute terms and as a percentage of total revenues, for the periods indicated basis the location of the customers:

( in million, except percentages)

Particulars	For the period ended September 30, 2023		Fiscal 2023		Fiscal 2022		Fiscal 2021
	( )	(%)	( )	(%)	( )	(%)	( )	(%)
Domestic market	45.81	3.03	468.70	18.93	69.79	2.62	106.72	5.11
International market	1,467.88	96.97	2,006.91	81.07	2,598.42	97.38	1,983.24	94.89
Total	1,513.69	100.00	2,475.61	100.00	2,668.21	100.00	2,089.96	100.00

As of September 30, 2023, the revenue from operations is 1,513.69 million, with international market sales accounting for 96.97% and domestic market sales for 3.03%. In Fiscal 2023, our company achieved a revenue from operations of 2,475.61 million, with international market comprising 81.07% and domestic market sales at 18.93%. In Fiscal 2022, the corresponding figures were 97.38% and 2.62%, generating a revenue from operations of 2,668.21 million. For Fiscal 2021, the percentages were 94.89% for international market sales and 5.11% for domestic market sales, contributing to a revenue from operations of 2,089.96 million. The following table sets forth select financial data from our restated financial statement of profit and loss for the period ended on September 30, 2023 and financial years ended March 31, 2023, 2022 and 2021 the components of which are also expressed as a percentage of total revenue for such period and financial years.

Particul ars	For the period ended on				For the year ended on
	30.09.2 023	% of Tota l Inco me	31.03.2 023	% of Tota l Inco me	31.03.2 022	% of Tota l Inco me	31.03.2 021	% of Tota l Inco me
Revenue from operatio n	1,513.6 9	97.5 0	2,475.5 8	98.7 1	2,668.2 1	98.0 0	2,089.9 6	97.9 4
Other income	38.83	2.50	32.31	1.29	54.58	2.00	43.86	2.06
Total Revenue	1,552.52	100. 00	2,507.8 9	100. 00	2,722.7 9	100. 00	2,133.82	100. 00
Cost of material Consum ed	1,011.75	65.1 7	1,202.6 6	47.9 6	1,772.7 4	65.1 1	1,025.98	48.0 8
Purchase s of Stock-in- Trade	171.07	11.0 2	529.16	21.1 0	284.68	10.4 6	788.52	36.9 5
Changes in inventori es of Finished Goods and Stock - in- process	-65.42	-4.21	-42.94	-1.71	39.71	1.46	-203.52	-9.54
Employe e Benefits Expense s	56.58	3.64	107.85	4.30	107.91	3.96	102.37	4.80
Finance Cost	37.65	2.43	67.13	2.68	61.82	2.27	54.97	2.58
Deprecia tion and Amortisa tion Cost	14.14	0.91	36.22	1.44	38.37	1.41	42.93	2.01
Other	154.23	9.96	349.03	13.9	325.14	11.9	205.49	9.63
Expense s				2		4
Total Expense s	1,380.0 0	88.9 1	2,249.1 1	89.6 8	2,630.3 7	96.6 1	2,016.7 4	94.5 1
Profit Before Tax	172.52	11.0 9	258.78	10.3 2	92.42	3.39	117.08	5.49

 

Tax Expense s	52.89	3.41	66.40	2.59	21.96	0.86	27.90	1.17
Profit (Loss) for the Year	119.63	7.68	192.38	7.67	70.46	2.59	89.18	4.18

Review of Restated Financials

Revenue from Operations: Revenue from operations mainly consists of sale of services or goods by way of 1) Sales of products; 2) Exports incentives of goods exported; 3) Stitching charges received & 4) Sale of fent and rags.

Other Income: Other income includes gain from foreign currency transactions (net), gain due to lease modification and reduction in tenure, interest income on loans and advances, Rent Income, Gains on investment in Mutual Funds etc.

Total Income: Our total income comprises of revenue from operations and other income.

Total Expenses: Companys total expenses consist of Cost of material consumed, Purchase of Stock-in-trade, Changes in inventories of finished goods, work-in-progress and stock-in-trade, Employee benefit expenses, Finance costs, Depreciation and Amortization expenses, other expenses.

Cost of materials consumed: Cost of materials comprises of purchase of raw materials such as grey cloth, printed fabric and packing materials etc.

Changes in inventory of finished goods, stock-in-trade and work-in-progress: This expense line item comprises of inventories at the beginning and at the end of the year.

Employee Benefits Expense: Employee benefit expense includes salary, wages and bonus, provision for gratuity, staff welfare expenses.

Finance Cost: Finance cost includes interest expenses on bank borrowing and other interest, lease liabilities and other borrowing cost.

Other expenses: Other expenses mainly consist of Manufacturing expenses which includes processing charges, job charges paid and stitching material. Administrative expenses such as rent, rates and travelling and conveyance and selling and distribution expenses.

REVIEW OF OPERATION FOR THE PERIOD ENDED SEPTEMBER 30, 2023

Revenue from Operations

The total income for the period ending on September 30, 2023, amounted to 1513.69 million, accounting for 97.50% of the revenue. The income was derived from selling of products such as Bedsheets sets, Curtains, Table linens as well as Kitchen linens, Quilt covers etc. Out of the above 85.56% of the sales are exported whereas 1.20% of the sales are domestic in nature.

Other Income

Other income for the period ended September 30, 2023, amounted to 38.83 million, constituting 2.50% of total income of which Interest income on loans and advances is 1.13 million, net gains on investments of mutual funds is 1.79 million, net gains from foreign currency transactions is 14.89 million and Gain due to lease modification and reduction in tenure is 20.39 million.

Cost of material consumed

Cost of material consumed was 1011.75 million during the six months period ended September 30, 2023.

As a percentage of total income, expenses relating to cost of material consumed were 65.17%. Our cost of material consumed during the six months period consisted of raw materials consumed of 885.39 million, packing material expense of 126.36 million etc.

Changes in inventory of finished goods, stock-in-trade and work-in-progress

Expenses relating to changes in inventories of finished goods, stock-in-trade and work-in-progress were - 65.42 million during the six months period ended September 30, 2023. As a percentage of total income, expenses relating to changes in inventories of finished goods, stock-in-trade and work-in-progress were -4.21% during the six months period ended September 30, 2023

Employee Benefits Expenses

The costs associated with employee benefits for the period that concluded on September 30, 2023, totalled

56.58 million, making up 3.69% of the total revenue. These employee benefits expenses primarily included salaries and wages, amounting to 53.81 million and provision for gratuity amounting to 1.91 million.

Finance Costs

The financial expenses for the period that concluded on September 30, 2023, totalled 37.65 million, accounting for 2.43% of the total revenue. These expenses consist interest expenses of 30.42 million, Leases liabilities 1.16 million and Other borrowing cost of 6.07 million.

Depreciation and amortization expenses

Our depreciation and amortization expenses for the period ended September 30, 2023, amounted to 14.14 million constituting 1.23% of total income.

Other Expenses

Our other expenses for the period ended September 30, 2023, amounted to 154.23 million constituting

9.93% of total income which primarily comprised of Processing charges of 22.81 million, Job worker charges of 40.42 million, Stitching Charges of 5.64 million, Power and Fuels of 2.52 million, Tools consumable expenses of 2.59 million, rent rates and taxes of 15.35 million and travelling and conveyance charges of 8.86 million.

Profit before tax

Our profit before tax for the period ended September 30, 2023, amounted to 172.52 million constituting

11.11% of total income.

Tax Expenses:

Our tax expenses for the period ended September 30, 2023, were 52.89 million. Our tax expenses were

3.41% of our total income.

Profit after Tax:

Our profit after tax for the period ended September 30, 2023, amounted to 119.63 million constituting

7.71% of total income.

COMPARISON OF F.Y. 2023 WITH F.Y. 2022:

Revenue from Operations

The Companys revenue from operations the financial year 2022-23 is 2475.58 million. This represents 192.63 million or 7.22 % decrease compared to the previous financial years revenue of 2668.21 million.

Most of the revenue came from selling of products such as Bedsheets sets, Curtains, Table linens as well as Kitchen linens, Quilt covers etc. This decrease was due to decrease in muted demand from the overseas market which contribute majority of our revenue from operation which can be seen from 23.05% decrease in sales from export.

Other Income

Other Income in the Financial Year 2022-23 shrunk by 40.80%, reaching 32.31 million in comparison to the 54.58 million incurred in the Financial Year 2021-22. This decline was primarily due to decrease in net gains from foreign currency transactions of 32.40 million.

Cost of material consumed

Our cost of materials consumed for the Fiscal 2023 was 1202.66 million as compared to 1772.74 million for Fiscal 2022, representing an decrease of 32.16%. This was primarily due to decrease in purchase of raw materials such as printed fabrics and packing materials.

Changes in inventory of finished goods, stock-in-trade and work-in-progress

Changes in inventory of finished goods, stock-in-trade and work-in-progress for the Fiscal 2023 was (42.94) million as compared to 39.71 million for Fiscal 2022, representing a decrease of 208.12%. This was primarily due to higher opening stock when compared to closing stock in Fiscal 2023.

Employee Benefits Expenses

Employee benefit expenses in the Financial Year 2022-23 decreased by 0.06%, reaching 107.85 million in comparison to the 107.91 million incurred in the Financial Year 2021-22. This decline in employee expenses primarily due to marginal decrease in salaries and wages and contribution to provident fund and gratuity.

Finance Cost

Finance cost in the Financial Year 2022-23 increased by 8.59%, reaching 67.13 million in comparison to the 61.82 million incurred in the Financial Year 2021-22. The increase of the Finance Charges is on account increase in Interest expense by 9.31 million in the FY 2022-23.

Depreciation and Amortisation Expenses

Depreciation and amortization in the Financial Year 2022-23 decreased by 5.60%, reaching 36.22 million in comparison to the 38.37 million incurred in the Financial Year 2021-22. This decrease in depreciation was a result of sale of fixed assets.

Other Expenses

Other expenses in the Financial Year 2022-23 increased by 7.35%, reaching 349.03 million in comparison to the 325.14 million incurred in the Financial Year 2021-22. This rise in other expenses was primarily attributed to several factors, including 75.22 million increase in Processing charges, 12.07 million increase in Travelling and Conveyance expense and freight and Octroi of 6.24 million

Tax Expenses:

Tax expenses increased by 202.40%, reaching a total of 66.40 million in the financial year 2022-23, in contrast to the 21.96 million in the financial year 2021-22. This notable increase in tax expenses can be primarily attributed to 41.60 million rise in current tax payments due to increase in profit before tax by

166.36 million.

Profit after Tax (PAT)

Due to the aforementioned factors, the profit experienced an upswing, primarily driven by the growth in total income and a decrease in total expenses as a percentage of total income. The Profit After Tax (PAT) for the financial year 2022-23 reached 192.38 million, marking a increase from 70.46 million in the financial year 2021-22. In the financial year 2022-23, PAT constituted 7.67% of the total revenue, in contrast to 2.59% in the fiscal year 2021-22.

COMPARISON OF F.Y. 2022 WITH F.Y. 2021:

Revenue from Operations

The Companys revenue from operations the financial year 2021-22 is 2668.21 million. This represents 578.25 million or 27.67% increase compared to the previous financial years total income of 2089.96 million. Most of the revenue came from selling of products such as Bedsheets sets, Curtains, Table linens as well as Kitchen linens, Quilt covers etc. The increase in revenue was majorly due to increase in sale of manufactured packsets by 1140.84 million.

Other Income

Other Income in the Financial Year 2021-22 surged by 19.69%, reaching 54.48 millions in comparison to the 43.86 million incurred in the Financial Year 2020-21. This increase was mainly attributable to a rise in interest received on loan and advances, amounting to 1.88 million and Gain on foreign currency transactions amounting to 27.59 million.

Cost of material consumed

Our cost of materials consumed for the Fiscal 2022 was 1772.74 million as compared to 1025.98 million for Fiscal 2021, representing an increase of 72.79%. This was primarily due to increase in raw materials consumed.

Changes in inventory of finished goods, stock-in-trade, and work-in-progress

Changes in inventory of finished goods, stock-in-trade, and work-in-progress for the Fiscal 2022 was 39.71 million as compared to (203.52) million for Fiscal 2021, representing a increase of 119.51%. This was primarily due to increase in closing stocks as on March 31, 2022 to 272.46 million from 68.94 million as of March 31, 2021.

Employee Benefits Expenses

Employee benefit expenses in the Financial Year 2021-22 increased by 5.43%, reaching 107.91 million in comparison to the 102.36 million incurred in the Financial Year 2020-21. This increase in employee costs was mainly driven by salaries and wages, amounting to a total of 5.80 million.

Finance Cost

Finance cost in the Financial Year 2021-22 increased by 12.46%, reaching 61.82 million in comparison to the 54.97 million incurred in the Financial Year 2020-21. The decrease of the Finance Charges is on account increase in Interest Expense by 6.00 million.

Depreciation and Amortisation Expenses

Depreciation and amortization in the Financial Year 2021-22 decreased by 10.62 %, reaching 38.37 million in comparison to the 42.93 million incurred in the Financial Year 2020-21.

Other Expenses

Other expenses in the Financial Year 2021-22 increased by 57.24%, reaching 325.14 million in comparison to the 205.44 million incurred in the Financial Year 2020-21. This rise in other expenses was primarily attributed to several factors, including 65.44 million increase in Processing charges, 4.33 million increase in Job worker charges, 5.66 million increase in Travel and Conveyance expenses.

Tax Expenses:

Tax expenses have decreased reaching a total of 21.96 million in the financial year 2021-22, in contrast to the 27.90 million in the financial year 2020-21. This decrease in tax expenses can be primarily attributed to decline in current tax payments and deferred tax payments due to decrease in profit before tax.

Profit after Tax (PAT)

Due to the previously mentioned factors, the profit registered a downtrend, primarily attributed to the increase of cost of raw material consumed and depreciation and amortisation. The Profit After Tax (PAT) for the fiscal year 2021-22 reached 70.46 million, contrasting with 89.18 million in the fiscal year 2020-21. In the fiscal year 2021-22, PAT constituted 2.59% of the total revenue, in comparison to 4.18% of the total revenue in the fiscal year 2020-21.

Cash Flow

The table below summaries our cash flows from our Restated Financial Information for the period ended September 30, 2023, and for the financial years ended on 2023, 2022, and 2021:

Particulars	For the period ended September 30, 2023	FY 2023	FY 2022	FY 2021
Net cash (used in)/ Generated from operating activities	(221.11)	326.04	16.31	19.34
Net cash (used in)/ Generated from investing activities	(115.22)	(175.74)	(14.47)	(30.32)
Net cash (used in)/ Generated from finance activities	291.52	(168.35)	79.57	1.07
Net increase/ (decrease) in cash and cash equivalents	(44.81)	(18.05)	81.41	(9.91)
Cash and Cash Equivalents at the beginning of the period	98.94	116.99	35.58	45.49
Cash and Cash Equivalents at the end of period	54.13	98.94	116.99	35.58

Net cash generated from operating activities

Net cash used in operating activities for the six-month period ended September 30, 2023 was 221.11 million and our profit before tax that period was 172.52 million. The difference was primarily attributable to depreciation of 14.14 million, Finance costs of 37.65 million, and Gain due to lease modification and reduction in tenure of 20.39 million thereafter change in working capital of (397.47) million respectively, resulting in gross cash use in from operations at 194.45 million. We have income tax paid of 26.66 million.

Net cash generated from operating activities in the Fiscal 2023 was 326.04 million and our profit before tax that period was 258.78 million. The difference was primarily attributable to depreciation of 36.22 million, Finance costs of 67.13 million, and thereafter change in working capital of 31.70 million respectively, resulting in gross cash generated from operations at 380.65 million. We have income tax paid of 54.61 million.

Net cash generated from operating activities in Fiscal 2022 was 16.31 million and our profit before tax that period was 92.42 million. The difference was primarily attributable to depreciation of 38.37 million, Finance costs of 61.82 million, and thereafter change in working capital of (136.26) million respectively, resulting in gross cash generated from operations at 49.93 million. We have income tax paid of 33.62 million.

Net cash generated from operating activities in the Fiscal 2021 was 19.34 million and our profit before tax that period was 117.08 million. The difference was primarily attributable to depreciation of 42.93 million, Finance costs of 54.97 million, and thereafter change in working capital of (154.21) million respectively, resulting in gross cash generated from operations at 37.20 million. We have income tax paid received of

17.86 million.

Net cash used in investing activities

For the six month period ended September 30, 2023, our net cash used in investing activities was 115.22 million, which was primarily for Net Purchase of property, plant & equipment (including capital work in progress) of 96.35 million, investment in preference shares of 20.00 million. Interest received of 1.13 million during the said year.

In the Fiscal 2023, our net cash used in investing activities was 175.74 million, which was primarily for sale of property, plant & equipment & tangible assets of 48.95 million, investment in preference shares of 230.00 million. Interest received of 5.31 million during the said year.

In the Fiscal 2022, our net cash used in investing activities was 14.47 million, which was primarily for Purchase of property, plant & equipment & tangible assets of 16.27 million. Interest received of 1.80 million during the said year.

In the Fiscal 2021, our net cash used in investing activities was 30.32 million, which was primarily for Purchase of property, plant & equipment & tangible assets of 32.99 million and We also received interest income 2.67 million.

Net cash generated from/ used in financing activities.

For the six-month period ended September 30, 2023, our net cash generated in financing activities was

291.52 million. This was primarily due to interest paid 35.27 million, procurement of long-term borrowing

328.31 million, principal and interest repayment of lease liabilities 1.52 million.

In the Fiscal 2023, our net cash used in financing activities was 168.35 million. This was primarily due to interest paid 50.54 million, procurement of long-term borrowing/short-term borrowing 95.48 million, principal and interest repayment of lease liabilities 22.33 million.

In the Fiscal 2022, our net cash generated from financing activities was 79.57 million. This was primarily due to interest paid 40.61 million, procurement of long-term borrowing/short-term borrowing 145.93 million, principal and interest repayment of lease liabilities 25.75 million.

In the Fiscal 2021, our net cash from financing activities was 1.07 million. This was primarily due to proceeds from long term/short term borrowings of 60.54 million, payment of interest 32.83 million and principal and interest repayment of lease liabilities 26.64 million.

LIQUIDITY AND CAPITAL RESOURCES

We fund our operations primarily with cash flow from operating activities and borrowings / credit facilities from banks. Our primary use of funds has been to pay for our working capital requirements and capital expenditure and for the expansion of our manufacturing facilities. We evaluate our funding requirements regularly considering the cash flow from our operating activities and market conditions. In case our cash flows from operating activities do not generate sufficient cash flows, we may rely on other debt or equity financing activities, subject to market conditions.

Our Company has cash and cash equivalents of 54.13 million, 98.94 million, 116.99 million 35.58 million as of for the six-month period ended September 30, 2023 and for the Fiscal 2023, 2022 and 2021, respectively.

We have long term borrowings and long term lease liabilities of 125.99 million as for the six-month period ended September 30, 2023 and Short term borrowing and short term lease liabilities of 1069.60 million as for the six month period ended September 30, 2023 of as per restated financial statement.

The following table sets forth certain information relating to our outstanding indebtedness as of September 30, 2023:

(in million)

Particular	Sanctioned amount as on February 29, 2024	Outstanding amount as on February 29, 2024
Fund based
Secured Loan
Term loan (#)	391.90	150.52
Guaranteed Emergency Credit	195.00	137.55
Line
Bill discount (*)	258.40	59.39
Export Packing Credit Limit (**)	1,000.00	786.93
Unsecured Loan
Directors ($)	3.17	3.17
Vehicle Loan	14.80	12.73
Total Fund based (A)	1,863.27	1,150.29
Non Fund Based
Pre Settlement Risk	100.00	-
Total Non Fund based (B)	100.00	-
Total (A) + (B)	1,963.27	1,150.29

(*) includes sublimit of bank Guarantee of Rs 5.00 Million, Letter of Credit of Rs 15.00 Millions and Cash Credit of Rs 1.00 Millions. (**) includes sublimit of Pre / Post shipment credit of Rs 1000.00 Millions. (#) Includes sublimit Letter of Credit limit of Rs. 386.30 Millions ($) Outstanding balance considered as sanction limit For further and detailed information on our indebtedness, see "Risk Factor No 26. We have incurred indebtedness and are required to comply with certain covenants based on documentation entered into with the lenders. Our inability to meet our obligations, including financial and other covenants, under our financing arrangements could adversely affect our business, results of operations, financial condition and cash flows. Further, the terms of our financing arrangements contain various covenants that may limit our business activities. on pages 61. and "Financial Indebtedness" on page 369 of this Draft Red Herring Prospectus

CONTINGENT LIABILITIES AND CAPITAL COMMITMENT

As of September 30, 2023, the estimated amount of contingent liabilities and capital commitment are as follows:

Sr. No.	Particulars	For the half year ended 30th September ,2023	For the year ended 31st March, 2023	For the year ended 31st March, 2022	For the year ended 31st March, 2021
(a)	Contingent liability
	Compensation (Refer note 1 below)	2.94	2.94	2.94	2.94
	Corporate Guarantee to banks against credit facilities extended to related party	3,950.00	--	--	--
(b)	Capital commitments	440.00	NIL	NIL	7.32

One of the customers has filed a civil suit against the company before Honble City Civil Court,

Ahmedabad, claiming Rs. 2.94 million (inclusive of interest) as compensation for the inferior quality of material supplied by the company. Pursuant to the order of Honble City Civil Court, Ahmedabad, the company has deposited a sum of Rs 2.5 million against the aforesaid claim. The company has not accepted the claim and thus not provided for in the books but considered as contingent liability.

The company has extended Corporate Guarantee in respect of credit facilities availed by its related party (Entity over which Key Management Personnel individually / jointly gaining control or exercise significant influence) from banks having aggregate sanction limits to the extent of 3950.00 million.

For further information on our contingent liabilities and commitments, see "Note 35 Contingent Liabilities" under the chapter "Restated Financial Statements" on page 295.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or which we believe reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, operating results, liquidity, capital expenditure or capital resources.

RELATED PARTY TRANSACTIONS

We enter into various transactions with related parties in the ordinary course of business. For further information relating to our related party transactions, see "Financial Information- Note 37 Related Party Transactions" on page 300 and "Summary of Offer Document" on page 27 of this Draft Red Herring Prospectus.

RESERVATIONS, QUALIFICATIONS AND ADVERSE REMARKS BY THE STATUTORY AUDITORS.

There are no reservations, qualifications and adverse remarks by our Statutory Auditors since incorporation.

Details of Default, if any, including therein the amount involved, duration of default and present status, in repayment of statutory dues or repayment of debentures or repayment of deposits or repayment of loans from any bank or financial institution

There have been no defaults in payment of statutory dues or repayment of debentures and interest thereon or repayment of deposits and interest thereon or repayment of loans from any bank or financial institution and interest thereon by the Company for the six month period ended September 30, 2023, Fiscal 2023, Fiscal 2022 and Fiscal 2021.

Material Frauds

There are no material frauds, as reported by our statutory auditor, committed against our Company, since incorporation.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Financial instrument and risk management

Capital management.

The Company manages its capital structure in a manner to ensure that it will be able to continue as going concerns while maximizing the return to stakeholders through the optimization of the debt and equity balance.

The Companys capital structure is represented by equity (comprising issued capital, retained earnings and other reserves) and debt (borrowings).

The Companys management reviews the capital structure of the Company on an annual basis. As part of this review, the management considers the cost of capital and the risks associated with each class of capital. The Companys plan is to ensure that the gearing ratio (debt equity ratio) is well within the limit of 2:1.

The capital structure of the Company consists of equity and debt. The capital structure of the Company consists of equity and debt.

[ in Millions]

Particulars	As at 30th September, 2023	As at 31st March, 2023	As at 31st March, 2022	As at 31st March, 2021
Debt	1 183.58	855.27	950.81	804.92
Average equity	905.12	748.54	616.39	536.22
Debt to equity ratio	1.31	1.14	1.54	1.50