Abha Power and Steel Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the financial years ended March 31, 2024, 2023 and 2022. One should read the following discussion and analysis of our financialcondition and results of operations in conjunction with our section titled "Financial Statements" and the chapter titled " FinancialStatement " on page 155 of the Draft Prospectus. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors" on page 25 of this Draft Prospectus. Actual results could differ materially from those contained in any forward-looking statements and for furtherdetails regarding forward-looking statements, kindly refer the chapter titled "Forward-Looking Statements" on page 16 of this Draft Prospectus. Unless otherwise stated, the financial information of our Company used in this section has been derivedfrom the Restated Financial Information. Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Thinking Hats Entertainment Solutions Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Statements for the financial years ended March 31, 2024, 2023 and 2022 included in this Draft Prospectus beginningon page 155 of this Draft Prospectus

BUSINESS OVERVIEW

Strategically located in mineral reach, densely industrialized and one of the steel hubs of central India i.e. state of Chhattisgarh, we are engaged in the business of iron and steel foundry, more particularly in the business of casting and manufacturing customised products in mostly all grades of iron and steel. Our versatile product portfolio covers all grades of mild steel, spheroidal graphite cast iron, manganese steel, stainless steel, low alloy and high alloy castings (high CR & high Ni), HRCS & WRCS, from as small as 0.5 Kgs to 6 Tonnes single finished casting. We are a RDSO certified vendor for supply of certain casting products to Indian Railways and an approved vendor for supply of certain casting products to National Mineral Development Corporation and Integral Coach Factory, Chennai. We are also holding a PED Certificate from TUV-Nord which certifies our quality management system for manufacturing of castings and makes us eligible for supply of pressure equipment to European nations

Over the years, we have leveraged our expertise, processes and infrastructure to cater to diverse industries such as Indian Railways, steel, cement, heavy engineering, mining, power, etc. We offer to our customers a comprehensive range of both standard and customised products. With around 20 years of experience, in understanding customer specific requirements, and have a strong focus on quality, safety, value proposition, and the price competitiveness of our offerings, which we believe has helped us in establishing and maintaining long term relationships with our customers. Our Company sell its products to domestic customers and also export them to over 6 countries, such as UAE, Germany, Canada, Italy and Netherlands.

For detailed information on the business of our Company please refer to "Our Business" beginning on page number 105 of this Draft Prospectus.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST AUDITED FINANCIALS

After the date of last Audited accounts i.e. March 31,2024, the Directors of our Company confirm that, there have not been any significant material developments.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factor" beginning on page 25 of this Draft Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

• Our Manufacturing Facility is located in Bilaspur, Chhattisgarh. Any disruption, breakdown or shutdown of obi Manufacturing Facility may have a material adverse effect on obi business, financial condition, results of operations and cash flow.

• We do not own premises where our Manufacturing Facility is located.

• Our manufacturing activity is subject to availability of raw material and the costs of the raw materials. Any shortage in availability or fluctuations in raw material prices, may have a material adverse effect on our business, financial condition, results of operations and cash flows.

• A significant majority of our revenues from operations are derived from a limited number of customers.

• We require certain approvals and licenses in the ordinary course of business and are required to comply with certain rules and regulations to operate our business, any failure to obtain, retain and renew such approvals and licences or comply with such rules and regulations may adversely affect our operations.

DISCUSSION ON RESULT OF OPERATION

Our Significant Accounting Policies

For Significant accounting policies please refer Significant Accounting Policies, under Chapter titled "Restated Financial Statements beginning on page 155 of the Draft Prospectus.

Overview of Revenue & Expenditure

Our revenue and expenses are reported in the following manner:

Revenues

• Revenue of operations

Our Company s revenue is primarily generated from the sale of finished casting products in mosdy all grades of iron and steel.

• Other Income

Our other income mainly consists of interest income and other income.

The below table show our revenue for the fiscal 2024, 2023 and 2022:

Particulars	For the period ended
	March 31,2024	March 31,2023	March 31,2022
Income
Revenue from Operations	5,174.70	5,469.96	5,451.67
% of total revenue	99.85%	99.24%	99.15%
Other income	7.97	41.86	46.73
% of total revenue	0.15%	0.76%	0.85%
Total Revenue	5,182.68	5,511.82	5,498.40

Expenditure

Our total expenditure primarily consists of cost of cost of materials consumed, Changes in inventories of finished goods, work-in-progress and stock-in-trade, employee benefits expenses, finance cost, depreciation and amortisation and other expenses.

• Cost of materials consumed and services received

This represents purchases of raw materials, mainly, pig iron, scrap MS, exo sleeves, mould paints, ferro alloys, etc.

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

This relates to the changes in inventories of finished goods, work-in-progress and stock-in-trade.

• Employment Benefit Expenses

It includes salaries, wages, bonus and allowances, directors remuneration, contributions to welfare funds, provision for gratuity and other expenses.

• Other Expenses

It includes auditors remuneration , Bad Debts/ Written off, Freight, Insurance premium , Miscelleanous expenses, Plywood Expenses, Power & Fuel, Rent, Stores and Repairs Expenses, RITES Inspection charges, Tour and Travelling Exp., Testing Charges, Security service Exps, Vehicle Exp., Legal and Professional charges, Roc filing charge, Registration/ Lisence and Renewal Fee,

• Finance Costs

Our finance costs mainly include processing charges and interest.

• Depreciation

Depreciation includes depreciation and amortization.

RESULTS OF OUR OPERATION

Particulars	31-Mar-24	31-Mar-23	31-Mar-22
Incomes:
Revenue from Operations	5,174.70	5,469.96	5,451.67
% of total revenue	99.85%	99.24%	99.15%
% Increase/(Decrease)	(5.40)%	0.34%	-
Other income	7.97	41.86	46.73
% of total revenue	0.15%	0.76%	0.85%
% Increase/(Decrease)	(80.96)%	-10.43%	-
Total Revenue	5,182.68	5,511.82	5,498.40
% Increase/(Decrease)	-5.97%	0.24%	-
Expenses:
Cost of raw material consumed	3,097.69	3,872.80	3,791.30
% of total revenue	59.77%	70.26%	68.95%
% Increase/(Decrease)	(20.01)%	2.15%	-
Changes in inventories of finished goods, work-in-progress and stock-in-trade	(306.73)	-563.78	-84.40
% of total revenue	(5.92)%	-10.23%	-1.54%
% Increase/(Decrease)	(45.59)%	567.95%	-
Employee Benefit expenses	361.44	276.54	268.71
% of total revenue	6.97%	5.02%	4.89%
% Increase/(Decrease)	30.70%	2.91%	-
Other Expenses	1,208.10	1,550.45	1,311.69
% of total revenue	23.31%	28.13%	23.86%
% Increase/(Decrease)	(22.08)%	18.20%	-
Total Expense	4,360.50	5,136.02	5,287.30
% of total revenue	84.14%	93.18%	96.16%
% Increase/(Decrease)	(15.10)%	-2.86%	-
Profit before Interest, Depreciation and Tax	822.18	375.79	211.10
% of total revenue	15.86%	6.82%	3.84%
Particulars	31-Mar-24	31-Mar-23	31-Mar-22
Depreciation and amortization Expenses	102.25	66.17	65.76
% of total revenue	1.97%	1.20%	1.20%
% Increase/(Decrease)	54.53%	0.63%	-
Profit before Interest and Tax	719.93	309.62	145.34
% of total revenue	13.89%	5.62%	2.64%
Financial Cost	212.90	112.68	114.44
% of total revenue	4.11%	2.04%	2.08%
% Increase/(Decrease)	88.94%	-1.53%	-
Profit before Tax and Extraordinary Expenses	507.03	196.94	30.91
% of total revenue	9.78%	3.57%	0.56%
Extraordinary Expenses	-	-	-
% of total revenue	-	-	-
% Increase/(Decrease)	-	-	-
Restated Profit/(Loss) before tax	507.03	196.94	30.91
% of total revenue	9.78%	3.57%	0.56%
% Increase/(Decrease)	157.45%	537.23%	-
Tax expenses/(income)
Current Tax	13.11	65.40	17.46
Deferred Tax	115.73	(8.60)	84.98
Total tax expenses	128.84	56.80	102.44
% of total revenue	2.49%	1.03%	1.86%
Restated profit/(loss) after Tax	378.19	140.14	-71.53
% of total revenue	7.30%	2.54%	-1.30%
% Increase/(Decrease)	169.86%	-	-

Our income is dependent upon few major intermediaries, details of the same is as following:

Particulars	Fiscal 2024		Fiscal 2023		Fiscal 2022
	Amount	Percentage (%)	Amount	1 Percentage 1 (%)	Amount	1 Percentage 1 (%)
Top 10 customers	3,528.08	68.18	4,022.04	72.97%	3,741.01	68.04%

Capacity utilised

Product	Total	FY 2024		FY 2023		FY 2022
	Installed Capacity (MT/Annu m)	Qty. (MT)	Capacity Utilized	Qty. (MT)	Capacity Utilized	Qty. (MT)	Capacity Utilized
Castings	14,400	5,362	37%	5,770	40%	6,445	45%

REVIEW OF OPERATIONS FOR THE PERIOD ENDED MARCH 31,2024 Income from Operations

Our revenue from operations for the fiscal year ended March 31. 2024 was ?5.174.70 Lakhs which was about 99.85% of the total revenue and which comprises of revenue from sale of finished casting products in mostly all grades of iron and steel.

Other Income

Our other income for the fiscal year ended March 31,2024 was ? 7.97 Lakhs which was about 0.26% of the total revenue and which includes discount received and interest income.

Expenditure

Cost of materials consumed

The Cost of materials consumed for the period ended March 31, 2024 were ? 3,097.69 Lakhs which was about 65.82% of the total revenue.

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

The changes in inventories of finish goods & work-in-progress for the period ended March 31, 2024 were ?(306.73) Lakhs.

Employee Benefits expenses

The employee benefits expenses for the fiscal year ended March 31, 2024 were ? 361.44 Lakhs which was about 6.97% of the total revenue and which includes salaries, wages, bonus and allowances, directors remuneration, contributions to welfare funds, provision for gratuity and other expenses.

Other Expenses

Other Expenses for the fiscal year ended March 31, 2024 were ? 1,208.10 Lakhs which was about 23.31% of the total revenue and which includes auditors remuneration, Bad Debts/ Written off, Freight, Insurance premium , Miscelleanous expenses , Plywood Expenses, Power & Fuel, Rent, Stores and Repairs Expenses, RITES Inspection charges, Tour and Travelling Exp., Testing Charges, Security service Exps, Vehicle Exp., Legal and Professional charges, Roc filing charge, Registration/ Lisence and Renewal Fee.

EBIDTA

Our EBITDA for the fiscal year ended March 31,2024 were ? 822.18 Lakhs.

Financial Costs

Financial costs for the period ended March 31, 2024 were ? 212.90 Lakhs which was about 4.11% of the total revenue and which consists of interest and other finance charges.

Depreciation

Depreciation for the fiscal year ended March 31, 2024 were ? 102.25 Lakhs which was about 1.97% of the total revenue and which consists of depreciation and amortization expenses.

Profit /(Loss) after Tax

PAT for the fiscal year ended March 31, 2024 was ? 378.19 Lakhs.

FISCAL YEAR ENDED MARCH 31, 2024 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2023

Income

Total revenue has decreased by ? 295.25 Lakhs and 5.40%, from ? 5,469.96 Lakhs in the fiscal year ended March 31, 2023 to ? 5,174.70 Lakhs in the fiscal year ended March 31, 2024. The decrease in revenue was on account of decrease in production and sale of finish product.

Expenditure

Total Expenditure decreased by ?639.23 Lakhs and 12.03%, from ?5,314.88 Lakhs in the fiscal year ended March 31,2023 to ? 4,675.65 Lakhs in the fiscal year ended March 31,2024. Overall expenditure was decreased mainly due to decrease in production.

Cost of materials consumed

Cost of materials consumed decreased by ?775.11 Lakhs and 20.01%, from ? 3,872.80 Lakhs in the fiscal year ended March 31,2023 to ? 3,097.69 Lakhs in the fiscal year ended March 31, 2024. Cost of materials consumed is decreased on account of decrease in production.

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

Changes in inventories of finished goods, work-in-progress and stock-in-trade was ?(306.73) Lakhs in the fiscal year ended March 31, 2024 as against ?(563.78) Lakhs the fiscal year ended March 31, 2023. The decrease in changes in Inventories of finish goods, work-in-progress and finish goods was because of lower production.

Employee Benefit Expenses

Employee Benefit Expenses in terms of value and percentage increased by ? 84.90 Lakhs and 30.70% from ?276.54 Lakhs in the fiscal year ended March 31, 2023 to ? 361.44 Lakhs in the fiscal year ended March 31, 2024. Overall employee cost was increased due to increase in staff strength and general increment in salary and incentives to employees.

Other Expenses

Other Expenses in terms of value and percentage decreased by ? 342.36 Lakhs and 22.08% from ? 1,550.45 Lakhs in the fiscal year ended March 31,2023 to ? 1,208.10 Lakhs in the fiscal year ended March 31, 2024. The decrease was mainly of lower cost of Freight, Power & Fuel, Stores and Repairs Expenses, RITES Inspection charges due to lower production.

EBIDTA

Profit before Interest, Depreciation and Tax has increased by ? 446.39 Lakhs and 118.78% from? 375.79 Lakhs in the fiscal year ended March 31, 2023 to ? 822.18 Lakhs in the fiscal year ended March 31, 2024. Profit before Interest, Depreciation and Tax was increased due to increase net margins on sales and lower expenses in the fiscal year ended March 31, 2024 as against in fiscal 2023. This has resulted in increased profitability.

Finance Costs

Finance Costs in terms of value and percentage increased by ? 100.22 Lakhs and 88.94% from ? 112.68 Lakhs in the fiscal year ended March 31, 2023 to ? 212.90 Lakhs in the fiscal year ended March 31, 2024. Finance Costs was increased mainly due to higher interest outgo on increased borrowings.

Depreciation & Amortization Expenses

Depreciation in terms of value increased by L36.08 Lakhs and 54.53% from ? 66.17 Lakhs in the fiscal year ended March 31, 2023 to ? 102.25 Lakhs in the fiscal year ended March 31, 2024. Increase in depreciation is due to increase in assets and is general in nature.

Net Profit after Tax

Net Profit has increased by ? 238.05 Lakhs and 169.86% from ? 140.14 Lakhs in the fiscal year ended March 31, 2023 to ? 378.19 Lakhs in the fiscal year ended March 31, 2024. Net profit was increased due to increase net margins on sales and lower expenses in the fiscal year ended March 31, 2024 as against in fiscal 2023. This has resulted in increased profitability.

FISCAL YEAR ENDED MARCH 31, 2023 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31,2022

Income

Total revenue has increased by ? 18.29 Lakhs and 0.34%. from ? 5.451.67 Lakhs in the fiscal year ended March 31, 2022 to ? 5,469.96 Lakhs in the fiscal year ended March 31, 2023. The increase in revenue was on account of higher price realisation.

Expenditure

Total Expenditure decreased by ?152.62 Lakhs and 2.79%, from ? 5,467.49 Lakhs in the fiscal year ended March 31, 2022 to ? 5,314.88 Lakhs in the fiscal year ended March 31,2023. Overall expenditure was decreased mainly due to lower production.

Cost of materials consumed

Cost of materials consumed increased by ? 81.50 Lakhs and 2.15%, from ? 3,791.30 Lakhs in the fiscal year ended March 31,2022 to? 3,872.80 Lakhs in the fiscal year ended March 31, 2023. Cost of materials consumed on account of increase in consumption of raw materials.

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

Changes in inventories of finished goods, work-in-progress and stock-in-trade increased by ? 479.37 in the fiscal year ended March 31, 2023 to ?(563.78) in the fiscal year ended March 31, 2023 as against ?(84.40) in the fiscal year ended March 31,2022. Changes in inventories of finished goods, work-in-progress and stock-in-trade was on account of higher inventory in hand.

Employee Benefit Expenses

Employee Benefit Expenses in terms ofvalue and percentage increased by ? 7.83 Lakhs and 2.91% from ? 268.71 Lakhs in the fiscal year ended March 31,2022 to ? 276.54 Lakhs in the fiscal year ended March 31,2023. Overall employee cost was increased due to increase in staff strength and general increment in salary and incentives to employees.

Other Expenses

Other Expenses in terms of value and percentage increased by ? 238.76 Lakhs and 18.20% from ? 1,311.69 Lakhs in the fiscal year ended March 31, 2022 to ? 1,550.45 Lakhs in the fiscal year ended March 31, 2023. The increase was mainly on account of Bad Debts/ Written off, Freight, Power & Fuel and Stores and Repairs Expenses.

EBIDTA

Profit before Interest, Depreciation and Tax has increased by ? 164.69 Lakhs and 78.02% from ? 211.10 Lakhs in the fiscal year ended March 31, 2022 to ? 375.79 Lakhs in the fiscal year ended March 31, 2023. Profit before Interest, Depreciation and Tax was increased due to better price realisation.

Finance Costs

Finance Costs in terms of value and percentage decreased by ? 1.76 Lakhs and 1.53% from ? 114.44 Lakhs in the fiscal year ended March 31, 2022 to ? 112.68 Lakhs in the fiscal year ended March 31, 2023. Finance Costs was decreased mainly due to lower interest outgo on borrowings.

Depreciation & Amortization Expenses

Depreciation in terms of value increased by ? 0.41 Lakhs and 0.63% from? 65.76 Lakhs in the fiscal year ended March 31,2022 to ? 66.17 Lakhs in the fiscal year ended March 31,2023. Increase in depreciation is due to increase in assets and is general in nature.

Net Profit after Tax

Net Profit has increased by ? 211.67 Lakhs from loss of ^71.53 Lakhs in the fiscal year ended March 3 L 2022 to profit of? 140.14 Lakhs in the fiscal year ended March 3 L 2023. With the help of better price realization we have been able to record profit.

Cash Flows

Particulars	For the year ended March 31,
	2024	2023	2022
Net Cash from Operating Activities	469.14	795.84	(676.07)
Net Cash from Investing Activities	(26.96)	(1,355.88)	(125.60)
Net Cash used in Financing Activities	(430.99)	551.92	813.11

Cash Flows from Operating Activities

Net cash from operating activities for fiscal 2024 was at ? 469.14 lacs as compared to the EBIDTA at ?822.18 lacs, while for fiscal 2023, net cash from operating activities was at ?795.84 lacs as compared to the EBIDTA at ?375.79 lacs. For fiscal 2022, the net cash from operating activities was ? (676.07) lacs compared to EBIDTA of? 211.10 lacs.

Cash Flows from Investment Activities

Net cash from investing activities for the fiscal 2024 was ? (26.96) lacs. This negative cash outflow is attributed to increase in investment in plant and equipments. Net cash from investing activities was at ? (1,355.88) lacs and ?(125.60) lacs and in the fiscal 2023 and 2022 attributed to increase in investment in plant and equipments.

Cash Flows from Financing Activities

Net cash from financing activities for fiscal 2024 was at ? (430.99)lacs. The negative cash flow was on account of higher interest outgo and repayment of loan. In fiscal 2023 was ? 551.92 lacs due increased loans and borrowings. For fiscal 2022, the net cash from financing activities was ? 813.11 lacs on account of loans and borrowings.

OTHER MATTERS

1. Unusual or infrequent events or transactions

Except as described in this Draft Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

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

Other than as described in the Section titled "Financial Information" and chapter titled "Managements Discussion and Analysis of Financial Conditions and Results of Operations", beginning on Page 155 and 201 respectively of this Draft Prospectus, to our knowledge there are no significant economic changes that materially affected or are 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 revenue or income from continuing operations

Other than as described in the chapter titled "Risk Factors" and "Managements Discussion and Analysis of Financial Conditions and Result of Operations", beginning on Page 25 and 201 respectively of this Draft Prospectus, best to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our company from continuing operations.

4. Future relationship between Costs and Income

Other than as described in the chapter titled "Risk Factors" beginning on Page 25 of this Draft Prospectus, best to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

5. Competition Conditions

Our Industry is fragmented consisting of large established players and small niche players. We compete with organized as well as unorganized sector on the basis of availability of product, price and product range. Further, there are no entry barriers in this industry and any expansion in capacity of existing manufacturers would further intensify competition. Industry is very competitive and we expect competition to continue and likely to increase in the future.