Abril Paper Tech Ltd Management Discussions

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, “Annexure 4” beginning under Chapter titled “Restated Financial Information” beginning on page no. 121 of the Draft Prospectus.

*It includes the Financial Statements of the partnership firm

COMPARISON OF F.Y. 2024-25 WITH F.Y. 2023-24:

Income from Operations

In the Financial Year 2024-25, the Company recorded a significant increase in its total revenue from operations, reaching 6091.08 lakhs, which marks a substantial growth of 142.45% compared to 2512.31 lakhs in FY 2023-24. This notable rise in revenue was primarily driven by a surge in overall business activity and trading of goods in addition to Manufacturing of goods. During FY 2024-25, the revenue comprised manufacturing turnover of 3476.56 lakhs and trading turnover of 2614.52 lakhs. In contrast, the previous financial year, FY 2023-24, had reflected a manufacturing turnover of 2512.31 lakhs. The Manufacturing turnover was increased by 38.38 % in FY 2024-25 in comparison to FY 2023-24. The substantial increase across all revenue streams, particularly in manufacturing, indicates the Companys enhanced operational capacity which was supported by increase in installed capacity and improved market presence during the year.

Other Income

In the Financial Year 2024-25, the Company reported other income of 0.37 lakhs, showing a decrease compared to 0.89 lakhs in FY 2023-24. This category of income primarily comprises interest earnings from Investments.

Expenditure:

Cost of Material Consumed

In the Financial Year 2024-25, the Company incurred a cost of 5629.19 lakhs towards material consumption which includes cost of material Consumed for manufacturing of 3119.25 Lakhs and for trading of 2509.94 Lakhs. In FY 2024-25, the Overall Cost of material consumed as a percentage of total revenue was 92.42% (for manufacturing operations it was 89.72% & for Trading Operations, it was 96.00%) while it was 86.16 % in FY 2023-24. This indicates the cost of material purchased was increased in FY 2024-25.

Employee Benefits Expenses:

In the Financial Year 2024-25, the Companys employee expenses stood at 80.20 lakhs, marking a slight decrease of 1.28% compared to 81.24 lakhs in FY 2023-24. This minor fall in employee costs was primarily due to less remuneration payment Made to Directors of the amount of 15.40 Lakhs compared to remuneration paid in the previous year to Partners as in the nature of partners remuneration as per Income Tax Act, 1961. The expansion in business activities necessitated a larger team, contributing to the higher employee expenditure during the year.

Finance Cost:

In the Financial Year 2024-25, the Companys finance cost decreased substantially to 0.07 lakhs from 32.17 lakhs in FY 2023-24, reflecting a sharp decrease of 99.78%. The company is having no borrowings that charges interest. This minor amount of finance cost includes Bank charges only.

Other Expenses

In the Financial Year 2024-25, the Company reported other expenses of 180.99 lakhs, a significant increase from 94.69 lakhs in FY 2023-24, representing a sharp rise of 91.14%. This escalation in other expenses was primarily driven by a substantial growth in business activity, which increased by 142.38% during the year. As a result, there was a corresponding high % of rise in transport expenses, Rent and Admin & Marketing expenses. These costs were essential to support and sustain the expanded scale of operations and market presence.

Depreciation and Amortisation Expenses:

In the Financial Year 2024-25, the Company recorded a depreciation expense of 11.29 lakhs, marking an increase of 1.35% compared to 11.14 lakhs in FY 2023-24. This significant rise was primarily due to the acquisition of new Plant & machinery in the FY 2024-25 amounting to Rs. 16.54 Lakhs.

EBIDTA

In the Financial Year 2024-25, the Company reported an EBIDTA of 201.07 lakhs, a significant rise from 172.55 lakhs in FY 2023-24. The EBITDA in absolute figures have increased but the EBIDTA margin decreased to 3.30% of total Income in FY 2024-25, compared to 6.87% in the previous year. This decrease was primarily due to substantial increase in percentage of Cost and Expenses to revenue incurred by the company during the year as compared to previous year 2023-24.

Profit after Tax (PAT)

In the Financial Year 2024-25, the Company achieved a Profit After Tax (PAT) of 141.30 lakhs, an increase from 95.98 lakhs in FY 2023-24. However, the PAT margin was 2.32% of the total Income from Operations against the profit margin of 3.82% in FY 2023-24. The profit margin was reduced in the FY 2024-25 on account of the trading activity in which gross margin was 4% only.

COMPARISON OF F.Y. 2023-24 WITH F.Y. 2022-23:

Income from Operations

In the Financial Year 2023-24, the Company recorded a minor decrease in its total revenue from operations, reaching 2512.31 lakhs, which marks a decrease of 0.53% compared to 2525.64 lakhs in FY 2022-23. Despite of Decrease in Nominal amount of Revenue during the year, the company was able to maintain Revenue earning as equivalent to the earned in Previous year.

Other Income

In the Financial Year 20223-23, the Company reported other income of 0.89 lakhs. This category of income primarily comprises interest earnings from Investments.

Expenditure:

Cost of Material Consumed

In the Financial Year 2023-24, the Company incurred a cost of 2164.72 lakhs towards material consumption, against 2283.63 lakhs in FY 2022-23. The cost of material consumed as a percentage of total revenue from operations decreased to 86.16% in FY 2022-23, compared to 90.42% in the previous year. This indicates an improvement in timely purchase of raw material and better utilization of raw materials relative to revenue, suggesting enhanced operational effectiveness and possibly improved procurement strategies or economies of scale achieved during the year.

Employee Benefits Expenses:

In the Financial Year 2023-24, the Companys employee expenses stood at 81.24 lakhs, marking a significant increase of 176.99% compared to 29.33 lakhs in FY 2022-23. This rise in employee costs was primarily due to an increase in the workforce to support the growing scale of operations, along with the impact of annual salary increments. The expansion in business activities necessitated a larger team, contributing to the higher employee expenditure during the year.

Finance Cost:

In the Financial Year 2023-24, the Companys finance cost decreased substantially to 32.17 lakhs from 53.88 lakhs in FY 2022-23, reflecting a sharp decrease of 40.29%. This significant decrease was primarily due to repayment of both short-term & Long-term borrowing reflecting the Companys good financial health and less dependency on the external sources of funds and more reliance on internal sources.

Other Expenses

In the Financial Year 2023-24, the Company reported other expenses of 94.69 lakhs, a slight decrease from 98.49 lakhs in FY 2022-23, representing a fall of 3.86%.

Depreciation and Amortisation Expenses:

In the Financial Year 2023-24, the Company recorded a depreciation expense of 11.14 lakhs, marking an increase of 42.46% compared to 7.82 lakhs in FY 2022-23. This significant rise was primarily due to the acquisition of assets in the FY 2023-24 amounting to Rs. 47.96 Lakhs.

EBIDTA

In the Financial Year 2023-24, the Company reported an EBIDTA of 172.55 lakhs, a significant rise from 114.19 lakhs in FY 2022-23. The EBIDTA margin also increased to 6.87% of total Income in FY 2023-24, compared to 4.52% in the previous year 2022-23. Despite of Non-increase in revenue as compared to the Previous year, the Company was able to cut Operating costs and maintain Higher EBITDA than the previous year. This improvement was primarily driven by the efficiency in cost management in the business operations during the year, reflecting better operational efficiency and cost absorption.

Profit after Tax (PAT)

In the Financial Year 2023-24, the Company achieved a Profit After Tax (PAT) of 95.98 lakhs, an increase from 38.84 lakhs in FY 2022-23. However, the PAT margin was 3.82% of total Income in FY 2023-24 as against the PAT margin of 1.54% in FY 2022-23. This Rise in PAT margin, despite not showing substantial growth in business, was primarily due to less cost required to manage business and reduction in other operating expenses leading to higher profit. These factors collectively impacted the profitability ratio for the year.

Cash flow March 31, 2025

The Company has negative Cash flow from operating activities on account of negative working capital major portion of which is due to increase of Trade Receivables & inventories more than the profit earned by the Company. The company had invested in the fixed assets and Other Non-current assets resulting into negative cash flow from investing activities. The Company had raised the funds through issue of Share capital and short-term borrowings resulting in the Positive cash flow from financing activities.

Cash flow March 31, 2024

The Company has Negative Cash flow from operating activities on account of negative working capital major portion of which is due to increase of Trade Receivables & inventories more than the profit earned by the Company. The Company had invested in the fixed assets and made non-current investment resulting into negative cash flow from investing activities. The Company had raised the funds through issue of share capital resulting in to Positive cash flow from financing activities.

Cash flow March 31, 2023

The Company has Negative Cash flow from operating activities on account of negative working capital major portion of which is due to increase of Trade Receivables & inventories more than the profit earned by the Company. The company had invested in the fixed assets and Other Non-current assets resulting into negative cash flow from investing activities. The Company had raised the funds from short-term borrowings and also adjustment of partnership capital and repaid the long-term borrowings resulting in the Positive cash flow from financing activities.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years.

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled “Risk Factors” beginning on page no. 20 of this Draft Prospectus. To our knowledge, except as we have described in this Draft Prospectus, there are no known factors which we expect to bring about significant economic changes.

Income and sales of our Company on account of major activities derives from manufacturing and marketing sublimation heat transfer paper and related products.

Our Company has not followed any unorthodox procedure for recording sales and revenues.

Apart from the risks as disclosed under Section titled “Risk Factors” beginning on page no. 20 in this Draft 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.

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

The Company is in the business of manufacturing, the relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page no. 74 of this Draft Prospectus.

Our Company has not announced any new products or business segment.

Our business is not seasonal.

10. Any significant dependence on a single or few suppliers or customers

Note : The above data has been certified by Statutory Auditor of our Company M/s. K.K. Haryani & Co. Chartered Accountants, Dated: June 06, 2025 bearing UDIN: 25110780BMHSQB3354 certified for Top 10 customers and certificate Dated: June 06, 2025 bearing UDIN: 25110780BMHSPX9911 certified for Top 10 Suppliers.

11. Competitive conditions.