Accord Transformer & Switchgear Ltd Management Discussions

You should read the following discussion and analysis of financial condition and results of operations together with our financial statements included in this Draft Red Herring Prospectus. The following discussion relates to our Company and is based on our restated financial statements. Our financial statements have been prepared in accordance with Indian GAAP, the accounting standards and other applicable provisions of the Companies Act.

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward looking statement" 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 our operations include, among others, economic conditions affecting demand/supply and price conditions in domestic and overseas market in which we operate, changes in Government Regulations, Tax Laws and other Statutes and incidental factor

BUSINESS OVERVIEW

Accord Transformer & Switchgear Limited is a company Incorporated on June 20, 2014as "Accord Transformer & Switchgear Private Limited". The corporate identification number of the company is U31500HR2014PLC052544. The company has been converted from Private limited company to Public limited company on December 4, 2024.

The company is engaged in the business of manufacturing, designing and engineering of transformers and switchgear of all sizes, shapes and descriptions, voltage stablisers, voltage regulators and conductor.

We have consistently grown in terms of our revenues over the past years our revenues from operation were 4,07,816.87 thousand in F.Y.2022-23, 4,85,369.15 thousand in the FY 2023-24 and 7,90,225.33 thousand in the FY 2024-25. Our Net Profit after tax for the above- mentioned periods are 8,745.61 thousand, 16,066.76 thousand and 60,530.78 thousand respectively.

FINANCIAL KPIs OF THE COMPANY:

	Accord Transformer & Switchgear
Performance	Fiscal 2025	Fiscal 2024	Fiscal 2023
Revenue from Operations	7,90,225.33	4,85,369.15	4,07,816.87
Growth in Revenue from Operations (%)	62.81%	19.02%	NA
Total Income	7,92,004.02	4,85,978.64	4,08,115.92
EBITDA	91,013.89	26,727.95	15,376.94
EBITDA Margin (%)	11.49%	5.50%	3.77%
Restated Profit for the Year	60,530.78	16,066.76	8,745.61
Restated Profit for the period Margin (%)	7.66%	3.31%	2.14%
Return on Net Worth	28.10%	26.60%	19.77%
Return on Average Equity ("ROAE") (%)	43.90%	30.69%	21.89%
Return on Capital Employed (ROCE") (%)	26.00%	16.00%	20.00%
Debt-Equity Ratio	0.55	1.51	0.52

* Notes:

1. Revenue from operations represents the revenue from sale of service & product & other operating revenue of our company as recognized in the Restated financial information.

2. Total income includes revenue from operations and other income.

3. EBITDA means Earnings before interest, taxes, depreciation and amortization expense, which has been arrived at by obtaining the profit before tax/ (loss) for the year / period and adding back interest cost, depreciation, and amortization expense.

4. EBITDA margin is calculated as EBITDA as a percentage of total income.

5. Net Profit for the year/period represents the restated profits of the Company after deducting all expenses.

6. PAT Margin (%) is calculated as Profit for the year/period as a percentage of Revenue from Operations.

7. Return on net worth is calculated as Net profit after tax, as restated, attributable to the owners of the Company for the year/ period divided by Net worth at the end of respective period/year. Networth means aggregate value of the paid-up equity share capital and reserves & surplus.

8. RoAE is calculated as Net profit after tax divided by Average Equity.

9. Return on capital employed calculated as Earnings before interest and taxes divided by capital employed as at the end of respective period/year. (Capital employed calculated as the aggregate value of total equity, total debt and deferred tax liabilities)

10. Debt- equity ratio is calculated by dividing total debt by total equity. Total debt represents long-term and short-term borrowings. Total equity is the sum of share capital and reserves & surplus.

FACTORS AFFECTING OUR RESULT OF OPERATIONS

Except as otherwise stated in this Draft Red Herring Prospectus and the Risk Factors given in the Draft Red Herring Prospectus, the following important factors could cause actual results to differ materially from the expectations include, among others:

? Changes in government regulations, municipal policies, or restrictions related to outdoor advertising could affect the availability or use of media assets;".

? General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies; ? Changes in laws and regulations that apply to the Power & Transformer Industry in which we operate; ? Increases in the prices of raw materials required for our operations ? Our failure to keep pace with rapid changes in technology; ? Our operations are subject to high working capital requirements ? Inability to successfully obtain registrations in a timely manner or at all; ? Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

SIGNIFICANT DEVELOPMENTS AFTER MARCH 31, 2025 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS

The Directors confirm that there have been no other events or circumstances since the date of the last financial statements as disclosed in the Draft Red Herring Prospectus which materially or adversely affect or is likely to affect the business or profitability of our Company or the value of our assets, or our ability to pay liabilities within next twelve months.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES a) BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS

The restated summary statement of assets and liabilities of the Company as at March 31, 2025, March 31, 2024, and March 31, 2023 and the related restated summary statement of profits and loss and cash flows for the year/period ended March 31, 2025, March 31, 2024 and March 31, 2023 (herein collectively referred to as ("Restated Summary Statements") have been compiled by the management from the audited Financial Statements of the Company for the year ended on March 31, 2025, March 31, 2024 and March 31, 2023 approved by the Board of Directors of the Company. Restated Summary Statements have been prepared to comply in all material respects with the provisions of Part I of Chapter III of the Companies Act,

2013 (the "Act") read with Companies (Prospectus and Allotment of Securities) Rules, 2014, Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 ("ICDR Regulations") issued by SEBI and Guidance note on Reports in Companies Prospectuses (Revised 2019) ("Guidance Note"). Restated Summary Statements have been prepared specifically for inclusion in the offer document to be filed by the Company with the BSE in connection with its proposed SME IPO. The Companys management has recast the Financial Statements in the form required by Schedule III of the Companies Act, 2013 for the purpose of restated Summary Statements.

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles in India.

All assets and liabilities have been classified as current or non-current as per the Companys normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current non-current classification of assets and liabilities.

b) USE OF ESTIMATES

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

c) PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS

(i) Property, Plant & Equipment

All Property, Plant & Equipment are recorded at cost including taxes, duties, freight and other incidental expenses incurred in relation to their acquisition and bringing the asset to its intended use.

(ii) Intangible Assets

Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any.

d) DEPRECIATION / AMORTISATION

Depreciation on fixed assets is calculated on a Straight-Line method using the rates arrived at based on the useful lives estimated by the management, or those prescribed under the Schedule II to the Companies Act, 2013. The management has determined that the residual value of all categories of assets is nil (zero), as the assets are not expected to have any significant value at the end of their useful lives.

Intangible assets including internally developed intangible assets are amortised over the year for which the company expects the benefits to accrue. Intangible assets are amortized on straight line method basis over 6 years in pursuance of provisions of AS-26.

e) INVENTORIES

Inventories comprise of Raw Material, Work-in-Progress and Finished Goods.

Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the first-in, first-out principle.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

f) IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable amount is the higher of an assets net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of the asset and from its disposal at the end of its useful life. Net selling price is the amount obtainable from sale of the asset in an arms length transaction between knowledgeable, willing parties, less the costs of disposal. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognised in prior accounting periods is reversed if there has been a change in the estimate of the recoverable value.

g) INVESTMENTS:

Non-current investments are carried at cost less any other-than-temporary diminution in value, determined on the specific identification basis.

Profit or loss on sale of investments is determined as the difference between the sale price and carrying value of investment, determined individually for each investment. Cost of investments sold is arrived using average method.

h) FOREIGN CURRENCY TRANSLATIONS

Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Any income or expense on account of exchange difference either on settlement or on translation at the balance sheet date is recognized in Profit & Loss Account in the year in which it arises.

i) BORROWING COSTS

Borrowing costs that are attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.

j) PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

k) REVENUE RECOGNITION

Sale of Goods & Services:

Revenue is recognised only when significant risk and rewards of ownership has been transferred to the buyer and services has been rendered as per the contracts, provided it can be reliably measured and its reasonable to expect ultimate collection of it. Gross sales are of net trade discount, rebates and GST.

l) OTHER INCOME

Interest Income on fixed deposit is recognized on time proportion basis. Other Income is accounted for when right to receive such income is established.

m) TAXES ON INCOME

Income taxes are accounted for in accordance with Accounting Standard (AS-22) "Accounting for taxes on income", notified under Companies (Accounting Standards) Rules, 2021. Income tax comprises of both current and deferred tax.

Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income Tax Act, 1961.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using substantially enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognized, only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realization.

n) CASH AND BANK BALANCES

Cash and cash equivalents comprises Cash-in-hand, Current Accounts, Fixed Deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. Other Bank Balances are short-term balance (with original maturity is more than three months but less than twelve months).

o) EARNINGS PER SHARE

Basic earning per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity share outstanding during the year. Diluted earning per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

p) EMPLOYEE BENEFITS

Defined Contribution Plan:

Contributions payable to the recognised provident fund, which is a defined contribution scheme, are charged to the statement of profit and loss.

Defined Benefit Plan:

The Company has an obligation towards gratuity, a defined benefit retirement plan covering eligible employees. The plan provides for lump sum payment to vested employees at retirement, death while in employment or on termination of employment of an amount equivalent to 15 days salary payable for each completed year of service without any monetary limit. Vesting occurs upon completion of five years of service. Provision for gratuity has been made in the books as per actuarial valuation done as at the end of the year.

q) SEGMENT REPORTING

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under:

RESULTS OF OUR OPERATIONS

Particulars	For the year ended 31st March, 2025	% of Total**	For the year ended 31st March, 2024	% of Total**	For the year ended 31st March, 2023	% of Total**
INCOME
Revenue from Operations	7,90,225.33	99.78%	4,85,369.15	99.87%	4,07,816.87	99.93%
Other Income	1,778.69	0.22%	609.49	0.13%	299.05	0.07%
Total Revenue (A)	7,92,004.02	100.00%	4,85,978.64	100.00%	4,08,115.92	100.00%
EXPENDITURE
Cost of material consumed	6,83,642.31	86.32%	4,08,515.33	84.06%	3,47,479.02	85.14%
Direct expenses	23,660.01	2.99%	18,279.94	3.76%	11,823.69	2.90%
Changes in Inventories of Work-In-Progress & Finished Goods	(79,777.45)	(10.07%)	(15,052.36)	(3.10%)	1,009.27	0.25%
Employee Benefits Expenses	36,185.78	4.57%	31,503.75	6.48%	19,328.32	4.74%
Finance Costs	6,737.65	0.85%	4,806.03	0.99%	3,199.78	0.78%
Depreciation & Amortisation Expenses	4,049.54	0.51%	1,628.35	0.34%	1,344.79	0.33%
Other Expenses	35,761.90	4.52%	14,898.89	3.07%	11,745.82	2.88%
Total Expenses (B)	7,10,259.74	89.68%	4,64,579.93	95.60%	3,95,930.69	97.01%
(C) Profit before tax (A B)	81,744.28	10.32%	21,398.71	4.40%	12,185.23	2.99%
(D) Tax Expense / (benefit)
(a) Current Tax Expense	21,677.52	2.74%	5,718.13	1.18%	3,447.12	0.84%
(b) Deferred Tax Expenses / (Credit)	(464.02)	(0.06%)	(386.18)	(0.08%)	(7.50)	(0.01%)
Net tax expense / (benefit)	21,213.50	2.68%	5,331.95	1.10%	3,439.62	0.84%
(E) Profit for the year (C D)	60,530.78	7.64%	16,066.76	3.31%	8,745.61	2.14%

**Total refers to Total Revenue

Components of our Profit and Loss Account

Income

Our total income comprises of revenue from operations and other income.

Revenue from Operations

The Revenue from operations as a percentage of our total income was 99.78%, 99.87% and 99.93% for the Financial Years ended March 31, 2025, March 31, 2024 and March 31, 2023 respectively.

Particulars	For the year ended 31 March 2025	For the year ended 31 March 2024	For the year ended 31 March 2023
Sale of Goods	7,77,896.91	4,84,093.39	4,06,742.77
Sale of Service	12,328.42	1,275.76	1,074.10
TOTAL	7,90,225.33	4,85,369.15	4,07,816.87

Other Income

Our other Income consists of Interest on Fixed Deposit, Interest on Security Deposit Electricity, Interest on Income Tax Refund, Sundry Balances written back, Discount received and Reversal of provision for leave encashment.

Particulars	For the year ended 31 March 2025	For the year ended 31 March 2024	For the year ended 31 March 2023
Interest on Fixed Deposit	704.55	307.24	240.52
Interest on Security Deposit Electricity	28.49	-	-
Interest on Income Tax Refund	-	-	44.76
Sundry Balances written back	1,039.65	265.53	13.77
Discount received	6.00	-	-
Reversal of provision for leave encashment	-	36.72	-
TOTAL	1,778.69	609.49	299.05

Expenditure

Our total expenditure primarily consists of cost of material consumed, Direct expenses, Changes in Inventories, Employee benefit expenses, Finance costs, Depreciation and Other Expenses.

Cost of material consumed

Our cost of material consumed primarily comprises raw materials required for our operations. It includes the value of opening stock at the beginning of the period, net purchases made during the year, and is adjusted for the closing stock at the end of the period.

Direct expenses

Our direct expenses comprise of Power and Fuel, Job work Expense, Freight and Cartages, Generator Running & Maintenance, Factory Rent, Loading and Weighing Expense. Employee Benefit Expenses

Our employee benefits expense comprises of Salaries, Staff Welfare, Directors Remuneration, Gratuity expense, Leave

Encashment and Contribution to Provident fund & other fund.

Finance costs

Our Finance cost expenses comprise of Bank Charges & Other Charges, Interest on Bills Discounting, Interest on delayed payment of Income Tax, TDS and TCS, Interest on Borrowings and Interest on delayed payment to MSME creditors. Other Expenses

Our other expenses primarily comprise of Legal & Professional Fees, Detention & Late Delivery Charges, Auditors remuneration, Business Promotion Expenses, Rent expense, Rates & Taxes, Office Expenses, Repair & Maintenance, etc.

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Auditor Remuneration:
- For Statutory Audit	45.00	30.00	25.00
- For Tax Audit	15.00	15.00	-
Brokerage and Commission Expense	2,532.01	2,357.36	547.12
Business Promotion Expenses	4,218.07	756.11	726.84
Conveyance Expense	197.87	30.11	226.31
Detention & Late Delivery Charges	8,198.50	-	-
Loss of translation of foreign currency balances	85.77	-	-
Insurance Charges	306.15	382.68	265.89
Legal & Professional Fees	2,411.79	1,713.49	474.03
Loss on Sale of Fixed Assets	907.56	-	132.97
Miscellaneous Expenses	154.06	818.43	6.42
Office Expenses	761.03	679.27	297.23
Liquidity Damages on delayed payment to Vendors	-	1,850.16	2,108.93
Postage and Courier Expense	170.50	103.54	69.51
Rates and Taxes	843.51	33.72	116.27
Rent Expense	7,936.53	-	-
Repair and Maintenance Expense	1,843.57	1,887.50	1,796.16
ROC Fees	1,620.65	-	-
Security Expenses	1,013.15	800.68	438.59
Sundry balance Written off	85.00	195.94	2,043.01
Tour and Travelling Expenses	1,939.61	1,327.89	653.04
Telephone & Internet Expenses	179.76	166.94	134.99
Testing Charges	296.81	1,750.07	1,683.51
Total	35,761.90	14,898.89	11,745.82

Provision for Tax

The provision for current taxation is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

Fiscal 2025 compared with Fiscal 2024

Revenue from Operations

The Revenue from Operations of our company for Fiscal year 2025 was 7,90,225.33 thousands against 4,85,369.15 thousands for Fiscal year 2024. An increase of 62.81% in revenue from operations. This growth was driven by capacity expansion through leasing additional factory premises (4,146 sq. meters) to overcome earlier space constraints that had limited order execution to 80% in Fiscal Year 2024, as well as backward integration with the establishment of a Fabrication Manufacturing Unit at Bhiwadi (Rajasthan) in September 2024 for MS Tanks, which ensured uninterrupted production, adequate stock levels, and improved cost efficiency.

Other Income

The other income of our company for Fiscal year 2025 was 1,778.69 thousands against 609.49 thousands for Fiscal year

2024. The increase of 191.83% in other income. This increase was due to higher interest income on deposits (increase of 397.31 thousand) arising from additional fixed deposits placed with banks against issuance of ABG and PBG in line with increased revenues, and sundry balances written back (increase of 743.40 thousand) on account of closure of a pending VAT matter, wherein the related amount earlier deposited has now been written back.

Total Income

The total income of the company for Fiscal year 2025 was 7,92,004.02 thousands against 4,85,978.64 thousands of Total income for Fiscal year 2024 with an increase of 62.97% in total income. This increase was primarily driven by capacity expansion and backward integration, and a 191.83% increase in other income, mainly from higher interest on deposits and sundry balances written back.

Expenditure

Cost of material consumed

In Fiscal 2025, Cost of material consumed were 6,83,642.31 thousands against 4,08,515.33 thousands of in Fiscal 2024.

An increase of 67.35%. This increase was due to This increase was due to higher production and sales volumes, as well as a rise in raw material prices.

Direct Expenses

In Fiscal 2025, the Company incurred Direct expenses of 23,660.01 thousands against 18,279.94 thousands of Direct expenses in fiscal 2024. An increase of 29.43%. This increase was due to increase in Job work Expense by 57.82% of 4072.69 Thousand which is aligned with revenue growth.

Changes in Inventories of Work-in-Progress & Finished Goods

In Fiscal 2025, the Changes in Inventories of Work-in-Progress & Finished Goods amounted to (79,777.45) thousands against (15,052.36) thousands in fiscal 2024.

Employee Benefit Expenses

In Fiscal 2025, the Company incurred employee benefit expenses of 36,185.78 thousands against 31,503.75 thousands expenses in Fiscal 2024. An increase of 14.86%, This increase was on account of salary revisions, recruitment of additional manpower, performance-linked incentives, and increase in contributions to statutory benefits due to increase in salary.

Finance Costs

The finance costs for the Fiscal 2025 were 6,737.65 thousands while it was 4,806.03 thousands for Fiscal 2024. An increase of 40.19%. This increase was due to the enhancement of Cash Credit (CC) limits and higher utilization of these facilities to support increased working capital requirements.

Depreciation & Amortisation Expenses

Depreciation & Amortisation Expenses for the Fiscal 2025 were 4,049.54 thousands while it was 1,628.35 thousands for

Fiscal 2024.

Other Expenses

In Fiscal 2025, our other expenses were 35,761.90 thousands against 14,898.89 thousands in Fiscal 2024. An increase of

140.03%. This increase on account of higher business promotion expenses aligned with revenue growth, and Detention & Late Delivery Charges of 8,198.50 Thousands incurred.

Profit before Tax

Our Company had reported a profit before tax for the Fiscal 2025 of 81,744.28 thousands against profit before tax of

21,398.71 thousands in Fiscal 2024. An increase of 282.01%. This increase was primarily driven by capacity expansion and backward integration, which resulted in higher revenue and improved profitability.

Profit after Tax

Profit after tax for the Fiscal 2025 were at 60,530.78 thousands against profit after tax of 16,066.76 thousands in fiscal 2024, An Increase of 276.75%. This increase was primarily driven by capacity expansion and backward integration, which resulted in higher revenue and improved profitability

Fiscal 2024 compared with Fiscal 2023

Revenue from Operations

The Revenue from Operations of our company for Fiscal year 2024 was 4,85,369.15 thousands against 4,07,816.87 thousand for Fiscal year 2023. An increase of 19.02% in revenue from operations. This increase was due to, In Fiscal year 2024, we had explored new customers in the states of Karnataka, Uttar Pradesh, Haryana, Bihar Uttarakhand etc. which has an impact in turnover around 72,948.65. We have also got an opportunity to enter in Govt. under taking like Madhyanchal Vidyut Vitaran Nigam Ltd (MVVNL) which has a great prospect for us for to enter in to Govt. under taking power sectors. In addition to new customers, we had got more orders from our existing customer which an impact in increasing more revenue in fiscal year 2024 as compared to 2023.

Other Income

The other income of our company for Fiscal year 2024 was 609.49 thousands against 299.05 thousands for Fiscal year

2023. The increase of 103.81% in other income. This increase was due to higher interest income on fixed deposits and sundry balances written back.

Total Income

The total income of the company for Fiscal year 2024 was 4,85,978.64 thousands against 4,08,115.92 thousands of total income for Fiscal year 2023 with an increase of 19.08 % in total income. This increase was Primarily driven by expansion into new states and securing orders from government undertakings such as MVVNL. Additionally, higher order volumes from existing customers further contributed to the growth compared to Fiscal Year 2023.

Cost of material consumed

In Fiscal 2024, Cost of material consumed were 4,08,515.33 thousands against 3,47,479.02 thousands of Cost of Material consumed in Fiscal 2023. An increase of 17.57%. This increase was due to higher production and sales volumes, as well as a rise in raw material prices.

Direct Expenses

In Fiscal 2024, the Company incurred Direct expenses of 18,279.94 thousands against 11,823.69 thousands of Direct expenses in fiscal 2023. An increase of 54.60%. This increase was due to higher production and related operational activities including power, fuel, freight, and job work expenses.

Changes in Inventories of Work-In-Progress & Finished Goods

In Fiscal 2024, the Changes in Inventories of Work-In-Progress & Finished Goods amounted to (15,052.36) thousands against

1,009.27 thousands in fiscal 2023.

Employee Benefit Expenses

In Fiscal 2024, the Company incurred employee benefit expenses of 31,503.75 thousands against 19,328.32 thousands expenses in fiscal 2023. An increase of 62.99%. This increase was due to salary revisions, additional recruitment, performance-linked incentives.

Finance Costs

The finance costs for the Fiscal 2024 were 4,806.03 thousands while it was 3,199.78 thousands for Fiscal 2023. An increase of 50.20%. This increase was due to increase in vehicle loans and utilization of working capital facilities.

Depreciation & Amortisation Expenses

Depreciation & Amortisation Expenses for the Fiscal 2024 were 1,628.35 thousands while it was 1,344.79 thousands for

Fiscal 2023.

Other Expenses

In fiscal 2024, our other expenses were 14,898.89 thousands while it was 11,745.82 thousands in fiscal 2023. An increase of 26.84%. This increase on account of higher business promotion expenses aligned with revenue growth, repair and maintenance, higher legal and professional fees.

Profit before Tax

Our Company had reported a profit before tax for the Fiscal 2024 of 21,398.71 thousands against profit before tax of

12,185.23 thousands in Fiscal 2023. An increase of 75.61%. was primarily driven by expansion into new states and securing orders from government undertakings such as MVVNL, which resulted in higher revenue and improved profitability.

Profit after Tax

Profit after tax for the Fiscal 2024 were at 16,066.76 thousands against profit after tax of 8,745.61 thousands in fiscal 2023,

An increase of 83.71%. This increase was primarily driven by expansion into new states and securing orders from government undertakings such as MVVNL, which resulted in higher revenue and improved profitability.

Cash Flows

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Net Cash Flow from / (used in) Operating Activities	(87,968.71)	(48,236.60)	20,125.62
Net Cash Flow from / (used in) Investing Activities	(26,872.94)	(23,068.66)	(1,091.30)
Net Cash Flow from / (used in) Financing Activities	1,14,646.20	63,551.69	(11,505.45)

Cash Flows from Operating Activities

1. In Fiscal 2025, Net cash flow used in operating activities was 87,968.71 thousands. This comprised of the net profit before tax of 81,744.28 thousands, which was primarily adjusted for Interest Cost of 6,565.68 thousands, Gratuity Provision of 471.54 thousands, Leave Encashment of 692.77 thousands, Interest income on fixed deposits and security deposits of 733.04 thousands, Unrealised Foreign Exchange Loss of 85.77 thousands, Sundry balances written back of 954.65 thousands, Loss on sale of fixed assets of 907.56 thousands, and Depreciation and Amortisation Expense of 4,049.54 thousands. The resultant operating profit before working capital changes was 92,829.45 thousands, which was primarily adjusted for an increase in Inventories of 74,526.01 thousands, increase in Trade Receivables of 2,17,141.01 thousands, increase in Loans and Advances of 17,451.64 thousands, and increase in Other Assets (including other bank balances) of 2,819.64 thousands, along with an increase in Trade Payables of 69,662.53 thousands and increase in Other Current Liabilities & Provisions of 74,659.63 thousands.

Cash used in operations was 74,786.69 thousands, which was further reduced by Income Tax paid of 13,182.02 thousands, resulting in a net cash flow used in operating activities of 87,968.71 thousands.

2. In Fiscal 2024, Net cash flow used in operating activities was 48,236.60 thousands. This comprised of the net profit before tax of 21,398.71 thousands, which was primarily adjusted for Interest Cost of 4,806.03 thousands, Gratuity Provision of 779.23 thousands, Leave Encashment reversal of 36.72 thousands, Interest income on fixed deposits and security deposits of 307.24 thousands, Sundry balances written back of 69.59 thousands, and Depreciation and Amortisation Expense of 1,628.35 thousands. The resultant operating profit before working capital changes was 28,198.77 thousands, which was primarily adjusted for an increase in Inventories of 51,372.05 thousands, increase in Trade Receivables of 31,976.68 thousands, increase in Loans and Advances of 3,214.41 thousands, and increase in Other Assets (including other bank balances) of 6,019.21 thousands, along with an increase in Trade Payables of 18,045.78 thousands and increase in Other Current Liabilities & Provisions of 2,563.82 thousands.

Cash used in operations was 43,773.98 thousands, which was further reduced by Income Tax paid of 4,462.62 thousands, resulting in a net cash used in operating activities of 48,236.60 thousands.

3. In Fiscal 2023, Net cash flow from operating activities was 20,125.62 thousands. This comprised of the net profit before tax of 12,185.23 thousands, which was primarily adjusted for Interest Cost of 3,185.63 thousands, Gratuity Provision of 323.39 thousands, Leave Encashment of 145.18 thousands, Interest income on fixed deposits and security deposits of 240.52 thousands, Interest Income on Income tax refund of 44.76 thousands, Sundry balances written off of 2,029.24 thousands, Loss on sale of fixed assets of 132.97 thousands, and Depreciation and Amortisation Expense of 1,344.79 thousands. The resultant operating profit before working capital changes was 19,061.15 thousands, which was primarily adjusted for an increase in Inventories of 7,814.35 thousands, increase in Loans and Advances of 27,648.83 thousands, along with a decrease in Trade Receivables of 25,964.62 thousands, decrease in Other Assets (including other bank balances) of 4,858.62 thousands, increase in Trade Payables of 9,651.48 thousands, and decrease in Other Current Liabilities & Provisions of 888.04 thousands.

Cash generated from operations was 23,184.65 thousands, which was further reduced by Income Tax paid of 3,059.03 thousands, resulting in a net cash flow from operating activities of 20,125.62 thousands.

Cash Flows from Investment Activities

1. In Fiscal 2025, Net cash used in investing activities was 26,872.94 thousands. This was primarily on account of purchase of property, plant & equipment and intangible assets of 30,805.98 thousands, offset by proceeds from sale of property, plant & equipment of 3,200.00 thousands and interest income on fixed deposits and security deposits of 733.04 thousands.

2. In Fiscal 2024, Net cash used in investing activities was 23,068.66 thousands. This was primarily on account of purchase of property, plant & equipment and intangible assets of 23,375.90 thousands, offset by interest income on fixed deposits and security deposits of 307.24 thousands.

3. In Fiscal 2023, Net cash used in investing activities was 1,091.30 thousands. This was primarily on account of purchase of property, plant & equipment and intangible assets of 4,031.82 thousands, offset by proceeds from sale of property, plant & equipment of 2,700.00 thousands and interest income on fixed deposits and security deposits of 240.52 thousands.

Cash Flows from Financing Activities

1. In Fiscal 2025, Net cash flow from financing activities was 1,14,646.20 thousands. This comprised proceeds from borrowings of 42,069.82 thousands, repayment of borrowings of 15,342.39 thousands, capital issued during the year (net of issue expenses) of 94,484.45 thousands, and interest cost paid of 6,565.68 thousands.

2. In Fiscal 2024, Net cash flow from financing activities was 63,551.69 thousands. This comprised proceeds from borrowings of 89,564.21 thousands, repayment of borrowings of 21,206.49 thousands, and interest cost paid of 4,806.03 thousands.

3. In Fiscal 2023, Net cash flow used in financing activities was 11,505.45 thousands. This comprised proceeds from borrowings of 3,545.39 thousands, repayment of borrowings of 11,865.21 thousands, and interest cost paid of 3,185.63 thousands.

OTHER MATTERS

1. Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. Except as disclosed in this Draft Red Herring Prospectus, there are no unusual or infrequent events or transactions in our Company.

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 143 and 149 respectively of this Draft Red Herring 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

Apart from the risks as disclosed under Chapter titled "Risk Factors" beginning on page no. 28in this Draft Red Herring 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, in case of events such as future increase in labour or material costs or prices that will cause a material change are known

Our Companys future costs and revenues will be determined by demand/supply situation, both of the end services as well as the government policies and other economic factor.

5. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or increased sales prices.

Increases in revenues are by and large linked to increases in volume of business and also dependent on the price realization on our products/services.

6. Total turnover of each major industry segment in which the issuer company operated.

Relevant Industry data and, as available, has been included in the chapter titled "Industry Overview" beginning on page no. 88 of this Draft Red Herring Prospectus.

7. The extent to which business is seasonal.

Our business is dependent to a certain extent on the seasonal, environmental and climate changes. Hence, our business is seasonal in nature.

8. Any significant dependence on a single or few suppliers or customer

Our business is dependent on few clients. Our top ten customers contributed 81.78%, 68.68% and 88.90% of our revenue from operations for the Fiscal Years ended March 31, 2025, 2024 and 2025, respectively and our top five customers contributed 71.55%, 56.14% and 79.43% of our revenue from operations for the Fiscal Years ended March 31, 2025, 2024 and 2025, respectively