Airfloa Rail Technology 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 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

Airfloa Rail Technology Limited is a company Incorporated on December 14, 1998 as "Air flow Equipments (India) Private Limited". The corporate identification number of the company is U30204TN1998PLC041571. The company changed its name from "Air flow Equipments (India) Private Limited" to "Airfloa Rail Technology Private Limited " on August 27, 2024 and has been converted from Private limited company to Public limited company on November 15, 2024.

The company is engaged in the business of manufacturing, processing, assembling, developing, designing with all type of railway rolling stocks, passenger rail coaches and their discrete components, Rail wagons and their discrete components, locomotives and their discrete components.

We have consistently grown in terms of our revenues over the past years our revenues from operation were Rs.9,517.39 lakhs in F.Y.2022-23, Rs. 11,930.36 lakhs in the FY 2023-24 and 19,238.70 lakhs in the FY 2024-25. Our Net Profit after tax for the above- mentioned periods are Rs.149.36 lakhs, Rs. 1,423.28 lakhs and 2,554.76 lakhs respectively.

FINANCIAL KPIs OF THE COMPANY:

(Amount in Lakhs, except EPS, % and ratios)

Performance	Airfloa Rail Technology Limited
	Fiscal 2025	Fiscal 2024	Fiscal 2023
	Consolidated	Standalone	Standalone
Revenue from operations	19,238.70	11,930.36	9,517.39
Growth in revenue from operations (%)	61.26%	25.35%	-30.78%
Total Income	19,266.26	12,287.22	9,532.90
EBITDA	4,740.84	3,457.92	1,468.46
EBITDA Margin (%)	24.61%	28.14%	15.40%
PAT	2,554.76	1,423.28	149.36
PAT Margin (%)	13.28%	11.93%	1.57%
RoE (%)	30.64%	29.13%	3.64%
RoCE (%)	26.28%	26.42%	11.31%
Debt- Equity Ratio	0.54	1.14	1.44

* Notes

1. Revenue from Operations: This represents the income generated by the Company from its core operating operation. This gives information regarding the scale of operations. Other Income is the income generated by the Company from its non core operations.

2. EBITDA means Earnings before interest, taxes, depreciation and amortization expense, which has been arrived at by obtaining the profit before tax for the year and adding back interest cost, depreciation, and amortization expense.

3. EBITDA margin is calculated as EBITDA as a percentage of Total Income.

4. Profit for the year represents the restated profits of the Company after deducting all expenses.

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

6. Return on Equity is calculated as Profit after tax, as restated, attributable to the owners of the Company for the year divided by average equity. Average equity is calculated as average of opening and closing balance of total equity (Shareholders’ fund s) for the year.

7. Return on capital employed calculated as Earnings before interest (excluding lease liabilities and other borrowing cost) and taxes divided by capital employed as at the end of respective year. (Capital employed calculated as the aggregate value of tangible net worth, total debt and deferred tax liability)

8. 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 Red Herring Prospectus and the Risk Factors given in the Red Herring Prospectus, the following important factors could cause actual results to differ materially from the expectations include, among others:

1. General economic and business conditions in the markets in which we operate and in the local, regional, national, and international economies;

2. Any change in government policies resulting in increases in taxes payable by us;

3. Increased competition in the industry in which we operate;

4. Ability to grow the business;

5. Changes in laws and regulations that apply to the industries in which we operate;

6. Company ‘ s ability to successfully implement its growth strategy and expansion plans;

7. Ability to keep pace with rapid changes in technology;

8. Ability to maintain relationships with vendor

9. Inability to successfully obtain registrations in a timely manner or at all;

10. General economic, political, and other risks that are out of our control;

11. Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

12. Any adverse outcome in the legal proceedings in which we are involved;

13. The performance of the financial markets in India and globally

14. Increase in price of raw materials and fuel cost

15. Adverse weather and climatic conditions in the region where we operate STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

a) BASIS OF ACCOUNTING

The restated summary statement of Consolidated assets and liabilities of the Company as at March 31, 2025, standalone assets and liabilities of the Company as at March 31, 2024 and March 31, 2023 and the related restated summary statement of Consolidated profits and loss and cash flows for the year ended March 31, 2025, standalone profits and loss and cash flows for the year March 31, 2024 and March 31, 2023 (herein collectively referred to as ("Restated Summary Statements") have been compiled by the management from the Consolidated Audited Financial Statements of the Company for the year ended on March 31, 2025 and standalone audited Financial Statements of the Company for the years 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 Company’s 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 Company’s 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.

The financial statements of the Company and its subsidiary companies have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses, after fully eliminating intra- group balances and intra-group transactions resulting in unrealized profits or losses as per Accounting Standard 21 - "Consolidated Financial Statements" notified by Companies (Accounting Standards) Rules, 2021.

Minority Interest in the net assets of consolidated subsidiaries is identified and presented in the Consolidated Balance Sheet separately from liabilities and equity of the Company’s shareholders. Minority interest in the net assets of consolidated subsidiaries consists of: a. The amount of equity attributable to minority at the date on which investment in a subsidiary is made; and b. The minority share of movements in equity since the date the parent subsidiary relationship came into existence.

Minority’s share of net profit for the year of consolidated subsidiaries is identified and adjusted against the Profit After Tax of the Group

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 tangible and intangible asset is calculated on a Written - Down value 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.

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

Revenue is recognized to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Sales are recognized on transfer of significant risk and ownership which generally coincide with the dispatch of the goods.

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 Standard) 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 shortterm 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 "unallocated revenue / expenses / assets / liabilities".

RESULTS OF OUR OPERATIONS

Based on Financial Statements of Profit & Loss as Restated

(Amount % in lakhs)

Particulars	Consolidated		Standalone
	For the year ended March 31, 2025	% of Total**	For the year ended March 31, 2024	% of Total**	For the year ended March 31, 2023	% of Total**
INCOME
Revenue from Operations	19,238.70	99.86%	11,930.36	97.10%	9,517.39	99.84%
Other Income	27.56	0.14%	356.86	2.90%	15.51	0.16%
Total Income (A)	19,266.26	100.00%	12,287.22	100.00%	9,532.90	100.00%
EXPENDITURE
Cost of material consumed	13,343.47	69.26%	6,179.87	50.30%	5,475.45	57.44%
Changes in inventories of work-in-progress	(2,048.25)	(10.63%)	288.14	2.35%	(881.60)	(9.25%)
Direct expense	1,172.67	6.09%	930.45	7.57%	1,655.81	17.37%
Employee benefits expense	1,252.18	6.50%	996.13	8.11%	1,240.90	13.02%
Finance costs	1,107.03	5.75%	1,184.85	9.64%	1,121.61	11.77%
Depreciation and amortization expense	253.27	1.31%	292.84	2.38%	313.43	3.29%
Other expenses	689.52	3.58%	354.93	2.89%	372.81	3.91%
Total Expenses (B)	15,769.89	81.85%	10,227.21	83.23%	9,298.42	97.54%
Profit before tax (A-B)	3,496.37	18.15%	2,060.01	16.77%	234.49	2.46%
Tax Expense/ (benefit)
(i) Current tax	941.95	4.89%	655.85	5.34%	131.18	1.38%
(ii) Deferred tax expenses / (credit)	(0.07)	(0.00%)	(19.12)	(0.16%)	(46.05)	(0.48%)
Net tax expense / (benefit)	941.88	4.89%	636.73	5.18%	85.13	0.89%
Profit for the Year before Minority interest	2,554.49	IGN=“RIGHT”>13.26%	1,423.28	11.58%	149.36	1.57%
Minority Interest	(0.27)	(0.00%)	-	-	-	-
Profit for the Year	2,554.76	13.26%	1,423.28	11.58%	149.36	1.57%

**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 99.86%, 97.10% and 99.84% for the Financial Years ended March 31, 2025, March 31, 2024 and March 31, 2023 respectively.

(Amount Rs. in Lakhs)

	Consolidated	Standalone	Standalone
Particulars	For the year ended 31 March 2025	For the year ended 31 March 2024	For the year ended 31 March 2023
Revenue from Sale of Products	19,238.70	11,930.36	9,517.39
Total	19,238.70	11,930.36	9,517.39

Other Income

Our other Income consists of Interest on Deposits, Interest on Income Tax Refund, Foreign exchange gain, Miscellaneous income, Profit on sale of Fixed assets and Reversal of gratuity provision.

(Amount Rs. in Lakhs)

	Consolidated	Standalone	Standalone
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 income	12.59	14.22	13.96
Discount Received	6.23	-	0.40
Profit on sale of Asset	8.74
Exchange Rate Gain	-	-	0.09
Sale of Scrap	-	29.50	-
Reversal of gratuity expense	-	-	1.06
Sundry Balances Written Back	-	313.14	-
TOTAL	27.56	356.86	15.51

Expenditure

Our total expenditure primarily consists of Cost of material consumed, Direct expenses, Employee benefit expenses, finance costs, Depreciation and Other Expenses.

Cost of material consumed

Our cost of material consumed comprises of Purchases of materials.

Direct expenses

Our direct expenses comprise of Freight expense, Service Charges, Rent, Electricity, Factory Repairs & Maintenance expenses, Testing Charges, Labour expense, and other expenses.

Employee Benefit Expenses

Our employee benefits expense comprises of Salaries and wages, Staff Welfare, Directors Remuneration Contribution to Provident fund and other fund and Provision for Gratuity.

Finance costs

Our Finance cost expenses comprise of Interest Expenses & other costs related to borrowings.

Other Expenses

Our other expenses primarily comprise of Auditors remuneration, Advertisement and Business Promotion Expenses, Travelling & Conveyance, Rates & Taxes, Professional and Consultancy Charges, Office Expenses, CSR expenses, Loss on foreign exchange, Vehicle Maintenance, etc.

(Amount Rs. in Lakhs)

Particulars	Consolidated	Standalone
	For the year ended 31 March 2025	For the year ended 31 March 2024	For the year ended 31 March 2023
Audit Fee	24.00	24.00	24.00
Donation Expenses	6.05	7.83	2.20
CSR expenses	17.85	-	19.64
Professional and Consultancy Charges	157.75	54.76	113.37
Sundry balance written off	15.32	1.81	1.50
Vehicle Maintenance	15.89	9.89	15.27
Office maintenance	24.88	33.09	37.85
Printing, Postage and Stationery	5.45	7.03	10.12
Rates & Taxes	87.44	29.38	19.26
Legal fees	0.79	9.85	0.99
Telephone Charges	6.58	7.68	8.20
Travelling & Conveyance	117.08	62.40	81.55
Research and Development expense	-	-	-
Advertisement and Business Promotion Expenses	206.71	107.21	38.86
Loss on foreign exchange	3.73	-	-
	689.52	354.93	372.81

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 Rs. 19,238.70 Lakhs against Rs. 11,930.36 Lakhs for Fiscal year 2024. An increase of 61.26% in revenue from operations. This increase was due to post-covid recovery of the industry, supported by improved market demand and enhanced execution of orders.

Other Income

The other income of our company for fiscal year 2025 was Rs. 27.56 Lakhs against Rs. 356.86 for Fiscal year 2024. The decrease of 92.28% in other income. This decrease was primarily on account of the absence of one-time income recorded in FY24 from writeback of certain liabilities no longer required.

Total Income

The total income of the company for fiscal year 2025 was Rs. 19,266.26 Lakhs against Rs. 12,287.22 Lakhs of total income for Fiscal year 2024 with an increase of 56.80% in total income. This increase was primarily due to This increase was due to post-covid recovery of the industry, supported by improved market demand and enhanced execution of orders.

Expenditure

Cost of material consumed

In Fiscal 2025, cost of material consumed were Rs. 13,343.47 Lakhs against Rs.6,179.87 Lakhs of Cost of material consumed in fisc al 2024. An increase of 115.92%. This increase was directly related to increase in revenue.

Direct Expenses

In Fiscal 2025, the Company incurred Direct expenses of Rs. 1,172.67 Lakhs against Rs. 930.45 Lakhs of Direct expenses in fiscal 2024. An increase of 26.03%. This increase was due to was directly related to increase in revenue.

Employee Benefit Expenses

In Fiscal 2025, the Company incurred employee benefit expenses of Rs. 1,252.18 Lakhs against Rs. 996.13 Lakhs expenses in Fiscal 2024. An increase of 25.70%. This increase was due to hiring of qualified labours to improve the production process.

Finance Costs

The finance costs for the Fiscal 2025 were Rs. 1,107.03 Lakhs while it was Rs. 1,184.85 Lakhs for Fiscal 2024. An decrease of 6.57%. This decrease was due to reduction in borrowings.

Other Expenses

In Fiscal 2025, our other expenses were Rs. 689.52 Lakhs and Rs. 354.93 Lakhs in Fiscal 2024. An increase of 94.27%. This increase was primarily on account of higher administrative and operational expenses in line with the scale-up of business.

Profit before Tax

Our Company had reported a profit before tax for the Fiscal 2025 of Rs. 3,496.37 Lakhs against profit before tax of Rs. 2,060.01 Lakhs in Fiscal 2024. This improvement was mainly attributable to strong revenue growth and better absorption of fixed costs, leading to improved operating leverage.

Profit after Tax

Profit after tax for the Fiscal 2025 were at Rs. 2,554.76 Lakhs against profit after tax of Rs. 1,423.28 Lakhs in fiscal 2024, An Increase of 79.50%. This improvement was mainly attributable to strong revenue growth and better absorption of fixed costs, leading to improved operating leverage.

Fiscal 2024 compared with fiscal 2023 Revenue from Operations

The Revenue from Operations of our company for fiscal year 2024 was Rs. 11,930.36 Lakhs against Rs. 9,517.39 Lakhs for Fiscal year 2023. An increase of 25.35% in revenue from operations. This increase was due to post-covid recovery of the industry, supported by improved market demand and enhanced execution of orders.

Other Income

The other income of our company for fiscal year 2024 was Rs. 356.86 Lakhs against Rs. 15.51 for Fiscal year 2023. The increase of 2,200.84% in other income. This increase was due to write-back of certain liabilities no longer required, which were recognized in accordance with applicable accounting standards, as well as sale of scrap materials.

Total Income

The total income of the company for fiscal year 2024 was Rs. 12,287.22 Lakhs against Rs. 9,532.90 Lakhs of total income for Fiscal year 2023 with an increase of28.89% in total income. This increase was primarily due to higher revenue from operations, supported by improved market demand and enhanced execution of orders

Expenditure

Cost of material consumed

In Fiscal 2024, cost of material consumed were Rs.6,179.87 Lakhs against Rs.5,475.45 Lakhs of Cost of material consumed in fiscal 2023. An increase of 12.87%. This increase was due to attributable to higher production volumes driven by increased revenue from operations and improved order execution, and while the proportionate increase remained lower due to the efficient use of raw materials and better production planning.

Direct Expenses

In Fiscal 2024, the Company incurred Direct expenses of Rs.930.45 Lakhs against Rs.1,655.81 Lakhs of Direct expenses in fiscal 2023. A decrease of 43.81%. This decrease was due to measures taken by the management to reduce the direct cost, implement more efficient manufacturing practices and optimized transportation costs.

Employee Benefit Expenses

In Fiscal 2024, the Company incurred employee benefit expenses of Rs.996.13 Lakhs against Rs.1,240.90 Lakhs expenses in fiscal 2023. A decrease of 19.73%. This decrease was due to measures taken by the management to reduce labour cost and bringing the workforce into optimal level.

Finance Costs

The finance costs for the Fiscal 2024 were Rs. 1,184.85 Lakhs while it was Rs. 1,121.61 Lakhs for Fiscal 2023. An increase of 5.64%. This increase was due to increase due to increase in borrowings and costs associated with it.

Other Expenses

In fiscal 2024, our other expenses were Rs. 354.93 Lakhs and Rs. 372.81 Lakhs in fiscal 2023. A decrease of 4.80%. This reduction was mainly attributable to better cost control measures, optimization of administrative overheads.

Profit before Tax

Our Company had reported a profit before tax for the Fiscal 2024 of t 2,060.01 Lakhs against profit before tax of Rs. 234.49 Lakhs in Fiscal 2023. An increase of 778.54%. This increase was primarily driven by higher revenue from operations, improved gross margins, and better absorption of fixed costs due to increased capacity utilization. The Company also benefited from tighter control over operating expenses and a rise in other income, contributing to the overall profitability

Profit after Tax

Profit after tax for the Fiscal 2024 were at Rs. 1,423.28 Lakhs against profit after tax of Rs. 149.36 Lakhs in fiscal 2023, An Increase of 852.92%. This increase was primarily driven by higher revenue from operations, improved gross margins, and better absorption of fixed costs due to increased capacity utilization. The Company also benefited from tighter control over operating expenses and a rise in other income, contributing to the overall profitability.

Cash Flows

(Amount Rs. in Lakhs)

Particulars	Consolidated	Standalone
	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	(444.60)	346.32	1,007.92
Net Cash Flow from/ (used in) Investing Activities	(615.77)	318.52	258.33
Net Cash Flow from/ (used in) Financing Activities	1,271.37	(748.27)	(2,064.02)

Cash Flows from Operating Activities

1. Net cash flow used in operating activities was Rs. 444.60 Lakhs. This comprised of the net profit before tax of Rs. 3,496.37 Lakhs, which was primarily adjusted for Depreciation and Amortisation expense of Rs. 253.27 Lakhs, Interest expense of Rs. 990.93 Lakhs, Interest income of Rs. 12.59 Lakhs, Gratuity provision of Rs. 6.92 Lakhs, Sundry Balance Written Off of Rs. 15.32 Lakhs, Unrealised Realised Forex Exchange Gain of Rs. 3.73 Lakhs and Profit on Sale of Asset Rs. 8.74 Lakhs. The resultant operating profit before working capital changes was Rs. 4,745.21 Lakhs, which was primarily adjusted for an increase in Trade Receivables of Rs. 2,604.56 Lakhs, Inventories of Rs. 1,663.60 Lakhs, Other Non-Current Assets of Rs. 231.14 Lakhs, and Loans and Advances of Rs. 283.28 Lakhs and Other Current Assets (including other bank balances) of Rs. 13.94 Lakhs. Additionally, there was an increase in Trade Payables of Rs. 411.80 Lakhs and decrease in Other Current Liabilities & Provisions of Rs. 337.88 Lakhs.

Cash generated from operations was Rs. 22.61 Lakhs, which was reduced by Income tax paid of Rs. 467.21 Lakhs, resulting into net cash flow used in operating activities of Rs. 444.60 Lakhs.

2. Net cash flow from operating activities was Rs. 346.32 Lakhs. This comprised of the net profit before tax of Rs. 2,060.01 Lakhs, which was primarily adjusted for Depreciation and Amortisation expense of Rs. 292.84 Lakhs, Interest expense of Rs. 1,145.79 Lakhs, Interest income of Rs. 14.22 Lakhs, Gratuity provision of Rs. 31.47 Lakhs, Sundry Creditors Written Back of Rs. 313.14 Lakhs and Sundry balance written off of Rs. 1.81 Lakhs. The resultant operating profit before working capital changes was Rs. 3,204.56 Lakhs, which was primarily adjusted for an increase in Trade Receivables of Rs. 5,294.07 Lakhs, Other Non-Current Assets of Rs. 172.64 Lakhs, and decrease in Loans and Advances of Rs. 412.14 Lakhs, Inventories of Rs. 452.10 Lakhs and Other Current Assets (including other bank balances) of t 109.74 Lakhs. Additionally, there was an increase in Trade Payables of Rs. 1,082.87 Lakhs and Other Current Liabilities & Provisions of Rs. 587.90 Lakhs.

Cash generated from operations was Rs. 382.60 Lakhs, which was reduced by Income tax paid of Rs. 36.28 Lakhs, resulting into net cash flow from operating activities of Rs. 346.32 Lakhs.

3. Net cash flow from operating activities was Rs. 1,007.92 Lakhs. This comprised of the net profit before tax of Rs. 234.49 Lakhs, which was primarily adjusted for Depreciation and Amortisation expense of Rs. 313.43 Lakhs, Interest expense of Rs. 1,013.22 Lakhs, Gratuity expense of Rs. 1.06 Lakhs, Interest income of Rs. 13.96 Lakhs, Unrealised Realised Forex Exchange Gain of Rs. 0.09 Lakhs and Sundry balance written off of Rs. 1.50 Lakhs. The resultant operating profit before working capital changes was Rs. 1,547.71 Lakhs, which was primarily adjusted for an increase in Loans and Advances of Rs. 668.21 Lakhs, Inventories of Rs. 985.85 Lakhs, and decrease in Other Non-Current Assets of Rs. 2.14 Lakhs, Other Current Assets (including other bank balances) of Rs. 43.59 Lakhs, and a and Trade Receivables of Rs. 1,538.41 Lakhs. Additionally, there was a decrease in Trade Payables of Rs. 367.30 Lakhs and Other Current Liabilities & Provisions of Rs. 34.82 Lakhs.

Cash generated from operations was Rs. 1,076.67 Lakhs, which was reduced by direct tax paid of Rs. 68.75 Lakhs, resulting into net cash flow from operating activities of Rs. 1,007.92 Lakhs.

Cash Flows from Investment Activities

1. For the year ended March 31, 2025, net cash used in investing activities was Rs. 615.77 Lakhs, which primarily comprised of cash outflow in capital advances of Rs. 72.54 Lakhs, interest income received of Rs. 12.59 Lakhs, Purchase of property, plant & equipment and intangible assets of Rs. 567.32 Lakhs and Proceeds from Sale of Purchase of property, plant & equipment of Rs. 11.50 Lakhs.

2. For the year ended March 31, 2024, net cash generated from investing activities was Rs. 318.52 Lakhs, which primarily comprised of decrease in capital advances of Rs. 394.19 Lakhs, interest income received of Rs. 14.22 Lakhs and purchase of property, plant & equipment and intangible assets of Rs. 89.89 Lakhs.

3. For the year ended March 31, 2023, net cash generated from investing activities was Rs. 258.33 Lakhs, which primarily comprised of decrease in capital advances of Rs. 450.00 Lakhs, interest income received of Rs. 13.96 Lakhs and purchase of property, plant & equipment and intangible assets of Rs. 205.63 Lakhs.

Cash Flows from Financing Activities

1. For the year ended March 31, 2025, net cash used in financing activities was Rs. 1,271.37 Lakhs, which primarily comprised of interest cost paid of Rs. 1,037.06 Lakhs and proceeds from long term borrowings of Rs. 144.59 Lakhs, repayment of long - term borrowings of Rs. 22.88 Lakhs, proceeds from short term borrowings of Rs. 654.00 Lakhs, repayment of long -term borrowings of Rs. 1,158.23 Lakhs and Proceeds from Fresh Shares issued during the year of Rs. 2,690.95 Lakhs.

2. For the year ended March 31, 2024, net cash used in financing activities was Rs. 748.27 Lakhs, which primarily comprised of interest cost paid of Rs. 1,106.69 Lakhs and Proceeds from Long term Borrowings of Rs. 8.86 Lakhs, Repayment of Long - term Borrowings of Rs. 92.49 Lakhs, Proceeds from Short term Borrowings of Rs. 494.12 Lakhs, Repayment of Short -term Borrowings of Rs. 52.07 Lakhs.

3. For the year ended March 31, 2023, net cash used in financing activities was Rs. 2,064.02 Lakhs, which primarily comprised of interest cost paid of Rs.1,000.86 Lakhs and Proceeds from Long term Borrowings of Rs. 34.19 Lakhs, Repayment of Long - term Borrowings of Rs. 229.85 Lakhs, Proceeds from Short term Borrowings of Rs. 98.58 Lakhs, Repayment of Short -term Borrowings of Rs. 966.08 Lakhs.

OTHER MATTERS

1. Unusual or infrequent events or transactions

Except COVID-19 or any such kind of pandemic and as described in this Red Herring Prospectus, there have been no other events or transactions to the best of our knowledge which may be described as "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 "Management’s Discussion and Analysis of Financial Conditions and Results of Operations, " beginning on Page 180 and 193 respectively of this 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. 33 in this 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 Company’s 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. 106 of this 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 10 customers contributed 92.52%, 91.93%% and 95.07% of revenue from operations for F.Y. ending on 2024-25, 2023-24, and 2022-23 respectively.