Aritas Vinyl Ltd Management Discussions

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the period ended on August 31, 2025 and for the year ended on March 31, 2025, March 31, 2024 and March 31, 2023. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 25 of this Red Herring Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and, is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year") are to the twelve-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 Aritas Vinyl Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for the period ended on August 31, 2025 and for the Financial Year 2024-25, Financial Year 2023-24 and Financial Year 2022-23 included in this Red Herring Prospectus beginning on page 169 of this Red Herring Prospectus.

BUSINESS OVERVIEW

Our Company is engaged in manufacturing of technical textile, such as "Artificial leather" also known as PU Synthetic leather and PVC-coated leather, using the latest technology known as Transfer Coating Technology.

PVC leather, also known as polyvinyl chloride leather, is a type of synthetic leather made by coating a fabric typically polyester or cotton with a layer of PVC (polyvinyl chloride) offering a soft, flexible, and alternative to genuine leather. It is designed to mimic the appearance and feel of genuine leather offering a range of additional benefits that make it ideal for various commercial and industrial applications.

PVC-Coated Leather: Manufactured by coating fabric with polyvinyl chloride, providing enhanced durability, water resistance, and affordability. Our Company is selling its products to distributors, wholesaler and manufacturers, and also exporting to other country like Greece, Oman, UAE, Sri Lanka, USA and also to SEZ. Traditionally Natural Leather or animal leather is procured by killing Animals and has caused Animal activist to express a huge concern. Synthetic Leather is widely replacing traditional leather. Synthetic Leather is economical, durable, requires low maintenance and easy fabric to work with. Our products come in variety of colour, texture and patterns which find application in a wide range of products in different industry such as seat covers, door covers, dashboards, shoe uppers, shoe lining and insoles, sandals, furnishing and Upholstery, purses, bags and briefcases, diary covers and stationery items, garments, belts, wallets etc.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

After the date of last financial period i.e. August 31, 2025, there is no any significant development occurred in the Company

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

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

a. Changes in Laws and Regulations that apply to our Industry.

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

c. Failure to adapt the changing technology in our industry of operation may adversely affect our business

d. Failure to comply with regulations prescribed by authorities of the jurisdiction in which we operate

e. Competition with existing and new entrants.

f. Any slowdown or shutdown in our manufacturing operations or strikes, work stoppages or increased wage demands by our employees that could interfere with our operations.

g. Our ability to retain our key managements persons and other employees;

h. Companys ability to successfully implement its growth strategy and expansion plans;

i. Failure to comply with the quality standards and requirements of our customers

j. Our inability to get the raw material at competitive price and transfer the upward revision in the price of raw material to the customers.

k. Exchange rate Fluctuation may affect the cost of Raw Material.

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under Chapter titled "Restated Financial Information" beginning on page 173 of the Red Herring Prospectus. Result for Stub Period.

		(Rs. in Lakhs)
Income from continuing operations	31.08.2025	% of revenue
Revenue from operations	4053.61	99.89
Other non-operating revenue	4.58	0.11
Total Revenue	4058.19	100.00
Other Income	0.02
Total Revenue	4058.21	100.00
Expenses
Cost of Material Consumed	3035.49	74.80
Employee benefits expense	126.04	3.11
Interest cost	103.41	2.55
Other finance charges	5.73	0.14
Other expenses	436.25	10.75
Depreciation and amortisation expenses	53.22	1.31
Total Expenses	3760.14	92.66
EBDITA	454.68	11.20
Restated profit before tax from continuing operations	298.07	7.34
Total tax expense	55.97
Restated profit after tax from continuing operations (A)	242.10	5.97

Standalone Financial Performance

Income from Operations

Our Companys Total revenue from operations for the period ended on August 31, 2025 was 4058.19 lakhs consist of sale of manufacturing product of 4053.61 Lakhs and other non-operating income of 4.58 Lakhs.

Total Expenditure

The total expenditure for stub period ended on August 31, 2025 was 3760.14 Lakhs which is 92.66% of the total revenue for the stub period. The major expenditure which is part of the total expenditure is Cost of Material Consumed of 3035.49 lakhs (74.80%), Employee Benefit Expenses of 126.04 lakhs (3.11%), finance cost of 109.14 Lakhs (2.69%), Depreciation 53.22 lakhs (1. 31%) and other Expenses of 436.25 lakhs (10.75%).

EBDTA

The EBDITA for the stub period was 454.68 lakhs representing 11.20% of total Revenue.

Profit after Tax

The profit after Tax for the stub period was 242.10 lakhs representing to 5.97 % of the total revenue.

RESULTS OF KEY OPERATIONS

		(Rs. in lakhs)
		For the year ended on
Particulars	For the Period ended on 31.03.2025	31.03.2024	31.03.2023
Income from continuing operations
Revenue from operations
Manufacturing Turnover	9,767.32	6,878.00	5,118.17
Other non-Operating Income	29.48	42.94	22.31
Total Revenue	9,796.80	6,920.94	5,140.48
% of growth	41.55	34.64	68.65
Other Income	5.05	3.69	1.52
% total Revenue	0.05	0.05	0.03
Total Revenue	9,801.85	6,924.63	5,142.00
% of growth	41.55	34.67	68.61
Expenses
Cost of Material Consumed	7,499.73	5,282.86	3,992.16
% of Revenue from operations	76.78	76.81	78.00
Employee benefits expense	289.51	230.65	155.71
% Increase/(Decrease)	25.52	48.13	14.37
Finance Costs	252.77	198.46	135.45
(a) Interest Expesnes	237.60	188.31	121.01
(b) Other Charges	15.17	10.15	14.44
% Increase/(Decrease)	27.37	46.52	76.53
Other expenses	1,129.18	932.09	668.91
% Increase/(Decrease)	21.14	39.34	46.12
Depreciation and amortisation expenses	124.88	78.18	67.33
% Increase/(Decrease)	59.73	16.11	12.10
Total Expenses	9,296.07	6,722.24	5,019.56
% to total revenue	94.84	97.08	97.62
EBDITA	863.21	465.19	309.26
% to total revenue	8.81	6.72	6.02
Restated profit before tax from continuing operations	505.78	202.39	122.44
Exceptional Item
Total tax expense	92.53	35.89	22.95
Restated profit after tax from continuing operations (A)	413.25	166.50	99.49
% to total revenue	4.22	2.40	1.93

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

Income from Operations

In the F.Y. 2024-25, the Companys total revenue was 9796.80 Lakhs, which is increased by 41.55% in compare to total revenue from operations of 6920.94 Lakhs in F.Y. 2023-24. The total revenue includes manufacturing Turnover of 9767.32 Lakhs, other non-operating revenue of 29.48 lakhs in FY 2024-25 as against manufacturing Turnover of 6878.00 lakhs and other non-operating revenue of 42.94 lakhs in FY 2023-24. The Revenue increased during FY 2025 was due to increase in the business.

Other Income

The other Income for the FY 2024-25 was 5.05 lakhs which was 3.69 lakhs in the FY 2023-24. The other income includes interest earned on the fixed deposit and Interest on Security Deposit.

Expenditure:

Cost of Material Consumed

The Cost of Material Consumed for F.Y. 2024-25 was 7499.73 Lakhs against the cost of Material Consumed of 5282.86 Lakhs in F.Y. 2023-24. The cost of material consumed was 76.78 % of the total revenue from operations in F.Y 2024-25 as against 76.81% of total revenue from Operations in F.Y 2023-24.

Employee Benefits Expenses:

The Employee expenses for F.Y. 2024-25 was 289.51 Lakhs against the expenses of 230.65 Lakhs in F.Y. 2023-24 showing increase by 25.52%. The expansion in business activities necessitated a larger team, contributing to the higher employee expenditure during the year.

Finance Cost:

The Finance Cost for the F.Y. 2024-25 was Rs.252.77 Lakhs against the cost of Rs.198.46 Lakhs in the F.Y. 2023-24 showing increase of 27.37%. The Higher borrowing cost and Interest on short-term borrowings lead to higher finance cost.

Other Expenses

Other Expenses increased to Rs.1129.18 Lakhs for F.Y. 2024-25 against Rs. 932.09 Lakhs in F.Y. 2023-24 showing increase of 21.14%. The Increase in the Other expenses in the FY 2024-25 was on account of increase of the business by 41.55% in comparison to FY 2023-24. The increase in the cost of freight, Insurance expenses, Electricity Expenses, Packing Material Expenses, ROC filing fee expenses and Labour Charges, Clearing and Forwarding Expenses in comparison to FY 2023-24 due to increase of business. Rs.

Depreciation and Amortisation Expenses:

The Depreciation for F.Y. 2024-25 was Rs.124.88 Lakhs as compared to Rs. 78.18 Lakhs for F.Y. 2023-24. The depreciation increased by 59.73 % in F.Y. 2024-25 as compared to F.Y. 2023-24. The depreciation in FY 2024-25 was increased on account of addition of the Fixed assets by Rs.86.20 lakhs in FY 2024-25.

EBIDTA

The EBIDTA for F.Y. 2024-25 was Rs.863.21 Lakhs as compared to Rs.465.19 Lakhs for F.Y. 2023-24. The EBIDTA was 8.81% of total Revenue in FY 2024-25 as compared to 6.72% in F.Y. 2023-24. EBIDTA has improved due to increase in the business by 41.55% in FY 2024-25 in comparison to FY 2023-24. The increase in the capacity utilization in FY 2024-25 in comparison of FY 2023-24 also contributed in increase in the EBIDTA of the Company.

Profit after Tax (PAT)

PAT is Rs.413.25 lakhs for the F.Y. 2024-25 in compared to Rs.166.50 lakhs in F.Y. 2023-24. The PAT was 4.22% of total revenue in F.Y. 2024-25 compared to 2.40% of total revenue in F.Y. 2023-24. The Profit margin has increased on account of increase of business by 41.55% and better utilization of installed capacity of the plant.

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

Income from Operations

In the F.Y. 2023-24, the Companys total revenue was Rs.6924.63 Lakhs, which is increased Rs. Rs.by 37.61 % in compare to total income from operations of Rs. 5142.00 Lakhs in F.Y. 2022-23.

The total revenue includes manufacturing Turn0ver of Rs.6878.00 Lakhs, other non-operating revenue of Rs.42.94 lakhs in FY 2023-24 as against manufacturing Turnover of Rs.5118.17 lakhs and other non-operating revenue of Rs.22.31 lakhs in FY 2022-23. The Revenue increased during FY 2024 was due to increase in the business.

Other Income

The other Income for the FY 2023-24 was Rs.3.69 lakhs which was Rs.1.52 lakhs in the FY 2022-23. The other income includes interest earned on the fixed deposit and Interest on Security Deposit.

Expenditure:

Cost of Material Consumed.

The Cost of Material Consumed for F.Y. 2023-24 was Rs.5282.86 Lakhs against the cost of Material Consumed of 3992.16 Lakhs in F.Y. 2022-23. The cost of material consumed was 76.81 % of the total revenue from operations in F.Y 2023-24 as against 78.00 % of total revenue from Operations in F.Y 2022-23.

Employee Benefits Expenses:

The Employee expenses for F.Y. 2023-24 was Rs.230.65 Lakhs against the expenses of Rs.155.71 Lakhs in F.Y. 2022-23 showing increase by 48.13 %. The company had appointed 2 technical personnel with high salary. Both the employees have joined from Jan 23. The total salary of both the employees were Rs. 3.43 Lakhs per month. Thus, the salary of only these 2 personnel resulted the increase in salary by Rs. 41.17 Lakhs in the FY 2023-24.

Finance Cost:

The Finance Cost for the F.Y. 2023-24 was Rs.198.46 Lakhs against the cost of Rs.135.45 Lakhs in the F.Y. 2022-23 showing increase of 46.52 %. The finance cost was increased on account of overall increase of the working capital limit. The total outstanding of the short term borrowings as on March 31.2024 was Rs.2031.03 lakhs as against Rs. 993.98 lakhs as on March 31.2023. The cash inflow from the long-term borrowings and short term borrowings in the FY 2023-24 was Rs.1968.86 lakhs resulting in to higher finance cost.

Other Expenses

Other Expenses increased to Rs.932.09 Lakhs for F.Y. 2023-24 against Rs. 668.91 Lakhs in F.Y. 2022-23 showing increase of 39.34 %. The Increase in the Other expenses in the FY 2023-24 was on account of increase of the business by 34.64 % in comparison to FY 2022-23. The increase in the cost of Electricity Stores and Spares Expenses, Packing Material Expenses, Labour Charges, Stall Exhibition Expenses and Clearing and Forwarding Expenses in comparison to FY 2022-23 due to increase of business.

Depreciation and Amortisation Expenses:

The Depreciation for F.Y. 2023-24 was Rs.78.18 Lakhs as compared to Rs. 67.33 Lakhs for F.Y. 2022-23. The depreciation increased by 16.11 % in F.Y. 2023-24 as compared to F.Y. 2022-23. The depreciation in FY 2023-24 was increased on account of addition of the Fixed assets by Rs.829.76 lakhs in FY 2023-24 which was 104.73 lakhs in FY 2022-23.

EBIDTA

The EBIDTA for F.Y. 2023-24 was 465.19 Lakhs as compared to 309.26 Lakhs for F.Y. 2022-23. The EBIDTA was 6.72 % of total Revenue in FY 2023-24 as compared to 6.02 % in F.Y. 2022-23. EBIDTA has improved due to improves in material consumption ratios to sales from 86.35 % in FY 2022-23 to 82.44 % in FY 2023-24 and increase in the business by 34.64 % in FY 2023-24 in comparison to FY 2022-23. The increase in the capacity utilization in FY 2023-24 in comparison of FY 2022-23 was also contributed in increase in the EBIDTA of the Company

Profit after Tax (PAT)

PAT is 166.50 lakhs for the F.Y. 2032-24 in compared to 99.49 lakhs in F.Y. 2022-23. The PAT was 2.40 % of total revenue in F.Y. 2023-24 compared to 1.93 % of total revenue in F.Y. 2022-23. The Profit margin has increased on account of increase of business by 34.64 % and better utilization of installed capacity of the plant.

CASH FLOW			( in lakhs)
Particulars	March 31, 2025	March 31, 2024	March 31, 2023
Net cash from Operating Activities	866.24	(905.62)	(768.65)
Net cash flow from Investing Activities	(86.20)	(829.76)	(71.04)
Net Cash Flow Financing Activities	(813.31)	1770.39	877.20

Cash flow March 31, 2025

The Company has Positive Cash flow from operating activities on account of Increase of Trade payable and other current liabilities. The Company had positive cash flow from operating activities before changing in working capital of 878.38 Lakhs. The Company invested in the fixed assets resulting into negative cash flow from investing activities. The Company has negative cash flow from financing activities due to repayment of long-term borrowings more than the enhancement of the share capital and short-term borrowings amount.

Cash flow March 31, 2024

The Company has Negative Cash flow from operating on account of Increase of inventory, Increase of Trade Receivables, and Increase of Short-term Loans and Advances, increase of other current assets, decrease of trade payables. The Company had positive cash flow from operating activities before changing in working capital of 475.34 Lakhs. The Company invested in the fixed assets resulting into negative cash flow from investing activities. The Company had enhanced the long-term borrowings and enhanced the short-term borrowing for purchase of fixed assets and increase in the current assets.

Cash flow March 31, 2023

The Company has Negative Cash flow from operating on account of Increase of current assets due to growth of business and increase of other liabilities more than the profit earned by the Company. The Company had positive cash flow from operating activities before changing in working capital of 323.70 Lakhs. The Company invested in the fixed assets resulting into negative cash flow from investing activities. The Company borrowed long term funds for financing the purchase of fixed assets and enhanced the short-term borrowing for working capital requirement.

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

1. Unusual or infrequent events or transactions

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

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

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 25 of this Red Herring Prospectus. To our knowledge, except as we have described in this Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Income and Sales on account of major product/main activities

Income and sales of our Company on account of major activities derives from manufacturing of technical textile such as "Artificial leather" also known as PU Synthetic leather and PVC-coated leather using latest technology called Transfer Coating Process.

4. Whether the company has followed any unorthodox procedure for recording sales and revenues

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

5. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page 25 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.

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

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

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

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 98 of this Red Herring Prospectus.

8. Status of any publicly announced new products or business segment.

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

9. The extent to which business is seasonal.

Our business is not seasonal.

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

Our top 10 buyers and suppliers constitute majority of our business.

							( in lakhs)
				Purchase / Sales
Particulars	August 31, 2025	%	Fiscal 2024-25	%	Fiscal 2023-24	%	Fiscal 2022-23	%
Top 10 Buyers	2101.68	51.85	4730.41	48.43	3674.06	53.41	2953.24	57.69
Top 10 suppliers	1711.58	53.30	4509.58	53.09	4403.70	72.99	3931.11	74.61

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Business Overview" beginning on pages 98 and 109, respectively of this Red Herring Prospectus.