Aztec Fluids & Machinery Ltd Management Discussions

You should read the following discussion in conjunction with our restated financial statements attached in the chapter titled "Financial Information of the Company" beginning on page 130 You should also read the section titled "Risk Factors" on page 22 and the section titled "Forward Looking Statements" on page 16 of this Red Herring Prospectus, which discusses a number of factors and contingencies that could affect our financial condition and results of operations. The following discussion relates to us, and, unless otherwise stated or the context requires otherwise, is based on our Restated financial Statements.

Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditor January 18, 2024 which is included in this Red Herring Prospectus under "Financial Statements". The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.

OVERVIEW

Since 2015, we are an exclusive distributor of Lead Tech (Zhuhai) Electronic Co. Ltd., China for CIJ Printers, TTO Printers and a range of associated equipment and accessories for various countries such as India, Sri Lanka, Nepal, Bhutan, Bangladesh, Kenya and Nigeria. The other type of printers such as DOD and NIJ are imported by us from other foreign suppliers. After import of printers, based on the customers requirements we carry out certain functions such as printer configuration & stand installation (if required). We also carry the necessary testing and trial run to check the desired output of printers.

We procure inks from Fluidtech Corp ("Fluidtech"), a partnership firm of our Promoters, Mr. Pulin Vaidhya and Mrs. Amisha Vaidhya with which we have entered into a manufacturing and supply agreement dated December 22, 2023. Fluidtech specializes in manufacturing a diverse colours of inks, including red, black, yellow, white, green, pink and UV, which are used in the printers in which we deal in. We also have a manufacturing setup at Vatva, Ahmedabad from where we manufacture printer consumable items

i.e. makeup and cleaning solvents as well as inks as per requirement basis. As on date of this DRHP, we own two registered patents on the cartridge design in which the inks and makeup are filled. The cartridges are purchased by us from a local manufacturer, which manufactures the cartidges as per our design specifications. In order to shield from the risks associated with counterfeit products, we embed a PCB chipset on each cartridge for identification purpose.

With our registered office in Ahmedabad, we own a warehouse at Survey 252, Kanera, Kheda, Gujarat, primarily for storing imported printers. To support our growth initiatives, weve recently acquired a substantial land parcel covering two plots at Survey No. 331 and 333 in Kanera, Kheda, Gujarat, measuring a total area of 7,689 square meters. These plots are strategically located in close proximity to our existing warehouse. The building construction work, encompassing the ground and first floor, has been completed at Survey No. 333. This newly constructed space will be dedicated to printer assembling, configuring, testing, and other relevant activities. Currently, our printer testing and repairing operations are conducted at Maninagar and Vatva, both located in Ahmedabad, Gujarat.

Key Performance Indicators of our Company

Key Financial Performance	Apr.23 – Sept.23	FY 2022-23	FY 2021-22	FY 2020-21
Revenue from operations(1)	3,572.68	5,426.11	4,571.55	3,389.94
EBITDA(2)	510.46	465.84	406.14	351.17
EBITDA Margin(3)	14.29%	8.59%	8.88%	10.36%
PAT(4)	333.27	327.38	311.25	246.28
PAT Margin(5)	9.33%	6.03%	6.81%	7.27%
RoE(%)(6)	19.58%	23.60%	28.33%	29.40%
RoCE (%)(7)	22.28%	22.07%	24.86%	26.51%

Notes:

1. Revenue from operation means revenue from sales, service and other operating revenues.
2. EBITDA is calculated as Profit before tax + Depreciation + Interest Expenses - Other Income
3. ‘EBITDA Margin is calculated as EBITDA divided by Revenue from Operations
4. PAT is taken as Profit after Tax attributable to equity owner.
5. ‘PAT Margin is calculated as Profit after Tax attributable to equity owner/year divided by revenue from operations.
6. Return on Equity is ratio of Profit after Tax attributable to equity owners and Average Shareholder Equity
7. Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as shareholders Fund + Long term borrowing + Short term borrowing+ Deferred Tax Liability (net)

Explanation for KPI metrics:

KPI	Explanations
Revenue from Operations	Revenue from Operations is used by our management to track the revenue profile of the business and in turn helps to assess the overall financial performance of our Company and volume of our business
EBITDA	EBITDA provides information regarding the operational efficiency of the business
EBITDA Margin (%)	EBITDA Margin (%) is an indicator of the operational profitability and financial performance of our business
PAT	Profit after tax provides information regarding the overall profitability of the business.
PAT Margin (%)	PAT Margin (%) is an indicator of the overall profitability and financial performance of our business.
RoE(%)CAPITAL ISATION STATEMENT	RoE provides how efficiently our Company generates profits from shareholders funds.
RoCE (%)	RoCE provides how efficiently our Company generates earnings from the capital employed in the business.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to "Annexure IV of Restated Financial Statements"

beginning on page 137 of this Draft Red Herring Prospectus.

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 22 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies;
2. Changes in consumer demand;
3. Failure to successfully upgrade our product portfolio, from time to time;
4. Any change in government policies resulting in increases in taxes payable by us;
5. Our ability to retain our key managements persons and other employees;
6. Changes in laws and regulations that apply to the industries in which we operate.
7. Our failure to keep pace with rapid changes in technology;
8. Our ability to grow our business;
9. Our ability to make interest and principal payments on our existing debt obligations and satisfy the other covenants contained in our existing debt agreements;
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. Companys inability to successful implement its growth strategy and expansions plans.
13. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;
14. Inability to successfully obtain registrations in a timely manner or at all;
15. Occurrence of Environmental Problems & Uninsured Losses;
16. Conflicts of interest with affiliated companies, the promoter group and other related parties;
17. Any adverse outcome in the legal proceedings in which we are involved;
18. Concentration of ownership among our Promoter;
19. The performance of the financial markets in India and globally;
20. Global distress due to pandemic, war or by any other reason.

Discussion on Result of Operations

The following discussion on results of operations should be read in conjunction with the Restated Financial Statements for the period ended on 30^th September, 2023 and financial years ended on March 31, 2023, March 31, 2022 and March 31, 2021.

Particulars	For the 6 months period ended 30th Sept, 2023	% of Total Income	For the year ended 31st March, 2023	% of Total Income	For the year ended 31st March, 2022	% of Total Income	For the year ended 31st March, 2021	% of Total Income
	Rs. In lakhs		Rs. In lakhs		Rs. In lakhs		Rs. In lakhs
Revenue from operations	3,572.68	99.63%	5,426.11	99.51%	4,571.55	98.47%	3,389.94	97.76%
Other Income	61.35	0.37%	26.86	0.49%	71.01	1.53%	77.81	2.24%
Total Income	3,634.03	100%	5,452.97	100%	4,642.56	100%	3,467.75	100.00%
Expenses
Cost of materials consumed	2,151.88	59.21%	3,383.79	62.05%	2,899.13	62.45%	2,059.74	59.40%
Purchases of stock-in- trade	208.17	5.73%	191.44	3.51%	168.96	3.64%	-	-
Changes in inventories of finished goods & WIP	-2.32	-0.06%	-	-	-	-	-	-
Employee benefits expenses	352.31	9.69%	605.68	11.11%	483.21	10.41%	440.76	12.71%
Finance costs	25.40	0.70%	38.78	0.71%	36.53	0.79%	56.55	1.63%
Depreciation and amortisation expense	10.23	0.28%	29.66	0.54%	31.91	0.69%	38.45	1.11%
Other Expense	350.16	9.64%	772.73	14.17%	608.85	13.11%	529.55	15.27%
Total Expenses	3,095.82	85.19%	5,022.08	92.10%	4,228.59	91.08%	3,125.06	90.12%
Profit / (Loss) before exceptional and extra- ordinary items and tax	538.20	14.81%	430.88	7.90%	413.97	8.92%	342.70	9.88%
Exceptional and Extra- ordinary items	-	-	-	-	-	-	-	-
Profit Before Tax	538.20	14.81%	430.88	7.90%	413.97	8.92%	342.70	9.88%
Tax Expense:
(a) Current tax expense	137.60	3.79%	110.00	2.02%	106.00	2.28%	99.85	2.88%
(b) Short/(Excess) Provision of Earlier Year	-	-	-0.10	0.00%	-	-	-0.09	0.00%
(c) Deferred Tax	67.34	1.85%	-6.40	-0.12%	-3.29	-0.07%	-3.35	-0.10%
Profit After Tax	333.27	9.17%	327.38	6.00%	311.25	6.70%	96.41	2.78%

Revenue from operations:

Revenue from operations mainly consists of sale of Printers, Makeup, inks, cleaning solvent, AMC charges and related spares, accessories and other items. It also consists sale of scrap and operating income from Export Duty Drawback and MEIS license sale income.

Other Income:

Our other income primarily comprises of Gain on Sale of Mutual Funds, Profit on Sale of Vehicle, Currency Rate Differences, Balance Written Off, Interest from Fixed Deposits, Interest on IT Refund etc.

Expenses:

Companys expenses consist of Cost of materials Consumed, Purchases of stock-in-trade, Change in inventories of finished goods, work in progress and stock in trade, Employee benefits expenses, Finance costs, Depreciation and amortization expense and Other Expense.

Cost of Raw material consumed:

Our raw material consumption comprises of purchase of material, changes in the inventory of raw material for manufacturing the end products.

Purchases of stock-in-trade:

Our purchase of stock-in-trade comprises purchase of Inks as stock.

Change in inventories of finished goods, work in progress and stock in trade:

Our changes in the inventory comprises of Change in inventories of finished goods.

Employee benefits expense:

Our employee benefits expense primarily comprises of Salary and Wages, Including Bonus & Incentive Remuneration to Directors & MD, Contribution to PF and Other Funds, Staff Welfare Expenses and Gratuity Expense.

Finance Costs:

Our finance cost includes Interest expense and Other Borrowing cost.

Depreciation and Amortization Expenses:

Depreciation includes depreciation on Property, Plant & Equipments, furniture and intangible assets etc.

Other Expenses:

Our other expenses include Discount on Sales, Freight & Transportation Expenses, Inspection and Lab Testing Charges, C & F Charges, Custom Duty Expenses, Packing Expenses, Worker Salary Expenses, Stores & Spares, Audit Fees, Currency Rate Differences, Donation Expenses, Bad Debts, Legal & Professional Expenses, Telephone Expenses, Rent Expenses, Repairs and Maintenance, Repairs to Buildings, Repairs of Machinery, Repairs of Others, Petrol Expenses Travelling Expenses, Security and Safety Charges, Sundry Balance Written off, Interest and Late Fees on Statutory Dues, Insurance Expenses, Internet Expenses, Kasar and Vatav, Office Expenses, Postage and Courier Expenses, Web Servicing Expenses, BIS Licence Registration Fees, Other Membership, Licence and Subscription Fees, Stationery and Printing Expenses, Tea and Refreshment Expenses, Software Programming Expenses, Preliminary Expense written off, ROC Compliance Fees, Electrical Expenses, Electricity Expenses, Entertainment Expenses, Rates and Taxes, Advertisement Expenses, Commission and Incentive Expenses and Exhibition Expense.

Details of Period ended September 30, 2023 (Based on Restated Financial Statements)

Total Income:

Total income for the period ended September 30, 2023 stood at Rs. 3,634.03 Lakhs. Total income consists of revenue from operation and other Income.

Revenue from Operations:

Revenue from operations for the period ended September 30, 2023 stood at Rs. 3,572.68 Lakhs. Revenue from operations mainly consists of sale of manufactured goods, traded goods and related services. It also consists sale of scrap and operating income from Export Duty Drawback and MEIS license sale income

Other Income:

Other Income for the period ended September 30, 2023 stood at Rs. 61.35 Lakhs. Our other income primarily comprises of Gain on Sale of Mutual Funds, Currency Rate Differences, Balance Written Off, Interest from Fixed Deposits and Interest on IT Refund.

Total Expenses:

Total Expenses for the period ended September 30, 2023 stood at Rs. 3,095.82 Lakhs. Companys expenses consist of Cost of materials Consumed, Purchases of stock-in-trade, Change in inventories of finished goods, work in progress and stock in trade, Employee benefits expenses, Finance costs, Depreciation and amortization expense and Other Expense.

Cost of Raw material consumed:

Cost of Raw material consumed for the period ended September 30, 2023 stood at Rs. 2,151.88 Lakhs. Our Raw Material Consumption comprises of purchase of material, changes in the inventory of raw material for manufacturing the end products.

Purchases of stock-in-trade:

Our purchase of stock-in-trade for the period ended September 30, 2023 stood at Rs. 208.17 Lakhs. It comprises purchase of Inks as stock-in-trade.

Change in inventories of finished goods, work in progress and stock in trade:

Change in inventories for the period ended September 30, 2023 stood at Rs. (2.32) Lakhs. Our changes in the inventory comprises of changes in the finished goods.

Employee benefits expense:

Employee benefit expenses for the period ended September 30, 2023 stood at Rs. 340.46 Lakhs. Our employee benefits expense primarily comprises of Salary and Wages, Including Bonus & Incentive Remuneration to Directors & MD, Contribution to PF

and Other Funds, Staff Welfare Expenses and Gratuity Expense.

Finance costs:

Finance Cost for the period ended September 30, 2023 stood at Rs. 25.40 Lakhs. Our finance cost includes Interest expense and Other Borrowing cost.

Depreciation and Amortization Expenses:

Depreciation for the period ended September 30, 2023 stood at Rs. 10.23 Lakhs. Depreciation includes depreciation on Property,

Plant & Equipments, furniture and intangible assets etc.

Other expense:

Other expenses for the period ended September 30, 2023 stood at Rs. 362.01 Lakhs. Our other expenses include Discount on Sales, Freight & Transportation Expenses, Inspection and Lab Testing Charges, C & F Charges, Custom Duty Expenses, Packing Expenses, Worker Salary Expenses, Stores & Spares, Audit Fees, Currency Rate Differences, Donation Expenses, Bad Debts, Legal & Professional Expenses, Telephone Expenses, Rent Expenses, Repairs and Maintenance, Repairs to Buildings, Repairs of Machinery, Repairs of Others, Petrol Expenses Travelling Expenses, Security and Safety Charges, Sundry Balance Written off, Interest and Late Fees on Statutory Dues, Insurance Expenses, Internet Expenses, Kasar and Vatav, Office Expenses, Postage and Courier Expenses, Web Servicing Expenses, BIS Licence Registration Fees, Other Membership, Licence and Subscription Fees, Stationery and Printing Expenses, Tea and Refreshment Expenses, Software Programming Expenses, Preliminary Expense written off, ROC Compliance Fees, Electrical Expenses, Electricity Expenses, Entertainment Expenses, Rates and Taxes, Advertisement Expenses, Commission and Incentive Expenses and Exhibition Expense.

Restated Profit/ (Loss) before tax:

Restated Profit before tax for the period ended September 30, 2023 stood at Rs. 538.20 Lakhs.

Restated Profit/ (Loss) after tax:

Restated Profit after tax for the period ended September 30, 2023 stood at Rs. 333.27 Lakhs.

Financial Year 2023 Compared to Financial Year 2022 (Based on Restated Financial Statements)

Total Income:

Total income for the financial year 2022-23 stood at Rs. 5,452.97 Lakhs as compared to Rs. 4,642.56 Lakhs in financial year 2021-22 representing an increase of 17.46%. Such Increase was due to increase in business operations of the Company.

Revenue from Operations:

During the financial year 2022-23, the revenue from operations of our company increased to Rs. 5,426.11 Lakhs as against Rs. 4,571.55 Lakhs in financial year 2021-22, representing an increase of 18.69%. The main reason of increase was due to increase in the sale of Printers from 1450.11 Lakhs in the FY. 2021-22 as compared to Rs. 1694.60 Lakhs in the financial year 2022-23 representing an increase of 16.86% and sale of manufactured goods (make up, wash and ink) from 2268.62 Lakhs in the FY. 2021-22 as compared to Rs. 2760.90 Lakhs in the financial year 2022-23 representing an increase of 21.70%.

Other Income:

During the financial year 2022-23, the other income of our company decreased to Rs. 26.86 Lakhs as against Rs. 71.01 Lakhs in financial year 2021-22, representing a decrease of 62.17%. The decrease in other income was due to decrease in Currency Rate Differences from

24.14 lakhs in the FY. 2021-22 as compared to Rs. 0.00 Lakhs in the FY. 2022-23 representing a decrease of 100% and decrease in Gain on Sale of Mutual Funds from Rs. 35.54 Lakhs in the FY. 2021-22 as compared to Rs. 8.59 Lakhs in FY 2022-23 representing a decrease of 75.84%.

Total Expenses:

Total expenses for the financial year 2022-23 increased to Rs 5,022.08 Lakhs as compared to Rs. 4,228.59 Lakhs in financial year 2021- 22 representing an increase of 18.76%. Such Increase was due to increase in the volume of business operations of the company.

Cost of Raw material consumed:

The cost of raw material consumed for the financial year 2022-23 stood at 3,383.79 Lakhs against Rs. 2,899.13 Lakhs in the Financial Year 2021-22 representing an increase of 16.72%. Such increase was due to increase in purchase of raw material from 2,997.63 Lakhs in FY. 2021-22 as compared to Rs. 3,348.56 Lakhs in FY 2022-23 representing an increase of 11.71% and also increase in opening stock from 62.25 Lakhs in FY. 2021-22 as compared to Rs. 160.75 Lakhs in FY 2022-23 representing an increase of 158.23%.

Purchases of stock-in-trade:

The Purchases of stock-in-trade for the financial year 2022-23 stood at 191.44 Lakhs against Rs. 168.96 Lakhs in the Financial Year 2021-22 representing an increase of 13.30%. Such increase in purchase of stock-in-trade due to increase in purchase of inks from 168.96 Lakhs in FY. 2021-22 as compared to Rs. 191.44 Lakhs in FY 2022-23 representing an increase of 13.30%

Change in inventories of finished goods, work in progress and stock in trade:

The Change in inventories of finished goods, work in progress for financial year 2022-23 has been reported Nil.

Employee benefits expense:

Our company has incurred Rs. 605.68 Lakhs as employee benefit expenses during the financials year 2022-23 as compared to Rs. 483.21

Lakhs in the financial year 2021-22 representing an increase of 25.34%. Such increase was due to increase in (i) Salary and Wages, Including Bonus & Incentive from 306.10 lakhs in FY. 2021-22 as compared to Rs. 394.79 Lakhs in FY. 2022-23 which amount to increase of 28.97%; (ii) Staff welfare expenses from 25.86 lakhs in FY. 2021-22 as compared to Rs. 47.35 Lakhs in FY. 2022-23 which amount to increase of 83.09%; (iii) Gratuity from Rs. 8.42 lakhs in FY. 2021-22 as compared to Rs. 11.70 Lakhs in FY. 2022-23 which amount to increase of 38.97%;

Finance costs:

These costs were for the financial Year 2022-23 increased to Rs. 38.78 Lakhs as against Rs. 36.53 Lakhs during the financial year 2021- 22, representing an increase of 6.17%. Such increase was due to increase in (i) Interest on Bill Discounting Facility (Buyers Credit) from

1.16 lakhs in FY. 2021-22 as compared to Rs 8.15 Lakhs in FY. 2022-23 which amount to increase of 604.81%; (ii) Interest on Term Loan from 0.12 lakhs in FY. 2021-22 as compared to Rs. 2.85 Lakhs in FY. 2022-23 which amount to increase of 2363.55%; (iii) Interest on cash credit facility is decrease from Rs. 3.77 lakhs in FY. 2021-22 as compared to Rs. 0.86 Lakhs in FY. 2022-23 which amount to decrease of 77.20%.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2022-23 stood at Rs. 29.66 Lakhs as against to Rs. 31.91 Lakhs in financial year 2021- 22 representing a decrease of 7.04%.

Other expense:

Our company has incurred Rs. 772.73 Lakhs as other expenses during the financials year 2022-23 as compared to Rs. 608.85 Lakhs in the financial year 2021-22 representing an increase of 26.92%. Such increase was due to increase in (i) Inspection and Lab Testing Charges from Rs. 2.18 lakhs in FY. 2021-22 as compared to Rs. 3.23 Lakhs in FY. 2022-23 which amount to increase of 48.16%; (ii) Custom duty Expenses from Rs. 29.39 lakhs in FY. 2021-22 as compared to Rs. 58.17 Lakhs in FY. 2022-23 which amount to increase of 97.94%; (iii) Bad debts from Rs. 16.51 lakhs in FY. 2021-22 as compared to Rs. 50.09 Lakhs in FY. 2022-23 which amount to increase of 203.34%; (iv) Repairs to Buildings from Rs. 0.43 lakhs in FY. 2021-22 as compared to Rs. 0.74 Lakhs in FY. 2022-23 which amount to increase of 71.93%; (v) Repairs of Machinery from Rs. 0.68 lakhs in FY. 2021-22 as compared to Rs. 2.30 Lakhs in FY. 2022-23 which amount to increase of 237.36%; (vi) Petrol Expenses from Rs. 9.17 lakhs in FY. 2021-22 as compared to Rs. 17.29 Lakhs in FY. 2022-23 which amount to increase of 88.56%; (vii) Travelling Expenses from Rs. 107.40 lakhs in FY. 2021-22 as compared to Rs. 165.08 Lakhs in FY. 2022-23 which amount to increase of 53.71%; (viii) Exhibition Expenses from Rs. 4.70 lakhs in FY. 2021-22 as compared to Rs. 11.80 Lakhs in FY. 2022-23 which amount to increase of 150.99%, (ix) Office Expenses from Rs. 4.11 lakhs in FY. 2021-22 as compared to Rs. 11.11 Lakhs in FY. 2022-23 which amount to increase of 170.08%, (x) Postage and Courier Expenses from Rs. 49.61 lakhs in FY. 2021-22 as compared to Rs. 70.01 Lakhs in FY. 2022-23 which amount to increase of 41.11%, (xi) Stationery and Printing Expenses from Rs. 2.81 lakhs in FY. 2021-22 as compared to Rs. 4.72 Lakhs in FY. 2022-23 which amount to increase of 67.98%, (xii) Currency rate difference from Rs. 0.00 lakhs in FY. 2021-22 as compared to Rs. 35.26 Lakhs in FY. 2022-23.

Restated Profit/ (Loss) before tax:

Restated Profit before Tax for the financial year 2022-23 was Rs. 430.88 Lakhs as compared to Restated profit before tax of Rs. 413.97 Lakhs during the financial year 2021-22 which amounts to increase was majorly due to factors as mentioned above.

Restated Profit/ (Loss) after tax:

Restated Profit after Tax for the financial year 2022-23 was Rs. 327.38 Lakhs as compared to Restated profit after tax of Rs. 311.25 Lakhs during the financial year 2021-22.

Financial Year 2022 Compared to Financial Year 2021 (Based on Restated Financial Statements)

Total Income:

Total income for the financial year 2021-22 stood at Rs. 3467.75 Lakhs as compared to Rs. 4642.56 Lakhs in financial year 2020-21 representing an increase of 33.88%. The main reason for Increase was increase in revenue from operation and Other Operating revenue due to increase of Business operations.

Revenue from Operations:

During the financial year 2021-22, the revenue from operations of our company increased to Rs. 4571.55 Lakhs as against Rs. 3389.94 Lakhs in financial year 2020-21, representing an increase of 34.86%. The main reason of increase was due to increase in the sale of Printers from 1088.38 Lakhs in the FY. 2020-21 as compared to Rs. 1450.11 Lakhs in the financial year 2021-22 representing an increase of 33.24% and sale of manufactured goods (make up, wash and ink) from 1846.26 Lakhs in the FY. 2020-21 as compared to Rs. 2268.62 Lakhs in the financial year 2021-22 representing an increase of 22.88%. Sale of traded goods (Ink) from 0.00 Lakhs in the FY. 2020-21 as compared to Rs. 310.21 Lakhs in the financial year 2021-22.

Other Income:

During the financial year 2021-22, the other income of our company decreased to Rs. 71.01 Lakhs as against Rs. 77.81 Lakhs in financial year 2020-21, representing a decrease of 8.74%. Such Decrease was due to decrease in Currency rate difference from Rs. 51.75 in FY 20-21 as compared to Rs. 24.14 Lakhs in FY. 21-22 representing a decrease of 53.35%.

Total Expenses:

Total expenses for the financial year 2021-22 increased to Rs. 4228.59 Lakhs as compared to Rs. 3125.06 Lakhs in financial year 2020- 21 representing an increase of 35.31%.

Cost of Raw material consumed:

The cost of raw material consumed for the financial year 2021-22 stood at 2899.13 Lakhs against Rs. 2059.74 Lakhs in the Financial Year 2020-21 representing an increase of 40.75%. Such increase was due to increase in Purchase made during the year from 2032.23 Lakhs in 20-21 as compared to 2997.63 in FY. 21-22 representing an increase of 47.50%.

Change in inventories of finished goods, work in progress and stock in trade:

The Change in inventories of finished goods, work in progress for financial year 2021-22 has been reported Nil.

Employee benefits expense:

Our company has incurred Rs. 483.21 Lakhs as employee benefit expenses during the financials year 2021-22 as compared to Rs. 440.76 Lakhs in the financial year 2020-21 representing an increase of 9.63%. Such increase was due to increase in

(i) Salary and Wages, Including Bonus & Incentive from Rs. 269.42 Lakhs in 20-21 as compared to 306.10 in FY. 21-22 representing an increase of 13.62%; (ii) Gratuity from Rs. 3.54 Lakhs in 20-21 as compared to Rs. 8.42 in FY. 21-22 representing an increase of 137.85%.

Finance costs:

These costs were for the financial Year 2021-22 decreased to Rs. 56.55 Lakhs as against Rs. 36.53 Lakhs during the financial year 2020- 21, representing a decrease of 35.41% due to decrease in (i) Bank charges including Commission and Loan Processing Charges from Rs.

8.71 Lakhs in FY. 20-21 as compared to Rs. 5.25 Lakhs in FY. 21-22 representing a decrease of 39.69%; (ii) Interest on Cash Credit Facility from Rs. 6.27 Lakhs in FY. 20-21 as compared to Rs. 3.77 Lakhs in FY. 21-22 representing a decrease of 39.92%. (iii) Interest on unsecured loan from Rs. 34.78 Lakhs in FY. 20-21 as compared to Rs. 20.31 Lakhs in FY. 21-22 representing a decrease of 41.61%.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2021-22 stood at Rs. 31.91 Lakhs as against to Rs. 38.45 Lakhs in financial year 2020- 21 representing a decrease of 17.00%.

Other expense:

Our company has incurred Rs. 608.85 Lakhs as other expenses during the financials year 2021-22 as compared to Rs. 529.55 Lakhs in the financial year 2020-21 representing an increase of 14.97% due to increase in (i) Freight & Transportation Expenses from Rs. 7.77 Lakhs in FY. 20-21 as compared to Rs. 22.53 Lakhs in FY. 21-22 representing an increase of 190.02%; (ii) Legal and Professional Expenses from Rs. 7.72 Lakhs in FY. 20-21 as compared to Rs. 35.77 Lakhs in FY. 21-22 representing an increase of 363.52%; (iii) Petrol expenses from Rs. 3.60 Lakhs in FY. 20-21 as compared to Rs. 9.17 Lakhs in FY. 21-22 representing an increase of 154.91%; (iv) Rates and taxes from Rs. 1.58 Lakhs in FY. 20-21 as compared to Rs. 10.54 Lakhs in FY. 21-22 representing an increase of 566.14%;

(v) Postage & Courier charges from Rs. 40.32 Lakhs in FY. 20-21 as compared to Rs. 49.61 Lakhs in FY. 21-22 representing an increase of 23.06%; (viii) Commission and incentives expenses from Rs. 67.66 Lakhs in FY. 20-21 as compared to Rs. 90.34 Lakhs in FY. 21-22 representing an increase of 33.51%; (ix) Exhibition expense from Rs. 0.93 Lakhs in FY. 20-21 as compared to Rs. 4.70 Lakhs in FY. 21- 22 representing an increase of 407.70%.

Restated Profit/ (Loss) before tax:

Restated Profit before Tax for the financial year 2021-22 was Rs. 413.97 Lakhs as compared to Restated profit before tax of Rs. 342.70 Lakhs during the financial year 2020-21. The increase was majorly due to factors as mentioned above.

Restated Profit/ (Loss) after tax:

Restated Profit after Tax for the financial year 2021-22 was Rs. 311.25 Lakhs as compared to Restated profit after tax of Rs.

246.28 Lakhs during the financial year 2020-21.

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

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

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.

There are no significant economic changes that may materially affect or 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 sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 22 of the 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

Other than as described in the sections "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 22, 89 and 170 respectively, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

5. Total turnover of each major industry segment in which our Company operates

Our business activity primarily falls within a single business and geographical segment.

6. Status of any publicly announced New Products or Business Segment

Except as disclosed in the Chapter "Our Business" on page 89, our Company has not announced any new product or service.

7. Seasonality of business

Our business is not subject to seasonality. For further information, see "Industry Overview" and "Our Business" on pages 76 and 89, respectively.

8. Dependence on single or few customers

We are dependent upon few customers. For details, please refer to risk factor "Substantial portion of our revenues has been dependent upon few customers, with which we do not have any firm commitments. The loss of any one or more of our major customer would have a material adverse effect on our business, cash flows, results of operations and financial condition."

9. Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Our Business" beginning on pages 76 and 89 respectively of this Draft Red Herring Prospectus.

10. Details of material developments after the date of last balance sheet i.e. September 3, 2023.

After the date of last Balance sheet i.e. September 30, 2023, the following material events have occurred after the last audited period:

1. Our company has allotted Bonus Shares to the existing shareholders of the company in the ratio of 4:1 i.e. 4 bonus shares to every 1 share held by shareholders on 05/10/2023.
2. Company was converted from private limited to public limited, pursuant to a special resolution passed by the shareholders of our Company on November 08, 2023 and the name of the Company was changed from "Aztec Fluids & Machinery Private Limited" to "Aztec Fluids & Machinery Limited" vide fresh certificate of incorporation dated November 24, 2023, issued by the Registrar of Companies, Ahmedabad.