dcx systems ltd share price Management discussions


The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Financial Information on page 221. Unless otherwise indicated or the context otherwise requires, the financial information for Fiscal 2019, 2020 and 2021 and the nine months ended December 31, 2020 and December 31, 2021 included herein is derived from the Restated Financial Information, included in this Draft Red Herring Prospectus, which have been derived from our audited financial statements and restated in accordance with the SEBI ICDR Regulations and the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the ICAI, as amended from time to time, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. For further information, see "Restated Financial Information" on page 221.

Unless the context otherwise requires, in this section, references to "our Company", "the Company", "we", "us" and "our" refer to DCXSystems Limited.

Unless otherwise indicated, industry and market data used in this section has been derived from the industry report titled "The Evolving Defence Technology Industry Base and Opportunities in the Defence Electronics Segment" dated March 29, 2022 (the "F&S Report") prepared and issued by Frost & Sullivan (India) Private Limited, appointed by us on January 7, 2022, and exclusively commissioned and paid for by us in connection with the Offer. A copy of the F&S Report is available on the website of our Company at https://dcxindia. com/investors. The data included herein includes excerpts from the F&S Report and may have been re-ordered by us for the purposes ofpresentation. There are no parts, data or information (which may be relevant for the proposed Offer), that has been left out or changed in any manner. Unless otherwise indicated, financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, see "Risk Factors - Industry information included in this Draft Red Herring Prospectus has been derived from an industry report commissioned and paid for by our Company for such purpose. " on page 49. Also see, "Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation - Industry and Market Data " on page 13.

OVERVIEW

We are among the leading Indian players for the manufacture of electronic sub-systems and cable harnesses in terms of manufacturing capability and revenue in Fiscal 2021 (Source: F&S Report). We are primarily engaged in system integration and manufacturing a comprehensive array of cables and wire harness assemblies and are also involved in kitting. We commenced operations in 2011 and have been a preferred Indian Offset Partner ("IOP") for foreign original equipment manufacturers ("OEMs") for executing defence manufacturing projects (Source: F&S Report). We are a rapidly growing company in the Indian defence space (Source: F&S Report) and our revenue from operations have grown at a CAGR of 46.22% between Fiscal 2019 and Fiscal 2021 We are also one of the largest Indian Offset Partner ("IOP") for ELTA Systems Limited and Israel Aerospace Industries Limited, System Missiles and Space Division (together, the "IAI Group"), Israel, for the Indian defence market for manufacture of electronic sub-systems and cable and wire harness assemblies. Over the years, we have expanded our manufacturing capabilities and grown our order book.

The growing Indian landscape for defence and aerospace serves as a key opportunity for our Company. The Indian aerospace and defence sector is poised to attain a value of USD 70 billion by 2030. Recent initiatives like increase in foreign direct investment ("FDI") in the Indian defence sector from the currenRs 49% to 74% under the automatic route and up to 100% under the government approval route is anticipated to be a key driver and growth opportunity for the market. The Defence Research and Development Organization has announced the indigenous development of roughly 108 systems and sub-systems which is expected to generate demand for cables and connectors across the Indian defence environment. The Indian government has also banned approximately 101 items within the defence-based imports segment. These initiatives are expected to boost indigenous manufacturing within India. The instating of defence industry corridors across Uttar Pradesh and Tamil Nadu is also poised to improve the market growth dynamics by broadening the opportunities offered to the private sector. (Source: F&S Report) All of these in turn, serve as an opportunity for us to capitalize on the expected growth in this space.

We believe, our competitive advantages include our efficiency in operations resulting in timely delivery to our customers, maintaining quality control and product security. This has enabled us to develop long-term and entrenched relationships with our OEM customers that has resulted in growth in our operations and sizeable order

book. We expect that our quality management systems will enable our system driven efficiency and continue to attract higher revenues going forward. Given the nature of our operations and industry that we operate in, projects have long lead times (Source: F&S Report) and, as such, visibility and predictability of our revenues is high. Our Companys order book has increased from Rs 10,423.01 million, as of March 31, 2019 to Rs 28,550.18 million, as of March 31, 2021. As of February 28, 2022, our order book was Rs 24,992.98 million to be executed in the Fiscal 2023 and Fiscal 2024.

We classify our operations under the following business verticals:

System Integration: We undertake system integration in areas of radar systems, sensors, electronic warfare, missiles, and communication systems. We provide product assembly and system integration services of various complexities to address customers requirements. System integration services are part of a comp rehensive array of electronics and electro-mechanical assembly and enclosure assembly. We also provide product repair support for the parts that we manufacture.

Cable and Wire Harness Assemblies: We manufacture a comprehensive array of cables and wire harnesses assemblies such as radio frequency cables, co-axial, mixed signal, power, and data cables for a variety of uses including communication systems, sensors, surveillance systems, missile systems, military armoured vehicles, and other electronic warfare systems for the aerospace and defence industries as per our customers requirements.

Kitting: We supply assembly ready kits of electronic and electro-mechanical parts and undertake all aspects of procurement including sourcing components from suppliers approved by our customer along with a ‘Certificate of Compliance for traceability, controlled storage of moisture sensitive devices to ensure that customers receive complete, assembly-ready kits when required when they are needed for production.

In addition, we also undertake certain job work services that includes assembly and testing of materials that have been supplied directly by our customers.

The table below shows our revenue from operations for the periods indicated as per our business verticals:

Verticals Fiscal Nine months ended December 31, 2020 Nine months ended December 31, 2021
2019 2020 2021
Amount (Rs million) Percentage of Revenue from Operations (%) Amount (Rs million) Percentage of Revenue from Operations (%) Amount (Rs million) Percentage of Revenue from Operations (%) Amount (Rs million) Percentage of Revenue from Operations (%) Amount (Rs million) Percentage of Revenue from Operations (%)
System Integration* 2,508.60 83.66% 3,717.65 82.75% 6,160.67 96.09% 5,345.29 97.45% 6,391.98 87.77%
Cable and Wire Harness Assemblies** 243.94 8.13% 333.14 7.42% 195.84 3.05% 125.91 2.30% 197.87 2.72%
Kitting 246.18 8.21% 441.83 9.83% 55.12 0.86% 13.71 0.25% 692.51 9.51%
Total 2,998.72 100.00% 4,492.62 100.00% 6,411.63 100.00% 5,484.91 100.00% 7,282.36 100.00%

* Includes Merchandise Exports from India Scheme ("MEIS") incentive of Rs 50.92 million, Rs 60.93 million, Rs 28.28 million, Rs 17.99 million and Rs 20.00 million in Fiscal 2019, 2020 and 2021 and in the nine months ended December 31, 2020 and December 31, 2021, respectively.

** Includes MEIS incentive ofRs 1.03 million, t5.83 million, t0.03 million, t 0.03 million and nil in Fiscal 2019, 2020 and 2021 and in the nine months ended December 31, 2020 and December 31, 2021, respectively.

We operate through our manufacturing facility located at the Hi-Tech Defence and Aerospace Park SEZ in Bengaluru, Karnataka. Our facility is spread over an area of 30,000 square feet and is set up for complete in-house environmental and electrical testing and wire processing. The location of our facility is in the same city as certain of our key domestic customers like Bharat Electronics Limited, Alpha Design Technologies Private Limited, Alpha Elsec Defence and Aerospace Systems Private Limited and Centum Adeno India Private Limited which, we believe, ensures shorter delivery time.

As of December 31, 2021, we had 26 customers in Israel, United States, Korea and India, including certain Fortune 500 companies, multinational corporations and start-ups. Our customers include domestic and international OEMs, and private companies and public sector undertakings in India across different sectors, ranging from defence and aerospace to space ventures and railways. We have a mix of domestic and international customers and certain of our key customers include Elta Systems Limited, Israel Aerospace Industries Limited - System

Missiles and Space Division, Bharat Electronics Limited, Astra Rafael Comsys Private Limited, Alpha-Elsec Defense and Aerospace Systems Private Limited, Alpha Design Technologies Private Limited, Astra Microwave Products Limited, Kalyani Rafael Advanced Systems Private Limited, SFO Technologies Private Limited and DCX-Chol Enterprises Inc.

We are led by experienced Promoters and a qualified senior management team with significant experience in the aerospace and defence manufacturing industry. Dr. H.S. Raghavendra Rao, our Individual Promoter, Chairman and Managing Director, has over two decades of experience in electronics manufacturing and in the defence and aerospace sectors. Neal Jeremy Castleman, our Non-Independent and Non-executive Director, has a vast experience of more than two decades in the field of electronic manufacturing sectors. Our senior management team have demonstrated ability to anticipate and capitalize on changing market trends, manage and grow our operations and leverage and deepen customer relationships.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Our results of operations have been, and will continue to be, affected by a number of events and actions, some of which are beyond our control. However, there are some specific items that we believe have impacted our results of operations and, in some cases, will continue to impact our results. We believe that the following factors, amongst others, have, or could have, an impact on these results, the manner in which we generate income and incur the expenses associated with generating this income.

Maintaining our customer relationships

Our customers typically have specific requirements, and we believe that our continued relationships with our customers plays a significant role in determining our continued success and results of operations. We are also the largest IOP for M/s. IAI Group, Israel, for the Indian defence market for manufacture of electronic sub-systems (Source: F&S Report). We primarily cater to the requirements of the export, both direct and deemed exports, markets in the aerospace and defence industry. Our customers include domestic and international OEMs, and private companies and public sector undertakings in India across different sectors, ranging from defence and aerospace to space ventures. We have strong and long-established relationships with most of our customers.

The demand for our products from our customers has a significant impact on our results of operations and financial condition and our sales are particularly affected by the inventory and sales levels of our key customers. In the event that we lose one or more of our key customers or if the amount of business we receive from them is reduced for any reason, our cash flows and results of operations may be affected. Our supply arrangements with our customers also require us to meet certain standards and performance obligations and our failure to meet such specifications could result in a reduction of business from them, termination of contracts or additional costs and penalties, all of which may adversely impact our results of operations and financial condition.

Our Order Book position

Our order book is computed based on the total order value from a customer less executed amount as on the relevant date. The following table sets forth details of our order book as per our business verticals for the periods indicated.

Verticals Fiscal Nine months ended December 31, 2020 Nine months ended December 31, 2021
2019 2020 2021
Amount (Rs million) Percentage of Total Order Book(%) Amount (Rs million) Percentage of Total Order Book(%) Amount (Rs million) Percentage of Total Order Book(%) Amount (Rs million) Percentage of Total Order Book (%) Amount (Rs million) Percentage of Total Order Book(%)
System Integration 9,804.46 94.06% 18,938.09 97.56% 25,592.23 89.64% 26,397.33 90.05% 24,206.59 91.98%
Cable and Wire Harness Assemblies 92.57 0.89% 390.87 2.01% 471.77 1.65% 390.00 1.33% 316.13 1.20%
Kitting 525.98 5.05% 84.15 0.43% 2,486.18 8.71% 2,527.59 8.62% 1,793.67 6.82%
Total 10,423.01 100.00% 19,413.11 100.00% 28,550.18 100.00% 29,314.92 100.00% 26,316.39 100.00%

As of February 28, 2022, our order book comprised 52 orders aggregating Rs 24,992.98 million which comprised orders amounting to Rs 23,557.25 million towards our system integration vertical, order amounting to Rs 1,168.98 million towards our kitting activities and Rs 266.74 million towards cable and wire harness assemblies.

Our order book position with our customers also require us to meet certain standards and performance obligations and our failure to meet such specifications could result in a reduction of business from them, termination of orders or additional costs and penalties, all of which may adversely impact our results of operations and financial condition.

Indian defence budget brief andforecast

Indias defence budget outlay for Fiscal 2023 is Rs 5,250,000 million, the annual budget representing a 10% increase over the budget of Rs 4,780,000 million in Fiscal 2022. The Indian defence budget has experienced a CAGR of 14.3% between the period Fiscals 2017 to 2023. (Source: F&SReport)

Defence exports of India

Due to relaxation of export limitations and policy changes, Indian defence exports are expected to rise rapidly. This is supported by the expanding capabilities of Indian defence suppliers. In comparison to defence public sector entities, the private sector now dominates Indian defence exports, which is expected to drive income prospects. Organizations such as our Company are well positioned to capture the growth in exports. The Government of India has set a target for US$ 25 billion for defence production by 2025. It includes US$ 5 billion in exports. In the next five years, India aims to export military hardware products worth US$ 5 billion. Additionally, the value of Indias defence exports in Fiscal 2020 was US$ 1,231.9 million and this moderated to US$ 771.8 million in Fiscal 2021. A dip in the exports for the year 2020 to 2021 is largely attributed to manufacturing disruptions and supply chain which have eased now. Indias cumulative weapon import value fell by 33% between 2011 - 2015 and 2016 - 2020. This is a strong indication that efforts to boost capabilities and sourcing from the local defence industry have paid off. (Source: F&S Report)

The defence exports from Fiscal 2015 to Fiscal 2021, are shown below:

(Source: F&S Report)

While we believe that our programmes are well aligned with Indias national defence and aerospace policies, shifts in market spending and tax policy, changes in security levels, defence, and intelligence priorities, general economic conditions and developments, and other factors may affect a decision to fund, or the amount of funding available to, existing or proposedprojects. Although we cater to our overseas customers directly, we may seek to expand this customer base by tying up with or entering into partnership with partners located around the world. Our future growth also depends on penetrating new international markets as well as remaining a key supplier to strategic sectors, adapting existing products to new applications, and introducing new products that achieve market acceptance.

Changes in applicable regulations have had and may have an impact on our business and results of operations. Our results of operations have been favourably impacted by the Governments initiatives. The Ministry of Defence has announced the Defence Acquisition Procedure which has come into effect from October 1, 2020. This procedure focuses on significantly boosting indigenous production and turning India into a global manufacturing hub of weapons and military platforms. This procedure has been aligned with the vision of the Governments Atmanirbhar Bharat initiative and to empower Indian domestic defence industry through ‘Make in India projects (Source: F&S Report). We believe that this policy will provide a significant boost to indigenous manufacturing companies with design and manufacturing capabilities and we are positioned through vertical integration of the business

model to take full benefit of the same. We believe this represents a significant opportunity for growth as we expand our products and solutions portfolio to designing, developing and/or manufacturing new products and solutions, which in turn will enable us to establish new customer bases and penetrate new geographies.

Availability and cost of raw materials

Our primary raw materials are electronic assemblies and sub-systems such as printed circuit board assemblies, power supplies, radio frequency cables and wires, radio frequency connectors, circular connectors, integrated circuits and mechanical enclosures. The following table sets out certain information about our raw materials expenditure in Fiscal 2019, 2020, 2021 and in the nine months ended December 31, 2020 and December 31, 2021:

Raw material Fiscal Nine months ended December 31, 2020 Nine months ended December 31, 2021
2019 2020 2021
Total Purchase Amount (Rs million) Percentage of Total Purchase Amount (%) Total Purchase Amount (Rs million) Percentage of Total Purchase Amount (%) Total Purchase Amount (Rs million) Percentage of Total Purchase Amount (%) Total Purchase Amount (Rs million) Percentage of Total Purchase Amount (%) Total Purchase Amount (Rs million) Percentage of Total Purchase Amount (%)
Printed Circuit Board Assemblies 2,148.00 80.59% 1,882.80 39.33% 3,055.30 41.13% 2,442.34 39.60% 2,343.60 46.70%
Integrated Circuits 190.90 7.16% 1,818.60 37.99% 3,446.80 46.39% 3,248.38 52.66% 1,853.20 36.93%
Power Supplies 148.30 5.56% 868.20 18.14% 464.10 6.25% 207.12 3.36% 603.60 12.03%
Cables and Wires 41.18 1.54% 75.20 1.57% 35.80 0.48% 31.25 0.51% 57.80 1.15%
Connectors 109.60 4.11% 78.90 1.65% 26.70 0.36% 21.7 0.35% 69.80 1.39%
Mechanical enclosures 20.10 0.75% 25.70 0.54% 32.90 0.44% 29.62 0.48% 36.50 0.73%
Others* 7.67 0.29% 37.59 0.78% 367.74 4.95% 187.19 3.04% 53.64 1.07%
Total 2,665.75 100.00% 4,786.99 100.00% 7,429.34 100.00% 6,167.60 100.00% 5,018.14 100.00%

Notes:

* Others includes filters, bare PCB, motors, relays, sleeves, and adhesives, active and passive electronic components.

We have from time to time experienced cost fluctuations of our primary raw materials, particularly in the aforementioned components due to volatility in commodity markets. Since the selling price of our products are affected by the prices of our primary raw materials, fluctuations in the prices of these raw materials and an inability to pass on the cost increase to our customers could negatively affect our operating results. To manage such risks, we have agreements with a majority of our customers, pursuant to which pass on any fluctuation or increase in cost of raw materials to our customers. This allows us to factor in the costs of the raw materials when we enter into any sales contracts and accordingly pass on any increase in the prices of raw materials to our customers. For most of our other suppliers with whom we do not have such pricing windows, we tend to submit purchase orders for raw materials back-to-back at or around the same time as we receive orders from customers, to help minimize our open raw material positions. While we enter into general purchase agreements with certain of our suppliers, we typically do not enter into long-term agreements with our suppliers, other than for the contract period of the project under the purchase order. We typically pay in advance to our suppliers for procuring raw materials. However, shortage in supply positions in the global market could be a risk in scheduling our delivery timings and hence pose a business risk considering that the raw materials required for our business is basically a long lead time frame oriented. Shortage in supply of raw materials we use in our business may result in an increase in the price of the products. An increase in raw material prices could result in a reduction of our profit margins.

Our results of operations may be impacted by our ability to formulate and adjust business strategies in accordance with market demand as influenced by changing dynamics on supply in the competitive landscape.

Design and development of new products

Our business model going forward will be dependent on our ability to successfully conduct design and development with respect to new products. However, this process is both time consuming and costly, and involves a high degree of business risk. To develop new products, we are required to commit substantial time, funds and

other resources. Our investments in design and development for new products could result in higher costs without a proportionate increase in our revenues.

In addition, we must adapt to rapid changes in our industry due to technological advances. The cost of implementing new technologies, upgrading our manufacturing facilities and recruiting design staff could be significant and could adversely affect our profitability if commensurate revenue is not generated from the new design efforts.

Expansion of business verticals and operations

Our manufacturing facility consists of a 30,000 square feet facility situated in a special economic zone dedicated for aerospace and defence industry. Our manufacturing has facilities for system integration, cable design, manufacturing, qualification and life cycle support of high reliability electronic systems used in defence and aerospace applications.

Our Company proposes to utilise Rs 449.90 million towards funding the capital expenditure of our wholly owned Subsidiary, RASPL for the purpose of setting up a manufacturing facility for EMS through RASPL. The facility will include capabilities for design, development, manufacturing, qualification and life cycle support of high reliability electronic and electro - mechanical systems used in aerospace and defence, medical electronics and industrial electronics applications. For further information, see "Objects of the Offer - Details of the Objects of the Fresh Issue - Investment in our wholly owned Subsidiary, Raneal Advanced Systems Private Limited, to fund its capital expenditure expenses" on page 97. We believe our investment in infrastructure will enable us to cater to the growing demand from our customers and enhance our product portfolio, which in turn is expected to result in an increase in our revenue and profits. However, the successful implementation of this project converting into revenue and getting new orders will depend on the demand from our customers, which is beyond our control and is subject to uncertainty as well as changes in Government policies and priorities.

While we continue to expand our business organically, we intend to evaluate and selectively pursue strategic investment and acquisition opportunities across the advanced technology platform products to supplement and complement our existing services and strategies when such opportunities arise. The actual deployment of funds will depend on a number of factors, including the timing, nature, size of acquisitions to be undertaken, as well as general factors affecting our results of operation, financial condition and access to capital. These factors will also determine the form of investment for these potential acquisitions. Going forward, our acquisition plans may be affected by delays, cancellations, renegotiations of the contracts as well as the long gestation period in implementing the plan and concluding such contracts, if any, which may affect our business positioning and financial results.

Imposition of liquidated damages and invocation of advance bank guarantees

Most of our contracts with our customers require us to pay liquidated damages in the event of delay in delivery of products. The value of the liquidated damages typically ranges from 0.5% per week of delay to a maximum of 5% - 10% of the value of the undelivered portion of the contract. Additionally, we are required to secure performance guarantees by our Company for 5% of one-third value of the purchase orders towards performance of the equipment supplied until completion of 12 months warranty period indicated in such contracts.

We cannot assure you that in future such contracts will have the same margin or profitability. Any time and / or cost overruns on our contract for reasons beyond control, could have a material adverse effect on our business, financial condition and results of operations. While we have not faced any instances of imposition of liquidated damages or invocation of our performance corporate guarantees in the past three years, there can be no assurance that delays at our end would not result in imposition of such penalties. The incurring of such liabilities pursuant to the imposition of liquidated damages as well as invocation of such performance corporate guarantees in relation to our contracts could have an adverse effect on our business, operations, revenues and earnings.

Cost and availability of skilled manpower

We require the application of skilled manpower at key stages of engineering and manufacturing processes. We have therefore, been focused on the recruitment, training and retention of a skilled employee base. As of December 31, 2021, we employed 92 full-time employees and 28 part time and contract labourers. Our expenses towards salaries, wages and other employee benefit costs was Rs 49.97 million, Rs 55.97 million, Rs 54.79 million, Rs 41.36 million and Rs 56.12 million for Fiscal 2019, 2020 and 2021 and in the nine months ended December 31, 2020 and

December 31, 2021, respectively, and accounted for 1.66%, 1.24%, 0.85%, 0.76% and 0.80% of our total expenses respectively. In addition to our full -time employees, we hire workers on a contractual basis, for semiskilled, unskilled and routine job works. We believe that our Companys growth and work environment combined with our employee satisfaction rate has allowed us to attract talent. In addition, the presence of varied profiles available in our organisation coupled with high growth potential facilitates higher retention of employees. If there are any labour shortages, it could increase our production cost and hinder our productivity and ability to meet customers delivery schedules, any or all of which may have an adverse impact on our results of operations.

Impact of COVID-19pandemic

The COVID-19 pandemic and the preventative or protective actions that governments around the world have taken to counter the effects of the pandemic have resulted in an extended period of business disruption and a decrease in economic activity in several countries, including in India. In order to contain the spread of the COVID - 19 pandemic, the Government of India along with State Governments declared a lockdown of the country in March 2020, including severe travel and transport restriction and a directive to all citizens to shelter in place. The lockdown has since been extended several times with gradual relaxations of the restrictions conducted through phases. As a result, the current COVID-19 pandemic has adversely affected workforces, consumer sentiment, economies and financial markets around the world and has led to uncertainty in the global economy and significant volatility in global financial markets.

Our business operations suffered certain minimal temporary disruptions in the period between March 2020 and June 2021, due to COVID-19 related lockdowns. Though our manufacturing facility was functioning largely as essential service industry with relevant permissions from the central/local authorities our ability to maintain operations resulted insignificant loss of productivity and cash flows. Events beyond our control may unfold in the future, which makes it difficult for us to predict the extent to which the COVID-19 pandemic will impact our Companys operations and results. We continue to closely monitor the effect that COVID-19 may have on our business and results of operations.

PRESENTATION OF FINANCIAL INFORMATION

Our Restated Financial Information has been compiled from our audited financial statements as at and for the years ended March 31, 2019, 2020 and 2021, and the nine months ended December 31, 2020 and December 31, 2021, prepared in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other relevant provisions of the Act.

NON-GAAP MEASURES

Earnings before Interest, Taxes, Depreciation and Amortization Expenses ("EBITDA ")/EBITDA Margin

EBITDA presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, Indian GAAP, IFRS or US GAAP. Further, EBITDA is not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the years/ period or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, Indian GAAP, IFRS or US GAAP. In addition, EBITDA is not a standardised term; hence a direct comparison of EBITDA between companies may not be possible. Other companies may calculate EBITDA differently from us, limiting its usefulness as a comparative measure. Although EBITDA is not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance.

Reconciliation of EBITDA and EBITDA Margin to Profit for the Period / Year

The table below reconciles profit for the period / year to EBITDA. EBITDA is calculated as profit before exceptional items and tax, plus finance costs, depreciation and amortization expenses plus net loss on foreign currency translation, while EBITDA Margin is the percentage of EBITDA divided by total income.

Particulars Fiscal Nine months ended December 31, 2020 Nine months ended December 31, 2021
2019 2020 2021
Profit before exceptional items and tax 73.03 128.67 398.06 419.22 436.08
Adjustments:
Add: Finance Costs 58.20 79.41 99.22 52.82 63.09
Add: Depreciation and Amortization expense 7.36 13.76 24.31 18.69 16.05
Less: Other Income# 91.98 159.67 420.79 387.75 210.13
Add: Net loss on foreign currency translation 59.74 242.96 - - 82.65
Earnings before interest, taxes, depreciation and amortization expenses (EBITDA) (A) 106.35 305.13 100.80 102.98 387.74
Revenue from Operations (B) 2,998.72 4,492.62 6,411.63 5,484.91 7,282.36
EBITDA Margin (EBITDA as a percentage of Revenue from Operations) (A/B) 3.55% 6.79% 1.57% 1.88% 5.32%

# Other income includes (i) interest income on fixed deposits; (ii) unwinding of interest on security deposit; (iii) income from foreign exchange fluctuation; (iv) gain on termination of lease; (v) income from mutual funds; (vi) income arising from fair valuation of asset through profit and loss; and (vii) other income on account of incentives received pursuant to the Pradhan Mantri Rojgar Protsahan Yojana.

Reconciliation of Adjusted EBITDA and Adjusted EBITDA Margin to Profit for the Period / Year

The table below reconciles profit for the period / year to Adjusted EBITDA. Adjusted EBITDA is calculated as EBITDA plus interest on fixed deposits. While Adjusted EBITDA Margin is the percentage of Adjusted EBITDA divided by total income.

Particulars Fiscal Nine months ended December 31, 2020 Nine months ended December 31, 2021
2019 2020 2021
EBITDA 106.35 305.13 100.80 102.98 387.84
Adjustments:
Add: Interest on fixed deposits 90.94 146.87 223.96 167.97 210.08
Adjusted Earnings before interest, taxes, depreciation and amortization expenses (Adjusted. EBITDA) (A) 197.29 452.00 324.76 270.95 597.82
Total Income (B) 3,090.70 4,652.29 6,832.42 5,872.66 7,492.49
Adjusted EBITDA Margin (Adjusted EBITDA as a percentage of total income from Operations) (A/B) 6.38% 9.72% 4.75% 4.61% 7.98%

SIGNIFICANT ACCOUNTING POLICIES Property, Plant and Equipment

Recognition and measurement

The Company has elected to continue with the carrying value of Property, Plant and Equipment (‘PPE) recognized as of transition date measured as per the Previous GAAP and use that carrying value as its deemed cost of the PPE as on the transition date.

Property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated

impairment losses. Cost includes purchase price (after deducting trade discount / rebate), non-refundable import duties and taxes, cost of replacing the component parts, borrowing costs and other directly attributable cost to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

Spare parts procured along with the Plant and Equipment or subsequently which meets the recognition criteria of PPE are capitalized and added to the carrying amount of such items. The carrying amount of those spare parts that are replaced are derecognized when no future economic benefits are expected from their use or upon disposal. If the cost of the replaced part is not available, the estimated cost of similar new parts is used as an indication of what the cost of the existing part was when the item was acquired.

An item of PPE is derecognised on disposal or when no future economic benefits are expected from use. Any profit or loss arising on the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds and the carrying amount of the asset and is recognized in statement of profit and loss.

Subsequent costs

The cost of replacing a part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The cost of the day-to-day servicing the property, plant and equipment are recognised in the statement of profit and loss as incurred.

Disposal

An item of property, plant and equipment is derecognised upon the disposal or when no future benefits are expected from its use or disposal. Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment, and are recognised net within other income / expenses in the statement of profit and loss.

Depreciation

Depreciation on property, plant and equipment is provided on written down value basis over the estimated economic useful life of the assets as prescribed in Schedule II of the Companies Act, 2013 or as determined based on a technical evaluation by the company periodically. The depreciable amount of an asset is determined after deducting its residual value. Where the residual value of an asset increases to an amount equal to or greater than the assets carrying amount, no depreciation charge is recognised till the assets residual value decreases below the assets carrying amount. Depreciation of an asset begins when it is available for use, i.e., when it is in the location and condition necessary for it to be capable of operating in the intended manner. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale in accordance with IND AS 105 and the date that the asset is derecognized. Individual assets costing Rs 5,000 or less are depreciated in full, in the year of purchase

Impairment of Assets

Assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs of disposal and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets (cash generating units). Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.

Intangible Assets

Recognition and measurement

Intangible assets are recognised when the asset is identifiable, is within the control of the Company, it is probable that the future economic benefits that are attributable to the asset will flow to the Company and cost of the asset

can be reliably measured.

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Intangible assets acquired by the Company that have finite useful lives are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually, either individually or at the cash-generating unit level.

Expenditure on research activities is recognised in the statement of profit and loss as incurred. Development expenditure is capitalised only if the expenditure can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to complete development and to use or sell the asset.

Intangible assets which comprise of the development expenditure incurred on new product and expenditure incurred on acquisition of user licenses for computer software are recorded at their acquisition price. Subscriptions to software are treated as revenue expenses as the economic life of such software does not exceed one year.

Subsequent measurement

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates.

Amortisation

Amortisation method, useful lives and residual values are reviewed at the end of each financial year and adjusted if appropriate. Intangible assets are assessed for impairment whenever there is an indication that the intangible asset may be impaired.

Disposal

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognized.

Investments and Other Financial Assets

Fair Value Assessment

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of asset and liability if market participants would take those into consideration. Fair value for measurement and / or disclosure purposes in these Financial Statements is determined on such basis except for transactions in the scope of Ind AS 2, 17 and 36. Normally at initial recognition, the transaction price is the best evidence of fair value.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques those are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All financial assets and financial liabilities for which fair value is measured or disclosed in the Restated Financial Information is categorized within the fair value hierarchy, described as follows, based on the lowest level input

that is significant to the fair value measurement as a whole.

Subsequent Measurement

For purposes of subsequent measurement financial assets are classified in three categories:

• Financial assets measured at amortized cost

• Financial assets at fair value through OCI

• Financial assets at fair value through profit or loss

Financial assets measured at amortized cost

Financial assets are measured at amortized cost if the financials asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. These financials assets are amortized using the effective interest rate (‘EIR) method, less impairment. Amortized cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortization is included in finance income in the statement of profit and loss. The losses arising from impairment are recognized in the statement of profit and loss.

Financial assets at fair value through OCI (FVTOCI )

Financial assets are measured at fair value through other comprehensive income if the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. At initial recognition, an irrevocable election is made (on an instrument-by-instrument basis) to designate investments in equity instruments other than held for trading purpose at FVTOCI. Fair value changes are recognized in the other comprehensive income (‘OCI). However, the Company recognizes interest income, impairment losses and reversals and foreign exchange gain or loss in the statement of profit and loss. On derecognition of the financial asset other than equity instruments designated as FVTOCI, cumulative gain or loss previously recognised in OCI is reclassified to the statement of profit and loss.

Financial assets at fair value through profit or loss (FVTPL)

Any financial asset that does not meet the criteria for classification as at amortized cost or as financial assets at fair value through other comprehensive income is classified as financial assets at fair value through profit or loss. Further, financial assets at fair value through profit or loss also include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Financial assets at fair value through profit or loss are fair valued at each reporting date with all the changes recognized in the statement of profit and loss.

Derecognition

The Company de-recognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the financial asset, the Company recognizes its retained interest in the asset and an associated liability for amounts it may have to pay.

Impairment of Financial Assets

The Company assesses impairment based on expected credit loss (‘ECL) model on the following:

• Financial assets that are measured at amortised cost; and

• Financial assets measured at FVTOCI

ECL is measured through a loss allowance on a following basis:

• The 12 month expected credit losses (expected credit losses that result from those default events on the financial instruments that are possible within 12 months after the reporting date)

• Full life time expected credit losses (expected credit losses that result from all possible default events over the life of financial instruments)

Financial Liabilities

The Companys financial liabilities include trade payable.

• Initial recognition and measurement

All financial liabilities at initial recognition are classified as financial liabilities at amortized cost or financial liabilities at fair value through profit or loss, as appropriate. All financial liabilities classified at amortized cost are recognized initially at fair value net of directly attributable transaction costs. Any difference between the proceeds (net of transaction costs) and the fair value at initial recognition is recognised in the statement of profit and loss.

• Subsequent measurement:

The subsequent measurement of financial liabilities depends upon the classification as described below:

Financial Liabilities Classified as Amortised Cost

Financial Liabilities that are not held for trading and are not designated as at FVTPL are measured at amortised cost at the end of subsequent accounting periods. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. Interest expense that is not capitalized as part of costs of assets is included as Finance costs in the statement of profit and loss.

Financial Liabilities classified as Fair value through profit and loss (FVTPL):

Financial liabilities classified as FVTPL includes financial liabilities held for trading and financial liabilities designated upon initial recognition as FVTPL. Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term. Financial liabilities designated upon initial recognition at FVTPL only if the criteria in Ind AS 109 is satisfied.

• Derecognition

A financial liability is derecognised when the obligation under the liability is discharged / cancelled / expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the de recognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit and loss.

• Offsetting of financial instruments:

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Other incomes, other then interest and dividend are recognized when the same are due to be received and right to receive such other income is established.

Share Capital and Share Premium

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a deduction net of tax from the proceeds. Par value of the equity share is recorded as share capital and the amount received in excess of the par value is classified as share premium.

Dividend Distribution to Equity Shareholders

The Company recognizes a liability to make cash distributions to equity holders when the distribution is authorized and the distribution is no longer at the discretion of the Company. As per the corporate laws in India, a distribution is authorized when it is approved by the shareholders. A corresponding amount is recognized directly in other equity along with any tax thereon.

Cash Flows and Cash and Cash Equivalents

Statement of cash flows is prepared in accordance with the indirect method prescribed in the relevant IND AS. For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, cheques and drafts on hand, deposits held with Banks, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and book overdrafts. However, Book overdrafts are to be shown within borrowings in current liabilities in the balance sheet for the purpose of presentation.

Provisions, Contingent Liabilities and Contingent Assets

Provisions are recognised when there is a present legal or constructive obligation as a result of a past event and it is probable (i.e., more likely than not) that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Such provisions are determined based on management estimate of the amount required to settle the obligation at the balance sheet date. When the Company expects some or all of a provision to be reimbursed, the reimbursement is recognised as a standalone asset only when the reimbursement is virtually certain.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance costs.

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist when a contract under which the unavoidable costs of meeting the obligations exceed the economic benefits expected to be received from it.

Contingent liabilities are disclosed on the basis of judgment of management/independent experts. These are reviewed at each balance sheet date and are adjusted to reflect the current management estimate.

Contingent assets are not recognized, however, disclosed in financial statement when inflow of economic benefits is probable.

Revenue Recognition and Other Income

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, regardless of when the payment is being made. Revenue is measured at the fair value of the consideration received or receivable, taking into account contractually defined terms of payment and excluding taxes or duties collected on behalf of the government.

Revenue from sale of goods is recognized, when the control is transferred to the buyer, as per the terms of the contracts and no significant uncertainty exists regarding the amount of the consideration that will be derived from the sale of goods.

Export incentives under various schemes notified by the government are recognised when no significant uncertainties as to the amount of consideration that would be derived and that the Company will comply with the conditions associated with the grant and ultimate collection exist.

Interest income or expense is recognised using the effective interest rate method. The "effective interest rate" is the rate that exactly discounts estimated future cash receipts or payments through the expected life of the financial instrument to:

• the gross carrying amount of the financial asset; or

• the amortised cost of the financial liability.

Leases

At inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Company assesses whether:

• the contract involves the use of an identified asset - this may be specified explicitly or implicitly and should be physically distinct or represent substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified.

• the Company has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and

• the Company has the right to direct the use of the asset. The Company has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decision about how and for what purpose the asset is used is predetermined, the Company has the right to direct the use of the asset if either:

? the Company has the right to operate the asset; or

? the Company designed the asset in a way that predetermines how and for what purpose it will be used.

• At inception or on reassessment of a contract that contains a lease component, the Company allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices.

Company as a lessee

The Company recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of- use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets re determined on the same basis as those of property and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Companys incremental borrowing rate. Generally, the Company uses its incremental borrowing rates as the discount rate.

Lease payments included in the measurement of the lease liability comprise the following:

• fixed payments, including in-substance fixed payments.

• variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date.

• amounts expected to be payable under a residual value guarantee; and

• the exercise price under a purchase option that the Company is reasonably certain to exercise, lease payments in an optional renewal period if the Company is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless the Company is reasonably certain not to terminate early.

The lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is change in future lease payments arising from a change in an index or rate, if there is change in the Companys estimate of the amount expected to be payable under a residual value guarantee, or if the Company changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in statement of profit and loss if the carrying amount of the right-of-use asset has been reduced to zero.

Leasehold land is amortised over the period of lease being 99 years remaining as on the date of purchase.

Short-term leases and leases of low-value assets

The Company has elected not to recognise right-of-use assets and lease liability for the short-term leases that have lease term of 12 months or less and leases of low-value assets. The Company recognises the lease payments associated with such leases as an expense on a straight-line basis over the lease term.

Income Taxes

Income tax expense represents the sum of tax currently payable and deferred tax. Tax is recognized in the statement of profit and loss, except to the extent that it relates to items recognized directly in equity or in other comprehensive income.

Current Tax

Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. The amount of current tax reflects the best estimate of the tax amount expected to be paid or received after considering the uncertainty, if any, related to income taxes. Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and the tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the country where the Company operates and generates taxable income. Current tax assets and liabilities are offset only if there is a legally enforceable right to set it off the recognised amounts and it is intended to realise the asset and settle the liability on a net basis or simultaneously.

Deferred Tax

Deferred tax is provided using the balance sheet method on temporary differences arising between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognised for all taxable temporary differences, except:

• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the

• accounting profit nor taxable profit or loss,

• Deferred tax assets are recognised for all deductible temporary differences, the carry forward of unused tax credits and any unused tax losses. Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses (including unabsorbed depreciation) can be utilised, except:

? When the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in Other comprehensive income r directly in equity. In this case, the tax is also recognized in other comprehensive income or directly or directly in equity respectively.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax (MAT) credit is recognised as an asset only when and to the extent there is convincing evidence that the company will pay normal income tax during the specified period. Such asset is reviewed at each balance sheet date and the carrying amount of the MAT credit asset is written down to the extent there is no longer a convincing evidence to the effect that the company will pay normal income tax during the specified period.

Employee Benefits Short term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Undiscounted value of benefits such as salaries, incentives, allowances and bonus are recognized in the period in which the employee renders the related service.

Long term benefits

Defined Contribution Plans

The Company contributes to the employees approved provident fund scheme. The Companys contribution paid/payable under the scheme is recognized as an expense in the statement of profit and loss during the period in which the employee renders the related services.

Defined Benefit Plans

Gratuity Liability is a defined benefit obligation and is provided on the basis of an actuarial valuation model made at the end of the Financial Year. At present the company is not maintaining fund with any Asset Management Company towards gratuity.

Earned Leave

The liabilities for earned leave are not expected to be settled wholly within 12 months after the end of the period in which the employees render the related service. The liability toward leave encashment is provided on the basis of an actuarial valuation model made at the end of the financial year.

Trade Receivables

Trade receivables are the amount due from the customers for the sale of goods and services rendered in the ordinary course of business. Trade receivables are initially recognized at the amount of consideration that is unconditional unless they contain significant financing component, when they are recognized that the fair value. The Company holds trade receivables for the receipt of contractual cashflows and therefore measures them subsequently at the amortized cost using effective interest rate method. In respect of advances received from the customers, contract liability is recognized when the payment is made. Contract liabilities are recognized as revenue where the company performs under the contract (transfer control of the related goods or services to the customers).

Trade Payables

These amounts represents liabilities for goods and services provided to the company prior to the end of financial year which are unpaid. The amounts are unsecured and are usually paid as per the terms of contract with suppliers.

Inventories

• Raw Materials, Work in Progress, Finished Goods, Packing Materials, Stores, Spares and Consumables are carried at the lower of cost and net realisable value. after providing cost of obsolescence.

• In determining the cost of Raw Materials, Packing Materials, Stores, Spares and Consumables, FIFO Method is used. Cost of Inventory comprises of all costs of purchase, duties, taxes (other than thosesubsequently recoverable from tax authorities) and all other costs incurred in bringing the inventory to their present location and condition.

• Cost of Finished Goods includes the cost of Raw Materials, Packing Materials, an appropriate share of fixed and variable production overheads and other costs incurred in bringing the inventories to their present location and condition.

• Cost of Stock in Trade procured for specific projects is assigned by specific identification of individual costs of each item.

Borrowing Costs

Borrowing costs directly attributable to the acquisition, construction or production of an asset, that necessarily takes substantial period of time to get ready for its intended use or sale, are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period in which they are incurred. Borrowing costs consist of interest, exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost that an entity incurs in connection with the borrowings of the funds.

Earnings Per Share

Basic EPS is calculated by dividing the profit for the year attributable to equity holders of the Company by the weighted average number of equity shares outstanding during the financial year, adjusted for bonus elements and stock split in equity shares issued during the year and excluding treasury shares. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares and stock split, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.

Diluted EPS adjust the figures used in the determination of basic EPS to consider.

• The after-income tax effect of interest and other financing costs associated with dilutive potential equity shares, and

• The weighted average number of additional equity shares that would have been outstanding assuming the conversion of all dilutive potential equity shares.

Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Company has identified Managing Director as Chief Operating Decision Maker.

Foreign Currency Transactions

Transactions in foreign currencies are translated into the respective functional currency of the Company at the exchange rates at the dates of the transactions.

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non-monetary assets and liabilities that are measured at fair value in a foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary items that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transaction and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rate are generally recognized in the statement of profit and loss

Government Grants and Subsidies

Grants and subsidies that compensate the Company for expenses incurred are recognised in the statement of profit and loss as other operating income on a systematic basis in the periods in which such expenses are recognised.

PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE Income

Our total income comprise (i) revenue from operations; and (ii) other business income.

Revenue from Operations

Revenue from operations comprise (i) sale of products which include system integration, cable and wire harness assembly and kitting; and (ii) sale of services which include job work services in system integration and cable and wire harness assembly verticals for both domestic and international customers; and (iii) MEIS incentive for physical exports.

Other Income

Other income includes (i) interest income on fixed deposits; (ii) unwinding of interest on security deposit; (iii) income from foreign exchange fluctuation; (iv) gain on termination of lease; (v) income from mutual funds; (vi) income arising from fair valuation of asset through profit and loss; and (vii) other income on account of incentives received pursuant to the Pradhan Mantri Rojgar Protsahan Yojana.

Expenses

Our expenses comprise (i) cost of materials consumed; (ii) changes in inventories of finished goods and work-inprogress; (iii) employee benefits expense; (iv) finance costs; (v) depreciation and amortization expense; and (vi) other expenses.

Costs of Materials Consumed

Cost of material consumed consists of (i) import purchases; (ii) local purchases; and (iii) changes in raw materials inventory. Primary raw materials include printed circuit board assemblies, integrated circuits, power supplies, cable and wires, connectors, mechanical enclosures and others. Others include filters, bare PCB, motors, relays, sleeves, and adhesives, active and passive electronic components.

Changes in inventories of finished goods and work-in-progress

Changes in inventories of finished goods and work-in-progress consists of (i) opening inventories (stock-in-trade, finished goods, work-in-progress and stores and spares); and (ii) closing inventories inventories (stock-in-trade, finished goods, work-in-progress and stores and spares).

Employee Benefits Expense

Employee benefits expense primarily comprises (i) salaries and wages including bonus, incentives; (ii) staff welfare expenses; (iii) gratuity; (iv) employee insurance; (v) induction and training programme expenses; (vi) encashment of earned leave; and (vii) entertainment expenses. As of December 31, 2021, we had 92 full-time employees.

Finance Costs

Finance costs include (i) interest on borrowings; (ii) bank charges; (iii) other interest including interest on working capital demand loan; (iv) unwinding of interest on lease liabilities; and (v) other borrowing costs, consisting of bank guaratee charges and bank charges.

Depreciation and Amortization Expense

Depreciation and amortization expenses comprise (i) depreciation on property, plant and equipment; (ii) amortization of right-of-use assets; and (iii) amortization of intangible assets.

Other Expenses

Other expenses comprises: (i) power and fuel expenses incurred towards our manufacturing operations; (ii) repairs and maintenance expenses towards building and machinery; (iii) wages and labour charges; (iv) freight expenses incurred towards import and local transportation of goods; (v) insurance; (vi) rates and taxes incurred towards custom duty; (vii) loss on foreign currency translation; (viii) business promotion expenses; (ix) travelling and conveyance expenses; (x) professional and consultancy fees; (xi) communication expenses; (xii) printing and

stationery; (xiii) recruitment expenses; (xiv) other expenses incurred towards security personnel charges, gardening charges, food expenditure, housekeeping expenditure, housekeeping material, membership fees and IT accessories; (xv) loss arising from fair valuation of assets through profit & loss (xvi) clearing and forwarding charges; and (xvii) remuneration to auditors towards statutory audit.

RESULTS OF OPERATIONS

The following table sets forth certain information with respect to our results of operations for Fiscal 2019, 2020 and 2021 and for the nine months ended December 31, 2020 and December 31, 2021:

Particulars Fiscal Nine months ended December 31, 2020 Nine months ended December 31, 2021
2019 2020 2021
(Rs million ) Percentag e of Total Income (%) (Rs million ) Percentag e of Total Income (%) (Rs million ) Percentag e of Total Income (%) (Rs million) Percentag e of Total Income (%) (Rs million) Percentag e of Total Income (%)
Revenue
Revenue from operations 2,998.7 2 97.02% 4,492.6 2 96.57% 6,411.6 3 93.84% 5,484.9 1 93.40% 7,282.3 6 97.20%
Other income 91.98 2.98% 159.67 3.43% 420.79 6.16% 387.75 6.60% 210.13 2.80%
Total Income 3,090.7 0 100.00% 4,652.2 9 100.00% 6,832.4 2 100.00% 5,872.6 6 100.00% 7,492.4 9 100.00%
Expenses
Cost of materials consumed 2708.80 87.64% 4311.78 92.68% 6604.35 96.66% 5254.75 89.48% 6125.55 81.76%
Changes in inventories of finished goods and work-inprogress 95.97 3.11% (232.49 ) (5.00)% (419.66 ) (6.14)% 41.06 0.70% 650.00 8.68%
Employee benefits expense 49.97 1.62% 55.97 1.20% 54.79 0.80% 41.36 0.70% 56.12 0.75%
Finance costs 58.20 1.88% 79.41 1.71% 99.22 1.45% 52.82 0.90% 63.09 0.84%
Depreciation and amortization expense 7.36 0.24% 13.76 0.30% 24.31 0.36% 18.69 0.32% 16.05 0.21%
Other expenses 97.37 3.15% 295.19 6.35% 71.35 1.04% 44.76 0.76% 145.60 1.94%
Total expenses 3,017.6 7 97.64% 4,523.6 2 97.23% 6,434.3 6 94.17% 5,453.4 4 92.86% 7,056.4 1 94.18%
Profit before exceptional items and tax 73.03 2.36% 128.67 2.77% 398.06 5.83% 419.22 7.14% 436.08 5.82%
Exceptional items - - - - - - - - - -
Profit before tax 73.03 2.36% 128.67 2.77% 398.06 5.83% 419.22 7.14% 436.08 5.82%
Tax expense
Current tax (26.83) (0.87)% (37.41) (0.80)% (104.65 ) (1.53)% (134.11 ) (2.28)% (106.26 ) (1.42)%
Deferred tax (0.34) (0.01)% 1.24 0.03% 2.17 0.03% (2.21) (0.04)% 2.13 0.03%
Previous year tax charges - - 4.94 0.11% - - - - - -
Total tax expense (27.17) (0.88)% (31.23) (0.67)% (102.48 ) (1.50)% (136.32 ) (2.32)% (104.13 ) (1.39)%
Particulars Fiscal Nine months ended December 31, 2020 Nine months ended December 31, 2021
2019 2020 2021
(Rs million ) Percentag e of Total Income (%) (Rs million ) Percentag e of Total Income (%) (Rs million ) Percentag e of Total Income (%) (Rs million) Percentag e of Total Income (%) (Rs million) Percentag e of Total Income (%)
Profit for the period (A) 45.86 1.48% 97.44 2.09% 295.58 4.33% 282.90 4.82% 331.95 4.43%
Other comprehensive (loss) / income
Items that will lot be reclassified to profit an d loss in subsequent periods
Re measurement is of defined benefit liability / (asset) (0.79) (0.03)% (0.36) (0.01)% 0.82 0.01% 0.49 0.01% (0.65) (0.01)%
Income tax relating to re measurement is of defined benefit liability / (asset) 0.22 0.01% 0.10 0.00% (0.24) 0.00% (0.17) 0.00% 0.23 0.00%
Total other comprehensive income (B) (0.57) (0.02)% (0.26) (0.01)% 0.58 0.01% 0.32 0.01% (0.42) (0.01)%
Total comprehensive income for the period (A+ B) 45.29 1.47% 97.18 2.09% 296.16 4.33% 283.22 4.82% 331.53 4.42%

NINE MONTHS ENDED DECEMBER 31, 2021 COMPARED TO NINE MONTHS ENDED DECEMBER

31, 2020

Income

Total income increased by 27.58% from Rs 5,872.66 million in the nine months ended December 31, 2020 to Rs

7,492.49 million in the nine months ended December 31, 2021, primarily attributable to the following:

Revenue from Operations

Revenue from operations increased by 32.77% from Rs 5,484.91 million in the nine months ended December 31,

2020 to Rs 7,282.36 million in the nine months ended December 31, 2021 attributable as follows:

• Sale of products increased by 32.94% from Rs 5,462.57 million in the nine months ended December 31, 2020 to Rs 7,261.82 million in the nine months ended December 31, 2021. This was driven by growth in our system integration business vertical.

• Revenue from sale of services decreased by 87.58% from Rs 4.32 million in the nine months ended December 31, 2020 to Rs 0.54 million in the nine months ended December 31, 2021 on account of reduction in job work services for customers in our system integration and cable and wire harness assembly verticals.

• Other operating revenue increased by 10.99% from Rs 18.02 million in the nine months ended December 31, 2020 to Rs 20.00 million in the nine months ended December 31, 2021 on account of increase in MEIS incentives.

Other Income

Other income decreased by 45.81% from Rs 387.75 million in the nine months ended December 31, 2020 to Rs 210.13 million in the nine months ended December 31, 2021. This was primarily due to a decrease in income from foreign exchange fluctuation from Rs 219.44 million in the nine months ended December 31, 2020 to nil in the nine months ended December 31, 2021. It was partially offset by an increase in interest on fixed deposits by 25.07% from Rs 167.97 million in the nine months ended December 31, 2020 to Rs 210.08 million in the nine months ended December 31, 2021.

Expenses

Total expenses increased by 29.39% from Rs 5,453.44 million in the nine months ended December 31, 2020 to Rs 7,056.41 million in the nine months ended December 31, 2021. This was primarily due to the increase in changes in inventories of finished goods and work-in-progress and other expenses.

Cost of Materials Consumed

Cost of materials consumed increased by 16.57% from Rs 5,254.75 million in the nine months ended December 31, 2020 to Rs 6,125.55 million in the nine months ended December 31, 2021 and the increase is primarily attributable to an increase in import purchases by 42.47% from Rs 702.79 million in the nine months ended December 31, 2020 to Rs 1,001.23 million in the nine months ended December 31, 2021. This was partially offset by a decrease in purchases made locally by 26.49% from Rs 5,464.81 million in the nine months ended December 31, 2020 to Rs 4,016.91 million in the nine months ended December 31, 2021.

Changes in Inventories of Finished Goods, Stock-in-Trade and Work-in-Progress

Changes in inventories of finished goods, stock-in-trade and work-in-progress increased from Rs 41.06 million in the nine months ended December 31, 2020 to Rs 650.00 million in the nine months ended December 31, 2021.

Employee Benefits Expenses

Employee benefit expenses increased by 35.68% from Rs 41.36 million in the nine months ended December 31, 2020 to Rs 56.12 million in the nine months ended December 31, 2021. This was primarily due to an increase in salaries and wages (including bonus and incentives) by 44.71% from Rs 38.85 million in the nine months ended December 31, 2020 to Rs 56.22 million in the nine months ended December 31, 2021, on account of growth in business operations and accordingly, a corresponding increase in number of employees during the period.

Finance Cost

Finance costs increased by 19.44% from Rs 52.82 million in the nine months ended December 31, 2020 to Rs 63.09 million in the nine months ended December 31, 2021. This increase is primarily attributable to an increase in other borrowing costs, by 138.25% from Rs 10.04 million in the nine months ended December 31, 2020 to Rs 23.92 million in the nine months ended December 31, 2021, on account of payment of bank guarantee commission. The increase was partially offset by a decrease in interest on borrowings, by 14.15% from Rs 38.73 million in the nine months ended December 31, 2020 to Rs 33.25 million in the nine months ended December 31, 2021, attributable to closure of an outstanding packing credit loan in foreign currency.

Depreciation and Amortization Expense

Depreciation and amortization expense decreased by 14.10% from Rs 18.69 million in the nine months ended December 31, 2020 to Rs 16.05 million in the nine months ended December 31, 2021, primarily due to a decrease in depreciation of property, plant and equipment by 14.66% from Rs 18.08 million in the nine months ended December 31, 2020 to Rs 15.43 million in the nine months ended December 31, 2021.

Other Expenses

Other expenses increased by 225.30% from Rs 44.76 million in the nine months ended December 31, 2020 to Rs 145.60 million in the nine months ended December 31, 2021. This was primarily due to an increase in:

• Net loss on foreign currency translation from nil in the nine months ended December 31, 2020 to Rs 82.65 million in the nine months ended December 31, 2021, on account of fluctuation of the US Dollar against the Indian Rupee. Our unhedged exposure as of December 31, 2021 was Rs 5,056.33 million, which includes trade receivables, advance to vendors, balances in Exchange earner foreign currency account, trade payables, advance from customers and packing credit in foreign currency.

• Professional and consultancy fees, by 46.46% from Rs 18.08 million in the nine months ended December 31, 2020 to Rs 26.48 million in the nine months ended December 31, 2021.

• Other expenses, by 132.08% from Rs 5.05 million in the nine months ended December 31, 2020 to Rs 11.72 million in the nine months ended December 31, 2021, on account of travel bills, hotel bills, and unregistered dealers bills, amongst others that were ineligible for GST input.

• Insurance, by 116.47% from Rs 1.70 million in the nine months ended December 31, 2020 to Rs 3.68 million in the nine months ended December 31, 2021, on account of providing adequate insurance coverage coupled with an increase in marine insurance charges.

• Travelling and conveyance, by 237.14% from Rs 0.35 million in the nine months ended December 31, 2020 to Rs 1.18 million in the nine months ended December 31, 2021.

• Power and fuel expenses, by 19.59% from Rs 1.48 million in the nine months ended December 31, 2 020 to Rs 1.77 million in the nine months ended December 31, 2021.

This was partially offset by a decrease in rates and taxes by 68.90% from Rs 3.73 million in the nine months ended December 31, 2020 to Rs 1.16 million in the nine months ended December 31, 2021, on account of lower custom duties and stamp duty charges.

Profit before Exceptional Items and Tax

For the reasons discussed above, profit before exceptional items and tax was Rs 436.08 million in the nine months ended December 31, 2021, as compared to Rs 419.22 million in the nine months ended December 31, 2020.

Tax Expenses

Deferred tax charge was Rs 2.13 million in the nine months ended December 31, 2021, as compared to deferred tax credit of Rs 2.21 million in the nine months ended December 31, 2020; Current tax charge was Rs 106.26 million in the nine months ended December 31, 2021, as compared to Rs 134.11 million in the nine months ended December 31, 2020 Total tax expense amounted to Rs 104.13 million in the nine months ended December 31, 2021, as compared to Rs 136.32 million in the nine months ended December 31, 2020.

Profit for the Period

For the various reasons discussed above, we recorded a profit after tax for the period of Rs 331.95 million in the nine months ended December 31, 2021, as compared to Rs 282.90 million in the nine months ended December 31, 2020.

Total Comprehensive Income for the Period, Net of Tax

Total comprehensive income for the period was Rs 331.53 million in the nine months ended December 31, 2021, as compared to Rs 283.22 million in the nine months ended December 31, 2020.

Adjusted Earnings before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

Adjusted EBITDA was Rs 597.82 million in the nine months ended December 31, 2021 compared to Rs 270.95 million in the nine months ended December 31, 2020, while Adjusted EBITDA margin was 7.98% in the nine months ended December 31, 2021 compared to 4.61% in the nine months ended December 31, 2020.

FISCAL 2021 COMPARED TO FISCAL 2020

Key Developments

Income

Total income increased by 46.86% from Rs 4,652.29 million in Fiscal 2020 to Rs 6,832.42 million in Fiscal 2021, primarily attributable to the following:

Revenue from Operations

Revenue from operations increased by 42.71% from Rs 4,492.62 million in Fiscal 2020 to Rs 6,411.63 million in Fiscal 2021 attributable as follows:

• Sale of products increased by 44.64% from Rs 4,410.10 million in Fiscal 2020 to Rs 6,378.72 million in Fiscal 2021. This was driven by an increase of 65.71% in our system integration business from Rs 3,717.65 million in Fiscal 2020 to Rs 6,160.67 million in Fiscal 2021.

• Income from sale of services decreased by 70.81% from Rs 15.76 million in Fiscal 2020 to Rs 4.60 million in Fiscal 2021 on account of a decline in our job work services.

• Other operating revenue decreased by 57.59% from Rs 66.76 million in Fiscal 2020 to Rs 28.31 million in Fiscal 2021 on account of export incentive rationalisation.

Other Income

Other income increased by 163.54% from Rs 159.67 million in Fiscal 2020 to Rs 420.79 million in Fiscal 2021. This increase is primarily attributable to an increase in interest on fixed deposits, by 52.49% from Rs 146.87 million in Fiscal 2020 to Rs 223.96 million in Fiscal 2021; and an increase in income from foreign exchange fluctuation from nil in Fiscal 2020 to Rs 196.05 million in Fiscal 2021.

Expenses

Total expenses increased by 42.24% from Rs 4,523.62 million in Fiscal 2020 to Rs 6,434.36 million in Fiscal 2021. This was primarily due to an increase in cost of materials consumed and finance costs.

Cost of Materials Consumed

Cost of materials consumed increased by 53.17% from Rs 4,311.78 million in Fiscal 2020 to Rs 6,604.35 million in Fiscal 2021 and the increase is primarily driven by an increase in local purchases by 107.81% from Rs 3,052.20 million in Fiscal 2020 to Rs 6,342.74 million in Fiscal 2021 on account of an increase in revenue from operations from Rs 4,492.62 million to Rs 6,411.63 million. This was partially offset by a decrease in import purchases, by 37.36% from Rs 1,734.79 million in Fiscal 2020 to Rs 1,086.60 million in Fiscal 2021.

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

Changes in inventories of finished goods, stock-in-trade and work-in-progress decreased by 80.51% from Rs (232.49) million in Fiscal 2020 to Rs (419.66) million in Fiscal 2021. This was primarily attributable to an increase in closing inventories by 143.34% from Rs 292.77 million in Fiscal 2020 to Rs 712.43 million in Fiscal 2021 on account of delivery schedules being pushed owing to shareholder dispute. For further information, see "Promoter and Promoter Group - Change in the control of our Company and "Risk Factors - Our Promoters will continue to collectively hold substantial shareholding in our Company and will continue to exercise significant influence over us after completion of the Offer" on pages 214 and 37, respectively.

Employee Benefits Expenses

Employee benefit expenses decreased slightly by 2.11% from Rs 55.97 million in Fiscal 2020 to Rs 54.79 million in Fiscal 2021. This was due to a marginal decrease in salaries and wages (including bonus and incentives) by 4.11% from Rs 53.10 million in Fiscal 2020 to Rs 50.92 million in Fiscal 2021, on account of the COVID-19 pandemic which led to rationalisation of our expenditure budget, as certain planned manpower additions were put on hold. The decrease was marginally offset by an increase in staff welfare expenses by 77.46% from Rs 1.42 million in Fiscal 2020 to Rs 2.52 million in Fiscal 2021, on account of expenses incurred in terms of providing additional facilities to employees.

Finance Cost

Finance costs increased by 24.95% from Rs 79.41 million in Fiscal 2020 to Rs 99.22 million in Fiscal 2021. This increase is primarily attributable due to an increase in other borrowing costs, by 182.63% from Rs 14.85 million in Fiscal 2020 to Rs 41.97 million in Fiscal 2021 on account of issuance of a bank guarantee to receive advance from customers. The increase was partially offset by a decrease in interest on borrowings by 13.81% from Rs 54.98 million in Fiscal 2020 to Rs 47.39 million in Fiscal 2021, attributable to closure of an outstanding packing credit loan in foreign currency.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by 76.66% from Rs 13.76 million in Fiscal 2020 to Rs 24.31 million in Fiscal 2021, primarily due to an increase in depreciation of property, plant and equipment by 186.99% from Rs 8.30 million in Fiscal 2020 to Rs 23.82 million in Fiscal 2021, on account of additional investments in our manufacturing facility. This was partially offset by a decrease in the amortization of right of use assets from Rs 5.18 million in Fiscal 2020 to nil in Fiscal 2021, on account of surrender of our previously leased premises in Bengaluru, Karnataka on account of relocating to our current facility located at Hi-Tech Defence and Aerospace Park SEZ, Bengaluru, Karnataka.

Other Expenses

Other expenses decreased by 75.83% from Rs 295.19 million in Fiscal 2020 to Rs 71.35 million in Fiscal 2021. This was primarily due to a decrease in:

• Net loss on foreign currency translation from Rs 242.96 million in Fiscal 2020 to nil in Fiscal 2021, on account of foreign exchange fluctuations.

• Wages and labour charges, decreased by 31.83% from Rs 8.86 million in Fiscal 2020 to Rs 6.04 million in Fiscal 2021, on account of reduction of use of contract labour during the Fiscal.

• Freight expenses, by 11.90% from Rs 13.03 million in Fiscal 2020 to Rs 11.48 million in Fiscal 2021, on account of cost optimisation.

This was partially offset by an increase in professional and consultancy fees by 177.63% from Rs 9.12 million in Fiscal 2020 to Rs 25.32 million in Fiscal 2021, on account of project execution consultancy charges for our system integration projects paid to an external agency; and an increase in other expenses by 167.67% from Rs 6.62 million in Fiscal 2020 to Rs 17.72 million in Fiscal 2021, on account of travel bills, hotel bills and unregistered dealers bills, amongst others that were ineligible for GST input.

Profit before Exceptional Items and Tax

For the reasons discussed above, profit before exceptional items and tax was Rs 398.06 million in Fiscal 2021, as compared to Rs 128.67 million in Fiscal 2020.

Tax Expenses

Deferred tax charge was Rs 2.17 million in Fiscal 2021, as compared to Rs 1.24 million in Fiscal 2020; Current tax charges amounted to Rs 104.65 million in Fiscal 2021, as compared to Rs 37.41 million in Fiscal 2020. Total tax expense amounted to Rs 102.48 million in Fiscal 2021, as compared to Rs 31.23 million in Fiscal 2020.

Profit for the Year

For the various reasons discussed above, we recorded a profit after tax for the year of Rs 295.58 million in Fiscal 2021, as compared to Rs 97.44 million in Fiscal 2020.

Total Comprehensive Income for the Year, Net of Tax

Total comprehensive income for the year was Rs 296.16 million in Fiscal 2021, as compared to Rs 97.18 million in Fiscal 2020.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

Adjusted EBITDA was Rs 324.76 million in Fiscal 2021 compared to Rs 452.00 million in Fiscal 2020, while Adjusted EBITDA margin was 4.75% in Fiscal 2021 compared to 9.72 % in Fiscal 2020.

FISCAL 2020 COMPARED TO FISCAL 2019

Income

Total income increased by 50.53% from Rs 3,090.70 million in Fiscal 2019 to Rs 4,652.29 million in Fiscal 2020, primarily attributable to the following:

Revenue from Operations

Revenue from operations increased by 49.82% from Rs 2,998.72 million in Fiscal 2019 to Rs 4,492.62 million in Fiscal 2020 attributable as follows:

• Sale of products increased by 49.66% from Rs 2,946.77 million in Fiscal 2019 to Rs 4,410.10 million in Fiscal 2020. This was driven by system integration vertical wherein revenue increased by 48.20% from Rs 2,508.60 million in Fiscal 2019 to Rs 3,717.65 million in Fiscal 2020.

• Income from sale of services increased from nil in Fiscal 2019 to Rs 15.76 million in Fiscal 2020 on account of job work services.

• Other operating revenue increased by 28.51% from Rs 51.95 million in Fiscal 2019 to Rs 66.76 million in Fiscal 2020, on account of increase in MEIS incentives.

Other Income

Other income increased by 73.60% from Rs 91.98 million in Fiscal 2019 to Rs 159.67 million in Fiscal 2020. This increase is primarily due to an increase in interest on fixed deposits by 61.50% from Rs 90.94 million in Fiscal 2019 to Rs 146.87 million in Fiscal 2020, on account of additional issuance of bank guarantees from banks for obtaining advance mobilisation from overseas customers, resulting in additional fixed deposits created; an increase in other income, by 1470.14% from t 0.69 million in Fiscal 2019 to Rs 10.78 million in Fiscal 2020, on account of incentives received pursuant to the Pradhan Mantri Rojgar Protsahan Yojana along with interest on refunds received from income tax authorities and an increase in gain on termination of lease from nil in Fiscal 2019 to Rs 1.66 million in Fiscal 2020.

Expenses

Total expenses increased by 49.90% from Rs 3,017.67 million in Fiscal 2019 to Rs 4,523.62 million in Fiscal 2020. This was primarily due to an increase in cost of materials consumed, finance costs and other expenses.

Cost of Materials Consumed

Cost of materials consumed increased by 59.18% from Rs 2,708.80 million in Fiscal 2019 to Rs 4,311.78 million in Fiscal 2020 and the increase is primarily driven by an increase in import purchases, by 220.34% from Rs 541.55 million in Fiscal 2019 to Rs 1,734.79 million in Fiscal 2020; and an increase in local purchases by 43.69% from Rs 2,124.20 million in Fiscal 2019 to Rs 3,052.20 million in Fiscal 2020.

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

Changes in inventories of finished goods, stock-in-trade and work-in-progress decreased from Rs 95.97 million in Fiscal 2019 to t (232.49) million in Fiscal 2020, primarily attributable to an increase in closing inventories from Rs 60.28 million in Fiscal 2019 to Rs 292.77 million in Fiscal 2020

Employee Benefits Expense

Employee benefit expenses increased by 12.01% from Rs 49.97 million in Fiscal 2019 to Rs 55.97 million in Fiscal 2020. This was primarily due to an increase in salaries and wages (including bonus & incentives) by 12.76% from Rs 47.09 million in Fiscal 2019 to Rs 53.10 million in Fiscal 2020, on account of increase in salaries.

Finance Cost

Finance costs increased by 36.44% from Rs 58.20 million in Fiscal 2019 to Rs 79.41 million in Fiscal 2020. This increase is primarily attributable to an increase in interest on borrowings by 33.95% from Rs 41.05 million in Fiscal 2019 to Rs 54.98 million in Fiscal 2020, on account of increased average utilisation of working capital; an increase in bank charges by 498.96% from Rs 1.34 million in Fiscal 2019 to Rs 8.05 million in Fiscal 2020; and an increase in other borrowing costs by 7.78% from Rs 13.78 million in Fiscal 2019 to Rs 14.85 million in Fiscal 2020, on account of bank processing charges for sanctioning of working capital limits. This was partially offset by a decrease in unwinding of interest on lease liabilities by 24.63% from Rs 2.03 million in Fiscal 2019 to Rs 1.53 million in Fiscal 2020, on account of Ind AS adjustment as per accounting standards.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by 87.07% from Rs 7.36 million in Fiscal 2019 to Rs 13.76 million in Fiscal 2020, primarily due to an increase in depreciation of property, plant and equipment by 368.93% from Rs 1.77 million in Fiscal 2019 to Rs 8.30 million in Fiscal 2020, on account of write off of leasehold improvements on account of relocating to our current facility located at Hi-Tech Defence and Aerospace Park SEZ, Bengaluru, Karnataka.

Other Expenses

Other expenses increased by 203.16% from Rs 97.37 million in Fiscal 2019 to Rs 295.19 million in Fiscal 2020. This was primarily due to an increase in:

• Net loss on foreign currency translation, by 306.69% from Rs 59.74 million in Fiscal 2019 to Rs 242.96 million in Fiscal 2020, on account of foreign exchange fluctuations.

• Freight expenses by 177.83% from Rs 4.69 million in Fiscal 2019 to Rs 13.03 million in Fiscal 2020, on account of increase in business volumes.

• Professional and consultancy fees, by 43.40% from Rs 6.36 million in Fiscal 2019 to Rs 9.12 million in Fiscal 2020, on account of project execution consultancy charges paid to an external agency.

• Rates and taxes, by 663.04% from t 0.46 million in Fiscal 2019 to Rs 3.51 million in Fiscal 2020, stamp duty paid towards execution of loan documents with banks.

• Other expenses, by 36.49% from Rs 4.85 million in Fiscal 2019 to Rs 6.62 million in Fiscal 2020, on account of insurance cost, security, housekeeping and other incidental expenses, maintaining leasehold property and shifting to our facility at SEZ.

This was partially offset primarily by the decrease in travelling and conveyance expenses by 49.48% from Rs 5.76 million in Fiscal 2019 to Rs 2.91 million in Fiscal 2020, on account of cost optimisation owing to COVID-19 pandemic; and a decrease in power and fuel expenses by 11.32% from Rs 2.12 million in Fiscal 2019 to Rs 1.88 million in Fiscal 2020, on account of shifting to our new facility thereby reducing fuel and maintenance charges on building.

Profit before Exceptional Items and Tax

For the reasons discussed above, profit before exceptional items and tax was Rs 128.67 million in Fiscal 2020, as compared to Rs 73.03 million in Fiscal 2019.

Tax Expenses

Deferred tax charge was Rs 1.24 million in Fiscal 2020, as compared to deferred tax credit of t 0.34 million in Fiscal 2019. Total tax expense amounted to Rs 31.23 million in Fiscal 2020, as compared to Rs 27.17 million in Fiscal 2019.

Profit for the Year

For the various reasons discussed above, we recorded a profit after tax for the year of Rs 97.44 million in Fiscal 2020, as compared to Rs 45.86 million in Fiscal 2019.

Total Comprehensive Income for the Year, Net of Tax

Total comprehensive income for the year was Rs 97.18 million in Fiscal 2020, as compared to Rs 45.29 million in Fiscal 2019.

Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA)

Adjusted EBITDA was Rs 452.00 million in Fiscal 2020 compared to Rs 197.29 million in Fiscal 2019, while Adjusted EBITDA margin was 9.72% in Fiscal 2020 compared to 6.38% in Fiscal 2019.

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed the expansion of our business and operations primarily through debt financing and funds generated from our operations. From time to time, we have obtained loan facilities to finance our short term working capital requirements.

CASH FLOWS

The following table sets forth certain information relating to our cash flows in the periods indicated:

Particulars Fiscal Nine months ended December 31, 2020 Nine months ended December 31, 2021
2019 2020 2021
(Rs m illion)
Net cash flow from/(used in) operating activities 1211.41 1300.28 1,139.81 248.36 (872.73)
Net cash flows (used in)/from investing activities 67.12 84.04 210.65 154.79 201.19
Net cash flows (used in)/from financing activities 383.21 189.68 (23.37) (9.14) 1,562.08
Cash and cash equivalents at the end of the period / year 2,592.24 4,166.24 5,493.33 4,560.25 6,383.87

Operating Activities

Nine months ended December 31, 2021

In the nine months ended December 31, 2021, net cash flows used in operating activities was Rs 872.73 million. Net profit before tax was Rs 436.08 million in the nine months ended December 31, 2021. Primary adjustments consisted of interest on fixed deposits of Rs 210.08 million; interest on borrowings of Rs 33.25 million; and depreciation of Rs 16.05 million.

Operating profit before working capital changes was Rs 275.30 million in the nine months ended December 31, 2021. The main working capital adjustments in the nine months ended December 31, 2021, included decrease in inventories of Rs 1,757.41 million; increase in other current assets of Rs 350.64 million; increase in non-current financial assets of Rs 165.79 million; decrease in trade payables of Rs 207.17 million; decrease in other current financial liabilities of Rs 157.93 million and decrease in other current liabilities of Rs 1,957.22 million.

Nine months ended December 31, 2020

In the nine months ended December 31, 2020, net cash flows from operating activities was Rs 248.36 million. Net profit before tax was Rs 419.22 million in the nine months ended December 31, 2020. Primary adjustments consisted of interest on fixed deposits of Rs 167.97 million; interest on borrowings of Rs 38.89 million; and depreciation of Rs 18.69 million.

Operating profit before working capital changes was Rs 309.02 million in the nine months ended December 31, 2020. The main working capital adjustments in the nine months ended December 31, 2020, included decrease in trade recievables of Rs 351.19 million; increase in inventories of Rs 871.79 million; decrease in other current assets of Rs 735.67 million; decrease in trade payables of Rs 398.26 million; and an increase - in other current liabilities of 1111.00million.

Fiscal 2021

In the Fiscal 2021, net cash flows from operating activities was Rs 1,139.81 million. Net profit before tax was Rs 398.06 million in Fiscal 2021. Primary adjustments consisted of interest on fixed deposits of Rs 223.96 million; interest on borrowings of Rs 47.39 million; and depreciation of Rs 24.31 million.

Operating profit before working capital changes was Rs 245.99 million in Fiscal 2021. The main working capital adjustments in Fiscal 2021 included decrease in trade receivables of Rs 756.57 million; increase in inventories of Rs 1,244.65 million; decrease in other current assets of Rs 859.43 million; decrease in trade payables of Rs 209.00

million; increase in other current financial liabilities of Rs 159.13 million and increase in other current liabilities of Rs 600.35 million.

Fiscal 2020

In the Fiscal 2020, net cash flows from operating activities was Rs 1,300.28 million. Net profit before tax was Rs 128.67 million in Fiscal 2020. Primary adjustments consisted of interest on fixed deposits of Rs 146.87 million; interest on borrowings of Rs 54.98 million; and depreciation of Rs 13.76 million.

Operating profit before working capital changes was Rs 50.05 million in Fiscal 2020. The main working capital adjustments in Fiscal 2020 included decrease in trade receivables of Rs 123.25 million; increase in inventories of Rs 707.70 million; decrease in other current assets of Rs 110.89 million; increase in trade payables of Rs 767.09 million; and increase in other current liabilities of Rs 1,004.52 million.

Fiscal 2019

In the Fiscal 2019, net cash flows from operating activities was Rs 1,211.41 million. Net profit before tax was Rs 73.03 million in Fiscal 2019. Primary adjustments consisted of interest on fixed deposits of Rs 90.94 million; interest on borrowings of Rs 41.05 million; and depreciation of Rs 7.36 million.

Operating profit before working capital changes was Rs 32.18 million in Fiscal 2019. The main working capital adjustments in Fiscal 2019 included increase in trade receivables of Rs 793.81 million; decrease in inventories of Rs 139.03 million; increase in other current assets of Rs 1.015.48 million; increase in trade payables of Rs 472.10 million; and increase in other current liabilities of Rs 2,393.88 million.

Investing Activities

Nine months ended December 31, 2021

Net cash flow from investing activities was Rs 201.19 million in the nine months ended December 31, 2021, primarily on account of purchase of property, plant and equipment of Rs 12.70 million; proceeds on sale/maturity of financial assets of Rs 3.81 million; and interest received of Rs 210.08 million.

Nine months ended December 31, 2020

Net cash flow from investing activities was Rs 154.79 million in the nine months ended December 31, 2020, primarily on account of purchase of property, plant and equipment of Rs 14.18 million; investments of mutual funds Rs 1.00 million; and interest received of Rs 167.97 million.

Fiscal 2021

Net cash flow from investing activities was Rs 210.65 million in Fiscal 2021, primarily on account of purchase of property, plant and equipment of Rs 15.84 million; proceeds on sale/maturity of financial assets of Rs 1.53 million; investments of mutual funds of Rs 1.00 million; and interest received of Rs 223.96 million.

Fiscal 2020

Net cash flow from investing activities was Rs 84.04 million in Fiscal 2020, primarily on account of purchase of property, plant and equipment of Rs 102.83 million; investments of mutual funds Rs 40.00 million; and interest received of Rs 146.87 million.

Fiscal 2019

Net cash flow from investing activities was Rs 67.12 million in Fiscal 2019, primarily on account of purchase of property, plant and equipment of Rs 28.56 million; investments of mutual funds Rs 39.88 million; loans (financial assets) of Rs 44.61 million; and interest received of Rs 90.94 million.

Financing Activities

Nine months ended December 31, 2021

Net cash flows from financing activities was Rs 1,562.08 million in the nine months ended December 31, 2021, primarily on account of proceeds from working capital facilities of Rs 1,587.52 million. This was partially offset by interest paid of Rs 33.25 million.

Nine months ended December 31, 2020

Net cash flows used in financing activities was Rs 9.14 million in the nine months ended December 31, 2021, primarily on account of interest paid of Rs 38.89 million. This was partially offset from the proceeds from working capital facilities of Rs 29.75 million.

Fiscal 2021

Net cash flows used in financing activities was Rs 23.37 million in Fiscal 2021, primarily on account of interest paid of Rs 47.39 million. This was partially offset from the proceeds from working capital facilities of Rs 24.02 million.

Fiscal 2020

Net cash flows from financing activities was Rs 189.68 million in Fiscal 2020, primarily on account of proceeds from working capital facilities of Rs 250.19 million. This was partially offset by interest paid of Rs 54.98 million; principal lease amount of Rs 4.00 million; and interest on lease amount of Rs 1.53 million.

Fiscal 2019

Net cash flows from financing activities was Rs 383.21 million in Fiscal 2019, primarily on account of proceeds from working capital facilities of Rs 430.26 million. This was partially offset by interest paid of Rs 41.05 million; principal lease amount of Rs 3.97 million; and interest on lease amount of Rs 2.03 million.

INDEBTEDNESS

We have historically financed the expansion of our business and operations primarily through debt financing, equity funding and funds generated from our operations. From time to time, we may obtain loan facilities to finance our short term working capital requirements.

As of December 31, 2021, we had total borrowings (consisting of non-current borrowings and current borrowings) of Rs 2,959.12 million. Our total debt/ equity ratio was 3.70 as of December 31, 2021.

The following table sets forth certain information relating to our outstanding indebtedness as of December 31, 2021, and our repayment obligations in the periods indicated:

Particulars As of December 31, 2021
Payment due by period

(Rs million)

Total Not later than 1 year 1-3 years 3-5 years More than 5 years
Current Borrowings
Packing credit facility 2,951.31 2,951.31 - - -
Vehicle loan 7.81 7.81
Total Current Borrowings 2,959.12 2,951.31 - 7.81 -
Total Borrowings 2,959.12 2,951.31 - 7.81 -

CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS

As of December 31, 2021, our contingent liabilities that have not been accounted for in our financial statements were as follows:

Particulars Amount (^million)
Bank guarantees 4,714.07
Total 4,714.07

For further information on our contingent liabilities, see "Restated Financial Information - Contingent liabilities, contingent assets and commitments - Note 37" on page 257.

Except as disclosed in the Restated Financial Information or elsewhere in this Draft Red Herring Prospectus, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

We do not have any long-term commitments or material non-cancellable contractual commitments/contracts, including derivative contracts for which there were any material foreseeable losses.

CAPITAL EXPENDITURES

In Fiscal 2019, 2020 and 2021, and in the nine months ended December 31, 2020 and December 31, 2021, our capital expenditure towards additions (after disposal and adjustments) to fixed assets (property, plant and equipments and intangible assets) were Rs 0.58 million, Rs 102.83 million, Rs 15.84 million, Rs 14.18 million and Rs 12.70 million, respectively. The following table sets forth our fixed assets for the periods indicated:

Particulars Fiscal 2019 Fiscal 2020 Fiscal 2021 For the nine months ended December 31, 2020 For the nine months ended December 31, 2021

(Rs million)

Plant and Equipment 4.57 127.02 116.12 121.73 109.38
Capital Work in Progress 27.97 - - - -
Rights of use 52.77 38.10 38.10 38.10 38.10
Other intangible assets 1.12 0.88 1.78 1.66 1.36
Total 86.43 166.00 156.00 161.49 148.84

RELATED PARTY TRANSACTIONS

We enter into various transactions with related parties in the ordinary course of business. These transactions principally include remuneration paid to KMPs, purchases of PCBAs, sale of cable and wire harness and export of cable and wire harness, equipment purchase and import of varieties of connectors, wires, sleeves, back shelf required for cable and wire harness.

In Fiscal 2019, 2020 and 2021 and in the nine months ended December, 31, 2020 and December 31, 2021, the aggregate amount of such related party transactions was Rs 643.45 million, Rs 380.58 million, Rs 4,296.77 million, 4,170.47 million and Rs 1,754.57 million respectively. For further information relating to our related party transactions, see "Restated Financial Information - Note 37" on page 257.

AUDITORS OBSERVATIONS

Our Statutory Auditors have included certain emphasis of matters in their examination report:

March 31, 2020

"Emphasis of matter paragraph has been included for year 19-20 for the spread of COVID-19, which has severely impacted business around the globe. In many countries including India, there has been severe disruption to regular business operations due to lockdown, disruptions in transportation, supply chain, travel bans, social distancing and other emergency measures. The situation continues to be uncertain "

March 31, 2021

"Emphasis of matter paragraph has also been included for year 20-21 for the spread of COVID-19, which has severely impacted business around the globe. In many countries including India, there has been severe disruption to regular business operations due to lockdown, disruptions in transportation, supply chain, travel bans, social distancing and other emergency measures. The situation continues to be uncertain. "

December 31, 2020

"Emphasis of matter paragraph has also been included for the period ending 31 December 2020for the spread of COVID-19, which has severely impacted business around the globe. In many countries including India, there has been severe disruption to regular business operations due to lockdown, disruptions in transportation, supply chain, travel bans, social distancing and other emergency measures. The situation continues to be uncertain. "

December 31, 2021

"Emphasis of matter paragraph has been included for the period ending 31 December 2021 for the spread of COVID-19, which has severely impacted business around the globe. In many countries including India, there has been severe disruption to regular business operations due to lockdown, disruptions in transportation, supply chain, travel bans, social distancing and other emergency measures. The situation continues to be uncertain. "

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our activities expose us to market risk, liquidity risk and credit risk. Our board of directors has overall responsibility for the establishment and oversight of our risk management framework.

Credit Risk

Credit risk is the risk of financial loss to our Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from our Companys receivables from customers.

Our Companys exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, our management also considers the factors that may influence the credit risk of its customer base, including the default risk associated with the industry and country in which customers operate.

Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. On account of adoption of Ind AS 109, our Company uses expected credit loss model to assess impairment loss or gain. Our Company uses a matrix to compute the expected credit loss allowance for trade receivables. The provision matrix takes into account available external and internal credit risk factors and Companys historical experience for customers.

Our Company has not made any provision on expected credit loss on trade receivables and other financials assets, based on the management estimates.

We believe that credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by domestic credit rating agencies.

Liquidity Risk

Liquidity risk is the risk that our Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Our approach to managing liquidity is to ensure, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our Companys reputation.

Our treasury department is responsible for liquidity and funding. In addition policies and procedures relating to such risks are overseen by our management.

Our Companys principal sources of liquidity are cash and cash equivalents and the cash flow that is generated from the operations.

For further information, please see "Restated Financial Information - Note 40" on page 259.

Market Risk

Market risk is the risk that changes with market prices - such as foreign exchange rates and interest rates, will affect our Companys income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.

For further information, please see "Restated Financial Information - Note 40" on page 259.

Foreign Currency Risk

Foreign currency risk is the risk that fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rate. Company transacts business in its functional currency (Indian Rupees) and in other foreign currencies. Our Companys exposure to the risk of changes in foreign exchange rates relates primarily to our Companys operating activities, where revenue or expense is denominated in a foreign currency.

For further information, please see "Restated Financial Information - Note 40" on page 259.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to the risk of changes in market interest rates relates primarily to our Companys debt obligations with floating interest rates. We manage our interest rates by selection of appropriate type of borrowings and by negotiation with bankers.

For further information, please see "Restated Financial Information - Note 40" on page 259.

CHANGES IN ACCOUNTING POLICIES

There have been no changes in our accounting policies during Fiscal 2019, 2020 and 2021, and the nine months ended December 31, 2021.

UNUSUAL OR INFREQUENT EVENTS OR TRANSACTIONS

Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.

SIGNIFICANT ECONOMIC CHANGES THAT MATERIALLY AFFECT 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 that materially affect or are likely to affect income from continuing operations identified above in " Managements Discussion and Analysis of Financial Condition and Results of Operations - Significant Factors Affecting our Results of Operations and Financial Condition"" and the uncertainties described in "Risk Factors"" on pages 284 and 24, respectively.

KNOWN TRENDS OR UNCERTAINTIES

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 "Managements Discussion and Analysis of Financial Condition and Results of Operations - Significant Factors Affecting our Results of Operations and Financial Condition" and the uncertainties described in "Risk Factors" on pages 284 and 24, respectively. To our knowledge, except as discussed in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

FUTURE RELATIONSHIP BETWEEN COST AND INCOME

Other than as described in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations"" on pages 24, 154 and 282, respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

NEW PRODUCTS OR BUSINESS SEGMENTS

Except as set out in this Draft Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments.

COMPETITIVE CONDITIONS

We operate in a competitive environment. See "Our Business"", "Industry Overview" and "Risk Factors" on pages 154, 113 and 24, respectively, for further information on competitive conditions that we face across our various business verticals.

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

Changes in revenue in the last three Fiscals and in the nine months ended December 31, 2020 and December 31, 2021 are as described in "Managements Discussion and Analysis of Financial Condition and Results of Operations - Nine Months ended December 31, 2021 compared to Nine Months ended December 31, 2020"", "Managements Discussion and Analysis of Financial Condition and Results of Operations - Fiscal 2021 compared to Fiscal 2020"" and "Managements Discussion and Analysis of Financial Condition and Results of Operations - Fiscal 2020 compared to Fiscal 2019" above on pages 301, 303 and 305, respectively.

SEGMENT REPORTING

Our Company is exclusively engaged in the business of manufacturing of electronic sub-systems and cable harness for both international and domestic aerospace and defence sector. These in the context of the Ind AS 108 Operating Segment, are considered to constitute one single primary segment.

For further information, see "Restated Financial Information - Note 48"" on page 274.

SIGNIFICANT DEVELOPMENTS AFTER DECEMBER 31, 2021 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS

Except as disclosed above and elsewhere in this Draft Red Herring Prospectus, to our knowledge no circumstances have arisen since December 31, 2021, that could materially and adversely affect or are likely to affect, our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the nexRs 12 months.