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Deepak Chemtex Ltd Management Discussions

₹114.95
(12.64%)
May 12, 2025|12:00:00 AM

Deepak Chemtex Ltd Share Price Management Discussions

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our restated financial statements attached in the chapter titled "Financial Information of the Company" beginning on page 147 You should also read the section titled "Risk Factors" on page 24 and the section titled "Forward Looking Statements" on page 18 of this Draft Red Herring Prospectus, which discusses a number of factors and contingencies that could affect our financial condition and results of operations. The following discussion relates to us, and, unless otherwise stated or the context requires otherwise, is based on our Restated financial Statements. Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditor dated September 29, 2023 which is included in this Draft Red Herring Prospectus under "Financial Statements". The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.

Business Overview

We are primarily engaged in the business of manufacturing of colorants finding its application in Food, Drug, Cosmetics, Cleaning compounds, Agriculture and other industries. Colorants are formulations of chemical intermediates, pigments or dyes and additives used to add colour to various consumables. We commenced our business in 1997 and have over the years evolved into manufacturing of a complete range of FD&C (Food, Drug and Cosmetic) colours used in the confectionary, bakery, desserts, beverages, dairy products, seasonings, pet foods, pharmaceutical products, cosmetics & personal care products. We also manufacture salt free dyes used in inkjet industry, pond dyes used in in ponds, lakes, swimming pools etc and other colorants used in car wash products, portable sanitation cleaners, detergent & soap, fuel, oil & lubricants, smoke, seed treatment, crop protection, fertilizer indicators, floral dyes etc.

Our manufacturing facility is situated at Ratnagiri District in Maharashtra and is equipped with glass lined reactors, boilers and stainless steel equipments and gets audited on a regular basis by our clients. We use various production processes like: Sulphonation, Condensation, Bromination, Oxidation, Reduction, High pressure reactions, Purification etc which enables us to cater to niche and advanced requirements of a wider range of end-products and applications. We manufacture colorants from unwanted salts and isomers. The quality framework at our organization comprises of quality checks focused on shade testing, heavy metals detection, microbiological contamination tests and particle size analysis done by our inhouse team. Our manufacturing facility is accredited with ISO 9001:2015 for quality management system for the manufacture and supply of chemical intermediates & dyes stuff. To ensure quality standards our manufacturing unit has also received HALAL certificate which guarantee that the food is prepared in accordance with Islamic law and is unadulterated and KOSHER certificate that a particular food item or product has been prepared in accordance with the Dietary Laws of Judaism. With the growing environmental concerns we have developed Effluent treatment Plant and carry out a series of treatments to check the COD, BOD, TDS and PH levels of the effluent before we discharge the same to the Common Effluent Treatment Plant.

We are exporting to countries like: China, France, Kenya, Mexico, Europe, Japan, Australia, United Kingdom, United States Of America etc. We have successfully expanded our commercialized product portfolio from around 50 products in Fiscal 2021 to around 100 products in Fiscal 2023. The revenue from top 10 products of the company for the Fiscal 2023, Fiscal 2022 and Fiscal 2021 were Rs 3,747.56 lakhs, Rs 4,489.66 lakhs and Rs 2,688.89 lakhs which contributed to 80.24%, 82.97% and 90.97% of our total revenue from operations. We have a diverse base of Indian and global customers who sometimes secure EN 71(European Standard) certification for our products.

We provide flexible packing options like: IBC Tank Packing, HDPE Drum Packing, Cardboard Drum Packing, Carton Packaging and Container Stuffing etc. We pack the offered range hygienically, so as to ensure its safety during the transit.

Our Company is led by our Promoter Saurabh Deepak Arora having an experience of around 26 years in the colorant manufacturing business. To further expand and facilitate our operations we also operate through our subsidiaries through DCPL Speciality Chemicals Private Limited and South West Chemicals Corporation in New Jersey in USA.

The share of revenue through application of our products across various Industry Segments are as under:

(Rs. In Lakhs)

Industry Segment

Fiscal 2023

%

Fiscal 2022

%

Fiscal 2021

%
HI&I - Household Industrial

and institutional

 2266.71 48.53% 3462.18 63.99% 1167.46

39.50%
Food 411.42

8.81%

 696.51 12.87% 991.46

33.54%
Cosmetics 181.87

3.89%

 135.48 2.50% 195.13

6.60%
Pharmaceuticals 63.25

1.35%

 0.00 0.00% 0.00

0.00%
Industrial 33.97

0.73%

 4.14 0.08% 7.84

0.27%
Agriculture 7.59

0.16%

 6.97 0.13% 6.59

0.22%
Others 1705.48 36.52% 1105.59 20.43% 587.19

19.87%
Total 4670.29 100.00% 5410.87 100.00% 2955.66

100.00%

Key Performance Indicators of our Company

(Rs. In Lakhs except percentages and ratios)

Key Financial Performance

FY 2022-23

FY 2021-22

FY 2020-21
Revenue from operations(1)

4,670.29

5,410.87

2,955.66
EBITDA(2)

799.32

592.98

411.84
EBITDA Margin(3)

17.11%

10.96%

13.93%
PAT

631.02

423.10

263.47
PAT Margin(4)

13.51%

7.82%

8.91%
Net Worth (5)

50.32%

58.16%

67.22%
RoE(%)(6)

49.63%

50.22%

55.09%
RoCE (%)(7)

4,670.29

5,410.87

2,955.66

Notes:

(1)Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements

(2)EBITDA is calculated as Profit before tax + Depreciation + Interest Expenses - Other Income

(3) ‘EBITDA Margin is calculated as EBITDA divided by Revenue from Operations

(4) ‘PAT Margin is calculated as PAT for the period/year divided by revenue from operations.

(5) Net worth means the aggregate value of the paid-up share capital and reserves and surplus of the company.

(6)Return on Equity is ratio of Profit after Tax and Average Shareholder Equity

(7)Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as shareholders equity plus total borrowings {current & non-current}.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of "Statement of Significant Accounting Policies", please refer to Annexure IV of Restated Financial Statements beginning on page 147 of this Draft Red Herring Prospectus.

Factors Affecting our Results of Operations

  1. General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies;
  2. Inability to promptly identify and respond to changing customer preferences or evolving trends and If one or more of our major customers choose not to source their requirements from us or to terminate our long-term contracts;
  3. Our ability to effectively manage the operations of and costs associated with our manufacturing facilities;
  4. Any slowdown or shutdown in our manufacturing operations or strikes, work stoppages or increased wage demands by our employees that could interfere with our operations;
  5. Certain risks consequent to our operations involving the manufacture, usage and storage of various hazardous substances;
  6. Our reliance on a combination of trade mark, trade secret, copyright law and contractual restrictions and our inability to protect our intellectual property rights;
  7. Exchange rate fluctuations that may adversely affect our results of operations, since our sales from exports and a portion of our expenditures are denominated in foreign currencies;
  8. We may not be able to sustain our historical growth rates, and our historical performance may not be indicative of our future growth or financial results;
  9. Failure to successfully upgrade our product portfolio, from time to time;
  10. Any change in government policies resulting in increases in taxes payable by us;
  11. Our ability to retain our key managements persons and other employees;
  12. Changes in laws and regulations that apply to the industries in which we operate;
  13. Our ability to grow our business;
  14. Restrictions on the import of our raw materials and/or an increase in shipment costs;
  15. Reduction in the demand of our products;
  16. Failure to comply with the quality standards and requirements of our customers;
  17. Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;
  18. Companys ability to successfully implement its growth strategy and expansion plans;
  19. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;
  20. Inability to successfully obtain registrations in a timely manner or at all;
  21. Occurrence of Environmental Problems & Uninsured Losses;
  22. Conflicts of interest with affiliated companies, the promoter group and other related parties;
  23. Any adverse outcome in the legal proceedings in which we are involved;
  24. Inability to meet out the permissible food standards may lead to cancellation of HALAL & KOSHER certification.
  25. Concentration of ownership among our Promoters;
  26. Other factors beyond our control.

Discussion on Result of Operations

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

Particulars

31.03.2023

% of Total Income

31.03.2022

% of Total Income

31.03.2021

% of Total Income
Revenue From Operations 4670.29 97.63% 5410.87 99.40% 2955.66

99.43%
Other Income 113.43 2.37% 32.81

0.60%

 17.09

0.57%
Total Revenue 4783.72 100.00% 5443.68 100.00% 2972.75 100.00%
Expenditure
Cost of Material Consumed 2681.66 56.06% 3258.14 59.85% 1456.37

48.99%
Purchase of stock in Trade 417.79 8.73% 464.21

8.53%

 378.16

12.72%
Change in inventories of finished goods, work in progress and stock

in trade

 -195.91 -4.10% 13.85

0.25%

 -7.90

-0.27%
Employee Benefit Expenses 222.78 4.66% 195.65

3.59%

 168.89

5.68%
Finance Cost 6.82 0.14% 9.46

0.17%

 7.68

0.26%
Depreciation and Amortisation

Expenses

 65.85 1.38% 54.27

1.00%

 57.26

1.93%
Other Expenses 741.71 15.50% 884.44 16.25% 545.98

18.37%
Total Expenditure 3940.70 82.38% 4880.01 89.65% 2606.44 87.68%
Profit/(Loss) Before Tax 843.03 17.62% 563.67 10.35% 366.30 12.32%
Tax Expense:
Current Tax 216.77 4.53% 145.79

2.68%

 103.94

3.50%
Adjustment of tax 0.00 0.00% 0.00

0.00%

 -0.46

-0.02%
Deferred Tax 4.76 0.10% 5.22

0.10%

 1.57

0.05%
Total Tax Expense 212.01 4.63% 140.57

2.77%

 102.84

3.46%
Net Profit and loss as restated 631.02 12.99% 423.10

7.58%

 263.47

8.86%

Revenue from operations:

Revenue from operations mainly consists of revenue from sale of colorants finding its application in Food, Drug, Cosmetics, Cleaning compounds, Agriculture and other industries.

Other Income:

Other income primarily comprises of Balances Written off, Duty Drawback, Interest Income, Govt Subsidy, Sale of Scrap, Discount Received and Exchange Fluctuation Gain.

Total Expenses:

Total expenses consist of operating cost like Cost of Material consumed, Purchase of stock in trade, Change in inventories of finished goods, work in progress and stock in trade, Employee benefits expense, Finance costs, Depreciation and amortization expenses and other expenses.

Cost of Material consumed

Cost of Material consumed expenses primarily comprises of Purchase of Raw & Packing Material, Freight Charges and change in stock of raw material both Indigenous and Imported.

Purchase of Stock in Trade

Purchase of Stock in Trade primarily comprises of Purchase of stock in trade made by the company.

Change in inventories of finished goods

Change in inventories of Finished goods comprises of increase/ (decrease) in stock of finished goods and consumables.

Employee benefits expense:

Employee benefits expense primarily comprises of salaries and wages, Contribution to PF & Other Funds, Rent for Employees, and Remuneration to directors, Staff welfare expenses and Gratuity.

Finance Costs:

Our Finance cost includes Interest expenses and Bank charges.

Depreciation and Amortization Expenses:

Depreciation includes depreciation on Building, Computer, Furniture & Fittings, Office Equipment, Computers, Vehicles and Plant & Machinery.

Other Expenses:

Other Expenses consists of Expenses like: Auditors Remuneration, Business Promotion, Bad Debts, Freight Charges, Commission paid, Custom Clearing Charges, Custom Duty on Import, Detention charges, donation, Discount Allowed, Electricity Charges – Factory, Electricity Charges-Office, Employees Training Expenses, Environmental Protection Expenses, Factory expenses, Gardening Expenses, GST Reversal, Insurance, Interest on Income Tax, Laboratory Expenses & Testing Charges, Labour Charges, Legal, Professional, Consultancy Charges, membership fees, Municipal Tax, Motor car Expenses, Office Maintenance Expenses, Postage & Courier, Printing & Stationery, Packing Charges Rates, Taxes & Fees, Rent, Repairs & Maintenance-Plant & Factory Building, Stores, Spares & Packing Materials Consumed, Shipping Line Charges, Telephone Charges, Travelling & Conveyance, Vat Expenses and Water Charges.

FINANCIAL YEAR 2023 COMPARED TO FINANCIAL YEAR 2022

Total Income:

Total income for the financial year 2022-23 stood at Rs. 4,783.72 Lakhs whereas in Financial Year 2021-22 the same stood at Rs. 5,443.68 Lakhs representing a decrease of 12.12%. The main reason of decrease was decrease in the volume of business operations of the company. The total income consists of revenue from operations and other income.

Revenue from Operations

During the financial year 2022-23 the net revenue from operation of our Company decreased to Rs. 4,670.29 Lakhs as against Rs. 5,410.87 Lakhs in the Financial Year 2021-22 representing a decrease of 13.69%. The main reason of decrease was due to decrease in the sales from domestic market.

Other Income:

During the financial year 2022-23 the other income of our Company increased to Rs.113.43 Lakhs as against Rs. 32.81 lakhs in the Financial Year 2021-22 representing an increase of 245.71% which was due to increase in income from (i) Duty Drawback of Rs. 56.36 lakhs in the financial year 2022-23 as compared to Rs. 20.54 lakhs in financial year 2021-22 which amount to increase of 174.39%, (ii) Balances written Off of Rs.3.21 lakhs in financial year 2022-23, which started in current year itself, (iii) Interest Income of Rs. 5.81 lakhs in the financial year 2022-23 as compared to Rs. 0.02 lakhs in financial year 2021-22 (iv) Govt Subsidy of Rs. 9.00 lakhs in the financial year 2022-23 as compared to Rs. 0.45 lakhs in financial year 2021-22 (v) Exchange Fluctuation Gain of Rs. 38.80 lakhs in the financial year 2022-23 as compared to Rs. 10.18 lakhs in financial year 2021-22 which amount to increase of 280.96%.

Total Expenses

The total expense for the financial year 2022-23 decreased to Rs. 3,940.70 Lakhs from Rs. 4,880.01 lakhs in the Financial Year 2021-22 representing a decrease of 19.25%. Such decrease was due to decrease in business operations of the Company.

Cost of Raw Material consumed

The Cost of material consumed for the financial year 2022-23 decreased to Rs. 2,681.66 lakhs from Rs. 3,258.14 lakhs in the Financial Year 2021-22 representing a decrease of 17.69%. Such decrease was due to decrease in purchase of (i) Raw & Packing materials from Rs 3,265.08 lakhs in financial year 2021-2022 to Rs 2,696.40 lakhs in financial year 2022- 2023 representing a decrease of 17.42%, (ii) Freight Charges from Rs 3.86 lakhs in financial year 2021-2022 to Rs 3.32 lakhs in financial year 2022-2023 representing a decrease of 14.06%.

Purchase of Stock in Trade

Purchase of Stock in Trade for the financial year 2022-23 decreased to Rs. 417.79 lakhs from Rs. 464.21 lakhs in the Financial Year 2021-22 representing a decrease of 10.00%. Such decrease was due to decrease in purchase of stock in trade during the financial year 2022-23.

Change in inventories of finished goods

Our Change in inventories of finished goods comprises of increase/(decrease) in finished goods and consumables. The closing inventories of finished goods for the financial year 2022-23 was Rs 242.55 lakhs as compared to Rs 42.84 lakhs in the Financial Year 2021-22 representing an increase of 466.12%. The closing inventories of Consumables for the financial year 2022-23 was Rs 10.38 lakhs as compared to Rs. 14.18 lakhs in the Financial Year 2021-22 representing a decrease of 26.78%.

Employee benefits expense:

Our Company has incurred Rs. 222.78 Lakhs as Employee benefits expense during the financial year 2022-23 as compared to Rs. 195.65 Lakhs in the financial year 2021-22. The increase of 13.87% was due to increase in (i) Salaries, Wages & Bonus of Rs. 183.05 lakhs in the financial year 2022-23 as compared to Rs. 158.77 lakhs in financial year 2021-22 which amount to increase of 15.29%, (ii) Gratuity of Rs.5.81 lakhs in financial year 2022-23 as compared to Rs.

2.57 lakhs in financial year 2021-22 which amount to increase of 126.36%, (iii) Rent for Employees of Rs. 0.90 lakhs in the financial year 2022-23 as compared to Rs. 0.84 lakhs in financial year 2021-22 which amount to increase of 7.14%,

(iv) Staff Welfare Expenses of Rs. 10.79 lakhs in the financial year 2022-23 as compared to Rs. 8.02 lakhs in financial year 2021-22 which amount to increase of 34.61%.

Finance Costs:

Our Company has incurred Rs. 6.82 Lakhs as finance cost during the financial year 2022-23 as compared to Rs. 9.46 Lakhs in the financial year 2021-22. The decrease of 27.92% was due to decrease in interest on Borrowings.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2022-23 stood at Rs. 65.85 Lakhs as against Rs. 54.27 Lakhs during the financial year 2021-22. The increase in depreciation was around 21.35% which was due to addition in Plant & Machinery, Furniture & Fittings, Building, Office Equipment and Vehicles.

Other Expenses:

Our Company has incurred Rs. 741.71 Lakhs during the Financial Year 2022-23 on other expenses as against Rs. 884.44 Lakhs during the financial year 2021-22. There was a decrease of 16.14% mainly due (i) decrease in Custom Duty on Import by 18.85% from Rs. 42.94 lakhs in financial year 2021-22 to Rs. 34.85 Lakhs in financial year 2022-23, (ii) decrease in Business Promotion by 85.51% from Rs. 27.01 lakhs in financial year 2021-22 to Rs. 3.91 lakhs in financial year 2022-23, (iii) decrease in Electricity Charges by 4.99% from Rs. 44.91 lakhs in financial year 2021-22 to Rs. 42.67 lakhs in financial year 2022-23, (iv) decrease in Employees Training Expenses by 93.95% from Rs. 1.59 lakhs in financial year 2021-22 to Rs. 0.10 lakhs in financial year 2022-23 (v) decrease in Gardening Expenses by 65.21 % from Rs. 5.99 lakhs in financial year 2021-22 to Rs 2.09 lakhs in financial year 2022-23 (vi) decrease in insurance by 66.14 % from Rs. 1.82 lakhs in financial year 2021-22 to Rs. 0.61 lakhs in financial year 2022-23 (vii) decrease in Labour Charges by 11.48 % from Rs. 58.07 lakhs in financial year 2021-22 to Rs. 51.41 lakhs in financial year 2022-23, (viii) decrease in Repair & Maintenance by 78.58 % from Rs.111.19 lakhs in financial year 2021-22 to Rs. 23.81 lakhs in financial year 2022-23, (ix) decrease in Stores, Spares & Packing Materials Consumed by 8.14 % from Rs.254.77 lakhs in financial year 2021-22 to Rs. 234.04 lakhs in financial year 2022-23 etc.

Restated Profit before tax:

Net profit before tax for the financial year 2022-23 increased to Rs. 843.03 Lakhs as compared to Rs. 563.67 Lakhs in the financial year 2021-22. The increase of 49.56% was majorly due to factors as mentioned above.

Restated profit after tax:

As a result of the above factors, our profit after tax for the year increase by 49.14% from net profit of Rs. 423.10 Lakhs in in financial year 2021-22 to net profit Rs. 631.02 lakhs in financial year 2022-23. Consequently, our PAT Margin expanded to 13.44% in financial year 2022-23 from 7.82 % in financial year 2021-22.

FINANCIAL YEAR 2022 COMPARED TO FINANCIAL YEAR 2021

Total Income:

Total income for the financial year 2021-22 stood at Rs. 5,443.68 Lakhs whereas in Financial Year 2020-21 the same stood at Rs. 2,972.75 Lakhs representing an increase of 83.12%. The main reason of increase was increase in the volume of business operations of the company. The total income consists of revenue from operations and other income.

Revenue from Operations

During the financial year 2021-22 the net revenue from operation of our Company increased to Rs. 5,410.87 Lakhs as against Rs. 2,955.66 Lakhs in the Financial Year 2020-21 representing an increase of 83.07%. The main reason of increase was due to increase in the sales.

Other Income:

During the financial year 2021-22 the other income of our Company increased to Rs. 32.81 Lakhs as against Rs. 17.09 lakhs in the Financial Year 2020-21 representing an increase of 92.01% which was due to increase in income from (i) Duty Drawback of Rs. 20.54 lakhs in the financial year 2021-22 as compared to Rs. 9.08 lakhs in financial year 2020-21 which amount to increase of 126.22%, (ii) Govt Subsidy of Rs. 0.45 lakhs in the financial year 2021-22 as compared to Rs. 0.35 lakhs in financial year 2020-21 which amount to increase of 26.72%, (iii) Exchange Fluctuation Gain of Rs.

10.18 lakhs in the financial year 2021-22 as compared to Rs. 2.84 lakhs in financial year 2020-21 which amount to increase of 258.40%, (iv) Sale of Scrap of Rs. 1.58 lakhs in the financial year 2021-22 as compared to Rs. 0.03 lakhs in financial year 2020-21.

Total Expenses

The total expense for the financial year 2021-22 increased to Rs. 4,880.01 Lakhs from Rs. 2,606.44 lakhs in the Financial Year 2020-21 representing an increase of 87.23%. Such increase was due to increase in volume of business operations of the Company.

Cost of Raw Material consumed

The Cost of Raw material consumed for the financial year 2021-22 increased to Rs. 3,258.14 lakhs from Rs. 1,456.37 lakhs in the Financial Year 2020-21 representing a increase of 123.72%. Such increase was due to increase in purchase of

(i) Raw & Packing materials to Rs 3,265.08 lakhs in financial year 2021-22 from Rs 1,465.50 lakhs in financial year 2020-21 representing an increase of 122.80% (ii) Freight Charges to Rs 3.86 lakhs in financial year 2021-22 which were incurred in this year itself.

Purchase of Stock in Trade

Purchase of Stock in Trade for the financial year 2021-22 increased to Rs. 464.21 lakhs from Rs. 378.16 lakhs in the Financial Year 2020-21 representing an increase of 22.75%. Such increase was due to increase in purchase of stock in trade during the financial year 2021-22.

Change in inventories of finished goods

Our Change in inventories of Finished goods comprises of increase/(decrease) in finished goods and Consumables. The closing inventories of finished goods for the financial year 2021-22 was Rs 42.84 lakhs as compared to Rs 68.60 lakhs in the Financial Year 2020-21 representing a decrease of 37.54%. The closing inventories of Consumables for the financial year 2021-22 was Rs 14.18 lakhs as compared to Rs. 2.27 lakhs in the Financial Year 2020-21 representing an increase of 524.54%.

Employee benefits expense:

Our Company has incurred Rs. 195.65 Lakhs as Employee benefits expense during the financial year 2021-22 as compared to Rs. 168.89 Lakhs in the financial year 2020-21. The increase of 15.84% was due to increase in (i) Salaries, Wages & Bonus of Rs. 158.77 lakhs in the financial year 2021-22 as compared to Rs. 123.51 lakhs in financial year 2020-21 which amount to increase of 28.55%, (ii) Staff Welfare Expenses of Rs. 8.02 lakhs in the financial year 2021-22 as compared to Rs. 6.80 lakhs in financial year 2020-21 which amount to increase of 17.81%.

Finance Costs:

Our Company has incurred Rs. 9.46 Lakhs as finance cost during the financial year 2021-22 as compared to Rs. 7.68 Lakhs in the financial year 2020-21. The increase of 23.19% was due to increase in interest on Borrowings.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2021-22 stood at Rs.54.27 Lakhs as against Rs. 57.26 Lakhs during the financial year 2020-21. The decrease in depreciation was around 5.23% which was due to no significant addition in fixed assets.

Other Expenses:

Our Company has incurred Rs. 884.44 Lakhs during the Financial Year 2021-22 on other expenses as against Rs. 545.98 Lakhs during the financial year 2020-21. There was an increase of 16.14% mainly due (i) increase in Custom Duty on Import by 212.07% from Rs. 13.76 lakhs in financial year 2020-21 to Rs. 42.94 lakhs in financial year 2021-22, (ii) increase in Business Promotion by 244.95% from Rs. 7.83 lakhs in financial year 2020-21 to Rs. 27.01 lakhs in financial year 2021-22, (iii) increase in Electricity Charges by 67.85% from Rs. 25.85 lakhs in financial year 2020-21 to Rs. 43.01 lakhs in financial year 2021-22, (iv) increase in Freight Charges by 206.98% from Rs. 60.82 lakhs in financial year 2020- 21 to Rs. 186.71 lakhs in financial year 2021-22 (v) increase in Gardening Expenses by 154.17 % from Rs. 2.36 lakhs in financial year 2020-21 to Rs 5.99 lakhs in financial year 2021-22 (vi) increase in Custom clearing charges by 27.53 % from Rs. 16.43 lakhs in financial year 2020-21 to Rs.20.96 lakhs in financial year 2021-22 (vii) increase in Labour Charges by 53.26 % from Rs. 37.89 lakhs in financial year 2020-21 to Rs. 58.07 lakhs in financial year 2021-22, (viii) increase in Repair & Maintenance by 141.26 % from Rs.46.09 lakhs in financial year 2020-21 to Rs. 111.19 lakhs in financial year 2021-22, (ix) increase in Stores, Spares & Packing Materials Consumed by 57.33 % from Rs.161.93 lakhs in financial year 2020-21 to Rs. 254.77 lakhs in financial year 2021-22, (x) increase in Rent by 37.94% from Rs 12.19

lakhs in financial year 2020-21 to Rs 16.81 lakhs in financial year 2021-22, (xi) increase in Travelling & Conveyance by 81.15% from Rs 18.78 lakhs in financial year 2020-21 to Rs 34.01 lakhs in financial year 2021-22 etc.

Restated Profit before tax:

Net profit before tax for the financial year 2021-22 increased to Rs. 563.67 Lakhs as compared to Rs. 366.30 Lakhs in the financial year 2020-21. The increase of 53.88 % was majorly due to factors as mentioned above.

Restated profit after tax:

As a result of the above factors, our profit after tax for the year increase by 60.59% from net profit of Rs. 263.47 Lakhs in in financial year 2020-21 to net profit Rs. 423.10 lakhs in financial year 2021-22. Consequently, our PAT Margin decreased to 7.82% in financial year 2021-22 from 8.91% in financial year 2020-21.

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

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

  1. Unusual or infrequent events or transactions

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

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

    3. There are no significant economic changes that may materially affect or likely to affect income from continuing operations.

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

    4. Apart from the risks as disclosed under Section "Risk Factors" beginning on page 24 of the Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

  4. Future changes in relationship between costs and revenues

    5. Other than as described in the sections "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 24, 103 and 179 respectively, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

  5. Segment Reporting

    6. Our company operates in a single product segment. For details on geographical segment please refer "Annexure IV"

    forming part of "Financial Information of the Company" on page 147 of the Draft Red Herring Prospectus

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

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

  7. Seasonality of business

    8. Our business is not subject to seasonality. For further information, see "Industry Overview" and "Our Business" on pages 87 and 103 respectively.

  8. Dependence on single or few customers

    9. During the period ended March 31, 2023 and for the FY 21-22 and FY 20-21 our top 10 customers contributed to 76.41%, 73.13% and 63.62% of our revenue from operations. For further information, see "Risk Factors" on page 24 of this Draft Red Herring Prospectus.

  9. Competitive conditions

    10. Competitive conditions are as described under the Chapters "Industry Overview" and "Our Business" beginning on pages 87 and 103 respectively of this Draft Red Herring Prospectus.

  10. Details of material developments after the date of last balance sheet i.e. March 31, 2023

    11. After the date of last Balance sheet i.e. March 31, 2023, the following material events have occurred after the last audited period–

    1. The Authorized Share Capital of the Company was increased from Rs ?50.00 Lakhs divided into 5,00,000 Equity Shares of Rs.10/- each to Rs. ?1100 lakhs divided into 1,10,00,000 equity shares vide Extra Ordinary General Meeting held on July 28, 2023
    2. We have capitalized the profits of the company by issuing 74,85,000 equity shares of Face Value of Rs. 10/- in ratio of 15:1 (15 new equity shares for 1 Existing shares) approved in Extra Ordinary General Meeting held on August 09, 2023.
    3. We have passed a Resolution in the meeting of Board of Directors dated September 20, 2023 authorizing the Board of Directors to raise funds by making an Initial Public Offering.
    4. We have passed a special resolution in the Extra-ordinary General meeting dated September 21, 2023 authorizing the Board of Directors to raise funds by making an Initial Public Offering.
    5. Our Company has approved the Restated Financial Statements for the financial year ended March 31, 2023, March 31, 2022 and March 31, 2021 in the Board meeting dated September 29, 2023
    6. Our Company has approved the Draft Red Herring Prospectus vide resolution in the Board Meeting dated September 30, 2023

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