Defrail Technologies Ltd Management Discussions

OF OPERATION

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the financial year ended March 31, 2025, March 31, 2024, and March 31, 2023. One should read the following discussion and analysis of our financial condition and results of operations in conjunction with our section titled "Financial Statements" and the chapter titled "Financial Information" on page 249 of the Draft Red Herring Prospectus. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors " on page 32 of this Draft Red Herring Prospectus. Actual results could differ materially from those contained in any forward-looking statements andfor further details regarding forward-looking statements, kindly refer the chapter titled "Forward-Looking Statements" on page 30 of this Draft Red Herring Prospectus. Unless otherwise stated, the financial information of our Company used in this section has been derived from the Restated Financial Information. Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Defrail Technologies Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Statements for the Financial Years 2025, 2024 & 2023 included in this Draft Red Herring Prospectus beginning on page 249 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Our Company is engaged in the business of manufacturing rubber parts & components including Rubber Hose and Assemblies, Rubber Profiles and Beadings and Rubber Moulding parts. Our Products have diverse application across different industries including Automotive, Railways and Defence. We assist clients in selecting the right type of product for their applications while also providing design and customization options according to the intended use.

Our Company operates with two (2) manufacturing plants located at Neemka, Tigaon Road, Sector 71, Near NTPC, Ballabgarh, Faridabad, Haryana - 121004 and Plot No 180 Sector 24 Faridabad, Haryana - 121005 spanning a total area of 2420 sq. yards and 4833.33 sq. yards respectively.

For further details, please refer to the chapter titled "Our Business" on page 154 of this Draft Red Herring Prospectus.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR I.E., MARCH 31, 2025

As per mutual discussion between the Board of the Company and BRLM, in the opinion of the Board of the Company there have not arisen any circumstances since the date of the last financial statements as disclosed in the Draft Red herring Prospectus and which materially and adversely affect or is likely to affect within the next twelve months except as follows:

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issue by way of Initial Public Offering.

• The board of directors appointed Ms. Ashi Aggarwal as Non-Executive Director w.e.f. February 14, 2024.

• The shareholder of our company re-appoint Mr. Vivek Aggarwal as Manager Director w.e.f. July 10, 2024.

• The board of directors appointed Mr. Vivek Karnavat as Additional Independent Director w.e.f. June 10, 2024.

• The board of directors appointed Ms. Neetu Dhulia as Additional Independent Director w.e.f. June 10, 2024.

• The shareholder of our company regularized Mr. Vivek Karnavat and Ms. Neetu Dhulia as Independent Director w.e.f. June 11, 2024.

• Mr. Himanshu Aggarwal resigned from the position of Director w.e.f December 13, 2024.

• The board of directors regularized Mr. Vaibhav Sharma as Company Secretary & Compliance officer of the Company w.e.f. July 01, 2024.

• The board of directors appointed Mr. Vikram Gover as Additional Independent Director of the Company w.e.f. July 02, 2025.

• The shareholder of our company regularized Mr. Vikram Grover as Independent Director w.e.f. July 29, 2024

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factor" beginning on page 32 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. Strategic and Operational Risks

• Growth Strategy and Expansion: Our ability to successfully implement growth strategies and expansion plans is crucial to our future performance. Any failure in executing these strategies could hinder our progress.

• Geographic Expansion: Expanding into new regions or markets is central to our growth. The success of this expansion depends on various factors, including market conditions, competition, and regulatory hurdles.

2. Market and Economic Risks

• Economic Conditions: Both local and global economic conditions—such as inflation interest rates, and currency fluctuations—affect consumer demand and overall market dynamics, impacting our revenues.

• Market Demand and Supply: Our business performance is sensitive to changes in demand for our products and services. A decrease in demand or supply chain disruptions could negatively affect sales and profitability.

3. Competitive Risks

• Competition: The competitive landscape is constantly shifting. New entrants or existing competitors may increase pricing pressure and reduce our market share, directly impacting profitability.

4. Political and Regulatory Risks

• Political Instability and Government Changes: Political instability, changes in government policies, or shifts in the political environment—particularly in India—could negatively affect our business operations and the broader economic landscape.

• Regulatory Changes: We operate in sectors that are regulated by national, state, and local governments.

Changes in regulations could affect our operational flexibility, cost structures, or compliance requirements.

• Indias Sovereign Credit Rating: Any downgrade in Indias debt rating by international or domestic agencies could increase borrowing costs and adversely affect investor confidence, leading to financial instability.

5. Financial Risks

• Capital Requirements: We require significant capital for ongoing operations, expansion, and development. Failure to raise sufficient funds or meet capital expenditure needs could impede business growth.

6. Related Party Risks

• Conflict of Interest: Potential conflicts of interest with affiliated companies, promoters, or related parties may affect decision-making and operations, leading to possible legal or reputational risks.

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MANAGEMENTS DISCUSSION ON RESULTS OF OPERATION

Based on Consolidated Restated Financial Statement

(Amount in Lakhs, except % )

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Items for Restated Financial Statements Our Significant Accounting Policies

For Significant accounting policies please refer to "Significant Accounting Policies", under the Chapter titled Restated Financial Statements beginning on page 249 of the Draft Red Herring Prospectus.

Overview of Revenue & Expenditure

The following discussion on the results of operations should be read in conjunction with the Restated Financial Statements for the Financial year ended March 31, 2025, March 31, 2024 & March 31, 2023.

Our revenue and expenses are reported in the following manner:

Revenues

• Revenue from operations

Our companys source of revenue is primarily generated from various segment that is mentioned below:

Hose Pipe

Moulded Parts

Rubber Beading

• Other Income

Other income includes only subsidy received from government.

Expenditure

Our total expenditure primarily consists of the cost of material consumed, employee benefit expenses, finance costs, depreciation and amortization and other expenses.

• Cost of Material Consumed

The cost of Material Consumed includes changes in the stock of rubber materials and purchases of rubber raw material during the year.

• Employment Benefit Expenses

Our employee benefits expense primarily comprises salaries, wages, bonuses, contribution to Provident and other fund, staff welfare expenses, gratuity and directors remuneration.

• Finance Cost

Our Finance Cost includes interest expenses on borrowings and other borrowing cost.

• Depreciation and Amortization Expenses

Depreciation and amortization expenses on fixed assets majorly include depreciation on plant & machinery, vehicles, furniture and fixtures, computers, motor cycles , car, computers and buildings etc.

• Other Expenses

Other Expenses majorly include expenses on power and fuel, rates and taxes, Insurance , legal and professional charges, business promotion expenses, repair and maintenance- machinery etc.

BASED ON STANDALONE FINANCIAL STATEMENT

FISCAL YEAR ENDED MARCH 31, 2025, COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2024 (COMPARION OF DEFRAIL OF MARCH 2025 WITH SOLE PROPRITERSHIP OF MARCH 2024)

Revenues

• Total Income

Total income for the financial year 2024-25 stood at Rs. 6,177.79 Lakhs whereas in the financial year 202324 it stood at Rs. 2,929.74 Lakhs representing an increase of 110.86%.

Reason: The increase in the total income of the company is due to a significant increase in the revenue of the company general growth in the business operations of the Company and increase in other income.

• Revenue from operations

Revenue from operations for the financial year 2024-2025 stood at Rs. 6,176.78 Lakhs whereas for the financial year 2023-24, it stood at 2,929.73 Lakhs representing an increase of 110.83%.

Reason: The increase in revenue are as follow:

Higher sales of rubber products: Revenue growth was mainly driven by increased sales of rubber products during FY 2024-25.

Capacity expansion and efficiency: The company enhanced its production capacity by adding more employees and machines, which enabled higher output and better fulfillment of customer demand, resulting in increased sales.

Increase in sales prices: Along with volume growth, the company also benefitted from an increase in the average selling price of its products compared to FY 2023-24, further boosting overall revenue.

• Other Income

Other income for the financial year 2024-2025 stood at Rs. 1.01 Lakhs whereas for the financial year 202324, it stood at Rs. 0.01 Lakhs representing an increase of 9239.02%.

Reason: The sharp rise in other income was primarily due to the receipt of Government subsidy during the year, which was not available in the previous financial year.

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• Total Expenses

Total expenses for the financial year 2024-2025 stood at Rs. 5,790.79 whereas for the financial year 2023-24, it stood at Rs. 2,754.02 Lakhs representing an increase of 110.27%.

Reason: The increase in account of the increase in the cost of Material Consumed and employee benefit expenses, finance cost, depreciation and amortization cost, other expenses.

• Cost of Material Consumed

Cost of Material Consumed for the Financial Year 2024-2025, stood at Rs. 4,212.88 Lakhs whereas in Financial Year 2023-24 it stood at Rs. 2,042.42 Lakhs representing an increase of 106.27%.

Reason: There is an increase in the ‘cost of material consumed due to increases in sale of the rubber products.

Particulars	FY 2024-25	FY 2023-24
Opening Stock of Raw Material	78.06	4.89
Purchases	4,315.04	2110.74
Closing Stock of Raw Material	180.22	73.21
Total	4,212.88	2,042.42

• Employment Benefit Expenses

Employee benefit expenses for the financial year 2024-25 stood at Rs. 791.82 Lakhs whereas for the financial year 2023-24, it stood at Rs. 325.55 Lakhs representing an increase of 143.23%.

Reason: There was an increase in ‘Employee benefit expenses because of an increase in Salaries, wages, bonuses, and other allowances, and staff welfare expenses, as company hired more employees and promoted the old ones and Directors Remuneration.

Particulars	FY 2024-25	FY 2023-24
Salary, Wages and Bonus	714.16	317.20
Contribution to Provident and Other fund	5.04	2.96
Staff Welfare Expenses	16.84	5.38
Gratuity	17.38	-
Directors Remuneration	38.40	-
Total	791.82	325.55

• Finance Cost

Finance costs for the financial year 2024-25 stood at Rs. 103.84 Lakhs whereas for the financial year 2023-24, it stood at Rs. 46.03 Lakhs representing an increase of 125.58%.

Reason: This was primarily due to an increase overall borrowing during the year which include the following:

Particulars	FY 2024-25	FY 2023-24
Interest Expenses	89.71	37.41
Other Borrowing Costs	14.12	8.62
Total	103.84	46.03

• Depreciation and Amortization Expenses

The depreciation and amortization expenses for the financial year 2024-25 stood at Rs. 62.69 Lakhs whereas for the financial year 2023-24, they stood at Rs. 34.39 Lakhs representing an increase of 82.27%.

Reason: This increase is due to the addition of the fixed assets in the year 2024-25. Also in Financial Year 2024-25, WDV of fixed asset is more than the previous year.

Particulars	FY 2024-25	FY 2023-24
Opening balance	841.90	549.13
Addition	349.33	308.17
Deletion	-	10.00
Depreciation	62.69	34.39
Closing balance of fixed assets	1128.54	812.90

• Other Expenses

The other expenses for the financial year 2024-25 stood at Rs. 1,006.78 Lakhs whereas for the financial year 2023-24, it stood at Rs. 437.20 Lakhs representing an increase of 130.28%.

Reason: There is an increase in ‘Other expenses because increase in power and fuel, consultancy expenses, rates and taxes, Insurance, Legal and Professional charges, Consumption of stores and spares parts, Factory Expenses, Business promotion expenses, Transportation expenses, Repair as shown below:

Particulars	FY 2024-25	FY 2023-24
Power and Fuel	125.84	50.57
Consultancy Expenses	7.56	0.42
Rates and Taxes	12.92	3.90
Insurance	23.10	2.74
Legal & Professional Charges	30.33	15.10
Consumption of stores and spare parts	348.98	206.48
Factory Expenses	57.39	11.26
Business Promotion Expenses	28.71	9.14
Transportation Expenses	40.52	14.71
Repair & Maintenance-Machinery	76.56	1.99
Consumption of Packing Materials	31.10	14.47

• Restated Profit before Tax

The restated profit before tax for the financial year 2024-25 stood at Rs. 386.99 Lakhs whereas for the financial

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year 2023-24, it stood at Rs. 175.72 Lakhs representing an increase of 120.23%.

• Tax Expenses

The Tax Expenses for the financial year 2024-25 stood at Rs. 35.07 Lakhs out of which the Current Tax was Rs. 65.05 Lakhs and the Deferred Tax being Rs. (29.98) Lakhs whereas in the Financial Year 2023-24 it stood at Rs. 43.02 Lakhs out of which for current tax being Rs. 44.98 Lakhs and deferred tax being Rs. (1.97) Lakhs representing a decrease of (18.48%).

• Restated Profit after Tax

The restated profit after tax for the financial year 2024-2025 stood at Rs. 351.93 Lakhs whereas for the financial year 2023-24, it stood at Rs. 132.70 Lakhs representing an increase of 165.20%.

Reason for change in the Revenue from operation and Profit after tax

Particulars	FY 2024-25	FY 2023-24
Revenue from Operation	6,176.78	2,929.73
Change in %	110.83%
Expenses	5,790.79	2,754.02
Change in %	110.27%
Profit after tax	351.93	132.70
PAT Margin in %	5.70%	4.53%

Increase in PAT Justification:

Revenue Growth Outpaced Expenses Growth

Revenue from operations increased by 110.83% (from Rs.2,929.73 lakhs to Rs.6,176.78 lakhs).

Expenses increased by 110.27% (from Rs. 2,754.02 lakhs to Rs. 5,790.79 lakhs).

Since the percentage growth in revenue was slightly higher than the growth in expenses, this translated into higher profitability.

Improved Operating Leverage

With higher sales volumes, fixed costs got spread over a larger revenue base, resulting in better utilization of resources.

This allowed incremental revenue to contribute more effectively to profits.

Increase in Absolute Profit

Profit after tax rose from Rs. 132.70 lakhs in FY 2023-24 to Rs. 351.93 lakhs in FY 2024-25, an increase of 165.20%, which is significantly higher than the growth in expenses.

FINANCIAL YEAR ENDED 31st MARCH 2024 (BASED ON RESTATED DEFRAIL FINANCIAL STATEMENTS) AS THE COMPANY WAS INCORPORATED ON OCTOBER 09, 2023.

Revenues

• Total Income

Total Income for the Financial year ended 31st March 2024, stood at Rs. 71.72 lakhs.

• Revenue from operations

Revenue from operation for the Financial year ended 31st March 2024, stood at Rs. 71.71 lakhs which is 99.99% of the Total Income.

• Other Income

Other Income for the Financial year ended 31st March 2024, stood at Rs. 0.01, which is 0.01% of the Total Income.

Expenditure

• Total Expenses

Total Expenses for the Financial year ended 31st March 2024, stood at Rs. 57.47 lakhs which is 80.13% of the Total Income which includes Cost of Material Consumed, Employee benefit expense, Finance Cost, Depreciation and Amortization Expenses, Other Expenses.

• Cost of Material Consumed

Cost of Material Consumed for the Financial year ended 31st March 2024, stood at Rs. 53.44 lakhs which is 74.52% of the Total Income which includes Opening cost of material, Purchases during the year and closing stock of Material.

• Employment Benefit Expenses

Employment Benefit Expenses for the Financial year ended 31st March 2024, stood at Rs. 2.68 lakhs which is 3.74% of the Total Income which includes Salaries, wages and bonus only.

• Finance Cost

Finance Cost for the Financial year ended 31st March 2024, stood at Rs. 12.29 lakhs which is 0.56% of the Total Income which includes Interest on banks and bank charges.

• Depreciation and Amortization Expenses

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Equipment.

• Other Expenses

Other Expenses for the Financial year ended 31st March 2024, stood at Rs. 1.35 lakhs which is 1.88% of the Total Income which includes Legal & Professional Charges, Business Promotion Expenses, Transportation Expenses, Auditors Remuneration which is 20.82%, 22.30%, 1.12%, 55.76% respectively of the Total other expenses.

• Restated Profit before Tax

Restated profit before tax for the Financial Year ended 31st March 2024 stood at Rs. 14.25 lakhs which is 19.87% of the Total Income.

• Tax Expense

Tax Expense for the Financial year ended 31st March 2024, stood at Rs. 3.70 lakhs out of which Current Tax being Rs. 3.70 lakhs and Deferred Tax being Rs. NIL which are 5.17% and NIL respectively of the Total Income.

• Restated Profit after Tax

Restated profit after tax for the Financial Year ended 31st March 2024 stood at Rs. 10.54 lakhs which is 14.70% of the Total Income.

FISCAL YEAR ENDED MARCH 31, 2024, (COMPARED OF SOLE PROPRIETERSHIP WITH THE FISCAL YEAR ENDED MARCH 31, 2023 (BASED ON RESTATED STANDALONE FINANCIAL STATEMENTS)

Revenues

• Total Income

Total income for the financial year 2023-24 stood at Rs. 2,929.74 Lakhs whereas in the financial year 202223 it stood at Rs. 3,362.54 Lakhs representing a decrease of 12.87%.

Reason: The decrease in the total income of the company is due to a significant decrease in the revenue of the company and decrease in other income.

• Revenue from operations

Net revenue from operations for the financial year 2023-2024 stood at Rs. 2,929.73 Lakhs whereas for the financial year 2022-23, it stood at 3,362.18 Lakhs representing a decrease of 12.86%.

Reason: Net revenue from operations for FY 2023-24 stood at Rs. 2,929.73 lakhs as against Rs. 3,362.18 lakhs in FY 2022-23, reflecting a decrease of 12.86%, mainly due to the following:

Particulars	FY 2024	FY 2023
Hose Pipe	2,714.40	3,131.87
Rubber Heading	188.38	200.39
Moulded Parts	26.95	29.92
Total Revenue	2,929.73	3,362.18

• Other Income

Other income for the financial year 2023-2024 stood at Rs. 0.01 Lakhs whereas for the financial year 202223, it stood at Rs. 0.36 Lakhs representing a decrease of 96.99%.

Expenditure

• Total Expenses

Total expenses for the financial year 2023-2024 stood at Rs. 2,754.02 whereas for the financial year 2022-23, it stood at Rs. 3,240.02 Lakhs representing a decrease of 15.00%.

Reason: The decrease in account of the decrease in the cost of consumption, other direct expenses, and employee benefit expenses due to increases in revenue from the operation of the company.

• Cost of Material Consumed

Cost of Material Consumed for the Financial Year 2023-2024, stood at Rs. 2,042.42 Lakhs Whereas in Financial Year 2022-23 it stood at Rs. 2,263.46 Lakhs representing a decrease of 9.77%.

Reason: There is a decrease in the ‘Cost of Material Consumed due to decreases in purchases during the year because of decrease in revenue from operation.

• Employment Benefit Expenses

Employee benefit expenses for the financial year 2023-2024 stood at Rs. 325.55 Lakhs whereas for the financial year 2022-23, it stood at Rs. 303.40 Lakhs representing an increase of 7.30%.

Reason: There was an increase in ‘Employee benefit expenses because of an increase in Salaries, wages, bonuses, Contribution to Provident and Other fund and staff welfare expenses.

Particulars	FY 2023-24	FY 2022-23
Salary, Wages and Bonus	317.20	297.23
Contribution to Provident and Other fund	2.96	3.01
Staff Welfare Expenses	5.38	3.16
Total	325.55	303.40

• Finance Cost

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Finance costs for the financial year 2023-2024 stood at Rs. 46.03 Lakhs whereas for the financial year 202223, it stood at Rs. 65.12 Lakhs representing a decrease of 29.32%.

Reason: This was primarily due to a decrease on interest on the long-term and short-term borrowings which include the following:

Particulars	FY 2023-24	FY 2022-23
Interest Expenses	37.41	65.12
Other Borrowing Costs	8.62	-
Total	46.03	65.12

• Depreciation and Amortization Expenses

The depreciation and amortization expenses for the financial year 2023-2024 stood at Rs. 34.39 Lakhs whereas for the financial year 2022-23, they stood at Rs. 26.50 Lakhs representing a increase of 29.76%.

Reason: The increase is primarily on account of additions to fixed assets during the FY 2023-24 along with a higher opening WDV of assets. In the financial year 2022-23, depreciation was charged on the full years WDV of existing assets, whereas in the financial year 2023-24, depreciation was impacted both by the higher opening WDV of assets as well as additions made during the year.

Particulars	FY 2023-24	FY 2022-23
Opening balance	549.13	550.84
Addition	308.17	24.79
Deletion	10.00	-
Depreciation	34.39	26.50
Ending balance of fixed assets	812.90	549.13

• Other Expenses

The other expenses for the financial year 2023-2024 stood at Rs. 437.20 Lakhs whereas for the financial year 2022-23, it stood at Rs. 552.11 Lakhs representing a decrease of 20.81%.

Reason: There is a decrease in ‘Other expenses because of the decrease in, printing & stationary, property rent, repairs, VAT demand, and repairs as shown below:

Particulars	FY 2023-24	FY 2022-23
Rates and Taxes	3.90	6.90
Consumption of stores and spare parts	206.48	332.20
Freight Charge	1.32	-
Office Expenses	2.07	6.46
Repair & Maintenance-Machinery	1.99	15.09
Repair & Maintenance-Building	0.96	9.09
Repair & Maintenance Expenses-Others	1.45	6.43
Vehicle Maintenance Expenses	0.73	4.61

Restated Profit before Tax

The restated profit before tax for the financial year 2023-2024 stood at Rs. 175.72 Lakhs whereas for the financial year 2023-24, it stood at Rs. 122.52 Lakhs representing an increase of 43.42%.

• Tax Expenses

The Tax Expenses for the financial year 2023-24 stood at Rs. 43.02 Lakhs out of which the Current Tax was Rs. 44.98 Lakhs and the Deferred Tax being Rs. (1.97) Lakhs whereas in the Financial Year 2022-23 it stood at Rs. 34.86 Lakhs out of which for current tax being Rs. 34.04 Lakhs and deferred tax being Rs. 0.81 Lakhs representing an increase of 23.41%.

• Restated Profit after Tax

The restated profit after tax for the financial year 2023-2024 stood at Rs. 132.70 Lakhs whereas for the financial year 2022-23, it stood at Rs. 87.66 Lakhs representing an increase of 51.38%.

Particulars	FY 2023-24	FY 2022-23
Revenue from Operation	2,929.73	3,362.18
Change in %	(12.86%)
Profit after tax	132.70	87.66
Pat Margin in %	4.53%	2.61%

Increase in PAT Justification:

• There is a decrease in revenue from operation of 12.86% but COGS of the company decreased by 16.70% which helps to increase directly to the PAT margin.

• There is also decrease in other expenses of 20.81% from the previous year which leads to increase in PAT.

BASED ON CONSOLIDATED FINANCIAL STATEMENT

FISCAL YEAR ENDED MARCH 31, 2025, COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2024 (BASED ON CONSOLIDATED RESTATED FINANCIAL STATEMENT)

Note:- Defrail Technologies Limited was incorporated on October 09,2023. Subsequently, the Business Transfer Agreement (BTA) was executed on April 01, 2024, whereby the businesses of two sole proprietorships were transferred to Defrail Technologies Limited. Therefore, the financial results of FY 2025 cannot be directly compared with those of FY 2024.

Revenues

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• Total Income

Total income for the financial year 2024-25 stood at Rs. 6,222.08 Lakhs whereas in the financial year 202324 it stood at Rs. 71.72 Lakhs representing an increase of 8,575.51%.

Reason: The increase in the total income of the company is due to a significant increase in the revenue of the company general growth in the business operations of the Company and increase in other income.

• Revenue from operations

Revenue from operations for the financial year 2024-2025 stood at Rs. 6,220.93 Lakhs whereas for the financial year 2023-24, it stood at Rs. 71.71 Lakhs representing an increase of 8,575.12%.

• Other Income

Other income for the financial year 2024-2025 stood at Rs. 1.15 Lakhs whereas for the financial year 202324, it stood at Rs. 0.01 Lakhs representing an increase of 11367.10%.

Expenditure

• Total Expenses

Total expenses for the financial year 2024-2025 stood at Rs. 5,824.43 Lakhs whereas for the financial year 2023-24, it stood at Rs. 57.47 Lakhs representing an increase of 10034.73%.

Reason: The increase in account of the increase in the cost of Material Consumed and employee benefit expenses, finance cost, depreciation and amortization cost, other expenses.

• Cost of Material Consumed

Cost of Material Consumed for the Financial Year 2024-2025, stood at Rs. 4,229.13 Lakhs whereas in Financial Year 2023-24 it stood at Rs. 53.44 Lakhs representing an increase of 7813.80%.

Reason: There is an increase in the ‘cost of material consumed due to increases in sale of the rubber products.

Particulars	FY 2024-25	FY 2023-24
Opening Stock of Raw Material	43.82	-
Purchases	4,394.94	58.29
Closing Stock of Raw Material	209.63	4.85
Total	4,229.13	53.44

• Employment Benefit Expenses

Employee benefit expenses for the financial year 2024-25 stood at Rs. 815.00 Lakhs whereas for the financial year 2023-24, it stood at Rs. 2.68 Lakhs.

Reason: There was an increase in ‘Employee benefit expenses because of an increase in Salaries, wages,

bonuses, Contribution to Provident and other fund, Staff welfare expenses, Gratuity and Director

• Finance Cost

Finance costs for the financial year 2024-25 stood at Rs. 105.05 Lakhs whereas for the financial year 2023-24, it stood at Rs. NIL Lakhs representing an increase of NIL.

• Depreciation and Amortization Expenses

The depreciation and amortization expenses for the financial year 2024-25 stood at Rs. 76.61 Lakhs whereas for the financial year 2023-24, they stood at Rs. NIL Lakhs representing an increase of NIL.

Reason: This increase is due to the addition of the fixed assets and BTA in the year 2024-25. Also in Financial Year 2024-25, WDV of fixed asset is more than the previous year.

• Other Expenses

The other expenses for the financial year 2024-25 stood at Rs. 1,011.45 Lakhs whereas for the financial year 2023-24, it stood at Rs. 1.35 Lakhs.

• Restated Profit before Tax

The restated profit before tax for the financial year 2024-25 stood at Rs. 397.65 Lakhs whereas for the financial year 2023-24, it stood at Rs. 14.25 Lakhs.

• Tax Expenses

The Tax Expenses for the financial year 2024-25 stood at Rs. 120.47 Lakhs out of which the Current Tax was Rs. 66.13 Lakhs and the Deferred Tax being Rs. 54.34 Lakhs whereas in the Financial Year 2023-24 it stood at Rs. 3.71 Lakhs out of which for current tax being Rs. 3.7 Lakhs and deferred tax being Rs. NIL.

• Restated Profit after Tax

The restated profit after tax for the financial year 2024-2025 stood at Rs. 277.18 Lakhs whereas for the financial year 2023-24, it stood at Rs. 10.54 Lakhs representing an increase of 2529.79%.

	Amount in Lakhs)
Particulars	FY 2024-25	FY 2023-24
Revenue from Operation	6,220.93	71.71
Change in %	8575.12%
Expenses	5,824.43	57.47
Change in %	10034.73%
Profit after tax	277.18	10.54
PAT Margin in %	4.46%	29.50%

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INFORMATION REQUIRED AS PER ITEM (II) (C) (I) OF PART A OF SCHEDULE VI TO THE SEBI REGULATIONS:

1. Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

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

Other than as described in the section titled Risk Factors beginning on page 32 of this Draft Red Herring Prospectus, to our knowledge there are no known significant economic changes that have or had or are expected to have a material adverse impact on revenues or income of our Company 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.

Other than as described in this Draft Red Herring Prospectus, particularly in the sections Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 32 and 251, respectively, to our knowledge, there are no known trends or uncertainties that are expected to have a material adverse impact on our revenues or income from continuing operations.

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

The income and sales of our Company on account of major activities derives from the business is manufacturing of rubber products.

5. Future changes in the relationship between costs and revenues, in case of events such as future increase in cost of service and freight & forwarding expenses that will cause a material change are known.

Our Companys future costs and revenues can be indirectly impacted by an increase in the cost of services and freight & forwarding expenses.

6. Future relationship between Costs and Income

Our Companys future costs and revenues will be determined by competition, demand/supply situation,interest rates quoted by banks & others.

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

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

8. Total turnover of each major industry segment in which the issuer company operates.

The Company operates in the Rubber Industry. Relevant industry data, as available, has been included in the chapter titled "Our Industry" beginning on page 134 of this Draft Red Herring Prospectus.

9. Status of any publicly announced new products or business segments.

Our Company has not announced any new services and segment / scheme, other than disclosure in this Draft Red Herring Prospectus.

10. The extent to which the business is seasonal.

Our business is not seasonal in nature.

DEFRAIL

11. Competitive Conditions

We face competition from existing and potential competitors, which is common for any business. We have, over a period of time, developed certain competitive strengths which have been discussed in the section titled Our Business on page 154 of this Draft Red Herring Prospectus.