Dhanlaxmi Crop Science Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial for the financial year ended on 31^st March 2024, 31^st March 2023 and 31^st March 2022 including the notes and significant accounting policies thereto and the reports thereon, which appear elsewhere in this Draft red herring prospectus. You should also see the section titled "Risk Factors" beginning on page 26 of this Draft Red Herring Prospectus, which discusses a number of factors and contingencies that could impact our financial condition and results of operations. The following discussion relates to our Company, unless otherwise stated, is based on restated audited financial statements.

These financial statements have been prepared in accordance with Ind GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditors dated July 27, 2024 which is included in this Draft Red Herring Prospectus under the section titled "Financial Information as Restated" beginning on page 217 of this Draft red herring prospectus. The restated financial statements have been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. We do not provide a reconciliation of our restated financial statements to US GAAP or IFRS and we have not otherwise quantified or identified the impact of the differences between Indian GAAP and U.S. GAAP or IFRS as applied to our restated financial statements.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" beginning on pages 26 and 17 respectively, and elsewhere in this draft red herring prospectus

Accordingly, the degree to which the financial statements in this Draft Red Herring Prospectus will provide meaningful information depends entirely on such potential investors level of familiarity with Indian accounting practices. Our F.Y. ends on March 31 of each year; therefore, all references to a particular fiscal are to the twelve-month period ended March 31 of that year. Please also refer to section titled "Certain Conventions, Use of Financial, Industry and Market Data and Currency Presentation" beginning on page 15 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Our Company was originally incorporated as a Private Limited Company in the name of "Dhanlaxmi Agrichem Private Limited" on November 28, 2005 under the provisions of Companies Act, 1956 bearing Corporate Identification Number U24120GJ2005PTC047153 issued by Registrar of Companies - Gujarat, Dadra and Nagar Havelli. Subsequently the name of our company was changed to "Dhanlaxmi Crop Science Private Limited" vide a fresh Certificate of Incorporation consequent upon Change of Name dated February 09, 2007 bearing Corporate Identification Number U24120GJ2005PTC047153 issued by Registrar of Companies - Gujarat, Dadra and Nagar Havelli. Subsequently, our company was converted into Public Limited Company under the Companies Act, 2013 and the name of our Company was changed to "Dhanlaxmi Crop Science Limited" vide a fresh Certificate of Incorporation consequent upon conversion from Private Company to Public Company dated September 15, 2023 bearing Corporate Identification Number U24120GJ2005PLC047153 issued by Registrar of Companies Ahmedabad. For more details about us, please refer to section titled "Our Business" and "Our History and Certain Corporate Matters" beginning on page 127 and 182 of the Draft Red Herring Prospectus respectively.

We are a technology driven seeds company that develops, produces, processes and sells seeds for a range of field crops and vegetables, have more than 18 years of experience in the Indian seeds industry. We integrate traditional breeding techniques with biotechnology tools and seek to produce hybrid and open pollinated variety field crops and vegetable seeds that deliver higher yields, enhanced product quality and higher levels of pest and disease tolerance over naturally occurring varieties. Our seeds are suitable for varying agroclimatic conditions, such as water availability, crop duration and soil attributes, across different geographic regions in India.

As of March 31, 2024, we produced seeds for 24 different field crops and vegetables and have operations in 5 states across India. The sale of cotton seeds contributes the majority of our revenue from operations, contributing 76.78%, 71.47% and 64.73% of our revenue from operations in Fiscal 2024, 2023 and 2022, respectively. Our product portfolio includes field crop and vegetable seeds for Cotton, Wheat, Cumin, Bajra, Maize, Gram, Okra, Green Gram, SSG, Soyabean, Milky, Mustard, Groundnut, Black Gram, Guar, Castor, Sesame, Jowar, Coriander, Red Gram, Green Pea, Multifeed, Onion etc.

Our research and development activities include conventional breeding programmes and the use of innovative biotechnology tools, which we believe have driven the development of our diverse repository of germplasm, which has enabled us to develop an extensive portfolio of products.

As of March 31, 2024, our Company had filed a total of five applications under the PPV & FR Act, including three for cotton, one for wheat and one for green gram. As of March 31, 2024, our Company had received the following certificates of registration under the PPV & FR Act: Cotton hybrids, ZCH-511, 25D51 and 25D55 and their parents. Two applications of our Company are in the final testing stage prior to certification. Through our research, we have successfully developed and commercialised several hybrid seed products for cotton, such as Advance and Agniveer, Dhanvarsha, which we believe met with commercial success because of their superior quality and yields relative to other cotton seed products at the time of their launch into the market. The sales of seeds for field crops other than cotton, such as Wheat, Cumin, Bajra, Maize presently constitute the remaining portion of our business. Over the period, we have registered significant growth in our sales of vegetable seeds and seeds of field crops other than cotton.

In Fiscal 2024, we produced 1,296 MT of raw seeds, comprising hybrids and open pollinated variety of field crops and vegetables. As of March 31, 2024, we had access to farmland in 4 states in India, primarily through contractual arrangements with over 45 Seed Growers/Organizers. As of March 31, 2024, we operated full processing facilities in Gujarat with a processing capacity of 7.3 MT per hour and an aggregate ambient storage capacity of 2,000 square meter (which can store 5,000 MT of seeds). In addition, we had access to temperature-controlled, or conditioned, storage facilities to store seeds on rent basis that have a short shelf life, with capacity to store 500 MT of seeds.

As of date of Draft Herring Prospectus, our Company has 1,185 Authorized Dealers/Distributors present across 4 states i.e. Gujarat, Rajasthan, Haryana and Maharashtra. Our distribution network and storage facilities (including conditioned storage facilities), which includes carrying and forwarding agent warehouses, help us meet the varying requirements of our customers.

Mr. Kamlesh Patel is Managing Director and also the Promoter of our Company. He possesses experience of more than 20 years in the production related activities of Companys business. He has been instrumental in the growth of our business and actively advise us on finance, corporate strategy and planning. Further, our board of directors are supported by a team of well experienced and qualified personnel. We believe that our management teams experience and their understanding of this industry, specifically in the finance and production, industry will enable us to continue to take advantage of both current and future market opportunities.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST AUDITED PERIOD

In the opinion of the Board of Directors of our Company, since the date of the last audited period i.e. March 31, 2024 as disclosed in this Draft Red Herring Prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the trading or profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months except as follows:

1. The Board of Directors have decided to get their equity shares listed on EMERGE Platform of National Stock Exchange of India Limited and pursuant to Section 62(1)(c) of the Companies Act 2013, by a resolution passed at its meeting held on July 02, 2024 proposed the Issue, subject to the approval of the shareholders and such other authorities as may be necessary.

2. The shareholders of the Company have, pursuant to Section 62(1)(c) of the Companies Act 2013, by a special resolution passed in the Extra Ordinary General Meeting held on July 15, 2024 authorized the Initial Public Offer.

3. On July 16, 2024, our company has allotted 30,00,000 Bonus Equity Shares in the ratio of 1:3 i.e., for every Three Equity Share, One Bonus Equity Shares are allotted.

4. Our overdraft facility from ICICI Bank has been increased to 750.00 lakhs from the current limit 500.00 Lakhs vide their updated sanction letter dated April 26, 2024

KEY FACTORS AFFECTING OUR RESULTS OF OPERATION

1. Covid-19 like pandemic.

2. Our dependence on limited number of customers/suppliers/brands for a significant portion of our revenues;

3. Any failure to comply with the financial and restrictive covenants under our financing arrangements;

4. Our ability to retain and hire key employees or maintain good relations with our workforce;

5. Impact of any reduction in sales of our services/products;

6. Rapid Technological advancement and inability to keep pace with the change;

7. Increased competition in industries/sector in which we operate;

8. General economic and business conditions in India and in the markets in which we operate and in the local, regional and national economies;

9. Changes in laws and regulations relating to the Sectors in which we operate;

10. Political instability or changes in the Government in India or in the government of the states where we operate could cause us significant adverse effects; 11. Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner; 12. Occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition and 13. Our inability to successfully diversify our product offerings may adversely affect our growth and negatively impact our profitability.

SIGNIFICANT ACCOUNTING POLICIES:

Our significant accounting policies are described in the section entitled "Financial Statements as Restated" beginning from page 217 of the Draft Red Herring Prospectus.

FINANCIAL KPIs OF THE COMPANY:

( in lakhs except percentage and ratios)

	( in lakhs except percentage and ratios)
Particulars	31-03-2024	31-03-2023	31-03-2022
Total Income	6,375.08	4,664.17	3,543.08
Growth (%)	36.68	31.64	19.09
Revenue from Operation	6,371.03	4,661.07	3,543.06
EBITDA (Operating Profit)	680.73	446.29	153.20
EBITDA Margin (%)	10.68%	9.57%	4.32%
PAT	465.36	299.55	58.28
Growth (%)	55.35%	414.02%	3.33%
PAT Margin (%)	7.30%	6.42%	1.64%
EPS (Basic & Diluted) - (As per Restated period)	5.17	16.22	3.28
EPS (Basic & Diluted) - (Post Bonus with retrospective effect)	3.88	2.50	1.09
Total Borrowings	104.24	258.32	913.16
Total Net Worth (TNW)	1,612.07	1,139.63	617.26
RONW (%)	28.87%	26.28%	9.44%
Debt Equity Ratio (Total Borrowing/TNW)	0.06	0.23	1.48

As certified by our statutory auditor having peer review certificate M/s. K A R M A & CO. LLP, Chartered Accountant vide their examination report dated 27/07/2024.

SUMMARY OF THE RESULTS OF OPERATION:

The following table sets forth select financial data from restated profit and loss accounts for the financial years ended on 31^st March 2024, 31^st March 2023 and 31^st March 2022 and the components of which are also expressed as a percentage of total income for such periods.

			( in lakhs except as otherwise mention)
		For the period ended (As per Restated Financials)
Particulars	31-03- 2024	% of Total Turnover	31-03- 2023	% of Total Turnover	31-03- 2022	% of Total Turnover
Income
Revenue from Operations	6,371.03	99.94%	4,661.07	99.93%	3,543.06	100.00%
Other Income	4.04	0.06%	3.10	0.07%	0.02	0.00%
Total Income	6,375.08	100.00%	4,664.17	100.00%	3,543.08	100.00%
Expenditure
Cost of Material Consumed	4,986.79	78.22%	3,438.40	73.72%	3,148.32	88.86%
Purchase of Stock-in-Trade	-	0.00%	-	0.00%	-	0.00%
Change in Inventories	(131.90)	-2.07%	304.61	6.53%	(236.32)	-6.67%
Employee Benefit Expenses	230.31	3.61%	185.93	3.99%	173.90	4.91%
Other Expenses	600.87	9.43%	283.02	6.07%	301.84	8.52%
Total Expenses	5,686.07	89.19%	4,211.96	90.30%	3,387.74	95.62%
Profit Before Interest, Depreciation and Tax	689.01	10.81%	452.20	9.70%	155.34	4.38%
Depreciation & Amortisation Expenses	23.06	0.36%	21.59	0.46%	21.26	0.60%
Profit Before Interest and Tax	665.95	10.45%	430.62	9.23%	134.08	3.78%
Financial Charges	24.92	0.39%	21.23	0.46%	55.02	1.55%
Profit before Taxation	641.03	10.06%	409.38	8.78%	79.06	2.23%
Provision for Taxation	176.66	2.77%	109.03	2.34%	19.53	0.55%
Provision for Deferred Tax	(0.99)	-0.02%	0.80	0.02%	1.26	0.04%
Total	175.67	2.76%	109.83	2.35%	20.79	0.59%
Profit After Tax but Before Extra-ordinary	465.36	7.30%	299.55	6.42%	58.28	1.64%
Items
Extraordinary Items	-	-	-	-	-	-
Profit Attributable to Minority Shareholders	-	-	-	-	-	-
Net Profit after adjustments	465.36	7.30%	299.55	6.42%	58.28	1.64%
Net Profit Transferred to Balance Sheet	465.36	7.30%	299.55	6.42%	58.28	1.64%

Net Profit Transferred to Balance Sheet 465.36 7.30% 299.55 6.42% 58.28 1.64%

As certified by our statutory auditor having peer review certificate M/s. K A R M A & CO. LLP, Chartered Accountant vide their examination report dated 27/07/2024.

Our focus on functional and operational excellence has contributed to our track record of robust financial performance. In the Fiscal 2024, Fiscal 2023 and Fiscal 2022, we generated total income of 6,375.08 Lakhs, 4,664.17 Lakhs and 3,543.08 Lakhs respectively, EBITDA (operating profit) of 680.73 Lakhs, 446.29 Lakhs and 153.20 Lakhs respectively and net profit after tax of 465.36 Lakhs, 299.55 lakhs and 58.28 Lakhs respectively. We have reported

Return on Net Worth of 28.87%, 26.28% and 9.44% for the Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. Our steady operating cash flows enable us to meet the present and future needs of our customers while our strong financial performance in still confidence in us.

The Revenue from operations has been increased from 3543.06 Lakhs in FY 2021-22 to 6371.03 Lakhs in FY 2023-24 i.e. revenue from operation increased by 2827.97 Lakhs (79.82% for the said period) and PAT from 58.28 lakhs (1.64% of total revenue) to 465.36 lakhs (7.30% of total revenue) as per restated financial statements for the said period primarily due to increase in revenue from operations and combined efforts taken by company to reduce their cost, which is discussed further in details in this chapter. The reason for increase in revenue/profit after tax from operation was mainly due to increase in demand of our products from our customers and the major focus for our company has been on further improving the profitability of the company by optimizing the customer base, improving customer relations, marketing and payment cycles.

Our product wise revenue was increased YOY as per details mentioned below:

			( in Lakhs)
Particulars	March 31, 2024	March 31, 2023	March 31, 2022
Cotton Seeds	4,891.97	3,331.10	2,293.48
Wheat Seeds	310.67	297.29	496.85
Cumin Seeds	218.84	58.93	49.46
Bajra Seeds	187.73	220.93	105.46
Maize Seeds	150.37	110.91	87.33
Gram Seeds	126.88	193.18	101.18
Okra Seeds	109.68	147.98	118.70
Green Gram	69.85	58.91	64.52
SSG Seeds	54.20	25.56	32.40
Soyabean Seeds	46.30	51.29	-
Hy. Milky Seeds	31.23	20.34	32.15
Mustard Seeds	29.41	31.94	20.80
Groundnut Seeds	26.57	29.93	89.70
Black Gram Seeds	22.21	-	-
Guar Seeds	18.50	9.33	13.97
Castor Seeds	16.47	19.54	15.16
Sesame Seeds	15.36	10.64	5.75
Jowar Seeds	15.34	-	-
Coriander Seeds	14.64	33.66	-
Red Gram Seeds	4.46	4.95	2.67
Green Pea Seeds	4.19	-	-
Multifeed	3.24	4.67	6.19
Onion Seeds	2.90	-	-
Milkmade	-	-	7.32
Total	6,371.03	4,661.07	3,543.06

Details of State-wise sales are as follows:

			( in Lakhs)
State	March 31, 2024	March 31, 2023	March 31, 2022
Telangana	3,677.79	2,769.66	1,789.96
Gujarat	1,581.05	1,043.40	746.17
Rajasthan	656.56	553.50	389.89
Maharashtra	311.93	286.55	446.55
Haryana	142.80	7.97	155.99
Madhya Pradesh	-	-	14.50
Total	6,371.03	4,661.07	3,543.06

MAIN COMPONENTS OF PROFIT AND LOSS ACCOUNT

Total Income

Our total income comprises of Revenue from Operations and Other Income

Revenue from Operations

Our revenue from operations comprises of Sale of products i.e. different variety of seeds viz. Bajara, Castor, Cotton, Cumin, Groundnut, Maize, Mustard, Okra, Coriander, Gram Seeds, Green Gram, Green Pea, Hy. Jowar, Hy. milky, Multifeed? Onion Seeds, Red Gram, Res. Black gram, Soyabean, Sesame Seeds, Vgwar Seeds, Gram Seeds F/s, SSG and Wheat.

Other Income

Our other income comprises of Jobwork Income, Interest from Fixed Deposits, Rate Difference Income and Other Income.

Expenditure

Our total expenditure primarily consists of Cost of Material Consumed, Change in Inventories work in progress and stock in trade, Employee Benefit Expenses, Depreciation & Amortisation Expenses, Finance Cost, Other Expenses etc.

Cost of Material Consumed

Cost of materials consumed comprises of difference in opening and closing balance of raw material and purchases.

Employee Benefit Expenses

Employee benefit expenses comprise of Salary and Wages including Bonus & Incentive, Remuneration to Directors & MD, Contribution to PF and Other Funds, Staff welfare expenses, Gratuity Expenses etc.

Financial Charges

Financial Charges comprises of Interest on Over Draft, Term Loan, Other interest expense, Unsecured Loan, Loan Processing charges, Bank Charges.

Depreciation and Amortization Expenses

Depreciation and Amortization Expenses comprises of depreciation on the Tangible/Intangible assets of our company.

Other Expenses

Other expenses comprise of Direct Manufacturing Expenses i.e. Job Work Charges, Research and Development Charges, Labour Expense, Electricity Expense, Seeds Certification Expense, Fumigation Expense, Transportation Expense (Inward) and other expenses i.e. Rent Expense, Insurance Expense, Travelling & Conveyance Expense, Advertisement Expense, Municipal Tax, Printing & Stationery Expense, Postage & Telegram Expense, Telephone Expense, Petrol & Diesel Expense, Repairs & Maintenance Expense, GST Late payment Fees, Professional Fees, Office Expense, Donation, ISO Certificate Expense, ROC Fees Expense, Bad Debts & Kasar Vatav, Seed Licence Expense, Sales Promotion Expense, Transport Expense, C & F Service Charge, PF Admin Expense, Membership Fees, Auditors Remuneration, Legal Expense, Rate Difference Expense.

Provision for Taxation

The provision for current tax is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

COMPARISON OF THE FINANCIAL PERFORMANCE OF FISCAL 2024 WITH FISCAL 2023

Total Revenue: The total revenue consist of revenue from operation and other income has been increased from 4664.17 lakhs in FY 2022-23 to 6375.08 lakhs in FY 2023-24 i.e. total revenue increased by 1710.91 lakhs (36.68% for the said period) primarily due to increase in revenue from operations of the Company.

Revenue from Operations: The revenue from operations has been increased from 4661.07 lakhs in FY 2022-23 to

6371.03 lakhs in FY 2023-24 i.e. revenue from operation increased by 1709.96 lakhs (36.69% for the said period). The reason for increase in revenue from operation was mainly due to increase in demand of our products as mentioned above from our customers and optimizing the customer base, improving customer relations, marketing and payment cycles.

Other Income: The other income of the company for FY 2023-24 was increased to 4.04 Lakhs as against 3.10 Lakhs in the FY 2022-23. This increase was mainly due to increase in other non-operating Income.

Total Expenses

The total expenses (excluding Depreciation & Amortization Expenses, Financial Charges and provision for tax) for the FY 2023-24 was increased to 5686.07 Lacs (89.19% of total revenue) as against 4211.96 Lacs (90.30% of total revenue) in the FY 2022-23 i.e., total expenses increased by 1474.10 lakhs (35.00% for the said period) and profitability increased by

1.11% of Total revenue. The increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above as details given as mentioned.

Cost of Material Consumed: The total Cost of Material Consumed for the FY 2023-24 was increased to 4854.89 Lacs (76.15% of total income) as against 3743.01 lacs in the FY 2022-23 (80.25% of total income) i.e., cost of material consumed increased by 1111.88 lakhs (29.71% for the said period) and profitability increased by 4.10% of Total revenue.

This increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above.

Employee Benefit Expenses: The Employee Benefit Expenses for the FY 2023-24 was increased to 230.31 Lakhs (3.61% of total income) as against 185.93 Lakhs in the FY 2022-23 (3.99% of total income) i.e., employee benefit expenses increased by 44.38 lakhs (23.87% for the said period) and profitability increased by 0.38% of Total revenue.

This increase was mainly due to increase in director remuneration, salaries, wages and bonus due to increase in volume of operations.

Other Expenses: The Other Expenses for the FY 2023-24 was increased to 600.87 Lakhs (9.43% of total income) as against 283.02 Lakhs in the FY 2022-23 (6.07% of total income) i.e., other expenses increased by 317.85 lakhs

(112.30% for the said period) and profitability decreased by 3.36% of Total revenue. This increase was mainly due to increase in job charges paid ( 201.39 lakhs in FY 2023-24 and 2.99 lakhs in FY 2022-23) and other expenses due to increase in volume of operation during the FY as mentioned in revenue from operation above.

Depreciation and Amortisation Expenses: The Depreciation and Amortisation expenses for FY 2023-24 was increased to 23.06 Lakhs (0.36% of total income) as against 21.59 Lakhs in the FY 2022-23 (0.46% of total income) i.e., depreciation increased by 1.47 lakhs (6.81% for the said period) and profitability decreased by 0.10% of Total revenue.

This increase was mainly due to addition of fixed asset during the year.

Financial Charges: The Financial Charges for the FY 2023-24 was increased to 24.92 Lakhs (0.39% of total income) as against 21.23 Lakhs in the FY 2022-23 (0.46% of total income) i.e., financial charges increased by 3.68 lakhs (17.34% for the said period) and profitability decreased by 0.07% of Total revenue. This increase was mainly due to increase in interest on secured and unsecured loan as per their utilisation.

Profit/ (Loss) Before Tax: The restated Profit before Tax for FY 2023-24 was increased to 641.03 Lakhs (10.06% of total income) as against 409.38 Lakhs in the FY 2022-23 (8.78% of total income) i.e., profit before tax increased by

231.65 lakhs (56.59% for the said period) and overall profitability increased by 1.28% of Total revenue. This increase was mainly due to increase in volume of operation. As a combined effort of all expenses together as discussed above, the profit before tax has been increased.

Total Tax Expenses: The total tax expense for FY 2023-24 was increased to 175.67 Lakhs (2.76% of total income) as against 109.83 Lakhs (2.35% of total income) in the FY 2022-23. This increase was mainly due to increase in Profit before Tax as mentioned above. Since the company is earning higher amount than the last year, its paying higher tax as per applicable tax slab and other provision of Income Tax Act.

Profit/ (Loss) After Tax: The restated Profit after Tax for FY 2023-24 has been increased to 465.36 Lakhs (7.30% of total income) as against 299.55 Lakhs (6.42% of total income) in the FY 2022-23. This increase was mainly due to increase in Profit before Tax as mentioned above.

COMPARISON OF THE FINANCIAL PERFORMANCE OF FISCAL 2023 WITH FISCAL 2022

Total Revenue: The total revenue consist of revenue from operation and other income has been increased from 3543.08 lakhs in FY 2021-22 to 4664.17 lakhs in FY 2022-23 i.e. total revenue increased by 1121.08 lakhs (31.64% for the said period) primarily due to increase in revenue from operations of the Company.

Revenue from Operations: The revenue from operations has been increased from 3543.06 lakhs in FY 2021-22 to

4661.07 lakhs in FY 2022-23 i.e. revenue from operation increased by 1118.01 lakhs (31.55% for the said period). The reason for increase in revenue from operation was mainly due to increase in demand of our products as mentioned above from our customers and optimizing the customer base, improving customer relations, marketing and payment cycles.

Other Income: The other income of the company for FY 2022-23 was increased to 3.10 Lakhs as against 0.02 Lakhs in the FY 2022-23. This increase was mainly due to increase in other non-operating Income.

Total Expenses

The total expenses (excluding Depreciation & Amortization Expenses, Financial Charges and provision for tax) for the FY 2022-23 was increased to 4211.96 Lacs (90.30% of total revenue) as against 3387.74 Lacs (95.62% of total revenue) in the FY 2021-22 i.e., total expenses increased by 824.23 lakhs (24.33% for the said period) and profitability increased by

5.32% of Total revenue. The increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above as details given as mentioned.

Cost of Material Consumed: The total Cost of Material Consumed for the FY 2022-23 was increased to 3743.01 Lacs (80.25% of total income) as against 2912.00 lacs in the FY 2021-22 (82.91% of total income) i.e., cost of material consumed increased by 831.01 lakhs (28.54% for the said period) and profitability increased by 2.66% of Total revenue.

This increase was mainly due to increase in volume of operation during the FY as mentioned in revenue from operation above.

Employee Benefit Expenses: The Employee Benefit Expenses for the FY 2022-23 was increased to 185.93 Lakhs (3.99% of total income) as against 173.90 Lakhs in the FY 2021-22 (4.91% of total income) i.e., employee benefit expenses increased by 12.03 lakhs (6.92% for the said period) and profitability increased by 0.92% of Total revenue.

This increase was mainly due to increase in director remuneration, salaries, wages and bonus due to increase in volume of operations.

Other Expenses: The Other Expenses for the FY 2022-23 was increased to 283.02 Lakhs (6.07% of total income) as against 301.84 Lakhs in the FY 2021-22 (8.52% of total income) i.e., other expenses decreased by 18.81 lakhs (-6.23% for the said period) and profitability increased by 2.45% of Total revenue. This decrease was mainly due to combined efforts taken by company to reduce their operational cost.

Depreciation and Amortisation Expenses: The Depreciation and Amortisation expenses for FY 2022-23 was increased to 21.59 Lakhs (0.46% of total income) as against 21.26 Lakhs in the FY 2021-22 (0.60% of total income) i.e., depreciation increased by 0.33 lakhs (1.53% for the said period) and profitability increased by 0.14% of Total revenue.

This increase was mainly due to addition of fixed asset during the year.

Financial Charges: The Financial Charges for the FY 2022-23 was decreased to 21.23 Lakhs (0.46% of total income) as against 55.02 Lakhs in the FY 2021-22 (1.55% of total income) i.e., financial charges decreased by 33.78 lakhs (-61.40% for the said period) and profitability increased by 1.09% of Total revenue. This decrease was mainly due to decrease in interest on secured and unsecured loan as per their utilisation.

Profit/ (Loss) Before Tax: The restated Profit before Tax for FY 2022-23 was increased to 409.38 Lakhs (8.78% of total income) as against 79.06 Lakhs in the FY 2021-22 (2.23% of total income) i.e., profit before tax increased by 330.32 lakhs (417.78% for the said period) and overall profitability increased by 6.55% of Total revenue. This increase was mainly due to increase in volume of operation. As a combined effort of all expenses together as discussed above, the profit before tax has been increased.

Total Tax Expenses: The total tax expense for FY 2022-23 was increased to 109.83 Lakhs (2.35% of total income) as against 20.79 Lakhs (0.59% of total income) in the FY 2021-22. This increase was mainly due to increase in Profit before Tax as mentioned above. Since the company is earning higher amount than the last year, its paying higher tax as per applicable tax slab and other provision of Income Tax Act.

Profit/ (Loss) After Tax: The restated Profit after Tax for FY 2022-23 has been increased to 299.55 Lakhs (6.42% of total income) as against 58.28 Lakhs (1.64% of total income) in the FY 2021-22. This increase was mainly due to increase in Profit before Tax as mentioned above.

AN ANALYSIS OF REASONS FOR THE CHANGES IN SIGNIFICANT ITEMS OF INCOME AND EXPENDITURE IS GIVEN HEREUNDER:

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.

There are no significant economic changes that may materially affect or likely to affect income from continuing operations. However, Government policies governing the sector in which we operate as well as the overall growth of the Indian economy has a significant bearing on our operations. Major changes in these factors can significantly impact income from continuing operations.

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

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 26 in 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. Expected Future changes in relationship between costs and revenues

Our Companys future costs and revenues will be determined by demand/supply situation, inflation, Government

Policies and Taxation and Currency fluctuations.

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

Changes in revenue in the last financial years are as explained in the part "Comparison of the Financial Performance" of above.

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

The Company is mainly engaged in manufacturing of various type of agriculture hybrid seeds. Therefore, there are no separate reportable segments.

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

Our Company has not announced any new product other than disclosed in this Draft Red Herring Prospectus.

8. Seasonality of business

Our business is seasonal in nature as per the type of crop we produce.

9. Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Our Business" beginning on page 102 and 127 respectively of the Draft Red Herring Prospectus.

10. Details of material developments after the date of last balance sheet i.e. March 31, 2024

Except as mentioned in this Draft Red Herring Prospectus, no circumstances have arisen since the date of last financial statement until the date of filing the Draft Red Herring Prospectus, which materially and adversely affect or are likely to affect the operations or profitability of our Company, or value of its assets, or its ability to pay its liability within next twelve months.