DSM Fresh Foods Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the financial year ended March 31, 2024 and financial year ended March 31, 2023, and for the financial year ended March 31, 2022. 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 214 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 27 of this Draft Red Herring Prospectus. Actual results could differ materially from those contained in any forward-looking statements and for further details regarding forward-looking statements, kindly refer the chapter titled "Forward-Looking Statements" on page 18 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 DSM Fresh Foods Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Statements for Financial Years 2024, 2023 & 2022 included in this Draft Red Herring Prospectus beginning on page 214 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Our company is a fresh meat and ready-to-cook/eat non-veg products retailer. We are an online meat delivery company committed to revolutionise the way customers experience and enjoy high-quality non-veg food. Established in 2015, our company has swiftly risen to prominence by blending convenience, unpreserved products, with a commitment to customer satisfaction. With a user-friendly website and mobile application that offers a diverse selection of fresh and hygienically sourced meats, ranging from succulent cuts of mutton, poultry and seafood to exotic options.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR

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 inthe Draft Red Herring Prospectus and which materially and adversely affect or is likely to affect within the next twelve months except as follows:

The Board of Directors of our Company has approved and passed resolution on May 07, 2024 to authorize the Board of Directors to raise the funds by way of Initial Public Offering.

The Shareholders of our Company has approved and passed resolution on May 08, 2024 in Extra ordinary General Meeting to authorize the Board of Directors to raise the funds by way of Initial Public Offering.

The Shareholders of our company appointed Deepanshu Manchanda as Managing Director and Chairman of the company, in the Extra ordinary General meeting held on May 08, 2024.

The shareholders of our Company appointed Mr. Mohammad Arif Khan as Non-Executive Director in the Extra ordinary General meeting held on May 08, 2024.

The shareholders of our Company appointed Mrs. Priya Aggarwal as Non-Executive Director in the Extra ordinary General meeting held on May 08, 2024.

The shareholders of our Company appointed Mr. Achal Kapoor and Suman Choudhary Independent Director in the Extra ordinary General meeting held on May 08, 2024.

The board of directors in its meeting held on May 20, 2024 appointed Mrs. Prabhleen Kaur Gujral as Company Secretary & Compliance officer of the Company.

The board of directors in its meeting held on May 07, 2024 appointed Mr. Saurabh Gandhi as Chief Financial Officer of the Company.

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 27 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

Changes, if any, in the regulations / regulatory framework / economic policies in India and / or in foreign countries, which affect national & international finance.

Companys results of operations and financial performance;

Performance of Companys competitors;

Significant developments in India‘s economic and fiscal policies;

Failure to adapt to the changing needs of industry and in particular government policies and regulations may adversely affect our business and financial condition;

Volatility in the Indian and global capital market.

DISCUSSION ON STATEMENT OF PROFIT AND LOSS

					(Amount in Lakhs)
S. No. Particulars	For FY ending on 31 March, 2024	%age of Total Income	For FY ending on 31st March 2023	%age of Total Income	For FY ending on 31st March 2022	%age of Total Income
	Rs.	%	Rs.	%	Rs.	%
I Revenue from operations	9,043.92	99.74%	5,628.39	99.42%	5,642.86	99.80%
II Other Income	23.65	0.26%	33.11	0.58%	11.45	0.20%
III Total Income (I+II)	9,067.57	100.00%	5,661.49	100.00%	5,654.31	100.00%
IV Expenses:
Cost of Material Consumed	6,853.90	75.59%	4,116.23	72.71%	4327.49	76.53%
Change in Inventory (Finished goods/WIP)	(396.15)	(4.37)%	(3.37)	(0.06)%	3.80	0.07%
Employee benefit expense	141.42	1.56%	98.90	1.75%	103.73	1.83%
Financial costs	92.65	1.02%	24.81	0.44%	10.17	0.18%
Depreciation and amortization expense	103.12	1.14%	34.79	0.61%	20.93	0.37%
Other expenses	1,510.45	16.66%	1,108.90	19.59%	1,498.41	26.50%
Total Expenses (IV)	8,305.39	91.59%	5,380.26	95.03%	5,964.54	105.49%
Profit before exceptional and extraordinary	762.18	8.41%	281.23	4.97%	(310.23)	(5.49)%
V items and tax (III-IV)
VI Exceptional Items
VII Profit before extraordinary items and tax	762.18	8.41%	281.23	4.97%	(310.23)	(5.49)%
VII Extraordinary Items
IX Profit before tax (VII-VIII)	762.18	8.41%	281.23	4.97%	(310.23)	(5.49)%
X Tax expense:
(I) Current tax
(II) Deferred tax	295.53	3.26%	7.38	0.13%	(61.36)	(1.09)%
(III) MAT credit
(III) Previous Year Taxes
Profit/(Loss) From The Period	466.65	5.15%	273.85	4.84%	(248.87)	(4.40)%
XI From Continuing Operations
XII Profit/ (Loss) from discontinuing operations
XIII Tax expense of discounting operations
XIV Profit/(Loss) from Discontinuing operations
XV Profit/ (Loss) for the period (XI + XIV)	466.65	5.15%	273.85	4.84%	(248.87)	(4.40)%
XVI Earning per equity share:
(I) Basic	4.54		2.69		(2.44)
(II) Diluted	4.53		2.69		(2.44)

Our Significant Accounting Policies

For Significant accounting policies please refer Significant Accounting Policies", under Chapter titled Financial Statements beginning on page 214 of the Draft Red Herring Prospectus.

Overview of Revenue & Expenditure

The following discussion on results of operations should be read in conjunction with the Restated Financial statements for the period ending on March 31, 2024, Financial years 2023- 2024, Financial Year 2022-23 & Financial Year 2021-22. Our revenue and expenses are reported in the following manner:

Revenues

Revenue of operations

Our Companys revenue is primarily generated from the sale of ready to cook/eat products, frozen chicken, meat & seafood

Other Income

Other Income includes Interest income on fixed deposits, Freight inwards, Reversal of provision and Balance written off.

Expenditure

Our total expenditure primarily consists of Cost of Material Consumed, Change in Inventory, Employee benefit expense, financial costs, Depreciation and amortization expense and other expenses

Cost of material consumed

The Cost of material consumed includes raw material purchases which includes chicken, mutton and sea food.

Changes in Stock in Trade

The Changes in Stock in Trade is the change of opening and closing stock of the period.

Employment Benefit Expenses

Our employee benefits expense primarily comprises of Salaries, wages & bonus expenses, Remuneration to directors, Contribution to Provident and Other Fund, Staff welfare expenses etc.

Finance Cost

Finance Cost includes interest on Bank & NBFCs Loans, statutory dues, other Borrowing cost including certain bank charges.

Depreciation and Amortization Expenses

Depreciation and Amortization Expenses on Fixed Assets majorly includes depreciation on Plant & Equipment.

Other Expenses

Other Expenses includes majorly expenses on Project execution, selling & advertisement, legal and professional charges, Job work charges and rent.

PERIOD ENDED MARCH 31, 2024, COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2023 (BASED ON RESTATED FINANCIAL STATEMENTS)

Revenues

Total Income

Total Income for the period ended FY 2023-24, stood at 9,067.57 Lakhs whereas for FY 2022-23 it stood at Rs. 5,661.49 Lakhs representing an increase of 60.16%.

Revenue of operations

Net revenue from operations for the FY 2023-24 stood at 9,043.92 Lakhs, whereas in FY 2022-23 it stood at Rs. 5,628.39 Lakhs representing an increase of 60.68%.

Reason: We have acquired Dr. Meat, a Bangalore-based meat brand, which caters to raw meat i.e. Chicken & Mutton. With this acquisition, we were able to enter in southern part of India. We have also introduced an additional line of items in the ready to cook/eat category during the FY 2023-24. This has opened a new area of growth for the company.

Other Income

Other Income for the FY 23-24, stood at 23.65 Lakhs whereas in FY 22-23 it stood at Rs. 33.11 Lakhs representing a decrease of 28.57%.

Reason: The decrease in other income from Rs. 33.11 lakhs in FY 22-23 to Rs. 23.65 Lakhs due to in FY 22-23 some miscellaneous income was there.

Expenditure

Total Expenses

Total Expenses for the FY 23-24, stood at 8,305.39 Lakhs i.e. 91.59% of Total Income whereas in the FY 22-23 it stood at Rs. 5,380.26 Lakhs i.e. 95.03% of Total Income. Though the Total expenses have decreased as a percentage of Total Income, there is an increase of 54.37% year-over-year.

Cost of Material Consumed

The Cost of Material Consumed for the FY 23-24 stood at Rs. 6,853.90 Lakhs i.e. 75.59% of Total Income and in FY 22-23 it stood at Rs. 4,116.23 Lakhs i.e. 72.71% of Total Income. This represents an increase of 66.51% year-over-year.

Reason: The change is on account of the acquisition of Dr. Meat and starting ready to cook/eat products in FY 2023-24.

Change in Inventory

The change in inventory for the FY 23-24 stood at Rs. (396.15) Lakhs in FY 22-23 it stood at Rs. (3.37) Lakhs representing increase of 11,661.07%.

Reason: The increase in closing stock in FY 23-24 was because we started ready to eat and frozen foods having an average of 6 months shelf life and we started to store finished goods for better margin and profitability.

Particulars	FY 23-24	FY 22-23
Opening Balance	4.53	1.16
Closing Balance	400.68	4.53
Total	(396.15)	(3.37)

Employee benefit expense

The Employee benefit expense for the FY 23-24, stood at Rs. 141.42 Lakhs i.e. 1.56% of Total Income whereas in FY 22-23 it stood at Rs. 98.90 Lakhs i.e. 1.75% of Total Income. This represents an increase of 42.99% year on year.

Reason: With acquisition of Dr. Meat, we also took over the employees of the business. Thus there has been an increase of employee expenses. Also, an annual increase in pay of employees led to the increase.

EMPLOYEE BENEFIT EXPENSE	FY 23-24	FY 22-23
Salaries and wages	104.62	53.47
Director Remuneration	26.00	24.00
Contributions to provident and other funds	1.06	1.88
Staff welfare expenses	1.95	18.49
Gratuity Expense	2.48	0.42
Leave Encashment Expenses	2.95	0.63
Other employee benefits	2.36	-
Total	141.42	98.90

Finance Cost

The Finance Cost for the FY 23-24, stood at 92.65 lakhs whereas in the FY 22-23 it stood at Rs. 24.81 Lakhs representing an increase of 273.48% from the previous years.

Reason: The borrowings of company has increased from FY 2023 to FY 2024. This has led to an increase in Finance cost to the company.

Particulars	FY 2024	FY 2023
Borrowings	764.84	206.80

Depreciation and Amortization Expenses

The Depreciation and Amortization Expenses for FY 23-24 stood at Rs. 103.12 Lakhs, whereas in the FY 22-23 it stood at Rs. 34.79 Lakhs representing an increase of 273.48%.

Reason: The Fixed Assets i.e., FA of the company has increased from FY 2023 to FY 2024. This has led to an increase in depreciation and amortization expenses of the company. Addition in FA are as follows:

Particulars	FY 2024	FY 2023
Opening FA	68.79	58.15
Addition	494.02	101.44
Subtract- Depreciation	103.12	34.79
Subtract Impairment	-	56.01
Closing Value	459.69	68.79

Other Expenses

The Other Expenses for FY 23-24, stood at Rs. 1,510.45 Lakhs i.e. 16.66% of Total Income whereas in FY 22-23 it stood at Rs. 1,108.90 Lakhs i.e. 19.59% of Total Income. This represents an increase of 36.21%.

Reason: We had to improve our branding awareness and focus on ensuring customer satisfaction overall in the markets and channels, which Impacted on our logistics cost including last mile delivery cost and branding by engaging with several market experts to build our marketing initiatives in a planned and effective way.

The major expenses in other expenses are as follows:

Particulars	FY 2024	FY 2023
Delivery Charges	429.91	356.07
Outsourcing Service Charges	381.81	260.48
Advertisement Expense	514.50	317.45
Rent	32.62	17.15
Total	1,358.85	951.14

Restated Profit before Tax

The restated profit before tax for FY 23-24, stood at Rs. 762.18 Lakhs whereas in FY 22-23 it stood at Rs. 281.23 Lakhs representing an increase of 171.01%.

Tax Expense

Tax Expense for the period ended March 24, stood at Rs. 295.53 lakhs out of which Current Tax being Nil and Deferred Tax stood at (295.53) Lakhs, whereas in FY 22-23 it stood at Rs. 7.38 Lakhs out of which Current Tax being Nil and Deferred Tax being Rs. 7.38 Lakhs representing as increase of 3,904.43%.

Restated Profit after Tax

The restated profit after tax for FY 23-24, stood at Rs. 466.65 Lakhs whereas in FY 22-23 it stood at Rs. 273.85 Lakhs representing an increase of 70.40%.

Reason: During the FY 2024, we acquired the Dr. Meat a Bangalore-based meat brand, which caters to raw meat i.e. Chicken & Mutton. With this acquisition, we were able to enter in southern part of India which leads to increase in the revenue. Further, also increase in the existing sales in respective states and we have also introduced an additional line of items in the ready to cook/eat category during the FY 2023-24. This has opened a new area of growth for the company which gives us a good margin for our company.

FISCAL YEAR ENDED MARCH 31, 2023, COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2022 (BASED ON RESTATED FINANCIAL STATEMENTS)

Revenues

Total Income

Total Income for the FY 22-23, stood at Rs. 5,661.49 Lakhs whereas in FY 2021-22 it stood at Rs. 5,654.31 Lakhs representing an increase of 0.13 %.

Revenue of operations

Net revenue from operations for the FY 22-23, stood at Rs. 5,628.39 Lakhs whereas in FY 21-22 it stood at Rs. 5,642.86 Lakhs representing a decrease of 0.26 %.

Reason: There has been no major change in revenue from operation. In FY 22 we operated in both B2B and D2C business but because of covid we discontinue our B2B services in FY 23 and only focus on the D2C business with was increase the revenue of the D2C part, which shows the overall no impact or minuet impact on revenue.

Other Income

Other Income for the FY 22-23, stood at Rs. 33.11 Lakhs whereas in the FY 21-22 it stood at Rs. 11.45 Lakhs representing a increase of 189.09%.

Reason: The increase in other income from Rs. 11.45 lakhs in FY 21-22 to Rs. 33.11 Lakhs due to increase in miscellaneous income.

Expenditure

Total Expenses

Total Expenses for the FY 22-23, stood at Rs. 5,380.26 Lakhs whereas in the FY 21-22 it stood at Rs. 5,964.54 Lakhs representing a decrease of 9.80%.

Reason: The change in total expenses is on account of changes in Cost of material consumed, change in inventory, employee benefit expenses, Finance Cost and other expenses.

Cost of Material Consumed

The Cost of Material Consumed for the FY 22-23 stood at Rs. 4,116.23 Lakhs in FY 21-22 it stood at Rs. 4,327.49 Lakhs representing a decrease of 4.88%.

Reason: The change in cost of material consumed due to in the FY 22 we operate in B2B and D2C business but because of covid we discontinue our B2B services in FY 23 which causes decrease in purchase of material cost and only focus on the D2C business with was increase the revenue of the D2C part, which shows the overall no impact or minuet impact on revenue.

Change in Inventory

The change in inventory for the FY 22-23 stood at Rs. (3.37) Lakhs in FY 21-22 it stood at Rs. 3.80 Lakhs representing a decrease of 188.59%.

Particulars	FY 22-23	FY 21-22
Opening Balance	1.16	4.96
Closing Balance	4.53	1.16
Total	(3.37)	3.80

Employee benefit expense

The Employee benefit expense for the FY 22-23, stood at 98.90 Lakhs whereas in FY 21-22 it stood at Rs. 103.73 Lakhs representing a decrease of 4.65%.

Reason: With the managements decision to be efficient, few non performing employees had to let go. We also negotiated with our freelancers who then performed some functions of our company and filled the gap.

EMPLOYEE BENEFIT EXPENSE	FY 22-23	FY 22-23
Salaries and wages	53.47	79.46
Director Remuneration	24.00	18.07
Contributions to provident and other funds	1.88	2.55
Staff welfare expenses	18.49	3.40
Gratuity Expense	0.42	-
Leave Encashment Expenses	0.63	-
Other employee benefits	-	0.25
Total	98.90	103.73

Finance Cost

The Finance Cost for FY 22-23, stood at 24.81 Lakhs whereas in the FY 21-22 it stood at Rs. 10.17 Lakhs representing an increase of 143.87% from the previous years.

Reason: The borrowings of company has increased from FY 2023 to FY 2024. This has led to an increase in Finance costs to the company.

Particulars	FY 2023	FY 2022
Borrowings	206.80	87.20

Depreciation and Amortization Expenses

The Depreciation and Amortization Expenses for the FY 23-24, stood at 34.79 lakhs whereas in the FY 21-22 it stood at Rs. 20.93 Lakhs representing an increase of 66.19%.

Reason: The Fixed Assets of the company has increased from FY 2022 to FY 2023. This has led to an increase in depreciation and amortization expenses of the company. Addition in FA are as follows:

Particulars	FY 2023	FY 2022
Opening FA	58.15	172.10
Addition	101.44	2.26
Subtract- Depreciation/Disposal	34.79	116.21
Subtract- Impairment	56.01	-
Closing Value	68.79	58.15

Other Expenses

The Other Expenses for the FY 22-23 stood at Rs. 1,108.90 Lakhs whereas in FY 21-22 it stood at Rs. 1,498.41 Lakhs representing a decrease of 25.99%.

Reason: Covid impact on our business was discontinuation of our B2B business. The management focusing to reduce the delivery cost for shift to outsourcing agency and marketing cost on improving our bottom line meaning reducing the losses we took a strategic call of not chasing growth at the cost of burning money or further investments of any kind till we become profitable.

The major expenses in other expenses are as follows:

Particulars FY 2023 FY 2022

Particulars	FY 2023	FY 2022
Delivery Charges	356.07	430.86
Outsourcing Service Charges	260.48	302.01
Advertisement Expense	317.45	520.96
Loss on FA	56.01	88.49
Total	990.01	1,342.32

Restated Profit before Tax

The restated profit before tax for the FY 22-23, stood Rs. 281.23 Lakhs whereas in FY 21-22 it stood at Rs. (310.23) Lakhs representing an increase of 190.65%.

Tax Expense

Tax Expense for the FY 22-23, stood at Rs. 7.38 lakhs out of which Current Tax being Nil and Deferred Tax being ended FY 22-23, It stood Rs. 7.38 lakhs whereas in FY 21-22 it stood at is (61.36) Lakhs out of which Current Tax being Nil and Deferred Tax being Rs. (61.36) Lakhs representing as increase of 112.03%.

Restated Profit after Tax

The restated profit after tax for the FY 22-23, stood at Rs. 273.85 Lakhs whereas in FY 21-22 it stood at Rs. (248.87) Lakhs representing an increase of 201.92%.

Reason: Covid impact on our business cause discontinue of B2B business/channel, where 25%-30% of the total revenue was contributed by this channel got washed away due to covid, but the other D2C online business covered up the shortfall of that channel resulted in growth of the business in D2C channel. The managements call to be efficient resulted in decrease in other expenses, decrease in Cost of Material consumed and thus resulted in better profitability for the company.

INFORMATION REQUIRED AS PER ITEM (II) (C) (I) OF PART A OF SCHEDULE VI TO THESEBI 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 27 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 27 and 238, 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 carrying and forward activites.

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 Transportation and Logistics Industry. Relevant industry data, as available, has been included in the chapter titled "Our Industry" beginning on page 125 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.

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 158 of this Draft Red Herring Prospectus.