Exim Routes Ltd Management Discussions

BUSINESS OVERVIEW

Our Company operates as a global platform enabling the exchange of recyclable paper materials, offering end-to-end services to Indian Paper Mills—from sourcing to logistics. Central to this our AI- powered B2B platform, the Exim Routes Intelligence System (ERIS). ERIS streamlines supply chain operations through global inventory matching and price discovery, enables efficient customer and communication, delivers actionable insights via integrated market intelligence, and ensures seamless logistics execution with our freight partners. By consolidating data ERIS empowers decisions, transactions, and optimized supply and demand.

SIGNIFICANT DEVELOPMENTS AFTER 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 which materially and adversely affect or is likely to impact within the next twelve months except as follows:

• The Board of Directors of our Company has approved and passed a resolution on May 19, 2025, to authorize the Board of Directors to raise the funds by way of an Initial Public Offering.

• The Shareholders of our Company has approved and passed a resolution on May 23, 2025, to authorize the issue by way of Initial Public Offering.

• The Shareholders of our company appointed Mrs. Charu Jora as Non-Executive Director w.e.f. May 23,2025.

• The Shareholders of our company appointed Mr. Mahender Singh Tanwar as Independent Director w.e.f. May 23, 2025.

• The Shareholders of our company appointed Mrs. Komal Goel as Independent Director w.e.f. April 29.2025.

• The Shareholders of our company appointed Mr. Mohit Garg as Independent Director w.e.f. April 29, 2025.

• The board of directors changed the designation of Mr. Manish Goyal as Executive Director on April 07.2025.

• The board of directors changed the designation of Mr. Govind Rai Garg as Executive Director on April 07, 2025.

• The Board of Director of our company appointed Mrs. Komal Goel as Additional Non-Executive Independent Director w.e.f. April 07, 2025.

• The Board of Director of our company appointed Mr. Mohit Garg as Additional Non-Executive Independent Director w.e.f. April 07, 2025.

• The board of directors appointed Mr. Manish Goyal as Chief Executive Officer on January 07, 2025.

• The board of directors appointed Mr. Govind Rai Garg as Chief Executive Officer on January 07, 2025.

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 34 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 foreigncountries, which affect national & international finance.

• Companys results of operations and financial performance;

• Performance of Companys competitors;

• Significant developments in Indias economic and fiscal policies;

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

• Volatility in the Indian and global capital markets.

DISCUSSION ON RESULT OF OPERATION

(Amount in Lakhs, except %)

Our Significant Accounting Policies

Overview of Revenue & Expenditure

Revenues

• Revenue from operations

• Other Income

Expenditure

Our total expenditure primarily consists of Expenses:

• Purchase of stock in Trade

• Change in Inventory

• Cost of service

• Employee Benefit Expenses

• Finance Cost

• Depreciation and Amortization Expenses

• Other Expenses

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

Revenues

• Total Income

Reason: The increase in the total income of the company is due to a significant increase in the revenue from operations.

• Revenue from operations

Reason: Revenue increased by Rs 4,881.09 in FY2024-25 due to following reasons.

• The major part of the revenue came from paper recyclables contributing Rs. 4,888.70 lakhs, which is 100.16% of the total increase in revenue.

• Increase in Management consultancy services added Rs. 33.74 lakhs, making up the remaining 1.93% of the revenue.

• ERIS subscription fee Rs. 75 Lakhs and logistics services has increased by Rs. 116.83 Lakhs.

• Further, some part of revenue has reduced amounting Rs. 233.19 Lakhs due to decrease of others sales during the year.

(Amounts in Lakhs)

• Other Income

Reason: There is a decrease in other income because of liabilities written off during in the last year.

(Amounts in Lakhs)

Expenditure

• Total Expenses

Reason: The increase in account of the increase in the purchase of stock in trade, cost of service, finance cost and other expenses.

• Purchase of Stock in trade

Reason: There is an increase in the ‘purchase of stock in trade as company have expanded the paper trading business.

• Change in inventory of stock in Trade

• Cost of Service

Reason: From FY 24 to FY 25, the cost of services increased as the paper trading business expand. Major part of the new sales came from the UK and Africa, where shipping costs are higher compared to Asia. So, the cost of services also became higher as a percentage of total revenue.

• Employment Benefit Expenses

Reason: There was a decrease in ‘Employee benefit expenses because of a majorly due to in salaries and wages reason being as part of the employee cost has been capitalized under "Software Under Development" in the balance sheet. Since the work has moved beyond the research stage, it is now considered development, and such costs are no longer recorded in the Profit & Loss account or under staff welfare expenses apart from there has been decrease in director remuneration as well for the same reason.

(Amounts in Lakhs)

• Finance Cost

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

(Amounts in Lakhs)

• Depreciation and Amortization Expenses

• Other Expenses

Reason: There is an increase in ‘Other expenses because of the increase in rent, rates and taxes, travelling and conveyance, business promotion expenses, legal and professional expenses, bank charges, inventory written off, asset written off.

(Amounts in Lakhs)

• Restated Profit before Tax

• Tax Expenses

Reason: The tax expenses increased over the financial year due to an increase in profit before tax therefore more tax expenses made in the financial year 2024-25 as compared to the financial year 2023-24.

• Restated Profit after Tax

(Amount in Lakhs)

Increase in PAT Justification:

The companys PAT margin increased from 5.85% to 6.27% from FY 2024 to FY 2025, as revenue increased at a faster rate than increased in total expenses. This improvement was due to the following reasons:

• By the end of FY24 and start of FY25, the company started using their tech platform ERIS. It helped them to do many tasks automatically and work faster. Further, the company also gets the subscription fee amounting to Rs. 75 Lakhs in FY2024-25

• Also, since some of their staff were working on building ERIS, their cost was shown as part of the project and capitalized in asset, not as regular expenses. Because of this, company are able to keep other costs like staff, finance, and depreciation lower, even when total sales increased by 67.93%, thus our PAT Margin was increase in the year 2024-25.

Revenues

• Total Income

Reason: The increase in the companys total income is primarily due to a significant rise in revenue driven by overall growth in business operations along with an increase in other income.

• Revenue from operations

Reason: The following are the reason for increase in the revenue from operations:

• This growth mainly came from a Rs. 4,417.14 Lakhs rise in sales from the paper recyclable business.

(Amount in Lakhs)

• Other Income

Reason: There is an increase in ‘other income because of Liabilities written off and foreign exchange fluctuation gain.

(Amounts in Lakhs)

Expenditure

• Total Expenses

Reason: The increase in account of the increase in the Purchase of stock-in-trade, employee benefit expenses, Finance cost, Depreciation and amortisation expenses.

• Purchase of Stock In Trade

Reason: There is an increase in the purchase of stock in trade due to increases in trading of wastepaper product.

• Change in Inventory of stock in Trade

• Cost of Service

Reasons: From FY 23 to FY 24, the cost of services became lower mainly because decrease in logistics sale of services.

• Employment Benefit Expenses

(Amounts in Lakhs)

• Finance Cost

Reason: This was primarily due to an increase in Interest on borrowings and Other borrowing cost-loan processing fees which include the following:

(Amounts in Lakhs)

• Depreciation and Amortization Expenses

Reason: This increase is due to the addition of the fixed assets in the year 2023-24. Also, the depreciation charged on the fixed assets with higher opening WDV of the assets and the assets purchased in the middle of the year.

(Amount in Lakhs)

• Other Expenses

Reason: There is an increase in ‘Other expenses because of the increase in Bank charges and Travelling charges as shown below:

(Amounts in Lakhs)

• Restated Profit before Tax

• Tax Expenses

Reason: The tax expenses increased over the financial year due to an increase in profit before tax therefore more tax expenses made in the financial year 2023-24 as compared to the financial year 2022-23.

• Restated Profit after Tax

Increase in PAT Justification:

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

Revenues

• Other Income

Reason: Other income increased mainly due to higher interest earned on loans and advances, net foreign exchange fluctuation gain and profit from the sale offixed assets.

(Amounts in Lakhs)

Expenditure

• Total Expenses

Reason: The increase is primarily due to a rise in the purchase of stock-in-trade, cost of services, finance costs and other operating expenses.

• Purchase of Stock in trade

Reason: The increase in purchase of stock in trade because the company started high seas sales and increase in domestic sales of recyclable paper in FY2024-25.

• Cost of Service

Reason: The increase in cost of services is primarily attributable to higher freight expenses, which correspond to an increase in freight revenue from operations.

• Employment Benefit Expenses

Reason: The drop in Employee Benefit Expenses is mainly because part of the salaries, paid to employees has been recorded as an asset under "Software Under Development" in the balance sheet. Since the work has moved from the research stage to the development stage, these costs are no longer shown as an expense in the Profit & Loss account or under staff welfare. Also, director salaries have gone down due to the same reason, which added to the overall decrease and staff welfare expenses.

(Amounts in Lakhs)

• Finance Cost

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

(Amounts in Lakhs)

• Depreciation and Amortization Expenses

• Other Expenses

Reason: There is an increase in ‘Other expenses because of the increase in rent, travelling and conveyance, legal and professional expenses, bank charges, inventory written off and asset written off.

(Amounts in Lakhs)

• Restated Profit before Tax

• Tax Expenses

Tax was Rs. 127.06 Lakhs and the Deferred Tax being Rs. (6.68) whereas in the Financial Year 202324 it stood at Rs. 25.76 Lakhs out of which for current tax being Rs. 26.93 Lakhs and deferred tax being Rs. (1.17) Lakhs representing an increase of 366.07%.

Reason: The tax expenses increased over the financial year due to an increase in profit before tax therefore more tax expenses made in the financial year 2024-25 as compared to the financial year 2023-24.

• Restated Profit after Tax

The restated profit after tax for the financial year 2024-2025 stood at Rs. 354.63 Lakhs whereas for the financial year 2023-24, it stood at Rs. 61.98 Lakhs representing an increase of 470.67%.

(Amount in Lakhs)

Increase in PAT Justification:

Exim Routes Limited witnessed a significant increase in Profit after Tax by 18.52% reaching Rs. 354.63 Lakhs from Rs. 61.98 Lakhs in the previous year. This increase is attributed to the following:

• The company has started High seas sales and increase in domestic sales of recyclable paper that contributors major part of increase in total revenue amounting to Rs. 1,128.00 lakhs and this done with their existing team, which helped them to save costs and make more profit.

• They also added one new subsidiary in FY 2024-25, which paid them management consultancy fee for the management services they rendered to their subsidiary.

• Additionally, the company has started a new service where a few paper mills paid them to use their ERIS platform, which gives them subscription fee amount fee Rs. 75.00 Lakhs.

Revenues

• Total Income

Total income for the financial year 2023-24 stood at Rs. 520.39 Lakhs whereas in the financial year 2022-23 it stood at Rs. 1,275.46 Lakhs representing a decrease of 59.20%.

Reason: The drop in the companys total income is mainly because both the revenue and other income have gone down significantly.

• Revenue from operations

Revenue from operations for the financial year 2023-2024 stood at Rs. 520.34 Lakhs whereas for the financial year 2022-23, it stood at 1,273.78 Lakhs representing a decrease of 59.15%.

Reason: Company revenue has decreased by Rs 754.00 Lakhs, mainly due to the following four reasons:

• Company have discontinued of freight forwarding services valued for Rs. 818.30 Lakhs which come under other services because they started focusing more on trading of recyclable which consisting high margins to the company.

(Amount in Lakhs)

Another reason for the drop in revenue was the closure of their chemical business, which earlier gave them commission and trading income of Rs. 281.02 Lakhs which was shown in other revenue, reason being, company have closed it to - focus more on their main trading business.

• Further income from trading of recyclable paper and consultancy services given to new subsidiaries that were added in FY 2023-24 along with some existing subsidiaries contributors which contribute Rs. 345.88 Lakhs.

• Other Income

Reason: There is a decrease in ‘other income because of there is no interest on loans and advances and there is no foreign exchange fluctuation gain during a particular year.

Expenditure

• Total Expenses

Reason: The decrease in account of the decrease in the Purchase of stock-in-trade, employee benefit expenses, cost of service, other expenses.

• Purchase of Stock in Trade

Reason: There is a decrease in the purchase of stock in trade due to decreases in chemical during the year, further we stopped operating the chemical segment.

• Change in Inventory of stock in Trade

• Cost of Service

Reasons: In FY2022-23, the company was doing freight forwarding services, where the company paid freight charges added and our margin then raised to invoice to the customer. Since In FY 2023- 24. we decrease this business and their service cost has come down.

• Employment Benefit Expenses

Reason: There was a decrease in ‘Employee benefit expenses because of decrease in Salaries, wages and bonus, Contribution to provident fund and other funds, Director Remuneration, Gratuity expense, Staff welfare expenses due to decrease in the number of employee, which are follows as:

(Amounts in Lakhs)

• Finance Cost

Reason: This was primarily due to an increase in Interest on borrowings and increase in loan processing fees which include the following:

(Amounts in Lakhs)

• Depreciation and Amortization Expenses

Reason: This increase is due to the addition of the fixed assets in the year 2023-24. Also, the depreciation charged on the fixed assets with higher opening WDV of the assets and the assets purchased in the middle of the year.

(Amount in Lakhs)

• Other Expenses

Reason: There is a decrease in ‘Other expenses because of the major decrease in Travelling & conveyance and legal and professional charges, and miron change in rates and taxes and Assets written off as shown below:

(Amounts in Lakhs)

• Restated Profit before Tax

• Tax Expenses

Reason: The tax expenses increased over the financial year due to an increase in profit before tax therefore more tax expenses made in the financial year 2023-24 as compared to the financial year 2022-23.

• Restated Profit after Tax

(Amount in Lakhs)

Increase in PAT Justification:

Exim Routes Limited witnessed a significant increase in Profit after Tax by 11.91 %, reaching Rs. 61.96 Lakhs from Rs. 30.33 Lakhs in the previous year. This increase is attributed to the following:

• Company have focused more on their main recyclable paper business, so they stopped lower- earning businesses like chemicals and freight forwarding services. Due to which we shifted from low-profit goods and services to high-profit trading and services.

• Company profit margin have improved because they earned more from high-profit areas like management consultancy, container handling, and paper trading.

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

1. Unusual or infrequent events or transactions:

2. Significant economic changes that materially affected or are 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. Income and Sales on account of major product/main activities:

5. Future changes in relationship between costs and revenues, in case of events such as future increase in marketing or advertisement costs or prices that will cause a material change are known:

6. Future relationship between Costs and Income

7. 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.

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

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

10. The extent to which the business is seasonal:

11. Competitive Conditions