The following discussion of our financial condition and results of operations should be read in conjunction with "Restated Consolidated Financial Information " beginning on page 270.
Our Companys financial year commences on April 1 and ends on March 31 of the immediately subsequent year, and references to a particular fiscal year are to the 12 months ended March 31 of that particular year. Unless otherwise indicated or the context otherwise requires, the financial information for the six month ended September 30, 2024 and Fiscals 2024, 2023 and 2022, included herein is based on or derivedfrom our Restated Consolidated Financial Information included in this Draft Red Herring Prospectus. For details, please see "Restated Consolidated Financial Information " beginning on page 270. The Restated Consolidated Financial Information is based on our audited financial statements and is restated in accordance with the Companies Act, 2013, and the SEBIICDR Regulations. For details, please see "Restated Consolidated Financial Information " beginning on page 270. The Restated Consolidated Financial Information is based on our audited financial statements and is restated in accordance with the Companies Act, 2013, and the SEBI ICDR Regulations. Our audited financial statements are prepared in accordance with Indian Accounting Standards, which differs in certain material respects with IFRS and U.S. GAAP. For details, see "Risk Factors - External Risk Factors - 61. Significant differences exist between Ind AS and other accounting principles, such as IFRS and U.S. GAAP, which may be material to investors assessments of our financial condition. " on page 66.
Only to the extent explicitly indicated, industry and market data used in this section has been derived from the report titled ‘Independent Market Report for Gem Aromatics dated December 26, 2024, prepared and issued by F&S (the "F&S Report"), commissioned by and paid for by our Company. The F&S Report has been prepared and issued by F&S for the purpose of understanding the industry exclusively in connection with the Offer. Unless otherwise indicated, all financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular fiscal or calendar year, refers to such information for the relevant fiscal or calendar year. For further details, see "Risk Factors - Internal Risks - 51. Certain sections of this Draft Red Herring Prospectus disclose information from the F&S Report which is a paid report and commissioned and paidfor by us exclusively in connection with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent risks " on page 61 and the section titled "Industry Overview" beginning on page 143. Also see, "Certain Conventions, Presentation of Financial, Industry and Market Data and Currency of Presentation " beginning on page 16.
For details relating to the defined terms in the section, please see "Definitions and Abbreviations" beginning on page 1. Unless the context otherwise requires, in this section, all references to "we", "us", or "our" refers to our Company and its Subsidiaries on a consolidated basis, while, all references to "the Company" or "our Company" refers to Gem Aromatics Limited on a standalone basis
OVERVIEW
We are an established manufacturer of specialty ingredients, including, essential oils, aroma chemicals and Value- Added Derivatives in India with a track record of over two decades. We offer a diversified portfolio of products, ranging from the Mother Ingredients to its various Value-Added Derivatives. Our products find application across a broad spectrum of industries, such as, oral care, cosmetics, nutraceuticals, pharmaceuticals, wellness and pain management and personal care. We are one of the prominent essential oils and Value-Added Derivatives manufacturers in India, based on value and volume manufactured, specializing in products that are derived from mint and clove oil. (Source: F&S Report) Our track record, diverse product portfolio and brand recall has helped us establish several leadership positions within our product portfolio, for instance, in India, we have a dominant presence in essential oil-based products and derivatives that are manufactured from mint, clove, eucalyptus oils and other essential oils. (Source: F&S Report) The largest segments under essential oil are - Orange oil, Mint oil, Clove oil, and Eucalyptus oil. We are present in three of the four major categories. (Source: F&S Report) During FY 2024 in India, we were the largest procurer of Piperita oil, and the largest processor of DMO, Clove oil, Eugenol and Eucalyptus Oil in terms of volume manufactured. (Source: F&S Report) As on FY 2024, our share of DMO and Eugenol in India was 11% and 62%, respectively, in terms of volume manufactured. (Source: F&S Report)
Our in-house manufacturing and R&D capabilities have contributed towards our track record of product innovation and launches and assisted us with maintaining consistent product quality. With over two decades of experience, we have developed our expertise in advanced organic synthesis through application of complex chemistries like Grignards, amide coupling, Friedel-Crafts reactions, cross-coupling chemistry, photochemical reactions, and methoxylation using green chemistry. Our advanced capabilities also extend to high-pressure reactions, continuous processes, fixed-bed systems, and process automation.
We offer 70 products across our four product categories, namely, (i) mint and mint derivatives; (ii) clove and clove derivatives; (iii) phenol; and (iv) other synthetic and natural ingredients. We enjoy leading position in many of the product lines that we operate in. (Source: F&S Report) Considering the market growth and our legacy of experience in the industry since 1915, there is a higher opportunity to explore. (Source: F&S Report) With a focus on servicing our customers and manufacturing quality products, we commenced our operation in Fiscal 1999 in the mint and mint derivative category with products like spearmint and piperita. In order to expand our product portfolio, we commenced production and sale under the clove and clove derivative category in 2009. In continuation with our focus on expanding our product portfolio, we are in the process of introducing products under the new category, being, citral. Over the years our Company has been recognised with awards and accolades, including, "Export Excellence Award for outstanding performance in category of One Star Export House - MSME (Gold)" from Federation of Indian Export Organisation for the years 2017-18 and 2019-20, "Export Excellence Award for outstanding performance in category of Two Star Export House - MSME (Silver)" from Federation of Indian Export Organisation for the years 2020-21. Our Company has also been accorded the status of a "Three Star Export House" by the Directorate General of Foreign Trade, Department of Commerce, Ministry of Commerce and Industry Government of India. For further details, see "History and Certain Corporate Matters - Key awards, accreditations and recognition" on page 239.
Further, in 2019, doTERRA Enterprises, Sarl ("doTERRA"), invested in our Company and while we initially started with supply of spearmint and piperita, during the six month period ended September 30, 2024 and the past three Fiscals, we have been supplied 18 products to doTERRA Global Limited. For further details of the Supply Agreement entered with doTERRA Global Limited and investment made by doTERRA in our Company, see "History and Certain Corporate Matters - Summary of key material agreements" and "History and Certain Corporate Matters - Shareholders agreements and other agreements" on pages 241 and 240, respectively.
The table below sets forth a break-up of our revenue from sale of products across our product categories, each category comprising both natural and synthetic ingredients, for the periods indicated:
| Six month ended September 30, 2024 | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | |||||
| Particulars | Amount (Rs in million) | % of revenue from operatio ns | Amount (Rs in million) | % of revenue from operatio ns | Amount (Rs in million) | % of revenue from operatio ns | Amount (Rs in million) | % of revenue from operatio ns |
| Mint and mint derivatives | 1,408.79 | 68.76 | 3,297.90 | 72.89 | 2,972.56 | 69.98 | 2,385.50 | 75.89 |
| Clove and clove derivatives | 445.59 | 21.75 | 683.02 | 15.10 | 640.92 | 15.09 | 315.38 | 10.03 |
| Phenol | 22.44 | 1.10 | 17.54 | 0.39 | 1.58 | 0.04 | 0.06 | 0.00 |
| Other synthetic and natural ingredients* | 133.70 | 6.53 | 471.83 | 10.43 | 577.76 | 13.60 | 411.01 | 13.08 |
| TotalA | 2,010.52 | 98.14 | 4,470.29 | 98.81 | 4,192.82 | 98.71 | 3,111.95 | 99.00 |
* Including eucalyptus, eucalyptol, lemon grass, amongst others. A Remaining percentage consists other operating revenues
Historically, due to the seasonal nature of our business, we have experienced higher revenues in the second half of the financial year as compared to the first half of the financial year. For further details see, "Risk Factors - Internal Risk Factors - 13. Some of the raw materials used in our production processes are natural resources and therefore we are subject to the seasonality and risk of depletion of such natural resources." on page 38.
The table below sets out the total addresable market both in India and globally:
| Product Category | Key End User Industries | Global Market Size (USD Million) - 2024 | India Market Size (USD Million ) - 2024 | India Productio n Size (USD Million) - 2024 | India Positionin g (% share of global supply) - 2024 | Our Company s productio n Value FY 24 (USD Million) | Our Company s productio n Volume FY 24 | India Productio n Current Market Share of our Company (%)- 2024 |
| Peppermin t Oil | Food & Beverages, Pharma & Alternative Medicine, Cosmetics & Personal Care, Tobacco, Aromatherap y | 785 | 456 | 635 | 81% | 18.78 | 1,130 | 3% |
| Menthol | 835 | 200 | 243 | 29% | 16.41 | 1,300 | 7% | |
| DMO | 160 | 75 | 130 | 81% | 13.75 | 1,100 | 11% | |
| Clove Oil | 100 | 17 | 17 | 17% | 4.32 | 354 | 26% | |
| Eugenol | 90 | 11 | 6 | 7% | 3.43 | 195 | 53% | |
| Eucalyptu s Oil | 140 | 10 | 4 | 3% | 2.39 | 266 | 68% | |
| MEHQ | 145 | 41 | 74 | 51% | Future strategy | |||
| Anethole | 185 | 22 | 14 | 8% | ||||
| Guaiacol | 330 | 40 | 38 | 12% | ||||
| 4MAP | 42 | 4.6 | 11 | 26% | ||||
| BHA | 147 | 92 | 50 | 34% | ||||
| Cooling Agents | 240 | 1.3 | NA | Negligible |
Source: F&S Report.
We have established long standing relationships with several domestic and global corporate customers such as, Colgate-Palmolive (India) Limited, Dabur India Limited, Patanjali Ayurved Limited, SH Kelkar and Company Limited, Rossari Biotech Limited, Symrise Private Limited, doTERRA, Ventos So Brasil Eireli and Anhui Hautian Spices Co. Ltd. as well as several domestic and global merchant traders. As on September 30, 2024, we supply our products to 170 customers, domestically and 30 customers across 13 countries globally, covering geographies including the Americas, Asia, Africa and Australia. In the domestic market, we sell our products directly to our customers on a business-to-business basis and our export sales are undertaken through a combination of methods such as (i) direct sales by our Company to our customers; (ii) sales through our Material Subsidiary, i.e., Gem Aromatics LLC, based in the USA; or (iii) sales through third party agencies.
The following table sets forth a breakdown of our revenue from operations, in absolute terms and as a percentage of total revenue from operations, for the periods indicated:
| Particulars | For the six month period ended September 30, 2024 | For the year ended March 31, 2024 | For the year ended March 31, 2023 | For the year ended March 31, 2022 | ||||
| Amount (Rs in million) | % of total revenue from operations | Amount (Rs in million) | % of total revenue from operations | Amount (Rs in million) | % of total revenue from operations | Amount (Rs in million) | % of total revenue from operations | |
| Sale of products - domestic sales | 1,156.22 | 56.43 | 2,228.43 | 49.25 | 1,529.49 | 36.00 | 1,274.36 | 40.54 |
| Sale of products - export sales | 854.30 | 41.69 | 2,241.86 | 49.55 | 2,663.33 | 62.70 | 1,837.59 | 58.46 |
| Other operating revenues | 38.42 | 1.88 | 54.23 | 1.20 | 55.11 | 1.30 | 31.34 | 1.00 |
| Total | 2,048.94 | 100.00 | 4,524.52 | 100.00 | 4,247.93 | 100.00 | 3,143.29 | 100.00 |
We operate three manufacturing facilities located in Budaun, Uttar Pradesh ("Budaun Facility"), Silvassa, Dadra and Nagar Haveli and Daman and Diu ("Silvassa Facility") and Dahej, Gujarat (Dahej Facility", and together with the Budaun Facility and Silvassa Facility, the "Manufacturing Facilities").
The table below sets forth the details of the Manufacturing Facilities:
| Name of the entity which owns/ has leased the property | Manufacturing facility location | Manufacturing facility address | Built-up area (in sq. mt.) | Production capacity as of September 30, 2024 (in MTPA)* |
| Gem Aromatics Limited | Budaun, Uttar Pradesh | 8/9/10 Khasara No, Village Gathona, Ujhani Budaun Rd, District: Budaun #243639 UP, India | 5,915 | 3,200 |
| Gem Aromatics Limited | Silvassa, Dadra and Nagar Haveli and Daman and Diu | Plot No.2, Survey No. 16/4/2, Near Alok Industries, Rakholi, Silvassa #396230 (D&NH), India. | 1,340 | 1,500 |
| Krystal Ingredients Private Limited | Dahej, Gujarat | Plot number- D-3/97, GIDC Industrial Estate, Dahej- III, Vagara, Bharuch, Gujarat, Bharuch-392130 Gujarat | 100 | 46 |
As certified by Anjaria Enviro Tech Private Limited by way of certificate dated December 23, 2024.
For further details on our installed capacity, see "Our Business - Our Operations - Manufacturing Facilities - Installed Capacity and Capacity Utilization" on page 222.
As on September 30, 2024, we have a dedicated in-house R&D team comprising of 15 scientists, that play a pivotal role in implementing the state-of-the-art technology adopted by us, that has helped us advance our formulations across the Value-Added Derivatives. Our manufacturing operations are bolstered by our dedicated research and development facility in Maharashtra ("R&D Facility"). We believe that our in-house R&D capabilities have been instrumental in our success by allowing us to work closely with our customer and develop products as per their specific requirements, including, their proprietary ratio of ingredients. Our in-house R&D capabilities assist us to achieve customised products for our customers, in terms of the specific fragrance profile of the product or a particular flavour.
Our Promoters, have been an integral part in the establishment and growth of our Company and with over two decades of experience in the specialty ingredients industry, including, essential oils, aroma chemicals and Value- Added Derivatives, have been instrumental in our continued growth. We have an experienced Board of Directors who bring their respective experience and expertise to our operations. The Key Management Personnel and the Senior Management Personnel of the Company contribute to the growth of the Company through their commitment and expertise and we believe our experienced and dedicated senior management team also enables us to identify market opportunities, formulate and execute business strategies, manage customer expectations and proactively address changes in market conditions.
Some of our key performance indicators ("KPIs") include:
| Particulars | Unit | For the six months ended September 30, 2024 | For the financial year ended March 31, 2024 | For the financial year ended March 31, 2023 | For the financial year ended March 31, 2022 |
| Revenue from Operations | Rs in million | 2,048.94 | 4,524.52 | 4,247.93 | 3,143.29 |
| Growth in revenue from operations | % | NA | 6.51 | 35.14 | NA |
| Gross Profit | Rs in million | 473.66 | 1,112.96 | 1,074.10 | 761.01 |
| Gross Margin | % | 23.12 | 24.60 | 25.29 | 24.21 |
| EBITDA | Rs in million | 295.56 | 783.54 | 661.86 | 491.64 |
| EBITDA Margin | % | 14.42 | 17.32 | 15.58 | 15.64 |
| Particulars | Unit | For the six months ended September 30, 2024 | For the financial year ended March 31, 2024 | For the financial year ended March 31, 2023 | For the financial year ended March 31, 2022 |
| Profit for the Period/ Year | Rs in million | 183.25 | 501.04 | 446.72 | 311.86 |
| Total income | Rs in million | 2,065.16 | 4,542.25 | 4,250.93 | 3,169.73 |
| PAT Margin | % | 8.87 | 11.03 | 10.51 | 9.84 |
| Return on Equity | % | 7.36 | 21.73 | 24.88 | 22.57 |
| Return on Capital Employed | % | 6.96 | 21.10 | 22.85 | 20.84 |
| Gross Fixed Assets Turnover Ratio | In times | 1.52 | 4.76 | 7.66 | 7.60 |
| Net Debt to Total Equity | In times | 0.48 | 0.36 | 0.44 | 0.51 |
| Net Working Capital Cycle | Days | 193.10 | 162.51 | 172.71 | 181.33 |
* Ratios and percentages are not annualized for the six months period ended September 30, 2024.
Notes:
1. Revenue from operations means the Revenue from operations for the period/year
2. Growth in Revenue from operations (%) is calculated as a percentage of Revenue from operations of the year minus Revenue from operations of the preceding year, divided by Revenue from operations of the preceding year
3. Gross profit is calculated as Revenue from operations minus cost of raw materials consumed minus purchase of stock-in-trade (traded goods) minus (increase)/decrease in inventories of finished goods, work-in-progress and stock-in-trade
4. Gross Margin is calculated as Gross Profit divided by Revenue from operations
5. Earnings before interest, tax, depreciation and amortization (EBITDA) is calculated as profit/ (loss) for the period/year plus finance costs, depreciation and amortization, exceptional items and total income tax expenses less other income.
6. EBITDA Margin is calculated as EBITDA divided by Revenue from operations.
7. Profit after tax (PAT) Margin is calculated as profit/ (loss) for the period/year divided by total income
8. Return on Equity is calculated as profit/ (loss) for the period/year (Excluding share of minority in profits) divided by total equity (Excluding non-controlling interest).
9. Return on Capital Employed is calculated as EBIT divided by capital employed Capital employed is calculated as total equity plus current borrowings (including current maturities of non-current borrowings), non-current borrowings and deferred tax liability while EBIT is calculated as EBITDA less depreciation and amortization.
10. Gross Fixed Assets Turnover Ratio is calculated as Revenue from operations for the period/year divided by cost ofproperty, plant and equipment, capital work-in-progress, right-of-use assets, goodwill, other intangible assets & intangible assets under development. In case of unavailability of cost of right-of-use assets, we have taken the carrying value.
11. Net Debt to Total Equity is calculated as net debt divided by total equity. Net Debt is calculated as current borrowings (including current maturities of non-current borrowings) plus non-current borrowings less cash and cash equivalents less other bank balances.
12. Net Working Capital Cycle (days) is calculated as net working capital divided by revenue from operations multiplied by 365 (year) 183 (six months). Net Working Capital is calculated as inventories plus trade receivables minus trade payables.
SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATION
The results of our operations and our financial conditions are affected by numerous factors and uncertainties, many of which may be beyond our control, including as discussed in "Our Business" and "Risk Factors", beginning on pages 208 and 143, respectively.
Please see below a discussion of certain factors that we believe may be expected to have a significant effect on our financial condition and results of operations:
Relationship with and dependence on key customers
We have established long standing relationships with several domestic and global corporate customers such as, Colgate-Palmolive (India) Limited, Dabur India Limited, Patanjali Ayurved Limited, SH Kelkar and Company Limited, Rossari Biotech Limited, Symrise Private Limited, doTERRA, Ventos So Brasil Eireli and Anhui Hautian Spices Co. Ltd. as well as several domestic and global merchant traders. As on September 30, 2024, we supply our products to 170 customers, domestically and 30 customers across 13 countries globally, covering geographies including the Americas, Asia, Africa and Australia. In the domestic market, we sell our products directly to our customers on a business-to-business basis and our export sales are undertaken through a combination of methods such as (i) direct sales by our Company to our customers; (ii) sales through our Material Subsidiary, i.e., Gem Aromatics LLC, based in the USA; or (iii) sales through third party agencies.
The table below sets forth the revenue derived from our top 10 customers, for the periods indicated:
| Six month ended September 30, 2024 | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | |||||
| Particulars of the top 10 customers^ | Amount (Rs in million) | % of revenue from operations | Amount (Rs in million) | % of revenue from operations | Amount (Rs in million) | % of revenue from operations | Amount (Rs in million) | % of revenue from operations |
| Customer 1 | 219.11 | 10.69 | 854.57 | 18.89 | 860.97 | 20.27 | 492.51 | 15.67 |
| Customer 2 | 210.74 | 10.29 | 323.05 | 7.14 | 325.11 | 7.65 | 364.65 | 11.60 |
| Customer 3 | 185.54 | 9.06 | 230.54 | 5.10 | 307.22 | 7.23 | 345.78 | 11.00 |
| Customer 4 | 166.30 | 8.12 | 154.29 | 3.41 | 282.83 | 6.66 | 175.85 | 5.59 |
| Customer 5 | 84.60 | 4.13 | 151.96 | 3.36 | 232.91 | 5.48 | 138.38 | 4.40 |
| Customer 6 | 69.70 | 3.40 | 147.70 | 3.26 | 231.47 | 5.45 | 130.30 | 4.15 |
| Customer 7 | 59.09 | 2.88 | 134.34 | 2.97 | 165.18 | 3.89 | 125.61 | 4.00 |
| Customer 8 | 54.09 | 2.64 | 130.17 | 2.88 | 147.88 | 3.48 | 117.46 | 3.74 |
| Customer 9 | 53.75 | 2.62 | 124.35 | 2.75 | 121.59 | 2.86 | 113.64 | 3.62 |
| Customer 10 | 51.87 | 2.53 | 109.77 | 2.43 | 120.68 | 2.84 | 106.03 | 3.37 |
| Total | 1,154.79 | 56.36 | 2,360.74 | 52.19 | 2,795.84 | 65.81 | 2,110.21 | 67.14 |
*Our top 10 customers include Colgate Palmolive (India) Limited, doTERRA Global Limited and Ventos Do Brasil LTDA; names of other customers have not been included in the above table because consents for disclosure of such customer names were not available.
A Top 10 customer have been included in each year /period independently.
Our customers do not provide a firm commitment for any specific product quantity and purchase orders may be amended or cancelled prior to finalization, as a result of which, we do not hold a significant order book at any time, making it difficult for us to forecast revenue, production or sales and plan our inventory in advance. Any increases or decreases in the customer demand are likely to have an effect on our revenues and our results of operations.
Raw Material Costs and Operating Costs
Our business, financial condition, results of operations and prospects are significantly impacted by the prices of raw materials purchased by us, particularly prices of mentha arvensis, mentha piperita, crude clove leaf oil and lemon grass oil. The table below sets forth the cost of raw materials consumed, including as a percentage of our total expense for the periods stated:
| Particulars | Six month ended September 30, 2024 | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | ||||
| Amount (Rs in million) | % of total expense | Amount (Rs in million) | % of total expense | Amount (Rs in million) | % of total expense | Amount (Rs in million) | % of total expense | |
| L menthol | 494.18 | 27.26 | 1,301.65 | 33.67 | 387.43 | 10.50 | 317.53 | 11.65 |
| Crude clove leaf oil Madagascar 80-82% | 266.35 | 14.69 | 484.34 | 12.53 | 410.88 | 11.13 | 215.31 | 7.90 |
| DMO crude | 228.55 | 12.61 | 414.54 | 10.72 | 342.80 | 9.29 | 620.95 | 22.78 |
| Eugenol | 96.78 | 5.34 | 144.38 | 3.73 | 191.37 | 5.19 | 88.18 | 3.23 |
| Mentha arvensis | 76.27 | 4.21 | 244.03 | 6.31 | 279.77 | 7.58 | 387.48 | 14.21 |
| Others* | 497.48 | 27.44 | 855.30 | 22.12 | 1,552.87 | 42.08 | 1,088.15 | 39.92 |
| Total | 1,659.61 | 91.55 | 3,444.24 | 89.08 | 3,165.12 | 85.77 | 2,717.60 | 99.69 |
*Others includes lemon grass oil, turmeric oil, pomegranate seed oil.
Raw material pricing can be volatile due to a number of factors beyond our control, including global demand and supply, general economic and political conditions, transportation and labour costs, labour unrest, natural disasters, competition, import duties, fuel prices and availability, power tariffs and currency exchange rates. This volatility in commodity prices can significantly affect our raw material costs. Our cash flows may still be adversely affected because of any gap in time between the date of procurement of those primary raw materials and date on which we can reset the product prices for our customers, to account for the increase in the prices of such raw materials. Our ability to manage our operating costs and operations efficiencies is critical to maintaining our competitiveness
and profitability. Our profitability is partially dependent on our ability to increase our productivity and reduce our operating expenses.
Research and development as well as product portfolio
The success of our business and our competitiveness depends on our ability to continue to develop innovative products, identify and understand evolving industry trends and preferences to develop new products to meet our customers demands as well as adapt our existing product offering to customer requirements while improving margins, operational efficiency, product enhancements and technological innovations and to support the continuous growth of our product range.
Innovation from our research and development activities is a basic prerequisite for sustainable success. The table below sets out our expenditure on R&D activities for the periods as indicated:
| Particulars | For the six month period ended September 30, 2024 | For the year ended March 31, 2024 | For the year ended March 31, 2023 | For the year ended March 31, 2022 | ||||
| Amount (Rs in million) | % of total expense | Amount (Rs in million) | % of total expense | Amount (Rs in million) | % of total expense | Amount (Rs in million) | % of total expense | |
| R&D expenditure | 7.57 | 0.42 | 17.99 | 0.47 | 8.26 | 0.22 | 0.21 | 0.01 |
We expect our research and development expenses will increase as our business and operations grow.
Development costs for a product manufactured according to customer requirements are generally recognized as expenses in our consolidated financial statement. We remain the owner of the formulations and know-how of the products we develop. Products developed, including as part of customer-specific projects, contribute to the continual enlargement and evolution of our product portfolio. This portfolio, and therefore ingredients and products already developed, can be accessed when new products are to be developed. This allows us to optimize our future research and development expenses by leveraging previous customer-specific research and development efforts. Multiple variations of a product are developed during the product development phase, usually in consultation with a customer. All variants are added to the portfolio, thereby strengthening our product portfolio.
As a result of our research and development efforts, we are able to produce a large number of different fragrance and flavour products and in quantities ranging from a few grams to several tons, depending on the end product for which our products are to be used as an ingredient. We continuously invest in new product development.
CHANGES IN ACCOUNTING POLICIES IN THE LAST THREE FINANCIAL YEARS
There have been no changes in the accounting policies of the Company during the last three financial years. SIGNIFICANT ACCOUNTING POLICIES
Set forth below is a summary of our most significant accounting policies adopted in preparation of the Restated Consolidated Financial Information:
Basis of preparation
The Restated Consolidated Financial Information of the Group comprises of the Restated Consolidated Statement of Assets and Liabilities as at September 30, 2024, March 31, 2024, March 31, 2023 and March 31, 2022, the Restated Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Statement of Cash Flows and the Restated Consolidated Statement of Changes in Equity for the six months period ended September 30, 2024 and years ended March 31, 2024, March 31, 2023 and March 31, 2022 and the Summary of Material Accounting Policies and explanatory notes (collectively, the "Restated Consolidated Financial Information").
These Restated Consolidated Financial Information have been prepared by the Management of the Group for the purpose of inclusion in the Draft Red Herring Prospectus (the "DRHP") proposed to be filed with the Securities and Exchange Board of India ("SEBI"), BSE Limited and National Stock Exchange of India Limited (collectively, the "Stock Exchanges") and the Registrar of Companies, in connection with the proposed initial public offer of equity shares of face value of Rs. 2 each of the Group (the "Offering"), to be prepared by the Group in connection with its proposed initial public offer of equity shares (the "IPO") prepared in terms of the requirements of:
a) Section 26 of Part I of Chapter III of the Companies Act, 2013, as amended ("the Act");
b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (the "ICDR Regulations"); and
c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended (the "Guidance Note") These Restated Consolidated Financial Information have been compiled by the management from:
The audited special purpose interim consolidated financial statements of the Group as at and for the six months period ended September 30, 2024 prepared in accordance with Indian Accounting Standard ("Ind AS") 34 "Interim Financial Reporting", specified under Section 133 of the Act and other accounting principles accepted in India ("Special Purpose Interim Consolidated Financial Statements"), which have been approved by the Board of Directors at their meeting held on ;
The audited special purpose financial statements of the Group as at and for the years ended March 31, 2024 (the "2024 Special Purpose Consolidated Financial Statements"), March 31, 2023 (the "2023 Special Purpose Consolidated Financial Statements") and March 31, 2022 (the "2022 Special Purpose Consolidated Financial Statements")(collectively referred to as "Special Purpose Consolidated Financial Statements") prepared in accordance with the Indian Accounting Standards ("Ind AS"), prescribed under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015 and the other accounting principles generally accepted in India, which have been approved by the Board of Directors at their meeting held on December 16, 2024.
Special Purpose Consolidated Financial Statements have been prepared solely for the purpose of preparation of Restated Consolidated Financial Information which will be included in DRHP in relation to the proposed IPO, which requires financial statements of all the periods included, to be presented under Ind AS. As such, Special Purpose Consolidated Financial Statements are not suitable for any other purpose other than for the purpose of preparation of Restated Consolidated Financial Information and are also not financial statements prepared pursuant to any requirements under section 129 of the Act.
During the year ended March 31, 2024, pursuant to a special resolution passed in extra-ordinary general meeting dated July 14, 2023, shareholders have approved the sub-division of equity shares of the Group from 17,84,858 fully paid up equity shares of face value of Rs10/- each into 8,924,290 fully paid up equity shares of face value Rs2/- each (the "Split") and the issuance of bonus shares to equity shareholders in the ratio of 17:4 (the "Bonus"). As required under Ind AS 33 "Earning per share" the effect of such Bonus / Split is required to be adjusted for the purpose of computing earnings per share for all the periods presented retrospectively. As a result, the effect of the Bonus and Split has been considered in these Restated Consolidated Financial Information for the purpose of calculating of earning per share for all the periods presented (Refer Note of the Restated Consolidated Financial Information)
The accounting policies have been consistently applied by the Group in preparation of the Restated Consolidated Financial Information and are consistent with those adopted in the preparation of financial statements as at and for the six months period ended September 30, 2024.
These Restated Consolidated Financial Information do not reflect the effects of events that occurred subsequent to the respective dates of board meeting for adoption of the Special Purpose Interim Consolidated Financial Statements and Special Purpose Consolidated Financial Statements, except for the issue of bonus shares and shares split mentioned above.
The Restated Consolidated Financial Information:
a) have been prepared after incorporating adjustments for the changes in accounting policies, material errors and regrouping/reclassifications retrospectively in the financial years ended March 31, 2024, 2023 and 2022, to reflect the same accounting treatment as per the accounting policy and grouping/classifications followed as at and for the six months period ended September 30, 2024, as applicable;
b) do not require any adjustment for modification as there is no modification in the underlying audit reports on the Special Purpose Interim Consolidated Financial Statements and Special Purpose Consolidated Financial Statements.
The auditors report dated on the 2024 Special Purpose Consolidated Financial Statements includes following emphasis of matter paragraph: Emphasis of Matter:
"Basis of preparation and restriction on distribution and use
We draw attention to Note 2.01 to the 2024 Special Purpose Consolidated Financial Statements, which describes the purpose and basis of preparation. The 2024 Special Purpose Consolidated Financial Statements have been prepared by the Company solely for the purpose of preparation of the restated consolidated financial information as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time (the "ICDR Regulations"), which will be included in the Draft Red Herring Prospectus ("DRHP") in connection with the proposed initial public Offering of the Company. As a result, the 2024 Special Purpose Consolidated Financial Statements may not be suitable for any other purpose. The 2024 Special Purpose Consolidated Financial Statements cannot be referred to or distributed or included in any offering document other than those referred above or used for any other purpose except with our prior consent in writing. Our report is intended solely for the purpose of preparation of the restated consolidated financial information and is not to be used, referred to or distributed for any other purpose without our prior written consent.
Our opinion is not modified in respect of this matter."
The auditors report dated on the 2023 Special Purpose Consolidated Financial Statements includes following emphasis of matter paragraph: Emphasis of Matter:
"Basis of preparation and restriction on distribution and use
We draw attention to Note 2.01 to the 2023 Special Purpose Consolidated Financial Statements, which describes the purpose and basis of preparation. The 2023 Special Purpose Consolidated Financial Statements have been prepared by the Company solely for the purpose of preparation of the restated consolidated financial information as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time (the "ICDR Regulations"), which will be included in the Draft Red Herring Prospectus ("DRHP") in connection with the proposed initial public Offering of the Company. As a result, the 2023 Special Purpose Consolidated Financial Statements may not be suitable for any other purpose. The 2023 Special Purpose Consolidated Financial Statements cannot be referred to or distributed or included in any offering document other than those referred above or used for any other purpose except with our prior consent in writing. Our report is intended solely for the purpose of preparation of the restated consolidated financial information and is not to be used, referred to or distributed for any other purpose without our prior written consent.
Our opinion is not modified in respect of this matter."
The auditors report dated on the 2022 Special Purpose Consolidated Financial Statements includes following emphasis of matter paragraph: Emphasis of Matter:
"Basis of preparation and restriction on distribution and use
We draw attention to Note 2.01 to the 2022 Special Purpose Consolidated Financial Statements, which describes the purpose and basis of preparation. The 2022 Special Purpose Consolidated Financial Statements have been prepared by the Company solely for the purpose of preparation of the restated consolidated financial information as required under the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 as amended from time to time (the "ICDR Regulations"), which will be included in the Draft Red Herring Prospectus ("DRHP") in connection with the proposed initial public Offering of the Company. As a result, the 2022 Special Purpose Consolidated Financial Statements may not be suitable for any other purpose. The 2022 Special Purpose Consolidated Financial Statements cannot be referred to or distributed or included in any offering document other than those referred above or used for any other purpose except with our prior consent in writing. Our report is intended solely for the purpose of preparation of the restated consolidated financial information and is not to be used, referred to or distributed for any other purpose without our prior written consent.
Our opinion is not modified in respect of this matter."
The Restated Consolidated Financial Information do not require any adjustments for the above mentioned Emphasis of Matter paragraphs. These Restated Consolidated Financial Information have been approved by the Board of Directors of the Group on December 16, 2024.
Basis of Measurement
The Restated Consolidated Financial Information have been prepared on a historical cost basis, except for certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments). The Restated Consolidated Financial Information are presented in Indian Rupees "INR Million" (Rupees Million) which is also the Groups functional currency. All values are rounded off to nearest two decimals , except when otherwise indicated.
Basis of Consolidation
Restated Consolidated Financial Information are prepared using uniform accounting policies for like transactions and other events in similar circumstances. The group combines the financial statements of the parent and its subsidiaries line by line adding together like items of assets, liabilities, equity, income and expenses.
Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated. Unrealised losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
Significant accounting estimates, judgements and assumptions
a. Useful lives of property, plant and equipment and intangible assets: Determination of the estimated useful life of tangible assets and intangible assets and the assessment as to which components of the cost may be capitalized. Useful life of tangible assets is based on the life specified in Schedule II of the Companies Act, 2013 and also as per management estimate for certain category of assets. Assumption also need to be made, when group assesses, whether as asset may be capitalized and which components of the cost of the assets may be capitalized.
b. Contingencies: Management judgement is required for estimating the possible outflow of resources, if any, in respect of contingencies/ claim/ litigation against group as it is not possible to predict the outcome of pending matters with accuracy.
c. Fair value measurements and valuation processes: Some of the Companies assets and liabilities are measured at fair value for financial reporting purposes. The Management determines the appropriate valuation techniques and inputs for the fair value measurements. In estimating the fair value of an asset or a liability, the Group used market-observable data to the extent it is available. Where Level 1 inputs are not available, the Group engaged third party qualified valuers to perform the valuations in order to determine the fair values based on the appropriate valuation techniques and inputs to fair value measurements such as Discounted Cash Flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Judgments include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about these factors could affect the reported fair value of financial instruments.
d. Estimation of defined benefit plans: The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post- employment benefit obligation.
e. Tax expense: Tax expense is calculated using applicable tax rate and laws that have been enacted or substantially enacted. In arriving at taxable profit and all tax bases of assets and liabilities, the Group determines the taxability based on tax enactments, relevant judicial pronouncements and tax expert opinions, and makes appropriate provisions which includes an estimation of the likely outcome of any open tax assessments / litigations. Any difference is recognized on closure of assessment or in the period in which they are agreed.
Deferred income tax assets are recognized to the extent that it is probable that future taxable income will be available against which the deductible temporary differences, unused tax losses, unabsorbed depreciation and unused tax credits could be utilised.
f. Operating lease commitments - Group as lessee: The Group has entered into lease agreement for office premises and leasehold land. The Group has determined based on an evaluation of the terms and conditions of the arrangements, such as the lease term not constituting a major part of the economic life of the asset and the fair value of the asset, that it retains all the significant risks and rewards of ownership of these properties and accounts for the contracts as operating leases.
Property, plant and equipment
All items of property, plant and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses. Historical cost includes expenditure that is directly attributable to the acquisition of the items. Cost includes its purchase price including non-refundable taxes and duties, borrowing costs and directly attributable costs of bringing the asset to its present location and condition.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably.
The carrying amount of any component accounted for as a separate asset is derecognised when replaced. All other repairs and maintenance are charged to the Statement of profit and loss during the reporting period in which they are incurred.
An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.
The residual values and useful lives of property, plant and equipment are reviewed at each financial year end and changes, if any, are accounted in the line with revisions to accounting estimates.
Depreciation
Depreciation on property, plant and equipment is provided on Written Down Value ("WDV") method, which is in line with the estimated useful life as specified in Schedule II of the Companies Act, 2013. Depreciation commences when the assets are ready for their intended use. The assets residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing net disposal proceeds with carrying amount. These are included in the Restated Consolidated Statement of profit and loss.
The estimated useful lives are as follows:
| Assets | Useful life (years) |
| Land (Freehold) | - |
| Building | 30 |
| Plant and Machinery | 15 |
| Furnitures and Fixtures | 10 |
| Electric Installation | 10 |
| Lab Equipments | 10 |
| Vehicles | 8 to 10 |
| Factory/Office Equipment | 5 |
| Computers | 3 to 6 |
Intangible Assets
Intangible assets with finite useful life are stated at cost of acquisition, less accumulated depreciation/ amortisation and impairment loss, if any. Cost includes taxes, duties and other incidental expenses related to acquisition and other incidental expenses. Amortisation is recognised in profit or loss on a diminishing balance method over the estimated useful lives of respective intangible assets.
The estimated useful lives are as follows:
| Assets | Useful life (years) |
| Computer Software | 3 to 6 |
Intangible assets are amortised in profit or loss over their estimated useful lives, from the date that they are available for use based on the expected pattern of consumption of economic benefits of the asset.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit or loss when the asset is derecognised.
Impairment of property, plant and equipment and intangible assets
Consideration is given at each balance sheet date to determine whether there is any indication of impairment of the carrying amount of the Groups each class of the property, plant and equipment or intangible assets. If any indication exists, an assets recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the net selling price or value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor.
Current versus non-current classification
The Group presents assets and liabilities in the balance sheet based on current/non-current classification. An asset is treated as current when it is:
- Expected to be realised or intended to be sold or consumed in normal operating cycle
- Held primarily for the purpose of trading
- Expected to be realised within twelve months after the reporting period, or
- Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period All other assets are classified as non-current.
A liability is current when:
- It is expected to be settled in normal operating cycle
- It is held primarily for the purpose of trading
- It is due to be settled within twelve months after the reporting period, or
- There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period The Group classifies all other liabilities as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The group has identified twelve months as its operating cycle.
Fair value measurement
The Group measures financial instruments at fair value at each balance sheet date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
- In the principal market for the asset or liability, or
- In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their best economic interest.
A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:
- Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or liabilities.
- Level 2 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
- Level 3 — Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.
For financial assets and liabilities maturing within one year from the balance sheet date and which are not carried at fair value, the carrying amount approximates fair value due to short term maturity of these instruments.
The Group recognises the transfer between the levels of fair value hierarchy at the end of the reporting period during which the changes have occurred.
For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
This note summarize accounting policy for fair value. Other fair value related disclosures are given in the relevant notes.
- Quantitative disclosures of fair value measurement hierarchy (Note 33)
- Financial instruments (including those carried at amortized cost) (Note 33)
Revenue
Revenue from contracts with customers is recognised on transfer of control of promised goods or services to a customer at an amount that reflects the consideration to which the Company is expected to be entitled to in exchange for those goods or services. Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price allocated to that performance obligation.
Sale of products:
Revenue from sale of products is recognised when the control of the goods have been transferred to the customer. The performance obligation in case of sale of product is satisfied at a point in time i.e., when the material is shipped to the customer or on delivery to the customer, as may be specified in the contract.
Rendering of services:
Revenue from services is recognised over time by measuring progress towards satisfaction of performance obligation for the services rendered.
Other income:
Revenue in respect of overdue interest, insurance claims, etc. is recognised to the extent the Group is reasonably certain of its ultimate realisation.
Interest /Dividend income:
Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive is established. Interest from customers on delayed payments are recognised when there is a certainty of realisation.
Export Incentive /Duty drawback:
Export incentives are recognised when there is reasonable assurance that the Group will comply with the conditions and the incentive will be received.
Inventories
Inventories are valued at the lower of cost (including purchase cost, non-refundable taxes and duties and other overheads incurred in bringing the inventories to their present location and condition) and estimated net realisable value, after providing for obsolescence, where appropriate. Raw materials, packing materials and other supplies held for use in production of inventories are not written down below cost except in cases where material prices have declined, and it is estimated that the cost of the finished products will exceed their net realisable value.
Raw materials, packing materials and stores and spares are valued at cost computed on weighted average basis. The cost includes purchase price, inward freight and other incidental expenses net of refundable duties, levies and taxes, where applicable.
Finished goods produced and work-in-progress are carried at lower of net realisable value and cost (including purchase cost, non-refundable taxes and duties and other overheads incurred in bringing the inventories to their present location and condition), computed on a weighted average basis.
Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.
Taxes
Income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities in accordance with the Income Tax Act 1961. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date.
Income tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Income tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Income tax assets and Income tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis.
Deferred Tax
Deferred tax is recognised using balance sheet approach at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purpose at the reporting date.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to
be utilised. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.
Deferred tax assets and liabilities are measured using the tax rates that are expected to apply in a year when asset is realised or the liability is expected to be settled based on the tax rates and tax laws that have been enacted or substantively enacted by the reporting date.
Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing Income tax where the deferred tax assets and deferred tax liabilities relate to taxes on income levied by the same governing taxation laws.
Current and deferred tax for the year
Current and deferred tax are recognised in the statement of profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively.
KEY COMPONENTS OF OUR STATEMENT OF PROFIT AND LOSS
Set forth below are the key components of our statement of profit and loss from our continuing operations:
Total Income
Our total income comprises (i) revenue from operations; and (ii) other income.
Revenue from Operations
Revenue from operations comprises (i) sale of products, which includes domestic sales and overseas sales; and (ii) other operating revenues, which includes job work, export incentive and others
Other Income
Our other income primarily comprises interest income on bank deposits, interest income on unwinding of security deposits, liabilities no longer required written back and miscellaneous income.
Expenses
Our expenses primarily comprise (i) cost of materials consumed; (ii) changes in inventories of finished goods and work-in-progress; (iii) employee benefits expenses; (iv) finance costs; (v) depreciation and amortisation expense; and (vi) other expenses.
Cost of materials consumed
Cost of materials consumed primarily comprises of purchase of raw materials required for our business operations. Changes in inventories of finished goods and work-in-progress
Changes in inventories of stock-in-trade comprise opening stock and closing stock of (i) finished goods; (ii) finished goods in transit; and (iii) work-in-progress.
Employee benefits expenses
Employee benefit expense primarily comprises salaries, wages and bonus, gratuity expense, contributions to provident and other funds and staff welfare expenses.
Finance Costs
Finance cost primarily comprise interest on lease liabilities, interest on working capital demand loan and interest on term loan.
Depreciation and amortisation expense
Depreciation and amortisation expense primarily comprise depreciation of property, plant and equipment, amortisation of right-of-use assets and amortisation of intangible assets.
Other expenses
Other expenses primarily comprise consumption of packing materials and stores and spare parts, rates and taxes, net foreign exchange gain/ loss, legal and professional charges, travelling and conveyance, power and fuel, insurance charges, security charges, corporate social responsibility, auditors remuneration and miscellaneous expenses.
Profit before tax
Tax Expense
Profit for the period
RESULTS OF OPERATIONS
The following tables set forth our selected financial data from our restated consolidated statement of profit and loss for the six month ended September 30, 2024 and Fiscals 2024, 2023 and 2022, the components of which are also expressed as a percentage of total income:
| Six months ended June 30, 2024 | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 | |||||
| Particulars | Amount (Rs in million) | % of total income | Amount (Rs in million) | % of total income | Amount (Rs in million) | % of total income | Amount (Rs in million) | % of total income |
| 1. Income | ||||||||
| Revenue from operations | 2,048.94 | 99.21 | 4,524.52 | 99.61 | 4,247.93 | 99.93 | 3,143.29 | 99.17 |
| Other income | 16.22 | 0.79 | 17.73 | 0.39 | 3.00 | 0.07 | 26.44 | 0.83 |
| Total Income | 2,065.16 | 100.00 | 4,542.25 | 100.00 | 4,250.93 | 100.00 | 3,169.73 | 100.00 |
| 2. Expenses | ||||||||
| Cost of materials consumed | 1,659.61 | 80.36 | 3,444.24 | 75.83 | 3,165.12 | 74.46 | 2,717.60 | 85.74 |
| Changes in inventories of finished goods and work- in-progress | (84.33) | (4.08) | (32.68) | (0.72) | 8.71 | 0.20 | (335.31) | (10.58) |
| Employee benefits expense | 62.09 | 3.01 | 111.34 | 2.45 | 108.07 | 2.54 | 93.18 | 2.94 |
| Finance costs | 24.25 | 1.17 | 62.70 | 1.38 | 56.40 | 1.33 | 31.12 | 0.98 |
| Depreciation and amortization expense | 35.28 | 1.71 | 62.63 | 1.38 | 47.57 | 1.12 | 43.31 | 1.37 |
| Other expenses | 116.01 | 5.62 | 218.08 | 4.80 | 304.17 | 7.16 | 176.18 | 5.56 |
| Total expenses | 1,812.91 | 87.79 | 3,866.31 | 85.12 | 3,690.04 | 86.81 | 2,726.08 | 86.00 |
| 3. Profit before tax(1-2) | 252.25 | 12.21 | 675.94 | 14.88 | 560.89 | 13.19 | 443.65 | 14.00 |
| 4. Tax expenses | ||||||||
| Current tax | 68.72 | 3.33 | 184.77 | 4.07 | 121.75 | 2.86 | 134.70 | 4.25 |
| Deferred tax | 0.28 | 0.01 | (4.44) | (010) | (758) | (048) | (250) | (0.08) |
| Tax relating to prior years | - |
- | (5.43) | (0.12) | (0.41) | (0.01) | ||
| Total tax expenses | 69.00 | 3.34 | 174.90 | 3.85 | 114.17 | 2.68 | 131.79 | 4.16 |
| 5. Profit after tax | 183.25 | 8.87 | 501.04 | 11.03 | 446.72 | 10.51 | 311.86 | 9.84 |
SIX MONTHS ENDED SEPTEMBER 30, 2024 Total Income
Our total income for the six month ended September 30, 2024 was Rs 2,065.16 million which primarily included revenue from operations of Rs 2,048.94 million and other income of Rs 16.22 million.
Revenue from Operations
Our revenue from operations for the six month ended September 30, 2024 was Rs 2,048.94 million which primarily included sale of products of Rs 2,010.52 million, consisting domestic sales of Rs 1,156.22 million and export sales of Rs 854.30 million, and other operating revenues of Rs 38.42 million, consisting export incentive of Rs 20.27 million and others of Rs 18.15 million.
Other Income
Our other income for the six month ended September 30, 2024 was Rs 16.22 million, which primarily included interest income on bank deposits of Rs 6.93 million, interest income on unwinding of security deposits of Rs 0.10 million, net foreign exchange gain of Rs 4.35 million, profit on sale of property plant and equipment of Rs 0.82 million, liabilities no longer required written back of Rs 0.64 million and miscellaneous income of Rs 3.38 million.
Expenses
Our total expenses for the six month ended September 30, 2024 was Rs 1,812.91 million which primarily included cost of materials consumed, changes in inventories of finished goods and work-in-progress, employee benefits expense, finance costs, depreciation and amortization expense and other expenses.
Cost of materials consumed
Our cost of materials consumed for the six month ended September 30, 2024 was Rs 1,659.61 million.
Changes in inventories of finished goods and work-in-progress
Our changes in inventories of finished goods and work-in-progress for the six month ended September 30, 2024 was Rs (84.33) million which primarily included opening stock of Rs 1,143.60 million and closing stock of Rs 1,227.93 million.
Employee benefits expenses
Our employee benefits expenses for the six month ended September 30, 2024 was Rs 62.09 million which primarily included salaries, wages and bonus of Rs 59.62 million, gratuity expense of Rs 0.57 million, contributions to provident and other funds of Rs 1.38 million and staff welfare expenses of Rs 0.52 million.
Finance Costs
Our finance costs for the six month ended September 30, 2024 was Rs 24.25 million which primarily included interest on lease liabilities of Rs 0.30 million, interest on working capital demand loan of Rs 18.38 million, interest on term loan of Rs 3.81 million, interest on others of Rs 0.19 million and other finance cost (processing fees and other related cost) of Rs 1.57 million.
Depreciation and amortisation expense
Our depreciation and amortisation expense for the six month ended September 30, 2024 was Rs 35.28 million which primarily included depreciation of property, plant and equipment of Rs 32.21 million, amortisation of right - of-use assets of Rs 2.83 million and amortisation of intangible assets of Rs 0.24 million
Other expenses
Our other expenses for the six month ended September 30, 2024 were Rs 116.01 million which primarily included consumption of packing materials and stores and spare parts of Rs 19.35 million, power and fuel of Rs 14.73 million, insurance charges of Rs 6.39 million, rates and taxes of Rs 4.23 million, security charges of Rs 2.21 million, repairs and maintenance expenses for factory of Rs 3.50 million, repairs and maintenance expenses for others Rs 2.40 million, selling and distribution expense of Rs 34.06 million, loss on derivative forwards measured through profit and loss of Rs 1.28 million, legal and professional charges of Rs 7.29 million, travelling and conveyance of Rs 3.83 million, corporate social responsibility of Rs 5.57 million, auditors remuneration of Rs 0.96 million and miscellaneous expenses of Rs 10.21 million.
Profit before tax
Our profit/loss before tax for the six month period ended was Rs 252.25 million.
Tax Expense
Our total tax expense for the six month period ended September 30, 2024 was Rs 69.00 million, comprising current tax of Rs 68.72 million and deferred tax of Rs 0.28 million.
Profit for the period
Our profit for the period for the six month period ended September 30, 2024 was Rs 183.25 million.
FISCAL 2024 COMPARED TO FISCAL 2023 Total Income
Our total income increased by 6.85 % to Rs 4,542.25 million in Fiscal 2024 from Rs 4,250.93 million in Fiscal 2023, primarily on account of the factors discussed below.
Revenue from Operations
Our revenue from operations increased by 6.51 % to Rs 4,524.52 million in Fiscal 2024 from Rs 4,247.93 million in Fiscal 2023, The primary reasons for this are discussed below.
Sale of products
Our sale of products increased by 6.62% to Rs 4,470.29 million in Fiscal 2024 from Rs 4,192.82 million in Fiscal 2023, primarily due to an increase in our domestic sales by 45.70% to Rs 2,228.43 million in Fiscal 2024 from Rs 1,529.49 million in fiscal 2023, which was partially offset by a decreased of 15.82% in export sales to Rs 2,241.86 million in Fiscal 2024 from Rs 2,663.33 million in Fiscal 2023.
Other operating revenues
Our other operating revenues decreased by 1.60% to Rs 54.23 million in Fiscal 2024 from Rs 55.11 million in Fiscal 2023, primarily due to a decrease of 100.00% in job work revenue to Nil in Fiscal 2024 from Rs 3.10 million in Fiscal 2023 and decrease of 25.50% in other to Rs 13.71 million in Fiscal 2024 from Rs 18.40 million in Fiscal 2023, which was partially offset by an increase of 20.57% in export incentive to Rs 40.52 million in Fiscal 2024 from Rs 33.61 million in Fiscal 2023.
Other Income
Our other income increased by 492.11% to Rs 17.73 million in Fiscal 2024 from Rs 3.00 million in Fiscal 2023, primarily due to an increase of 11,292.12% in the interest income on bank deposits to Rs 7.67 million in Fiscal 2024 from Rs 0.07 million in Fiscal 2023, an increase of 21.12% in the interest income on unwinding of security deposits to Rs 0.18 million in Fiscal 2024 from Rs 0.15 million in Fiscal 2023, an increase of 100.00% in gain on derivative forwards measured through profit and loss to Rs 8.34 million in Fiscal 2024 from Nil in Fiscal 2023, which was partially offset by decrease of 100.00% in profit on sale of property plant and equipment to Nil in Fiscal 2024 from Rs 0.06 million in Fiscal 2023, a decrease of 3.65% in the liabilities no longer required written back to Rs 0.52 million in Fiscal 2024 from Rs 0.54 million in Fiscal 2023 and decrease of 53.35% in miscellaneous income to Rs 1.02 million in Fiscal 2024 from Rs 2.18 million in Fiscal 2023.
Expenses
Our total expenses increased by 4.78% to Rs 3,866.31 million in Fiscal 2024 from Rs 3,690.04 million in Fiscal 2023, primarily on account of the factors discussed below.
Cost of materials consumed
Our cost of materials consumed increased by 8.82% to Rs 3,444.24 million in Fiscal 2024 from Rs 3,165.12 million in Fiscal 2023. This increase was primarily due to an increase of 14.30% in raw materials purchased during the year to Rs 3,727.53 million in Fiscal 2024 from Rs 3,261.11 million in Fiscal 2023 owing to increase in sale of products.
Changes in inventories of finished goods and work-in-progress
Our changes in inventories of finished goods and work-in-progress decreased by 475.07% to Rs (32.68) million in Fiscal 2024 from Rs 8.71 million in Fiscal 2023.
Our opening stock of finished goods was Rs 107.55 million for the year ended March 31, 2024, while it was Rs 97.82 million for the year ended March 31, 2023. Our closing stock of finished goods was Rs 117.99 million for the year ended March 31, 2024, while it was Rs 107.55 million for the year ended March 31, 2023. Changes in inventories of finished goods was Rs (10.44) million for the year ended March 31, 2024, while it was Rs (9.73) million for the year ended March 31, 2023. The increase in stock is attributed to the rescheduling of certain deliveries to the next year, in accordance with our customers requirements as well as to meet the increased demand from the customers.
Our opening stock of finished goods in transit was Rs 397.06 million for the year ended March 31, 2024, while it was Rs 428.68 million for the year ended March 31, 2023. Our closing stock of finished goods in transit was Rs 227.78 million for the year ended March 31, 2024, while it was Rs 397.06 million for the year ended March 31, 2023. Changes in inventories of finished goods in transit was Rs 169.28 million for the year ended March 31, 2024, while it was Rs 31.62 million for the year ended March 31, 2023. This increase was due to revenue recognition method under Ind AS.
Our opening stock of work-in-progress was Rs 606.31 million for the year ended March 31, 2024, while it was Rs 593.13 million for the year ended March 31, 2023. Our closing stock of work-in-progress was Rs 797.83 million for the year ended March 31, 2024, while it was Rs 606.31 million for the year ended March 31, 2023. Changes in inventories of work-in-progress was Rs (191.52) million for the year ended March 31, 2024, while it was Rs (13.18) million for the year ended March 31, 2023. This increase was due to maintain optimal levels of inventory to meet potential demand swiftly.
Employee benefits expenses
Our employee benefits expenses increased by 3.02% to Rs 111.34 million in Fiscal 2024 from Rs 108.07 million in Fiscal 2023, primarily due to an increase of 2.19% in salaries, wages and bonus to Rs 107.11 million in Fiscal 2024 from Rs 104.82 million in Fiscal 2023, an increase of 44.50% in gratuity expense to Rs 1.06 million in Fiscal 2024 from Rs 0.74 million in Fiscal 2023, an increase of 23.90% in contributions to provident and other funds to Rs 2.42 million in Fiscal 2024 from Rs 1.96 million in Fiscal 2023 and an increase of 37.39% in staff welfare expenses to Rs 0.75 million in Fiscal 2024 from Rs 0.55 million in Fiscal 2023. This increase was primarily due to an increase in workforce to 216 in Fiscal 2024 from 190 in Fiscal 2023.
Finance Costs
Our finance costs increased by 11.17% to Rs 62.70 million in Fiscal 2024 from Rs 56.40 million in Fiscal 2023, primarily due to an increase of 6.59% in interest on working capital demand loan to Rs 52.64 million in Fiscal 2024 from Rs 49.39 million in Fiscal 2023, an increase of 1,858.67% in the interest on term loan to Rs 3.84 million in Fiscal 2024 from Rs 0.20 million in Fiscal 2023 due to the new term loan obtained for our Dahej Facility in Fiscal 2023, an increase of 257.51% in the interest on statutory dues to Rs 0.08 million in Fiscal 2024 from Rs 0.02 million in Fiscal 2023 and an increase of 1,624.66% in the interest on others to Rs 3.32 million in Fiscal 2024 from Rs 0.19 million in Fiscal 2023, which was partially offset by a decrease of 2.44% in interest on lease liability to Rs 0.91 million in Fiscal 2024 from Rs 0.93 million in Fiscal 2023 and a decrease of 66.33% in the other financial cost (processing fees and other related cost) to Rs 1.91 million in Fiscal 2024 from Rs 5.67 million in Fiscal 2023.
Depreciation and amortisation expense
Our depreciation and amortisation expense increased by 31.65% to Rs 62.63 million in Fiscal 2024 from Rs 47.57 million in Fiscal 2023. This increase was primarily due to increase of 32.87% in depreciation of property, plant and equipment to Rs 56.57 million in Fiscal 2024 from Rs 42.57 million in Fiscal 2023, an increase of 18.78% in
amortisation of right-of-use assets to Rs 5.64 million in Fiscal 2024 from Rs 4.75 million in Fiscal 2023 and an increase of 67.81% in amortisation of intangible assets to Rs 0.42 million in Fiscal 2024 from Rs 0.25 million in Fiscal 2023.
Other expenses
Our other expenses decreased by 28.31% to Rs 218.08 million in Fiscal 2024 from Rs 304.17 million in Fiscal 2023. This decrease was primarily due to a decrease of 9.03% in consumption of packing materials and stores and spare parts to Rs 39.63 million in Fiscal 2024 from Rs 43.56 million in Fiscal 2023, a decrease of 39.46% in selling and distribution expense to Rs 55.14 million in Fiscal 2024 from Rs 91.07 million in Fiscal 2023, a decrease of 32.11% in rates and taxes to Rs 6.18 million in Fiscal 2024 from Rs 9.11 million in Fiscal 2023, a decrease of 97.43% in net foreign exchange loss to Rs 1.19 million in Fiscal 2024 from Rs 46.43 million in Fiscal 2023, a decrease of 100.00% in loss on derivative forwards measured through profit and loss to Nil in Fiscal 2024 from Rs 7.94 million in Fiscal 2023, a decrease of 10.53% in legal and professional charges to Rs 23.34 million in Fiscal 2024 from Rs 26.09 million in Fiscal 2023 and a decrease of 33.54% in travelling and conveyance to Rs 6.16 million in Fiscal 2024 from Rs 9.27 million in Fiscal 2023, which was partially offset by an increase of 21.84% in power and fuel to Rs 37.34 million in Fiscal 2024 from Rs 30.65 million in Fiscal 2023, an increase of 25.48% in insurance charges to Rs 11.39 million in Fiscal 2024 from Rs 9.08 million in Fiscal 2023, an increase of 105.33% in security charges to Rs 5.07 million in Fiscal 2024 from Rs 2.47 million in Fiscal 2023, an increase of 13.07% in repairs and maintenance of factory to Rs 1.90 million in Fiscal 2024 from Rs 1.68 million in Fiscal 2023, an increase of 14.59% in repairs and maintenance of others to Rs 2.86 million in Fiscal 2024 from Rs 2.50 million in Fiscal 2023, an increase of 34.83% in corporate social responsibility to Rs 8.70 million in Fiscal 2024 from Rs 6.45 million in Fiscal 2023, an increase of 6.80% in auditors remuneration Rs 1.72 million in Fiscal 2024 from Rs 1.61 million in Fiscal 2023, an increase of 100.00% in loss on sale of property plant and equipment/ written off to Rs 0.04 million in Fiscal 2024 from Nil in Fiscal 2023 and an increase of 7.15% in miscellaneous expenses to Rs 17.42 million in Fiscal 2024 from Rs 16.26 million in Fiscal 2023.
Profit before tax
Our profit before tax for Fiscal 2024 was Rs 675.94 million as compared to Rs 560.8 9 million for Fiscal 2023.
Tax Expense
Our total tax expense increased by 53.19% to Rs 174.90 million in Fiscal 2024 from Rs 114.17 million in Fiscal 2023, primarily due to an increase in profit before tax.
Profit for the period
Our profit for the period for Fiscal 2024 was Rs 501.04 million as compared to Rs 446.72 million for Fiscal 2023. FISCAL 2023 COMPARED TO FISCAL 2022 Total Income
Our total income increased by 34.11% to Rs 4,250.93 million in Fiscal 2023 from Rs 3,169.73 million in Fiscal 2022, primarily on account of the factors discussed below.
Revenue from Operations
Our revenue from operations increased by 35.14% to Rs 4,247.93 million in Fiscal 2023 from Rs 3,143.29 million in Fiscal 2022, The primary reasons for this are discussed below.
Sale of products
Our sale of products increased by 34.73% to Rs 4,192.82 million in Fiscal 2023 from Rs 3,111.95 million in Fiscal 2022, primarily due to an increase in our domestic sales by 20.02% to Rs 1,529.49 million in Fiscal 2023 from Rs 1,274.36 million in Fiscal 2022 and an increase of 44.94% in export sales to Rs 2,663.33 million in Fiscal 2023 from Rs 1,837.59 million in Fiscal 2022.
Other operating revenues
Our other operating revenues increased by 75.84% to Rs 55.11 million in Fiscal 2023 from Rs 31.34 million in Fiscal 2022, primarily due to an increase of 22.49% in export incentive to Rs 33.61 million in Fiscal 2023 from Rs 27.44 million in Fiscal 2022, an increase of 103.61% in job work revenue to Rs 3.10 million in Fiscal 2023 from Rs 1.52 million in Fiscal 2022 and increase of 672.77% in other to Rs 18.40 million in Fiscal 2023 from Rs 2.38 million in Fiscal 2022.
Other Income
Our other income decreased by 88.67% to Rs 3.00 million in Fiscal 2023 from Rs 26.44 million in Fiscal 2022, primarily due a decrease of 100.00% in interest income on others to Nil in Fiscal 2023 from Rs 0.04 million in Fiscal 2022, a decrease of 100.00% in net foreign exchange gain to Nil in Fiscal 2023 from Rs 15.12 million in Fiscal 2022, a decrease of 100.00% in gain on derivative forwards measured through profit and loss to Nil in Fiscal 2023 from Rs 9.27 in million in Fiscal 2022 and a decrease of 55.96% in the liabilities no longer required written back to Rs 0.54 million in Fiscal 2023 from Rs 1.22 million in Fiscal 2022, which was partially offset by an increase of 78.10% in the interest income on bank deposits to Rs 0.07 million in Fiscal 2023 from Rs 0.04 million in Fiscal 2022, an increase of 9.33% in the interest income on unwinding of security deposits to Rs 0.15 million in Fiscal 2023 from Rs 0.14 million in Fiscal 2022 and an increase 260.58% in miscellaneous income to Rs 2.18 million in Fiscal 2023 from Rs 0.61 million in Fiscal 2022.
Expenses
Our total expenses increased by 35.36% to Rs 3,690.04 million in Fiscal 2023 from Rs 2,726.08 million in Fiscal 2022, primarily on account of the factors discussed below.
Cost of materials consumed
Our cost of materials consumed increased by 16.47% to Rs 3,165.12 million in Fiscal 2023 from Rs 2,717.60 million in Fiscal 2022. This increase was primarily due to an increase of 17.97% in raw materials purchased during the year to Rs 3,261.11 million in Fiscal 2023 from Rs 2,764.42 million in Fiscal 2022.
Changes in inventories of finished goods and work-in-progress
Our changes in inventories of finished goods and work-in-progress increased by 102.60% to Rs 8.71 million in Fiscal 2023 from Rs (335.31) million in Fiscal 2022.
Our opening stock of finished goods was Rs 97.82 million for the year ended March 31, 2023, while it was Rs 178.57 million for the year ended March 31, 2022. Our closing stock of finished goods was Rs 107.55 million for the year ended March 31, 2023, while it was Rs 97.82 million for the year ended March 31, 2022. Changes in inventories of finished goods was Rs (9.73) million for the year ended March 31, 2023, while it was Rs 80.75 million for the year ended March 31, 2022. This decrease was due to certain significant orders being completed as per the schedule.
Our opening stock of finished goods in transit was Rs 428.68 million for the year ended March 31, 2023, while it was Rs 151.87 million for the year ended March 31, 2022. Our closing stock of finished goods in transit was Rs 397.06 million for the year ended March 31, 2023, while it was Rs 428.68 million for the year ended March 31, 2022. Changes in inventories of finished goods in transit was Rs 31.62 million for the year ended March 31, 2023, while it was Rs (276.81) million for the year ended March 31, 2022. This increase was due to revenue recognition method under Ind AS.
Our opening stock of work-in-progress was Rs 593.13 million for the year ended March 31, 2023, while it was Rs 453.88 million for the year ended March 31, 2022. Our closing stock of work-in-progress was Rs 606.31 million for the year ended March 31, 2023, while it was Rs 593.13 million for the year ended March 31, 2022. Changes in inventories of work-in-progress was Rs (13.18) million for the year ended March 31, 2023, while it was Rs (139.24) million for the year ended March 31, 2022. This increase was due to maintain optimal levels of inventory to meet potential demand swiftly.
Employee benefits expenses
Our employee benefits expenses increased by 15.99% to Rs 108.07 million in Fiscal 2023 from Rs 93.18 million in Fiscal 2022, primarily due to an increase of 16.20% in salaries, wages and bonus to Rs 104.82 million in Fiscal 2023 from Rs 90.21 million in Fiscal 2022, an increase of 19.18% in gratuity expense to Rs 0.74 million in Fiscal 2023 from Rs 0.62 million in Fiscal 2022, an increase of 7.33% in contributions to provident and other funds to Rs 1.96 million in Fiscal 2023 from Rs 1.82 million in Fiscal 2022 and an increase of 2.44% in staff welfare expenses to Rs 0.55 million in Fiscal 2023 from Rs 0.53 million in Fiscal 2022. This increase was primarily due to an increase in workforce to 190 in Fiscal 2023 from 148 in Fiscal 2022.
Finance Costs
Our finance costs increased by 81.21% to Rs 56.40 million in Fiscal 2023 from Rs 31.12 million in Fiscal 2022, primarily due to an increase of 95.04% in interest on working capital demand loan to Rs 49.39 million in Fiscal 2023 from Rs 25.32 million in Fiscal 2022, an increase of 95.82% in the interest on term loan to Rs 0.20 million in Fiscal 2023 from Rs 0.10 million in Fiscal 2022, an increase of 100.00% in the interest on statutory dues to Rs 0.02 million in Fiscal 2023 from Nil in Fiscal 2022, an increase of 17,507.26% in the interest on others to Rs 0.19 million in Fiscal 2023 from Rs 0.00 million in Fiscal 2022 and an increase of 26.87% in the other financial cost (processing fees and other related cost) to Rs 5.67 million in Fiscal 2023 from Rs 4.47 million in Fiscal 2022, which was partially offset by a decrease of 24.34% in interest on lease liability to Rs 0.93 million in Fiscal 2023 from Rs 1.23 million in Fiscal 2022.
Depreciation and amortisation expense
Our depreciation and amortisation expense increased by 9.84% to Rs 47.57 million in Fiscal 2023 from Rs 43.31 million in Fiscal 2022. This increase was primarily due to increase of 11.31% in depreciation of property, plant and equipment to Rs 42.57 million in Fiscal 2023 from Rs 38.25 million in Fiscal 2022, an increase of 4.35% in amortisation of right-of-use assets to Rs 4.75 million in Fiscal 2023 from Rs 4.55 million in Fiscal 2022, which was partially offset by a decrease by 50.85% in amortisation of intangible assets to Rs 0.25 million in Fiscal 2023 from Rs 0.51 million in Fiscal 2022.
Other expenses
Our other expenses increased by 72.65% to Rs 304.17 million in Fiscal 2023 from Rs 176.18 million in Fiscal 2022. This increase was primarily due to an increase of 14.72% in consumption of packing materials and stores and spare parts to Rs 43.56 million in Fiscal 2023 from Rs 37.97 million in Fiscal 2022, an increase of 15.41% in insurance charges to Rs 9.08 million in Fiscal 2023 from Rs 7.87 million in Fiscal 2022, an increase of 15,000.87% in rates and taxes to Rs 9.11 million in Fiscal 2023 from Rs 0.06 million in Fiscal 2022, an increase of 15.28% in security charges to Rs 2.47 million in Fiscal 2023 from Rs 2.14 million in Fiscal 2022, an increase of 52.75% in repairs and maintenance of factory to Rs 1.68 million in Fiscal 2023 from Rs1.10 million in Fiscal 2022, an increase of 58.90% in sales and distribution expense to Rs 91.07 million in Fiscal 2023 from Rs 57.31 million in Fiscal 2022, an increase of 100.00% in net foreign exchange loss to Rs 46.43 million in Fiscal 2023 from Nil in Fiscal 2022, an increase of 100.00% in loss on derivative forwards measured through profit and loss to Rs 7.94 million in Fiscal 2023 from Nil in Fiscal 2022, an increase of 80.46% in legal and professional charges to Rs 26.09 million in Fiscal 2023 from Rs 14.46 million in Fiscal 2022, an increase of 172.28% in travelling and conveyance to Rs 9.27 million in Fiscal 2023 from Rs 3.41 million in Fiscal 2022, an increase of 140.69% in corporate social responsibility to Rs 6.45 million in Fiscal 2023 from Rs 2.68 million in Fiscal 2022 and an increase of 32.16% in miscellaneous expenses to Rs 16.26 million in Fiscal 2023 from Rs 12.30 million in Fiscal 2022, which was partially offset by a decrease of 2.00% in power and fuel to Rs 30.65 million in Fiscal 2023 from Rs 31.27 million in Fiscal 2022, a decrease of 29.38% in repair and maintenance of others to Rs 2.50 million in Fiscal 2023 from Rs 3.54 million in Fiscal 2022, a decrease of 10.03% in auditors remuneration to Rs 1.61 million in Fiscal 2023 from Rs 1.79 million in Fiscal 2022 and a decrease of 100.00% in loss on sale of property plant & equipment/ written off to Nil in Fiscal 2023 from Rs 0.28 million in Fiscal 2022.
Profit before tax
Our profit before tax for Fiscal 2023 was Rs 560.89 million as compared to Rs 443.65 million for Fiscal 2022.
Tax Expense
Our total tax expense decreased by 13.37% to Rs 114.17 million in Fiscal 2023 from Rs 131.79 million in Fiscal 2022, primarily due to a decrease in profit before tax.
Profit for the period
Our profit for the period for Fiscal 2023 was Rs 446.72 million as compared to Rs 311.86 million for Fiscal 2022. LIQUIDITY AND CAPITAL RESOURCES Capital Requirements
Our principal capital requirements are for working capital and ongoing projects. Our principal source of funding is expected to continue to be cash generated from our operations and supplemented by borrowings from banks and financial institutions and optimization of operating working capital. For the six months ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, we met our funding requirements, including satisfaction of debt obligations, capital expenditure, investments, other working capital requirements and other cash outlays, principally with funds generated from operations, optimization of operating working capital with the balance met from external borrowings.
Liquidity
Our liquidity requirements arise principally from our operating activities, repayment of borrowings and debt service obligations Historically, our principal sources of funding have included cash from operations, short-term and long-term borrowings from financial institutions, cash and cash equivalents.
Cash
Our anticipated cash flows are dependent on various factors that are beyond our control. For details, please see "Risk Factors - Internal Risk Factors - 33. We have had negative cash flows in the past and any negative cash flows in the future could adversely affect our ability to operate our business and implement our growth plans, thereby affecting our financial conditionon page 50. Certain information relating to our cash flows for the six month ended September 30, 2024 and Fiscals 2024, 2023 and 2022 is provided below:
| Particulars | Six months ended September 30, 2024 | Fiscal 2024 | Fiscal 2023 | Fiscal 2022 |
| (in Rs million) | ||||
| Net cash generated from/ (used in) operating activities | 174.58 | 276.27 | 153.16 | (52.03) |
| Net cash used in investing activities | (392.35) | (383.75) | (143.58) | (140.14) |
| Net cash generated from financing activities | 115.29 | 151.79 | 64.38 | 180.94 |
| Net increase/ (decrease) in cash and cash equivalents | (102.48) | 44.31 | 73.96 | (11.23) |
| Cash and cash equivalents at the end of the period | 56.54 | 158.84 | 105.83 | 64.98 |
Six months ended September 30, 2024
We generated Rs 174.58 million net cash from operating activities during the six months ended September 30, 2024. Profit before tax for the year after share of profit of associate for the six month ended September 30, 2024 was Rs 252.25 million. Adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortization, interest on lease liabilities, finance cost, which was partially offset by interest income, foreign exchange loss, net unrealised fair value loss on forward contracts and net loss on sale of property, plant and equipment.
Our adjustments for working capital changes for the six month ended September 30, 2024 primarily consisted of increase in inventories, decrease in trade receivables, decrease in other assets, increase in trade payables and decrease in other liabilities.
Cash generated from operations for the six month ended September 30, 2024 amounted to Rs 292.39 million. This was offset by tax paid - net of refund.
Net cash used in investing activities was Rs 392.35 million during the six months ended September 30, 2024, primarily on account of purchase of property, plant and equipment and intangible assets, which was partially offset by sale of property, plant and equipment and interest income.
Net cash generated from financing activities was Rs 115.29 million during the six months ended September 30, 2024, primarily on account of proceeds from current borrowings and proceeds from non-current borrowings (includes current maturities of long-term borrowings). This was partially offset by repayment of current borrowings, repayment of non-current borrowings, interest paid and payment of lease liabilities including interest.
Fiscal 2024
We generated Rs 276.27 million net cash from operating activities during Fiscal 2024. Profit before tax and after share of profit of associate for Fiscal 2024 was Rs 675.94 million. Adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortization, interest on lease liabilities, finance cost, foreign exchange gain, net unrealised fair value gain on forward contracts and net profit on sale of property, plant and equipment, which was partially offset by interest income.
Our adjustments for working capital changes for Fiscal 2024 primarily consisted of increase in inventories, decrease in trade receivables, increase in other assets, decrease in trade payables and decrease in other liabilities.
Cash generated from operations in Fiscal 2024 amounted to Rs 434.80 million. This was offset by tax paid - net of refund.
Net cash used in investing activities was Rs 383.75 million in Fiscal 2024, primarily on account of purchase of property, plant and equipment and intangible assets, which was partially offset by sale of property, plant and equipment and interest income.
Net cash generated from financing activities was Rs 151.79 million in Fiscal 2024, primarily on account of proceeds from current borrowings and proceeds from non-current borrowings (includes current maturities of long-term borrowings). This was partially offset by repayment of current borrowings, repayment of non-current borrowings, interest paid and payment of lease liabilities including interest.
Fiscal 2023
We generated Rs 153.16 million net cash used in operating activities during Fiscal 2023. Profit before tax and after share of profit of associate for Fiscal 2023 was Rs 560.89 million. Adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortization, interest on lease liabilities, finance cost, foreign exchange gain and net unrealised fair value gain on forward contracts, which was partially offset by interest income and net loss on sale of property, plant and equipment.
Our adjustments for working capital changes for Fiscal 2023 primarily consisted of increase in inventories, increase in trade receivables, decrease in other assets, increase in trade payables and increase in other liabilities.
Cash generated from operations in Fiscal 2023 amounted to Rs 328.49 million. This was offset by tax paid - net of refund.
Net cash used in investing activities was Rs 143.58 million in Fiscal 2023, primarily on account of purchase of property, plant and equipment and intangible assets, which was partially offset by interest income.
Net cash generated from financing activities was Rs 64.38 million in Fiscal 2023 primarily on account of proceeds from current borrowings and proceeds from non-current borrowings (includes current maturities of long-term borrowings). This was partially offset by repayment of current borrowings, repayment of non-current borrowings, interest paid and payment of lease liabilities including interest.
Fiscal 2022
We used Rs 52.03 million net cash for operating activities during Fiscal 2022. Profit before tax and after share of profit of associate for Fiscal 2022 was Rs 443.65 million. Adjustments to reconcile profit before tax to operating profit before working capital changes primarily consisted of depreciation and amortization, interest on lease liabilities, finance cost, and net gain on sale of property, plant and equipment, which was partially offset by interest income, foreign exchange gain and net unrealised fair value loss on forward contracts.
Our adjustments for working capital changes for Fiscal 2022 primarily consisted of increase in inventories, increase in trade receivables, increase in other assets, increase in trade payables and increase in other liabilities.
Cash generated from operations in Fiscal 2022 amounted to Rs 59.32 million. This was offset tax paid - net of refund.
Net cash used in investing activities was Rs 140.14 million in Fiscal 2022, primarily on account of purchase of property, plant and equipment and intangible assets, which was partially offset by sale of property, plant and equipment and interest income.
Net cash generated from financing activities was Rs 180.94 million in Fiscal 2022, primarily on account of proceeds from current borrowings and proceeds from non-current borrowings (includes current maturities of long-term borrowings). This was partially offset by repayment of non-current borrowings, interest paid and payment of lease liabilities including interest.
CAPITAL EXPENDITURE
In the six months ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, our closing value for property, plant and equipment were Rs 404.90 million, Rs 402.76 million, Rs 263.26 million and Rs 258.45 million, respectively.
BORROWINGS
As of September 30, 2024. March 31, 2024, March 31, 2023 and March 31, 2022, we had total outstanding borrowings of Rs 1,253.50 million, Rs 1,111.25 million, Rs 893.61 million and Rs 769.21 million. For further details see, "Financial Indebtedness" beginning on page 357.
CONTINGENT LIABILITIES AND COMMITMENTS
As on September 30, 2024, we had the following contingent liabilities and commitments not acknowledged as debts, as derived from our Restated Consolidated Financial Information:
(in ^ million)
| Particulars | As on September 30, 2024 |
| I Contingent liabilities: | |
| (a) Claims against our Company not acknowledged as debt | |
| Under customs regulations | 300.77 |
| Under income tax act | 56.66 |
| Under goods and services tax act | 40.49 |
| Under MSMED act | 0.55 |
| Under Uttar Pradesh trade tax regime | 176.48 |
| Total contingent laibilities | 574.95 |
| II. Commitments: | |
| (a) Estimated amount of contracts remaining to be executed on capital account and not provided for | |
| (i) Capital commitments entered by our Company | 404.83 |
| (b) Other commitments | |
| (i) Other Commitments - Corporate Guarantee | 883.00 |
| Total Commitments | 1,287.83 |
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Groups Board of Directors has overall responsibility for the establishment and oversight of the Groups risk management framework. The Board is responsible for developing and monitoring the Groups risk management policies. The Board holds regular meetings on its activities.
The Groups risk management policies are established to identify and analyse the risks faced by the Group, to set appropriate risk limits and controls and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Groups activities. The Group, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment in which all employees understand their roles and obligations.
The Board oversees how management monitors compliance with the Groups risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group.
a) Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations and arises principally from the Groups receivables from customers.
Trade and other receivables
The Groups exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the factors that may influence the credit risk of its customer base, including the default risk of the industry and country in which customers operate.
A default on a financial asset is when the counterparty fails to make contractual payments when they fall due. This definition of default is determined by considering the business environment in which Group operates and other macro-economic factors.
Credit quality of a customer is assessed based on its credit worthiness and historical dealings with the Group, market intelligence and goodwill. Outstanding customer receivables are regularly monitored. The management uses a simplified approach for the purpose of computation of expected credit loss for trade receivables and other receivables.
Cash and cash equivalents and other bank balances
The Group held cash and cash equivalents and other bank balances of Rs 66.82 million as at September 30, 2024 (March 31, 2024: Rs 285.71 million, March 31, 2023: Rs 105.94 million, March 31, 2022: Rs 65.08 million). The credit worthiness of banks and financial institutions is evaluated by management on an ongoing basis and is considered to be good.
Loans
Loan is given to related parties for which credit risk is managed by monitoring the recoveries of such amounts on regular basis. The Group does not perceive any credit risk related to such loans given to subsidiary companies since these will have an additional financial support from promoters as and when necessary.
Other financial assets
Other financial assets measured at amortized cost includes deposits and capital advances for immovable properties etc. Credit risk related to these financial assets are managed by monitoring the recoveries of such amounts on regular basis and the Group does not perceive any credit risk related to these financial assets.
Other than trade and other receivables, the Group has no other financial assets that are past due but not impaired.
b) Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Groups approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due. The Group has access to unused credit facility at the period ended Rs 1,521.57 million as at September 30, 2024 (March 31, 2024: Rs 1,775.84 million, March 31, 2023: Rs 910.48 million March 31, 2022: Rs 630.79 million) towards working capital needs as and when required.
OFF-BALANCE SHEET ARRANGEMENTS
There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors
RELATED PARTY TRANSACTIONS
We have entered into transactions with a number of related parties. For details of our related party transactions, see "Restated Consolidated Financial Information - Note 32 - Related party transactions" on page 308.
QUALIFICATIONS, RESERVATIONS AND ADVERSE REMARKS
There are no reservations, qualifications or adverse remarks highlighted by the auditors in their report to our Restated Consolidated Financial Information.
SIGNIFICANT DEVELOPMENTS AFTER SEPTEMBER 30, 2024
Except as otherwise as set out in this Draft Red Herring Prospectus and mentioned below, to our knowledge and belief, no circumstances have arisen since the date of the last financial information contained in this Draft Red Herring Prospectus which materially affect, or are likely to affect, the business and profitability of our Company, or the value of our assets or our ability to pay material liabilities within the next 12 months.
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