Harikanta Overseas Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the year ended on March 31,2025 March 31,2024 and March 31, 2023. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Red herring Prospectus. You should also read the section entitled “Risk Factors” beginning on page 24. of this Draft Red herring Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and, is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year (“Fiscal Year”) are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to “we”, “us” or “our” refers to Harikanta Overseas Limited, our Company. Unless otherwise indicated, financial information included herein are based on our “Restated Financial Statements” for the Financial Years 2024-25, 2023-24, and 2022-23 are included in this Draft Red herring Prospectus beginning on page 158 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Our Company is engaged in the manufacturing of Synthetic textile fabrics. Our product portfolio includes Ikat fabrics, polyester garment fabrics, saree fabrics, dhupion fabrics, poly linen, and natural fiber. We primarily cater fabric to womens wear, producing fabrics for sarees, dress materials, and kurtas, while also offering fabrics for mens kurtas. Although our fabrics have multiple end uses, the majority of them are utilized in the manufacturing of different types of sarees.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

After the date of last financial period i.e. March 31,2025 there is no any significant development occurred in the Company.

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

Our Companys future results of operations could be affected potentially by the following factors:

1. Changes in Fiscal, Economic or Political conditions in India

2. Failure to adapt the changing technology in our industry of operation may adversely affect our business

3. Failure to comply with regulations prescribed by authorities of the jurisdiction in which we operate

4. Competition with existing and new entrants.

5. Our ability to retain our key managements persons and other employees;

6. Failure to successfully upgraded our portfolio from time to time.

7. Companys ability to successfully implement growth strategy and expansion plans.

8. Changes in Laws and Regulations that apply to our Industry.

9. Failure to comply with the quality standards and requirements of our customers

10. Exchange rate Fluctuation may affect the cost of Raw Material.

OUR SIGNIFICANT ACCOUNTING POLICIES

Revenue Recognition

i. Revenue from sale of goods is recognized when significant risk and rewards of ownership of the goods have been passed to the buyer and it is reasonable to expect ultimate collection. Sale of goods is recognized net of GST and other taxes as the same is recovered from customers and passed on to the government. ii. Interest is recognized on a time proportion basis taking into account the amount outstanding and the rate applicable. iii. Other items of income and expenses are recognised on accrual basis. iv. Income from export entitlement is recognized as on accrual basis.

For remaining Significant accounting policies please refer Significant Accounting Policies, “Annexure IV” beginning under Chapter titled “Restated Consolidated Financial Information” beginning on page 158 of the Draft Red Herring Prospectus.

RESULTS OF KEY OPERATIONS

The Financial Figures of the Consolidated key operations of The Company.

(Rs. In lakhs)

	For the year ended on
Particulars	March 31, 2025 Standalone	March 31, 2024 Standalone	March 31, 2023 Standalone
Income from continuing operations
Revenue from operations
Sale of Services	3,517.30	1,111.22	1,490.27
Total Revenue	3,517.30	1,111.22	1,490.27
% of growth	216.53	(25.43)
Other Income	29.27	15.88	15.97
% total Revenue	0.83	1.41	1.06
Total Revenue	3,546.57	1,127.10	1,506.24
% total Revenue	214.66	(25.17)
Expenses
Cost of Material Consumed	1,961.73	526.24	990.68
% of Revenue	55.77	47.36	66.48
Employee benefits expense	268.59	42.25	89.69
% Increase/(Decrease)	535.72	(52.89)
Finance Costs	7.34	8.51	13.10
% Increase/(Decrease)	(13.75)	(35.04)
Depreciation and amortisation expenses	38.11	22.76	20.41
% Increase/(Decrease)	67.44	11.51
Other Expenses	642.68	415.06	358.19
% Increase/(Decrease)	54.84	15.88
Total Expenses	2,918.45	1,014.82	1,472.07
% to total revenue	82.29	90.04	97.73
EBDITA	640.45	127.24	48.65
% to total revenue	18.06	11.29	3.23
Restated profit before tax from continuing operations	628.12	112.28	34.17
Exceptional Item
Total tax expense	173.82	30.30	8.92
Restated profit after tax from continuing operations (A)	454.30	81.98	25.25
% to total revenue	12.81	7.27	1.68

COMPARISON OF RESTATED STANDALONE FOR THE FY 2024-25 WITH FY 2023-24

Income from Operations

Our Company is engaged in the manufacturing of Synthetic textile fabrics. Our product portfolio includes Ikat fabrics, polyester garment fabrics, saree fabrics, dhupion fabrics, poly linen, and natural fiber. In the FY 2024-25, the Companys total revenue was 3,517.30 Lakhs, which is increased by 216.53 % in compare to total revenue from operations of 1,111.22 Lakhs in FY 2023-24.

Other Income

The other Income for the FY 2024-25 was 29.27 Lakhs which was 15.88 lakhs in the FY 2023-24. The other income mainly includes income from exchange fluctuation and profit from sale of Mutual fund and PMS.

Expenditure

Cost of Material Consumed

The Cost of Material Consumed of FY 2024-25 was 1,961.74 Lakhs against the cost of Material Consumed of 526.24 Lakhs in FY 2023-24. The cost of material consumed was 55.77 % of the total revenue from operation in F.Y 2024-25 as against 47.36 % of total revenue from operation in FY 2023-24.

Employee Benefits Expenses

The Employee benefit expenses for F.Y. 2024-25 was 268.59 Lakhs against the expenses of 42.25 Lakhs in FY 2023-24 showing increase by 268.59%. The increase in the employee cost was on account of annual increment.

Finance Cost

The Finance Cost for the FY 2024-25 was 7.34 Lakhs against the cost of 8.51 Lakhs in the FY 2023-24. showing decrease of 13.75 %. The total outstanding of the borrowings as on March 31, 2025 was 8.66 lakhs as against 147.33 lakhs as on March 31, 2024. The company has repaid loan of 138.67 Lakhs during FY 2024-25.

Other Expenses

Other Expenses increased to 642.68 Lakhs for FY 2024-25 against 415.06 Lakhs in FY 2023-24. The Other expenses mainly consist Cutting and packing expenses of 228.50 Lakhs in FY 2024-25 which was 81.32 Lakhs in FY 2023-24, Labour and job work expenses of 176.42 Lakhs in FY 2024-25 which was 277.89 Lakhs in FY 2023-24 and Rent, rates and tax expenses of 60.13 Lakhs which was 0.05 Lakhs in FY 2023-24.

Depreciation and Amortization Expenses:

The Depreciation for FY 2024-25 was 38.11 Lakhs as compared to 22.76 Lakhs for FY 2023-24. The depreciation increased by 67.44 % in F.Y. 2024-25 as compared to FY 2023-24.

EBDITA

The EBDITA for FY 2024-25 was 640.45 Lakhs as compared to 127.24 Lakhs for FY 2023-24. The EBDITA was 18.06 % of total revenue in FY 2024-25 as compared to 11.29 % in FY 2023-24.

Profit after Tax (PAT)

PAT is 454.30 lakhs for the FY 2024-25 compared to 81.98 lakhs in FY 2023-24. The PAT was 12.81% of total revenue in FY 2024-25 compared to 7.27 % of total revenue in FY 2023-24.

COMPARISON OF RESTATED STANDALONE FOR THE FY 2023-24 WITH FY 2022-23

Income from Operations

Our Company is engaged in the manufacturing of Synthetic textile fabrics. Our product portfolio includes Ikat fabrics, polyester garment fabrics, saree fabrics, dhupion fabrics, poly linen, and natural fiber. In the FY 2023-24 the Companys total revenue from operation was 1,111.22 Lakhs, which is decreased by 25.43 % total in compare to total Income from operations of 1,490.27 Lakhs in F.Y. 2022-23.

Other Income

The other Income for the FY 2023-24 was 29.27 Lakhs which was 15.88 lakhs in the FY 2022-23. In FY 2023-24 the mainly income received from Exchange Fluctuation Income of 4.66 Lakhs which was 15.54 Lakhs in FY 2022-23. Further in FY 2023-24 company received Profit on sale of Mutual Fund and PMS Equity of 10.05 Lakhs.

Expenditure:

Cost of Material Consumed

The cost of material consumed in FY 2023-24 was 526.24 Lakhs against the cost of material consumed of 990.68 Lakhs in FY 2022-23. The cost of material consumed was 47.36% of the total revenue in FY 2023-24 as against 66.48 % of total revenue in FY 2022-23.

Employee Benefits Expenses

The employee expenses for FY 2023-24 were 42.25 Lakhs against the expenses of 89.69 Lakhs in FY 2022-23. Which is decreased by 52.89% in FY 2023-24.

Finance Cost:

The Finance Cost for the FY 2023-24 was 8.51 Lakhs against the finance cost of 13.10 Lakhs in the F.Y. 2022-23 showing decreased by of 35.04%. The short-term borrowings were 147.33 Lakhs in FY 2023-24 which was 133.66 Lakhs in FY 2022-23.

Other Expenses

Other Expenses increased to 415.06 Lakhs for FY 2023-24 against 358.19 Lakhs in FY 2022-23 showing increase of 15.88%. In the FY 2023-24, The Major increase in the other expenses was due to comparatively high Labour and Job Work Expenses 277.89 Lakhs as compared to 223.37 Lakhs in FY 2022-23 and Cutting and Packing Expenses of 81.32 Lakhs as compared to 61.55 Lakhs in FY 2022-23.

Depreciation and Amortisation Expenses

The Depreciation for FY 2023-24 was 22.76 Lakhs as compared to 20.41 Lakhs for F.Y. 2022-23. The depreciation increased by 11.51% in FY 2023-24 as compared to FY 2022-23.

EBDITA

The EBDITA for FY 2023-24 was 127.24 Lakhs as compared to 48.65 Lakhs for FY 2022-23. The EBDITA was 11.29 % of total Revenue in FY 2023-24 as compared to 3.23 % in F.Y. 2022-23.

Profit after Tax (PAT)

PAT is 81.98 Lakhs for the FY 2023-24 in compared to 25.25 Lakhs in F.Y. 2022-23. The PAT was 7.27 % of total revenue in FY 2023-24 compared to 1.68 % of total revenue in FY 2022-23.

BALANCE SHEET ITEMS

The Financial Figures of the Consolidated key operations of The Company.

(Rs. In lakhs)

	For the year ended on
Particulars	March 31, 2025 Standalone	March 31, 2024 Standalone	March 31, 2023 Standalone
Long Term Borrowings
Term loan from Bank	0	5.41	56.98
Unsecured loan from related Parties and others	3.25	89.92	10.27
Total	3.25	95.33	67.25
Short term Borrowings
From Banks	5.41	52.00	66.41
Total	5.41	52.00	66.41
Trade Receivables
Undisputed - Considered good
Less than 1 year	360.7	114.78	63.44
1-2 years	17.47	17.47	0
Total	378.17	132.25	63.44
Trade Payables
MSME
Less than 1 year	131.64	53.66	49.14
1-2 years	-	-	-
Other Than MSME
Less than 1 year	138.16	99.62	48.06
1-2 years	-	11.24	6.97
2-3 years	6.13		44.76
More Than 3 Years	22.21	43.59
Total	298.14	208.11	148.93
Inventory
Finished goods	423.87	19.41	4.58
Raw materials	40.44	23.30	7.90
Semi-finished Goods	3.01	0.00	0.00
Packing Material	19.97	0.00	0.00
Stores and Spares	1.15	0.00	0.00
Total	488.44	42.71	12.48
Long term loans and advances
Related Parties	19.40	17.41	47.76
Other	11.20	10.00	10.00
Total	30.60	27.41	57.76
Short term loans and advances
Advance to Supplier	57.98	4.94	30.63
Total	57.98	4.94	30.63
Contingent Liabilities	0	0	0
Total	0	0	0

Short term Borrowings and long-term borrowings

Short-term borrowings include the term loan availed by the Company in FY 2024-25. the company had availed the loan from The The Sutex Co-Operative Bank Limited 289.93 Lakhs for the purpose of purchase of plant and machineries.

Trade Receivables

The Trade Receivables are considered good and the majority is due for less than 1 year, and one year to two years. The outstanding trade receivables for less than 1 year are 95.38 %, 86.79% and 100 % for the FY 2024-25, 2023-24 and 2022-23 respectively.

Trade Payables

The majority of Trade Payables are for less than one year. The trade payables are 12.49%, 37.40% and 15.68% of the purchase made during FY 2024-25, 2023-24 and 2022-23 respectively.

Inventory:

The inventory includes Finished good of products, Raw materials, semi-finished goods, packaging material and stores & spares for the operation.

Loans and Advances Given

The majority of the loans and advances include Loans and advances to Suppliers and related parties.

Contingent Liabilities.

There is no contingent Liabilities in the company.

CASH FLOW

(In lakhs)

Particulars	March 31, 2025	March 31, 2024	March 31, 2023
Net cash from Operating Activities	(100.12)	67.64	193.99
Net cash flow from Investing	(388.81)	(63.08)	(336.69)
Activities
Net Cash Flow Financing Activities	583.93	5.59	128.15

March 31, 2025

The Company has negative Cash flow from operating activities on account of increase in Inventories, increase in trade receivables, Increase in loans & advances. The Company invested in plant and machineries, invested in subsidiary company, and invested in Mutual Funds which is resulting in negative cash flow from investing activities.

March 31, 2024

The Company has positive Cash flow from operating on account of increase in trade payables and increase in short term provisions.

March 31, 2023

The Company has positive Cash flow from operating on account of increase of Inventories and trade receivables. The Company invested in Plant & Machineries mutual funds which resulting in negative cash flow from investing activities.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

1. Unusual or infrequent events or transactions

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years

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

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled “Risk Factors” beginning on page 24 of this Draft Red Herring Prospectus. To our knowledge, except as we have described in this Draft Red herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

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

Income and sales of our Company on account of major activities derives from sale of products Our product portfolio includes Ikat fabrics, polyester garment fabrics, saree fabrics, dhupion fabrics, poly linen, and natural fiber.

4. Whether the company has followed any unorthodox procedure for recording sales and revenues

Our Company has not followed any unorthodox procedure for recording sales and revenues.

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

Apart from the risks as disclosed under Section titled “Risk Factors” beginning on page 24 in this Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

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

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

7. Total turnover of each major industry segment in which the issuer company operated.

The Company is in the business of sale of service, the relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 96 of this Draft Red Herring Prospectus.

8. Status of any publicly announced new products or business segment.

Our Company has not announced any new business segment.

9. The extent to which business is seasonal.

Our business is not seasonal.

10. Any significant dependence on a single or few suppliers or customers.

The percentage of contribution of our Companys customers vis-a-vis the total revenue from operations respectively for the financial year ended March 31, 2025, 2024 and 2023 is as follows:

(Rs.In Lakhs)

	% Contribution to revenue from operations for the Financial Year ended March 31
Particulars	2024-25	%	2023-24	%	2022-23	%
Top 1 Customer	191.4	8.02	467.07	83.93	764.01	80.46
Top 5 Customers	872.54	36.57	553.65	99.49	937.28	98.71
Top 10 Customers	1341.75	56.24	554.48	100.00	949.54	100.00

The percentage of contribution of our Companys suppliers vis-a-vis the total purchases respectively for the financial year ended March 31, 2025, 2024 and 2023 is as follows:

(Rs.In Lakhs)

	% Contribution to Purchases for the Financial Year ended March 31
Particulars	2024-25	%	2023-24	%	2022-23	%
Top 1 Supplier	768.38	22.26	270.64	25.58	588.20	40.89
Top 5 Suppliers	2296.65	66.54	972.11	91.88	1276.67	88.75
Top 10 Suppliers	2713.65	78.62	1058.02	100.00	1432.25	99.57

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled “Industry Overview” and “Business Overview” beginning on pages 96 and 107, respectively of this Draft Red Herring Prospectus.