HVAX Technologies Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Red Herring Prospectus. You should also read the section entitled "Risk Factors " on page 25, which discusses several 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.

The Restated Financial Statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditors dated May 16, 2024 which is included in this Red Herring Prospectus under the section titled "Restated Financial Statements" on page 192. The restated financial statements have been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. We do not provide a reconciliation of our restated financial statements to US GAAP or IFRS and we have not otherwise quantified or identified the impact of the differences between Indian GAAP and U.S. GAAP or IFRS as applied to our restated financial statements.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" on page 25 and 17 respectively, and elsewhere in this Red Herring Prospectus. Accordingly, the degree to which the financial statements in this Red Herring Prospectus will provide meaningful information depend entirely on such potential investors level of familiarity with Indian accounting practices. See "Certain Conventions, Use of Financial Information and Market Data and Currency of Presentation " on page 15.

BUSINESS OVERVIEW

Our Company was originally incorporated as "HVAX Technologies Private Limited" as a private limited company under the Companies Act, 1956 vide certificate of incorporation dated November 26, 2010 issued by Deputy Registrar of Companies, Maharashtra, Mumbai. Further, our Company was converted from a private limited company to public limited company pursuant to special resolution passed in the Extra-Ordinary General Meeting of our Company dated December 11, 2023 and consequently, the name of our Company was changed from "HVAX Technologies Private Limited" to "HVAX Technologies Limited" and a fresh certificate of incorporation dated January 8, 2024 was issued to our Company by the Registrar of Companies, Mumbai. The Corporate Identification Number of our Company is U74999MH2010PLC210329.

Since our incorporation in 2010, we have evolved from our origins of acting as a HVAC project contractor and have developed expertise in undertaking turnkey projects on engineering, procurement and execution basis of controlled environment infrastructure and cleanrooms; design, engineering and consultancy services for pharma and healthcare companies; and sale and supply of equipment. While our primary customers are pharmaceutical companies, our customers also include chemical companies, hospitals, healthcare companies, and FMCG companies.

FINANCIAL SNAPSHOT

The financial performance of the company for stub period and last three years as per restated financial Statement:

			(Rs. In Lakhs)
Particulars	For the Year Ended on March 31, 2024	For the Year Ended on March 31, 2023	For the Year Ended on March 31, 2022
Revenue from Operations	10,606.13	9,592.92	6,825.93
Other Income	140.86	20.94	53.20
Total Revenue	10,746.99	9,613.86	6,879.13
EBITDA	1382.72	855.65	688.86
EBITDA % to revenue from Operations	13.04%	8.92%	10.09%
Profit Before Tax (PBT)	1,258.66	699.00	557.81
Profit After Tax (PAT)	939.07	520.37	418.15

FINANCIAL KPIs OF OUR COMPANY

			(Rs. In Lakh)
Particulars	Fiscal 2024	Fiscal 2023	Fiscal 2022
Revenue from Operations (Rs. in Lakhs) (1)	10,606.13	9592.92	6825.93
Growth in Revenue from Operations (%) (2)	10.56%	40.54%	12.36%
EBITDA (Rs. in Lakhs) (3)	1,382.72	855.65	688.86
EBITDA Margin (%) (4)	13.04%	8.92%	10.09%
Profit After Tax ( Rs. in Lakhs) (5)	939.07	520.37	418.15
PAT Margin (%) (6)	8.85%	5.42%	6.13%
RoE (%) (7)	39.29%	35.63%	42.18%
RoCE (%) (8)	25.17%	22.20%	26.91%
Debt Equity Ratio (9)	0.80	0.98	0.84
Key working capital requirement (in days)
Working Capital days (10)	141	67	38
Inventory days (11)	69	76	80
Trade Receivable days (12)	86	124	106
Trade Payable days (13)	21	36	45

Notes:

As certified by our Statutory Auditor, M/s Keyur Shah & Associates Chartered Accountants vide their certificate dated

September 19, 2024.

1. Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements.

2. Growth in revenue from operations (%) is calculated as a percentage of revenue from operations of the relevant period/year minus revenue from operations of the preceding period/year, divided by revenue from operations of the preceding period/year.

3. EBITDA is calculated as restated profit/(loss) for the period/year, plus finance costs, total taxes, and depreciation and amortisation expense reduced by other income.

4. EBITDA Margin (%) is calculated as EBITDA divided by Revenue from Operations.

5. Profit After Tax Means Profit for the period/year as appearing in the Restated Financial Statements.

6. PAT Margin (%) is calculated as Profit for the year/period as a percentage of Revenue from Operations.

7. Return on Equity (%) refers to restated profit after tax divided by Average Shareholders Equity of our Company for the year/period. Restated profit after tax means restated profit/(loss) for the period/year as appearing in the Restated Financial Statements.

8. Return on Capital Employed is calculated as adjusted EBIT divided by Capital Employed which is defined as Shareholders Equity plus Total Borrowing (Current and Non-Current).

9. Debt Equity ratio is calculated as total borrowings divided net worth available to the equity shareholders of the Company

10. Working Capital Days refers to total current assets days minus total current liabilities days.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO LAST AUDITED BALANCE SHEET:

After the date of last Audited accounts i.e. March 31, 2024, the Directors of our Company confirm that, there have not been any significant material developments.

FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS:

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

> Our ability to successfully implement our strategy, our growth and expansion, technological changes.

> Failure to attract, retain and manage the transition of our management team and other skilled & unskilled employees;

> Our ability to protect our intellectual property rights and not infringing intellectual property rights of other parties;

> Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;

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

> Our ability to effectively manage a variety of business, legal, regulatory, economic, social and political risks associated with our operations;

> Changes in laws and regulations relating to the industries in which we operate;

> We have incurred indebtedness and an inability to comply with repayment and other covenants in our financing agreements could adversely affect our business, results of operations, financial condition and cash flows

> Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition;

> Failure to obtain any approvals, licenses, registrations and permits in a timely manner;

> Changes in political and social conditions in India or in countries in which we operate, the monetary and interest rate policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices.

OUR SIGNIFICANT ACCOUNTING POLICIES:

For Significant accounting policies, see Significant Accounting Policies and Notes to accounts, "Annexure-4 under chapter titled "Restated Financial Statements on page 192

RESULTS OF OUR OPERATION BASED ON RESTATED FINANCIAL STATEMENTS

Particulars	(Rs. in Lakhs, except for percentage)
	Fiscal 2024		Fiscal 2023		Fiscal 2022
Revenue from operations	10,606.13	98.69%	9592.92	99.78%	6825.93	99.23%
Other Income	140.86	1.31%	20.94	0.22%	53.20	0.77%
Total income	10,746.99	100.00%	9,613.86	100.00%	6,879.13	100.00%
Expenses
Cost of materials and services consumed	6,753	62.84%	6,418.62	66.76%	4,204.83	61.12%

 

Particulars				(Rs. in Lakhs, except for percentage)
	Fiscal 2024		Fiscal 2023		Fiscal 2022
Employee benefits expense	1,095.30	10.19	897.96	9.34%	822.29	11.95%
Finance Costs	157.65	1.47%	70.35	0.73%	62.69	0.91%
Depreciation and amortisation expenses	107.27	1.00%	107.24	1.12%	121.56	1.77%
Other expenses	1,375.11	12.80%	1420.69	14.78%	1109.95	16.14%
Total Expenses	9,488.33	88.29%	8,914.86	92.73%	6,321.32	91.89%
Profit/(Loss) Before Extra Ordinary Items and Tax	1,258.66	11.71%	699.00	7.27%	557.81	8.11%
Exceptional Items	0.00		0.00		0.00
Profit before Tax	1,258.66	11.71%	699.00	7.27%	557.81	8.11%
Total tax expense	319.59	2.97%	178.63	1.86%	139.66	2.03%
Profit and Loss after tax for the Year as Restated	939.07	8.74%	520.37	5.41%	418.15	6.08%

COMPARISON OF FY 2023-24 WITH FY 2022-23:

	(Rs. in Lakhs, except for percentage)
	Fiscal 2024	Fiscal 2023	% Increase/(Decrease)
Revenue from operations	10,606.13	9592.92	10.56%
Other Income	140.86	20.94	572.68%
Total income	10,746.99	9,613.86	11.79%
Expenses
Cost of materials and services consumed	6,753	6,418.62	5.21%
Employee benefits expense	1,095	897.96	21.98%
Finance Costs	157.65	70.35	124.09%
Depreciation and amortisation expenses	107.27	107.24	0.03%
Other expenses	1,375.11	1420.69	-3.21%
Total Expenses	9,488.33	8,914.86	6.43%
Profit/(Loss) Before Extra-Ordinary Items and Tax	1,258.66	699.00	80.07%
Exceptional Items
Profit before Tax	1,258.66	699.00	80.07%
Total tax expense	319.59	178.63	78.91%
Profit and Loss after tax for the Year as Restated	939.07	520.37	80.46%

REVENUE:

Revenue from operations

The revenue from operations for the year ended on FY 2023-24 was Rs. 10,606.13 Lakh as compared to Rs. 9,592.92 Lakh during the FY 2022-23. Revenue from operations mainly includes revenue from Turnkey projects, revenue from service activities and other operating revenue (such as duty drawbacks and sale of licenses received under MEIS/RoDTEP scheme). Revenue from operations increased by 10.56% in FY 2023 -24. An increase in revenue from operations is on account of increase in domestic revenue from Rs. 2,184.33 Lakhs in FY 2022-23 to Rs. 2915.24 Lakhs in FY 2023-24 as well as increase in export revenue from Rs. 7,408.59 Lakhs in FY 2022-23 to Rs. 7,690.89 Lakhs in FY 2023-24.

Other Income:

Other income of the Company was Rs. 140.86 Lakhs for FY 2023-24 as against Rs. 20.94 Lakhs FY 2022-23. Other income for FY 2023-24 consists of interest income Rs.17.41Lakhs, rent income Rs.1.40 Lakhs ,dividend income Rs.0.81 Lakhs, Capital Gain on sale of MF 16.03 Lakhs, Profit on Sales of FA 62.99 Lakhs & Exchange Gain 42.22 Lakhs.

EXPENDITURE:

Cost of materials and services consumed

Our cost of materials and services consumed increased by 5.21% from Rs. 6,418.62 lakhs in FY 2023-24 to Rs. 6,753.00 Lakhs in FY 2022-23. An increase of cost of material consumed is in line with increase in revenue from operations of our Company.

Employee Benefit Expenses

Employee benefit expenses mainly includes salary, director remuneration, gratuity, contribution to provident fund and staff welfare expenses. Employee benefit expenses increased by 21.98% from Rs.897.96 Lakh in FY 2022-23 to Rs. 1095.30 Lakhs for FY 2023-24, mainly on account of annual increment, and gratuity provision.

Finance Cost

Finance cost mainly includes interest long and short-term loan and other borrowing cost. Finance expense increased by 124.09% from Rs.70.35 Lakh in FY 2022-23 to Rs. 157.65 Lakh for FY 2023-24, mainly on account of increase in Bank Borrowings

Depreciation and amortization expenses

The depreciation and amortization expense for FY 2023-24 was Rs. 107.27 Lakh as against Rs. 107.24 Lakhs for FY 2022-23.

Other Expenses

Other Expenses Increased to Rs. 1,375.11 Lakh for FY 2023-24 from Rs. 1,420.69 Lakh for FY 2022-23 showing an increase of 12.80%. Other expense mainly includes Audit Fees, Brokerage & Commission, Computer Expenses, Conveyance Expenses, CSR expenses, Electricity Expenses, Freight Clearing and Forwarding Charges, Duties and Rates, Inspection and Installation Charges, Insurance, Office Expenses, Office Maintenance & Property Tax, Other Expenses, Postage & Courier Charges, Printing & Stationery, Professional & Legal Expenses, Rent, Repairs and Maintenance, Sales Promotion and Exhibition Expenses, Discount, Security Expenses, Telephone & Mobile & Internet, Tours and Travelling, Vehicle Expenses.

Particulars	Year Ended 31st March, 2024	Year Ended 31st March, 2023	% Increase/ (Decrease)
Audit Fees	3.00	0.30	900%
Brokerage & Commission	144.50	100.63	43.60%
Computer Expenses	3.52	2.44	44.26%
Conveyance Expenses	0.66	1.79	-63.13%
CSR expenses	11.60	8.55	35.67%
Electricity Expenses	10.73	8.71	23.19%
Foreign Exchange Loss	-	82.10	-
Freight Clearing and Forwarding Charges	219.43	681.04	-67.78%
Inspection and Installation Charges	6.94	4.35	59.54%
Insurance	31.56	19.34	63.19%
Office Expenses	11.94	5.63	112.08%
Office Maintenance & Property Tax	4.09
Particulars	Year Ended 31st March, 2024	Year Ended 31st March, 2023	% Increase/ (Decrease)
Other Expenses	8.82	2.59	240.54%
Postage & Courier Charges	6.72	5.24	28.24%
Printing & Stationery	7.39	8.72	-15.25%
Professional & Legal Expenses	405.14	114.11	255.04%
Rent	76.52	53.67	42.57%
Repairs and Maintenance	1.07	1.04	2.88%
Sales Promotion and Exhibition Expenses	108.18	103.33	4.69%
Discount	2.21
Security Expenses	1.57	1.50	4.67%
Telephone & Mobile & Internet	8.06	7.92	1.77%
Tours and Travelling	277.65	196.81	41.08%
Vehicle Expenses	13.25	10.88	21.78%
Total	1375.11	1,420.69	-3.21%

Profit before Extra-Ordinary Items and Tax

The profit before extra-ordinary items and tax for the FY 2023-24 was 11.71% of the total revenue from operations and it was 7.27% of total revenue from operations for the FY 2022-23. The profit before extra-ordinary items and tax has increased to Rs. 1258.66 Lakh in FY 2023-24 from Rs. 699.00 Lakh in FY 2022-23.

Profit after Tax (PAT)

PAT increased to Rs. 939.07 Lakh in FY 2023-24 from Rs. 520.37 Lakh in the FY 2022-23. PAT was 8.74% and 5.41% of total revenue of our Company for the year ended on March 31, 2024 and March 31, 2023 respectively.

COMPARISON OF FY 2022-23 WITH FY 2021-22:

	(Rs. in Lakhs, except for percentage)
Particulars	Fiscal 2023	Fiscal 202	% Increase/(Decrease)
Revenue from operations	9592.92	6825.93	40.54%
Other Income	20.94	53.2	-60.64%
Total income	9,613.86	6,879.13	39.75%
Expenses
Cost of materials and services consumed	6,418.62	4,204.83	52.65%
Employee benefits expense	897.96	822.29	9.20%
Finance Costs	70.35	62.69	12.22%
Depreciation and amortisation expenses	107.24	121.56	-11.78%
Other expenses	1420.69	1109.95	28.00%
Total Expenses	8,914.86	6,321.32	41.03%
Profit/(Loss) Before Extra-Ordinary Items and Tax	699	557.81	25.31%
Exceptional Items	-	-	-
Profit before Tax	699	557.81	25.31%
Total tax expense	178.63	139.66	27.90%
Profit and Loss after tax for the Year as Restated	520.37	418.15	24.44%

REVENUE:

Revenue from operations

The revenue from operations for the year ended on FY 2022-23 was Rs. 9592.92 Lakh as compared to Rs. 6825.93 Lakh during the FY 2021-22. Revenue from operations mainly includes revenue from Turnkey projects, revenue from service activities and other operating revenue (such as duty drawbacks and sale of licenses received under MEIS/RoDTEP scheme). Revenue from operations increased by 40.54% in FY 2022-23. An increase in revenue from operations is on account of increase in domestic revenue from Rs. 517.47 Lakhs in FY 2021-22 to Rs. 2,184.33 Lakhs in FY 2022-23 as well as increase in export revenue from Rs. 6308.47 Lakhs in FY 2021-22 to Rs. 7,408.59 Lakhs in FY 2022-23.

Other Income:

Other income of the Company was Rs. 20.94 lakhs and Rs. 53.20 lakhs for FY 2022-23 and FY 2021-22 respectively. Other income consists of interest on FDR, rent income and dividend income. In FY 2021-22, there was capital gain on sell of units of mutual funds amounting to Rs. 19.66 Lakhs which was NIL in FY 2022-23 which has resulted in reduction in other income and exchange gain of Rs. 15.09 Lakhs in FY 2021-22.

EXPENDITURE:

Cost of materials and services consumed

Our cost of materials and services consumed increased by 52.65% from Rs. 4,204.83 lakhs in FY 2021-22 to Rs. 6,418.62 lakhs in FY 2022-23. An increase of cost of material consumed is in line with increase in revenue from operations of our Company.

Employee Benefit Expenses

Employee benefit expenses increased to Rs. 897.96 Lakhs for FY 2022-23 from Rs. 822.29 Lakh for FY 2021-22 showing an increase by 9.20%. Employee benefit expenses mainly includes salary, director remuneration, gratuity, contribution to provident fund and staff welfare expenses.

Finance Cost

Finance expense were Rs. 70.35 Lakhs for FY 2022-23 as against Rs. 62.69 Lakhs in FY 2021-22 showing an increase of 12.22%. Finance cost mainly includes interest long and short-term loan and other borrowing cost.

Depreciation and amortization expenses

The depreciation and amortization expense for FY 2022-23 was Rs. 107.24 Lakh as against Rs. 121.56 Lakhs for FY 2021-22 showing decline by 11.78%.

Other Expenses

Other Expenses Increased to Rs. 1420.69 Lakh for FY 2022-23 from Rs. 1109.95 Lakh for FY 2021-22 showing an increase of 28.00%. Other expense mainly includes professional & legal expenses, brokerage and commission, rent, rates & taxes, advertisement expenses, audit fees, conveyance expense, freight clearing and forwarding charges, repair & maintenance, sales promotion, electricity expense, travelling expenses, insurance expenses and other miscellaneous expenses.

			(Rs. In Lakhs)
Particulars	Year Ended 31st March, 2023	Year Ended 31st March, 2022	Increase/ (Decrease)
Audit Fees	0.30	0.30	-
Brokerage & Commission	100.63	1.56	99.07
Computer Expenses	2.44	2.10	0.34
Conveyance Expenses	1.79	4.20	(2.41)
CSR expenses	8.55	-	8.55
Donations	-	0.50	(0.50)
Electricity Expenses	8.71	7.12	1.59
Foreign Exchange Loss	82.10	-	82.10

 

Particulars	Year Ended 31st March, 2023	Year Ended 31st March, 2022	Increase/ (Decrease)
Freight Clearing and Forwarding Charges	681.04	800.21	(119.17)
Inspection and Installation Charges	4.35		4.35
Insurance	19.34	14.63	4.71
Office Expenses	5.63	6.37	(0.74)
Office Maintenance & Property Tax		21.35	(21.35)
Other Expenses	2.59	5.89	(3.30)
Postage & Courier Charges	5.24	3.04	2.20
Printing & Stationery	8.72	4.97	3.75
Professional & Legal Expenses	114.11	24.35	89.76
Rent	53.67	81.79	(28.12)
Repairs and Maintenance	1.04	4.04	(3.00)
Sales Promotion and Exhibition Expenses	103.33	43.13	60.20
Security Expenses	1.50	-	1.50
Telephone & Mobile & Internet	7.92	6.44	1.48
Tours and Travelling	196.81	66.35	130.46
Vehicle Expenses	10.88	11.61	(0.73)
Total	1,420.69	1,109.95	310.74

Profit before Extra-Ordinary Items and Tax

The profit before extra-ordinary items and tax for the FY 2022-23 was 7.27% of the total revenue from operations and it was 8.11% of total revenue from operations for the FY 2021-22. The profit before extra-ordinary items and tax has increased to Rs. 699.00 Lakh in FY 2022-23 from Rs. 557.81 Lakh in FY 2021-22.

Profit after Tax (PAT)

PAT increased to Rs. 520.37 Lakh in FY 2022-23 from Rs. 418.15 Lakh in the FY 2021-22. PAT was 5.41% and 6.08% of total revenue of our Company for the year ended on March 31, 2023 and March 31, 2022 respectively. In absolute terms, profit of our Company has increased by 24.44%.

DISCUSSION ON THE STATEMENT OF CASH FLOWS

The table below summaries our cash flows from our restated for the period /financial year ended March 31, 2024, March 31, 2023 and 2022:

			(Rs. In Lakhs)
Particulars	For the Period / March 31, 2024	Year ended March 31, 2023	March 31, 2022
Net cash generated from/(used in) Operating activities	(1,224.03)	(362.46)	(84.12)
Net cash generated from/(used in) Investing activities	(167.73)	(23.00)	169.72
Net cash generated from/(used in) from Financing activities	987.42	611.83	248.68
Net Increase/(decrease) in Cash & Cash Equivalents	(404.34)	226.37	334.28
Cash and cash equivalents at the beginning of the Period/year	871.41	645.04	310.76
Cash and cash equivalents at the end of the Period/ year	467.07	871.41	645.04

Operating Activities

• For the year ended March 31, 2024, net cash utilized in operating activities was Rs. 1224.03 Lakhs. While our net profit before tax was Rs. 1258.66 Lakhs, we had an operating profit before working capital changes of Rs. 1426.34 Lakhs, primarily due to adjustment for depreciation and amortization expenses of Rs. 107.27 Lakhs, finance cost of Rs. 157.65 Lakhs, which were partially offset by Interest and dividend income of Rs. 18.22 Lakhs, capital gains on sale of mutual funds Rs. 16.03 Lakhs and capital gain on sale of fixed asset Rs.62.99 Lakhs.

Our adjustment for working capital changes mainly consisted of an increase in inventory by Rs. 6.71 Lakhs, decrease of trade payables by Rs. 339.87 Lakhs, decrease in other current liabilities by Rs. 3289.44 Lakhs, decrease in other long term liabilities Rs.2.00 Lakhs, increase in other non-current asset by Rs. 38.55 Lakhs, which partly offset by decrease in trade receivables by Rs. 757.66 Lakhs , decrease in other current assets by Rs. 75.44 Lakhs, increase in long term provision Gratuity provision Rs.57.43 Lakhs, decrease in short term loans and advances Rs.435.09 Lakhs ,increase in short term provision by Rs.30.46 Lakhs and, our cash utilized for operating activities was Rs. 894.15 Lakhs, adjusted by tax paid of Rs. 329.88 Lakhs.

• In the year ended March 31, 2023, net cash utilized in operating activities was Rs. 362.46 Lakhs. While our net profit before tax was Rs. 699.00 Lakhs, we had an operating profit before working capital changes of Rs. 859.85 Lakhs, primarily due to adjustment for depreciation and amortization expenses of Rs. 107.24 Lakhs, finance cost of Rs. 70.35 Lakhs, which were partially offset by Interest and dividend income of Rs. 16.74 Lakhs.

Our adjustment for working capital changes mainly consisted of an increase in inventory by Rs. 508.14 Lakhs, increase in trade receivables by Rs. 1272.40 Lakhs, increase in other current assets by Rs. 115.94 Lakhs, increase in short term loans and advances by Rs. 368.73 Lakhs, increase of trade payables by Rs. 92.20 Lakhs, increase in current liabilities by Rs. 1119.63 Lakhs and increase in short term provision by Rs. 18.52 Lakhs. Our cash utilized for operating activities was Rs. 179.59 Lakhs, adjusted by tax paid of Rs. 182.87 Lakhs.

• In Financial Year 2021 -22, net cash utilized in operating activities was Rs. 84.12 Lakhs. While our net profit before tax was Rs. 557.81 Lakhs, we had an operating profit before working capital changes of Rs. 726.28 Lakhs, primarily due to adjustment for depreciation and amortization expenses of Rs. 121.56 Lakhs, finance cost of Rs. 62.69 Lakhs, which were partially offset by Interest and dividend income of Rs. 15.65 Lakhs, gain on sale of fixed assets Rs. 0.13 Lakhs. Our adjustment for working capital changes mainly consisted of an increase in inventory by Rs. 1214.33 Lakhs, increase in trade receivables by Rs. 345.55 Lakhs, increase in other current assets by Rs. 27.85 Lakhs, increase in short term loans and advances by Rs. 44.10 Lakhs, decrease of trade payables by Rs. 63.19 Lakhs, increase in current liabilities by Rs. 1015.65 Lakhs and increase in short term provision by Rs. 17.29 Lakhs. Our cash generated from operating activities was Rs. 63.35 Lakhs, adjusted by tax paid of Rs. 147.47 Lakhs.

Investing Activities

• For the year ended March 31, 2024, net cash utilised for investing activities was Rs. 167.73 Lakhs, which primarily comprised of cash used for the purchase of fixed assets of Rs. 236.53 Lakhs, proceeds from sale of investment of Rs. 50.58 Lakhs and interest and dividend income were Rs. 18.22 Lakhs.

• In Financial Year 2022-23, net cash utilized for investing activities was Rs. 23.00 Lakhs, which primarily comprised of cash used for the purchase of fixed assets of Rs. 9.27 Lakhs, purchase of investment of Rs. 30.47 Lakhs and interest and dividend income were Rs. 16.74 Lakhs.

• In Financial Year 2021-22, net cash generated from investing activities was Rs. 169.72 Lakhs, which primarily comprised of proceeds from sale of fixed assets of Rs. 109.67 Lakhs, proceeds from sale of investment of Rs. 44.40 Lakhs and interest and dividend income were Rs. 15.65 Lakhs.

Financing Activities

• For the year ended March 31, 2024 net cash generated from financing activities was Rs.987.42 Lakhs, which predominantly comprised of proceeds from issuance of shares Rs.399.99 Lakhs increase of short-term borrowings by 683.57 Lakhs, repayment of long-term borrowings of Rs. 61.51 Lakhs, and finance cost paid of Rs.157.65 Lakhs.

• In Financial Year 2022-23, net cash Inflow from financing activities was Rs. 611.83 Lakhs, which predominantly comprised of Increase in short-term borrowings of Rs. 795.91 Lakhs and repayment of long-term borrowings of Rs.

113.73 Lakhs and finance cost paid of t 70.35 Lakhs.

• In Financial Year 2021-22, net cash Inflow from financing activities was Rs. 248.68 Lakhs, which predominantly comprised of increase in short-term borrowings by Rs. 515.55 Lakhs, and repayment of Long-term borrowings of Rs.204.18 Lakhs and finance cost paid of Rs. 62.69 Lakhs.

RELATED PARTY TRANSACTIONS

For further information, see "Annexure 29 - Related Party Transaction" under section "Restated Financial Statement " on page 192.

FINANCIAL MARKET RISKS

We are exposed to financial market risks from changes in borrowing costs, interest rates and inflation.

INTEREST RATE RISK

We are currently exposed interest to rate risks to the extent of outstanding loans. However, any rise in future borrowings may increase the risk.

EFFECT OF INFLATION

We are affected by inflation as it has an impact on the operating cost, staff costs etc. In line with changing inflation rates, we rework our margins so as to absorb the inflationary impact.

INFORMATION REQUIRED AS PER ITEM (II) (C) (iv) OF PART A OF SCHEDULE VI TO THE SEBI REGULATIONS, 2018:

1. Unusual or infrequent events or transactions

Except as described in this Red Herring Prospectus, there have been no other events or transactions to the best of our knowledge which may be described as "unusual" or "infrequent".

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" on page 25. To our knowledge, except as we have described in the Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

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

Apart from the risks as disclosed under Section titled "Risk Factors" on page 25, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

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

Other than as described in the chapter titled "Risk Factors", Business Overview and "Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 25, 138 and 232 respectively, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

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

Except as set out in this Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments

6. The extent to which business is seasonal.

Our Company specialises in building controlled environment infrastructure and cleanrooms on a turnkey basis. Business of our Company is not seasonal in nature. Hence, our business is not subject to seasonality or cyclicality.

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

Our Company specialises in building controlled environment infrastructure and cleanrooms on a turnkey basis. Contribution of our customers and suppliers, as a percentage of total revenue and cost, respectively, for the periods indicated below:

	Top Customers as a percentage (%) of revenue from operations
Particulars	FY 2023-24	FY 2022-23	FY 2021-22
Top 1	11.97%	31.97%	32.91%
Top 3	33.11%	52.68%	64.55%
Top 5	50.24%	67.52%	76.07%
Top 10	69.10%	86.83%	89.46%

 

	Top Suppliers as a percentage (%) of Purchase
Particulars	FY 2023-24	FY 2022-23	FY 2021-22
Top 1	37.64%	36.76%	31.77%
Top 3	44.19%	45.63%	44.99%
Top 5	47.84%	49.74%	50.88%
Top 10	56.14%	58.12%	60.83%

8. Competitive conditions:

We face competition from existing and potential competitors which is common for any business. We have, over a period, developed certain competitors who have been discussed in section titles "Business Overview" on page 138.