jyoti cnc automation ltd Management discussions

OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

The following discussion is intended to convey the managements perspective on our financial condition and results of operations for Fiscal 2023, 2022 and 2021 and should be read in conjunction with ‘Financial Statements on page 251.

This Draft Red Herring Prospectus may include forward-looking statements that involve risks and uncertainties, and our actual financial performance may materially vary from the conditions contemplated in such forward-looking statements as a result of various factors, including those described below and elsewhere in this Draft Red Herring Prospectus. For further information, see ‘Forward-Looking Statements on page 21. Also see ‘Risk Factors and ‘Managements Discussion and Analysis of Financial Condition and Results of Operations - Principal Factors Affecting our Results of Operations and Financial Condition on pages 33 and 315, respectively, for a discussion of certain factors that may affect our business, financial condition or results of operations.

Our Companys Fiscal commences on April 1 and ends on March 31 of the immediately subsequent year, and references to a particular Fiscal are to the 12 months ended March 31 of that particular year. Unless otherwise indicated or the context otherwise requires, the financial information for Fiscal 2021, 2022 and 2023 included herein is derived from the Restated Consolidated Financial Statements, included in this Draft Red Herring Prospectus. For further information, see ‘Financial Statements on page 251.

Ind AS differs in certain respects from Indian GAAP, IFRS and U.S. GAAP and other accounting principles with which prospective investors may be familiar. Also see ‘Risk Factor - Significant differences exist between Ind AS and other accounting principles, such as U.S. GAAP and IFRS, which may be material to the Financial Statements prepared and presented in accordance with SEBIICDR Regulations contained in this Draft Red Herring Prospectus on page 61.

Unless otherwise indicated, industry and market data used in this section has been derived from the report titled ‘Assessment of the CNC Machining Centers Market dated August 23, 2023, prepared by F&S which has been commissioned and paid for by our Company in connection with the Issue. 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 year, refers to such information for the relevant calendar year. F&S was appointed by our Company and is not connected to our Company, our Directors, our Promoters, our Key Managerial Personnel, Senior Management or BRLMs. A copy of the F&S Report is available on the website of our Company at www.jyoti.co.in. The data included herein includes excerpts from the F&S Report and may have been re-ordered by us for the purposes of presentation. Unless otherwise indicated, financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular calendar year/ Fiscal refers to such information for the relevant calendar year/ Fiscal. For further information, see ‘Risk Factor - This Draft Red Herring Prospectus contains information from an industry report prepared by F&S which our Company has commissioned and paid for. on page 54. Also see, ‘Certain Conventions, Presentation of Financial, Industry and Market Data and Currency of Presentation on page 18.

OVERVIEW

We are one of the worlds leading manufacturers of CNC machines with the second and twelfth largest market share, in India and globally, respectively. In Fiscal 2022, we were the second largest CNC machine manufacturer in India and accounted for approximately 8% of the market share. We are a prominent manufacturer of simultaneous 5-Axis CNC machines in India and are a supplier of one of the most diverse portfolios of CNC machines in India (Source: F&S Report) including CNC Turning Centers, CNC Turn Mill Centers, CNC Vertical Machining Centers (VMCs), CNC Horizontal Machining Centers (HMCs), simultaneous 3-Axis CNC machining Centers, simultaneous 5-Axis CNC machining Centers and multi-tasking machines. We rely on our expertise built over 2 decades of presence and strong R& D capabilities to deliver customised solutions to our customers across diverse set of industries including aerospace and defence, auto and auto components, general engineering, EMS, dies and moulds, and others.

We offer solutions suited for transitioning towards ‘Industry 4.0, including our flagship multifunctional solutions package viz. ‘ 7^th Sense - which is geared towards automating sophisticated diagnostic and analytical functions enabling seamless management of productivity, health and tool life of the CNC machine. The CNC machines market is expected to grow globally at a CAGR of 9.9% during CY 2023-2027. This growth is expected to be propelled by a growth in the manufacturing industries due to factors such as industrial automation, and integration of computer aided manufacturing. The surge in demand for high precision machinery from various industries including aerospace, defense and medical sector is expected to result in the increased demand for the machining centers market. (Source: F&S Report).

We have vertically integrated operations which we consider essential to our ability to provide technologically relevant and customized solutions that lias helped us gamer customers such as Space Applications Centre - ISRO, BrahMos Aerospace Thiruvananthapuram Limited, KVIBKJifl Turkish Aerospace, Uniparts India Limited, AVTEC Limited, Tata Advances System Limited, Tata Sikorsky Aerospace Limited, Bharat Forge Limited, C.R.I. Pumps Private Limited, Kalyani Technoforge Limited, Shakti Pumps (India) Limited, Shreeram Aerospace & Defence LLP, Rolex Rings Limited, Orbit Bearings India Private Limited, Omnitech Engineering Private Limited, Harsha Engineers International Limited, Bosch Limited, HAWE Hydraulics Private Limited, Festo India Private Limited, Elgi Rubber Company Limited, National Fittings Limited, and Aequs Private Limited. We have been awarded Best Metal Cutting Brands by Economic Times for 5 consecutive years from 2018 to 2022.

We offer over 200 variants across 44 series and during the last 3 Fiscals, our Company has supplied over 7,200 CNC machines to more than 3,000 customers in India and across Asia (excluding India), Europe, North America and rest of the world. Since April 1, 2004, we have supplied over 30,000 CNC machines globally. During the last 3 Fiscals we have sold our products in India and 16 other countries across the globe through our principal offices in India, France, Germany, Turkey and Canada. We sell our products in Romania, France, Poland, Belgium, Italy, and United Kingdom through Hurons established dealer network and also have 29 sales and service centres (including our sales offices located within the precincts of one of our Manufacturing Facilities in Rajkot, Gujrat) spread across 12 states in India. As of June 30, 2023, we had an order book of Rs 31,430.56 million including an order of Rs 2,602.50 million from an entity in the electronics manufacturing services (EMS) industry (as per the end-user industries as specified to us at the time of supply of machines).

Since, one of our Promoters, Parakramsinh Ghanshyamsinh Jadeja, acquired our Company in 2002, we have significantly expanded the range of our operations. Currently, our product portfolio comprises entry level products to sophisticated machines including high speed simultaneous 5-Axis, multi-purpose, multi-tasking machines. In November 2007, we acquired Huron Graffenstaden SAS (Huron, our step-down subsidiary), a pioneer for 5-Axis machining technology (Source: F&S Report). The acquisition of Huron was undertaken with the strategic objective of augmenting our technological capabilities, broadening the range of our operations on the global scale, increasing our geographic reach and our access, and our ability to cater, to global customers across aerospace, defence and other high end engineering application industries.

Our ability to deliver high precision multi-purpose products is also enabled by our dedicated research and development (R&D) facility at Rajkot, Gujarat (R&D Centre) and our R&D team in Strasbourg, France. R&D is key element of our ability to offer customised products to our customers. It is also a critical aspect of product development, and is integral to our process optimisation which ensures that we continue to evolve with the changing industry landscape. As of June 30, 2023, our R&D team aggregated 129 employees in Rajkot, Gujarat and Strasbourg, France. Our R&D capabilities are supported by design and development tools such as Pro/E Foundation, Pro/E advance assembly extensions, Pro/Mechanical solutions, Pro/Manufacturing UNIGR APHICS and Altair Hyperworks.

We operate out of 3 manufacturing facilities, 2 in Rajkot, Gujarat, (Indian Manufacturing Facilities) and 1 in Strasbourg, France, which are equipped with capabilities to design, develop and manufacture our product portfolio. Our Indian manufacturing facilities have obtained ISO 9001:2015, ISO 14001:2015 and ISO 45001:2018 certification and our manufacturing facility in Strasbourg, France has obtained ISO 9001:2015 certification. As on June 30, 2023, we had the capacity to manufacture 4,400 machines p.a. in India and 121 machines p.a. in France. Our Indian manufacturing operations are fully integrated and comprise, in addition, to our production lines, a foundry, sheet metal shop, paint shop, sub-assembly and assembly lines, and we also have a repair facility in Rajkot, Gujarat. Our vertically integrated operations, for instance, enable our design and development teams work in conjunction with our R&D team in tailoring products to our customers specifications; these teams also seek and receive inputs from the production team to determine aspects of functionality which are factored into the product design. The collaboration of our various teams enables us to adopt a structured and coordinated approach to customising products which inter alia reduces our delivery timelines. Additionally, our vertically integrated operations also enable us to manufacture spare parts and address after-sales aspects which are an important element of our business, in an efficacious manner since the necessary support is readily available.

Our integrated approach to our operations which is one of the cornerstones of our progress, was spearheaded by one our Promoters, Parakramsinh Ghanshyamsinh Jadeja, who is also our Chairman and Managing Director. He continues to be a driving force behind our operations and his entrepreneurial nous is well recognised. He has been honoured inter alia with the ‘Premier Outstanding Entrepreneurship Award by the Indian Machine Tools Manufacturers Association (IMTMA) in 2013, the ‘Small Scale Entrepreneur Third Award - 2003, by the Ministry of Small Scale Industries, Government of India, and the "CII Best Entrepreneurship of the year award for 2004-2005. He was also awarded the Hercules Award in 2013 on "Converting SSI into Indian MNC" by the Gujarat Innovation Society. He, and our Board of Directors, are also ably supported by strong and technically proficient group of KMPs and SMPs comprising Kamlesh Sureshbhai Solanki, Chief Financial Officer, Hitesh Chhaganbhai Patel, General Manager - Assembly, Hiren Mahipatsinh Jadeja - President - Marketing, Vijaysinh Pravinsinh Zala, Executive Head - Design, Marc Paul Troia, Director General of Huron Graffenstaden SAS, Maulik B Gandhi, Company Secretary and Compliance Officer, Vikas Raj Taneja President - Marketing, and Shivangi Bipinbhai Lakhani, Executive Head - Corporate Communication, who supervise various aspects of our business development, strategy and operational focus. As of June 30, 2023, our KMPs and SMPs had been with us for an average duration of over 16 years. Further, as of June 30, 2023, we had an aggregate of 2,573 employees (including employees on contract basis) on a consolidated basis.

One of the key aspects of our growth has been our continual efforts to optimise our operations - a recent example of process engineering improvement is that we are contemplating a cupola furnace, which we are in the process of implementing. The cupola furnace is expected to aid our foundry division by enabling continuous heating operations which in turn ought to augment our forging capacity in a cost efficient manner. We are also in the process of establishing a separate facility to process the sand used in our foundry operations - a separate sand processing unit would, generally, streamline sand-handling operations and improve efficiencies.

Set out below are some of our financial metrics on a consolidated basis.

Particulars	As of and for the year ended March 31,
	2023	2022	2021
Revenue from Operations (Rs million)	9,292.59	7,464.87	5,800.59
Gross Profit (Rs million)⁽¹⁾	3,966.46	3,268.02	2,611.04
Gross Margin (%)⁽²⁾	42.68%	43.78%	45.01%
EBITDA (Rs million)¹³	973.79	726.62	316.89
EBITDA Margin (%)⁽⁴⁾	10.48%	9.73%	5.46%
Profit for the Year (Rs million)	150.60	(483.00)	(700.29)
PAT Margin (%)⁽⁵⁾	1.58%	(6.44%)	(11.87%)
Total Equity (Rs million)	820.63	411.54	1,125.86
Total Current Assets (Rs million)	11,794.20	9,569.31	9,887.27
Total Non-Current Assets (Rs million)	3,359.61	3,293.04	3,994.65
Total Assets (Rs million)	15,153.81	12,862.35	13,881.92

Particulars	As of and for the year ended March 31,
	2023	2022	2021
Return on Equity (%)⁽⁶⁾	18.35%	(117.37%)	(62.20%)
Return on Capital Employed (%)⁽⁷⁾	9.50%	4.85%	0.47%
Gross Block (i.e. cost of property, plant and equipment, right to use assets, capital work-in- progress, cost of intangible assets and intangible assets under development) (Rs million)	7,313.29	6,921.46	7,490.69
Gross Fixed Assets Turnover Ratio (in times)⁽⁸⁾	1.27	1.08	0.77

As certified by our Statutory Auditors pursuant to certificate dated August 30, 2023.

Notes:

1. Gross profit is calculated as revenue from operations minus cost of raw materials consumed minus (increase)/decrease in inventories of finished goods and work-in-progress.

2. Gross Margin is calculated as gross profit divided by revenue from operations.

3. EBITDA is calculated as profit/ (loss) for the year less exceptional items and other income plus finance costs, depreciation and amortisation, and total income tax expenses.

4. EBITDA Margin is calculated as EBITDA divided by revenue from operations.

5. PAT Margin is calculated as profit/ (loss) for the year divided by total income.

6. Return on Equity is calculated as profit/ (loss) for the year divided by total equity.

7. Return on Capital Employed is calculated as EBIT divided by capital employed. Capital employed is calculated as total equity plus total borrowings while EBIT is calculated as EBITDA plus other income less depreciation and amortization.

8. Gross Fixed Assets Turnover Ratio is calculated as revenue from operations divided by cost ofproperty, plant and equipment; capital work in progress; right of use assets; intangible assets and intangible assets under development.

For reconciliation in relation to the Gross Profit, Gross Margin, EBITDA, EBITDA Margin, Return on Equity, Return on Capital Employed, PAT Margin and Gross Fixed Asset Turnover Ratio, see ‘ Other Financial Information on page 300.

PRINCIPAL FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Retaining our existing Customers and augmenting our customer base

Our ability to grow our business requires us to (i) retain our Customers; (ii) deepen our relationship with our existing Customers; and (iii) expand our customer base. We constantly endeavour to engage with Customers to understand their requirements better to be able to provide more holistic solutions and to identify new business opportunities as and when they arise. Our constant endeavour is to nurture every client relationship to ensure that it translates into long tenn association. Some of our prominent Customers include Space Applications Centre - ISRO, BraliMos Aerospace Thiruvananthapuram Limited, Turkish Aerospace, Uniparts India Limited, AVTEC Limited, Tata

Advances System Limited, Tata Sikorsky Aerospace Limited, Bharat Forge Limited, C.R.I. Pumps Private Limited, Kalyani Technoforge Limited, Shakti Pumps (India) Limited, Shreeram Aerospace & Defence LLP, Rolex Rings Limited, Orbit Bearings India Private Limited, Omnitech Engineering Private Limited, Harsha Engineers International Limited, Bosch Limited, HAWE Hydraulics Private Limited, Festo India Private Limited, Elgi Rubber Company Limited, National Fittings Limited, and Aequs Private Limited. We have also recently forayed into supplying our products such as CNC Vertical Machining Centers (Model Tachyon 5FT with RT 200 direct drive rotary table) for companies in EMS industry in Fiscal 2023. As on June 30, 2023 our order book in EMS industry was Rs 2,602.50 million constituting around 8% of our order book of Rs 31,430.56 million. Accordingly, our Company has set up 2 dedicated assembly lines for manufacturing of machines for EMS industry at our unit at 2839, Lodhika GIDC, Kalawad Road, Metoda, Rajkot - 360 021, Rajkot, Gujarat. Our wide product basket helps us service a broad spectrum of Customers and reduces our dependence on a limited set of Customers.

Currently, we are dependent on the revenue generated from our top 10 clients in each financial year. Set out in the table below are our revenues from operations from our top 3, top 5 and top 10 customers, based on our Restated Consolidated Financial Statements across the periods indicated:

Particulars	Fiscal 2023		Fiscal 2022		Fiscal 2021
	Revenue from operations (in Rs million)	As a % of Revenue from Operations	Revenue from operations (in Rs million)	As a % of Revenue from Operations	Revenue from operations (in Rs million)	As a % of Revenue from Operations
Top 3 customers	1,296.18	13.95	1,044.04	13.99	1,063.27	18.33
Top 5 customers	1,499.53	16.14	1,274.88	17.08	1,308.84	22.56
Top 10 customers	1,866.00	20.08	1,685.87	22.58	1,713.36	29.54

Our continued success and growth will depend on our continuing to receive the patronage of our existing Customers while simultaneously broadening and augmenting our customer base.

Focus on technology and ability to deliver innovative solutions and improving operational efficiencies

We are one of the leading manufacturers of metal cutting computer numerical control (CNC) machines globally and the second largest CNC player in India, constituting approximately 8% market share in domestic markets for CNC machines in Fiscal 2022 (Source: F&SReport). We are also the leading manufacturer of 5-Axis CNC machines in India and a supplier of one of the widest portfolios of CNC machines in India (Source: F&S Report).

Our business and our reputation are, therefore, intrinsically linked to our ability to constantly focus on technology and to provide improved product offerings catering to the specific needs of our customers. Over the years, we have expanded the range of our operations and currently our product portfolio comprises entry level products to sophisticated machines including high speed 5-axis, multi-purpose, multi-tasking machines. The growth in our product range from entry level CNC machines to sophisticated multi-axis machines is a testament to our constant focus on technology and drive to continually provide customised solutions to our Customers. Our focus on technology and ability to customise our product offerings is buttressed by a strong on R&D. We have established an in-house R&D centre which is based in Rajkot, India, which comprises a 112 member dedicated team of R&D employees. Additionally, we also have a focussed R&D team based in Strasbourg, France.

We are also a vertically integrated CNC machine manufacturer with design, development and manufacturing capabilities. For us to continually increase our operational efficiencies, we must hone our integration capabilities. To this end, we focus on integration of our operations by involving different teams across the production process to enable us to manufacture some of the critical machine components such as spindles, tool-changers, pallet changers, rotary tables and universal heads in-house. This reduces our reliance on third parties, which streamlines our production process and improves our operational efficiencies. In addition, it also enables us to maintain control over the entire manufacturing process and also provide better delivery timelines to our Customers at a more competitive cost. In addition, it also enables us to maintain control over the entire manufacturing process and also provide better delivery timelines to our customers at a more competitive cost.

Focus on diversifying our end-user industries and geographical reach

include Space Applications Centre - ISRO, BraliMos Aerospace Thiruvananthapuram Limited, IVKBKJiB Turkish Aerospace, Uniparts India Limited, AVTEC Limited, Tata Advances System Limited, Tata Sikorsky Aerospace Limited, Bharat Forge Limited, C.R.I. Pumps Private Limited, Kalyani Technoforge Limited, Shakti Pumps (India) Limited, Shreeram Aerospace & Defence LLP, Rolex Rings Limited, Orbit Bearings India Private Limited, Omnitech Engineering Private Limited, Harsha Engineers International Limited, Bosch Limited, HAWE Hydraulics Private Limited, Festo India Private Limited, Elgi Rubber Company Limited, National Fittings Limited and Aequs Private Limited. Set out in the table below are details of our order book and revenue from operations split across the various end-user industries, as specified to us at the time of supply of machines:

End-user industries*	*Order Book as of June 30, 2023 (in Rs million)**	Fiscal 2023		Fiscal 2022		Fiscal 2021
		Revenue from sale of machinery (in Rs million)	As a % of revenue from sale of machinery	Revenue sale of machinery (in Rs million)	As a % of revenue from sale of machinery	Revenue from sale of machinery (in Rs million)	As a % of revenue from sale of machinery
Aerospace and Defence	18,394.60	1,730.74	20.32	512.30	7.52	978.44	19.03
Auto & Auto Components	3,967.19	3,975.84	46.68	2,689.93	39.47	1,836.61	35.72
General Engineering	3,261.93	1,667.77	19.58	1,900.29	27.88	1,254.16	24.39
Dies & Moulds	1,545.92	765.72	8.99	660.42	9.69	321.99	6.26
EMS	2,602.50	1.50	0.02	-	-	-	-
Others	1,658.41	375.54	4.41	1,052.71	15.45	750.87	14.60
Total	31,430.56	8,517.10	100.00	6,815.65	100.00	5,142.07	100.00

As certified by our Statutory Auditors, G. K. Choksi & Co. pursuant to a certificate dated August 30, 2023.

* As per the end-user industries as specified to us at the time of supply of machines

We intend to diversify into other new end use industries such as Electric Vehicles and have started developing our CNC machines to supply to this end user industry. We are proposing to manufacture a range of motors production machines such as slot insulation machines, winding and inserting machines, intermediate and final forming machines, lacing machines, core screw machines, and welding machines. The sales of battery electric vehicles and plug-in hybrid electric vehicles has increased from 0.12 million units in CY 2012 to 10.5 million units in CY 2022 due to factors such as growing demand for low emission commuting and governments supporting long range, zero emission vehicles through subsidies & tax rebates have compelled the manufacturers to provide electric vehicles around the world. The global EV market is expected to grow at a CAGR of 23.1% during the forecast period 2023 to 2032. (Source: F&S Report). Moreover, we are proposing to venture into manufacturing high precision stages, which are a crucial ingredient in semi-conductor manufacturing. As India aims to establish itself as a production hub, aligning with the Make in India initiative, these high precision stages find applications in various crucial processes within semiconductor manufacturing (Source: F&S Report). By providing the technology required for these sophisticated applications, expect to capitalise on the anticipated opportunities in semiconductor manufacturing.

We also intend to deepen our penetration in the Aerospace and Defence industries which are expected to grow, both in India and globally. (Source: F&S Report). The growth in the domestic production for Indian defence industry is expected to be propelled by the Government of Indias ‘Aatma Nirbhar Bharat programme pursuant to which the Union Defence Ministry, Government of India has decided to earmark over Rs 700,000 million constituting around 64% of its modernisation fund under the capital acquisition budget for Fiscal 2022, for purchases from the domestic sector. (Source: F&S Report). The Indian defence export, which has grown over 325% during the last 5 years, is expected to achieve its export target of Rs 350,000 million by Fiscal 2025. The focus on increasing exports in defence sector in India is also expected to propel investment and growth in high end CNC machines in India. (Source: F&S Report).

We also intend to increase our market share in the end use industries to which we currently offer our CNC machines and also intend to diversify our customer base. We also intend to expand our geographical footprint to offer our CNC machines in countries in the regions in which we are currently present.

Focus on improving our market share and taking advantage of the growing industry demand

The Indian CNC machine market is highly fragmented with a wide range of small, medium and large suppliers. Similarly, the global CNC machine market is also highly fragmented with a limited number of leading manufacturers. (Source: F&S Report). We were one of the leading manufacturer of CNC machines globally with only a 0.4% market share in Fiscal 2021, and the second largest CNC player in India, with approximately 8% market share in domestic markets for CNC machines in Fiscal 2022 (Source: F&S Report). For us to increase our market share and remain competitive, we must, in addition, continuing to meet exacting quality standards, continuously strive to leverage our technological capabilities to penetrate the markets, both in India and globally.

The CNC machines market is expected to grow globally at a CAGR of 9.9% during CY 2021-2027. (Source: F&S Report). We intend to capitalise our experience of over 20 years in CNC operations and our technical capabilities in manufacturing CNC machines, which have grown from a limited portfolio of CNC machines to sophisticated machines including high speed 5-axis, multi-purpose, multi-tasking machines, to improve our market share in CNC machines, both in India and globally. We also intend to use the technological capabilities and experience of Huron, our step- down subsidiary, which has been a pioneer in the 5-Axis machines globally. (Source: F&S Report). We intend to also capitalise on global trends towards multifaceted machining centers, surge in demand for high precision machinery and Industry 4.0, and to take advantage of the expected 12.10% and 17.40% growth between Fiscal 2022 and Fiscal 2027, globally and in India, respectively, in 4-6 Axis machining centres, to improve our market share in CNC machines, both in India and globally (Source: F&S Report).

Competition

We operate in a highly competitive environment in both in the Indian and overseas markets. The industry is highly fragmented, both domestically and globally. (Source: F&S Report). As a result, to remain competitive in the market we must, in addition, continuing to meet exacting quality standards, continuously strive to reduce our production and distribution costs and improve our operating efficiencies and innovate our products offering. If we fail to do so, it may have an adverse effect on our market share and results of operations. Many of our competitors may be larger than us and may benefit from greater economies of scale and operating efficiencies. There can be no assurance that we can continue to effectively compete with such manufacturers in the future, and failure to compete effectively may have an adverse effect on our business, financial condition, and results of operations. Moreover, the competitive nature of the manufacturing industry may result in lower prices for our products and decreased profit margins, which may materially adversely affect our revenue and profitability.

PRESENTATION OF FINANCIAL INFORMATION

The Restated Consolidated Financial Statements of our Company comprising: (i) the restated consolidated summary statement of assets and liabilities of the Company as at March 31, 2023, March 31, 2022 and March 31, 2021 the restated consolidated summary statement of profit and loss (including other comprehensive income), the restated consolidated summary statement of cash flows and the restated consolidated summary statement of changes in equity for the financial years ended March 31, 2023, March 31, 2022 and March 31, 2021 together with the summary statement of significant accounting policies, and other explanatory information relating to such financial periods.

The Restated Consolidated Financial Statements of our Company is derived from our audited consolidated financial statements as at and for the years ended March 31, 2023, March 31, 2022 and March 31, 2021, prepared in accordance with Ind AS, and restated in accordance with requirements of Section 26 of Part I of Chapter III of Companies Act, SEBI ICDR Regulations and the Guidance Note on ‘Reports in Company Prospectuses (Revised 2019) issued by ICAI.

SIGNIFICANT ACCOUNTING POLICIES 2. BASIS OF PREPARATION

a. Statement of compliance with Ind AS

The Restated Consolidated Financial Statements comprises of the Restated Consolidated Summary Statement of Assets and Liabilities of the Company and its subsidiaries as at March 31, 2023, March 31, 2022 and March 31, 2021, the related Restated Consolidated Summary Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Summary Statement of Cash Flows and the Restated Consolidated Summary Statement of Changes in Equity for years ended March 31, 2023, March 31, 2022 and March 31, 2021, and the summary of Significant Accounting Policies and explanatory notes.

These Restated Consolidated Financial Statements have been prepared by the Management of the Company in accordance with the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended from time to time, issued by the Securities and Exchange Board of India (SEBI) on 11 September 2018, in pursuance of the Securities and Exchange Board of India Act, 1992 ("ICDR Regulations") for the purpose of inclusion in the offer documents in connection with the proposed initial public offering of equity shares of face value of Rs. 2 each of the Company comprising a fresh issue of equity shares (the "Offer"). These Restated Consolidated Financial Statements have been prepared by the Company to comply in all material respects with the requirements of:

a) Section 26 of Part I of Chapter III of the Companies Act, 2013 ("the Act").

b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended ("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 Statements have been compiled by the Management from audited consolidated financial statements of the Company and its subsidiaries as at and the for year ended March 31, 2023, March 31, 2022 and March 31, 2021 prepared in accordance with Indian Accounting Standards (IND AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended from time to time) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable which have been approved by the Board of Directors at their meetings held on July 12, 2023, February 19, 2023 and March 17, 2022 respectively.

The accounting policies have been consistently applied by the Company and its subsidiaries in preparation of the Restated Consolidated Financial Statements are consistent with those adopted in the preparation of audited consolidated financial statements for the year ended March 31, 2023. These Restated Consolidated Financial Statements have been prepared by the Company and its subsidiaries on the basis that it will continue to operate as a going concern.

b. Functional and presentation currency

Items included in the financial statements of each of the groups entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency). The audited consolidated financial statements referred above were presented in Indian Rupee (Rs.) and all values were rounded to the nearest lacs (Rs. 00,000), however, Restated Consolidated Financial Statements are presented in Indian Rupee (Rs.) and all values are rounded to the nearest million (Rs. 000,000), except when otherwise indicated.

c. Basis of measurement

The Restated Consolidated Financial Statements have been prepared on a historical cost basis, except for the following assets and liabilities which have been measured at fair value or revalued amount:

• Derivative financial instruments,

• Certain financial assets and liabilities measured at fair value (refer accounting policy regarding financial instruments), and

• Defined benefit pension plans - plan assets are measured at fair value

In addition, the carrying values of recognized assets and liabilities designated as hedged items in fair value hedges that would otherwise be carried at amortized cost are adjusted to record changes in the fair values attributable to the risks that are being hedged in effective hedge relationships.

d. Measurement of fair values

A number of the Groups accounting policies and disclosures require measurement of fair values, for both financial and non-financial assets and liabilities. The Group has an established control framework with respect to measurement of fair values.

Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows:

Level 1: Quoted prices (unadjusted) in active markets for financial instruments.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximize the use of observable market data rely as little as possible on entity specific estimates.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

When measuring the fair value of an asset or liability, the Group uses observable market data as far as possible. The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the changes have occurred.

e. Principles of Consolidation

The Restated Consolidated Financial Statements comprises of the summary statements of the Company and its direct subsidiary Jyoti SAS as well as indirect subsidiaries Huron Graffenstaden SAS, Huron Frasmaschinen, GmbH, Huron Canada Inc and Huron Turkey. for the year ended March 31, 2023, March 31, 2022 and March 31, 2021.

The Restated Consolidated Financial Statements have been prepared on the following basis:

• Subsidiaries are all entities over which the group has control. The group controls an entity when the group is exposed to or has rights to variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date of acquisition up to the effective date of disposal, as appropriate.

• The Restated Consolidated Financial Statements of the Company and its subsidiaries are combined by like items of assets, liabilities, equity, income, expenses and cash flows. The carrying amount of the Companys investment in the subsidiary and the Companys portion of equity of the subsidiary have been eliminated. Inter-company balances and inter-company transactions and unrealised profits or losses have been fully eliminated.

• Where any member of the group uses accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that group members financial statements in preparing the consolidated financial statements.

• The excess of cost to holding company of its investments in the subsidiary companies over its share of equity of the subsidiary companies, at the dates on which the investments in the subsidiary companies are made, is recognised as Goodwill being an asset in the restated consolidated financial statements. Alternatively, where the share of equity in the subsidiary companies as on the date of investment is in excess of cost of investment of the company, it is

recognised as Capital Reserve and shown under the head Reserves and Surplus, in the restated consolidated financial statements.

• In case of a foreign subsidiary, being non-integral operations, revenue items are consolidated at the average rate prevailing during the year. All the assets and the liabilities are converted at the rates prevailing at the end of the year. Any exchange difference arising on consolidation is recognised as "Foreign Currency Translation Difference" in the Restated Consolidated Statement of Profit and Loss.

• The list of subsidiary companies (direct & indirect) which are included in the consolidation & the group holdings therein are as under:

Sr. No. Name of the Subsidiary Company	Date of Acquisition	Country of Incorporation	% of Holding As at 31.03.2023
Direct Subsidiary
1 Jyoti SAS	06.09.2007	France	100%
Indirect Subsidiaries
1 Huron Graffenstaden SAS	20.11.2007	France	100%
2 Huron Frasmaschinen, GmbH	20.11.2007	Germany	100%
3 Huron Canada Inc.	20.11.2007	Canada	100%
4 Huron Makina Servis Ve Dis Ticaret Limited Sirketi	03.02.2023	Turkey	100%

Jyoti SAS was floated as a 100% subsidiary of Jyoti CNC Automation Ltd on 06.09.2007. Jyoti SAS thereafter acquired 100% shareholding of Huron Graffenstaden SAS along with its marketing subsidiaries namely, Huron Frasmaschinen GmbH and Huron Canada Inc. However, the effective control of these indirect subsidiaries was taken with effect from 01.01.2008.

2A. BASIS OF PREPARATION

a. Current-non-current classification

All assets and liabilities are classified into current and non-current.

Assets

An asset is classified as current when it satisfies any of the following criteria:

a) it is expected to be realised in, or is intended for sale or consumption in, the normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is expected to be realised within 12 months after the reporting date; or

d) it is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least 12 months after the reporting date.

Current assets include the current portion of non-current financial assets. All other assets are classified as non-current.

Liabilities

A liability is classified as current when it satisfies any of the following criteria:

a) it is expected to be settled in the normal operating cycle;

b) it is held primarily for the purpose of being traded;

c) it is due to be settled within 12 months after the reporting date; or

d) the Group does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments do not affect its classification.

Current liabilities include current portion of non-current financial liabilities. All other liabilities are classified as non- current.

Operating cycle

Operating cycle is the time between the acquisition of assets for processing and their realisation in cash or cash equivalents. The Group has determined its operating cycle as 12 months for the purpose of classification of its assets and liabilities as current and non-current.

b. Foreign currency transactions

i. Initial recognition

Transactions in foreign currencies are translated into the functional currency at the exchange rates at the date of the transaction.

ii. Measurement at reporting date

Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate at the reporting date. Non- monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate at the date of the transaction. Exchange differences on restatement/ settlement of all monetary items are recognized in the Restated Consolidated Statement of Profit and Loss.

c. Property, Plant and Equipment

i. Recognition and measurement

Freehold Land is carried at cost and other items of property, plant and equipment are initially measured at cost of acquisition or construction which includes capitalized borrowing cost. The cost of an item of property, plant and equipment comprises its purchase price, including import duties and other non-refundable purchase taxes or levies, any directly attributable cost of bringing the asset to its working condition for its intended use and estimated cost of dismantling and removing the item and restoring the site on which it is located. Any trade discounts and rebates are deducted in arriving at the purchase price. After initial recognition, items of property, plant and equipment are carried at its cost less any accumulated depreciation and/ or accumulated impairment loss, if any.

The cost of a self-constructed item of property, plant and equipment comprises the cost of materials and direct labor, any other costs directly attributable/ allocable to bring the item to working condition for its intended use.

If significant parts of an item of property, plant and equipment have different useful lives, then they are accounted for as separate items (major components) of property, plant and equipment.

Gains or losses arising on sale/disposal of items of property, plant and equipment are recognized in Restated Consolidated Statement of Profit and Loss.

Capital work-in-progress comprises the cost of fixed assets that are not ready for their intended use at the reporting date.

ii. Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

iii. Derecognition

Gains or losses arising from de-recognition of a property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Restated Consolidated Statement of Profit and Loss when the asset is derecognised.

iv. Depreciation

Depreciation is provided on a straight-line basis or diminishing balance method, the cost/deemed cost of Property, Plant and Equipment, to their residual value as per useful lives prescribed under Schedule II of Companies Act, 2013 which are as follows:

Particulars	Estimated useful life (years)
	Holding Company	Subsidiary Companies
Leasehold Land	On Basis of Lease Agreement	Not Depreciated
Building	60 years	10 to 20 years
Plants and Machinery	15 years	3 to 10 years
Furniture and Fixtures	10 years	3 to 6 years
Electrical Installation	10 years	3 to 6 years
Office Equipment	5 years	3 to 6 years
Computers	3 years	3 to 6 years
Vehicles:
Four Wheelers	8 years	3 to 6 years
Two Wheelers	10 years

Depreciation commences from the date the asset is available for their intended use and is spread over assets estimated useful economic lives. The estimated useful lives of assets and residual values are reviewed regularly and when necessary, revised. Depreciation on assets under construction commences only when the assets are ready for their intended use.

Leasehold land is not depreciated.

The Company fully depreciates the assets costing less than Rs. 30,000 in the year of acquisition.

d. Intangible Assets

i. Recognition and measurement

Intangible assets and intangible assets under development that are acquired by the Group are measured initially at cost. After initial recognition, such assets are carried at their cost less any accumulated amortization and any accumulated impairment loss.

ii. Subsequent expenditure

Subsequent expenditure is capitalized only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.

iii. Derecognition

Gains or losses arising from de-recognition of intangible assets and intangible assets under development are measured as the difference between the net disposal proceeds and the carrying amount of such asset and are recognised in the Restated Consolidated Statement of Profit and Loss when such asset is derecognised.

iv. Amortisation

Intangible assets with indefinite useful lives are carried at cost less accumulated amortization and accumulated impairment losses, if any. Intangible assets with definite useful lives are amortized on a straight line basis so as to reflect the pattern in which the assets economic benefits are consumed.

Particulars	Estimated useful life (years)
	Holding Company	Subsidiary Companies
Software	10 years	5 years

Amotisation commences from the date the asset is available for their intended use and is spread over assets estimated useful economic lives. The estimated useful lives of assets and residual values are reviewed regularly and when necessary, revised.

The Group expenses costs incurred during research phase to profit or loss in the year in which they are incurred. Development phase expenses are initially recognized as intangible assets under development until the development phase is complete, upon which the amount is capitalized as intangible asset.

e Leases

The Group determines that a contract is or contains a lease, if the contract conveys right to control the use of an identified asset for a period of time in exchange for a consideration. At the inception of a contract which is or contains a lease, the Group recognises lease liability at the present value of the future lease payments for non-cancellable period of a lease which is not short term in nature except for lease of low value items. The future lease payments for such non-cancellable period are discounted using the Companys incremental borrowing rate specific to the lease being evaluated or for the portfolio of the lease with similar characteristics. Lease payments include fixed payments, i.e. amounts expected to be payable by the Company under residual value guarantee, the exercise price of a purchase option if the Company is reasonably certain to exercise that option and payment of penalties for terminating the lease if the lease term considered reflects that the Company shall exercise termination option. The Group also recognizes a right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. The right-of-use assets are also subject to impairment.

Payment made towards short term leases (leases for which non-cancellable term is 12 months or lesser) and low value assets are recognized in the Restated Consolidated Statement of Profit and Loss as rental expenses over the tenor of such leases.

f. Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

i. Recognition and initial measurement

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the instrument and are measured initially at fair value adjusted for transaction costs, except for those carried at fair value through Profit and Loss which are measured initially at fair value. However, trade receivables are recognised initially at the transaction price as they do not contain significant financing components.

ii. Classification and subsequent measurement Financial assets

On initial recognition, a financial asset is classified as measured at :

- Amortized cost - A Financial Asset is measured at Amortised Cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the Financial Asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding; or

- fair value through other comprehensive income (FVTOCI) - A Financial Asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling Financial Assets and the contractual terms of the Financial Asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

- fair value through profit or loss (‘FVTPL) - A Financial Asset which is not classified in any of the above categories are measured at FVTPL.

Financial assets are not reclassified subsequent to their initial recognition, except if and in the period the Group changes its business model for managing financial assets.

Financial liabilities

Financial liabilities are classified as measured at amortized cost or FVTPL. A financial liability is classified as at FVTPL if it is classified as held for trading, or it is a derivative or it is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and net gains and losses, including any interest expense, are recognized in Restated Consolidated Statement of Profit and Loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. The Group does not have any fixed liabilities under the category of FVTPL.

iii. Impairment of Financial Assets

In accordance with Ind AS 109, the Group uses ‘Expected Credit Loss (ECL) model, for evaluating impairment of Financial Assets other than those measured at Fair Value Through Profit and Loss (FVTPL).

Expected credit losses are measured through a loss allowance at an amount equal to:

• The 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

• Full lifetime expected credit losses (expected credit losses that result from all possible default events over the life of the financial instrument)

For Trade Receivables the Group applies ‘simplified approach which requires expected lifetime losses to be recognised from initial recognition of the receivables. The Group uses historical default rates to determine impairment loss on the portfolio of trade receivables.

At every reporting date these historical default rates are reviewed and changes in the forward looking estimates are analysed.

For other assets, the Group uses 12 month Expected Credit Loss to provide for impairment loss where there is no significant increase in credit risk. If there is significant increase in credit risk full lifetime Expected Credit Loss is used.

iv. Derecognition Financial assets

The Group de-recognises a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all of the risks and rewards of ownership of the financial asset are transferred or in which the Group neither transfers nor retains substantially all of the risks and rewards of ownership and does not retain control of the financial asset.

Financial liabilities

The Group de-recognises a financial liability when its contractual obligations are discharged or cancelled or expire. The Group also de-recognises a financial liability when its terms are modified and the cash flows under the modified terms are substantially different. In this case, a new financial liability based on the modified terms is recognized at fair value. The difference between the carrying amount of the financial liability extinguished and the new financial liability with modified terms is recognized in Restated Consolidated Statement of Profit and Loss.

v. Offsetting

Financial assets and financial liabilities are offset and the net amount presented in the balance sheet when, and only when, the Group currently has a legally enforceable right to set off the amounts and it intends either to settle them on a net basis or to realize the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the group or the counterparty.

Financial Assets

A. Inventories

Inventories are measured at the lower of cost and net realizable value. The cost of inventories is ascertained on the weighted average basis, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their present location and condition but does not include statutory levies of whom input credits is availed by the company.

Costs of finished goods and works-in-progress are determined by taking material cost (net of input tax credit availed), labor and relevant appropriate overheads based on the normal operating capacity but excluding borrowing costs.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. The net realizable value of work in progress is determined with reference to the selling prices of related finished products.

B. Trade Receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business and reflects Groups unconditional right to consideration (that is, payment is due only on the passage of time). Trade receivables are recognised initially at the transaction price as they do not contain significant financing components. The Group holds the trade receivables with the objective of collecting the contractual cash flows and therefore measures them subsequently at amortised cost using the effective interest method, less loss allowance.

C. Other Equity Investments

All other equity investments are measured at fair value, with value changes recognized in Restated Consolidated Statement of Profit and Loss, except for those equity investments for which the Group has elected to present the value changes in ‘Other Comprehensive Income.

D. Loans to Employees

Loans given to the employees are repayable on demand and hence are carried at cost in the financial statements.

E. Cash & Cash Equivalents

Cash and cash equivalents in the balance sheet comprise cash at banks and on hand and highly liquid investments with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.

Financial Liabilities & Equity Instruments

A. Classification as debt or equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument.

B. Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received.

C. Trade and other payables

Trade and other payables represent liabilities for goods or services provided to the Company prior to the end of financial year which are unpaid.

D. Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest rate method. Borrowings are de-recognised from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

E. Employee Benefits:

i. Short Term Employee Benefits

The undiscounted amount of short term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.

ii. Post-Employment Benefits

Jyoti CNC Automation Limited

a) Defined Contribution Plan:

• Provident Fund and Employee State Insurance

Contributions under defined contribution plans are recognised as expense for the period in which the employee has rendered the service. Payments made to state managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Companys obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.

b) Defined Benefits Plan:

• Gratuity

For defined benefit retirement schemes, the cost of providing benefits is determined using the discounted cash flow method, with actuarial valuation being carried out at each year-end balance sheet date. Remeasurement gains and losses of the net defined benefit liability/(asset) are recognised immediately in other comprehensive income. The service cost and net interest on the net defined benefit liability/(asset) are recognised as an expense within employee costs. Past service cost is recognised as an expense when the plan amendment or curtailment occurs or when any related restructuring costs or termination benefits are recognised, whichever is earlier.

The retirement benefit obligations recognised in the balance sheet represents the present value of the defined benefit obligations as reduced by the fair value of plan assets.

• Compensated absences

Compensated absences which are expected to occur after the end of the period in which the employee renders the related service are recognised based on actuarial valuation at the present value of the obligation as on the reporting date.

Huron Graffenstaden SAS/Huron Frasmaschinen, GmbH a) Retirement Pension Commitments

Retirement Gratuities: the provision was determined according to a method integrating the number of years service, the likelihood of the persons presence in the company at retirement age (turnover and mortality), an annual salary adjustment rate of 0.50%, a discount rate of 0.48% for retirement at the employees own initiative at the age of 62.

F. Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation.

Long-term provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money. Short term provisions are carried at their redemption value and are not offset against receivables from reimbursements.

Provision for Warranty & Commissioning:

When each new machine is sold, a provision is constituted according to a standard amount defined for each family of machines for any warranty costs adjusted according to the specificities of each machine, the country of destination and the distribution network, and an amount is determined machine by machine for backfitting costs known at the end of the financial year. The costs of commissioning and training customers are provisioned on the sale of each machine according to a standard amount defined for each family of machines.

The standard amounts for provisions for warranties are re-assessed at the end of each financial year taking account of the net expenses actually incurred (hours of labour, cost of parts and work entrusted to subcontractors, minus any refunds obtained from suppliers of components or their insurers) during the warranty period and exclusively concerning work done under warranty.

This revision is determined overall for the entire machine base. These provisions are tracked machine by machine, the net costs incurred giving rise to a writeback of the provision originally constituted. At the end of the warranty period or on completion of commissioning, the remainder of the provision is written back in full.

g. Revenue recognition:

Revenue from operations is recognised over time, when the outcome of the contract can be estimated reliably by reference to the percentage of completion of the contract on the reporting date under input method. Percentage of completion is determined as a proportion of costs incurred-to-date to the total estimated contract costs. In respect of process technology and design and engineering contracts percentage of completion is measured with reference to the milestones specified in the contract, which in the view of the management reflects the work performed and to the extent it is reasonably certain of recovery.

Contract costs include costs that relate directly to the specific contract and costs that are attributable to the contract activity and allocable to the contract. Costs that cannot be attributed to contract activity are expensed when incurred.

When the final outcome of a contract cannot be reliably estimated, revenue from operations is recognised only to the extent of costs incurred that are expected to be recoverable. The provision for expected loss is recognised immediately when it is probable that the total estimated contract costs will exceed total revenues from sale of product.

Variations, claims and incentives are recognised as a part of revenues from operations to the extent it is probable that they will result in revenue and are capable of being reliably measured.

Determination of revenues under the percentage of completion method necessarily involves making estimates by the company, some of which are of a technical nature, concerning, where relevant, the percentage of completion, costs to completion, the expected revenues from the project / activity and the foreseeable losses to completion.

Execution of contracts necessarily extends beyond accounting periods. Revision in costs and revenues estimated during the course of the contract are reflected in the accounting period in which the facts requiring the revision become known.

Sale of Products:

The Group recognizes revenue from sale of products measured at the fair value of the consideration received or receivable, upon satisfaction of performance obligation which is at a point in time when control of the goods is transferred to the customer. Depending on the terms of the contract, which differs from contract to contract, the goods are sold on reasonable credit terms.

Sale of Services:

The Group recognizes revenue from sales of services over time, because the customer simultaneously receives and consumes the benefits provided by the Group. Revenue from services provided is recognised upon rendering of the services, in accordance with the agreed terms with the customers where ultimate collection of the revenue is reasonably expected.

Other operating income:

All export benefits under various policies of Government of India are recognised on accrual basis when no significant uncertainties as to the amount of consideration that would be derived and as to its ultimate collection exist.

Other Income:

Interest Income is recognized on time proportion basis depending upon the amount outstanding and effective interest rate applicable.

h. Contingent Liabilities

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Groupor a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made.

i. Contingent Assets

Contingent Assets are neither recognized nor disclosed in the Notes forming part of the Restated Consolidated Financial Statements

j. Foreign currency transactions, translation

Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date.

The results and financial position of foreign operation that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

• assets and liabilities are translated at closing rate at the date of that balance sheet

• income, expenses &cash flows are translated at average exchange rates and

• all Resulting exchange differences are recognised in other comprehensive income

On Consolidation, exchange differences arising from the translation of any net investment in foreign entities, are recognised in other comprehensive income. When foreign operation is sold, the associated exchange differences are reclassified to profit & loss, as part of the gain or loss on sale.

Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction.

Exchange differences arising on settlement or translation of monetary items are recognised in Restated Consolidated Statement of Profit and Loss except to the extent of exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings that are directly attributable to the acquisition or construction of qualifying assets which are capitalized as cost of assets.

k. Income taxes

Tax expenses comprise of current and deferred tax. Current and deferred tax are recognized as an expense or income in the Restated Consolidated Statement of Profit and Loss, except when they relate to items credited or debited either in other comprehensive income or directly in other equity, in which case the tax is also recognized in other comprehensive income or directly in equity.

Current Tax:

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Restated Consolidated Statement of Profit and Loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible.

The Groups liability for current tax is calculated using tax rates and tax laws that have been enacted or substantively enacted in countries where the Company and its subsidiaries operate by the end of the reporting period.

Deferred Tax:

Deferred tax is provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date. Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying value of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences. In contrast, deferred tax assets are only recognized to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.

The carrying value of deferred tax assets is reviewed at the end of each reporting period 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 asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on the tax rates and tax laws that have been enacted or substantially enacted by the end of the reporting period. The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to cover or settle the carrying value of its assets and liabilities.

Deferred tax assets include Minimum Alternate Tax (MAT) paid in accordance with the tax laws in India, which is likely to give future economic benefits in the form of availability of set off against future income tax liability. MAT is recognized as deferred tax assets in the Consolidated balance sheet when the asset can be measured reliably and it is probable that the future economic benefit associated with the asset will be realized.

l Borrowing costs:

Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization.

Other borrowing costs are expensed in the period in which they are incurred.

m. Impairment of Non-Financial Assets

The Group assesses at each reporting date as to whether there is any indication that any Property, Plant and Equipment and Intangible Assets or group of Assets, called Cash Generating Units (CGU) may be impaired. If any such indication exists, the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any.

When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the CGU to which the asset belongs.

An impairment loss is recognized in the Restated Consolidated Statement of Profit and Loss to the extent, assets carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assets fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.

The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

n. Government grants

Government grants are recognized in accordance with the terms of the respective grant on accrual basis considering the status of compliance of prescribed conditions and ascertainment that the grant will be received.

Government grants related to revenue are recognized on a systematic and net basis in the Restated Consolidated Statement of Profit and Loss over the period during which the related costs intended to be compensated are incurred.

Government grants related to assets are recognized as income in equal amounts over the expected useful life of the related asset.

o. Earnings per share

Basic Earnings Per Share are calculated by dividing the net profit or loss (excluding other comprehensive income) for the period attributable to Equity Shareholders by the Weighted Average Number of Equity Shares outstanding during the period. Earnings considered in ascertaining the Companys Earnings per Share are the Net Profit after Tax for the Year. The Weighted Average Numbers of Equity Shares outstanding during the period are adjusted for events of Sub-division of Shares.

For the purpose of calculating diluted earnings per share, the net profit or loss (excluding other comprehensive income) for the year attributable to equity share holders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.

2B. USE OF ESTIMATES AND JUDGEMENTS

The preparation of restated consolidated financial information in conformity with generally accepted accounting principles require management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses and the disclosure of contingent liabilities on the date of the restated consolidated financial information. Actual results could differ from those estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Any revision to accounting estimates are recognized prospectively in current and future periods. Information about judgments made in applying accounting policies that have the most significant effects on the amounts recognized in the restated consolidated financial information is included in the following notes:

Significant estimates

Useful lives of depreciable/amortizable assets - Management reviews its estimate of the useful lives of depreciable/amortizable assets at each reporting date, based on the expected utility of the assets. Uncertainties in these estimates relate to technical and economic obsolescence that may change the utility of assets.

Defined benefit obligation (DBO) - Managements estimate of the DBO is based on underlying assumptions such as standard rates of inflation, mortality, discount rate and anticipation of future salary increases. 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 probable maturity of post-employment benefit obligations. Due to complexities involved in the valuation and its long-term nature, defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting period. Variation in these assumptions may significantly impact the DBO amount and the annual defined benefit expenses.

Recognition of deferred tax assets and liabilities - Deferred tax assets and liabilities are recognized for the future tax consequences of temporary differences between the carrying values of assets and liabilities and their respective tax bases, and unutilized business loss and depreciation carry-forwards and tax credits. Deferred tax assets and liabilities 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, depreciation carry-forwards and unused tax credits could be utilized.

Provisions - Significant estimates are involved in the determination of provisions related to warranty costs. The Group records a provision for onerous sales contracts when current estimates of total contract costs exceed expected contract revenue. The provision for warranty, liquidated damages, onerous contracts is based on the best estimate required to settle the present obligation at the end of the reporting period.

Significant judgments

Contingent liabilities - At each balance sheet date, on the basis of the management judgment, changes in facts and legal aspects, the Group assesses the requirement of disclosure against the outstanding contingent liabilities. However, the actual future outcome may be different from this judgement.

Impairment of financial assets - At each balance sheet date, based on historical default rates observed over expected life, the management assesses the expected credit loss on outstanding financial assets.

Evaluation of indicators for impairment of assets - The evaluation of applicability of indicators of impairment of assets requires assessment of several external and internal factors which could result in deterioration of recoverable amount of the assets.

Classification of leases - The Group enters into leasing arrangements for various premises. The assessment (including measurement) of the lease is based on several factors, including, but not limited to, transfer of ownership of leased asset at end of lease term, lessees option to extend/terminate etc. After the commencement date, the Group reassesses the lease term if there is a significant event or change in circumstances that is within its control and affects its ability to exercise or not to exercise the option to extend or to terminate.

2C. STANDARDS ISSUED BUT NOT YET EFFECTIVE

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On 31 March 2023, MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:

Ind AS 1 - Presentation of Financial Statements

This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after 1 April 2023. The amendment is not expected to have material impact on the Restated Consolidated Financial Statements.

Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors

This amendment has introduced a definition of ‘accounting estimates and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after 1 April 2023. The amendment is not expected to have material impact on the Restated Consolidated Financial Statements.

Ind AS 12 - Income Taxes

This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after 1 April 2023. The amendment is not expected to have material impact on the Restated Consolidated Financial Statements.

NON-GAAP MEASURES

Earnings before Interest, Taxes, Depreciation and Amortization Expenses (EBITDA)/ EBITDA Margin/ Return on Capital Employed / PAT Margin / Return on Equity / Gross Fixed Assets Turnover Ratio / Gross Profit/ Gross Margin

In addition to our results determined in accordance with Ind AS, we believe the following Non-GAAP measures are useful to investors in evaluating our operating performance and liquidity. We use the following Non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Non-GAAP financial information, when taken collectively with financial measures disclosed in the financial statements prepared in accordance with Ind AS, may be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with other companies in our industry because it provides consistency and comparability with past financial performance. However, our management does not consider these Non-GAAP measures in isolation or as an alternative to financial measures.

Gross Profit, Gross Profit Margin, EBITDA, EBITDA Margin, Return on Capital Employed, PAT Margin, Return on Equity and Gross Fixed Assets Turnover Ratio (Non-GAAP Measures) presented in this Draft Red Herring Prospectus is a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS, IFRS or US GAAP. Further, EBITDA is not a measurement of our financial performance or liquidity under Ind AS, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the years or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS, IFRS or US GAAP. In addition, Non-GAAP Measures are not standardised terms, hence a direct comparison of Non-GAAP Measures between companies may not be possible. Other companies may calculate the Non-GAAP Measure differently from us, limiting its usefulness as a comparative measure. Although Non-GAAP Measures is not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance. See ‘Risk Factors - Certain non-GAAP financial measures and certain other statistical information relating to our operations andfinancial performance like Gross Profit, Gross Profit Margin, EBITDA, EBITDA Margin, Return on Capital Employed, PAT Margin, Return on Equity and Gross Fixed Assets Turnover Ratio have been included in this Draft Red Herring Prospectus. These non-GAAP financial measures are not measures of operating performance or liquidity defined by Ind AS and may not be comparable on page 54.

Reconciliation of Profit/ (loss) for the Year to EBITDA and EBITDA Margin

The table below reconciles profit/ (loss) for the year to EBITDA. EBITDA is calculated as profit/ (loss) for the year minus other income exceptional items plus finance costs, depreciation and amortisation and total income tax expenses, while EBITDA Margin is calculated as EBITDA divided by revenue from operations.

Particulars	Fiscal
	2023	2022	2021
	Consolidated	Consolidated	Consolidated
	(Rs million, unless otherwise stated)
Profit for the year (I)	150.60	(483.00)	(700.29)
Other income (II)	233.41	35.74	100.33
Finance costs (III)	897.02	821.99	755.12
Depreciation and amortization expense (IV)	336.18	357.86	377.84
Total income tax expense (V)	127.90	65.50	(15.44)
Exceptional Items (VI)	304.50	-	-
EBITDA (VII = I-II+III+IV+V-VI)	973.79	726.62	316.89
Revenue from operations (VIII)	9,292.59	7,464.87	5,800.59
EBITDA Margin (%) (IX) = (VII/VIII)	10.48%	9.73%	5.46%

Reconciliation of Total Equity to Capital Employed, Profit/ (loss) for the Year to EBIT and Return on Capital Employed

The table below reconciles total equity to capital employed. Capital employed is calculated as total equity plus total borrowing while EBIT is calculated as profit/ (loss) for the year plus total income tax expense plus finance costs. Return on Capital Employed is calculated as EBIT divided by capital employed.

Particulars	Fiscal
	2023	2022	2021
	Consolidated	Consolidated	Consolidated
	(Rs million, unless otherwise stated)
Total equity (I)	820.63	411.54	1,125.86
Non-current borrowings (II)	1,274.65	1,402.63	1,194.28
Current borrowings (III)	7,075.09	6,518.94	6,056.89

Particulars	Fiscal
	2023	2022	2021
	Consolidated	Consolidated	Consolidated
	(Rs million, unless otherwise stated)
Total Capital Employed (IV) = I+II+III	9,170.37	8,333.11	8,377.03
Profit for the year (V)	150.60	(483.00)	(700.29)
Total income tax expense (VI)	127.90	65.50	(15.44)
Finance costs (VII)	897.02	821.99	755.12
Less: Exceptional Items (VIII)	304.50	-	-
Earnings before interest and tax (EBIT) (IX = V + VI + VII - VIII)	871.02	404.49	39.38
Return on Capital Employed (%) (IX = VIII/IV)	9.50%	4.85%	0.47%

Reconciliation of Total Equity to Return on Equity

The table below reconciles total equity to return on equity. Return on equity is calculated as profit/ (loss) for the year divided by total equity.

Particulars	Fiscal
	2023	2022	2021
	Consolidated	Consolidated	Consolidated
	(Rs million, unless otherwise stated)
Total equity (I)	820.63	411.54	1,125.86
Profit for the year (II)	150.60	(483.00)	(700.29)
Return on Equity (%) (III) = (II/I)	18.35%	(117.37%)	(62.20%)

Reconciliation of Revenue from Operations to Gross Fixed Assets Turnover Ratio The table below reconciles revenue from operations to gross fixed assets turnover ratio.

Particulars	Fiscal
	2023	2022	2021
	Consolidated	Consolidated	Consolidated
	(Rs million, unless otherwise stated)
Revenue from Operations (I)	9,292.59	7,464.87	5,800.59
Property, Plant and Equipment (II)	6,161.23	5,940.23	5,997.74
Capital Work in Progress (III)	82.79	8.97	510.89
Right of Use Assets (IV)	1.53	1.53	1.53
Intangible assets (V)	996.73	924.92	954.16
Intangible assets under development (VI)	71.01	45.81	26.37
Total Gross Fixed Assets (VII = I + II + III + IV + V+VI)	7,313.29	6,921.46	7,490.69
Gross Fixed Assets Turnover Ratio (in times) (VIII = I/VII)	1.27	1.08	0.77

Reconciliation for Revenue from Operations to Gross Profit and Gross Margin The table below reconciles revenue from operations to gross profit and gross margin:

Particulars	Fiscal
	2023	2022	2021
	Consolidated	Consolidated	Consolidated
	(Rs million, unless otherwise stated)
Revenue from operations (I)	9,292.59	7,464.87	5,800.59
Cost of material consumed (II)	6,795.30	4,187.80	4,638.57
(Increase)/ decrease in inventories of finished goods and work-in-progress (III)	(1,469.17)	9.05	(1,449.02)
Gross Profit (IV) = (I - (II+III))	3,966.46	3,268.02	2,611.04
Gross Margin (%) (V = IV/I)	42.68%	43.78%	45.01%

Reconciliation for Profit/ (loss) for the Year to Profit After Tax Margin (PAT Margin) The table below reconciles profit/ (loss) for the year to PAT Margin:

Particulars	Fiscal
	2023	2022	2021
	Consolidated	Consolidated	Consolidated
	(Rs million, unless otherwise stated)
Profit for the Year (I)	150.60	(483.00)	(700.29)
Total Income (II)	9,526.00	7,500.61	5,900.92
PAT Margin (%) (III = I/II)	1.58%	(6.44%)	(11.87%)

PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE

Income

Our total income comprises (i) revenue from operations and (ii) other income.

Revenue from Operations

Revenue from operations comprise (i) sale of products which further comprises of sale of machinery and sale of machinery parts, (ii) sale of services such as income from annual maintenance contract, machine service, job work and installation and commissioning; and (ii) other operating income which primarily includes income from export & other incentive schemes and others.

Other Income

Other income comprises (i) interest income; (ii) gain on sale of property, plant & equipment (iii) foreign exchange fluctuation gain (net of loss); (iv) gain on sale of investment; and (v) Others which includes reversal of excess provision.

Expenses

Our expenses comprise cost of raw materials consumed, increase/ decrease in inventories of finished goods and work- in-progress, employee benefits expense, finance costs, depreciation and amortization expense; and other expenses.

Cost of Raw Materials Consumed

Cost of raw materials and components consumed consists of raw materials used by us and includes the electronics and other components that we procure.

(Increase)/ decrease in inventories of finished goods and work-in-progress

(Increase)/ decrease in inventories of finished goods and work-in-progress denotes increase/ decrease in inventories of finished goods and work in progress between opening and closing dates of a reporting period as adjusted for changes on account of foreign currency translation.

Employee Benefits Expense

Employee benefit expenses primarily include salaries and wages, contribution to provident fund and other funds, and other employee benefit expenses.

Finance Costs

Finance costs include interest expenses on borrowings and others and bank & other financial charges.

Depreciation and Amortisation Expenses

Depreciation and amortisation expense primarily include depreciation expenses on our property, plant and equipment, amortisation expenses on our right to use assets and intangibles assets.

Other Expenses

Other expenses comprises: (i) consumption of stores and spares; (ii) job work charges; (iii) power and fuel expenses; (iv) factory expenses; (v) transportation expense; (vi) clearing, forwarding & agency expenses; (vii) repairs & maintenance expense; (viii) advertisement, marketing expenses & exhibition expenses; (ix) AMC expenses; (x) Legal & Professional Charges; (xi) Office Expenses; (xii) postage, stationary & telephone expenses; (xiii) commission expense; (xiv) travelling, conveyance & vehicle expenses; (xv) foreign exchange fluctuation loss (net of gain); (xvi) expected credit loss; (xvii) warranty expense; (xviii) corporate social responsibility expenses; (xix) donation; (xx) audit fees; and (xxi) miscellaneous expenses.

Exceptional Item

Exceptional item pertains to debt cancellation during the respective financial year which is accounted for as an addition to profit before tax for our Company.

RESULTS OF OPERATIONS

The following table sets forth select financial data from our statement of restated consolidated profit and loss for Fiscal 2021, Fiscal 2022 and Fiscal 2023, the components of which are also expressed as a percentage of total income for such years.

Particulars	Fiscal
	2023		2022		2021
	(Rs million)	Percentage of Total Income	(Rs million)	Percentage of Total Income	(Rs million)	Percentage of Total Income
INCOME
Revenue from operations	9,292.59	97.55%	7,464.87	99.52%	5,800.59	98.30%
Other income	233.41	2.45%	35.74	0.48%	100.33	1.70%
Total Income	9,526.00	100.00%	7,500.61	100.00%	5,900.92	100.00%
EXPENSES
Cost of raw materials consumed	6,795.30	71.33%	4,187.80	55.83%	4,638.57	78.61%
(Increase)/ decrease in inventories of finished goods and work-in- progress	(1,469.17)	(15.42%)	9.05	0.12%	(1,449.02)	(24.56%)
Employee benefits expense	1,662.40	17.45%	1,418.36	18.91%	1,313.86	22.27%
Finance costs	897.02	9.42%	821.99	10.96%	755.12	12.80%
Depreciation and amortization expense	336.18	3.53%	357.86	4.77%	377.84	6.40%
Other expenses	1,330.28	13.96%	1,123.04	14.97%	980.28	16.61%

Particulars	Fiscal
	2023		2022		2021
	(Rs million)	Percentage of Total Income	(Rs million)	Percentage of Total Income	(Rs million)	Percentage of Total Income
Total expenses	9,552.01	100.27%	7,918.11	105.57%	6,616.65	112.13%
Profit before tax and exceptional item	(26.00)	(0.27%)	(417.50)	(5.57%)	(715.73)	(12.13%)
Exceptional Item	304.50	3.20%	-	0.00%	-	0.00%
PROFIT BEFORE TAX	278.50	2.92%	(417.50)	(5.57%)	(715.73)	(12.13%)
Tax expense:
Current tax	135.80	1.43%	65.00	0.87%	-	0.00%
Prior Year Tax	0.50	0.01%	-	0.00%	-	0.00%
Deferred tax	(8.40)	(0.09%)	0.50	0.01%	(15.44)	(0.26%)
Total income tax expense	127.90	1.34%	65.50	0.87%	(15.44)	(0.26%)
PROFIT FOR THE YEAR	150.60	1.58%	(483.00)	(6.44%)	(700.29)	(11.87%)
OTHER COMPREHENSIVE INCOME (OCI)
Other comprehensive income that will be classified to profit or loss
Foreign Currency Translation Reserve	10.90	0.11%	(78.10)	(1.04%)	(45.39)	(0.77%)
Other comprehensive income not to be classified to profit or loss
Remeasurement gains/ (losses) on post- employment defined benefit plans	(2.70)	(0.03%)	(0.40)	(0.01%)	(2.25)	(0.04%)
Total other comprehensive income/ (loss) for the year, net of tax	8.20	0.09%	(78.50)	(1.05%)	(47.64)	(0.81%)
Total comprehensive income/ (loss) for the year, net of tax	158.80	1.67%	(561.50)	(7.49%)	(747.93)	(12.67%)

Fiscal 2023 compared to Fiscal 2022

Total Income

Our total income increased by 27.00% from Rs7,500.61 million in Fiscal 2022 to Rs9,526.00 million in Fiscal 2023, primarily due to an increase in our revenue from operations and other income as discussed below:

Revenue from operations

Our revenue from operations increased by 24.48% from Rs7,464.87 million in Fiscal 2022 to Rs9,292.59 million in Fiscal 2023, primarily due to an increase in the revenue from sale of products by 24.41% from Rs7,244.36 million in

Fiscal 2022 to Rs9,012.46 million in Fiscal 2023. The said increase was primarily due to a surge in our capital expenditure cycle which led to increase in revenues from sale of machinery and offset the drop in revenues from our medical devices business resulting in increased revenue from sale of machinery from Rs6,815.65 million in Fiscal 2022 to Rs8,517.10 million in Fiscal 2023. Additionally, our revenues from sale of services increased by 17.71% from Rs209.29 million in Fiscal 2022 to Rs246.36 million in Fiscal 2023 primarily due to increase in machine service income, job work income and installation & commissioning income which was partially offset by a decline in income from annual maintenance contracts. Other operating income increased by 200.97% from Rs 11.22 million in Fiscal 2022 to Rs33.77 million in Fiscal 2023 due to export income generated for development of machinery design by our team at our customers premises.

Other Income

Our other income increased by 553.11% from Rs35.74 million in Fiscal 2022 to Rs233.41 million in Fiscal 2023, primarily as a result of increase in gain from foreign exchange fluctuation (net of loss) from nil in Fiscal 2022 to Rs222.99 million in Fiscal 2023, which was partially offset by decrease in interest income from Rs14.87 million in Fiscal 2022 to Rs 8.99 million in Fiscal 2023 and decrease in others from Rs15.21 million in Fiscal 2022 to nil in Fiscal 2023.

Total Expenses

Our total expenses increased by 20.63% from Rs7,918.11 million in Fiscal 2022 to Rs9,552.01 million in Fiscal 2023.

Cost of Raw Materials Consumed

Cost of raw materials consumed increased by 62.26% from Rs4,187.80 million in Fiscal 2022 to Rs6,795.30 million in Fiscal 2023 due to increase in business volume and increase in inventories of finished goods and work-in-progress.

(Increase)/ decrease in inventories of finished goods and work-in-progress

There was a net increase in inventory of Rs1,469.17 million in Fiscal 2023, as compared to a reduction in inventory of Rs9.05 million in Fiscal 2022. This was primarily due an increase in work-in-progress from Rs3,692.00 million in Fiscal 2022 to Rs4,966.34 million in Fiscal 2023 and an increase in inventory of finished goods from Rs170.83 million in Fiscal 2022 to Rs395.30 million in Fiscal 2023.

Employee Benefits Expense

Our employee benefits expense increased by 17.21% from Rs1,418.36 million in Fiscal 2022 to Rs1,662.40 million for Fiscal 2023 due to an increase in payment of salary number of payment of salaries, bonus and allowances, contributions to provident and other funds, and staff welfare expenses primarily on account of increase in number of employees (including employees on contract basis) from 2,299 in Fiscal 2022 to 2,510 in Fiscal 2023.

Finance Costs

Our finance costs increased by 9.13% from Rs821.99 million in Fiscal 2022 to Rs897.02 million in Fiscal 2023 primarily due to an increase in interest expenses due to higher borrowings from banks and ‘others.

Depreciation and Amortisation Expenses

Our depreciation and amortisation expenses decreased by (6.06%) from Rs357.86 million in Fiscal 2022 to Rs336.18 million in Fiscal 2023 primarily due to lower incremental investments into property, plant and machinery during Fiscal 2023 as compared to Fiscal 2022.

Other Expenses

Our other expenses increased by 18.45% from Rs1,123.04 million in Fiscal 2022 to Rs1,330.28 million in Fiscal 2023, in aggregate, primarily due to an increase in expenses related to job work by 105.06% from Rs91.66 million in Fiscal 2022 to Rs187.95 million in Fiscal 2023; increase in expenses related to advertisement, marketing expenses & exhibition from Rs2.73 million in Fiscal 2022 to ^71.39 million in Fiscal 2023; increase in expenses related to repair and maintenance for machinery by 76.14% from Rs24.34 million in Fiscal 2022 to Rs42.88 million in Fiscal 2023; increase in power and fuel expenses by 23.01% from Rs135.99 million in Fiscal 2022 to Rs167.28 million in Fiscal 2023; increase in travelling, conveyance and vehicle expenses by 22.69% from Rs125.31 million in Fiscal 2022 to Rs153.74 million in Fiscal 2023; and increase in miscellaneous expenses by 68.87% from Rs131.45 million in Fiscal 2022 to Rs221.98 million in Fiscal 2023. The aforementioned increase was partially offset primarily by a decrease in consumption of stores & spares by 82.34% from Rs166.63 million in Fiscal 2022 to Rs29.42 million in Fiscal 2023 as a part of the same was accounted for under raw material expenses; and a decrease in office expenses by 45.76% from Rs17.75 million in Fiscal 2022 to Rs9.63 million in Fiscal 2023.

Total Income Tax Expense

Our total income tax expense increased by 95.27% from Rs65.50 million in Fiscal 2022 to Rs127.90 million in Fiscal 2023, primarily due an increase in the profit before tax from Rs(417.50) million in Fiscal 2022 to Rs278.50 million in Fiscal 2023 on account of an exceptional item and an increase in our profit before tax from our Companys operations. The aforementioned increase primarily constituted an increase in current tax (net) by 108.92% from Rs65.00 million in Fiscal 2022 to Rs 135.80 million in Fiscal 2023, and decrease in deferred tax charge from Rs0.50 million in Fiscal 2022 to Rs(8.40) million in Fiscal 2023.

Exceptional Items

During Fiscal 2023, there was an exceptional item on account of a waiver of debt of Rs304.50 million availed by Huron Graffenstaden SAS, our step-down subsidiary. This reduction in liability has been recognized as an exceptional income in the Restated Consolidated Financial Statements as well as a part of contingent liabilities of our Company.

Profit for the Year

As a result of the foregoing factors, our profit for the year was Rs150.60 million in Fiscal 2023 compared to Rs(483.00) million in Fiscal 2023.

Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA)

EBITDA was Rs973.79 million in Fiscal 2023 as compared to EBITDA of Rs726.62 million in Fiscal 2022, while EBITDA Margin was 10.48% in Fiscal 2023 compared to 9.73% in Fiscal 2022.

For reconciliation of EBITDA and EBITDA Margin, see ‘Other Financial Information - Reconciliation of Non-GAAP Measures - Reconciliation of Profit/ (loss) for the Year to EBITDA and EBITDA Margin on page 301.

Fiscal 2022 compared to Fiscal 2021

Total Income

Our total income increased by 27.11% from Rs5,900.92 million in Fiscal 2021 to Rs7,500.61 million in Fiscal 2022, primarily due to an increase in our revenue from operations and other income as discussed below:

Revenue from operations

Our revenue from operations increased by 28.69% from Rs 5,800.59 million in Fiscal 2021 to Rs7,464.87 million in Fiscal 2022, primarily due to an increase in the revenue from sale of products by 29.03% from Rs 5,614.51 million in Fiscal 2021 to Rs7,244.36 million in Fiscal 2022. The increase was primarily due to partial normalization of business post COVID and increase in revenues from our medical devices business resulting in an increase in revenue from sale of machinery from Rs5,142.07 million in Fiscal 2021 to Rs6,815.65 million in Fiscal 2022. Our revenues from sale of services increased by 17.02% from Rs178.86 million in Fiscal 2021 to Rs209.29 million in Fiscal 2022 primarily due to increase in income from annual maintenance contracts and machine service income. Other operating revenue increased by 55.52% from Rs7.22 million in Fiscal 2021 to ^11.22 million in Fiscal 2022 due to transfer of Merchandise Exports from India Scheme (MEIS) license.

Other Income

Our other income decreased by 64.38% from Rs100.33 million in Fiscal 2021 to Rs35.74 million in Fiscal 2022, primarily as a result of decrease in the gain from foreign exchange fluctuation (net of loss) from Rs84.22 million in Fiscal 2021 to nil in Fiscal 2022, which was partially offset by increase in gain on sale of property, plant & equipment from nil in Fiscal 2021 to Rs4.43 million in Fiscal 2022 and increase in ‘others by 467.49% from Rs2.68 million in Fiscal 2021 to Rs15.21 million in Fiscal 2022.

Total Expenses

Our total expenses increased by 19.67% from Rs6,616.65 million in Fiscal 2021 to Rs7,918.11 million in Fiscal 2022.

Cost of Raw Materials Consumed

Cost of raw materials consumed decreased by 9.72% from Rs4,638.57 million in Fiscal 2021 to Rs4,187.80 million in Fiscal 2022 due to decrease in in inventories of finished goods and work-in-progress.

(Increase)/ decrease in inventories of finished goods and work-in-progress

There was net decrease in inventory of Rs9.05 million in Fiscal 2022, as compared to a net increase of Rs1,449.02 million in Fiscal 2021. This was primarily due to increase in work-in-progress from Rs3,600.32 million in Fiscal 2021 to Rs3,692.00 million in Fiscal 2022 and decrease in inventory of finished goods from Rs284.45 million in Fiscal 2021 to Rs170.83 million in Fiscal 2022.

Employee Benefits Expense

Our employee benefits expense increased by 7.95% from ^1,313.86 million in Fiscal 2021 to Rs1,418.36 million for Fiscal 2022 due to an increase in payment of salary number of payment of salaries, bonus and allowances, contributions to provident and other funds, and staff welfare expenses primarily on account of increase in number of employees (including employees on contract basis) from 2,107 in Fiscal 2021 to 2,299 in Fiscal 2022.

Finance Costs

Our finance costs increased by 8.86% from Rs 755.12 million in Fiscal 2021 to Rs821.99 million in Fiscal 2022 primarily due to an increase in our borrowings from banks as well as ‘ others .

Depreciation and Amortisation Expenses

Our depreciation and amortisation expenses decreased by (5.29%) from Rs377.84 million in Fiscal 2021 to Rs357.86 million in Fiscal 2022 primarily due to lower incremental investments into property, plant and machinery as compared to Fiscal 2021.

Other Expenses

Our other expenses increased by 14.56% from Rs980.28 million in Fiscal 2021 to Rs1,123.04 million in Fiscal 2022, in aggregate, primarily due to an increase in consumption of stores & spares by 56.40% from Rs106.54 million in Fiscal 2021 to Rs166.63 million in Fiscal 2022; increase in inward transportation expenses by 54.69% from Rs85.19 million in Fiscal 2021 to ^131.77 million in Fiscal 2022; increase in legal and professional charges by 37.64% from Rs18.88 million in Fiscal 2021 to Rs25.99 million in Fiscal 2022; increase in travelling, conveyance & vehicle expenses by 59.30% from Rs78.66 million in Fiscal 2021 to Rs125.31 million in Fiscal 2022; and increase in commission expenses by 140.85% from Rs20.82 million in Fiscal 2021 to Rs50.14 million in Fiscal 2022. This was partially offset primarily by decrease in expenses towards advertisement, marketing expenses & exhibition by 93.60% from Rs42.66 million in Fiscal 2021 to Rs2.73 million in Fiscal 2022; and decrease in warranty expenses by 86.96% from Rs13.80 million in Fiscal 2021 to Rs1.80 million in Fiscal 2022.

Total Income Tax Expense

Our total income tax expense increased from Rs (15.44) million in Fiscal 2021 to Rs65.50 million in Fiscal 2022, primarily due a corresponding increase in profit before tax from our Company s operations. This primarily constituted an increase in current tax (net) from nil in Fiscal 2021 to Rs65.00 million in Fiscal 2022, and increase in deferred tax charge from Rs(15.44) million in Fiscal 2021 to Rs0.50 million in Fiscal 2022.

Profit for the Year

As a result of the foregoing factors, our profit for the year was Rs (483.00) million in Fiscal 2022 compared to Rs(700.29) million in Fiscal 2021.

Earnings before Interest, Taxes, Depreciation and Amortisation (EBITDA)

EBITDA was Rs726.62 million in Fiscal 2022 compared to EBITDA of Rs316.89 million in Fiscal 2021, while EBITDA Margin was 9.73% in Fiscal 2022 compared to 5.46% in Fiscal 2021.

For reconciliation of EBITDA and EBITDA Margin, see ‘Other financial Information - Non-GAAP Measures - Reconciliation of Profit/ (loss) for the Year to EBITDA and EBITDA Margin on page 301.

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed the expansion of our business and operations through a combination of internal accruals and external borrowings.

Cash Flows

The following table sets forth certain information relating to our consolidated cash flows during the Fiscal periods indicated:

(Rs million)

Particulars	Fiscal
	2023	2022	2021
	(Consolidated)	(Consolidated)	(Consolidated)
Cash flow from operating activities	116.67	385.50	280.49
Net Cash flow used in investing activities	(316.12)	(310.61)	(179.78)
Net cash from/ (used in) financing activities	335.93	(151.59)	(31.10)
Net (decrease)/ increase in cash and cash equivalents	136.48	(76.69)	69.60
Cash and cash equivalents at year end	160.92	24.44	101.15

Operating Activities

Fiscal 2023

Cash flow from operating activities was Rs116.67 million in Fiscal 2023. In Fiscal 2023, our net profit before tax was Rs278.50 million. The primary adjustments consisted of depreciation and amortization expense of Rs336.18 million; finance cost of Rs897.02 million; adjustment for exceptional income of Rs304.50 million and adjustment for unrealized gain on foreign exchange of Rs271.53million.

Operating profit before changes in operating assets and liabilities was Rs958.78 million in Fiscal 2023. The primary adjustments in Fiscal 2023 included increase in inventories by Rs1,858.78 million, increase in other current and non - current assets by Rs835.20 million, decrease trade receivables by Rs543.12 million, partially off-set by an increase in trade payables by Rs1,176.30 million and increase in other current and non-current liabilities by Rs203.06 million.

Fiscal 2022

Cash flow from operating activities was Rs385.50 million in Fiscal 2022. In Fiscal 2022, our net profit before tax was (Rs417.50) million. Primary adjustments consisted of depreciation and amortization expense of Rs357.86 million; finance cost of Rs821.99 million; adjustment for unrealized loss on foreign exchange of Rs206.00 million; and adjustment for other expense of Rs 110.02 million.

Operating profit before changes in operating assets and liabilities was Rs1,057.91 million in Fiscal 2022. The primary adjustments in Fiscal 2022 included decrease in other current and non-current liabilities by Rs769.58 million, decrease in trade payables by Rs 165.60 million, decrease in inventories by Rs106.65 million and decrease trade receivables by Rs164.50 million partially off-set by an increase in other current and non-current assets by Rs2.30 million.

Fiscal 2021

Cash flow from operating activities was Rs280.49 million in Fiscal 2021. In Fiscal 2021, our net profit before tax was (Rs715.73) million. The primary adjustments consisted of depreciation and amortization expense of Rs380.00 million and finance cost of Rs755.13 million.

Operating profit before changes in operating assets and liabilities was Rs406.79 million in Fiscal 2021. The primary adjustments in Fiscal 2021 included increase in inventories by Rs582.77 million, increase in trade receivables by Rs203.02 million, increase in trade payables by Rs405.02 million, increase in other current and non-current liabilities by Rs338.14 million and increase in other current and non-current assets by Rs 79.29 million.

Investing Activities

Fiscal 2023

Net cash flow used in investing activities in Fiscal 2023 was ^316.12 million, primarily due to payments for acquisition of property, plant and equipment and intangible assets (including capital work in progress, intangible assets under development and capital advance) of Rs340.65 million.

Fiscal 2022

Net cash flow used in investing activities in Fiscal 2022 was ^310.61 million, primarily due to payments for acquisition of property, plant and equipment and intangible assets (including capital work in progress, intangible assets under development and capital advance) of Rs405.60 million. This was partially offset by proceeds from term deposit of Rs69.15 million and interest and commission received of Rs14.87 million.

Fiscal 2021

Net cash flow used in investing activities in Fiscal 2021 was Rs179.78 million, primarily due to payments for acquisition of property, plant and equipment and intangible assets (including capital work in progress, intangible assets under development and capital advance) of Rs142.66 million, increase in term deposit by ^31.54 million, purchase of investments (net) of Rs15.93 million a partially off-set by interest and commission received of Rs10.34 million.

Financing Activities

Fiscal 2023

Net cash flow generated from financing activities in Fiscal 2023 was Rs335.94 million, primarily on account of increase in non-current borrowings by Rs 176.52 million, increase in current borrowing by Rs556.15 million and proceeds from issue of shares (including share premium) by Rs500.30 million, which was partially offset by finance cost of Rs 897.02 million.

Fiscal 2022

Net cash flow used in financing activities in Fiscal 2022 was ^151.59 million, primarily on account of finance cost of Rs821.99 million which was partially off-set by increase in non-current borrowings by Rs208.35 million and increase in current borrowing by Rs462.06 million.

Fiscal 2021

Net cash flow used in financing activities in Fiscal 2022 was ^31.10 million, primarily on account of financ e cost of Rs768.33 million which was partially offset by increase in non-current borrowings by Rs661.99 million and increase in current borrowing by Rs75.24 million.

INDEBTEDNESS

As of March 31, 2023, we had non-current borrowings of Rs1,274.65 million, current borrowings of Rs7,075.09 million, and net debt (net off bank balances and cash and cash equivalents) aggregating Rs8,066.85 million, with a net debt to equity ratio of 9.83 times. Some of our financing agreements include various conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering into certain transactions. We cannot assure you that we will be able to obtain these consents and any failure to obtain these consents could have significant adverse consequences for our business. For further information on our outstanding indebtedness, see ‘Financial Indebtedness on page 302 and ‘Risk Factors - We have incurred significant indebtedness which exposes us to various risks which may have an adverse effect on our business, results of operations andfinancial conditions. Conditions and restrictions imposed on us by the agreements governing our indebtedness could adversely affect our ability to operate our business on page 43.

CONTINGENT LIABILITIES

The following table below sets forth the principal components of our contingent liabilities as per Ind AS 37 - Contingent Liabilities to the extent not provided for, as of March 31, 2023:

Particulars	As of March 31, 2023 (Rs million)
Letter of Credit, Standby Letter of Credit, Letter of Comfort & Bank Guarantee
(i) Outstanding Letter of Credits & Bank Guarantee	941.42
(ii) Outstanding Standby Letter of Credit & Letter of Comfort	537.65
Corporate Guarantee
(ii) Guarantees given by the Company to banks on behalf of step down subsidiary	806.47
Claim Against the Company not Acknowledged as Debt
- Vendor	0.61
- Customer (Compensation claim)	5.84
- Customer (Amount paid under protest)	3.61
Disputed Excise Duty, Service Tax & Other Liabilities in respect of Pending Litigations before Appellate Authority & Against which amount paid Under Protest are as follows
- Disputed excise duty liabilities	27.26
- Disputed income tax liabilities	4.32
- Disputed CST liabilities	166.59
- Disputed VAT liabilities	28.54

Particulars	As of March 31, 2023
	(Rs million)
- Disputed GST Liabilities	-
- Amount paid under protest - Excise duty	4.43
- Amount paid under protest - CST	14.00
Amount paid under protest - VAT	2.65
Total	2,543.37

For further information of our contingent liabilities as at March 31, 2023 as per Ind AS 37, see ‘Restated Consolidated Financial Statements - Note 34 - Contingent Liabilities & Commitments - to the extent not provided for on page 283.

CAPITAL COMMITMENTS

The table below sets forth our capital commitments as of March 31, 2023:

Particulars	As of March 31, 2023 (Rs million)
Estimated amount of Capital Contracts Remaining to be executed & not provided as on Balance Sheet Date	66.06
Other Commitments - Subsidiary	1,136.10

For further information of our capital commitments as at March 31, 2023 as per Ind AS 37, see ‘Restated Consolidated Financial Statements - Note 34 - Contingent Liabilities & Commitments - to the extent not provided for on page 283.

OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS

We do not have any off-balance sheet arrangements, derivative instruments or other relationships with other entities that would have been established for the purpose of facilitating off-balance sheet arrangements.

RELATED PARTY TRANSACTIONS

We enter into various transactions with related parties in the ordinary course of business. Related parties with whom transactions have taken place during the year primarily include sale of finished goods, purchase of raw materials, loans taken from Directors and interest on such loans, conversion of loan and advance to equity, short term employee benefits, loans and advances given, trade receivables and directors sitting fees. For further details see ‘Restated Consolidated Financial Statements - Note 36 - Related Party Disclosures and ‘Risk Factors - Our Company has in the past entered into related party transactions and may continue to do so in the future and we cannot assure you that we could not have achieved more favourable terms if such transactions had not been entered into with related parties and that such transactions will not have an adverse effect on our financial conditions and result of operations on page 286 and 42, respectively.

CHANGES IN ACCOUNTING POLICIES

There have been no changes in the accounting policies of the Company during the last three Fiscals.

AUDITOR OBSERVATIONS

There are no qualifications, reservations and adverse remarks by our Statutory Auditors in our Restated Consolidated

Financial Statements.

However, our Statutory Auditors have drawn attention to Emphasis of Matters in our standalone audited financial statements for Fiscal 2023 and 2022, and our erstwhile statutory auditors have drawn attention to Emphasis of Matters in our standalone audited financial statements for Fiscal 2021. For details see ‘Risk Factors - Our Statutory Auditors have made certain comments in respect of our Companys standalone audited financial statements for Fiscals 2023 and 2022. Our erstwhile statutory auditors have made certain comments in respect of our Companys standalone audited financial statements for Fiscals 2021. on page 44.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have exposure to the following risks: market risk, credit risk and liquidity risk. Our Board of Directors oversees the management of these risks and also ensures that financial risk activities are governed by appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with our policies and risk objectives.

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. While we endeavour to take partial or full payment from our customers before despatch of products (except in the case of contracts with government entities), we are still exposed to credit risk from our operating activities (primarily trade receivables) and from our financing activities, including deposits with banks and financial institutions, and other financial instruments.

Liquidity Risk

Liquidity risk is the risk that our Company may not be able to meet its present and future cash and collateral obligations without incurring unacceptable losses. Our Companys objective is to maintain optimum levels of liquidity at all times to meet its cash and collateral requirements. Our Company closely monitors its liquidity position and deploys a robust cash management system. It maintains adequate sources of financing including debt and overdraft from banks at an optimised cost.

Market Risk

Foreign Exchange Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. Our Company operates both within India and outside India and major portion of our business is transacted in INR, USD and Euro amongst other currencies. Our Company has sales, purchase, borrowing (etc.) in foreign currency which exposes us to foreign exchange risk. Foreign exchange exposure is partially balanced through purchase of goods, commodities and services in the respective currencies. Our Company evaluates exchange rate exposure arising from foreign currency transactions and follows established risk management policies.

Interest Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our Company has interest rate risk exposure mainly from changes in rate of interest on borrowings and on deposits with bank. A large part of our interest bearing borrowings have a floating rate which can potentially increase our finance costs in a rising interest rate scenario.

Commodity Price Risk

Commodity price risk is the possibility of impact from changes in the prices of raw materials. We are exposed to risk with respect to the prices of certain raw materials used for our products, including different components or grades of steel which is a primary raw material for the products manufactured at our facilities. The costs for these materials are based on commodity prices and subject to fluctuations. The costs of components sourced from outside manufacturers may also fluctuate based on their availability from suppliers.

CAPITAL EXPENDITURE

Our capital expenditure (i.e. payments for acquisition of property, plant and equipment, right to use assets, and intangible assets (including capital work in progress and intangible assets under development)) was Rs142.66 million, Rs405.60 million and Rs340.65 million in Fiscal 2021, 2022 and 2023, respectively. The following table sets forth our fixed assets, as indicated:

(in Rs million)

Particulars	As on March 31, 2023	As on March 31, 2022	As on March 31, 2021
	Consolidated	Consolidated	Consolidated
Property, Plant and Equipment (I)	2,689.02	2,745.55	2,991.55
Capital Work in Progress (II)	82.79	8.97	510.89
Right of Use Assets (III)	0.06	0.36	0.86
Intangible assets (IV)	141.60	179.12	219.75
Intangible assets under development (V)	71.01	45.81	26.37
Total Fixed Assets (VI = I + II + III + IV + V)	2,984.47	2,979.80	3,749.40

SIGNIFICANT ECONOMIC CHANGES

To the knowledge of our management, there are no other significant economic changes that materially affect or are likely to affect income from continuing operations.

UNUSUAL OR INFREQUENT EVENTS OF TRANSACTIONS

Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no ‘unusual or ‘infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.

KNOWN TRENDS OR UNCERTAINTIES

Our business has been affected and we expect will continue to be affected by the trends identified above in ‘Risk Factors and ‘Managements Discussion and Analysis of Financial Condition and Results of Operations - Principal Factors Affecting our Results of Operations and Financial Condition on pages 33 and 315. To our knowledge, except as described or anticipated in this Draft Red Herring Prospectus, there are no known factors which we expect will have a material adverse impact on our revenues or income from continuing operations.

FUTURE RELATIONSHIP BETWEEN COST AND INCOME

Other than as described in ‘ Risk Factors , ‘ Our Business and ‘ Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 33, 176 and 312, respectively, there are no known factors that might affect the future relationship between costs and revenues.

NEW PRODUCTS OR BUSINESS SEGMENTS

Except as set out in this Draft Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments other than in the normal course of business.

COMPETITIVE CONDITIONS

We operate in a competitive environment. See ‘Our Business ‘Industry Overview and ‘Risk Factors on pages 176, 139 and 33, respectively, for further information on competitive conditions that we face.

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

Changes in revenue in the last three Fiscals are as described in ‘Managements Discussion and Analysis of Financial Condition and Results of Operations - Fiscal 2023 compared to Fiscal 2022 , ‘Managements Discussion and Analysis of Financial Condition and Results of Operations - Fiscal 2022 compared to Fiscal 2021 above on pages 339 and 341 respectively.

SEGMENT REPORTING

Our Company operates in a single operating segment and therefore separate segment reporting has not been made under Ind-AS 108.

SIGNIFICANT DEPENDENCE ON SINGLE OR FEW SUPPLIERS OR CUSTOMERS

Other than as disclosed in ‘Risk Factors - Our Company does not have long-term agreements with suppliers for our input materials and a significant increase in the cost of, or a shortfall in the availability, or deterioration in the quality, of such input materials could have an adverse effect on our business and results of operations on page 35, we are not dependent on a single or few suppliers or customers.

SEASONALITY/ CYCLICALITY OF BUSINESS

While our business is not seasonable in nature, we generally witness lower revenues in period between April and June which is compensated by higher revenues in period from January to March.

TOTAL TURNOVER OF EACH MAJOR INDUSTRY SEGMENT IN WHICH THE COMPANY OPERATED

We operate only in the machine tool industry and our entire revenue from operations is generated from this industry.

SIGNIFICANT DEVELOPMENTS AFTER MARCH 31, 2023 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS

Except as disclosed in this Draft Red Herring Prospectus, there are no significant developments or circumstances that have occurred post March 31, 2023, which has materially and adversely affected, or are likely to adversely affect within the next twelve months (a) our revenues or profitability, (b) the value of our assets, or (c) our ability to pay our liabilities.

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