The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Consolidated Financial Information, which is included in this Draft Red Herring Prospectus. The following discussion and analysis of our financial condition and results of operations are based on our Restated Consolidated Financial Information, including the related notes and reports, which are prepared under Ind AS, in accordance with the requirements of the Companies Act, and restated in accordance with the SEBIICDR Regulations. Significant differences exist between Ind AS and other accounting principles, such as Indian GAAP, U.S. GAAP and IFRS, and our assessment of the factors that may affect our prospects and performance in future periods. Accordingly, the degree to which our Restated Consolidated Financial Information willprovide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Ind AS.
This discussion contains certain forward-looking statements that involve risks and uncertainties and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward- looking statements as a result of certain factors such as those described under "Risk Factors " and "Forward-Looking Statements " on pages 27 and 26, respectively.
Unless otherwise indicated or the context requires otherwise, the financial information included herein is based on our Restated Consolidated Financial Information as at and for the six months period ended September 30, 2024 and September 30, 2023 and Fiscals 2024, 2023 and 2022, included in this Draft Red Herring Prospectus. For further information, see "Financial Information " beginning on page 272. Our fiscal year ends on March 31 of each year, and references to a particular Fiscal are to the 12 months ended March 31 of that year.
Unless otherwise indicated, industry and market data used in this section has been derived from the report titled "Industry Report on Renewable Energy Structures" dated January 20, 2025 (the "F&SReport") prepared andreleased by Frost & Sullivan (India) Private Limited and exclusively commissioned and paid for by us in connection with the Offer, pursuant to an engagement letter dated November 5, 2024. A copy of the F&S Report is available on the website of our Company at www.karamtara. com/investors/. The data included herein includes excerpts from the F&S Report and may have been re-ordered by us for the purposes of presentation. There are no parts, data or information (which may be relevant for the proposed Offer), that has been left out or changed in any manner. Unless otherwise indicated, financial, operational, industry and other related information derivedfrom the F&S Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, see "Risk Factors — Internal Risk Factors — 40. Certain sections of this Draft Red Herring Prospectus disclose information from the F&S Report which has been prepared exclusively for the Offer and commissioned and paid for by us for such purpose and any reliance on such information for making an investment decision in the Offer is subject to inherent risks " on page 52.
Overview
For an overview of the business of our Company, see "Our Business - Overview" on page 198.
Significant Factors Affecting our Financial Condition and Results of Operations
Manufacturing capabilities and backward integration
Our profitability is significantly dependent on our manufacturing capabilities, which in turn are dependent on our ability to leverage our advanced technologies, equipment and machinery, together with stringent standards, processes and protocols. Our ability to manage our capacity utilization is also critical to maintaining our operating efficiencies. Optimum levels of capacity utilization at our manufacturing facilities are essential to sustain the growth of our operations, which in turn impacts our competitiveness and profitability. Further, our backward integration capabilities reduce our dependence on external suppliers while ensuring quality and timely supply of key materials required for manufacturing our products.
An extensive manufacturing network enables us to benefit from diversification and manage risks. We are in the process of expanding our manufacturing footprint by setting up additional manufacturing facilities for, among others, production of tubular towers for wind turbines and solar stamping parts and increasing our installed capacity for existing products such as solar tracker piles and piers, solar torque tubes, Solar MMS and lattice towers for transmission lines. We also intend to strengthen our backward integration by expanding our in-house fabrication and galvanizing capacity and structural steel profile manufacturing capacity. For details of our expansion plans, see "Our Business - Strategies" on page 206. We believe that these expansion activities, once operational, will allow us to increase our volume of products manufactured and sold. Increased sales volume favourably affects our results of operations as it enables us to benefit from economies of scale in procurement and manufacturing and improves our operating margins through our ability to leverage our relatively fixed cost base.
Our ability to profitably expand our manufacturing capacities is dependent on our ability to efficiently manage the corresponding increase in expenditures and achieve timely completion and commissioning of the expanded capacities. We expect higher realizations as our existing and planned capacity additions come into greater utilization and translate into commercial production in line with increased demand for our products.
Diversification ofproductportfolio
A diverse product mix increases sales, reduces risks of dependency on any single or few products or product categories and optimizes costs and resources. It also enables us to meet a wider range of customer needs leading to customer stickiness and creates new sources of revenue leading to economies of scale. In addition, diversification ensures sufficient cash flow from mature product categories to build the market share of newer categories. We offer a wide range of products in the solar energy and transmission sectors. Our ability to expand our product portfolio will also depend on, among others, emerging market trends, government regulations and customer needs. For details of revenue in relation to each of our product categories, see "Our Business - Our Business Operations - Product Portfolio" on page 208.
Cost and availability of raw materials
Our financial condition is dependent upon, among other things, our ability to anticipate and react to any fluctuations in the costs of our raw materials and components or any interruptions in the supply of raw materials and components. Set out below are details of our cost of materials consumed (which includes cost of raw materials such as steel billets, hot rolled steel coils and galvanized/galvalume/zinc aluminum magnesium coated coils, steel wire rods, steel angles, steel hot rolled plates and zinc, and components such as washers, casting and forging) for the periods/years indicated:
| Particulars | Six months period ended September 30, | Fiscal | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Cost of materials consumed million) | 9,821.05 | 7,503.26 | 17,437.89 | 11,132.10 | 8,470.83 |
| - Domestic (f million) | 6,255.39 | 6,327.96 | 12,970.47 | 8,793.01 | 8,109.97 |
| - Imports (f million) | 3,565.66 | 1,175.30 | 4,467.42 | 2,339.09 | 360.87 |
| Cost of materials consumed as a percentage of total expenses (%) | 73.54% | 74.57% | 76.16% | 71.61% | 69.22% |
| - Domestic (%) | 46.84% | 62.89% | 56.65% | 56.57% | 66.27% |
| - Imports (%) | 26.70% | 11.68% | 19.51% | 15.05% | 2.95% |
Raw material pnces are influenced by changes in global economic conditions, industry cycles, demand-supply dynamics, foreign currency exchange rate, attempts by individual producers to capture market share and also by speculation in the market. Further, a substantial part of our raw materials is imported from outside India including China, Oman, Vietnam and South Korea. Any restrictions, either from the central or state/provincial governments or from any other authorized bilateral or multilateral organizations, including the exporting country in which our principal suppliers are located, may adversely impact our manufacturing processes and overall business. Moreover, any additional imposition of import duties in relation to our raw materials will significantly impact our costs which we may be unable to pass on to our customers. This could significantly affect our profit margins and financial condition.
Export sales
We generate a significant portion of our revenues from export sales, details of which are set out below for the periods/years indicated:
| Particulars | Six months ended September 30, | Fiscal | ||||||||
| 2024 | 2023 | 2024 | 2023 | 2022 | ||||||
| Amount (? million) | % of revenue from operations | Amount (? million) | % of revenue from operations | Amount (? million) | % of revenue from operations | Amount (? million) | % of revenue from operations | Amount (? million) | % of revenue from operations | |
| Domestic (A) | 7,379.06 | 52.22% | 2,967.18 | 28.19% | 10,150.49 | 41.86% | 3,367.62 | 21.04% | 4,685.25 | 37.64% |
| Exports | ||||||||||
| United States | 5,403.14 | 38.24% | 6,294.09 | 59.79% | 11,682.61 | 48.17% | 9,020.63 | 56.37% | 3,904.93 | 31.37% |
| Europe | 754.10 | 5.34% | 959.56 | 9.11% | 1,451.39 | 5.98% | 944.79 | 5.90% | 1,487.43 | 11.95% |
| Rest of the world | 531.19 | 3.76% | 209.73 | 1.99% | 824.32 | 3.40% | 2,538.64 | 15.86% | 2,255.60 | 18.12% |
| Total (B) | 6,688.43 | 47.33% | 7,463.38 | 70.90% | 13,958.32 | 57.56% | 12,504.06 | 78.14% | 7,647.96 | 61.44% |
| Export incentive (C) | 63.55 | 0.45% | 96.77 | 0.92% | 142.69 | 0.59% | 131.39 | 0.82% | 114.88 | 0.92% |
| Grand total (D=A+B+C) | 14,131.04 | 100.00% | 10,527.33 | 100.00% | 24,251.50 | 100.00% | 16,003.07 | 100.00% | 12,448.09 | 100.00% |
Our export sales allow us higher margins as compared to domestic sales and are dependent on several factors including, among others, our ability to maintain high quality standards, meeting customer specifications, relationship with international customers,
the relevant accreditations and certifications, import/export regulations and policies of India and the export jurisdictions. An increase in export sales consequently increases our profitability and overall financial condition.
Fluctuations in foreign exchange rates
Our products are typically priced in Indian Rupees for Indian sales, in U.S. Dollars for sales in the United States, in Euros for sales in the European Union and in the local currency of the other jurisdictions where we sell our products. Further, we import a significant portion of our raw material from outside India for which payments are made in the local currency of the relevant jurisdiction. Consequently, we are exposed to currency rate fluctuations between the Indian Rupee and the local currencies of the jurisdictions where we sell our products or the jurisdictions from where we procure our raw materials.
Government regulations and policies
Government regulations and policies in India and internationally may affect the demand for our products. Governments worldwide are implementing stricter regulations and policies aimed at promoting the use of renewable energy, which in turn could bolster the demand and sale of our products. Our business is also subject to various statutory and regulatory permits, licenses, registrations and approvals. For more details, see "Government and Other Approvals" on page 370. These permits, licenses, registrations and approvals are subject to periodic renewals and may impose certain terms and conditions, both of which require us to incur significant costs. In addition, government regulations and policies of India as well as the other jurisdictions from where we import our raw materials can affect the availability of raw materials that are critical to our operations. We have incurred and expect to continue incurring costs for compliance with such laws and regulations. These regulations and policies and the tax regimes to which we are subject could change at any time, with little or no warning or time for us to prepare.
Further, we avail certain benefits under export promotion schemes such as Duty Drawback Scheme, Remission of Duties and Taxes on Exported Products (RoDTEP) and Export Promotion Capital Goods (EPCG) Scheme, which allow us to reduce the costs of production and consequently enable us to price our products competitively. Our ability to contain to avail these benefits will depend on compliance with the terms and conditions for such schemes, including meeting export targets and obligations stated therein. These incentives, as well as the conditionalities for such incentives, are subject to change as a result of changes in applicable laws, regulations or policies. Changes have occurred in the past and are likely to occur in the future, which may materially affect our profitability.
Competition and other macroeconomic market conditions
We operate in a highly competitive industry, and we compete with various domestic manufacturers. Competition in our business is based on various factors including pricing, relationships with customers, product quality, customization and innovation. We may not be able to compete effectively with our competitors, which may negatively impact our business, results of operations and financial condition. Certain other macro economic and other market conditions such as inflation, access to capital and borrowing costs, trade policies, Indias trade d?ficit, fluctuations in global commodity and crude oil prices, fluctuations in Indias foreign exchange reserves or currency exchange rates and development in the renewable energy and transmission power sectors, among others, may also impact our results of operations.
Critical Accounting Policies
Summary of Material Accounting Policies Revenue recognition
a) Revenue from sale of products is recognised upon satisfaction of performance obligations, i.e. at a point of time, which occurs when the control is transferred to the customer. Customers obtain control as per the incoterms. In determining the transaction pnce for sale of product, the Group considers the effects of variable consideration, if any. Invoices are issued according to contractual terms and are usually payable as per the credit period agreed with the customer
b) Revenue on service contracts is recognized on the basis of completed service contract method. Invoices are issued according to contractual terms and are usually payable as per the credit period agreed with the customer.
c) Export benefits available are accounted for in the year of export, to the extent the realisation of the same is not considered uncertain by the Group.
d) Interest is accounted on time proportion basis.
e) Dividend income is accounted as and when the right to receive is established.
Inventory
Inventories (raw material, work-in-progress, finished goods, stores and spares and erection material) are stated at the lower of cost and net realisable value. Cost of purchased material is determined on the moving weighted average basis. Net realisable value represents the estimated selling pnce for inventories less all estimated costs of completion and costs necessary to make the sale. Scrap is valued at net realisable value.
Cost of work-in-progress and finished goods includes material cost, labour cost, and manufacturing overheads absorbed on the basis of normal capacity of production.
Leases
The Group has adopted Ind AS 116-Leases effective April 1, 2019 using the modified retrospective method. The Group has applied the standard to its leases with the cumulative impact recognised on the date of initial application (April 1, 2019). Accordingly, previous period information has not been restated.
The Groups lease asset classes primarily consist of leases for land and buildings and plant and machinery. The Group assesses whether a contract is or contains a lease, at inception of a contract. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, the Group assesses whether:
a) the contract involves the use of an identified asset
b) the Group has the right to obtain substantially all of the economic benefits from use of the asset through the period of the lease
c) the Group has the right to direct the use of the asset
d) the Group has the right to operate the asset
e) the Group designed the assets in a way that predetermined how and for what purpose it will be used
At the date of commencement of the lease, the Group recognises a right-of-use asset (ROU) and a corresponding lease liability for all lease arrangements in which it is a lessee, except for leases with a term of twelve months or less (short term leases) and leases of low value assets. For these short term and leases of low value assets, the Group recognises the lease payments as an operating expense on a straight line basis over the term of the lease.
The right-of-use assets are initially recognised at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or prior to the commencement date of the lease plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located less any lease incentives received. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any. Right-of-use assets are depreciated from the commencement date on a straight-line basis over the shorter of the lease term and useful life of the underlying asset.
The lease liability is initially measured at the present value of the future lease payments. The lease payments are discounted using the interest rate implicit in the lease or, if not readily determinable, using the incremental borrowing rates. The lease liability is subsequently remeasured by increasing the carrying amount to reflect interest on the lease liability, reducing the carrying amount to reflect the lease payments made.
A lease liability is remeasured upon the occurrence of certain events such as a change in the lease term or a change in an index or rate used to determine lease payments. The remeasurement normally also adjusts the leased assets.
Lease liability and ROU asset have been separately presented in the Balance Sheet and lease payments have been classified as financing cash flows.
The Group as a lessor
Leases under which the Group is a lessor are classified as finance or operating leases. Lease contracts where all the risks and rewards are substantially transferred to the lessee, the lease contracts are classified as finance leases. All other leases are classified as operating leases.
For leases under which the Group is an intermediate lessor, the Group accounts for the head-lease and the sub-lease as two separate contracts. The sub-lease is further classified either as a finance lease or an operating lease by reference to the RoU asset arising from the head-lease.
Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
Finance expenses are recognised immediately in the statement of profit and loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Groups general policy on borrowing costs.
All other borrowing costs are recognised in the statement of profit and loss in the period in which they are incurred.
Cash and cash equivalents
For the purpose of presentation in statement of cash flows, cash and cash equivalents include cash on hand, deposits held at call with financial institutions, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amount of cash and which are subject to an insignificant risk of change in value.
Income Tax
a) Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. Taxable profit differs from ‘profit before tax as reported in the statement of profit and loss because of items of income or expense that are taxable or deductible in the other years and the items that are never taxable or deductible. The Groups current tax is calculated using tax rates which have been enacted or substantively enacted by the end of reporting period. Management periodically evaluates positions taken in tax return with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
b) Deferred tax is recognised on temporary differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base used in computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets (including unused tax credits and unused tax losses) are generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will be available against which those deductible temporary differences can be utilised.
The carrying amount of deferred tax asset 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 asset to be recovered.
Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset is realised based on tax rates (and tax laws) that have been enacted or substantially enacted by the end of the reporting period.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in OCI or in equity). Deferred tax items are recognised in correlation to the underlying transactions either in OCI or directly in equity.
Property, plant and equipment
Recognition and Measurement
Property, plant and equipment acquired by the Group are reported at acquisition cost, with deductions for accumulated depreciation and impairment losses, if any. The acquisition cost includes purchase pnce (excluding refundable taxes) and expenses, such as delivery and handling costs, installation, legal and consultancy services, directly attributable to bringing the asset to the site and in working condition for its intended use.
Subsequent Expenditure
Subsequent expenditure is capitalised only if it is probable that the future economic benefits associated with the expenditure will flow to the Group.
Depreciation
Depreciation is calculated on cost of items of property, plant and equipment less their estimated residual value over their estimated useful lives using the straight line method and is generally recognised in the statement of profit and loss.
The Group has charged depreciation based on the basis of the straight line method and useful life of assets prescribed in Schedule II of the Companies Act, 2013, except for individual assets costing up to ?5,000 are depreciated in full in the period of purchase.
The residual values, useful lives and method of depreciation of property, plant and equipment is reviewed at each financial year end and adjusted prospectively, if appropriate. Any gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sale proceeds and the carrying value of the asset and is recognised in profit
and loss account.
Capital work in progress is stated at cost.
Intangible assets
Intangible assets acquired separately are measured on initial recognition at cost. The useful lives of intangible assets are assessed as either finite or indefinite.
Intangible assets with finite lives are amortised over useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least the end of each reporting period.
Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually. The assessment of indefinite life is reviewed annually to determine whether the indefinite life continues to be supportable. If not, the change in useful life from indefinite to finite is made on a prospective basis.
Employee benefits
Provident fund
Retirement benefit in the form of provident fund is a defined contribution scheme. The Group has no obligation other than the contribution payable to the provident fund. Contribution as required by the Statute paid to the government provident fund and the same is debited to the statement of profit and loss.
Gratuity
Gratuity liability is a defined benefit obligation for employees. The Groups net obligation in respect of a defined benefit plan is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets is deducted.
Actuarial gains and losses are recognised immediately in the statement of profit and loss. Re-measurement which comprises of actuarial gain and losses, the return of plan assets (excluding interest) and the effect of asset ceiling (if any, excluding interest) are recognised in OCI.
Earnings per share
Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. Earnings considered in ascertaining the Groups earnings per share is the net profit for the period after deducting preference dividends and any attributable tax thereto for the period. The weighted average number of equity shares outstanding during the period and for all periods presented is adjusted for events, such as bonus shares, other than the conversion of potential equity shares that have changed the number of equity shares outstanding, without a corresponding change in resources.
For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders and the weighted average number of shares outstanding during the period is adjusted for the effects of all dilutive potential equity shares.
Provisions and contingent liabilities and contingent assets
Provisions are recognized when the Group has a legal and constructive obligation as a result of a past event, for which it is probable that cash outflow will be required and a reliable estimate can be made of the amount of the obligation.
Contingent liabilities are disclosed when the Group has a possible or present obligation where it is not probable that an outflow of resources will be required to settle it. Contingent assets are disclosed only when an inflow of economic benefit is probable.
Impairment loss
The Group assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Group estimates the recoverable amount of the asset. The recoverable amount is the greater of the net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value based on an appropriate discount factor. If such recoverable amount of the asset or the recoverable amount of the cash generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the Statement of profit and loss. If at the balance sheet date, there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the
recoverable amount subject to a m?ximum of depreciable historical cost.
Foreign currency
a) Foreign currency transactions: Transactions in foreign currencies are translated into the respective functional currencies of the Group at the exchange rates on the date of transactions or an average rate, if the average rate approximates the actual rate at the date of the transaction.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the exchange rate on the reporting date. Non-monetary assets and liabilities that are measured at fair value in foreign currency are translated into the functional currency at the exchange rate when the fair value was determined. Non-monetary assets and liabilities that are measured based on historical cost in a foreign currency are translated at the exchange rate on the date of the transaction. Exchange differences are recognised in profit & loss, except exchange differences arising from the translation of the following items which are recognised in OCI:
• Equity investments at fair value through OCI (FVOCI);
• A financial liability designated as a hedge of the net investment in a foreign operation to the extent that a hedge is effective; and
• Qualifying cash flow hedges to the extent that hedges are effective.
b) Foreign operations: The assets and liabilities of foreign operations (subsidiaries, associates, joint arrangements, branches) including goodwill and fair value adjustments arising on acquisition, are translated into INR, the functional currency of the Group, at the exchange rates on reporting date. The income and expenses of foreign operations are translated into INR at the exchange rates on the dates of transactions or an average rate if the average rate approximates the actual rate on the date of transaction.
When a foreign operation is disposed of in its entirety or partially such that control, significant influence or joint control is lost, the cumulative amount of exchange differences related to that foreign operation recognised in OCI is reclassified to profit or loss as part of the gain or loss on disposal.
Financial instrumenta
Financial assets and financial liabilities are recognized when the Group becomes a party to the contractual provisions of the instruments. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss (FVTPL) are recognized immediately in the statement of profit and loss.
a) Financial assets - amortised cost
Financial assets that meet the following conditions are measured at amortized cost (except for financial assets that are designated as at fair value through profit or loss on initial recognition):
• the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows.
• the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
b) Financial sssets - FVTOCI
Financial assets that meet the following conditions are measured at fair value through other comprehensive income (FVOCI):
• the asset is held within a business model whose objective is to hold assets in order to collect contractual cash flows and selling financial assets.
• the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
c) Financial assets - FVTPL
Financial Assets that do not meet the amortized cost or FVOCI criteria are measured at FVTPL. In addition, financial assets that meet the amortized cost or FVOCI criteria but are designated as at FVTPL are measured at FVTPL.
d) Impairment of financial assets
In accordance with Ind AS 109, the Group applies expected credit loss (ECL) model for measurement and recognition of impairment loss on the following financial assets and credit risk exposure:
• Financial assets that are debt instruments, and are measured at amortised cost
• Lease receivables under Ind AS 17
• Trade receivables or any contractual right to receive cash or another financial asset that result from transactions that are within the scope of Ind AS 11 and Ind AS 18
• Loan commitments which are not measured as at FVTPL
• Financial guarantee contracts which are not measured as at FVTPL
ECL is the difference between all contractual cash flows that are due to the entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e., all cash shortfalls), discounted at the original EIR.
e) Financial liabilities
All financial liabilities are initially recognised at fair value, which is normally the transaction pnce plus, for those financial liabilities not carried at fair value through profit & loss, directly attributable transaction costs.
All financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTPL except for: a) financial liabilities that arise when a transfer of a financial asset does not qualify for derecognition or when the continuing involvement approach applies; or b) financial guarantee contracts issued by the Group; and c) commitments issued by the Group to provide a loan at below-market interest rate are measured in accordance with the specific accounting policies set out below.
Financial liabilities that are not held-for-trading and are not designated as at FVTPL are measured at amortized cost at the end of subsequent accounting periods. The carrying amounts of financial liabilities that are subsequently measured at amortized cost are determined based on the effective interest method. Interest expense that is not capitalized as part of costs of an asset is included in the ‘finance costs line item.
Forward exchange contracts
Forward contract is respect of assets and liabilities are measured at the fair value at the end of each reporting period and net impact thereof is recognised and disclosed in the financial statements. The forward exchange contracts are marked to market and gain/loss on such contracts are recognised in the statement of profit and loss at the end of each reporting period, in respect of the actual export.
Investment property
Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and accumulated impairment loss, if any.
Investment properties are derecognised either when they have been disposed of or when they are permanently withdrawn from use and no future economic benefit is expected from their disposal. The difference between the net disposal proceeds and the carrying amount of the asset is recognised in profit or loss in the period of derecognition. In determining the amount of derecognition from the derecognition of investment properties the Group considers the effects of variable consideration, existence of a significant financing component, non-cash consideration, and consideration payable to the buyer (if any).
Fair value as disclosed in notes are calculated based on the guideline rates prescribed by the Government.
Transfers are made to (or from) investment property only when there is a change in use.
Current and non-current classification
The Group presents assets and liabilities in the financial statements based on current/ non-current classification. 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 Groups 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
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.
All other assets are classified as non-current.
A liability is classified as current when it satisfies any of the following criteria:
a) it is expected to be settled in the Groups 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
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.
All other liabilities are classified as non-current. The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Group has identified its operating cycle as 12 months. Deferred tax assets and liabilities are classified as non-current only.
Principal Components of our Statement of Profit and Loss
The following descriptions set forth information with respect to the key components of our statement of profit and loss.
Income
Revenue from operations. Revenue from operations primarily includes the sale of products (domestic and exports) and other operating revenue. Sale of products includes the sale of products in the solar energy sector (such as module mounting structures, tracker piles and piers and torque tubes) and the transmission sector (such as lattice towers for transmission lines). These also include sale of fasteners (such as bolts, nuts, studs and washers) and OHTL hardware fittings and accessories (such as insulator string fittings, conductor accessories and vibration dampers). Other operating revenue primarily comprises scrap sales (including steel scrap, zinc dross and zinc ash, generated at the time of manufacturing our products) and export incentives.
We also derive revenue from the sale of certain services including designing services in relation to our lattice towers for transmission lines.
Other income. Other income primarily comprises profit on sale of investment in properties, rent income, insurance income and dividend income.
Expense
Cost of material consumed. Cost of material consumed primarily includes cost of purchasing raw materials such as steel billets, steel HR and coated coils, steel wire rods, steel angles, steel HR plate and zinc and components such as washers, castings and forgings. These also include the cost of purchasing packing materials such as air bag, lacing steel, dunnage, composite strip, wooden boxes, nylon rope and gunny bags.
Changes in inventories of finished goods and work-in-progress. Changes in inventories of finished goods and work-in-progress includes opening stock and closing stock of work-in-progress and finished goods.
Employee benefit expense. Employee benefit expense comprises salaries and wages and allowances, directors remuneration, contribution to provident and other funds, gratuity and staff welfare expenses.
Finance cost. Finance costs primarily comprise interest on long term and short term loans and other borrowing costs including sale and purchase bill discounting charges/bank charges including letter of credit opening/amendment charges, bank guarantee opening/amendment charges and foreign currency transaction charges.
Depreciation and amortization expense. Depreciation and amortization expenses primarily comprise depreciation of property, plant and equipment, amortization of intangible assets and depreciation of right to use.
Other expenses. Other expenses primarily include freight charges (net), consumption stores, spares and consumables expenses, power and fuel expenses, repairs and maintenance expenses for plant and machinery and buildings, servicing and testing charges which includes among others testing of the product as per the customer requirement legal and professional charges, sales promotion expenses, travelling expenses, insurance charges, security charges and corporate social responsibility expenses.
Results of Operations
The following table sets forth selected financial data from our restated statement of profit and loss for the six months periods ended September 30, 2024 and September 30, 2023 and for Fiscals 2024, 2023 and 2022, the components of which are expressed as a percentage of total income for such years/periods.
| Six months period ended September 30, | ||||
| 2024 | 2023 | |||
| (? million) | % of total income | (? million) | % of total income | |
| Income | ||||
| Revenue from operations | 14,131.04 | 99.91% | 10,527.33 | 99.88% |
| Other income | 12.03 | 0.09% | 13.14 | 0.12% |
| Total income | 14,143.07 | 100.00% | 10,540.47 | 100.00% |
| Expenses | ||||
| Cost of material consumed | 9821.05 | 69.44% | 7503.26 | 71.19% |
| Changes in inventories of finished goods and work- in-progress | (159.01) | (1.12)% | (199.46) | (1.89)% |
| Employee benefit expense | 697.52 | 4.93% | 522.88 | 4.96% |
| Finance cost | 568.93 | 4.02% | 406.45 | 3.86% |
| Depreciation and amortization expense | 185.93 | 1.31% | 167.37 | 1.59% |
| Other expenses | 2,239.9 | 15.84% | 1,661.32 | 15.76% |
| Total expenses | 13,354.32 | 94.42% | 10,061.82 | 95.46% |
| Profit before tax | 788.75 | 5.58% | 478.65 | 4.54% |
| Tax expenses | ||||
| Current tax | 188.07 | 1.33% | 110.1 | 1.04% |
| Deferred tax | 10.77 | 0.08% | (20.66) | (0.20)% |
| Profit after tax | 589.91 | 4.17% | 389.21 | 3.69% |
| Fiscal | ||||||
| 2024 | 2023 | 2022 | ||||
| (? million) | % of total income | (? million) | % of total income | (? million) | % of total income | |
| Income | ||||||
| Revenue from operations | 24,251.50 | 99.92% | 16,003.07 | 99.95% | 12,448.09 | 99.85% |
| Other income | 19.66 | 0.08% | 7.67 | 0.05% | 18.67 | 0.15% |
| Total income | 24,271.16 | 100.00% | 16,010.74 | 100.00% | 12,466.76 | 100.00% |
| Expenses | ||||||
| Cost of material consumed | 17,437.89 | 71.85% | 11,132.1 | 69.53% | 8,470.83 | 67.95% |
| Changes in inventories of finished goods and work-in-progress | (208.97) | (0.86)% | (287.67) | (1.80)% | 248.8 | 2.00% |
| Employee benefit expense | 1,137.89 | 4.69% | 851.08 | 5.32% | 791.13 | 6.35% |
| Finance cost | 928.52 | 3.83% | 759.12 | 4.74% | 775.98 | 6.22% |
| Depreciation and amortization expense | 346.05 | 1.43% | 318.69 | 1.99% | 311.48 | 2.50% |
| Other expenses | 3,255.41 | 13.41% | 2,771.49 | 17.31% | 1,639.28 | 13.15% |
| Total expenses | 22,896.79 | 94.34% | 15,544.81 | 97.09% | 12,237.5 | 98.16% |
| Profit before tax | 1,374.37 | 5.66% | 465.93 | 2.91% | 229.26 | 1.84% |
| Tax expenses | ||||||
| Current tax | 353.86 | 1.46% | 125.26 | 0.78% | 84.48 | 0.68% |
| Deferred tax | (5.99) | (0.02)% | (82.93) | (0.52)% | 18.32 | 0.15% |
| Profit after tax | 1,026.50 | 4.23% | 423.60 | 2.65% | 126.46 | 1.01% |
Six months period ended September 30, 2024 compared to six months period ended September 30, 2023
Total Income. Our total income increased by 34.18% from ?10,540.47 million in the six months period ended September 30, 2023 to ?14,143.07 million in the six months period ended September 30, 2024 primarily due to the reasons discussed below.
Revenue from operations. Our revenue from operations increased by 34.23% from ?10,527.33 million in the six months period ended September 30, 2023 to ^14,131.04 million in the six months period ended September 30, 2024, primarily due to an increase in sale of products - domestic by 163.85% from ?2,592.27 million in the six months period ended September 30, 2023 to ?6,839.71 million in the six months period ended September 30, 2024. This increase in sale of products was experienced across all our solar energy product categories primarily on account of increase in demand from existing as well as new customers. Our other operating revenue also increased by 28.06% from ?470.14 million in the six months period ended September 30, 2023 to ?602.06 million in the six months period ended September 30, 2024 primarily due to an increase in sale of scrap on account of increase in overall production.
The increase in revenue from operations was marginally offset by a decrease in sale of products - export (including deemed export) by 9.42% from ?7,384.48 million in the six months period ended September 30, 2023 to ?6,688.79 million in the six months period ended September 30, 2024 on account of higher sale in the domestic market.
Other income. Other income marginally decreased by 8.45% from ?13.14 million in the six months period ended September 30, 2023 to ?12.03 million in the six months period ended September 30, 2024, primarily due to a decrease in miscellaneous income which comprises government subsidies received by our Subsidiary, Iselfa Morsetteria SRL, in relation to gas, energy and machinery.
Total Expenses. Total expenses increased by 32.72% from ?10,061.82 million in the six months period ended September 30, 2023 to ?13,354.32 million in the six months period ended September 30, 2024 primarily due to the reasons discussed below and in line with the increase of 34.23% in our revenue from operations during the same periods.
Cost of material consumed. Cost of material consumed increased by 30.89% from ?7,503.26 million in the six months period ended September 30, 2023 to ?9,821.05 million in the six months period ended September 30, 2024. As a percentage of revenue from operations, our cost of material consumed decreased from 71.27% in the six months period ended September 30, 2023 to 69.50% in the six months period ended September 30, 2024, primarily due to fluctuations in the pnces for raw materials, sales volume, product mix and ratio between domestic and export sales.
Changes in inventories of finishedgoods and work-in-progress. Changes in inventories of finished goods and work-in-progress was ?(159.01) million in the six months period ended September 30, 2024 compared to ?(199.46) million in the six months period ended September 30, 2023. For the six months period ended September 30, 2023, we had an opening inventory of finished goods of ?869.79 million, a closing inventory of finished goods of ?893.08 million, an opening inventory of work -in-progress of ?742.38 million and a closing inventory of work-in-progress of ?918.55 million. For the six months period ended September 30, 2024, we had an opening inventory of finished goods of ?979.43 million, a closing inventory of finished goods of ?1,281.78 million, a n opening inventory of work-in-progress of ?841.71 million and a closing inventory of work-in-progress of ?698.37 million.
The aggregate of cost of material consumed and changes in inventories of finished goods and work-in-progress increased from ?7,303.80 million in the six months period ended September 30, 2023 to ?9,662.04 million in the six months period ended September 30, 2024. The aggregate of the cost of material consumed and changes in inventories of finished goods and work-in-progress as a percentage of revenue from operations decreased by 1.01% from 69.38% for the six months period ended September 30, 2023 to 68.37% for the six months period ended September 30, 2024. This decrease is primarily attributable to fluctuations in the pnces for raw materials, sales volume, product mix and the ratio between domestic and export sales.
Employee benefit expense. Employee benefit expense increased by 33.40% from ?522.88 million in the six months period ended September 30, 2023 to ?697.52 million in the six months period ended September 30, 2024, primarily due to increase in salaries and wages by 33.32% from ?425.35 million in the six months period ended September 30, 2023 to ?567.09 million in the six months period ended September 30, 2024 on account of annual increments in salaries and increase in manpower. Directors remuneration increased by 83.73% from ?41.92 million in the six months period ended September 30, 2023 to ?77.02 million in the six months period ended September 30, 2024 on account of increments in director remunerations. This increase in employee benefit expense was marginally offset by a decrease in staff welfare expenses by 18.80% from ?40.16 million in the six months period ended September 30, 2023 to ?32.61 million in the six months period ended September 30, 2024 on account of a decrease in medical expenses for employees.
Finance cost. Finance cost increased by 39.98% from ?406.45 million in the six months period ended September 30, 2023 to ?568.93 million in the six months period ended September 30, 2024 primarily due to:
• an increase in other borrowing cost/ bank charges by 45.09% from ?254.88 million in the six months period ended September 30, 2023 to ?369.80 million in the six months period ended September 30, 2024 on account of discounting charges in relation to letters of credit due to increase in sales and purchases;
• an increase in interest on short term loans by 26.18% from ?118.40 million in the six months period ended September 30, 2023 to ?149.40 million in the six months period ended September 30, 2024 on account of higher utilization of short term loans and increase in borrowing costs; and
• an increase in interest on long term loans by 54.58% from ?38.68 million in the six months period ended September 30, 2023 to ?59.79 million in the six months period ended September 30, 2024 on account of availing additional long term loans.
Depreciation and amortization expense. Depreciation and amortization expense increased by 11.09% from ?167.37 million in the six months period ended September 30, 2023 to ?185.93 million in the six months period ended September 30, 2024 due to an increase in depreciation of property, plant and equipment by 11.58% from ?161.60 million in the six months period ended September 30, 2023 to ?180.31 million in the six months period ended September 30, 2024 primarily on account of the addition of plant and machinery in our manufacturing facilities located at Tarapur, Maharashtra and depreciation of right to use by 140.31% from ?1.91 million in the six months period ended September 30, 2023 to ?4.59 million in the six months period ended September 30, 2024 on account of new guest houses taken on lease.
Other expenses. Other expenses increased by 34.83% from ?1,661.32 million in the six months period ended September 30, 2023 to ?2,239.90 million in the six months period ended September 30, 2024, primarily due to the following:
• increase in freight charges (net) by 44.36% from ?894.33 million in the six months period ended September 30, 2023 to ?1,291.03 million in the six months period ended September 30, 2024 primarily on account of an increase in sales volume. Our freight charges also increased due to increase in exports based on delivered duty paid ("DDP") terms and reduction in
exports on free on board ("FOB") terms. The sale price on DDP terms is inclusive of transportation costs up to the place of delivery and the transportation cost is borne by the Company;
• increase in consumption stores, spares and consumables expenses by 34.35% from ?160.06 million in the six months period ended September 30, 2023 to ?215.04 million in the six months period ended September 30, 2024, primarily due to an increase in production volumes;
• increase in power and fuel expenses by 23.88% from ?297.07 million in the six months period ended September 30, 2023 to ?368.01 million in the six months period ended September 30, 2024, primarily due to an increase in production volumes causing an increase in consumption of electricity and other fuel for our manufacturing processes; and
• increase in travelling expenses by 79.93% from ?36.12 million in the six months period ended September 30, 2023 to ?64.99 million in the six months period ended September 30, 2024, primarily due to an increase in foreign travel for enhancing exports.
This increase in other expenses was marginally offset by a decrease in servicing/testing charges by 85.82% from ?44.77 million in the six months period ended September 30, 2023 to ?6.35 million in the six months period ended September 30, 2024, primarily attributable to high testing charges for lattice towers in the six months ended September 30, 2023.
Profit before tax. For the various reasons discussed above, profit before tax increased by 64.79% from ?478.65 million in the six months period ended September 30, 2023 to ?788.75 million in the six months period ended September 30, 2024.
Tax expenses. Current tax increased by 70.82% from ^110.10 million in the six months period ended September 30, 2023 to ?188.07 million in the six months period ended September 30, 2024, in line with an increase in our profit before tax. Deferred tax was ?10.77 million in the six months period ended September 30, 2024 compared to ?(20.66) million in the six months period ended September 30, 2023 primarily on account of changes in deferred tax liability on depreciation.
Profit after tax. For the various reasons discussed above, profit after tax increased by 51.57% from ?389.21 million in the six months period ended September 30, 2023 to ?589.91 million in the six months period ended September 30, 2024.
Fiscal 2024 compared to Fiscal 2023
Total Income. Our total income increased by 51.59% from ?16,010.74 million in Fiscal 2023 to ?24,271.16 million in Fiscal 2024 primarily due to the reasons discussed below.
Revenuefrom operations. Our revenue from operations increased by 51.54% from ?16,003.07 million in Fiscal 2023 to ?24,251.50 million in Fiscal 2024, primarily due to an increase in the sale of products - domestic by 269.79% from ?2,519.27 million in Fiscal 2023 to ^9,315.95 million in Fiscal 2024 and sale of products - export (including deemed export) by 11.26% from ?12,462.62 million in Fiscal 2023 to ?13,865.55 million in Fiscal 2024. This increase in sale of products was experienced across all our solar energy product categories primarily on account of an increase in demand from existing as well as new customers.
Other income. Other income increased by 156.32% from ?7.67 million in Fiscal 2023 to ?19.66 million in Fiscal 2024, primarily due to an increase in insurance income from nil in Fiscal 2023 to ?7.84 million in Fiscal 2024 on account of settlement of insurance claims mainly related to breakdown of machines due to adverse weather conditions such as heavy wind and rain.
Total Expenses. Total expenses increased by 47.30% from ?15,544.81 million in Fiscal 2023 to ?22,896.79 million in Fiscal 2024 primarily due to the reasons discussed below.
Cost of material consumed. Cost of material consumed increased by 56.65% from ^11,132.10 million in Fiscal 2023 to ?17,437.89 million in Fiscal 2024. As a percentage of total revenue from operations, our cost of raw materials consumed increased from 69.56% to 71.90% from Fiscal 2023 to Fiscal 2024, primarily due to fluctuations in the pnces for raw materials, sales volume, product mix and the ratio between domestic and export sales.
Changes in inventories of finishedgoods and work-in-progress. Changes in inventories of finished goods and work-in-progress was ?(208.97) million in Fiscal 2024 compared to ?(287.67) million in Fiscal 2023. In Fiscal 2023, we had an opening inventory of finished goods of ?799.21 million, a closing inventory of finished goods of ?869.79 million, an opening inventory of work-in- progress of ?525.29 million and a closing inventory of work-in-progress of ?742.38 million. In Fiscal 2024, we had an opening inventory of finished goods of ?869.79 million, a closing inventory of finished goods of ?979.43 million, an opening inventory of work-in-progress of ?742.38 million and a closing inventory of work-in-progress of ?841.71 million.
The aggregate of cost of material consumed and changes in inventories of finished goods and work-in-progress increased from ?10,844.43 million in Fiscal 2023 to ?17,228.92 million in Fiscal 2024. The aggregate of cost of material consumed and changes in inventories of finished goods and work-in-progress as a percentage of revenue from operations increased by 3.28% from 67.76%
for Fiscal 2023 to 71.04% for Fiscal 2024. This increase is primarily attributable to fluctuations in the prices for raw materials, increase in sales volume, changes in product mix and changes in the ratio between domestic and export sales.
Employee benefit expense. Employee benefit expense increased by 33.70% from ?851.08 million in Fiscal 2023 to ?1,137.89 million in Fiscal 2024, primarily due to increase in salaries and wages by 28.19% from ?720.37 million in Fiscal 2023 to ?923.44 million in Fiscal 2024 on account of annual increments in salaries and increase in manpower. Directors remuneration also increased by 153.86% from ?37.95 million in Fiscal 2023 to ?96.34 million in Fiscal 2024 on account of increments in directors remuneration and a performance pay-out of ?12.50 million to one of the directors. Further, staff welfare expenses increased by 42.53% from ?53.84 million in Fiscal 2023 to ?76.74 million in Fiscal 2024 on account of increase in medical expenses of employees.
Finance cost. Finance cost increased by 22.32% from ?759.12 million in Fiscal 2023 to ?928.52 million in Fiscal 2024 primarily due to:
• an increase in other borrowing cost/bank charges by 19.33% from ?539.60 million in Fiscal 2023 to ?643.93 million in Fiscal 2024 on account of bill discounting charges in relation to letters of credit due to increase in sales and purchases; and
• an increase in interest on short term loans by 22.13% from ?181.90 million in Fiscal 2023 to ?222.16 million in Fiscal 2024 on account of higher utilization of short term loans and increase in other borrowing costs.
Depreciation and amortization expense. Depreciation and amortization expense increased by 8.59% from ?318.69 million in Fiscal 2023 to ?346.05 million in Fiscal 2024 due to an increase in depreciation of property, plant and equipment by 10.64% from ?304.65 million in Fiscal 2023 to ?337.06 million in Fiscal 2024 primarily on account of the addition of new plant and machinery in relation to new galvanizing manufacturing facilities and automation machines at Tarapur, Maharashtra.
Other expenses. Other expenses increased by 17.46% from ?2,771.49 million in Fiscal 2023 to ?3,255.41 million in Fiscal 2024, primarily due to the following:
• increase in freight charges (net) by 17.50% from ?1,430.52 million in Fiscal 2023 to ?1,680.81 million in Fiscal 2024 on account of increase in sales volume on DDP terms;
• increase in power and fuel by 19.12% from ?521.30 million in Fiscal 2023 to ?620.98 million in Fiscal 2024, primarily due to an increase in production volumes causing an increase in consumption of electricity and other fuel for our manufacturing processes;
• increase in repairs and maintenance - plant and machinery by 36.12% from ?87.92 million in Fiscal 2023 to ^119.68 million in Fiscal 2024, primarily due to overhauling of an overhead crane and increase in repairs and maintenance for our solar torque tubes facility which was operational for the full year in Fiscal 2024 as compared to three months in Fiscal 2023;
• increase in consumption stores, spares and consumables by 10.55% from ?315.10 million in Fiscal 2023 to ?348.33 million in Fiscal 2024, primarily due to an increase in production volumes; and
• increase in servicing/testing charges by 410.93% from ?10.70 million in Fiscal 2023 to ?54.67 million in Fiscal 2024, primarily attributable to high testing charges for lattice towers in Fiscal 2024.
This increase in other expenses was marginally offset by a decrease in corporate social responsibility expenses by 51.40% from ?30.80 million in Fiscal 2023 to ?14.97 million in Fiscal 2024. In Fiscal 2023 corporate social responsibility expenses were higher to meet a shortfall experienced in prior years.
Profit before tax. For the various reasons discussed above, profit before tax increased by 194.97% from ?465.93 million in Fiscal 2023 to ?1,374.37 million in Fiscal 2024.
Tax expense. Current tax increased by 182.50% from ?125.26 million in Fiscal 2023 to ?353.86 million in Fiscal 2024, in line with an increase in our profit before tax. Deferred tax was ?(5.99) million in Fiscal 2024 compared to ?(82.99) million in Fiscal 2023 primarily on account of changes in deferred tax liability on depreciation.
Profit after tax. For the various reasons discussed above, profit after tax increased by 142.33% from ?423.60 million in Fiscal 2023 to ?1,026.50 million in Fiscal 2024.
Fiscal 2023 compared to Fiscal 2022
Total Income. Our total income increased by 28.43% from ?12,466.76 million in Fiscal 2022 to ?16,010.74 million in Fiscal 2023 primarily due to the reasons discussed below.
Revenuefrom operations. Our revenue from operations increased by 28.56% from ?12,448.09 million in Fiscal 2022 to ?16,003.07 million in Fiscal 2023, primarily due to an increase in sale of products - export (including deemed export) by 67.49% from ?7,440.75 million in Fiscal 2022 to ?12,462.62 million in Fiscal 2023. This increase in sale of products was experienced across all our solar energy product categories primarily on account of an increase in demand from existing customers as well as new customers from international markets. Our operating revenue also increased by 14.88% from ?842.94 million in Fiscal 2022 to ?968.37 million in Fiscal 2023 primarily due to an increase in scrap sales in line with an increase in our production.
The increase in revenue from operations was marginally offset by a decrease in sale of products - domestic by 35.89% from ?3,929.73 million in Fiscal 2022 to ?2,519.27 million in Fiscal 2023 on account of increased focus on export sales due to the potential for higher realizations.
Other income. Other income decreased by 58.92% from ?18.67 million in Fiscal 2022 to ?7.67 million in Fiscal 2023, primarily due to a decrease in government subsidies received by our Subsidiary, Iselfa Morsetteria SRL, in relation to gas, energy and machinery.
Total Expenses. Total expenses increased by 27.03% from ?12,237.50 million in Fiscal 2022 to ?15,544.81 million in Fiscal 2023 primarily due to the reasons discussed below and in line with the increase of 28.56% in our revenue from operations during the same Fiscals.
Cost of material consumed. Cost of material consumed increased by 31.42% from ?8,470.83 million in Fiscal 2022 to ^11,132.10 million in Fiscal 2023. As a percentage of total revenue from operations, our cost of raw materials consumed increased from 68.05% to 69.56% from Fiscal 2022 to Fiscal 2023, primarily due to fluctuations in the pnces for raw materials, sales volume, product mix and the ratio between domestic and export sales.
Changes in inventories of finishedgoods and work-in-progress. Changes in inventories of finished goods and work-in-progress was ?(287.67) million in Fiscal 2023 compared to ?248.80 million in Fiscal 2022. In Fiscal 2022, we had an opening inventory of finished goods of ?1,018.69 million, a closing inventory of finished goods of ?799.21 million, an opening inventory of work -in- progress of ?554.61 million and a closing inventory of work-in-progress of ?525.29 million. In Fiscal 2023, we had an opening inventory of finished goods of ?799.21 million, a closing inventory of finished goods of ?869.79 million, an opening inventory of work-in-progress of ?525.29 million and a closing inventory of work-in-progress of ?742.38 million.
The aggregate of cost of material consumed and changes in inventories of finished goods and work-in-progress increased from ?8,719.63 million in Fiscal 2022 to ?10,844.43 million in Fiscal 2023. The aggregate of cost of material consumed and changes in inventories of finished goods and work-in-progress as a percentage of revenue from operations decreased by 2.28% from 70.05% for Fiscal 2022 to 67.76% for Fiscal 2023. This decrease is primarily due to fluctuations in the raw material pnce, sales volume, product mix and the ratio between domestic and export sales.
Employee benefits expense. Employee benefit expense increased by 7.58% from ?791.13 million in Fiscal 2022 to ?851.08 million in Fiscal 2023, primarily due to an increase in salaries and wages by 9.18% from ?659.79 million in Fiscal 2022 to ?720.37 million in Fiscal 2023 mainly on account of annual increments in salaries.
Finance cost. Finance cost decreased by 2.17% from ?775.98 million in Fiscal 2022 to ?759.12 million in Fiscal 2023 primarily due to an increase in interest income from fixed deposit receipts in relation to margin money by 386.23% from ?8.93 million in Fiscal 2022 to ?43.42 million in Fiscal 2023.
Depreciation and amortization expense. Depreciation and amortization expense increased by 2.31% from ^311.48 million in Fiscal 2022 to ?318.69 million in Fiscal 2023 due to an increase in depreciation of property, plant and equipment by 4.34% from ?291.99 million in Fiscal 2022 to ?304.65 million in Fiscal 2023 primarily on account of the addition of plant and machinery including automation machines at our manufacturing facilities at Tarapur, Maharashtra.
Other expenses. Other expenses increased by 69.07% from ?1,639.28 million in Fiscal 2022 to ?2,771.49 million in Fiscal 2023, primarily due to the following:
• increase in freight charges (net) by 118.31% from ?655.28 million in Fiscal 2022 to ?1,430.52 million in Fiscal 2023 on account of increase in sales volume. Our freight expenses also increased due to an increase in exports as compared to domestic sales. Further, this increase is attributable to an increase in DDP exports and reduction in cost insurance freight ("CIF") exports as freight on DDP exports is higher as compared to CIF exports;
• increase in consumption stores, spares and consumables by 55.06% from ?203.21 million in Fiscal 2022 to ^315.10 million in Fiscal 2023, primarily due to an increase in production volumes, particularly due to an increase in the production of fasteners in Fiscal 2023 where consumption of stores, spares and consumables is relatively higher as compared to other product offerings;
• increase in power and fuel by 26.95% from ?410.65 million in Fiscal 2022 to ?521.30 million in Fiscal 2023, primarily due to an increase in production volumes causing an increase in consumption of electricity and other fuel for our manufacturing processes; and
• increase in travelling expenses by 118.58% from ?27.82 million in Fiscal 2022 to ?60.81 million in Fiscal 2023, primarily due to an increase in foreign travel for enhancing exports.
This increase in other expenses was marginally offset by a decrease in legal and professional fees by 39.87% from ^51.17 million in Fiscal 2022 to ?30.77 million in Fiscal 2023, primarily due to an additional management consultancy fee paid for material management and counsel fees for arbitration in Fiscal 2022.
Profit before tax. For the various reasons discussed above, profit before tax increased by 103.23% from ?229.26 million in Fiscal 2022 to ?465.93 million in Fiscal 2023.
Tax expense. Current tax increased by 48.27% from ?84.48 million in Fiscal 2022 to ?125.26 million in Fiscal 2023, in line with an increase in our profit before tax. During Fiscal 2023, our Company opted for a new tax regime at a lower tax rate as compared to the previously followed tax regime, which resulted in a reduction in taxes in Fiscal 2023 as compared to Fiscal 2022. Due to the same reason, deferred tax was ?(82.93) million in Fiscal 2023 compared to ?18.32 million in Fiscal 2022.
Profit after tax. For the various reasons discussed above, profit after tax increased by 234.97% from ?126.46 million in Fiscal 2022 to ?423.60 million in Fiscal 2023.
Liquidity and Capital Resources
Our primary liquidity requirements have been for financing our capital expenditure, acquisitions, working capital and repayment of debt needs. In recent periods, we have met these requirements through internal accruals from operations, term loans, equipment loans, unsecured loans, working capital loans and non-fund based letters of credit. As of September 30, 2024, we had ^113.08 million in cash and cash equivalents. We believe that, after taking into account the expected cash to be generated from operations and our borrowings, we will have sufficient liquidity for our present requirements and anticipated requirements for capital expenditure, working capital, interest obligations and other operating needs under our current business plans for the next 12 months. We continue to assess our liquidity requirements depending on business growth and market developments and take appropriate actions to manage the liquidity through various sources, internal and external.
Cash Flows
The following table sets forth our cash flows for the years/periods indicated:
| Six months period ended September 30, | Fiscal | ||||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Net cash (used in)/ generated from operating activities | 762.55 | (121.78) | 400.23 | 2,407.36 | 1,815.46 |
| Net cash used in investing activities | (256.68) | (544.50) | (1,237.93) | (610.45) | (559.75) |
| Net cash (used in)/ generated from financing activities | (491.56) | 685.03 | 880.54 | (1,800.21) | (1,293.51) |
| Net (decrease)/ increase in cash and cash balance | 14.31 | 18.75 | 42.84 | (3.30) | (37.80) |
| Cash and cash equivalents at the end of the year | 113.08 | 74.68 | 98.77 | 55.93 | 59.23 |
Operating Activities
Six months period ended September 2024
Net cash generated from operating activities was ?762.55 million in the six months period ended September 30, 2024. Our net profit after tax was ?589.91 million in the six months period ended September 30, 2024, which was primarily adjusted for interest and bank charges of ?579.00 million and depreciation of ?185.93 million. Our operating profit before working capital changes was ?1,530.40 million in the six months period ended September 30, 2024.
Adjustments for changes in working capital primarily comprised an increase in trade payables of ?2,902.03 million, significantly offset by an increase in inventories of ?1,662.05 million, increase in trade receivables of ?1,041.99 million, increase in other financial assets and current assets of ?633.80 million and decrease in non financial liabilities and other non current liabilities of ?480.23 million. Cash generated from operations amounted to ?920.56 million in the six months period ended September 30, 2024 and direct tax paid was ?158.01 million in the six months period ended September 30, 2024.
Six months period ended September 2023
Net cash used in operating activities was ?121.78 million in the six months period ended September 30, 2023. Our net profit after tax was ?389.21 million in the six months period ended September 30, 2023, which was primarily adjusted for interest and bank charges of ?414.80 million and depreciation of ?167.37 million. Our operating profit before working capital changes was ?1062.02 million in the six months period ended September 30, 2023. Adjustments for changes in working capital primarily comprised increase in trade receivables of ?954.58 million, decrease in financial liabilities and other current liabilities of ?509.73 million and increase in other financial assets and current assets of ?60.75 million, offset by increase in trade payables of ?483.21 million. Cash used in operating activities amounted to ?69.22 million in the six months period ended September 30, 2023 and direct tax paid was ?52.56 million in the six months period ended September 30, 2023.
Fiscal 2024
Net cash generated from operating activities was ?400.23 million in Fiscal 2024. Our net profit after tax was ?1,026.50 million in Fiscal 2024, which was primarily adjusted for interest and bank charges of ?951.42 million, depreciation of ?346.05 million and income tax of ?347.87 million. Our operating profit before working capital changes was ?2,655.45 million in Fiscal 2024. Adjustments for changes in working capital primarily comprised increase in trade payables of ?1,600.40 million, decrease in financial liabilities and other current liabilities of ?758.23 million, decrease in non financial liabilities and other non current liabilities of ?785.90 million and decrease in other financial assets and current assets of ?375.77 million significantly offset by an increase in trade receivables of ?2,516.71 million. Cash generated from operations amounted to ?605.76 million in Fiscal 2024 and direct tax paid was ?205.53 million in Fiscal 2024.
Fiscal 2023
Net cash generated from operating activities was ?2,407.36 million in Fiscal 2023. Our net profit after tax was ?423.60 million in Fiscal 2023, which was primarily adjusted for interest and bank charges of ?802.54 million and depreciation of ?318.69 million. Our operating profit before working capital changes was ?1,537.52 million in Fiscal 2023. Adjustments for changes in working capital primarily comprised an increase in non financial liabilities and other non current li abilities of ?559.39 million, increase in financial liabilities and other current liabilities of ?484.40 million and decrease in other financial assets and current assets of ?391.15 million significantly offset by a decrease in trade payables of ?496.66 million, decrease in inventory of ? 196.51 million and increase in trade receivables of ?188.50 million. Cash generated from operations amounted to ?2,486.82 million in Fiscal 2023 and direct tax paid was ?79.46 million in Fiscal 2023.
Fiscal 2022
Net cash generated from operating activities was ?1,815.46 million in Fiscal 2022. Our net profit after tax was ?126.46 million in Fiscal 2022, which was primarily adjusted for interest and bank charges of ?784.91 million and depreciation of ?311.48 million and income tax of ?102.80 million. Our operating profit before working capital changes was ?1,330.81 million in Fiscal 2022. Adjustments for changes in working capital primarily comprised an increase in trade payables of ?891.66 million, increase in non financial liabilities and other non current liabilities of ?435.30 million and increase in financial liabilities and other current liabilities of ?149.46 million offset by an increase in inventories of ?508.65 million and increase in trade receivables of ?366.87 million. Cash generated from operations amounted to ?1,905.08 million in Fiscal 2022 and direct tax paid was ?89.62 million in Fiscal 2022.
Investing Activities
Six months period ended September 2024
Net cash used in investing activities was ?256.68 million in the six months period ended September 30, 2024 primarily on account of capital expenditure on property, plant and equipment and intangible asset (after adjustment of increase/decrease in capital work- in-progress and advances for capital expenditure) of ?818.38 million primarily on account of expenses towards construction of the manufacturing facilities in Bhuj, Gujarat and Tarapur, Maharashtra which was offset by sale of investment in property of ?485.00 million.
Six months period ended September 2023
Net cash used in investing activities was ?544.50 million in the six months period ended September 30, 2023 primarily on account of capital expenditure on property, plant and equipment and intangible asset (after adjustment of increase/ decrease in capital work- in-progress and advances for capital expenditure) of ?534.70 million primarily attributable to the expenses towards enhancing our in-house galvanizing capacity in Tarapur, Maharashtra.
Fiscal 2024
Net cash used in investing activities was ?1,237.93 million in Fiscal 2024 primarily on account of capital expenditure on property, plant and equipment and intangible assets (after adjustment of increase/decrease in capital work-in-progress and advances for capital expenditure) of ?1,165.30 million primarily attributable to the expenses towards enhancing our in-house galvanizing capacity in Tarapur, Maharashtra, increase in investment in property of ?59.07 million and increase in bank deposit ?65.82 million.
Fiscal 2023
Net cash used in investing activities was ?610.45 million in Fiscal 2023 primarily on account of capital expenditure on property, plant and equipment and intangible assets (after adjustment of increase/decrease in capital work-in-progress and advances for capital expenditure) of ?615.63 million primarily attributable to the expenses towards enhancing our manufacturing facilities and installed capacities at Tarapur, Maharashtra and Nagpur, Maharashtra and related acquisition of land, and increase in bank deposit ?54.74 million.
Fiscal 2022
Net cash used in investing activities was ?559.75 million in Fiscal 2022 primarily on account of capital expenditure on property, plant and equipment and intangible assets (after adjustment of increase/decrease in capital work-in-progress and advances for capital expenditure) of ?593.93 million primarily attributable to the expenses towards enhancing our manufacturing facilities and installed capacities at Tarapur, Maharashtra and Nagpur, Maharashtra and sale of property, plant and equipment of ?40.33 million.
Financing Activities
Six months period ended September 2024
Net cash used in financing activities was ?491.56 million in the six months period ended September 30, 2024 primarily comprising interest and bank charges of ?558.13 million, repayment of borrowings (other than short term borrowings) of ?367.70 million and dividend payment of ?233.59 million which was offset by an increase in unsecured borrowings of ?313.32 million.
Six months period ended September 2023
Net cash generated from financing activities was ?685.03 million in the six months period ended September 30, 2023 primarily comprising an increase in secured borrowings of ?1,343.33 million which was offset by interest and bank charges of ^411.57 million and repayment of borrowings (other than short term borrowings) of ?229.31 million.
Fiscal 2024
Net cash generated from financing activities was ?880.54 million in Fiscal 2024 primarily comprising an increase in secured short term borrowings of ?1,558.13 million and long term borrowings of ?682.08 million significantly offset by interest and bank charges of ?931.04 million and repayment of borrowings (other than short term borrowings) of ?406.06 million.
Fiscal 2023
Net cash used in financing activities was ?1,800.21 million in Fiscal 2023 primarily comprising a decrease in secured short term borrowings of ?801.46 million, repayment of long term borrowings of ?425.11 million and interest and bank charges of ?797.97 million which was partially offset by an increase in long term borrowings of ?227.11 million.
Fiscal 2022
Net cash used in financing activities was ?1,293.51 million in Fiscal 2022 primarily comprising repayment of long term borrowings of ?501.64 million, decrease in secured short term borrowings of ?207.36 million and interest and bank charges of ?783.56 million which were partially offset by increase in long term borrowings of ^221.81 million.
Capital Expenditures
Capital expenditures primarily consist of property, plant and equipment (including plant and machinery, land and building and furniture and fixture) as well as intangible assets such as software and licenses. We intend to continue to expand our manufacturing facilities to existing and newer geographies, which may lead us to incur further capital expenditure. The following table sets forth details of our capital expenditure for the period/ years indicated:
| Particulars | As of and for the six months period ended September 30, | As of and for the financial year ended March 31, | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Property, plant and equipment | 5,693.36 | 5,312.42 | 5,693.55 | 5,021.27 | 4,523.39 |
| Right of use | 23.53 | 6.09 | 5.19 | 8.00 | 13.43 |
| Capital work in progress | 566.29 | 216.17 | 169.48 | 160.43 | 402.09 |
| Goodwill | 29.32 | 26.74 | 28.10 | 27.96 | 26.32 |
| Particulars | As of and for the six months period ended September 30, | As of and for the financial year ended March 31, | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Other intangible assets | 4.87 | 7.13 | 5.45 | 10.08 | 16.92 |
| Investment in properties under development | - |
419.14 | 474.14 | 415.06 | 410.61 |
| Intangible asset under development | 1.13 | 0.73 | 0.39 | 0.15 | - |
Indebtedness
As of September 30, 2024, a brief summary of our aggregate outstanding borrowings is set forth below:
| As of September 30, 2024 | |
| Current borrowings | 4,129.45 |
| Non-current borrowings | 1,255.85 |
| Total Borrowings | 5,385.30 |
For further information on our indebtedness, see "Financial Indebtedness" on page 336.
Contractual Obligations, Contingent Liabilities and Commitments
Contractual Obligations
The following table sets forth a summary of the maturity profile of our contractual obligations as of September 30, 2024:
| As of September 30, 2024 | ||||
| Less than one year | One to five years | More than five years | Total | |
| Contractual maturities of lease liabilities on an un-discounted basis | 9.83 | 16.46 | - | 26.29 |
Contingent Liabilities
The following sets forth the principal components of our contingent liabilities as of September 30, 2024:
| As of September 30, 2024 | |
| Claims not acknowledged as debt | 102.09 |
| Statutory liability - Income tax | 136.76 |
| Statutory liability - Goods and service tax | 186.35* |
*Contingent liability of 7?183.78 million dropped in favour of Company vide order in Original No PLG/CGST/ADC/VRR/33/2-24-25 dated December 27, 2024 passed by Additional Commissioner, CGST & Central Excise Palghar Commissionerate.
For further information, see "Restated Consolidated Financial Information - Notes to Restated Financial Information - Note 35 - Contingent Liabilities" on page 317.
Commitments
The following table sets forth our capital commitments as of September 30, 2024:
| As of September 30, 2024 | |
| Estimated amount of contracts remaining to be executed on capital account (net of advances) | 1,284.26 |
For further information, see "Restated Consolidated Financial Information - Note 34 - Capital commitments" on page 317.
Non-GAAP Measures
EBITDA, EBITDA margin, Adjusted EBITDA margin, net debt to EBITDA, return on equity, return on capital employed, net worth and other non-GAAP measures, (together, "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, Indian GAAP, IFRS or U.S. GAAP. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or U.S. 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, Indian GAAP, IFRS or U.S. GAAP. In addition, such Non-GAAP Measures are not standardized terms, hence a direct comparison of these Non-GAAP Measures between companies may not be possible. Other companies may calculate these Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although such Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us as they are widely used measures to evaluate a companys operating performance.
Reconciliation for the following non-GAAP financial measures included in this Draft Red Herring Prospectus are set out below for the periods/ years indicated:
Reconciliation for EBITDA
| Particulars | Six months period ended September 30, | Fiscal | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Profit before tax (A) | 788.75 | 478.65 | 1,374.37 | 465.93 | 229.26 |
| Finance cost (B) | 568.93 | 406.45 | 928.52 | 759.12 | 775.98 |
| Depreciation and amortization expense (C) | 185.93 | 167.37 | 346.05 | 318.69 | 311.48 |
| Other income (D) | 12.03 | 13.14 | 19.66 | 7.67 | 18.67 |
| EBITDA (G=A+B+C-D) | 1,531.58 | 1,039.33 | 2,629.28 | 1,536.07 | 1,298.05 |
Reconciliation for EBITDA Margin
| Six months period ended September 30, | Fiscal | ||||
| Particulars | 2024 | 2023 | 2024 | 2023 | 2022 |
| Profit before tax (A) | 788.75 | 478.65 | 1,374.37 | 465.93 | 229.26 |
| Finance cost (B) | 568.93 | 406.45 | 928.52 | 759.12 | 775.98 |
| Depreciation and amortization expense (C) | 185.93 | 167.37 | 346.05 | 318.69 | 311.48 |
| Other income (D) | 12.03 | 13.14 | 19.66 | 7.67 | 18.67 |
| EBITDA (E=A+B+C-D) | 1,531.58 | 1,039.33 | 2,629.28 | 1,536.07 | 1,298.05 |
| Revenue from operations (F) | 14,131.04 | 10,527.33 | 24,251.50 | 16,003.07 | 12,448.09 |
| EBITDA Margin (G=E/F) | 10.84% | 9.87% | 10.84% | 9.60% | 10.43% |
Reconciliation for Adjusted EBITDA Margin
| Particulars | Six months period ended September 30, | Fiscal | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Profit before tax (A) | 788.75 | 478.65 | 1,374.37 | 465.93 | 229.26 |
| Finance cost (B) | 568.93 | 406.45 | 928.52 | 759.12 | 775.98 |
| Depreciation and amortization expense (C) | 185.93 | 167.37 | 346.05 | 318.69 | 311.48 |
| Other income (D) | 12.03 | 13.14 | 19.66 | 7.67 | 18.67 |
| EBITDA (E=A+B+C-D) | 1,531.58 | 1,039.33 | 2,629.28 | 1,536.07 | 1,298.05 |
| Adjusted revenue from operations (F)* | 12,840.01 | 9,633.00 | 22,570.69 | 14,572.55 | 11,792.81 |
| Adjusted EBITDA Margin (G=E/F) | 11.93% | 10.79% | 11.65% | 10.54% | 11.01% |
* Adjusted revenue from operations is calculated as revenue from operations after eliminating outward transportation cost where the sales are inclusive of transportation cost.
Reconciliation for PAT Margin
| Particular* | Six months period ended September 30, | Fiscal | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Restated profit after tax (A) | 589.91 | 389.21 | 1,026.50 | 423.60 | 126.46 |
| Total income (B) | 14,143.07 | 10,540.47 | 24,271.16 | 16,010.74 | 12,466.76 |
| PAT Margin (C=A/B) | 4.17% | 3.69% | 4.23% | 2.65% | 1.01% |
Reconciliation for Net debt to EBITDA
| Particulars | Six months period ended September 30, | Fiscal | |||
| 2024* | 2023* | 2024 | 2023 | 2022 | |
| Profit before tax (A) | 788.75 | 478.65 | 1,374.37 | 465.93 | 229.26 |
| Finance cost (B) | 568.93 | 406.45 | 928.52 | 759.12 | 775.98 |
| Depreciation and amortization expense (C) | 185.93 | 167.37 | 346.05 | 318.69 | 311.48 |
| Other income (D) | 12.03 | 13.14 | 19.66 | 7.67 | 18.67 |
| EBITDA (E=A+B+C-D) | 1,531.58 | 1,039.33 | 2,629.28 | 1,536.07 | 1,298.05 |
| Non current borrowings (F) | 1255.85 | 1,076.58 | 1,469.05 | 1,189.17 | 1,343.42 |
| Current borrowing (G) | 4129.45 | 3,293.58 | 3,616.09 | 2,084.39 | 2,932.38 |
| Total borrowings (H=F+G) | 5,385.3 | 4,370.16 | 5,085.14 | 3,273.56 | 4,275.80 |
| Cash and cash equivalents (I) | 113.08 | 74.68 | 98.77 | 55.93 | 59.23 |
| Bank deposit (current) (J) | 294.29 | 191.45 | 325.48 | 278.10 | 220.57 |
| Bank deposit (non-current) (K) | 8.46 | 129.18 | 27.43 | 8.99 | 11.78 |
| Current investment (L) | 2.04 | 1.79 | 1.98 | 1.59 | 1.52 |
| Net Debt (M=H-I-J-K-L) | 4,967.43 | 3,973.06 | 4631.48 | 2,928.95 | 3,982.70 |
| Net debt to EBITDA (N=M/E)* | 3.24* | 3.82* | 1.76 | 1.91 | 3.07 |
*Not annualized
Reconciliation for Net debt to Equity
| Particulars | Six months period ended September 30, | Fiscal | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Non current borrowings (A) | 1,255.85 | 1,076.58 | 1,469.05 | 1,189.17 | 1,343.42 |
| Current borrowing (B) | 4,129.45 | 3,293.58 | 3,616.09 | 2,084.39 | 2,932.38 |
| Total borrowings (C=A+B) | 5,385.3 | 4,370.16 | 5,085.14 | 3,273.56 | 4,275.80 |
| Cash and cash equivalents (D) | 113.08 | 74.68 | 98.77 | 55.93 | 59.23 |
| Bank deposit (current) (E) | 294.29 | 191.45 | 325.48 | 278.1 | 220.57 |
| Bank deposit (non-current) (F) | 8.46 | 129.18 | 27.43 | 8.99 | 11.78 |
| Current investment (G) | 2.04 | 1.79 | 1.98 | 1.59 | 1.52 |
| Net Debt (H=C-D-E-F-G) | 4,967.43 | 3,973.06 | 4631.48 | 2,928.95 | 3,982.70 |
| Closing equity (I) | 5,889.73 | 4,899.52 | 5,534.38 | 4,507.14 | 4,093.64 |
| Net debt to Equity (J=H/I) | 0.84 | 0.81 | 0.84 | 0.65 | 0.97 |
Reconciliation for Return on Equity
| Particulars | Six months period ended September 30, | Fiscal | |||
| 2024* | 2023* | 2024 | 2023 | 2022 | |
| Profit after tax (A) | 589.91 | 389.21 | 1,026.50 | 423.60 | 126.46 |
| Closing equity (B) | 5,889.73 | 4,899.52 | 5,534.38 | 4,507.14 | 4,093.64 |
| Particular* | Six months period ended September 30, | Fiscal | |||
| 2024* | 2023* | 2024 | 2023 | 2022 | |
| Opening equity (C) | 5,534.38 | 4,507.14 | 4,507.14 | 4,093.64 | 3,955.66 |
| Average equity (D=(B+C)/2) | 5,712.06 | 4,703.33 | 5,020.76 | 4,300.39 | 4,024.65 |
| Return on equity (E=A/D)* | 10.33%* | 8.28%* | 20.45% | 9.85% | 3.14% |
*Not annualized
Reconciliation for Return on Capital Employed
| Particulars | Six months period ended September 30, | Fiscal | |||
| 2024* | 2023* | 2024 | 2023 | 2022 | |
| Profit before tax (A) | 788.75 | 478.65 | 1,374.37 | 465.93 | 229.26 |
| Finance cost (B) | 568.93 | 406.45 | 928.52 | 759.12 | 775.98 |
| Depreciation and amortization expense (C) | 185.93 | 167.37 | 346.05 | 318.69 | 311.48 |
| Other income (D) | 12.03 | 13.14 | 19.66 | 7.67 | 18.67 |
| EBITDA (E=A+B+C-D) | 1,531.58 | 1,039.33 | 2,629.28 | 1,536.07 | 1,298.05 |
| Depreciation (F) | 185.93 | 167.37 | 346.05 | 318.69 | 311.48 |
| EBIT (G=E-F) | 1,345.65 | 871.96 | 2,283.23 | 1,217.38 | 986.57 |
| Total equity (H) | 5,889.73 | 4,899.52 | 5,534.38 | 4,507.14 | 4,093.64 |
| Non current borrowings (I) | 1,255.85 | 1,076.58 | 1,469.05 | 1,189.17 | 1,343.42 |
| Current borrowings (J) | 4,129.45 | 3,293.58 | 3,616.09 | 2,084.39 | 2,932.38 |
| Deferred tax liability (K) | 296.84 | 271.40 | 286.07 | 292.06 | 374.99 |
| Goodwill (L) | 29.32 | 26.74 | 28.10 | 27.96 | 26.32 |
| Other intangible assets (M) | 4.87 | 7.13 | 5.45 | 10.08 | 16.92 |
| Closing Capital Employed (N= H+I+J+K-L-M) | 11,537.68 | 9,507.21 | 10,872.04 | 8,034.72 | 8,701.19 |
| Opening capital employed (O) | 10,872.04 | 8,034.72 | 8,034.72 | 8,701.19 | 9,045.47 |
| Average capital employed (P=(N+O)/2) | 11,204.86 | 8,770.97 | 9,453.38 | 8,367.96 | 8,873.33 |
| Return on capital employed (Q=G/P) | 12.01%* | 9.94%* | 24.15% | 14.55% | 11.12% |
*Not annualized
Reconciliation for Return on Net Worth
| Particulars | For the six months period ended September 30 | As at and for the Financial Year ended March 31 | |||
| 2024* | 2023* | 2024 | 2023 | 2022 | |
| Profit after tax (A) | 589.91 | 389.21 | 1,026.50 | 423.60 | 126.46 |
| Paid-up share capital (B) | 55.33 | 55.33 | 55.33 | 55.33 | 55.33 |
| Other equity | |||||
| Add: | |||||
| Security premium (C) | 207.68 | 207.68 | 207.68 | 207.68 | 207.68 |
| Retained earnings (D) | 4,570.80 | 3,577.19 | 4,214.48 | 3,187.98 | 2,764.38 |
| Other items of comprehensive income (E) | 3.87 | 3.71 | 4.46 | 2.73 | 3.65 |
| General reserve (F) | 1,044.02 | 1,044.02 | 1,044.02 | 1,044.02 | 1,044.02 |
| Foreign currency translation reserve (G) | 2.85 | 6.41 | 3.23 | 4.22 | 13.40 |
| Closing net worth H = B+C+D+E+F+G | 5,884.55 | 4,894.34 | 5,529.20 | 4,501.96 | 4,088.46 |
| Opening net worth (I) | 5,529.20 | 4,501.96 | 4,501.96 | 4,088.46 | 3,950.48 |
| Average net worth J=((H+I)/2) | 5,706.88 | 4,698.15 | 5,015.58 | 4,295.21 | 4,019.47 |
| Return on net worth (K=A/J) | 10.34%* | 8.28%* | 20.47% | 9.86% | 3.15% |
*Not annualized
Reconciliation for Net Asset Valueper Equity Share
| Particulars | For the six months period ended September 30 | As at and for the Financial Year ended March 31 | |||
| 2024* | 2023* | 2024 | 2023 | 2022 | |
| Paid-up share capital (A) | 55.33 | 55.33 | 55.33 | 55.33 | 55.33 |
| Other equity | |||||
| Add: | |||||
| Security premium (B) | 207.68 | 207.68 | 207.68 | 207.68 | 207.68 |
| Retained earnings (C) | 4,570.80 | 3,577.19 | 4,214.48 | 3,187.98 | 2,764.38 |
| Other items of comprehensive income (D) | 3.87 | 3.71 | 4.46 | 2.73 | 3.65 |
| General reserve (E) | 1,044.02 | 1,044.02 | 1,044.02 | 1,044.02 | 1,044.02 |
| Foreign currency translation reserve (F) | 2.85 | 6.41 | 3.23 | 4.22 | 13.40 |
| Net worth G = A+B+C+D+E+F | 5,884.55 | 4,894.34 | 5,529.20 | 4,501.96 | 4,088.46 |
| Equity shares and bonus shares issued outstanding (H)A | 28,21,57,500 | 28,21,57,500 | 28,21,57,500 | 28,21,57,500 | 28,21,57,500 |
| Net Asset Value per Equity Share I = G/H | 20.86 | 17.35 | 19.60 | 15.96 | 14.49 |
APursuant to a Board resolution and Shareholders resolution dated December 23, 2024, bonus share have been issued in the ratio of 50 equity shares for every 1 equity shares. For calculation of NAV, bonus equity shares have been retrospectively adjusted for all theperiods/year ended.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that we believe have or are reasonably likely to have a current or future material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.
Related Party Transactions
We enter into various transactions with related parties in the ordinary course of business. These transactions principally include dividends paid, remuneration paid to Key Managerial Personnel, director fees and sale of investment property which includes residential properties sold to directors. For further information relating to our related party transactions, see "Restated Consolidated Financial Information - Note 39 - Related Party Disclosure" on page 319.
Auditors Observation
There have been no reservations/qualifications/adverse remarks/emphasis of matters highlighted by our Statutory Auditors in their examination report to the Restated Consolidated Financial Information and/or their audit reports on the special purpose interim financial statements of the Company for the six months period ended September 30, 2024 and 2023, and audited financial statements as of and for the years ended March 31, 2024, 2023 and 2022.
Quantitative and Qualitative Disclosures about Market Risk
We are exposed to the following risks arising from financial instruments: market risk, credit risk and liquidity risk.
Market Risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
Foreign currency 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. Set out below are the carrying amounts of our net foreign currency exposure (net of forward contracts) denominated monetary assets and monetary liabilities as of the dates indicated:
| Particulars | Currency | As of September 30, | As of March 31, | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | ||
| Trade receivables | USD | 3,235.35 | 2,833.67 | 2,580.27 | 2,569.88 | 1,804.05 |
| EUR | 431.20 | 152.79 | 135.18 | 75.34 | 67.67 | |
| Other currency | 2.78 | 2.12 | 2.60 | 7.83 | 172.13 | |
| Loans receivable | USD | - |
- |
- |
- |
- |
| EUR | 134.31 | 121.45 | 127.41 | 122.02 | 111.01 | |
| Other currency | - |
- |
- |
- |
- |
|
| Advance received from customers | USD | (383.59) | (1,618.83) | (585.93) | (2,719.25) | (970.25) |
| EUR | (0.94) | (16.19) | (1.40) | (50.86) | (13.96) | |
| Other currency | - |
- |
- |
(105.75) | ||
| Trade payables | USD | (3,204.55) | (407.29) | (1,854.49) | (1,861.05) | (109.21) |
| EUR | (0.95) | 0.08 | (0.92) | (8.20) | (180) | |
| Other currency | 0.10 | 0.09 | 0.10 | (0.76) | 0.02 | |
| Loan payable | USD | (1,996.46) | (2,320.35) | (2,023.40) | (1,153.81) | (1,489.90) |
| EUR | - |
(58.23) | - |
(14.04) | - |
|
| Other currency | - |
- |
- |
- |
- |
|
| Advance to vendor | USD | 178.14 | 108.07 | 12.52 | 19.35 | 20.86 |
| EUR | 9.46 | 0.06 | 0.02 | 0.02 | 0.47 | |
| Other currency | 6.36 | 0.19 | 0.14 | 0.23 | 0.13 | |
Interest rate risk
Interest rate risk can be fair value interest rate risk or cash flow interest rate risk. Fair value interest rate risk is the risk of changes in fair values of fixed interest-bearing investments because of fluctuations in the interest rates, in cases where the borrowings are measured at fair value through profit or loss. Cash flow interest rate risk is the risk that the future cash flows of floating interest- bearing investments will fluctuate because of fluctuations in the interest rates. Our interest rate risk arises from borrowings, and we endeavour to adopt a policy of ensuring that the maximum amount of our interest rate risk exposure is at fixed rate.
Our interest-bearing financial instruments are reported as below:
| Particulars | As of September 30, | As of March 31, | |||
| 2024 | 2023 | 2024 | 2023 | 2022 | |
| Fixed rate instruments | |||||
| Financial assets | 302.75 | 320.63 | 352.91 | 287.09 | 232.35 |
| Financial liabilities | 5,385.30 | 4,370.16 | 5,085.14 | 3,273.56 | 4,275.80 |
Credit Risk
Credit risk arises from the possibility that the counterparty will default on its contractual obligations.
Trade receivables
Our historical experience of collecting receivables ensures a low credit risk. Hence, a trade receivable is considered to be a single class of financial asset. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the credit worthiness of customers who are granted credit terms in the normal course of business.
Other financial assets
Credit risk on cash and cash equivalents is limited as we generally invest in deposits with banks and financial institutions with high credit ratings assigned by international and/or domestic credit rating agencies. Investments primarily include investment in liquid
mutual fund units, quoted bonds issued by govemment and quasi-govemment organizations and certificates of deposit which are funds deposited at a bank for a specified time period.
Liquidity Risk
Liquidity risk refers to the risk of financial distress or an extraordinary financing cost arising due to shortage of liquid funds in a situation where business conditions unexpectedly deteriorate and require financing. Our objective is to maintain at all times optimum levels of liquidity to meet our cash and collateral requirements. Processes and policies related to such risk are overseen by senior management that monitors our net liquidity position through rolling forecasts on the basis of expected cash flows.
The following are the remaining contractual maturities of financial liabilities as of September 30, 2024.
| Particular* | As of September 30, 2024 | Less than one year | 1-2 years | 2-5 years | Above 5 years |
| Borrowings | 5,385.30 | 4,129.45 | 792.31 | 394.10 | 69.44 |
| Trade payables | 9,006.52 | 9,006.52 | - |
- |
- |
| Other financial liabilities | 145.16 | 145.16 | - |
- |
- |
| Lease liabilities | 24.07 | 8.46 | 15.61 | - |
- |
| Total | 14,561.05 | 13,289.59 | 807.92 | 394.10 | 69.44 |
For further information, see "Restated Consolidated Financial Information - Note 59 - Financial Instruments - financial risk management" on page 325.
Unusual or Infrequent Events or Transactions
Except as disclosed in this Draft Red Herring Prospectus, there have been no other events or transactions that, to our knowledge, may be described as "unusual" or "infrequent" that led to a material adverse effect on our business and operations.
Known Trends or Uncertainties
Our business has been subject, and we expect it to continue to be subject, to significant economic changes. To our knowledge, except as discussed in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on income from our continuing operations. For further information regarding trends and uncertainties, please see "- Significant Factors Affecting our Financial Condition and Results of Operations"" on page 339 and "Risk Factors"" on page 27.
Future Relationship between Cost and Income
Except as disclosed in this Draft Red Herring Prospectus, there are no known factors that will have a material adverse impact on our operations and finances. For further information, see "Risk Factors"" and "Our Business"" on pages 27 and 198, respectively.
Seasonality of Business
Our business is subject to seasonal fluctuation during the rainy season. For further information, see "Risk Factors — Internal Risk Factors — 49. Our business prospects and future financial performance depend on the demand for solar power, transmission and wind power products and is subject to occasional/ seasonal fluctuation, that may affect our business, financial condition, cash flows and results of operations"" on page 55.
Significant Dependence on a Single or Few Customers or Suppliers
We depend on certain of our customers for a significant portion of our revenue. In the six months periods ended September 30, 2024 and 2023 and Fiscals 2024, 2023 and 2022, our top 10 customers accounted for 53.91%, 75.88%, 63.47%, 70.21% and 63.19%, respectively, of our total revenue from operations. For further information, see "Risk Factors — Internal Risk Factors — 3. We depend on certain key customers for a significant portion of our revenues (our top 10 customers contributed to 53.91% and 63.47% of our total revenue from operations in the six months ended September 30, 2024 and Fiscal 2024, respectively). Any decrease in revenues from any of our key customers or any loss of these customers may adversely affect our business, financial condition, cash flows and results of operations" on page 29.
We also depend on certain of our suppliers for a significant portion of our raw materials and components. In the six months periods ended September 30, 2024 and 2023 and Fiscals 2024, 2023 and 2022, our top 10 suppliers accounted for 81.65%, 85.59%, 76.00%,
87.04% and 85.93% of our total purchases, respectively. For further information, see "Risk Factors — Infernal Risk Factors — 5. Our operations are subject to volatility in the supply and pricing of raw materials and components. We are dependent on our suppliers (our top supplier contributed to 81.65% and 76.00% of total purchases in the six months ended September 30, 2024 and Fiscal 2024, respectively) for certain raw materials and components and an inability to procure the required quality and quantity, at competitive prices, our business, financial condition, cash flows and results of operations may be adversely affected on page 31.
Segment Reporting
We are engaged in the manufacturing of solar structures for renewable energy projects and transmission towers for power evacuation, which constitutes a single business segment.
Significant Economic Changes
Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations. See "Risk Factors" and "- Significant Factors Affecting our Financial Condition and Results of Operations" on pages 27 and 339, respectively.
New Products or Business Segment
Apart from the disclosures in "Our Business" on page 198, we currently have no plans to develop new products or establish new business segments that are expected to have a material impact on our business, results of operations or financial condition.
Competitive Conditions
We operate in a competitive environment. For information on our competitive conditions and our competitors, see "Risk Factors" and "Our Business on pages 27 and 198, respectively.
Significant Developments subsequent to September 30, 2024
Except as disclosed below and elsewhere in this Draft Red Herring Prospectus, no circumstances have arisen since the date of the last financial statements as disclosed in this Draft Red Herring Prospectus which materially or adversely affect, or are likely to affect, our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next 12 months:
1. Pursuant to an agreement dated November 18, 2024 between with Clean Max Enviro Energy Solutions Private Limited, Clean Max Ame Private Limited and our Company, our Company has acquired a 26.00% shareholding in a special purpose vehicle, Clean Max Ame Private Limited, which aims to set up wind and solar power plants in India. The power generated from such plants will be used for our captive consumption under an energy supply agreement dated December 13, 2024 executed between our Company and Clean Max Ame Private Limited.
2. Pursuant to a shareholders resolution dated December 9, 2024, Clause V of the MoA was amended to reflect the increase in authorized share capital of the Company from ^410,000,000 divided into 41,000,000 equity shares of face value of ?10 each, to ^5,000,000,000 divided into 500,000,000 equity shares of face value of ?10 each. For further details, see "Capital Structure" and "History and Certain Corporate Matters - Amendments to our Memorandum of Association in the last 10years" on pages 80 and 235, respectively.
3. Our Company has allotted (i) an aggregate of 276,625,000 Equity Shares to its existing shareholders by way of a bonus issue on December 23, 2024, (ii) an aggregate of 9,908,600 Equity Shares to certain allottees by way of preferential allotment on January 10, 2025, at a pnce of ?310 per Equity Share, and (iii) an aggregate of 229,140 Equity Shares to certain eligible employees of the Company pursuant to ESPS 2025 on January 16, 2025, at a pnce of ?310 per Equity Share. For further details,
see "Capital Structure - Notes to the Capital Structure - Share capital history of our Company" on page 81.
4. Our Company has obtained a sanction for inter alia a term loan for an amount of ?1,520.00 million from one of our lenders, for financing the setting up of a solar tracker piles and piers manufacturing facility at Gundle, Palghar, Maharashtra.
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