kaynes technology india ltd share price Management discussions

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our Financial Statements on page 280. Unless otherwise indicated or the context otherwise requires, the financial information for Fiscals 2020, 2021 and 2022 and the three months ended June 30, 2022 included herein is derived from the Restated Consolidated Financial Statements, included in this Red Herring Prospectus, which have been derived from our audited financial statements and restated in accordance with the SEBI ICDR Regulations and the Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the ICAI, as amended from time to time, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. For further information, see "Financial Statements" on page 280.

Unless otherwise indicated or the context otherwise requires, in this section, references to "the Company" or "our Company" are to Kaynes Technology India Limited on a standalone basis, and references to "the Group", "we", "us", "our", are to Kaynes Technology India Limited on a consolidated basis.

Unless otherwise indicated, industry and market data used in this section has been derived from industry publications, in particular, the report titled "Assessment of Electronics System Design & Manufacturing, Skill Development (ESDM) In India" dated October 21, 2022 (the "F&S Report"), prepared and issued by Frost & Sullivan (India) Private Limited appointed on November 16, 2021, and exclusively commissioned by and paid for by us in connection with the Offer. A copy of the F&S Report is available on the website of our Company at https://kaynestechnology.co.in/investors. There are no parts, data or information (which may be relevant for the proposed issue), that has been left out or changed in any manner. Unless otherwise indicated, financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, see "Risk Factors Industry information included in this Red Herring Prospectus has been derived from an industry report prepared by Frost & Sullivan (India) Private Limited exclusively commissioned and paid for by us for such purpose." on page 55. Also see, "Certain Conventions, Presentation of Financial, Industry and Market Data and Currency of Presentation Industry and Market Data" on page 16.

OVERVIEW

We are an end-to-end and IoT solutions enabled integrated electronics manufacturing player, having capabilities across the entire spectrum of electronics system design and manufacturing ("ESDM") services. We have experience in providing conceptual design, process engineering, integrated manufacturing and life-cycle support for major players in the automotive, industrial, aerospace and defence, outer-space, nuclear, medical, railways, Internet of Things ("IoT"), Information Technology ("IT") and other segments.

Our business is classified based on the stage of services that we provide to our customers. We classify our operations under the following business verticals:

OEM Turnkey Solutions Box Build ("OEM Box Build"): We undertake "Build To Print" or "Build to Specifications" of complex box builds, sub-systems and products across various industry verticals.

OEM Turnkey Solutions Printed Circuit Board Assemblies ("PCBAs") ("OEM Turnkey Solutions"): We undertake turnkey electronics manufacturing services of PCBAs, cable harness, magnetics and plastics ranging from prototyping to product realization including mass manufacturing.

ODM: We offer ODM services in smart metering technology, smart street lighting, brush less DC ("BLDC") technology, inverter technology, gallium nitride based charging technology and providing IoT solutions for making smart consumer appliances or devices IoT connected.

Product Engineering and IoT Solutions: We offer conceptual design and product engineering services in industrial and consumer segments. Our services include PCB cladding or electrical schematics to embedded design and submitting proof of concept to prototyping. We also offer connected product engineering and solutions. We have a portfolio of hardware, software accelerators and proprietary sensors along with cloud platform based service and solution offerings in asset tracking, remote device management and smart product development. Our digital engineering offerings leverage latest technologies including IoT, big data, machine learning, cloud and media to improve customers efficiency. We also provide end-to-end IoT and cloud enablement solutions and offer IoT data and analytics platform and vertical IoT solutions.

Our Organisational Structure:

The below table shows details of operations of our Subsidiaries and the revenue from operations generated by such Subsidiaries for the periods indicated:

Name of the Subsidiary	Operations				Revenue from operations (Rs. million)
		Fiscal 2020	Fiscal 2021	Fiscal 2022	For the three months ended June 30, 2022
Kemsys Technologies Private Limited	It provides IOT solutions such as sensors and IO, edge processing, connectivity and monitoring solutions through device engineering, digital engineering, manufacturing and firmware engineering.	68.53	43.43	48.23	6.10
Kaynes International Design & Manufacturing Private Limited	It is involved in end-to-end procurement, assembly, manufacturing and testing of HVAC controllers.	112.66	317.63	334.98	69.57
Kaynes Technology Europe GMBH	It is engaged in consultancy and sales of manufacturing services and related technical services for the electronic manufacturing services industry.	8.98	16.01	15.37	3.97
Kaynes Embedded Systems Private Limited	Currently there are no business operations. However, it was incorporated for dealing in embedded computer software technology allied equipment including for computer aided design, manufacturing and telecommunications and to install or hire computer and allied equipment and to run and conduct bureau of computer service and in particular develop, design, programme, conduct feasibility studies and act as advisors in matters relating to management, marketing, and manufacturing	-	-	-	-
Kaynes Electronics Manufacturing Private Limited	Our Company intends to set up a new facility at Chamarajanagar, Karnataka under this Subsidiary as disclosed in the section "Objects of the Offer".	-	-	-	-

The table below shows our revenue from operations across various service segments for the periods indicated:

Services	Fiscal					Three months ended June
	2020		2021		2022		30, 2022
	Amount ( million)	Percentage of Revenue from Operations (%)	Amount (Rs. million)	Percentage of Revenue from Operations (%)	Amount (Rs. million)	Percentage of Revenue from Operations (%)	Amount (Rs. million)	Percentage of Revenue from Operations (%)
OEM Turnkey Solutions Box Build	942.07	25.58%	1,276.25	30.34%	1,988.21	28.15%	468.68	23.52%
OEM Turnkey Solutions Printed Circuit Board Assemblies	2,290.02	62.19%	2,509.07	59.65%	4,436.19	62.81%	1,326.96	66.59%
ODM	76.18	2.07%	184.21	4.38%	278.04	3.94%	98.99	4.97%
Product Engineering and IoT solutions	374.11	10.16%	236.74	5.63%	360.06	5.10%	98.03	4.92%
Total	3,682.38	100.00%	4,206.27	100.00%	7,062.49	100.00%	1,992.67	100.00%

We operate eight strategically located manufacturing facilities across India in the states of Karnataka, Haryana, Himachal Pradesh, Tamil Nadu, and Uttarakhand. Our facilities are located in proximity to our customers, allowing us to service their requirements efficiently and cost-effectively. Certain of our manufacturing facilities are approved under the Electronics Hardware Technology Park Scheme of Software Technology Park of India, Bengaluru and 100% Export Oriented Unit Scheme of Madras Export Processing Zone, Chennai, Tamilnadu that offer incentives similar to a special economic zone. As of June 30, 2022, we had a combined capacity to assemble over 1,500 million (on an annualized basis) components for the period and have an exclusive line for ‘Green Manufacturing that is compliant with Directive 2002/95/EC Restriction of Hazardous Substances ("RoHS"). As of June 30, 2022, our manufacturing infrastructure also includes one design facility and two service centres.

We lay significant emphasis on research and development. This has enabled us to address our consumers diverse needs, enhance existing products with emerging technologies, introduce new and innovative products in the market, enhance existing products with emerging technologies, and optimize costs across our products through value analysis and value engineering. We have a dedicated research and development facility located within our facility at Mysuru, Karnataka Unit - I.

Our research and development efforts are focused on development of new products and improvement of the quality of our existing products; and driving the design and engineering capabilities and original design manufacturing capabilities. As of June 30, 2022, our research and development team comprised 19 employees, including engineers, designers and other workers.

Over the years, we have focused on creating robust manufacturing systems and processes that comply with health and safety, as well as environmental and social and governance requirements. Our operations comply with global standards and our facilities have 10 global accreditations, making us the most certified ESDM company in India (Source: F&S Report). We are an ISO 9001 /14001/45001 BVCI certified company.

Our facilities are approved by global product certification agencies including Underwriters Laboratories, Canadian Standards Association and TUV Rhineland. In addition, we have separate vertical specific certifications including EN/AS 9100 for defence and aerospace products, International Railway Industry Standard ("IRIS") (ISO/TS 22613) for railway signalling, IATF 16949 for automotive, and ISO:13485 for medical systems. We are the first company in the ESDM industry to be National Aerospace and Defense Contractors Accreditation Program ("NADCAP") accredited for aerospace products and are among the few Indian companies to maintain this accreditation (Source: F&S Report).

We have long-term relationships with a large customer base diversified across verticals and geographies. In the three months ended June 30, 2022, we served 229 customers in 21 countries globally and multiple industry verticals such as automotive, aerospace and defence, industrial, railways, medical and IT / ITES. Of the customers contributing 80.00% of our revenue from operations in the three months ended June 30, 2022, 37.50% of our customers (by value) have been associated with us for over seven years and accounted for 31.45%, 33.95%, 30.17% and 27.66%, respectively, of our revenue from operations in Fiscal 2020, 2021 and 2022, and the three months ended June 30, 2022. We collaborate with our customers through the entire product life-cycle and after-sales and end-of-life services including assisting with concept creation, product development, prototyping, testing and mass manufacturing.

This results in customers shortening their product development and time-to-market cycles. We are well positioned to increase the number of different products that we manufacture for them, increase the volume of our shipments to them of each particular product and expand our coverage to other areas where they require similar solutions.

We are led by experienced Promoters with significant experience in the ESDM industry. Our Promoter and Managing Director, Ramesh Kunhikannan, started Kaynes Technology as a sole proprietorship in 1989.

Ramesh Kunhikannan is a technocrat and has over 33 years of experience in the electronic manufacturing services industry. Savitha Ramesh, our Promoter and Whole-time Director has been associated with our Company since 1996 and is responsible for the overall implementation of process and control across our operations.

Under their leadership we have been able to expand our operations and have established a significant presence in India. We also have a qualified and experienced Key Managerial Personnel that has demonstrated its ability to anticipate and capitalize on changing market trends, manage and grow our operations and leverage and deepen customer relationships.

The following table sets forth certain information relating to certain key financial performance metrics as of the dates and for the periods indicated:

Particulars	As of and for the year ended March 31,		As of and for the three months ended June 30,
	2020	2021	2022	2022
		(million, except percentages)
Revenue from Operations	3,682.38	4,206.27	7,062.49	1,992.67
Gross Margins(1)	34.37%	31.98%	30.70%	29.48%
EBITDA(2)	413.33	408.91	936.71	245.66
EBITDA Margin (3)	11.22%	9.72%	13.26%	12.33%
Restated Profit After Tax	93.55	97.33	416.75	100.46
Restated Profit After Tax	2.54%	2.31%	5.90%	5.04%
Margin(4)
Return on Equity	10.51%	8.08%	24.50%	4.78%*
("ROE")(5)
Return on Capital	14.42%	13.47%	24.44%	5.54%*
Employed ("ROCE")(6)
Net Worth(7)	957.58	1,365.10	2,018.18	2,120.03
Asset Turnover Ratio(8)	4.02	3.68	4.79	1.34*
Net Working Capital Days(9)	121	117
Debt to Equity Ratio(10)	1.50	1.02	0.84	0.88
Inventory Turnover Ratio(11)	2.70	2.67

Notes:

* Not annualized

# Annualised

(1) Gross margin is calculated as revenue from operations less cost of materials consumed and changes in inventories of finished goods and traded goods divided by revenue from operations.

(2) EBITDA is calculated as profit before tax plus depreciation and amortization expense plus finance cost less finance income and other income.

(3) EBITDA margin is calculated as EBITDA divided by revenue from operations.

(4) Restated Profit After Tax Margin is calculated as restated profit after tax divided by revenue from operations.

(5) ROE is calculated as restated profit after tax less share of profit / (loss) of minority interest divided by average Net Worth. Average Net Worth is calculated as average of Net Worth as of the first day of the relevant period and as of the last day of the relevant period.

(6) ROCE is calculated as EBIT divided by capital employed. EBIT is calculated as restated profit before tax plus finance cost. Total capital employed is calculated as tangible net worth plus non-current borrowings plus current borrowings. Tangible net worth is calculated as total assets less total non-current liabilities (except non-current lease liabilities and deferred tax liabilities), total current liabilities (except current lease liabilities), intangible assets, intangible assets under development, goodwill and right of use asset.

(7) Net Worth is the aggregate value of the paid-up share capital and all reserves created out of the profits, securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the restated balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation, debenture redemption reserve and foreign currency translation reserve.

(8) Asset Turnover Ratio is calculated as revenue from operations divided by gross block of assets.

(9) Net Working Capital Days is calculated as average inventory days plus average receivable days less average payable days.

(10) Debt to Equity Ratio is calculated as total debt divided by Net Worth. Total debt is calculated as non-current borrowings plus current borrowings.

(11) Inventory Turnover Ratio is calculated as revenue from operations divided by average inventory.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION

We believe that the below mentioned factors have significantly affected our results of operations, costs and financial conditions during the periods under review, and may continue to affect our results of operations and financial condition in the prospective future:

Revenue from key customers

We depend on certain key customers for a substantial portion of our revenues. Our customers typically have specific requirements and accordingly, maintaining close relationships with our key customers is critical part of our business strategy and to the ongoing growth of our operations.

The demand for our products and services from our customers has a significant impact on our results of operations and financial condition. In the event that we lose one or more of our key customers or if the amount of business we receive from them is reduced for any reason, our cash flows and results of operations may be affected. Our arrangements with our customers include terms relating to product specifications, delivery schedule, and warranties and pricing policy and also require us to meet certain standards and performance obligations. Our key customers also provide us with annual operating plan and enter into scheduling agreements only for the purposes of providing non-binding information for production and manufacturing planning. Based on these arrangements, our customers provide us with purchase orders which typically include precise terms for lead time for delivery of products, delivery schedule in terms of quantities for certain months. Our failure to meet such specifications could result in a reduction of business from them, termination of contracts or additional costs and penalties, all of which may adversely impact our results of operations and financial condition.

Of the customers contributing 80.00% of our revenue from operations in the three months ended June 30, 2022, 37.50% of our customers (by value) have been associated with us for over seven years and accounted for 31.45%, 33.95%, 30.17% and 27.66%, respectively, of our revenue from operations in Fiscal 2020,2021 and 2022 and in the three months ended June 30, 2022. Although we have long standing relationships with several customers and in several instances, we engage closely with our customers from concept to delivery. It is difficult for us to predict with certainty when our customers will decide to increase or decrease inventory levels or levels of production, which strategic direction they will pursue, or whether future orders will be consistent with historical orders. Any increases or decreases in the orders and activity by our customers, in turn, are likely to have an effect on our revenues and our results of operations.

Availability and cost of raw materials

Majority of our raw materials and components are imported and are accordingly impacted by any change in global price indices leading to significant impact on the prices of raw materials purchased by us. Our operations and performance are directly related to and affected by the cost of various inputs including semi-conductors, metals such as copper, aluminium, steel, plastics and other commodities. Additionally, the prices of raw material and components also affected severely on account of global sea and air freight indices. Further, raw material prices can be volatile due to a number of factors beyond our control, including global demand and supply, general economic and political conditions, transportation and labour costs, labour unrest, natural disasters, competition, import duties, fuel prices, power tariffs and currency exchange rates, and there are uncertainties inherent in estimating such variables, regardless of the methodologies and assumptions that we may use. This volatility in commodity prices can significantly affect our raw material costs. This issue is addressed by entering into long term contracts with our suppliers and also enter into agreement with our customers for the price adjustments towards the uncertainties of raw material procurement prices. Our cost of materials consumed constituted a significant component of our expenditure and in Fiscal 2020, 2021 and 2022 and in the three months ended June 30, 2022, was, 2,603.38 million, 2,822.99 million, 4,931.07 million and 1,585.27 million, respectively, and constituted 72.54%, 68.22%, 75.71% and 84.98%, respectively, of our total expenses. Our financial condition and results of operations are significantly impacted by the availability and costs of raw materials read with aforementioned factors even though we adopt the risk mitigation strategies to protect our margins.

Ability to maintain and grow demand for our products

Changes in inventory and production levels of our key customers could lead to changes in demand for our products over time, which can have a significant impact on our revenue growth. The loss of key customers has the potential to adversely impact our financial position. The level of growth in demand for our product depends on our ability to convert existing and new customers through bringing new opportunities of customer value creation, focus on product quality relative to other competitors in the market. Our ability to drive value to our customers relative to competition is also key in helping us improve pricing and realisations over time.

We face competition from both international and local players in respective geographies, product segments or sub-segments in which we operate. Our sales to our customers also depend largely on the number and type of products that we supply to them and our ability to increase the wallet share of our customers. While our customers may implement various cost-cutting strategies, which include restructuring of operations, relocation of production/procurement to low-cost regions and vendor rationalisation, we believe that the criticality of the products we manufacture, our customer relationships, lack of alternate vendors, high switching costs, our ability to maintain high quality and delivery commitments and ability to produce a diverse range of products will allow us meet these business challenges.

Foreign currency fluctuation

Products manufactured by that were sold domestically accounted for 79.49%, 74.36%, 80.01% and 87.32% of our revenue from operations in Fiscal 2020, 2021 and 2022 and in the three months June 30, 2022, respectively. Our export proceeds were denominated in GBP, EURO and U.S. Dollars for sales in the other jurisdictions where we sell our products. Further, we source our raw materials from multiple countries number including Singapore, Hong Kong, USA and China. The cost of our imported raw materials is also affected by fluctuations in the rate of exchange of the currency in which we purchase these raw materials (including USD) and the Rupee. Foreign exchange gain (net) during in Fiscal 2020, 2021 and 2022 and in the three months ended June 30, 2022 amounted was nil, 13.64 million, 28.15 million and nil represented nil, 0.32%, 0.40% and nil of our revenue from operations, respectively. We are exposed to exchange rate risk primarily due to payables in respect of our imported raw material and from receivables in respect of our exports, which are mainly denominated in foreign currencies. Any fluctuation in the value of the Indian Rupee against such currencies may inimically affect our results of operations. Any gains or losses arising on account of differences in foreign exchange rates on settlement and translation of monetary assets and liabilities are recognized in the statement of profit and loss.

Seasonality

A few customer businesses in our industrial vertical are subject to seasonality. Our sales to customers in this vertical are generally highest in the fourth quarter. Certain of our products used in fans such as BLDC motor controllers and switch gear electronics are typically sold in the peak summer months in India which is quarter of the Fiscal and which maps with the fourth quarter manufacturing of previous year. While certain end-use industry verticals we serve witness seasonality which in turn impacts our sales, however, no fixed trend of seasonality is ascertainable for our operations on an overall basis.

General global and Indian economic conditions

Our results of operations are dependent on the overall economic conditions in the markets in which we operate, including India, Europe and North America. We derive a significant portion our revenues from OEM Turnkey Solutions and OEM

Box Build Solutions catering to the automotive, industrial, aerospace and defence, outer-space, nuclear, medical, railways, IoT and IT sectors. The level of demand for ESDM services depends primarily on conditions in these sectors in our target markets, which, in turn, depend to a large extent on general economic conditions in these markets. Stronger economic indicators tend to correlate with higher demand for products in the sectors where we are present, while weaker economic indicators tend to correlate with lower demand for such products. The cyclical nature of general economic conditions means that our results of operations can fluctuate substantially from time to time. We expect that these economic factors and conditions, particularly changes in consumer confidence, employment levels, fuel prices, urbanisation, changes in consumer preferences, government policies and interest rates, will continue to be the most important factors affecting our results of operations.

Impact of COVID-19 pandemic

The COVID-19 pandemic and the preventative or protective actions that governments around the world have taken to counter the effects of the pandemic have resulted in an extended period of business disruption and a decrease in economic activity in several countries, including in India. In order to contain the spread of the COVID-19 pandemic, the Government of India along with State Governments declared a lockdown of the country in March 2020, including severe travel and transport restriction and a directive to all citizens to shelter in place. The lockdown has since been extended several times with gradual relaxations of the restrictions conducted through phases. As a result, the current COVID-19 pandemic has adversely affected workforces, consumer sentiment, economies and financial markets around the world and has led to uncertainty in the global economy and significant volatility in global financial markets.

Our business operations suffered certain temporarily disruptions due to COVID-19 related lockdowns. Due to COVID-19 restrictions, all of our manufacturing facilities were closed from March 23, 2020 to April 18, 2020, following which we continued to operate at less than our 50% of our capacity and majority of the employees were diverted for the manufacturing of ventilators pursuant to a significant order received by the Government of India by a certain customer. Post-COVID-19 easing of restrictions, labour were not available due to the absence of public transportation and the travel restrictions, had slow down our operations, however, gradually labour availability was normalised. For further information, see "Risk Factors The current and continuing impact of the COVID-19 pandemic on our business and operations, including its impact on the ability or desire of customers to outsource manufacturing of their products, may have an adverse effect on our business, results of operations, financial condition and cash flows" on page 64.

While it remains possible that sustained or deepened impact on consumer demand resulting from COVID-19 or the related economic recession could negatively impact our performance, we believe that we were well positioned to overcome the adverse impact of pandemic. Events beyond our control may unfold in the future, which makes it difficult for us to predict the extent to which the COVID-19 pandemic will impact our Companys operations and results. We continue to closely monitor the effect that COVID-19 may have on our business and results of operations.

PRESENTATION OF FINANCIAL INFORMATION

Our Restated Consolidated Financial Statements have been compiled from our audited consolidated financial statements as at and for the years ended March 31, 2020, 2021 and 2022, and the three months ended June 30, 2022, prepared in accordance with the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013, read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other relevant provisions of the Act.

NON-GAAP MEASURES

Earnings before Interest, Taxes, Depreciation and Amortization Expenses ("EBITDA")/ EBITDA Margin

EBITDA presented in this 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 US GAAP. Further, EBITDA is not a measurement of our financial performance or liquidity under Ind AS, Indian GAAP, IFRS or US GAAP and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the years/ period 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 US GAAP. In addition, EBITDA is not a standardised term; hence a direct comparison of EBITDA between companies may not be possible. Other companies may calculate EBITDA differently from us, limiting its usefulness as a comparative measure. Although EBITDA is not a measure of performance calculated in accordance with applicable accounting standards, our

Companys management believes that it is useful to an investor in evaluating us because it is a widely used measure to evaluate a companys operating performance.

Reconciliation of EBITDA and EBITDA Margin to Profit Before Tax

The table below reconciles profit before tax to EBITDA. EBITDA is calculated as profit/loss for the year/ period, plus finance costs, depreciation and amortization expenses, less other income and less finance income, while EBITDA Margin is the percentage of EBITDA divided by revenue from operations

Particulars		Fiscal		Three months ended June 30,
	2020	2021	2022	2022
		(Rs. million)
Profit before tax	112.80	108.72	590.27	134.39
Adjustments:
Add: Finance Costs	236.02	239.79	255.87	72.67
Add: Depreciation and Amortization expense	83.79	100.76	131.62	45.70
Less: Other Income	7.31	29.74	28.62	0.11
Less: Finance Income	11.97	10.62	12.43	6.99
Earnings before interest, taxes, depreciation and amortization expenses (EBITDA) (A)	413.33	408.91	936.71	245.66
Revenue from Operations (B)	3,682.38	4,206.27	7,062.49	1,992.67
EBITDA Margin (EBITDA as a percentage of revenue from operations) (A/B)	11.22%	9.72%	13.26%	12.33%

PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE

Income

Our total income comprise (i) revenue from operations; (ii) finance income; and (iii) other income.

Revenue from Operations

Revenue from operations comprise (i) sale of goods (net); and (ii) sale of services (net).

Finance Income

Finance income comprise of interest income, mainly (i) interest received on deposits with banks; and (ii) interest received on advances with others and security deposits.

Other Income

Other income includes (i) profit on sale of investment; (ii) profit on sale of property, plant and equipment (net); (iii) liabilities no longer required, written back; (iv) provision of diminution of value of investments; (v) export incentives; (vi) rent received; (vii) government grants; (viii) other non-operating income; and (ix) exchange differences (net)

Expenses

Our expenses comprise (i) cost of materials consumed; (ii) changes in inventories of finished goods and traded goods; (iii) employee benefits expenses; (iv) depreciation and amortization expense; (v) finance cost; and (vi) other expenses.

Costs of Materials Consumed

Cost of material consumed consists of inventory at the beginning of the year, add purchases, less inventory at the end of the year and research and development expenses.

Changes in Inventories of Finished Goods and Traded Goods

Changes in inventories of finished goods and traded goods consists of (i) inventories at the end of the year (finished goods) and inventories at the end of the year (work-in-progress).

Employee Benefits Expense

Employee benefits expense primarily comprises (i) salaries and incentive; (ii) contribution to provident funds; (iii) gratuity contribution scheme; and (iv) staff welfare expenses, less capitalized.

As of June 30, 2022, we had 1,651 full-time employees. We believe that an equity component in compensation aligns objectives of an individual with those of the organization. Our Company has adopted the Kaynes ESOP 2022 to attract new employees to our Company and retain our existing employees in the Company.

Depreciation and Amortization Expense

Depreciation and amortisation expenses comprise (i) depreciation on property, plant and equipment; (ii) amortization of intangible assets; (iii) impairment of intangible assets; and (iv) depreciation of right to use assets.

Finance Costs

Finance cost refers to (i) interest on borrowings; (ii) interest to vendors; (iii) intereston others;(iv) other borrowing costs; and (v) interest on lease liabilities.

Other Expenses

Other expenses comprises: (i) consumption of stores and spares incurred towards machine maintenance and production; (ii) contract labour incurred towards production and other support services like canteen and house keeping; (iii) freight and forwarding charges incurred towards transport of our finished and traded goods; (iv) insurance incurred towards fixed assets, marine, stocks and vehicles; (v) legal and professional fees incurred towards audit fees and consulting services; (vi) power and fuel incurred towards plant operations and general lighting; (vii) research and development expenses incurred towards new product development; (viii) provision for doubtful advances to others; (ix) rent incurred towards office rent, plant rent and staff accomodation; (x) repairs and maintenance (others) incurred towards vehicle, furniture and fixtures and other office equipments; (xi) CSR expenditure; (xii) travelling and conveyance, incurred towards business travel and vehicle fuel; (xiii) business promotion, incurred towards advertisment, stalls in product exhibitions; (xiv) commission expenses, incurred towards affiliates in international markets; (xv) bank charges, incurred towards export and import remitances and other transaction charges; and (xvi) security maintenance incurred towards outsourced security services.

SIGNIFICANT ACCOUNTING POLICIES

Current versus non-current classification

The Company presents assets and liabilities in the standalone balance sheet based on current/ non-current classification.

An asset is treated as current when it is:

• Expected to be realised or intended to be sold or consumed in normal operating cycle,

• Held primarily for the purpose of trading,

• Expected to be realised within twelve months after the reporting period, or

• Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

All other assets are classified as non-current.

A liability is current when:

• It is expected to be settled in normal operating cycle,

• It is held primarily for the purpose of trading,

• It is due to be settled within twelve months after the reporting period, or

• There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities. Advance tax paid is classified as non- current assets.

The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents.

Fair value measurement

The Company measures financial instruments at fair value at each balance sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or

• In the absence of a principal market, in the most advantageous market for the asset or liability

The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

The principal or the most advantageous market must be accessible by the Company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

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

• Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

• Level 2 Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);and

• Level 3 Inputs for the asset or liability that are not based on observable market data (unobservable inputs).

When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible. If the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.

The Group recognizes transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.

Use of estimates and judgements

The preparation of the Restated Consolidated Financial Statements in conformity with Ind AS requires the management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities. Estimates include provision for employee benefits, allowances for uncollectible trade receivables / advances / contingencies, useful life of fixed assets, provision for taxation, etc., during and at the end of the reporting period. Although these estimates are based on the managements best knowledge of current events and actions, uncertainty about these assumptions and estimates could result in the outcomes requiring a material adjustment to the carrying amounts of assets or liabilities in future periods.

The financial statements of Kemsys and GMBH have been prepared as per relevant GAAP since the management is of the opinion that the impact of Ind AS is expected to be immaterial

Assumptions and estimation uncertainties

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment within the next financial year are included in the notes to the Restated Consolidated Financial Statements.

Foreign currency translation

The Companys financial statements are presented in Indian Rupees, which is also the parent companys functional currency. For each foreign operation, the Company determines the functional currency and items included in the financial statements of each entity are measured using that functional currency. The Company uses the direct method of consolidation and on disposal of a foreign operation the gain or loss that is reclassified to profit or loss reflects the amount that arises from using this method.

Initial recognition

Transactions in foreign currencies entered into by the Company are accounted at the exchange rates prevailing on the date of the transaction or at the average rates that closely approximate the rate at the date of the transaction.

Conversion

Monetary assets and liabilities denominated in foreign currencies are translated at the foreign currency exchange rates at the reporting date. Non-monetary assets and liabilities that are carried at historical cost are translated using the exchange rates at the dates of initial transactions. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value is determined.

Treatment of Exchange Differences

Exchange differences are recognised in profit or loss, except exchange differences arising from the translation of the qualifying cash flow hedges, to the extent the hedges are effective, which are recognised in other comprehensive income (OCI).

Principles of consolidation

Subsidiaries

Subsidiaries are entities controlled by the Group. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

• Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

• Exposure, or rights, to variable returns from its involvement with the investee; and the ability to use its power over the investee to affect its returns.

• The ability to use its power over the investee to affect its returns.

• Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement with the other vote holders of the investee;

• Rights arising from other contractual arrangements;

• The Groups voting rights and potential voting rights;

• The size of the groups holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders.

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the Restated Consolidated Financial Statements from the date the Group gains control until the date the Group ceases to control the subsidiary

Restated Consolidated Financial Statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of the Group uses accounting policies other than those adopted in the Restated Consolidated Financial Statements for like transactions and events in similar circumstances, appropriate adjustments are made to that Group members financial statements in preparing the consolidated financial statements to ensure conformity with the Groups accounting policies.

The financial statements of all entities used for the purpose of consolidation are drawn up to same reporting date as that of the parent company, i.e,. year ended on March 31 / period ended on June 30.

Consolidation Procedures:

• Combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries. For this purpose, income and expenses of the subsidiary are based on the amounts of the assets and liabilities recognized in the Restated Consolidated Financial Statements at the acquisition date.

• Offset (eliminate) the carrying amount of the parents investment in each subsidiary and the parents portion of equity of each subsidiary. Business combinations policy explains how to account for any related goodwill.

• Eliminate in full intragroup assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group (profits or losses resulting from intragroup transactions that are recognized in assets, such as inventory and property, plant and equipment and intangible assets, are eliminated in full). Intragroup losses may indicate an impairment that requires recognition in the Restated Consolidated Financial Statements. Ind AS

12 Income Taxes applies to temporary differences that arise from the elimination of profit and losses resulting from intragroup transactions.

Non-controlling interests ("NCI")

NCI are measured at their proportionate share of the acquirees net identifiable assets at the date of acquisition.

Changes in the Groups equity interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions.

Loss of control

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it:

• Derecognises the assets (including goodwill) and liabilities of the subsidiary.

• Derecognises the carrying amount of any non-controlling interests.

• Derecognises the cumulative translation differences recorded in equity.

• Recognises the fair value of the consideration received.

• Recognises the fair value of any investment retained.

• Recognises any surplus or deficit in profit or loss.

• Reclassifies the parents share of components previously recognized in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.

Subsidiaries considered in the Restated Consolidated Financial Statements

			Ownership Interest in %
Name of Entity	Relationship	Country of Incorporation	June 30, 2022	March 31, 2022	March 31, 2021	March 31, 2020
Kaynes Technology India Private Limited	Holding	India	100.00	100	100.00	100.00
Kaynes International Design & Manufacturing Private Limited	Subsidiary	India	95.21	95.21	95.21	95.21
Kemsys Technologies Private Limited	Subsidiary	India	100.00	100	100.00	100.00
Kaynes Embedded Systems Private Limited	Subsidiary	India	60.00	60.00	60.00	60.00
Kaynes Electronics Manufacturing Private Limited	Subsidiary	India	100.00	NA	NA	NA
Kaynes Technology Europe GMbh	Subsidiary	Switzerland	60.00	60.00	60.00	60.00

Revenue recognition

Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The Company has generally concluded that it is the principal in its revenue arrangements because it typically controls the goods or services before transferring them to the customer.

The specific recognition criteria described below must also be met before revenue is recognised.

Sale of products and services

Revenue from sale of products is recognised at the point in time when control of the asset is transferred to the customer, generally on delivery of the products. Revenue from sale of services is recognized as the service is performed and there are no unfulfilled obligations.

The Company considers whether there are other promises in the contract that are separate performance obligations to which a portion of the transaction price needs to be allocated if any. In determining the transaction price for the sale of goods, the Company considers the effects of variable consideration, the existence of significant financing components, non-cash consideration, and consideration payable to the customer (if any).

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold and services rendered is net of variable consideration on account of various discounts and schemes offered by the Company as part of the contract. This variable consideration is estimated based on the expected value of outflow. Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.

The Company has ascertained that all performance obligations are performed at a point in time.

Contract balances

Contract assets

A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If the Company performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognised for the earned consideration that is conditional. Contract assets are transferred to receivables when the rights become unconditional and contract liabilities are recognized as and when the performance obligation is satisfied. Contract assets are subject to impairment assessment.

A receivable is recognised if an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).

Contract Liability

A contract liability is recognised if a payment is received or a payment is due (whichever is earlier) from a customer before the Company transfers the related goods or services. Contract liabilities are recognised as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).

Other Income

Interest income is recognized on time proportion basis and other income, if any, recognized on the basis of certainty of receipts and on accrual basis and this is included in the finance income in the statement of profit and loss.

For all financial instruments measured either at amortised cost or at fair value through other comprehensive income, interest income is recorded using the effective interest rate ("EIR"). EIR is the rate that exactly discounts the estimated future cash payments or receipts over the expected life of the financial instrument or a shorter period, where appropriate, to the gross carrying amount of the financial asset or to the amortised cost of a financial liability.

When calculating the effective interest rate, the Company estimates the expected cash flows by considering all the contractual terms of the financial instrument but does not consider the expected credit losses. Interest income is included in finance income in the statement of profit and loss.

Government Grant

Government grants are recognised where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. When the grant relates to an expense item, it is recognised as income on a systematic basis over the periods that the related costs, for which it is intended to compensate, are expensed. When the grant relates to an asset, it is recognised as income in equal amounts over the expected useful life of the related asset.

Employee Benefits

• Short-term benefits

Short-term employee benefit obligations are measured on an undiscounted basis and are recorded as expense as the related service is provided. A liability is recognised for the amount expected to be paid, if the Company has a present obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably.

• Provident Fund

This is a defined benefit plan. Aggregate contributions along with interest thereon are paid at retirement, death, incapacitation or termination of employment. Both the employee and the Company make monthly contributions equal to a specified percentage of the employees salary to the provident fund. The Company contributes to the government administered pension fund.

• Gratuity

This is a defined benefit plan. The Company provides for Gratuity covering eligible employees in accordance with the

Payment of Gratuity Act, 1972. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment.

• Leave Encashment

The Company treats accumulated leave expected to be carried forward beyond twelve months, as long-term employee benefit for measurement purposes. Such long term compensated absences are provided for based on the actuarial valuation using the projected unit credit method at the reporting date. Actuarial gains/losses are immediately taken to the statement of profit and loss and are not deferred. The obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer the settlement for at least twelve months after the reporting date.

The Companys liability for Gratuity and Leave encashment are actuarially determined using the Projected Unit Credit method at the end of each year.

Actuarial gains and losses are recognised immediately in the retained earnings through Other Comprehensive Income (OCI) in the period in which they occur. Remeasurements are not reclassified to profit or loss in subsequent periods. The defined benefit obligation recognised in the balance sheet represents the present value of the defined benefit obligation less the fair value of plan assets out of which the obligations are expected to be settled.

Borrowing cost

Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the asset until such time as the assets are substantially ready for the intended use or sale. All other borrowing costs are expensed in the period in which they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing costs.

Financial instruments

Financial assets

Initial recognition and measurement

A financial asset (except trade receivable and contract asset) is recognised initially at fair value plus or minus transaction cost that are directly attributable to the acquisition or issue of financial assets (other than financial assets at fair value through profit and loss). Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss (‘FVTPL) are recognised immediately in the Restated Consolidated Statement of Profit and Loss.

Subsequent measurement

For purposes of subsequent measurement financial assets are classified in two broad categories:

Amortised cost

• Fair Value through Other Comprehensive Income (FVOCI) equity investment; or

• Fair Value through Profit or Loss (FVTPL)

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

Where assets are measured at fair value, gains and losses are either recognised entirely in the statement of profit and loss (i.e. fair value through profit or loss), or recognised in other comprehensive income (i.e. fair value through other comprehensive income).

A financial asset is measured at amortised cost if it meets both of the following conditions and is not designated as at FVTPL:

• the asset is held within a business model whose objective is to hold assets to collect contractual cash flows; and • the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets at FVTPL: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss.

Financial assets at FVOCI: These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in Other Comprehensive Income.

Financial assets at amortised cost: These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.

Derecognition

A financial asset (or, where applicable, a part of a financial asset or part of a Group of similar financial assets) is primarily derecognised (i.e. removed from the Groups statement of financial position) when:

The rights to receive cash flows from the asset have expired, or

The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without material delay to a third party under a pass-through arrangement and either;

• the group has transferred substantially all the risks and rewards of the asset, or

• the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Group has transferred its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all the risks and rewards of the asset, nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of the Groups continuing involvement. In that case, the Group also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.

Impairment of financial assets

The Group assesses impairment based on expected credit losses (ECL) model to the following:

• Financial assets measured at amortised cost;

• Financial assets measured at fair value through other comprehensive income (FVTOCI);

• Expected credit losses are measured through a loss allowance at an amount equal to the 12-months expected credit losses (expected credit losses that result from those default events on the financial instrument that are possible within 12 months after the reporting date); or

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

The Group follows simplified approach for recognition of impairment loss allowance on trade receivables or contract revenue receivables.

Under the simplified approach, the Group does not track changes in credit risk. Rather, it recognises impairment loss allowance based on lifetime ECLs at each reporting date, right from its initial recognition.

The Group uses a provision matrix to determine impairment loss allowance on the portfolio of trade receivables. The provision matrix is based on its historically observed default rates over the expected life of the trade receivable and is adjusted for forward looking estimates. At every reporting date, the historical observed default rates are updated and changes in the forward-looking estimates are analysed.

For recognition of impairment loss on other financial assets and risk exposure, the Group determines that whether there has been a significant increase in the credit risk since initial recognition. If credit risk has not increased significantly, 12-months ECL is used to provide for impairment loss. However, if credit risk has increased significantly, lifetime ECL is used. If, in a subsequent period, credit quality of the instrument improves such that there is no longer a significant increase in credit risk since initial recognition, then the Group reverts to recognising impairment loss allowance based on 12-months ECL.

For assessing increase in credit risk and impairment loss, the Group combines financial instruments on the basis of shared credit risk characteristics with the objective of facilitating an analysis that is designed to enable significant increases in credit risk to be identified on a timely basis.

For investments in subsidiary companies, the company does not provide for impairment losses till indicators of impairment are confirmed.

Financial liabilities

Initial recognition and measurement

All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs. The Groups financial liabilities include trade and other payables, loans and borrowings.

Subsequent measurement

The measurement of financial liabilities depends on their classification, as described below:

Financial liabilities at fair value through profit or loss

Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition as at fair value through profit or loss.

Financial liabilities are classified as held for trading if they are incurred for the purpose of repurchasing in the near term.

Gains or losses on liabilities held for trading are recognised in the statement of profit and loss. Financial liabilities designated upon initial recognition at fair value through profit or loss are designated at the initial date of recognition, and only if the criteria in Ind AS 109 are satisfied.

Loans and borrowings

After initial recognition, interest-bearing loans and borrowings are subsequently measured at amortised cost using the EIR method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the EIR amortisation process.

Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance costs in the statement of profit and loss.

Derecognition

A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit and loss.

Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount is reported in the balance sheet if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.

Property, plant and equipment and intangible assets

Capital work in progress includes cost of property, plant and equipment under installation / under development, net of accumulated impairment loss, if any, as at the balance sheet date. Plant and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term construction projects if the recognition criteria are met. When significant parts of plant and equipment are required to be replaced at intervals, the Group depreciates them separately based on their specific useful lives. All other repair and maintenance costs are recognised in profit or loss as incurred.

Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate assets are derecognised when replaced. All other repairs and maintenance are charged to profit and loss during the reporting period in which they are incurred.

The Company identifies and determines cost of each component/ part of the asset separately, if the component / part has a cost which is significant to the total cost of the asset having useful life that is materially different from that of the remaining asset. These components are depreciated over their useful lives; the remaining asset is depreciated over the life of the principal asset.

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses, if any.

Internally generated intangibles, excluding capitalised development costs, are not capitalised and the related expenditure is reflected in profit or loss in the period in which the expenditure is incurred.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with finite lives are amortised over the 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 at the end of each reporting period with the affect of any change in the estimate being accounted for on a prospective basis. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are considered to modify the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in the statement of profit and loss unless such expenditure forms part of carrying value of another asset.

Intangible assets with indefinite useful lives are not amortised, but are tested for impairment annually, either individually or at the cash-generating unit level. 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.

An intangible asset is derecognised upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit and loss when the asset is derecognised.

Depreciation and amortisation

Depreciation is provided using the straight-line method as per the useful lives of the assets estimated by the management in line with schedule II of the Companies Act, 2013 except in the case of moulds in respect of which the estimated useful life is ascertained as 6 years based on the independent technical evaluation carried out by the internal technical team which is different from the estimated useful life prescribed under Part C of Schedule II of the Companies Act 2013. Building in leasehold land will be depreciated over the remaining useful life of the building as ascertained by an independent valuer over the remaining lease period or life specified in the Companies Act for such building whichever is lower.

Asset Category	Management Estimate of Useful Life and Useful Life as per Schedule II
Land	Unlimited
Buildings	60
Plant and Equipment	15

Asset Category	Management Estimate of Useful Life and Useful
	Life as per Schedule II
Furniture and Fittings	10
Office Equipments	5
Electrical Fittings	10
Computers	3
Vehicles	8
Air conditioners	5
Leasehold Improvement	3
Software	5
Technical know-how	5

The amortisation of software development and intellectual property costs is allocated on a straight-line basis over the best estimate of its useful life of the product. The factors considered for identifying the basis include obsolescence, product life cycle and actions of competitors. The amortization period and the amortization method are reviewed at each year end.

Impairment of tangible and intangible assets

The carrying amounts of assets are reviewed at each balance sheet date if there is any indication of impairment based on internal / external factors. An impairment loss is recognised wherever the carrying amount of an asset exceeds its recoverable amount. The recoverable amount is the greater of the assets net selling price and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and risks specific to the asset. After impairment, depreciation is provided on the revised carrying amount of the assets over its remaining useful life.

Government grants

Inventories

Inventories are valued at lower of cost and net realisable value. However, materials and other items held for use in the production of inventories are not written down below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

• Raw materials and stores and spares: cost includes cost of purchase and other costs incurred in bringing the inventories to their present location and condition.

• Finished goods and work in progress: cost includes cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs.

Cost of raw materials, stores and spares, work-in-progress and finished goods is determined on a weighted average basis.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Leases

The Group has lease contracts for office spaces. The Group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

As lessee

• Right-of-use assets

The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment.

• Lease liabilities

At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

For the arrangements entered into prior to April 1, 2018, the Company has determined whether the arrangement contain lease on the basis of facts and circumstances existing on the date of transition.

Cash and cash equivalents

Cash and cash equivalent in the standalone balance sheet comprise cash at banks and on hand and short-term deposits with an original maturity of three months or less that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value.

For the purpose of the statement of cash flows, cash and cash equivalents consist of cash and short-term deposits, as defined above, as they are considered an integral part of the Companys cash management.

Taxes on Income

Current income tax

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period in the countries where the Parent Company and its subsidiaries operate and generate taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.

Deferred tax

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

Deferred tax assets are recognized for all deductible temporary differences, carry forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilized.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilized. Unrecognised deferred tax assets are re-assessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss (either in other comprehensive income or in equity). Deferred tax items are recognised in correlation to the underlying transaction either in OCI or directly in equity.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Minimum Alternate Tax

Minimum Alternative Tax ("MAT") under the provisions of the Income-tax Act, 1961 ("the IT Act") is recognised as current tax in the statement of profit and loss. The credit availed under the IT Act in respect of MAT paid is recognised as an asset only when and to the extent there is convincing evidence that the Company will pay normal income tax during the period for which the MAT credit can be carried forward for set-off against normal tax liability. MAT credit recognised as an asset is reviewed at each balance sheet date and written down to the extent the aforesaid convincing evidence no longer exists.

Provisions

General

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Group expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognised as a separate asset, but only when the reimbursement is virtually certain. The expense relating to a provision is presented in the statement of profit and loss net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.

Provisions are reviewed at each balance sheet.

Contingent liabilities and contingent assets

A contingent liability exists when there is a possible but not probable obligation, or a present obligation that may, but probably will not, require an outflow of resources, or a present obligation whose amount cannot be estimated reliably. Contingent liabilities do not warrant provisions, but are disclosed unless the possibility of outflow of resources is remote.

Contingent Asset

Contingent assets has to be recognised in the financial statements in the period in which if it is virtually certain that an inflow of economic benefits will arise. Contingent assets are assessed continually and no such benefits were found for the current financial year.

Earnings per share ("EPS")

Basic earnings per share is calculated by dividing the net profit or loss attributable to equity holder of the Group by the weighted average number of equity shares outstanding during the period. Partly paid equity shares are treated as a fraction of an equity share to the extent that they are entitled to participate in dividends relative to a fully paid equity share during the reporting period.

For the purpose of calculating diluted earnings per share, the net profit or loss for the period attributable to equity shareholders of the parent company and the weighted average number of shares outstanding during the period are adjusted for the effects of all dilutive potential equity shares.

Cash flow statement

Cash flows are reported using the indirect method, whereby net profit/ (loss) before tax is adjusted for the effects of transactions of a non-cash nature and any deferrals or accruals of past or future cash receipts or payments and item of income or expenses associated with investing or financing cash flows. The cash flows from regular revenue generating (operating activities), investing and financing activities of the Group are segregated.

Events after reporting date

Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.

RESULTS OF OPERATION

The following table sets forth certain information with respect to our results of operations on a consolidated basis for Fiscal 2020, 2021 and 2022 and for the three months ended June 30, 2022:

Particulars			Fiscal				Three months ended June
		2020	2021		2022		30, 2022
	( million)	Percentage of Total Income	(Rs. million) Percentage of Total Income		(Rs. million) Percentage of Total Income		(Rs. million)	Percentage of Total Income
Revenue
Revenue from operations	3,682.38	99.48%	4,206.27	99.05%	7,062.49	99.42%	1,992.67	99.64%
Finance Income	11.97	0.32%	10.62	0.25%	12.43	0.17%	6.99	0.35%
Other income	7.31	0.20%	29.74	0.70%	28.62	0.40%	0.11	0.06%
Total Income	3,701.66	100.00%	4,246.63	100.00%	7,103.54	100.00%	1,999.77	100.00%
Expenses
Cost of materials consumed	2,603.38	70.33%	2,822.99	66.48%	4,931.07	69.42%	1,585.27	79.27%
Changes in inventories of finished goods and traded goods	(186.58)	(5.04)%	38.23	0.90%	(36.77)	0.52%	(179.97)	8.99%
Employee benefits expense	424.31	11.46%	458.99	10.81%	602.35	8.48%	183.94	9.19%
Depreciation and amortization expense	83.79	2.26%	100.76	2.37%	131.62	1.85%	45.70	2.29%
Finance cost	236.02	6.38%	239.79	5.65%	255.87	3.60%	72.67	3.63%
Other expenses	427.94	11.56%	477.15	11.24%	629.13	8.86%	157.77	7.89%
Total expenses	3,588.86	96.95%	4,137.91	97.44%	6,513.27	91.69%	1,865.38	93.28%
Profit before tax	112.80	3.05%	108.72	2.56%	590.27	8.31%	134.39	6.72%
Tax expense
Income taxes
• Current tax	19.55	0.53%	36.23	0.85%	153.07	2.15%	34.71	1.74%
• Adjustment of tax	(0.47)	(0.01%)	-	-	-	-	-	-

Particulars			Fiscal				Three months ended June
		2020	2021		2022		30, 2022
	(million)	Percentage of Total Income	(Rs. million)	Percentage of Total Income	(Rs. million)	Percentage of Total Income	(Rs. million)	Percentage of Total Income
MAT credit relating to earlier periods	-	-	-	-	-	-	-	-
Deferred tax charge / (benefit)	0.17	0.00%	(24.84)	(0.59%)	20.45	0.29%	(0.78)	(0.04)%
Profit for the year / period	93.55	2.53%	97.33	2.29%	416.75	5.87%	100.46	5.02%
Other comprehensive income Items that will not be reclassified to profit or loss
Remeasurement (loss) on defined benefit plans	9.16	0.25%	(5.41)	(0.13%)	(1.68)	(0.02)%	2.20	0.11%
Exchange differences in translating financial statements of foreign operations	0.06	0.00%	(1.70)	(0.04)%	-	-	(1.81)	(0.09)%
Income tax effect	(3.22)	(0.09)%	1.79	0.04%	(0.15)	0.00%	(1.01)	(0.05)%
Other comprehensive income for the year / period , net of tax
Total comprehensive income for the year / period, net of tax	99.56	2.69%	92.02	2.17%	414.92	5.84%	99.84	4.99%
Less: Share of profit/(Loss) of minority interest	(1.20)	-0.03%	3.56	0.08%	2.27	0.03%	1.54	0.08%
Total comprehensive income for the year / period, net of tax	100.75	2.72%	88.45	2.08%	412.65	5.81%	98.30	4.92%

THREE MONTHS ENDED JUNE 30, 2022

Key Developments

• The Ministry of Commerce and Industry approved our application under the PLI Whitegoods Scheme for Manufacturing of Specified Products at our Manesar plant on June 28, 2022.

Income

Total income was 1,999.77 million in the three months ended June 30, 2022.

Revenue from Operations

Revenue from operations was 1,992.67 million in the three months ended June 30, 2022.

• Sale of goods (net) was 1,913.86 million; and

• Sale of services (net) was 78.81 million.

Finance Income

Finance income was 6.99 million in the three months ended June 30, 2022, consisting of interest received on deposits with banks of 6.83 million, interest received on advances with others of 0.15 million and interest on income tax refund of 0.01 million.

Other Income

Other income was 0.11 million in the three months ended June 30, 2022, consisting of other non-operating income of 0.11 million.

Expenses

Total expenses were 1,865.38 million in the three months ended June 30, 2022.

Cost of Materials Consumed

Cost of materials consumed was 1,585.27 million in the three months ended June 30, 2022, consisting of inventory at the beginning of the year of 1,784.30 million, and purchases of 2,098.48 million, less inventory at the end of the year of 2,245.65 million, less research and development expenses considered separately of 15.96 million.

Changes in Inventories of Finished Goods and Traded Goods

Changes in inventories of finished goods was (179.97) million in the three months ended June 30, 2022, consisting of finished goods of 71.76 million (i.e., closing stock of 164.97 million and opening stock of 236.73 million), and work-in-progress of (251.73) million (i.e., closing stock of 406.40 million and opening stock of 154.67 million).

Employee Benefits Expenses

Employee benefit expenses were 183.94 million in the three months ended June 30, 2022. Salaries and incentive was

168.62 million in the three months ended June 30, 2022. Consequently, contribution to provident fund was 6.22 million in the three months ended June 30, 2022. Gratuity contribution scheme and staff welfare expenses were 3.35 million and

17.64 million in the three months ended June 30, 2022, respectively, less capitalised research and development expenses of 11.89 million.

Depreciation and Amortization Expense

Depreciation and amortization expenses were 45.70 million in the three months ended June 30, 2022. Depreciation of property, plant and equipment was 16.85 million in the three months ended June 30, 2022; amortisation of intangible assets was 17.22 million in the three months ended June 30, 2022; and depreciation of right to use assets of 11.63 million in the three months ended June 30, 2022.

Finance Cost

Finance cost was 72.67 million in the three months ended June 30, 2022. Interest on borrowings was 58.57 million in the three months ended June 30, 2022; interest to vendors was 3.53 million in the three months ended June 30, 2022; Interest on lease liabilities 6.17 million in the three months ended June 30, 2022; interest on others of 0.61 million and other borrowing cost was 4.09 million in the three months ended June 30, 2022.

Other Expenses

Other expenses was 157.77 million in the three months ended June 30, 2022, primarily due to consumption of stores and spares of 35.98 million, contract labour charges of 31.42 million; freight and forwarding charges of 30.24 million; power and fuel expenses of 11.92 million; travelling and conveyance expenses of 8.11 million, bank charges of 2.70 million; repairs and maintenance others of 6.54 million; legal and professional charges of 5.68 million; and rates and taxes of 6.42 million.

Profit before Tax

For the reasons discussed above, profit before tax was 134.39 million in the three months ended June 30, 2022.

Tax Expenses

Current tax was 34.71 million in the three months ended June 30, 2022. Total tax expense amounted to 33.93 million in the three months ended June 30, 2022 including (0.78) million of deferred tax charge.

Profit for the Period

For the various reasons discussed above, we recorded a profit of 100.46 million in the three months ended June 30, 2022.

Other Comprehensive Income

Other comprehensive loss was 0.62 million in the three months ended June 30, 2022.

Total Comprehensive Income for the Period, Net of Tax

Total comprehensive income for the period, net of tax was 98.30 million in the three months ended June 30, 2022.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

EBITDA was 245.66 million in the three months ended June 30, 2022, while EBITDA Margin (EBITDA as a percentage of our revenue from operations) 12.33% in the three months ended June 30, 2022.

FISCAL 2022 COMPARED TO FISCAL 2021

Key Developments

• Our Company raised funds through an equity infusion in the form of CCPS from certain individuals for expansion and to support growth of business.

• Our Company incorporated a wholly-owned subsidiary Kaynes Electronics Manufacturing Private Limited on March 30, 2022.

Income

Total income increased by 67.27% from 4,246.63 million in Fiscal 2021 to 7,103.54 million in Fiscal 2022, primarily attributable to the following:

Revenue from Operations

Revenue from operations increased by 67.90% from 4,206.27 million in Fiscal 2021 to 7,062.49 million in Fiscal 2022 due to the following:

• Sale of goods (net) increased by 71.53% from 3,983.64 million in Fiscal 2021 to 6,833.00 million in Fiscal

2022. This was driven primarily by growth across all our verticals, i.e., automotive, industrial, aerospace, defence, outer-space and nuclear, medical, railways, IoT/ IT and others and consumer.

• Sale of services (net) increased by a 3.08% from 222.63 million in Fiscal 2021 to 229.49 million in Fiscal 2022 account of growth in the business primarily from our medical vertical.

Finance Income

Finance income increased by 17.04% from 10.62 million in Fiscal 2021 to 12.43 million in Fiscal 2022, primarily due to an increase in interest received on deposits with banks from 6.71 million in Fiscal 2021 to 10.59 million in Fiscal 2022 and increase in interest on security deposit from 1.12 million in Fiscal 2021 to 1.57 million in Fiscal 2022.

Other Income

Other income decreased by 3.77%, from 29.74 million in Fiscal 2021 to 28.62 million in Fiscal 2022 on account of decrease in receipt of export incentives from 12.62 million in Fiscal 2021 to 0.28 million in Fiscal 2022 due to withdrawal of MEIS Scheme by Ministry of Commerce and Industry. The decrease in receipt of export incentives was partially offset by increase in exchange differences from 13.64 million in Fiscal 2021 to 28.15 million in Fiscal 2022.

Expenses

Total expenses increased by 57.40% from 4,137.92 million in Fiscal 2021 to 6,513.27 million in Fiscal 2022. This was primarily due to an increase in cost of materials consumed, employee benefits expense, depreciation and amortisation expense, finance cost and other expenses.

Cost of Materials Consumed

Cost of materials consumed increased by 74.68% from 2,822.99 million in Fiscal 2021 to 4,931.07 million in Fiscal 2022 majorly driven by an increase in revenue from operations by 67.90% from 4,206.27 million in Fiscal 2021 to 7,062.49 million in Fiscal 2022 and also the change in revenue segments mix.

Changes in Inventories of Finished Goods and Traded Goods

Changes in inventories of finished goods decreased by 196.18% from 38.23 million in Fiscal 2021 to (36.77) million in Fiscal 2022.

Employee Benefits Expenses

Employee benefits expenses increased by 31.23% from 459.00 million in Fiscal 2021 to 602.35 million in Fiscal 2022. This increase was due to an increase in salaries and incentives from 449.93 million in Fiscal 2021 to 582.33 million in Fiscal 2022, contribution to provident and other funds from 19.21 million in Fiscal 2021 to 25.77 million in Fiscal 2022, gratuity contribution from 2.19 million in Fiscal 2021 to 9.13 million in Fiscal 2022 and staff welfare expenses from 45.03 million in Fiscal 2021 to 49.82 million in Fiscal 2022.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by 30.63% from 100.76 million in Fiscal 2021 to 131.62 million in Fiscal 2022, primarily due to a marginal increase in depreciation of property, plant and equipment from by 7.54% from 60.37 million in Fiscal 2021 to 64.92 million in Fiscal 2022, increase in amortization of intangible assets by 123.44% from 15.70 million in Fiscal 2021 to 35.08 million in Fiscal 2022 and an increase in depreciation of right of use assets by 28.07% from 24.69 million in Fiscal 2021 to 31.62 million in Fiscal 2022.

Finance Costs

Finance costs increased by 6.71%, from 239.79 million in Fiscal 2021 to 255.87 million in Fiscal 2022, primarily on account of an increase in interest on borrowings from 220.39 million in Fiscal 2021 to 224.04 million in Fiscal 2022, primarily on account of increase in term loans availed under ECLGS schemes and minimally due to increase in short term working capital facilities.

Other Expenses

Other expenses increased by 31.85%, from 477.15 million in Fiscal 2021 to 629.13 million in Fiscal 2022. This was primarily due to an increase in:

• Contract labour expenses by 76.80% from 92.42 million in Fiscal 2021 to 163.40 million in Fiscal 2022 on account of increase in pay to contract labour and increase in number of contract labours on account of business growth;

• Consumption of stores and spares by 44.74% from 93.40 million in Fiscal 2021 to 135.19 million in Fiscal 2022;

• Freight forward charges by 30.71% from 75.67 million in Fiscal 2021 to 98.91 million in Fiscal 2021 on account of increased in freight charges.

• Travelling and conveyance by 61.28% from 14.85 million in Fiscal 2021 to 23.95 million in Fiscal 2022;

• Rates and taxes from 12.10 million in Fiscal 2021 to 15.06 million in Fiscal 2022; and

• Increase in power and fuel from 30.03 million in Fiscal 2021 to 37.58 million in Fiscal 2022.

This was partially offset primarily in decrease in research and development expenses by (2.65)% from 12.08 million in Fiscal 2021 to 11.76 million in Fiscal 2022 primarily on account of internal handling of research and development activities for our without reliance on external agencies which reduced professional charges that we may had to pay in the event we used their services, a decrease in donation by (81.38)% from 14.45 million in Fiscal 2021 to 2.69 million in Fiscal 2022 on account of increased donations and charity activities done during the COVID-19 pandemic in Fiscal 2021, and a decrease in business promotion expenses by (12.02)% from 8.40 million in Fiscal 2021 to 7.39 million in Fiscal 2022.

Profit before Tax

For the reasons discussed above, profit before tax was 590.27 million in Fiscal 2022 compared to profit before tax of 108.71 million in Fiscal 2021.

Tax Expenses

Current tax increased to 153.07 million in Fiscal 2022 compared to 36.23 million in Fiscal 2021 due to the increase in profitability of our Company and comparatively the effective tax rate was reduced as our Company had opted tax regime under section 115BAA of the Income-tax Act, 1961Deferred tax also increased from (24.84) million in Fiscal 2022 compared to 20.45 million in Fiscal 2022 due to change of effective tax rate.

Profit/(Loss) for the Year

For the various reasons discussed above, we recorded a profit for the year of 416.75 million in Fiscal 2022 compared to profit for the year of 97.33 million in Fiscal 2021.

Other Comprehensive Income

Other comprehensive loss was 1.83 million in Fiscal 2022 while other comprehensive loss of 5.32 million in Fiscal 2021.

Total Comprehensive income for the year, net of tax

Total comprehensive income for the year was 412.65 million in Fiscal 2022 compared to 88.44 million in Fiscal 2021.

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

EBITDA was 936.71 million in Fiscal 2022 compared to 408.91 million in Fiscal 2021, while EBITDA Margin was 13.26% in Fiscal 2022 compared to EBITDA Margin of 9.72% in Fiscal 2021.

FISCAL 2021 COMPARED TO FISCAL 2020

Key Developments

• Our operations during the first quarter of Fiscal 2021 were significantly impacted on account of lockdowns imposed on account of the COVID-19 pandemic. Consequently, our revenues were adversely affected during the first half of Fiscal 2021.

• In the month of April 2020, we received special permission to operate our facilities to manufacture ventilators, protein analyzers and respirator machine for select customers.

• We purchased the assets and the business of an entity that specializes in manufacturing high precision injection moulded plastic components for engineering applications.

• We were allotted seven acres of land by the Karnataka Industrial Area Development Board at Bandanaguppe, Kellamballi Industrial Area, Chamarajanagar District for the purpose of setting up a new manufacturing facility.

Income

Total income increased by 14.72% from 3,701.66 million in Fiscal 2020 to 4,246.63 million in Fiscal 2021, primarily attributable to the following:

Revenue from Operations

Revenue from operations increased by 14.23% from 3,682.38 million in Fiscal 2020 to 4,206.27 million in Fiscal 2021 attributable as follows:

• Sale of goods (net) increased by 18.29% from 3,367.80 million in Fiscal 2020 to 3,983.64 million in Fiscal 2021. This was driven by growth in our automotive and health care verticals.

• Sale of services (net) decreased by 29.23% from 314.58 million in Fiscal 2020 to 222.63 million in Fiscal 2021 on account of decrease in business primarily from the Indian Railways due to the COVID-19 pandemic.

Finance Income

Finance income decreased by 11.28% from 11.97 million in Fiscal 2020 to 10.62 million in Fiscal 2021, primarily due to a decrease in interest received on deposits with banks from 7.63 million in Fiscal 2020 to 6.71 million in Fiscal 2021 and interest received on advances with others decreased from 3.52 million in Fiscal 2020 to 1.84 million in Fiscal 2021 due to repayment of advances in Fiscal 2021.

Other Income

Other income increased from 7.31 million in Fiscal 2020 to 29.74 million in Fiscal 2021. The increase was on account of:

• Receipt of export incentives amounting to 12.62 million in Fiscal 2021 compared with export incentives amounting to 5.51 million in the Fiscal 2020; and

• Increase in foreign exchange gain / (loss) (net) from (7.91) million in Fiscal 2020 to 13.64 million in Fiscal 2021 on account of decline in the value of the US Dollar due to the impact of COVID-19 and the general economic slowdown.

Expenses

Total expenses increased by 15.30% from 3,588.86 million in Fiscal 2020 to 4,137.91 million in Fiscal 2021. This was primarily due to the increase in cost of materials consumed, purchases of stock-in-trade, employee benefits expense, depreciation and amortisation expense, finance cost and other expenses.

Cost of Materials Consumed

Cost of materials consumed increased by 8.44% from 2,603.38 million in Fiscal 2020 to 2,822.99 million in Fiscal 2021 and the increase is primarily driven by an increase in revenue from operations which grew by 14.23% between Fiscal 2020 and Fiscal 2021.

Changes in Inventories of Finished Goods and Traded Goods

Changes in inventories of finished goods and traded goods increased by 120.49% from (186.58) million in Fiscal 2020 to

38.23 million in Fiscal 2021.

Employee benefits expenses

Employee benefit expenses increased by 8.17% from 424.31 million in Fiscal 2020 to 458.99 million in Fiscal 2021. This was due to an increase in salaries, wages and bonus from 415.51 million in Fiscal 2020 to 457.26 million in Fiscal 2021, contribution to provident and other funds from 14.67 million in Fiscal 2020 to 19.21 million in Fiscal 2021, gratuity contribution scheme from 3.07 million in Fiscal 2020 to 2.19 million in Fiscal 2021, and staff welfare expenses from 41.76 million in Fiscal 2020 to 45.03 million in Fiscal 2021.

Depreciation and Amortization Expense

Depreciation and amortization expense increased by 20.25% from 83.79 million in Fiscal 2020 to 100.76 million in Fiscal 2021, primarily due to an increase in depreciation of property, plant and equipment by 11.09% from 54.35 million in Fiscal 2020 to 60.37 million in Fiscal 2021 on account of additional property, plant and equipment aggregating

226.30 million acquired during the period.

Finance Cost

Finance costs increased marginally by 1.60% from 236.02 million in Fiscal 2020 to 239.79 million in Fiscal 2021. This increase is primarily attributable due to an increase in interest on borrowings by 8.49% from 203.15 million in Fiscal 2020 to 220.39 million in Fiscal 2021 on account of COVID-19 term loans aggregating 153.14 million availed by our Company.

Other Expenses

Other expenses increased by 11.50%, from 427.94 million in Fiscal 2020 to 477.15 million in Fiscal 2021. This was primarily due to increase in:

• Freight forward charges from 22.45 million in Fiscal 2020 to 75.67 million in Fiscal 2021 on account of increased in freight charges.

• Increase in consumption of stores and spares by 17.37% from 79.58 million in Fiscal 2020 to 93.40 million in Fiscal 2021.

• Increase in contract labour charges by 17.02% from 78.98 million in Fiscal 2020 to 92.42 million in Fiscal 2021 on account of increase in pay to contract labour and increase in number of contract labours on account of business growth.

• Increase in donations from 1.24 million in Fiscal 2020 to 14.45 million in Fiscal 2021 on account of donations and charity activities done during the COVID-19 pandemic.

This was partially offset primarily by the decrease in travelling and conveyance expenses by 49.83% from 29.60 million in Fiscal 2020 to 14.85 million in Fiscal 2021 on account of reduction in travel by management and employees due to the travel restrictions imposed due to the COVID-19 pandemic and decrease in rates and taxes by 51.46% from 24.93 million in Fiscal 2020 to 12.10 million in Fiscal 2021 on account of limiting in issuance of bank guarantees and other documentation charges.

Profit before Tax

For the reasons discussed above, profit before tax was 108.72 million in Fiscal 2021 and 112.80 million in Fiscal 2020.

Tax Expenses

Income tax (current tax) increased by 85.32% from 19.55 million in Fiscal 2020 to 36.23 million in Fiscal 2021, offset by an adjustment of tax relating to earlier periods, from (0.47) million in Fiscal 2020 to nil in Fiscal 2021. Deferred tax credit decreased, from 0.17 million in Fiscal 2020 to a deferred tax charge of (24.84) million in Fiscal 2021 on account of our decision to adopt 25.17% effective tax rate.

Profit/(Loss) for the year

For the various reasons discussed above, we recorded a profit for the year of 97.33 million in Fiscal 2021 compared to

93.55 million in Fiscal 2020.

Other Comprehensive Income

Other comprehensive loss was (5.32) million in Fiscal 2021 while other comprehensive income was 6.00 million in Fiscal 2020.

Total Comprehensive Income for the year, net of tax

Total comprehensive income for the year was 88.45 million in Fiscal 2021 compared to 100.75 million in Fiscal 2020.

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA)

EBITDA was 408.91 million in Fiscal 2021 compared to 413.33 million in Fiscal 2020, while EBITDA margin was 9.72% in Fiscal 2021 compared to 11.22% in Fiscal 2020.

LIQUIDITY AND CAPITAL RESOURCES

We have historically financed the expansion of our business and operations primarily through debt financing and funds generated from our operations. From time to time, we have obtained loan facilities to finance our short term working capital requirements.

CASH FLOWS

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

Particulars		Fiscal		Three months ended
	2020	2021	2022	June 30, 2022
			(Rs. million)
Net cash from/(used in) operating activities	452.47	277.30	211.09	(71.13)
Net cash (used in)/from investing activities	(99.26)	(240.84)	(445.27)	(70.13)
Net cash (used in)/from financing activities	(354.13)	(13.39)	272.42	95.63
Cash and cash equivalents at the end of the	7.43	30.50	68.74	23.11
period / year

Operating Activities

Three months ended June 30, 2022

In the three months ended June 30, 2022, net cash used in operating activities was 71.13 million. Net profit before tax was 134.39 million in the three months ended June 30, 2022. Primary adjustments consisted of depreciation and amortisation expense of 45.70 million; interest expense of 72.67 million; and interest income of 6.83 million. Operating profit before working capital changes was 245.96 million in the three months ended June 30, 2022. The main working capital adjustments in the three months ended June 30, 2022, included increase in inventories of 637.26 million; increase in trade receivables of 344.66 million; increase in loans and advances and other assets of 443.56 million; increase in trade payables and other liabilities of 1,097.34 million; and increase in provisions of 11.05 million. Income tax paid was nil.

Fiscal 2022

In the Fiscal 2022, net cash from operating activities was 211.09 million. Net profit before tax was 590.27 million in Fiscal 2022. Primary adjustments consisted of depreciation and amortisation expense of 131.62 million; interest expense of 255.87 million and interest income of 10.59 million. Operating profit before working capital changes was 967.20 million Fiscal 2022. The main working capital adjustments in Fiscal 2022 included an increase in trade receivables of 759.78 million; increase in loans and advances and other assets of 290.92 million; increase in trade payables and other liabilities of 920.62 million; increase in provisions of 13.16 million and increase in inventories of 625.13 million. Income tax paid was 14.06 million.

Fiscal 2021

In the Fiscal 2021, net cash from operating activities was 277.30 million. Net profit before tax was 108.72 million in Fiscal 2021. Primary adjustments consisted of depreciation and amortisation expense of 100.76 million; interest expense of 239.79 million and interest income of 6.71 million.

Operating profit before working capital changes was 442.43 million Fiscal 2021. The main working capital adjustments in Fiscal 2021 included an increase in trade receivables of 280.99 million; decrease in loans and advances and other assets of 160.48 million; increase in trade payables and other liabilities of 102.03 million; increase in provisions of 8.98 million and increase in inventories of 127.55 million. Income tax paid was 28.08 million.

Fiscal 2020

In the Fiscal 2020, net cash from operating activities was 452.47 million. Net profit before tax was 112.80 million in Fiscal 2020. Primary adjustments consisted of depreciation and amortisation expense of 83.79 million; interest expense of 236.02 million; and interest income of 7.63 million.

Operating profit before working capital changes was 426.61 million in Fiscal 2020. The main working capital adjustments in Fiscal 2020, included decrease in trade receivables of 293.12 million; increase in loans and advances and other assets of 120.26 million; Increase in trade payables and other liabilities of 164.93 million; decrease in provisions of 0.10 million and increase in inventories of 293.28 million. Income tax paid was 18.55 million.

Investing Activities

Three months ended June 30, 2022

Net cash used in investing activities was 70.13 million in the three months ended June 30, 2022, primarily on account of purchase of fixed assets of 70.62 million and proceeds from sale of investments / fixed deposits matured of (6.34) million, which was marginally offset by interest received of 6.83 million.

Fiscal 2022

Net cash flow used in investing activities was 445.27 million in Fiscal 2022, primarily on account of purchase of fixed assets of 422.44 million and proceeds from sale of investments / fixed deposits matured of (33.42) million, which was marginally offset by interest received of 10.59 million.

Fiscal 2021

Net cash flow used in investing activities was 240.84 million in Fiscal 2021, primarily on account of purchase of fixed assets of 249.95 million, which was marginally offset by interest received of 6.71 million, proceeds from fixed deposits of 2.40 million.

Fiscal 2020

Net cash flow used in investing activities was 99.26 million in Fiscal 2020, primarily on account of purchase of fixed assets of 312.23 million, and was partially set-off by proceeds from sale of investments / fixed deposits of 205.34 million and interest received of 7.63 million.

Financing Activities

Three months ended June 30, 2022

Net cash from financing activities was 95.63 million in the three months ended June 30, 2022, primarily on account of proceeds from long-term borrowings of 32.66 million, proceeds from short term borrowings of 135.64 million, which was marginally offset by interest expense of 72.67 million.

Fiscal 2022

Net cash from financing activities was 272.42 million in Fiscal 2022, primarily on account of preference share premium received of 223.70 million, proceeds from long-term borrowings of 121.93 million, proceeds from short term borrowings of 178.86 million, which was marginally offset by interest expense of 255.87 million.

Fiscal 2021

Net cash used in financing activities was 13.39 million in Fiscal 2021, primarily on account of proceeds from long-term borrowings of 72.90 million, preference share premium of 259.20 million, which was marginally offset by interest expense of 239.79 million and repayment of short-term borrowings of 116.50 million.

Fiscal 2020

Net cash used in financing activities was 354.13 million in Fiscal 2020, primarily on account of repayment of long-term borrowings of 197.50 million, interest expense of 236.02 million, which was marginally offset by proceeds from short-term borrowings of 79.39 million.

INDEBTEDNESS

As of June 30, 2022, we had total borrowings (consisting of non-current borrowings and current borrowings) of 1,863.76 million. Our total debt/ equity ratio was 0.88 as of June 30, 2022. The following table sets forth certain information relating to our outstanding indebtedness as of June 30, 2022, and our repayment obligations in the periods indicated:

Particulars		As of June 30, 2022
		Payment due by period
			(Rs. million)
	Total	Not later than 1 year	1-3 years	3 -5 years	More than 5 years
Non-Current Borrowings
- Term loan from bank	275.38	-	188.71	86.67	-
- Term loan from others	37.03	-	27.36	9.67	-
- Non-Convertible Debentures	-	-	-	-	-
- Vehicle Loans	13.04	-	12.01	1.03	-
Total Non-Current borrowings	325.45	-	228.08	97.37	-
Current Borrowings
- Cash Credit facility	1,067.14	1,067.14	-	-	-

Particulars		As of June 30, 2022
		Payment due by period
		(Rs. million)
	Total	Not later than 1 year	1-3 years	3 -5 years	More than 5 years
- Loans from Shareholders	0.52	0.52	-	-	-
- Rupee Packaging Credit	139.93	139.93	-	-	-
- Working Capital Demand Loan	255.00	255.00	-	-	-
Current maturities of long-term borrowings
- Term Loans	45.68	45.68	-	-	-
- Non-Convertible Debentures	22.31	22.31	-	-	-
- Vehicle Loans	7.73	7.73	-	-	-
Total Current Borrowings	1,538.31	1,538.31	-	-	-
Total Borrowings	1,863.76	1,538.31	228.08	97.37	-

CONTINGENT LIABILITIES AND OFF-BALANCE SHEET ARRANGEMENTS

As of June 30, 2022, our contingent liabilities that have not been accounted for in our financial statements were as follows:

Particulars	Amount (million)
Claims against the company not acknowledged as debt
- Disputed income tax demand(1)	1.74
- Disputed income tax demand(2)	6.05
- Disputed income tax demand(3)	3.32
- Disputed income tax demand(4)	1.65
- Disputed indirect taxes demand(5)	50.55
Bank guarantees for contractual performance	37.89
Letter of credit issued by bank	7.44
Bond Executed for Customs/Central Excise (covered by bank guarantee to the extent of 8.16 million)	353.21
On account of Bills Discounted with Banks set off against Trade Receivable	450.97
Corporate Guarantee to Subsidiary Company	44.00
Other sums for which company is contingently liable	13.27
Total	970.09

Notes

(1) CPC demand of 1.74 million against the disallowance made by ITO against under 35(2AB) for A.Y. 2016-2017 and thereby reducing the MAT credit availed by the company which was disputed in appeal before CIT(A) and the matter is resolved in Fiscal 2022.

(2) Income tax authorities disallowed R&D expenditure and raised a demand for non-submission of certificate from DSIR, Delhi. We requested for extension of time and in the process of obtaining the certificate to substantiate the claim.

(3) The disallowance on account of delay in payment of employers contribution to EPF and ESI. Filed appeal against the order and submitted the relevant documentation. Assessing officer is in the process of reviewing supporting documents provided by us to substantiate our claim.

(4) Commissioner of Income Tax, Bangalore has issued a notice on short deduction of TDS for various years commencing from Fiscal 2010 to Fiscal 2022 and imposed interest and penalty. Demand appearing in the TDS Portal amounts to 1.65 million. We are in the process of adjusting the demand against the unconsumed challans available. We have already submitted a request to the commissioner for extension of time for reconciliation of TDS.

(5) There are 16 cases relating to excise, VAT, Customs and CST amounting to 50.60 million covering a period commencing from Fiscal 2013 to Fiscal 2019 pertaining to units located in various states in Karnataka, Uttarakhand, Haryana, Tamil Nadu and Maharashtra. Many of the cases required information provided to the concerned authorities and are in progress.

There have been delays in the monthly payments of TDS, though subsequently all amounts have been duly paid. In the last three Fiscals, the Company had received certain TRACES intimations regarding the same and have paid the amounts due along with the applicable interest and relevant late fees, except in few instances which are appearing in contingent liabilities amounting to 1.65 million. All the amounts payable towards Goods and Services Tax ("GST") to the relevant regulatory authorities along with interest and relevant late fees have been paid, as of the date of this Red Herring Prospectus. Further, any delay in payment of GST by the Company has been remitted as on the date of this Red Herring Prospectus. For further information on our contingent liabilities, see "Financial Statements Annexure VI Note 29-Contingent Liabilities and Commitments" on page 326. Except as disclosed in the Restated Consolidated Financial Statements or elsewhere in this Red Herring Prospectus, there are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that we believe are material to investors.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table sets forth certain information relating to our future commitments:

Particulars			As of June 30, 2022
			Payment due by period
	Total	Less than 1 year	1-3 years	3-5 years	More than 5 years
			( million)
Estimated amount of contracts remaining to be executed on capital account and not provided for, net of advances.	28.18	2.69	25.49	-	-
Cumulative dividend on preference shares	-	-	-	-	-
Approval for land conversion from lease to sale of plot no. 20 and plot no. 119 from KIADB is in progress.	12.14	12.14	-	-	-
Estimated conversion cost is considered as a capital commitment remaining unexecuted.
Total	40.32	14.83	25.49	-	-

For further information on our capital and other commitments, see "Financial Statements Annexure VI Note 29-Contingenet Liabilities and Commitments" on page 326.

CAPITAL EXPENDITURES

In Fiscal 2020, 2021, 2022 and in the three months ended June 30, 2022, our capital expenditure towards additions to fixed assets (property, plant and equipment, intangible assets, capital work in progress, intangibles under development and right of use - assets) were 275.23 million, 542.12 million, 633.44 million, and 81.10 million, respectively. The following table sets forth our fixed assets for the periods indicated:

Particulars	Fiscal 2020	Fiscal 2021	Fiscal 2022	For the three months ended June 30, 2022
		(Rs. million)
Property, plant and equipment	502.22	570.65	639.58	636.24
Capital Work in Progress	49.75	10.06	44.20	45.60
Intangible assets	45.14	126.94	289.73	272.51
Intangible under development	69.70	116.17	39.09	67.23
Rights of use assets	86.40	78.58	180.62	196.56
Total	753.21	902.40	1,193.20	1,218.24

RELATED PARTY TRANSACTIONS

We enter into various transactions with related parties in the ordinary course of business. These transactions principally include sale of goods and services to entities where any of our KMPs or their relatives have control or significant influence, sale of goods to subsidiaries and purchase of goods from subsidiaries, dividend paid to the KMPs, investments made in the form of compulsory convertible debentures in one of our Group Companies, rent paid to KMPs, sale of property, plant and equipment assets to KMPs, loan taken from related parties and loan repaid related parties, employee advance to related parties, employee advance received back from related parties, remuneration paid to KMPs and guarantees given to lenders against borrowings.

In Fiscal 2020, 2021 and 2022 and in the three months ended June 30, 2022, the aggregate amount of such related party transactions was (63.10) million, (31.71) million, (83.44) million and (26.99) million, respectively. The percentage of the aggregate value of such related party transactions to our revenue from operations in Fiscal 2020, 2021 and 2022 and in the three months ended June 30, 2022 was (1.71)%, (0.75)%, (1.18)% and (1.35)%, respectively.

For further information relating to our related party transactions, see "Financial Statements Annexure VI Note 30- Related Party Disclosures" on page 326.

AUDITORS OBSERVATIONS

There have been no reservations/ qualifications/ adverse remarks/ matters of emphasis highlighted by our Statutory Auditors in their reports on the audited financial statements as of and for the years ended March 31, 2020, 2021 and 2022 and in the three months ended June 30, 2022.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our activities expose us to market risk, liquidity risk and credit risk. Our board of directors has overall responsibility for the establishment and oversight of our risk management framework.

Market Risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: interest rate risk and currency rate risk. Financial instruments affected by market risk include loans and borrowings, deposits and advances.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to the risk of changes in market interest rates relates primarily to our debt obligations with floating interest rates.

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. Our exposure to the risk of changes in foreign exchange rates relates primarily to our operating activities (when revenue or expense is denominated in a foreign currency) and the Groups net investments in foreign subsidiaries.

Credit Risk

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. We are exposed to credit risk from our operating activities (primarily trade receivables) and from our investing activities, deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.

Customer credit risk is managed by each business unit subject to our established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on an extensive credit rating scorecard and individual credit limits are defined in accordance with this assessment. Outstanding customer receivables are regularly monitored. An impairment analysis is performed at each reporting date on an individual basis for major clients. In addition, a large number of minor receivables are grouped into homogenous groups and assessed for impairment collectively. The calculation is based on exchange losses historical data.

We do not hold collateral as security. We evaluate the concentration of risk with respect to trade receivables as low, as our customers (which are in the nature of reputed banking and financial institutions) are located in several jurisdictions and industries and operate in largely independent markets.

Credit risk from balances with banks and financial institutions is managed by our treasury department. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the management on an annual basis, and may be updated throughout the year subject to approval of the finance committee. The limits are set to minimise the concentration of risks and therefore mitigate financial loss through counterpartys potential failure to make payments.

Liquidity Risk

Liquidity risk is the risk that we may not be able to meet our present and future cash and collateral obligations without incurring unacceptable losses. Our objective is to, at all times maintain optimum levels of liquidity to meet cash and collateral requirements. We closely monitor our liquidity position and deploy a robust cash management system. We maintain adequate sources of financing including loans, debt, and overdraft from both domestic and international banks at an optimised cost.

CHANGES IN ACCOUNTING POLICIES

Other than as required for the preparation of our Restated Consolidated Financial Statements, there have been no changes in our accounting policies during Fiscals 2020, 2021 and 2022, and the three months ended June 30, 2022.

UNUSUAL OR INFREQUENT EVENTS OR TRANSACTIONS

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

SIGNIFICANT ECONOMIC CHANGES THAT MATERIALLY AFFECT OR ARE LIKELY TO AFFECT INCOME FROM CONTINUING OPERATIONS

Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect income from continuing operations identified above in "Managements Discussion and Analysis of Financial Condition and Results of Operations Significant Factors Affecting our Results of Operations" and the uncertainties described in "Risk Factors" on pages 360 and 37, respectively.

KNOWN TRENDS OR UNCERTAINTIES

Our business has been subject, and we expect it to continue to be subject, to significant economic changes arising from the trends identified above in "Managements Discussion and Analysis of Financial Condition and Results of Operations Significant Factors Affecting our Results of Operations" and the uncertainties described in "Risk Factors" on pages 360 and 37, respectively. To our knowledge, except as discussed in this Red Herring Prospectus, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

FUTURE RELATIONSHIP BETWEEN COST AND INCOME

Other than as described in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 37, 196 and 356, respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

NEW PRODUCTS OR BUSINESS SEGMENTS

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

COMPETITIVE CONDITIONS

We operate in a competitive environment. See "Our Business", "Industry Overview" and "Risk Factors" on pages 196, 156 and 37, respectively, for further information on competitive conditions that we face across our various business verticals.

EXTENT TO WHICH MATERIAL INCREASES IN NET SALES OR REVENUE ARE DUE TO INCREASED SALES VOLUME, INTRODUCTION OF NEW PRODUCTS OR SERVICES OR INCREASED SALES PRICES

Changes in revenue in the last three Fiscals and three months ended June 30, 2022 are as described in "Managements Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2022 compared to Fiscal 2021", "Managements Discussion and Analysis of Financial Condition and Results of Operations Fiscal 2021 compared to Fiscal 2020" and "Managements Discussion and Analysis of Financial Condition and Results of Operations Three months ended June 30, 2022" above on pages 379, 381 and 384, respectively.

SEGMENT REPORTING

We primarily operate in the electronics manufacturing segment. Based on the management approach as defined in Ind AS 108 Operating Segments, the chief operating decision maker evaluates our performance and allocates resources based on an analysis of various performance indicators by geographical segments.

Accordingly, we have identified India and outside India as our reportable geographic segments. As expenses, assets and liabilities are not separately identi ed for the individual segments, these are considered as common cost and unallocated.

Hence, information with respect to revenue alone is provided by the Company for the geographical segments identified.

Geographic Segment	Fiscal 2020	Fiscal 2021	Fiscal 2022	Three months ended June 30, 2022
		(Rs. million)
Outside India	755.24	1,078.48	1,411.77	252.59
In India	2,927.14	3,127.79	5,650.72	1,740.08
Total	3,682.38	4,206.27	7,062.49	1,992.67

For further information, see "Financial Statements Annexure VI Note 31-Segment information" on page 330.

SIGNIFICANT DEVELOPMENTS AFTER JUNE 30, 2022 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS

Except as disclosed above and elsewhere in this Red Herring Prospectus, to our knowledge no circumstances have arisen since June 30, 2022 that could materially and 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.

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