Kizi Apparels Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the year ended on March 31, 2024, March 31, 2023 and March 31, 2022. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Prospectus. You should also read the section entitled "Risk Factors" beginning on page 20 of this Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and, is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year") are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Kizi Apparels Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for the year ended on March 31, 2024, March 31, 2023 and March 31, 2022 included in this Prospectus beginning on page 119 of this Prospectus.

BUSINESS OVERVIEW

Our Company is led by our Promoter & Managing Director, Abhishek Nathani, who is in the field of garment designing, manufacturing and trading for last 6 years. He has established a proprietorship concern in the name and style of M/s. Aaika Creations, in November, 2017. M/s. Aaika Creations was started with a vision to bring a wave in the manufacturing industry in terms of meeting the end-to-end requirement of our customers enhancing the overall quality parameters. In Aaika Creations, he started off with some small & medium sized brands which could give him some consistent business and also, he can place himself in the market with bigger brands. His first year was with full of struggle as he was in the process of getting the knowledge and intricacy of the business & its loop holes, however, he focuses on the business potentiality. In initial years of his business, he focused on building up a strong team and strengthening roots in the market, studying the scope and opportunities in the business.

For more details, please refer chapter titled "Business Overview" on page 79 of this Prospectus

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

There is no any significant development occurred in the Company except following.

1. The cash credit limit has been increased from Rs. 300.00 Lakhs to Rs.425.00 Lakhs of Axis Bank Limited dated May 29, 2024

2. The Company avails the discounting facility from Shield Finance Private Limited of Rs. 50.00 Lakhs dated July, 2024

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

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

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

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

3. Companys inability to retain the experienced staff

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

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

6. Competition with existing and new entrants

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure I" beginning under

Chapter titled "Restated Financial Information" beginning on page 119 of the Prospectus.

RESULTS OF KEY OPERATIONS

Income from Operations:

The Issuer company is primarily engaged in the business of garment designing, manufacturing and trading for last 6 years. In FY 2023-24, the companys total revenue from operation was Rs.2,026.51 Lakhs, which is increased 30.91% in compare to F.Y. 2022-23. The rise in product is because of Our Company has signed agreement with M/s. Absolute Brands and Retails Private Limited (ABRPS), Banglore, vide Agreement dated June 05, 2023 and Agreement with M/s. Fab India Limited (FIL), New Delhi, vide Vendor Agreement (to Manufacture and Supply) dated June 21, 2023 for manufacturing of Branded products in our Company.

Cost of Material Consumed:

The Cost of Material Consumed for F.Y. 2023-24 was Rs.1,646.41 Lakhs against the cost of Material Consumed of Rs.1,002.71 Lakhs in F.Y. 2022-23. The cost of material consumed was 81.24 % of the total revenue from operations in F.Y 2023-24 as against 64.77 % of total revenue from Operations in F.Y 2022-23. This surge in demand has consequently led to an escalation in material consumption.

Employee Benefits Expenses:

The Employee expenses for F.Y. 2023-24 was Rs.66.82 Lakhs against the expenses of Rs.162.96 Lakhs in F.Y. 2022-23. The employee benefit expenses was decreased by 59.009 % as compare to FY 2022-23

Finance Cost:

The Finance Cost for the F.Y. 2023-24 was Rs.62.36 Lakhs against the cost of Rs.41.62 Lakhs in the F.Y. 2022-23 showing increase of 49.83%. The company had borrowed from NBFC and banks in FY 2023-24 for the working capital requirement so that we can grow the business of the company.

Other Expenses

The other expenses for the F.Y. 2023-24 was Rs.138.77 Lakhs against the Rs.259.60 Lakhs in F.Y. 2022-23 showing decrease by 46.54% due to significant decrease in the job work expenses. Power and Fuel Expenses, Consumable expenses and other manufacturing expenses.

Depreciation and Amortisation Expenses

The Depreciation for F.Y. 2023-24 was Rs.17.83 Lakhs as compared to Rs.7.03 Lakhs for F.Y. 2022-23. The depreciation increased by 153.46 % in F.Y. 2023-24 as compared to F.Y. 2022-23.

EBDITA

The EBDITA for F.Y. 2023-24 was Rs.161.34 Lakhs as compared to Rs.115.75 Lakhs for F.Y. 2022-23, because of an increase in the business of the company by 30.91% in FY 2023-24 as compared to FY 2022-23.

Income from Operations.

The Issuer company is primarily engaged in the business of garment designing, manufacturing and trading for last 6 years In FY 2022-23, the companys total revenue from operation was Rs.1,548.05 Lakhs, which is increased 210.28% in compare to F.Y. 2021-22. The rise in product sales has resulted in a corresponding increase in revenue. This surge in demand has consequently led to an escalation in material consumption as well.

Cost of Material Consumed

The Cost of Material Consumed for F.Y. 2022-23 was Rs.1,002.71 Lakhs against the cost of Material Consumed of Rs.319.61 Lakhs in F.Y. 2021-22. The cost of material consumed was 64.77 % of the total revenue from operations in F.Y 2022-23 as against 64.06 % of total revenue from Operations in F.Y 2021-22. The sales surged by 210.28% in the financial year 2022-23 compared to 2021-22, leading to an extension of the credit period for customers from 57 days to 126 days. This lead to a rise in trade receivables.

Employee Benefits Expenses:

The Employee expenses for F.Y. 2022-23 was Rs.162.96 Lakhs against the expenses of Rs.53.24 Lakhs in F.Y. 2021-22. The employee benefit expenses was increased by 206.09% as compare to FY 2021-22

Finance Cost:

The Finance Cost for the F.Y. 2022-23 was Rs.41.62 Lakhs against the cost of Rs.23.73 Lakhs in the F.Y. 2021-22 showing increase of 75.39%. The company had borrowed from NBFC and banks in the FY 2022-23 for the growth of the business.

Other Expenses

The other expenses for the F.Y. 2022-23 was Rs.259.60 Lakhs against the Rs.108.55 Lakhs in F.Y. 2021-22 showing increase by 139.15% due to significant increase in the job work expenses.

Depreciation and Amortisation Expenses

The Depreciation for F.Y. 2022-23 was Rs.7.03 Lakhs as compared to Rs.7.94 Lakhs for F.Y. 2021-22. The depreciation decreased by 11.44 % in F.Y. 2022-23 as compared to F.Y. 2021-22.

EBDITA

The EBDITA for F.Y. 2022-23 was Rs.115.75 Lakhs as compared to Rs.13.27 Lakhs for F.Y. 2021-22, because of an increase in the business of the company by 210.28% in FY 2022-23 as compared to FY 2021-22.

CASH FLOW

Cash flow March 31, 2024

The negative cash flow from operating activities increase in trade payables and retention of high inventory in the company. The negative cash flow from Investing activities due to acquiring / increasing in Goodwill of the company.

Cash flow March 31, 2023

The negative cash flow from operating activities due to retention of high inventory in the company. The Outflow of the cash flow from Investing activity due to investment in the shares of the Company.

Cash flow March 31, 2022

As far as Cash flow from operating activities were concerned, the companys funds blocked in change in working capital is more than the Profit earned by the Company hence the cash flow from Operating activity was negetive. The inflow of the cash flow from financing activity was utilized for purchase of fixed assets.

1. Unusual or infrequent events or transactions

Except COVID-19 or any such kind of pandemic, there have been no unusual or infrequent events or transactions that have taken place during the last three years.

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

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page 20 of this Prospectus. To our knowledge, except as we have described in this Prospectus, there are no known factors which we expect to bring about significant economic changes.

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

Income and sales of our Company on account of major activities derives from providing clothing products for more information investor can refer "Business Overview" beginning on page 79

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

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

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

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page 20 in this Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

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

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

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

The Company is in the business of service industry, the relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 74 of this Prospectus.

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

Our Company has not announced any new services or business segment

9. The extent to which business is seasonal.

Our business is not seasonal

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

Our Company is not dependent on any single or few suppliers or customers.

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Business Overview" beginning on pages 74 and 79, respectively of this Prospectus.