KRM Ayurveda Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the financial year ended/period ended March 31, 2025, March 31, 2024, and for the financial year ended March 31, 2023. One should read the following discussion and analysis of our financial condition and results of operations in conjunction with our section titled "Financial Statements" and the chapter titled

"Financial Information" on page 263 of the Draft Red Herring Prospectus. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors" on page 28 of this Draft Red Herring Prospectus. Actual results could differ materially from those contained in any forward-looking statements and for further details regarding forward-looking statements, kindly refer the chapter titled "Forward-Looking Statements" on page 18 of this Draft Red Herring Prospectus. Unless otherwise stated, the financial information of our Company used in this section has been derived from the Restated Financial Information. Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-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 KRM Ayurveda Limited (Formerly Known as KRM Ayurveda Private Limited), our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Statements for year ended Financial Years ended/period ended March 31, 2025, March 31, 2024 and March 31, 2023 included in this Draft Red Herring Prospectus beginning on page 263 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Our Company, established in 2019, is operating a network of hospitals and clinics across multiple cities in India as well as marked its presence in abroad through telemedicines consulting and sales. We integrate authentic Ayurvedic wisdom with modern practices to address chronic, lifestyle, and preventive health needs through personalized care and wellness programs. Presently, Company runs 6 (Six) Hospitals and 5 (Five) Clinics at different locations in the country. Though KRM Ayurveda started off as a kidney hospital and it continues to provide specialized treatment for kidney disorders, the Company has widened its horizons in the past few years and has now evolved for various health disorders such as kidney disorder, Liver Cirrhosis, Diabetes, Fatty Liver, Arthritis etc. Company has marked its reach globally as well through Tele-Consultancy Services. Our hospitals and clinics offer a comprehensive range of services, including:

In-Patient & Out-Patient Care: Treatment for chronic diseases, lifestyle disorders, and post-operative rehabilitation.

Panchakarma Therapies: Detoxification and rejuvenation programs.

Specialized Clinics: Orthopedic care, skin and hair care, womens wellness, geriatric care.

Wellness Packages: Stress management, weight management, preventive health plans.

Medicinal Sales: Dispensary of in-house and certified Ayurvedic medicines.

Diet & Lifestyle Counseling: Personalized nutrition and yoga consultation.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR

As per mutual discussion between the Board of the Company and BRLM, in the opinion of the Board of the Company there have not arisen any circumstances since the date of the last financial statements as disclosed in the Draft Red Herring Prospectus and which materially and adversely affect or is likely to affect within the next twelve

The Board of Directors of our Company has approved and passed a resolution on September 03, 2025 to authorize the Board of Directors to raise the funds by way of Initial Public Offering.

The Shareholders of our Company has approved and passed a resolution on September 09, 2025 to authorize the issue by way of Initial Public Offering.

The Shareholders of our company appointed Mr. Puneet Dhawan as Managing Director w.e.f. March 15, 2025in the Extra- Ordinary General Meeting held on March 15, 2025.

The Shareholders of our company appointed Mr. Sanchit Hans as Whole Time Director w.e.f. March 15, 2025 in the Extra- Ordinary General Meeting held on March 15, 2025.

The shareholders of our Company appointed Mrs. Tanya Dhawan as Non-Executive Director in the Extra Ordinary General Meeting held on September 30, 2024

The shareholders of our Company appointed Miss. Laxmi and Ms. Vandana Gupta as Independent Directors in the Extra-Ordinary General Meeting held on January 21, 2025.

The board of directors in its meeting held on March 07, 2025 appointed Ms. Pooja Garg as Company Secretary & Compliance officer w.e.f. March 10, 2025.

The board of directors in its meeting held on April 29, 2025 Mr. Avtar Singh Rana as Chief Financial Officer of the Company w.e.f. May 01, 2025, respectively.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled

"Risk Factor" beginning on page 28 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

Changes, if any, in the regulations / regulatory framework / economic policies in India and / or in foreign countries, which affect national & international finance.

Companys results of operations and financial performance;

Performance of Companys competitors;

Significant developments in India‘s economic and fiscal policies;

Failure to adapt to the changing needs of industry and in particular Sector may adversely affect our business and financial condition;

Volatility in the Indian and global capital market;

MANAGEMENTs DISCUSSION ON RESULTS OF OPERATION

On the basis of restated financial statement

(Rs. In Lakhs)

S.no. Particulars	For the year ended March 31, 2025	% of total income	For the year ended March 31, 2024	% of total income	For the year ended March 31, 2023	% of total income
I Revenue from Operations	7,655.27	99.48%	6,715.57	99.38%	8,928.71	99.90%
II Other Income	39.70	0.52%	41.60	0.62%	8.88	0.10%
III Total Income	7,694.97	100.00%	6,757.17	100.00%	8,937.59	100.00%
Expenses
a) Cost of materials consumed	1,326.38	17.24%	1,088.92	16.12%	1,900.69	21.27%
Change in Inventories of Finished
b) goods, WIP and Stock in trade	(376.28)	(4.89)%	(84.95)	(1.26)%	(37.51)	(0.42)%
c) Employee benefits expenses	1,869.98	24.30%	1,947.99	28.83%	1,911.15	21.38%
d) Finance costs	212.43	2.76%	200.70	2.97%	38.96	0.44%
Depreciation & Amortisation
e) expenses	104.39	1.36%	101.90	1.51%	64.18	0.72%
f) Other expenses	2,924.26	38.00%	3,029.97	44.84%	4,051.55	45.33%
IV Total expenses	6,061.16	78.77%	6,284.53	93.01%	7,929.01	88.72%
V Profit before Tax (III-IV)	1,633.80	21.23%	472.64	6.99%	1,008.58	11.28%
VI Tax Expense:
a) Current tax expense	425.52	5.53%	128.01	1.89%	255.13	2.85%
b) (Deferred tax	(1.44)	0.02%	3.41	0.05%	(6.35)	(0.07)%
Total tax expense	424.08	5.51%	131.42	1.94%	248.78	2.78%
VII Profit for the year	1,209.72	15.72%	341.22	5.05%	759.80	8.50%

Our Significant Accounting Policies

For Significant accounting policies please refer Significant Accounting Policies, under Chapter titled Financial Statements beginning on page 263 of the Draft Red Herring Prospectus.

Overview of Revenue & Expenditure

The following discussion on results of operations should be read in conjunction with the Restated Financial statements for the Financial Year 2024-25, Financial Year 2023-24 & Financial Year 2022-23. Our revenue and expenses are reported in the following manner:

Revenue

Revenue of operations

We are engaged in the business of operating Ayurvedic multi-speciality hospitals and in the development and sale of proprietary and generic Ayurvedic medicines. Our offerings encompass a wide range of formulations including capsules, tablets, syrups, gels, oils, resins, and powders, designed to address diverse healthcare requirements with authenticity and effectiveness. In addition to our product portfolio, we emphasize holistic patient care through our hospital network, delivering preventive, curative, and wellness-oriented Ayurvedic treatments and services

Other Income

Other Income mainly includes interest income on fixed deposits.

Expenditure

Our total expenditure primarily consists of various expenses necessary for smooth operations of the company.

Cost of material consumed

Cost of material consumed includes raw material required by our processing unit in order to create and pack our medicines. It also includes purchase of same products that we use in our therapies.

Changes in inventories of finished goods, work-in-progress and stock-in-trade

Change in inventories of finished goods, work-in-progress and stock-in-trade includes open and closing inventory of finished goods.

Employee benefit expense

The Employee benefit expense Salaries & Wages, Salary Incentives, Directors Remuneration, EPF Employees Contribution, Gratuity expenses etc.

Finance Cost

Finance cost includes interest paid on various bank loans.

Depreciation and Amortization Expenses

Depreciation and Amortization Expenses majorly includes depreciation on Property, Plant & Equipment.

Other Expenses

Other Expenses include various expenses like Advertisement Expenses, Rent Expenses, Courier Charges, Office Expenses, Reversal of Input Tax credit, Royalty Charges etc.

FISCAL YEAR ENDED MARCH 31, 2025, COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2024 (BASED ON RESTATED FINANCIAL STATEMENTS)

Revenues

Total Income

Total Income for FY25 stood at Rs.7,694.97 lakhs whereas in FY24 it was Rs.6,757.17 lakhs representing an increase of 13.88%. Reason: The increase is mainly due to an increase in revenue from sale of hospital services.

Revenue from operations

Revenue from operation for FY25 stood at Rs. 7,655.27 lakhs whereas in FY24 it was Rs. 6,715.57 lakhs representing an increase of 13.99%.

Reason: The reason for increase in revenue from operation is due to an increase in the revenue from sale of services. From FY24 to FY25 revenue from services increased by more than 300% contributing majorly to the increase in revenue from operations.

(Amount in Lakhs)

Particulars	For the year ended 31 March 2025	For the year ended 31 March 2024
Revenue from Operations	7,655.27	6,715.57
Revenue from services	2,731.97	651.95
Percentage of revenue from sale of service	35.69%	9.71%

Other Income

Other Income for FY25 stood at Rs. 39.70 lakhs whereas in FY24 it was Rs. 41.60 lakhs representing a decrease of 4.58%.

Reason: The decrease in other income is due to a fall in interest received in fixed deposits

(Amount in Lakhs)

Particulars	For the year ended 31st March 2025	For the year ended 31st 2024 March
Interest on fixed deposits	38.89	41.00
Interest on Dividend UHBVNL	0.80	0.51
Interest from TPDDL	-	0.09
Total	39.70	41.60

Total Expenses

Total Expenses for FY25 were standing at Rs. 6,061.16 lakhs and in FY24 it was at Rs. 6,284.53 lakhs representing a decrease of 3.55%.

Reason: The reason for decrease in total expenses is due to a decrease in the other expenses and employee benefit expense as compared to the previous year.

Cost of material consumed

The cost of material consumed includes cost of material consumed plus change in inventories of Finished goods, WIP and Stock in Trade for FY25 stood at Rs. 950.10 lakhs whereas in FY24 it was standing at Rs.1,003.97 lakhs representing a decrease of 5.37%.

Reason: The decrease in cost of materials consumed is directly linked to the decline in sale of products. The company has also optimized costs and utilized resources more efficiently, contributing to the reduction in material consumption.

Employment Benefit Expenses

Employment Benefit Expenses for the financial year ended 31^st March 2025, stood at Rs.1,869.98 lakhs and for the financial year ended 31^st March 2024 it was at Rs. 1,947.99 lakhs representing a 4.00% decrease from the previous year.

Reason: In FY25, the employee benefit expense fell due to fall in average number of employees from FY24.

Finance Cost

Finance cost for the financial year ended 31^st March 2025 stood at Rs. 212.43 lakhs whereas for the financial period ended 31^st March 2024 it was 200.70 lakhs representing an increase of 5.84%.

Reason: In FY25, there is a major increase in the total borrowings which increased the interest cost ultimately increasing the finance cost for the year.

(Amount in Lakhs)

Particulars	For the period ended 31st March 2025	For the period ended 31st March 2024
Total Borrowings	3,120.00	2,317.49
Finance Cost	212.43	200.70

Depreciation and Amortization Expenses

Depreciation and Amortization Expenses for the financial period ended 31^st March 2025 was Rs. 104.39 Lakhs whereas for the financial year ended 31^st March 2024 it was Rs. 101.90 Lakhs representing an increase of 2.44%.

Reason: Increase in depreciation was primarily due to purchase of Plant & Machinery, Motor Vehicles, Office Equipment and which as compared to fiscal year of 2024 were increased by Rs. 25.17 lakhs, 23.80 lakhs, and 16.57 lakhs respectively. Details of WDV of PPE and increase in depreciation as follows:

(Amount in Lakhs)

Particulars	For the period ended 31st March 2025	For the period ended 31st March 2024
Plant & Machinery	69.24	44.07
Motor Vehicles	27.64	3.84
Office Equipment	39.75	23.18
Total	136.63	71.09
YOY Increase	65.54
YOY increase in depreciation	10.38

Other Expenses

Other expenses for the financial year ended 2025 were Rs.2,924.26 lakhs and for the financial year ended 2024 it was Rs.3,029.97 lakhs representing a decrease of 3.49%.

Reason: The decrease in other expenses was primarily driven by lower advertising spend, which accounted for a significant portion among other expenses. The reduction in advertisement expense was due to the companys allocation of resources towards its services segment, which offers better profit margins.

(Amount in Lakhs)

Particulars	For the period ended 31st March 2025	For the period ended 31st March 2024
Advertisement Expenses	1,528.05	1,952.15
Courier Charges	193.48	255.08
Telephone and Internet Expenses	47.02	51.18
Software Expenses	11.84	17.71

Profit before tax

Profit before tax for the period ended 31^st March 2025 stood at Rs. 1,633.80 lakhs and for the period ended 31^st March 2024 it was Rs. 472.64 Lakhs representing an increase of 245.68%.

Reason: The increase in profit before tax was primarily driven by an increase in revenue from operations.

Tax Expense

Tax Expense for the period ended 31^st March 2025, stood at Rs. 421.28 lakhs and for the period ended 31^st March 2024 it was Rs. 131.28 lakhs representing an increase of 220.90%.

Reason: The Tax expense increase in FY25 due to an increase in the profit before tax for the financial period ended 2025. Increase in tax expense is in line with the increase in the total income of the company.

Profit after tax

Profit after tax for the period ended 31^st March 2025, stood at Rs. 1,212.52 lakhs and for the year ended 31^st March 2024 it was Rs. 341.36 lakhs representing an increase of 255.20%.

Reason:

(Amt in Lakhs, except %)

Particulars	For the period ended 31st March 2025	For the period ended 31st March 2025
Revenue from operations	7,655.27	6,715.57
YoY change	13.99%
Total Expense	6,061.20	6,284.51
YoY change	(3.55)%
Profit after Tax	1,209.72	341.22
PAT Margin	15.76%	5.05%

Revenue

During the financial year 2025 the company expanded their revenue stream from sale of products to sale of services. This was done due to the fact that profit margins were better in services along with better scalability of business. In FY25, revenue from operations rose mainly due to a nearly four-fold increase in service income..

Expense

As the company moved its focus towards the service sector, the pattern of expenses also changed. Hospitals require fewer employees, which reduced employee benefit costs. The company also began keeping higher stock levels to ensure supplies are always available for hospital use. In addition, advertisement expenses decreased, as earlier most of the spending was to promote products. Together, these factors led to an overall reduction in expenses.

PAT Margin

The increased revenue from services and decrease in overall expense were the main reason for the profit margin to increase.

FISCAL ENDED MARCH 31, 2024, COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2023 (BASED ON RESTATED FINANCIAL STATEMENTS)

Revenues

Total Income

Total Income for the Financial Year 31^st March 2024, stood at Rs. 6,757.17 Lakhs whereas in Financial Year 31^st March 2023 it stood at Rs. 8,937.59 Lakhs representing a decrease of 24.40%.

Reason: The main reason for decrease in total income is decrease in revenue from operation.

Revenue of operations

Net revenue from operations for the Financial Year 31^st March 2024, stood at Rs. 6,715.57 Lakhs whereas in Financial Year 31^st March 2023 it stood at Rs. 8,928.71 Lakhs representing a decrease of 24.79%.

Reason: During the financial year 2024 the company was in an expansion process from sale of products towards sale of services. During this process the company was spending its resources towards the establishment of hospitals, due to this shifted focus the revenue went down for the period.

Other Income

Other Income for the Financial Year 31^st March 2024, stood at Rs. 41.60 Lakhs whereas in the Financial Year 31^st March 2023 it stood at Rs. 8.88 Lakhs represent an increase of 368.47%

Reason: The increase in other income was due to increase in the interest received on fixed deposits

(Amt in Rs. Lakhs)

Particulars	For the period ended 31st March 2024	For the period ended 31st March 2023
Interest on fixed deposits	41.00	8.83
Interest on Dividend UHBVNL	0.51	0.05
Interest from TPDDL	0.09	-
Total	41.60	8.88

Expenditure

Total Expenses

Total Expenses for the Financial Year 31^st March 2024, stood at Rs. 6,284.53 lakhs and in FY23 it Rs.7,929.01 lakhs representing a decrease of 20.74%.

Reason: The expenses in FY24 decreased due to a major reduction in other expenses and cost of material consumed.

Cost of material consumed

The cost of material consumed for FY24 was at Rs. 1,003.97 lakhs and in FY23 it was Rs. 1,863.18 lakhs representing a decrease of 46.12%

Reason: The decrease in cost of materials consumed is directly linked to the decline in sale of products. The company has also optimized costs and utilized resources more efficiently, contributing to the reduction in material consumption.

Employee benefit expense

The Employee benefit expense for the Financial Year 31^st March 2024, stood at Rs. 1,947.99 Lakhs whereas in Financial Year 31^st March 2023 it stood at Rs. 1,911.13 Lakhs representing an increase of 1.93%.

Finance Cost

The Finance Cost for the Financial Year on 31^st March 2024, stood at Rs. 200.70 Lakhs whereas in the Financial Year 31^st March 2023 it stood at Rs 38.96 Lakhs representing an increase of 415.15% from the previous years.

Reason: The increase in borrowing was due to an overall increase in the borrowings as show in the below table. The borrowing was undertaken to finance the acquisition process.

(Amount in Lakhs)

Particulars	For the period ended 31st March 2024	For the period ended 31st March 2023
Total Borrowings	2,317.49	1,987.41
Finance Cost	200.70	38.96

Depreciation and Amortization Expenses

The Depreciation and Amortization Expenses for the Financial Year 31^st March 2024, stood at Rs. 101.90 Lakhs whereas in the Financial Year 31^st March 2023 it stood at Rs. 64.18 Lakhs representing an increase of 58.77%.

Reason: In FY 24, we have given depreciation on plant and machinery of Rs. 50.55 lakhs as compared to previous year amounting to Rs. 9.54 lakhs. The increase in depreciation on plant and machinery was due to addition of building of 541.60 lakhs and the depreciation charged on FY 2023 was not for the full financial year whereas the depreciation given on FY 2024 was for full Financial Year.

Other Expenses

The Other Expenses for the Financial Year March 31, 2024, stood at Rs. 3,029.97 Lakhs whereas in Financial Year 31^st March 2023 it stood at Rs. 4,051.55 Lakhs representing a decrease of 25.21%.

Reason: The decrease in other expenses

(Amount in Lakhs)

Particulars	For the year ended 31st March 2024	For the year ended 31st March 2023
Advertisement Expenses	1,952.15	2,822.68
Courier Charges	255.08	425.37
Telephone and Internet Expenses	51.18	71.02
Miscellaneous Expenses (Security expenses, festival expenses, office expenses etc)	45.72	83.89
Write offs	12.70	60.71

Profit before Tax

The profit before tax for the Financial Year ended 31^st March 2024 stood at Rs. 472.64 Lakhs and for the Financial year ended 31^st March 2023 was Rs. 1,008.58 lakhs representing a decrease of 53.14%

Reason: The profit before tax saw a decline due to a fall in revenue from FY23 to FY24.

Tax Expense

Tax Expense for the Financial Year ended 31^st March 2024, stood at Rs. 126.56 lakhs and for the financial year ended 31^st March 2023 it was Rs. 261.13 lakhs, representing a decrease of 51.53%.

Reason: The fall in tax expense is due to a fall in the profit before tax.

Profit after Tax

The profit after tax for the Financial Year 31st March 2024, stood at Rs. 346.08 Lakhs whereas in Financial Year 31st March 2023 it stood at Rs 747.45 Lakhs representing a decrease of 53.70%.

Reason:

(Amt in lakhs, except %)

Particulars	For the year ended 31 March 2024	For the year ended 31 March 2023
Revenue from operations	6,715.57	8,928.71
Percentage change	(24.79)%
Total expense	6,284.53	7,929.01
Percentage change	(20.74)%
Profit after Tax	346.08	747.45
PAT Margin	5.12%	8.36%

During FY24, the company underwent a major expansion phase towards establishment of hospital so that they can expand into the services like in-house treatment through Ayurveda. So, to achieve this goal the company started focusing its significant time and resources towards expansion and acquisition of property, plant, and equipment (PPE) as can be seen in the financials as-well. Due to this the company was unable to generate as much sales as FY23, hence there was a fall in revenue.

Expenses

During the expansion phase the employee benefit costs remained stable but because the expansion was financed through additional debt it led to higher finance costs. Furthermore, the increase in the asset base resulted in higher depreciation expenses.

PAT Margin

The fall in revenue and an increase in the expenses collectively contributed to a decline in the PAT margin.

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

1. Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

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

Other than as described in the section titled Risk Factors beginning on page 28 of this Draft Red Herring Prospectus, to our knowledge there are no known significant economic changes that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

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

Other than as described in this Draft Red Herring Prospectus, particularly in the sections Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 28 and 265, respectively, to our knowledge, there are no known trends or uncertainties that are expected to have a material adverse impact on our revenues or income from continuing operations.

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

The income and sales of our Company on account of major activities derives from the business is carrying and forward activities.

5. Future changes in the relationship between costs and revenues, in case of events such as future increase in cost of service and freight & forwarding expenses that will cause a material change are known.

Our Companys future costs and revenues can be indirectly impacted by an increase in the cost of services and freight & forwarding expenses.

6. Future relationship between Costs and Income

Our Companys future costs and revenues will be determined by competition, demand/supply situation, interest rates quoted by banks & others.

7. The 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 our revenues are by and large linked to increases in the volume of business.

8. Total turnover of each major industry segment in which the issuer company operates.

The Company operates in the Pharmaceutical Industry. Relevant industry data, as available, has been included in the chapter titled "Our Industry" beginning on page 128 of this Draft Red Herring Prospectus.

9. Status of any publicly announced new products or business segments.

Our Company has not announced any new services and segment / scheme, other than disclosure in this Draft Red Herring Prospectus.

10. The extent to which the business is seasonal.

Our business is not seasonal in nature.

11. Competitive Conditions

We face competition from existing and potential competitors, which is common for any business. We have, over a period of time, developed certain competitive strengths which have been discussed in the section titled Our Business on page 164 of this Draft Red Herring Prospectus.