L.K.Mehta Polymers Ltd Management Discussions

You should read the following discussion of our financial position and results of operations together with our Restated Standalone Financial Information, which have been included in this Draft Prospectus. You should also read the section entitled "Risk Factors " beginning on page no. 17 and "Forward Looking Statements " beginning on page no. - 10, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations.

The following discussion and analysis of our financial position and results of operations is based on our Restated Financial Statements for the period ended 30^th, June, 2024 and for the financial years ended March 31^st, 2024, 2023 and 2022 including the related notes and reports, included in this Draft Prospectus prepared in accordance with requirements of the Companies Act and restated in accordance with the SEBI Regulations, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. Our Financial Statements, as restated have been derived from our audited financial statements for the respective period and years. Accordingly, the degree to which our Restated Financial Statements will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level off a miliarity with Indian GAAP, Companies Act, SEBI Regulations and other relevant accounting practices in India.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" on page nos. 17 and 10, respectively, and elsewhere in this Draft Prospectus. Our Financial Year ends on March 31 of each year. Accordingly, all references to a particular Financial Year are to the 12 months ended March 31 of that year.

BUSINESS OVERVIEW

Our Company was originally incorporated as Public Limited, under the Companies Act, 1956 ("Companies Act") in the name and style of "L.K.Mehta Polymers Limited" on January 2^nd, 1995 under the provisions of the Companies Act, 1956 vide Certificate of Incorporation issued by the Registrar of Companies, Gwalior, Madhya Pradesh with a object to acquire and takeover the existing proprietorship business of a sole proprietorship as going concern carried by Suresh Kumar Mehta in the name and style as ‘M/s. Sajjan Plastic Industries.

Our Company is promoted by Mr. Babu Lal Mehta and Mr. Kamlesh Mehta with experience ranging upto 30 and 35 years respectively. L.k. Mehta was incorporated on January 2, 1995, and over the years, swiftly establishing itself as a beacon of innovation and quality in the industry. With an initial product range encompassing ropes, twines and granules.

Our company is actively involved in the trading and manufacturing of comprehensive array of Plastic products, addressing the diverse needs of our discerning customers. Our product line is specifically designed to encompass a wide range of ropes and twines, including monofilament ropes, danline ropes, tape ropes, baler twines, packaging twine (sutli). We are also engaged in trading and reprocessing of basic raw materials like polypropylene granules and polyethylene granules for our various customers.

Our company sells the products under the brand name of "Super Pack", establishment of its brand, "SuperPack", served as a testament to the companys commitment to delivering superior quality and building enduring relationships with customers. This brand identity not only resonated with consumers but also distinguished LK Mehta Polymers Ltd. from its competitors, solidifying its reputation in the industry. Our Company based on its experience and its standards, conforms to major specifications and customer requirements. Our products quality has enabled us to achieve the ISO 9001:2015 certification.

We have a strong track record of revenue growth and profitability. The following table sets forth certain Key Performance Indicators for the years indicated:

Key Performance Indicators of our Company:

(Rs. In Lakhs)

Particulars	As on June, 30th, 2024	As on 31st March, 2024	As on 31st March, 2023	As on 31st March, 2022
Revenue from Operations1	393.87	1816.26	1675.21	1142.81
Other Income	7.60	71.14	38.59	50.86
Total Income	401.47	1887.40	1713.80	1193.67
Growth in Revenue from Operations (%) 2	-	8%	47%	-
EBITDA3	41.78	101.41	13.53	21.25
EBITDA Margin (%)4	10.61%	5.58%	0.81%	1.86%
PAT5	20.97	85.56	-0.76	4.08
PAT Margin (%)6	5.22%	4.53%	0%	0.34%
Net Debt7	663.62	637.33	388.64	438.35
Total Equity8	361.02	301.79	216.23	216.99
ROE (%)9	8.09%	28.35%	-0.35%	1.88%
ROCE (%)10	46.63	160.56	40.90	60.80
EPS (Basic & Diluted) 11	0.75	3.42	-0.03	0.16

Note:

(1) Revenue from operation means revenue from sales;

(2) Growth in Revenue from Operations (%) is calculated as Revenue from Operations of the relevant period minus Revenue from Operations of the preceding period, divided by Revenue from Operations of the preceding period;

(3) EBITDA is calculated as Profit before tax + Depreciation + Finance Costs - Other Income;

(4) EBITDA Margin is calculated as EBITDA divided by Revenue from Operations;

(5) PAT is calculated as Profit before tax - Taxes;

(6) PAT Margin is calculated as PAT for the period/year divided by total income.

(7) Net debt = Non-current borrowing + current borrowing - Cash and cash equivalent, Bank balance, and Investments.

(8) Total Equity = Equity share capital + other equity.

(9) ROE = Net profit after tax / Total equity.

(10) ROCE = Profit before tax and finance cost / Capital employed*

*Capital employed = Total Equity +Non-current borrowing + Current Borrowing + Deferred Tax Liabilities.

(11) EPS = Net Profit after tax, as restated, attributable to equity shareholders divided by weighted average number of equity shares outstanding during the year/ period.

After the date of last Audited accounts i.e., 30^th June, 2024, the Directors of our Company confirm that, there have not been any significant material developments except as stated below;

1. The Board of Directors of the Company approved the Initial Public Offering of our Company in their meeting held on 12^th July, 2024.

2. The Shareholders of the Company approved the Initial Public Offering of our Company in their meeting held on 06^th August, 2024.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer Restated Financial Statements under chapter titled "Restated Financial Statements" beginning on page nos. 132 of this Draft Prospectus.

Significant Developments after June 30^th, 2024 that may affect our Future Results of Operations:

The Directors confirm that there have been no events or circumstances since the date of the last financial statements as disclosed in the Draft Prospectus which materially or adversely affect or is likely to affect the profitability of our Company, or the value of our assets, or our ability to pay liabilities within next twelve months.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page no. 17 of this Draft Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. Our dependence on limited number of customers/suppliers/brands for a significant portion of our revenues;

2. Any failure to comply with the financial and restrictive covenants under our financing arrangements;

3. Our ability to retain and hire key employees or maintain good relations with our workforce;

4. Impact of any reduction in sales of our services/products;

5. Rapid Technological advancement and inability to keep pace with the change;

6. Increased competition in industries/sector in which we operate;

7. General economic and business conditions in India and in the markets in which we operate and in the local, regional and national economies;

8. Changes in laws and regulations relating to the Sectors in which we operate;

9. Political instability or changes in the Government in India or in the government of the states where we operate could cause us significant adverse effects;

10. Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner;

11. Occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition; and

12. Our inability to successfully diversify our product offerings may adversely affect our growth and negatively impact our profitability.

BRIEF FINANCIALS OF OUR COMPANY

(? In Lakhs)

			For the year ended March 31,
Particulars	For the period ended June 30th, 2024		2024		2023		2022
	Amount	% of Total Income	Amount	% of Total Income	Amount	% of Total Income	Amount	% of Total Income
Revenue from operations	393.87	98.11%	1816.26	96.23	1675.21	97.75	1142.81	95.74
Other Income	7.60	1.89%	71.14	3.77	38.59	2.25%	50.86	4.26
Total Income	401.47	100%	1887.40	100	1713.80	100%	1193.67	100
EXPENDITURE
Cost Of Material Consumed	2.13	0.53%	28.98	1.54	12.58	0.73	2.63	0.22
Purchase of Trading Goods	340.49	84.81%	1783.99	94.52	1529.71	89.26	1151.58	96.47
Changes In Inventories	-11.67	-2.90%	-170	-9.00	59.01	3.44	-96.96	-8.12
Employees Benefits Expenses	2.01	0.50%	7.73	0.41	5.94	0.35	7.93	0.66
Finance Costs	17.40	4.33%	59.88	3.17	40.76	2.38	46.80	3.92
Depreciation And Amortization Expense	2.76	0.69%	11.99	0.64	11.23	0.66	11.31	0.95
Other Expenses	19.12	4.76%	64.14	3.40	54.45	3.18	56.38	4.72
TOTAL EXPENSES	372.24	92.72%	1786.72	94.67	1713.67	99.95	1179.68	98.83
Profit Before Tax	29.23	7.28%	100.68	5.33	0.13	0.01	14.00	1.17
Tax Expenses	-	-	15.12	0.80	0.89	0.05	9.92	0.83
Current Tax	8.25	2.05%	13.32	0.70	4.29	0.25	0.70	0.06
Deffered Tax (Liabilities) / Assets	-	-	1.80	0.10	-3.40	-0.20	9.21	0.77
Profit After Tax	20.97	5.22%	85.56	4.53	-0.76	0.04	4.08	0.34

Financial Performance Highlights for the period ended 30^th June, 2024:

The following descriptions set forth information with respect to the key components of our profit and loss statement.

1. INCOME:

Revenue from Operation: Our Companys total income during the period (April 01, 2024 to June 30th, 2024) was ? 401.47 Lakhs. The revenue from operation was ? 393.87 Lakhs which is almost 98.11% of Total Income which consist of sales Containers.

Other Income: Other Income during the period (April 01, 2024 to June 30th, 2024) was ? 7.60 Lakhs which is 1.89% of the Total income which consist of interest income, commission income, profit on sale of business units and cash discounts from vendors.

2. EXPENSES:

Total Expenses: Our Companys total expenses during the said period (April 01, 2024 to June 30th, 2024) were ?372.24 Lakhs. The Total Expenditure is almost 82.43% of Total Income. The main constituent of Total Expenditure is Change in Inventories which was ?328.82 Lakhs, which is almost 81.90 % of Total Revenue.

Cost of Material Consumed, Purchase of Trading Goods and Changes in Inventories: Cost of Material consumed, Purchase of Trading Goods and changes in Inventories for the said period (April 01, 2024 to June 30th, 2024) was ? 330.95 Lakhs, almost 82.44% of Total income.

Employee Benefits Expense: The Employee Benefit Expenses for the said period (April 01, 2024 to June 30th, 2024) was ? 2.01 Lakhs, almost 0.50% of Total income.

Finance Cost: The Finance Cost for the said period (April 01, 2023 to June 30th, 2024) was ? 17.40 Lakhs, almost 4.33% of Total income.

Depreciation and Amortization Expense: We recognize Depreciation and Amortization expenses on a Straight Line basis and at the rates prescribed under schedule II of the Companies Act, 2013.

The cost for the said period (April 01, 2024 to to June 30th, 2024) was ? 2.76 Lakhs, almost 0.69% % of Total income.

Other Expenses: Other expenses includes direct expenses such as power and fuel, repairs and maintenance, freight, and other manufacturing costs, indirect expenses such as rent, audit fees, telephone expenses and other such kind of miscellaneous expenses. Total other expenses for the said period (April 01, 2024 to June 30th, 2024) was ? 19.12 Lakhs, almost 4.76% of Total income.

3. PROFIT:

Profit/ (Loss) Before Tax: The Restated Profit Before Tax for the said period (April 01, 2024 to June 30th, 2024) was ? 29.23 Lakhs, almost 7.28% % of Total income.

Profit/ (Loss) after Tax: The Restated Profit After Tax for the said period (April 01, 2024 June 30^th, 2024) was ?20.97 Lakhs, almost 5.22% % of Total income.

Comparison of Financial Performance of Fiscal 2024 with Fiscal 2023

The following descriptions set forth information with respect to the key components of our profit and loss statement.

1. INCOME:

Total Revenue: During FY 2023-24, the companys revenue from operations and other income increased to ?1887.40 Lakhs, from the amount of ?1713.80 Lakhs recorded in FY 2022-23. Due to the increase in demand of plastic ropes, also the company was able to expand their client base and increase the revenue.

2. EXPENSES:

Total Expenses: The total expenditure for FY 2023-24 has been increased to ? 1786.72 Lakhs as against ?1713.67 Lakhs in FY 2022-23. This increase was mainly due to increase in purchase of stock in trade comprising of plastic granules and plastic ropes during the years and due to increase in finance cost during the year.

Cost of Material Consumed, Purchase of Trading Goods and Changes in Inventories: Cost of Material consumed, purchase of Trading goods and Changes in Inventories for FY 2023-24 have increased to ?1642.97 Lakhs, from the amount of ? 1601.29 Lakhs in FY 2022-23. This was mainly due to increase in purchase of trading goods.

Employee Benefits Expense: The Employee Benefit Expenses for FY 2023-24 have increased to ?7.73 Lakhs, from the amount of ?5.94 Lakhs in FY 2022-23. This was mainly due to increase in salaries and wages.

Finance Cost: The Finance Cost for the FY 2022-2023 have increased to ?59.88 Lakhs as against ?40.76 Lakhs in the FY 2022-23. This was mainly due to increase in Short Term Borrowings.

Depreciation and Amortization Expense: The Depreciation and Amortization Expenses for FY 2023-24 have increased to ^11.99 Lakhs, from the amount of ^11.23 Lakhs in FY 2022-23. This was mainly due to addition to factory building in the prescribed period.

Other Expenses: The Other Expenses for the FY 2022-2023 have increased to ?64.14 Lakhs as against to ?54.45 Lakhs in the FY 2022-23. This increase was majorly due to increase in freight and job-work expenses.

3. PROFIT:

Profit/ (Loss) Before Tax: The Restated Profit Before Tax for FY 2023-24 has been significantly increased to ?100.68 Lakhs as against ?0.13 Lakhs in the FY 2022-23. This was mainly due to increase in the sales volume during the fiscal year.

Profit/ (Loss) After Tax: The restated Profit After Tax for FY 2023-24 has been significantly increased to ?85.56 Lakhs as against loss of ?0.76 Lakhs in the FY 2022-23. This was mainly due to increase in the sales volume during the fiscal year.

•NIK-1 LIO.

Comparison of Financial Performance of Fiscal 2023 with Fiscal 2022

The following descriptions set forth information with respect to

1. INCOME:

Total Revenue: During FY 2022-23 the revenue from operation and other income of the company increased to ?1675.21 Lacs as against ? 1142.81 Lacs in FY 2021-22. This increase was mainly due to our association with new dealers clients along with increased revenue from existing clients.

2. EXPENSES:

Total Expenses: The total expenditure for FY 2022-23 increased to ?1713.67 Lakhs as against ?1179.68 Lakhs in FY 2021-22. This increase was mainly due to increase in Purchase of stock in trade and operational expenses due to increase in revenue from operation as mentioned above.

Cost of Material Consumed and Changes in Inventories: Cost of Material consumed and Changes in Inventories for FY 2022-23 have increased to ? 1601.29 Lakhs, from the amount of ? 1057.25 Lakhs in FY 2021 -22. This was mainly due to increase in purchase of trading goods.

Employee Benefits Expense: The Employee Benefit Expenses for FY 2022-23 have decreased to ?5.94 Lakhs, against the amount of ?7.93 Lakhs in FY 2021-22. This was mainly due to decrease in salaries and wages.

Finance cost: The Finance Cost for the FY 2022-2023 have decreased to ?40.76 Lakhs as against ?46.80 Lakhs in the FY 2021-22. This increase was mainly due to decrease in Short term borrowings.

Depreciation and Amortization Expense: The Depreciation and Amortization Expenses for FY 2022-23 have slightly decreased to ^11.23 Lakhs, from the amount of ^11.31 Lakhs in FY 2021-22.

Other Expenses: The Other Expenses for the FY 2022-2023 decreased to ?54.45 Lakhs as against ?56.38 Lakhs in the FY 2021-22. This decrease was mainly due to decrease in operational and administrative expenses like rent, sales & promotion, office expenses and insurance expenses.

3. PROFIT:

Profit/ (Loss) Before Tax: The Restated Profit Before Tax for FY 2022-23 decreased to ?0.13 Lakhs as against ?14.00 Lakhs in the FY 2021-22. This decrease was mainly due to increase in consumption costs.

Profit/ (Loss) after Tax: The Restated Loss for the FY 2022-23 increased to ? 0.76 Lakhs as against profit of ? 4.08 Lakhs in the FY 2021-22. This Significant decrease was mainly due to increase in consumption costs.

CASH FLOWS:

(? In Lakhs)

		For the Year ended March 31st
Particulars	For the period ended June 30th, 2024	2024	2023	2022
Net Cash from Operating Activities	(39.77)	(200.72)	55.10	62.28
Net Cash from Investing Activities	0.80	11.19	34.00	48.20
Net Cash from Financing Activities	37.09	199.17	(89.09)	(53.66)

Cash Flows from Operating Activities

Net cash Flow from operating activities for the period ended 30^th June 2024 was at (?39.77) Lakhs as compared to the Profit Before Tax at ? 29.23 Lakhs. This was primarily due to increase in Trade receivables.

Net cash Flow from operating activities for year ended 31^st March, 2024 was at (?200.72) Lakhs as compared to the Profit Before Tax at ? 100.68 Lakhs. This was primarily due to increase in inventories.

Net cash flow from operating activities for year ended 31^st March, 2023 was at ? 55.10 Lakhs as compared to the profit Before tax at ? 0.13 Lakhs. This was primarily due to decrease in inventories and loans and advances.

Net cash Flow from operating activities for year ended 31^st March, 2022 was at ?62.28 Lakhs as compared to the Profit Before Tax at ? 14.00 Lakhs. This was primarily due to decrease in trade receivables.

Cash Flows from Investment Activities

For the year period ended 30^th June, 2024 net cash outflows from Investing Activities were ? 0.80 Lakhs. This was mainly on account of interest and other income.

For the year ended 31^st March, 2024, net cash outflows from Investing Activities were ? 11.19 Lakhs. This was mainly on account of sale of fixed assets and interest and other income.

For the year ended 31^st March, 2023, net cash outflows from Investing Activities were ? 34.00 Lakhs. This was mainly on account of sale of fixed assets.

For the year ended 31^st March, 2022, net cash outflows from Investing Activities were ? 48.27 Lakhs. This was mainly on account of sale of fixed assets.

Cash Flows from Financing Activities

For the period ended 30^th June, 2024, net cash Inflow from financing activities was ? 37.09 Lakhs. This was primarily on account of right issue of equity shares, movement in Long term and Short term Borrowings and Interest paid.

For the year ended 31^st March, 2024, net cash Inflow from financing activities was ? 199.17 Lakhs. This was primarily on account of movement in Long term and Short term Borrowings and Interest paid.

For the year ended 31^st March, 2023, net cash outflow from financing activities was ? 89.09 Lakhs. This was primarily on account of repayment of Short term Borrowings and interest Paid.

For the year ended 31^st March, 2022, net cash outflow from financing activities was ? 53.66 Lakhs. This was primarily on account of repayment of Long term Borrowings and interest Paid.

Information required as per Item (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

1. Unusual or infrequent events or transactions.

There has not been any unusual trend on account of our business activity. There are no Unusual or infrequent events or transactions in our Company. The transactions are as per usual business operations.

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

Except for any change in economic policy affecting service industry in India, there are no other significant economic changes that may materially affect or likely to affect income 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.

Apart from the risks as disclosed under Section "Risk Factors " beginning on page no. 17 in the Draft 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.

4. Future changes in relationship between costs and revenues.

Our Companys future costs and revenues will be determined by growth of industry in which we operate.

5. Increases in net sales or revenue and Introduction of new products or services or increased sales prices.

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

6. Status of any publicly announced New Products or Business Segment.

Our Company has not announced any new products.

7. Seasonality of business.

The nature of business is non seasonal. For further detail, please refer to section titled "Risk Factors" beginning on page no. 17 of this Draft Prospectus.

8. Competitive conditions.

Competitive conditions are as described under the Chapters "Industry Overview " and "Business Overview" beginning on page nos. 80 and 89, respectively of the Draft Prospectus.

9. Details of material developments after the date of last balance sheet i.e. June 30^th, 2024.

Except as mentioned in this Draft Prospectus, no circumstances have arisen since the date of last financial statement until the date of filing the Draft Prospectus, which materially and adversely affect or are likely to affect the operations or profitability of our Company, or value of its assets, or its ability to pay its liability within next twelve months.