Lamosaic India Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Prospectus. You should also read the section entitled "Risk Factors" on page 20 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 financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the ICDR Regulations and restated as described in the report of our auditor dated December 04, 2023 which is included in this Draft Prospectus under "Financial Statements". The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.

Overview of the Company

Our Company was originally formed as a Partnership Firm pursuant to Deed of Partnership dated January 07, 2020 in the name and style of "Swastik Marketing", thereafter the firm got registered under the Partnership Act, 1932 ("Partnership Act") having Firm Registration Number PN000005192 in the name and style of "Swastik Marketing" dated December 19, 2022. The firm was thereafter converted from Partnership Firm to a Public Limited Company under Companies Act, 2013 with the name and style of "Lamosaic India Limited" and received a Certificate of Incorporation from the Registrar of Companies, Pune dated June 13, 2023. The Companys Corporate Identity Number is U31001PN2023PLC221416. For further details, pertaining to change of name and registered office of our Company, please refer the chapter titled "Our History and Certain Corporate Matters" beginning on page 102 of this Draft Prospectus.

Our Company is engaged into plywood and lamination industry. Our Company is into trading of decorative laminates, acrylic sheets, printing paper (base), plywood and others. Additionally, to expand the business, our Company has entered into manufacturing of flush door and other customized products from the month of September 2023. Our Company also provides a one stop customized solutions i.e.; right from designing to manufacturing to supplying flush doors and laminated products.

Our Company has a network of direct distributors and / or dealers across Maharashtra through whom it promotes market and sells its products. Additionally, our Company also sells its products through one of our franchisee located at Mumbai.

We have our own in-house designing team who constantly keep themselves updated on developing the latest design as per the market demand. As on the date of the Draft Prospectus, our Company has a wide variety of portfolio for our products such as laminated sheets, acrylic sheets, etc.

Our Promoters, namely Mr. Vinod Visaria Juthalal, Mr. Jitesh Khushalchand Mamaniya and Mr. Jay Manilal Chheda have experience of more than ten years altogether in the decorative laminates and plywood industry.

For more information on our Companys business, please refer to chapter titled "Business Overview" on page no. 87 of this Draft Prospectus.

COVID 19 Pandemic:

Pursuant to outbreak of coronavirus disease (COVID-19) worldwide and its declaration as global pandemic, the Government of India declared lockdown on March 24, 2020, followed by several restrictions imposed by the Governments across the globe on the travel, goods movement and transportation considering public health and safety measures, which had some impact on the Companys supply chain during March, 2020. The Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its customers, employees, vendors and business partners. The management has exercised due care, in concluding on significant accounting judgments and estimates, inter-alia, recoverability of receivables, inventory, based on the information available to date, both internal and external, while preparing the Companys financial results as of and for the year ended 31st March, 2020.

Significant Developments Subsequent to the Last Financial Year

After the date of last audited accounts i.e., September 30, 2023, the Directors of our Company confirm that, there have not been any significant material developments which materially and adversely affect or is likely to affect within the next twelve months for the trading or profitability of the Company, the value of its assets or its ability to pay its liability. However, following material events have occurred after the last audited period

1) The Board of Directors via its Board resolution passed on November 02, 2023 authorized the funds to be raised by making an Initial Public Offering.

2) The Shareholders via its Resolution passed at the EGM held on November 27, 2023 authorized the funds to be raised by making an Initial Public Offering.

3) The financial statement-Audit Report for September 30, 2023 was approved by Board resolution dated November 02, 2023.

Significant Developments subsequent to September 30, 2023

Except as set out above, to our knowledge, no circumstances have arisen since the date of the last financial statements as disclosed in this Draft Prospectus which materially or adversely affect or are likely to affect, our operations or profitability, or the value of our assets or our ability to pay our material liabilities within the next 12 months.

The business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factor" beginning on page no. 20 of this Draft Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

• General economic and demographic conditions;

• Fluctuations in foreign and Indian currency;

• Significant developments in FMCG sector;

• Our ability to obtain the necessary licenses in timely manner;

• Our ability to attract and retain our Manpower;

• Our ability to expand its existing distribution network;

• Changes in laws or regulations in FMCG sector;

• Changes in Segment Contribution to Revenue.

Our Significant Accounting Policies:

For Significant accounting policies please refer Significant Accounting Policies, "Annexure D" beginning under "Auditors Report and Financial Information of our Company" on page no. 127 of this Draft Prospectus.

Discussion on Results of Operations:

The following discussion on results of operations should be read in conjunction with the audited financial results of our Company for the period ended September 30, 2023 and for the financial years ended March 31, 2023, 2022 and 2021.

Our Results of Operation

For Six months period ending on September 30, 2023

Main Components of our Profit and Loss Account

(Rs. In Lakhs)

Particulars	Sep-23	% of Total Income
I. Income
I. Revenue From Operation	2092.82	100.00%
II. Other Income	0.08	0.00%
III. Total Income (I+II)	2092.90	100.00%
IV. Expenses
Cost of Material Consumed	1346.87	64.35%
Employee Benefits Expenses	20.70	0.99%
Finance Cost	101.74	4.86%
Depreciation and Amortization Expenses	22.16	1.06%
Other Expenses	60.78	2.90%
Total Expenses	1552.24	74.17%
V. Profit before tax (III-IV)	540.65	25.83%
VI. Extraordinary items	0.00	0.00%
VII. Profit Before Tax After Extra items(V-VI)	540.65	25.83%
VIII Tax expenses
1. Current taxes	136.03	6.50%
2. Deferred tax	-1.75	-0.08%
Profit after tax and before extraordinary items	406.38	19.42%
Extraordinary items	0.00	0.00%
Net Profit after extraordinary items available for appropriation	406.38	19.42%
Proposed Dividend	0.00	0.00%
Dividend distribution tax	0.00	0.00%
Net profit carried to Balance sheet	406.38	19.42%

Income - Our total income comprises of revenue from operations and other income.

Revenue from Operations- Our revenue from operation as a percentage of our total income was 100.00%, 99.73%, 99.79% and 100.00% for the period ending 30^th September, 2023 and Financial Years ended March 31, 2023, March 31, 2022 and March 31, 2021 respectively.

Expenditure- Our total expenditure primarily consists of Cost of Material Consumed, Changes in inventories of finished goods and Stock in trade, employee benefit expenses, Depreciation, finance costs and Other Expenses.

Employee Benefit Expenses- Our employee benefits expense comprises of Salaries and wages, Director Remuneration & Staff Welfare Expenses.

Finance costs- Our Finance cost expenses comprises of Interest Expenses & other borrowing costs.

Other Expenses- Other expenses primarily include Manufacturing Expenses, Transportation Administrative & Selling Expenses, etc.

Provision for Tax- The provision for current taxation is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

(Rs. In Lakhs)

Particulars	2023	% of Total Income	2022	% of Total Income	2021	% of Total Income
I. Income
I. Revenue From Operation	3167.27	99.73%	1001.31	99.79%	264.43	100.00%
II. Other Income	8.58	0.27%	2.14	0.21%	0.00	0.00%
III. Total Income (I+II)	3175.85	100.00%	1003.45	100.00%	264.43	100.00%
IV. Expenses
Cost of Material Consumed	2347.95	73.93%	854.38	85.14%	226.31	85.58%
Employee Benefits Expenses	57.59	1.81%	33.60	3.35%	21.49	8.13%
Finance Cost	112.33	3.54%	27.11	2.70%	1.77	0.67%
Depreciation and Amortization Expenses	27.02	0.85%	0.62	0.06%	0.02	0.01%
Other Expenses	70.30	2.21%	19.51	1.94%	7.26	2.74%
Total Expenses	2615.19	82.35%	935.22	93.20%	256.85	97.13%
V. Profit before tax (III-IV)	560.66	17.65%	68.22	6.80%	7.58	2.87%
VI. Extraordinary items	0.00	0.00%	0.00	0.00%	0.00	0.00%
VII. Profit Before Tax After Extra items (V-VI)	560.66	17.65%	68.22	6.80%	7.58	2.87%
VIII Tax expenses
1. Current taxes	141.06	4.44%	17.16	1.71%	1.91	0.72%
2. Deferred tax	12.46	0.39%	0.17	0.02%	0.00	0.00%
Profit after tax and before extraordinary items	407.14	12.82%	50.89	5.07%	5.68	2.15%
Extraordinary items	0.00	0.00%	0.00	0.00%	0.00	0.00%
Net Profit after extraordinary items available for appropriation	407.14	12.82%	50.89	5.07%	5.68	2.15%
Proposed Dividend	0.00	0.00%	0.00	0.00%	0.00	0.00%
Dividend distribution tax	0.00	0.00%	0.00	0.00%	0.00	0.00%
Net profit carried to Balance sheet	407.14	12.82%	50.89	5.07%	5.68	2.15%

COMPARISON OF THE FINANCIAL PERFORMANCE OF PERIOD ENDING MARCH 2023 WITH MARCH 2022

Revenue from Operations

During the Financial Year 2022, the total revenue from operations was Rs 1001.31 lakhs. This has increased to Rs 3167.27 in FY23. Rapid growth of more than 200% was achievable as the company was able to buy more stock at better credit terms from creditors than earlier which eventually led to increase in sales.

Revenue - Other Income

During Financial Year 2021-22 other income was 0.21% of total revenue and in FY23 other income was 0.27%. This increased slightly due to rent income of Rs 3.75 lakhs and bank interest of Rs 4.83 lakhs.

Total Expenses

The total expenses consist of various sub-headings that include Cost of Material Consumed, Employee Benefits Expense, Finance Cost, Depreciation & Amortization Expense, and Other Expenses.

Cost of Material Consumed

During Financial Year 2021-22 the Cost of Material Consumed was 85.14% of total income whereas in FY23 it decreased to 73.93% of total income. This was due to better purchasing terms and as some of outsourced manufacturing/processing was done in-house which led to a decrease in the overall cost.

Employee expenses

Expenses incurred on staff and executives and their welfare during the financial year 202-23 was Rs 57.59 lakhs, which is a increase from the Rs 33.60 lakhs from the previous year. Although in value terms it is an increase of Rs 23.99 lakhs but in relation to total revenue it has decreased to 1.81% in FY23 from 3.35% in FY22. This is because of economy of scales achieved.

Finance and Interest cost

The Finance and Interest Cost incurred during the financial year 2023 is Rs 112.33 lakhs which is an increase from Rs 27.11 lakhs in FY22. This is mainly due to new bank loans taken for business and purchase of shop.

Depreciation and amortization expense

During the financial year 2023 depreciation and amortization expense of the company has increased to Rs 27.02 lakhs from Rs 0.62 lakhs in FY22. This is due to an addition in the asset block, specifically new premises along with is furniture and fixtures and plant and machinery.

Other Expenses

In FY23 Other Expenses were Rs 70.30 lakhs as compared to Rs 19.51 lakhs in FY22. This as a percentage of total income. This increase is attributable to increase in labour and transportation charges due to increase in revenue from operations.

Profit/ (Loss) After Tax

The Profit After Tax for Financial Year 2023 has increased to Rs 407.14 lakhs from Rs 50.89 lakhs in FY22. This is due to better margins on sales and improved business opportunities resulting in exceptional growth in sales.

COMPARISON OF THE FINANCIAL PERFORMANCE OF FISCAL 2022 WITH FISCAL 2021

Revenue from Operations

During the Financial Year 2022, the total revenue from operations was Rs 1001.31 lakhs as compared to Rs 264.43 lakhs in FY21. During the period sales increased multi-fold as the company had raised loans from banks for working capital which resulted in multifold increase in sales.

Revenue - Other Income

In FY22 other income was Rs 2.14 lakhs mainly due to bank interest as compared to NIL in FY21.

Total Expenses

The total expenses consist of various sub-headings that include Cost of Material Consumed, Employee Benefits Expense, Finance Cost, Depreciation & Amortization Expense, and Other Expenses.

Cost of Material Consumed

During the Financial Year 2022 the Cost of Material Consumed was about 85.14% of total revenue as compared to 85.58% in FY21. This marginal decrease can be attributed to better pricing due to higher quantity purchased in FY23 as compared to FY22.

Employee expenses

When comparing both years FY21 and FY22, there has been a increase in Employee Expenses from Rs 21.49 lakhs in FY21 to Rs 33.60 lakhs in FY22, which accounts for almost a 56% increase. The increase is mainly due increase in director remuneration and salary to staff.

Finance and Interest cost

In FY22 Finance Costs increased to Rs 27.11 lakhs as compared to Rs 1.77 lakhs in FY21. This increase can be attributed to additional loans raised by the company.

Depreciation and Amortization expense

In FY22 there has been an increase in Depreciation and Amortization expense to Rs 0.62 lakhs from Rs 0.02 lakhs in FY21 due to addition in asset block.

Other Expenses

In FY22 Other Expenses increased to Rs 19.51 lakhs as compared to Rs 7.26 lakhs in FY21. This increase is mainly attributable to increase rent, insurance and transport charges increased due to increase in revenue.

Profit/ (Loss) After Tax

In FY22 Profit After Tax increased multi-fold to Rs 50.89 lakhs as compared to Rs 5.68 lakhs in FY21. This can be attributed to multifold increase in sales during the period and purchases at better pricing as compared to FY21.

Cash Flow Details

The table below summaries our cash flows from our Restated Audited Financial Information for the period ended September 30, 2023 and for the financial year ended March 31, 2023, 2022 and 2021

(Rs. in Lakhs)

Particulars	For the period ended September 30, 2023	FY 2022-23	FY 2021-22	FY 2020-21
Net cash generated from / (used in) operating activities	96.55	-343.02	28.06	-113.71
Net cash generated from / (used in) Investing Activities	-20.25	-637.19	-16.50	-0.17
Net cash generated from / (used in) from financing activities	40.21	914.29	95.61	125.65

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.

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years, except the outbreak of COVID 19.

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 no. 20 of this Draft Prospectus respectively, to our knowledge 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.

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

Income and sales of our Company on account of major products like Laminates including designing, Acrylic Products, Plywood, Print Paper (Base), Franchisee (Display Showroom)- Direct Order, Flush Door manufacturing.

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 revenue or income from continuing operations.

Other than as described in the section titled "Risk Factors" beginning on page no. 20 of this Draft Prospectus, in our opinion 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.

6. Future changes in relationship between costs and revenues, in case of events such as future increase in labour or material costs or prices that will cause a material change are known.

Our Companys future costs and revenues will be determined by demand/supply situation, government policies and prices of raw material.

7. 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 operated.

Our Company is in the business of lamination and plywood industry. Relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 81 of this Draft Prospectus.

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

Our Company has not announced any new product and business segment publicly.

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

As on September 30, 2023	Suppliers contribution	Customers contribution
Top 5 %	63.03%	80.73%
Top 10 %	78.67%	89.62%

 

As on March 31, 2023	Suppliers contribution	Customers contribution
Top 5 %	46.81%	54.36%
Top 10 %	72.08%	70.67%

 

As on March 31, 2022	Suppliers contribution	Customers contribution
Top 5 %	44.82%	85.97%
Top 10 %	69.69%	92.81%

 

As on March 31, 2021	Suppliers contribution	Customers contribution
Top 5 %	56.06%	86.99%
Top 10 %	80.67%	91.25%

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Business Overview" beginning on pages 81 and 87, respectively of this Draft Prospectus.