Macfos Ltd Management Discussions

1. INTRODUCTION:

Our Company was originally incorporated on September 26,2017, as "Macfos Private Limited" vides Registration No. 172718 under the provisions of the Companies Act, 2013 with the Registrar of Companies, Pune, Maharashtra. The name of our Company was changed from "Macfos Private Limited" to "Macfos Limited" vide Fresh Certificate of Incorporation dated January 06, 2023, vide Corporate Identification Number U29309PN2017PLC172718. Further, our Company has issued shares under an Initial Public Offer (IPO) and got listed on the SME platform of BSE LTD on 01st March 2023.

2. OVERVIEW OF BUSINESS

Incorporated in 2017, we are engaged in the development, manufacturing, reselling, and distribution of industrial electronics, engineering, and R&D products in India. Our operations also include 3D printing services, prototyping, mechanical and electronic assembly, and battery pack assembly.

Guided by our motto, "Your Ideas, Our Parts", we are primarily an e-commerce company focused on offering hard-to-find electronics through a single platform. Our goal is to empower manufacturers. Industries, educational institutions, researchers, and developers by accelerating their product prototyping and development cycles.

We currently offer over 71,000 SKUs across 12 end-use segments, (DroneParts, 3D printers, Electronics parts, Modules, Sensors, Etc..), making us one of the most comprehensive platforms in our space. With an early-mover advantage since 2013, weve built a niche in specialized electronics and earned one of the best Google review ratings in the industry.

Our in-house developed ERP system and robust IT infrastructure ensure seamless stock management, timely order fulfillment, and effective customer support, giving us a significant edge over new entrants. Our diversified portfolio and broad customer base provide stability and scalability, positioning us strongly for future growth.

We hold exclusive distributorships for several leading global brands and serve as a trusted vendor to many renowned companies. With 150+ brands and 210+ vendor partnerships across India and overseas, this ecosystem would take years for a new competitor to replicate.

The company benefits from the deep domain expertise of its technocrat promoters, who possess a strong understanding of customer needs in the electronics space. This experience has been instrumental in establishing a niche market position with limited competition.

Our B2B segment is growing rapidly, supported by a diversified revenue base that reduces dependency7 on any single product, customer, or supplier. We not only distribute but also provide after-sales support and customized electromechanical solutions.

As part of our long-term growth strategy, we are actively working on Robu 2.0—an initiative focused on developing and scaling our own range of products, with a strong emphasis on drones and other emerging technologies.

Over the past two years, this segment has seen increasing traction and has become a key area of focus. We are witnessing encouraging market acceptance of our in-house developed products, and we strongly believe that indigenously built solutions will play a significant role in future strategic and high-tech applications.

We currently market our products under four distinct in-house brands, each catering to specific categories:

• SmartElex - Our range of electronic products. Over 180 new SKUs were added this year.

• EasyMech - Our mechanical product line. Introduced 6 new drone frame designs during the year.

• SimplyFly - A dedicated brand for our drone product portfolio.

• ProRange - Our OEM product range, which saw 600+ SKUs added in the past year.

This evolving product ecosystem is central to our vision of becoming a technology-driven company offering innovative, locally manufactured solutions.

3. SWOT ANALYSIS:

A. Strengths:

. Wide Product Portfolio

0 Over 71,000 SKUs across 12+ end-use segments, covering electronics, mechanical parts, drones, sensors, 3D printing, and more.

0 Four in-house brands (SmartElex, EasyMech, SimplyFly, ProRange) help build customer loyalty and product differentiation.

. Early Mover Advantage

0 Pioneered niche electronics e-commerce in India since 2013, giving it a strong foothold and brand recall among makers, students, and industries.

. Strong IT & ERP Infrastructure

0 In-house ERP ensures efficient stock movement, order processing, and customer support, creating high operational efficiency and scalability.

. Exclusive Partnerships & Global Vendor Network

0 Holds exclusive distributorships and maintains over 200 vendor tie-ups, which are hard to replicate by new entrants.

. Experienced & Technocrat Leadership

0 Founders with deep domain knowledge and technical expertise have been critical in product development and customer-centric innovations.

. Positive Market Reputation

0 High customer satisfaction reflected through strong Google reviews and organic brand affinity.

. Diversified Revenue Streams

0 Balanced exposure to B2C and B2B, reducing dependency on a single market. Not reliant on any specific product, customer, or supplier.

B. Weaknesses

. Dependence on Niche Segments

0 While specialization is a strength, high reliance on niche electronics and R&D segments can limit mainstream scalability.

. Brand Visibility Outside Core Audience

0 Robu.in has limited awareness among general consumers and larger industries.

. Logistics & Fulfillment Complexity

? Managing a vast inventory with a high SKU count increases warehousing and order sorting complexities.

. Limited Offline Presence

0 Business is largely e-commerce-driven; the absence of physical touchpoints may restrict growth in traditional industries that prefer in-person engagement.

C. Opportunities

. ‘Make in India & Strategic Autonomy Push

0 Growing emphasis on domestic manufacturing, drones, defense tech, and robotics creates demand for locally developed solutions.

. Expanding Robu 2.0 Initiative

0 Scaling in-house product lines (especially drones and electronics) offers better margins, brand control, and IP ownership.

. B2B Market Growth

0 Increased demand from institutions, startups, and OEMs opens doors for deeper B2B engagement and bulk orders.

. Educational & Institutional Partnerships

0 Potential to collaborate with engineering colleges, innovation hubs, and government R&D initiatives.

. Global Expansion via E-commerce

0 Niche products and in-house brands can be marketed to international hobbyists, research labs, and product developers.

D. THREATS

• Inventory Management: Our inventory procurement is based on anticipation sales (mostly for online sales). If not carefully planned and managed, this approach could lead to operational losses and cash flow challenges.

• Supply Chain Disruptions: Global supply chain disruptions, such as shipping delays or material shortages, can impact product availability and increase costs.

• Regulator}- Changes: - New regulations or tariffs have the protentional to raise operational costs or restrict market access, posing a risk to our business.

4. MITIGATION OF RISK /RISK MANAGEMENT

The Companys Board takes a comprehensive approach to risk management by identifying and evaluating potential risks across all key areas of the business, including operations, finance, marketing, regulatory compliance, and corporate governance.

To ensure thorough oversight, the Internal Auditor, Statutory Auditor, and Company Secretary each play a crucial role in assessing risks within their respective domains during the course of their audits. Their observations and assessments are then reported to the Board, enabling informed and timely decision-making.

In addition to identifying existing risks, the company also focuses on anticipating future challenges. It has adopted a proactive stance by implementing both immediate control measures and long-term strategies aimed at mitigating potential risks before they escalate. This structured and forward-looking approach helps safeguard the companys interests and supports its sustainable growth.

5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an effective and reliable internal control system commensurate with the size of its operations. At the same time, it adheres to local statutory requirements for orderly and efficient conduct of business, safeguarding of assets, the detection and prevention of frauds and errors, adequacy and completeness of accounting records, and timely preparation of reliable financial information. The efficacy of the internal checks and control systems is validated by self-audits and internal as well as statutory auditors.

6. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

i. The company has acquired an entire stake in an existing Foreign Company M/s Nuo Zhan Technologies Limited, incorporated in Hong Kong. The company has become the parent company of the above foreign company by way of transfer of equity share capital vide a duly executed Instrument of Transfer dated June 14, 2023.

ii. The Authorized share capital of the Company from Rs. 9,00,00,000/- (Nine Crore only) comprising of 90,00,000 (Ninety Lakhs) equity share of Rs. 10 (Ten rupees) each, to Rs. 12,00,00,000/- (Twelve Crore only) comprising of 1,20,00,000 (One Crore Twenty Lakhs) equity share of Rs. 10 (Ten rupees) each, vide Ordinary Resolution passed at their Shareholder Meeting dated 23rd Day of March 2024.

iii. During the year company allotted 5,81,397 Equity Shares for Rs. 430 per Equity Share (at a premium of Rs. 420 per Equity Share), aggregating up to Rs. 25,00,00,710/- (Rupees Twenty-Five crore Seven Hundred and Ten only) to M/S SAGEONE FLAGSHIP GROWTH 2 FUND and M/S SAGEONE INVESTMENT MANAGERS LLP for cash consideration by way of a preferential issue on a private placement basis ("Preferential Issue").

• Reserves and Surplus:

During the year under review, the company has a Standalone Reserve and Surplus of Rs. 6090.08 Lakhs and a consolidated Reserve and Surplus of Rs. 6081.53 Lakhs.

• Total Income:

Duringthe year under review, the company has made Standalone Revenue from Operations of Rs. 25498.68 Lakh and Net Profit after Tax of Rs. 1794.22 lacs, and consolidated Revenue from Operations of Rs. 25506.14 Lakh and Net Profit after Tax of Rs. 1791.94 lakh.

7. CORPORATE GOVERNANCE

In addition to the applicable provisions of the Companies Act, 2013 with respect to Corporate Governance, provisions of the SEBI (LODR) Regulation, 2015 will also have complied with the extent applicable to our Company immediately upon the listing of the Equity Shares on the Stock Exchange. Our Company stands committed to good Corporate Governance practices based on principles such as accountability, transparency in dealings with our stakeholders, emphasis on communication and transparent reporting. We have complied with the requirements of the applicable regulations, with respect to corporate governance, including the constitution of the Board and Committees thereof. The Corporate governance framework is based on an effective Independent Board, the Boards Supervisory role over the executive management team, and the constitution of the Board Committees as required under law. The Board functions either as a full board or through the various committees constituted to oversee specific operational areas. As of the date, there are Six Directors on our Board, out of which half of the board are Independent Directors. Our Company complies with the corporate governance norms prescribed under the Companies Act, 2013, particularly in relation to the appointment of Independent Directors to our Board and the constitution of Board-level committees. Our Company undertakes to take all necessary steps to continue to comply with all the requirements of the SEBI (LODR) Regulation, 2015, and the Companies Act, 2013.

8. MATERIAL DEVELOPMENTS IN THE HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT,

INCLUDING THE NUMBER OF PEOPLE EMPLOYED:

Our Company follows a policy of building strong teams of talented professionals. People remain the most valuable asset of our Company. The Company recognizes people as its most valuable asset, and the Company has kept a sharp focus on Employee Engagement. The Companys Human Resources is commensurate with the size, nature, and operations of the Company. In continuous development company is also providing the health Insurance policy of a recognized Insurance company, M/s ICICI Lombard, to our employees, which provides the benefit of Health coverage up to the sum of Rs. 3,00,000.

During the reporting period, the Company made significant strides in strengthening its human resources infrastructure through the implementation of a comprehensive annual appraisal system that incorporates both performance-based evaluations and 360-degree feedback mechanisms. This enhanced performance management framework has been designed to provide a holistic assessment of employee capabilities and contributions while creating structured career development pathways and identifying training needs across all organizational levels.

The Company has prioritized employee engagement and team development through the systematic introduction of regular team bonding activities aimed at strengthening inter-departmental collaboration, improving workplace culture, and enhancing employee satisfaction and retention rates. These team-building initiatives have fostered better communication, trust, and productivity among cross-functional teams, contributing to a more cohesive work environment.

To ensure organizational alignment and transparent communication, the Company has established periodic all-hands meetings that facilitate the dissemination of company objectives, strategic initiatives, and performance updates to all employees. These company-wide forums have created direct interaction channels between management and employees, promoting organizational transparency and encouraging employee involvement in decision-making processes.

The Company maintained stable employment levels with 178 employees as of 31st March 2025, demonstrating its commitment to workforce retention during the reporting period. The continued investment in human capital development through structured performance management and employee engagement programs has contributed to reduced attrition rates and improved job satisfaction metrics. The Company has successfully maintained harmonious industrial relations through proactive employee engagement initiatives and open communication channels, resulting in zero industrial disputes during the reporting period, thereby ensuring operational continuity and workplace stability.

9. CAUTIONARY STATEMENT:

This report contains forward-looking statements based on the perceptions of the Company and the data and information available to the Company. The company does not and cannot guarantee the accuracy of various assumptions underlying such statements, and they reflect the Companys current views of future events and are subject to risks and uncertainties. Many factors, like changes in general economic conditions, amongst others, could cause actual results to be materially different.