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 the year 2017, we are engaged in the business of Developing, manufacturing, Reselling of Industrial Electronic, Engineering and R & D products in India or elsewhere and to carry on the business of 3D printing Services, Prototyping Services, Assembly of Mechanical, Electronics products and Li-ion Batteries.

Driven by the motto, "Your Ideas, Our Parts", we are primarily an e-Commerce Company focused on the marketing of a broad range of electronic components which find application in basic and advanced engineering products & projects, including emerging technologies such as IoT, Robotics, Automation, Drone, Electric Vehicles, 3D Printing and Auto Guided Vehicles. Our broad portfolio consists of over +24,000 SKUs of electronics components and parts that facilitate consumers such as manufacturers, educational institutions, researchers and developers, to turn their ideas into reality as well as to speed up their product R&D and prototyping cycle.

3. SWOT ANALYSIS:

A) OPPORTUNITIES

• In September 2021, the Government of India took significant strides towards promoting electronics manu facturing and bolstering the electronics industry within the nation. Among the notable initiatives are Make in India, National Policy on Electronics, Production Linked Incentive (PLI) Scheme, Electronics Manufacturing Clusters (EMC), and several others.

These initiatives collectively lay the groundwork for a supportive and conducive environment that fosters growth and innovation in the electronics sector. As a result, they have sparked a surge of interest among com panies like ours to venture into this field.

The forward-looking government policies are not only fostering domestic manufacturing but also creating a fertile environment for technological advancements and investments. This has significantly increased the demand for electronic components and modules, offering substantial growth opportunities for companies like ours.

With initiatives such as Smart Village, Smart City, Atal Tinkering Labs, Namo Didi, Drone Shakti, and the active deployment of drones in military and surveillance operations now taking shape on the ground, Robu.in is well-positioned to capitalize on the rising demand for advanced technology and innovative solutions that align with these national priorities.

B) THREATS:

• Global Sourcing and Geopolitical Risks: We procure, store, and sell cufflng-edge technology and electronic products from around the world. However, any significant shifts in geopolitical scenarios or changes in government policies could negatively impact our supply chain and overall business operations.

• Inventory Management: Our inventory procurement is based on anticipated 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.

• Regulatory Changes: New regulations or tariffs have the potential to raise operational costs or restrict market access, posing a risk to our business.

C) STRENGTHS:

We believe the following business strengths allow us to successfully compete in the industry:

a) The alignment of government priorities with the Make in India campaign, particularly concerning electronic products, is set to generate substantial demand within this industry. As a company, we find ourselves excellently positioned to capitalize on this opportunity.

b) Extensive and diverse portfolio of electronic items and parts along with content-rich platform and excellent customer support.

c) Capability of developing new Electronics & Mechanical products.

d) Strong, diverse and growing customer base.

e) Scalable and reliable technology platform.

f) Experienced Promoters with strong management team having domain knowledge.

g) Consistent track record of profitable growth and strong financial performance.

D) WEAKNESS:

Our business is subjected to various risks and uncertainties, and the weakness factors include the following:

1. Our failure to keep pace with rapid changes in technology.

2. General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies.

3. Changes in consumer demand.

4. Changes in laws and regulations that apply to the industries in which we operate.

4. MITIGATION OF RISK /RISK MANAGEMENT:

The Board assesses and classifies risks across various domains such as operations, finance, marketing, regulatory compliance, and corporate affairs. The Internal Auditor, Statutory Auditor, and Company Secretary provide their insights on risk levels while auditing specific areas, reporting to the Audit Committee. The company is proactively implementing immediate and future-oriented measures to minimize any potential risks that might emerge.

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 a parent company of the above foreign company by way of transfer of equity share capital vide 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 proposed to issue 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. 1854.00 Lakhs and a consolidated Reserve and Surplus of Rs.1848.51 Lakhs.

Total Income:

During the year under review, the company has made Standalone Revenue from Operations of Rs. 12,512.76 Lakh and Net Profit after Tax of Rs. 1,087.98 lacs. and consolidated Revenue from Operations of Rs. 12,513.31 Lakh and Net Profit after Tax of Rs. 1082.50 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 from the executive management team and 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 Five Directors on our Board out of which one-third 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 HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

Your Company follows a policy of building strong teams of talented professionals. People remain the most valuable asset of your 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 recognized Insurance company M/s ICICI Lombard to our employee. which provides the benefit of Health coverage up to the sum of Rs. 3,00,000.

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 the 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.