Mahalaxmi Fabric Mills Ltd Management Discussions

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS:-

This Information Memorandum may include our financial condition and results of operations together with our Financial Statements which appear elsewhere in this Information Memorandum. You should also read the Section titled "Risk factors" on page 15, which discusses a number of factors and contingencies that could impact our financial condition and results of operations. The following discussion relates to the Financial Statements of our Company.

For further information, contains forward-looking statement and reflects our current plans and expectations, actual results may differ materially from those anticipated in these forward-looking statements. By their nature certain market risk disclosures are only estimates and could be materially different from those that have been estimated. Given these uncertainties, prospective investors are cautioned not to place undue reliance on such forward looking statements, factors that could cause or contribute to such differences include, but are not limited to, those discussed in the Sections titles "Risk factors", "Forward Looking Statements" and "Our Business" on page 15, 10 and 37 respectively.

Business Overview

Pursuant to the Scheme, First Demerged Undertaking i.e. Traditional Textiles Processing Division along with Wind power division of MRT has been transferred to MFML. In the Traditional Textiles Processing Division, it mainly engaged in bleaching, dyeing, printing and finishing and at the end of the chain, its fabric range goes into apparels and home textiles, catering to Domestic as well as Global Market. The company has end-to-end complete facility of processing various types of fabrics such as cotton, polyester, Bottom-weight and other blends.

The Company continues to sustain its overall performance in the Financial Year 2023-24 driven by the average performance in the business. The Traditional Textiles processing division performance is continue plunged to some extent as compared to the previous years due to a significant increase in the cost of raw materials, cost of coal power-fuel and logistics. Your Directors have been making efforts on all fronts viz. marketing, finance and cost control, etc. and these efforts have been yielding good results. The outlook for the Companys products appears to be good and the Company is confident of achieving improved operational performance.

In order to achieve the greatest level of customer satisfaction and excellent business relations, continuous infrastructure upgradations are made. There is a special focus on adopting sustainable business processes that add value for the stakeholders. Our dedicated team, with rich experience in the field of procuring superior quality for the perfect quality cotton fabric.

Product Basket - Traditional Textile Processing Division

Product ranges at MFML is in end-to-end complete facility of processing various types of fabrics such as cotton, polyester, Bottom- weight and other blends, its fabric range goes into apparels and home textiles such as made-ups articles, bed sheets, pillow covers, bed covers, curtain, etc.

Traditional Textile processing divisions are well accepted in domestic and international markets by premium buyers. Our products respond well to the fine end products like garments, apparels and home textiles products.

Significant factors affecting Our Business. Financial Condition and Results of Operations

Our financial condition and results of operations are affected by numerous factors and uncertainties, including those discussed in the Section titled ‘Risk factors on page 15. The following are certain factors that had, and we expect will continue to have, a significant effect on our financial condition and results of operations:

• Competition from multinational corporations;

• Raw material and cotton fabric price fluctuations;

• Ability to obtain registrations;

• Fluctuating foreign exchange rates;

• Factors affecting the global textile industry;

• Increasing competition in the Industry;

• Changes in Government regulations, tax regimes, laws and regulations that apply to the industry;

• Changes in fiscal, economic or political conditions in India;

• Changes in the foreign exchange control regulations, interest rates and tax laws in India.

Significant Accounting Policies

For details about our key significant accounting policies, see Section titled "Financial Statements" on page 57.

Change in Accounting Policies

There are no changes in Accounting Policies in last three years. However, Restated Financial Statements for the Financial Year 2023-24 has been prepared in accordance with the IND AS. For details, refer to Notes to the Financial Statements for the F. Y. 2023- 24.

Reservations. Qualifications. Matter of Emphasis. Adverse Remark / Other Observations in Caro

There are no qualifications by our Statutory Auditors in the Financial Statements for the Financial Year ended on 31^st March, 2023, 31^st March, 2022, 31^st March, 2021.

Principal Components of Our Statement of Profit and Loss Revenue

Our Company was incorporated on April 04, 1991, we did not generate considerable income from business activities. However, pursuant to the Scheme becoming effective, the Traditional Textile Processing business of the First Demerged undertaking of the Demerged Company vested into our Company has generated revenue from business activities.

Total Revenue from Operation Rs. 8750.51 Lakhs and Other Income is Rs. 274.51 Lakhs for the Restated Financial Year ended on 31^st March 2024, on a Standalone basis.

Expenses

Our total expenditure primarily consists of manufacturing and operation cost, employee benefits expenses, finance cost, and other expenses etc.

Profit before Tax

Our Profit/(Loss) before Tax was Rs. (234.59) Lakhs for the Restated Financial Year ended on 31^st March, 2024, on a Standalone basis.

Profit after Tax

Our Profit/(Loss) after Tax was Rs. (42.76) Lakhs for the Restated Financial Year ended on 31^st March 2024, on a Standalone basis.

Results of our Operations

The following table sets forth select financial data from our Audited Financial Statement for the year ended on 31^st March, 2024, 31^st March, 2023 and 31^st March, 2022:-

* Upon effectiveness of the Scheme i.e. April 01, 2024, Mahalaxmi Exports Private Limited has became the Wholly Owned

Subsidiary Company of Mahalaxmi Fabric Mills Limited.

Significant developments after March 31. 2023 that may affect our future results of operations

1. Honble NCLT has, vide an Order dated March 04, 2024 (Certified True Copy of the Order was received on March 27, 2024) approved the Scheme of Arrangements involving Demerger between Mahalaxmi Rubtech Limited (MRT) (CIN:- L25190GJ1991PLC016327) ("Demerged Company"); Mahalaxmi Fabric Mills Private Limited (Formerly known as "Sonnet Colours Pvt Ltd") (MFMPL) (CIN:- U17100GJ1991PTC015345) ("First Resulting Company"); and Globale Tessile Private Limited (GTPL) (CIN:- U17299GJ2017PTC098506) ("Second Resulting Company") and their respective Shareholders and Creditors ("Scheme") under Sections 230 to 232 of the Companies Act, 2013. Pursuant to the Scheme, Traditional Textile Processing Division located at Narol, Ahmedabad and Wind Power Division of the Demerge company along with existing investment of the demerge company in its wholly owned subsidiary company namely Mahalaxmi Exports Private Limited (as defined in the Scheme) is transferred to and vested into our Company. The Effective Date of the Scheme is April 01, 2024 with the Appointed Date of April 01, 2022. Accordingly, in accordance with the Scheme, our Company has allotted 1,06,20,275 Number of Equity Shares of Rs. 10/- each to the Shareholders of the Demerged Company as on the Record Date in the ratio of 1:1 and the existing share capital of 5,000 Number of Equity Shares Rs. 100/- each of our Company was cancelled.

2. The Board of Directors were reconstituted and Independent Directors & CFO were appointed in the Board Meeting of the Company held on 18^th April, 2024. Board Committees were constituted and Company Secretary was appointed in the Board Meeting of the Company held on 29^th April, 2024.

3. Our Company was granted an exemption from the application of Rule 19(2) (b) of the Securities Contracts (Regulation) Rules, 1957 by the SEBI vide the Letter dated 12^th August, 2024.

4. Other than the above, after the date of the last Audited Financial Statements i.e. 31^st March 2023 and stub period of Nine Months ended on 31^st December, 2023, the Directors of our Company confirm that, there have not been any significant developments.

Credit Risk

Credit risk is the risk that a counterparty fails to discharge its obligation to the Company. The Companys exposure to credit risk arises on account of financial assets are measured at amortized cost.

Liquidity Risk

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Companys approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Companys reputation.