Malpani Pipes & Fittings Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the year ended on March 31, 2024, March 31, 2023, and March 31, 2022. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 21 of this Draft Red Herring Prospectus, 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 fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year") are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Malpani Pipes and Fittings Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for the Financial Year 2023-24, 2022-23 and 2021-22 included in this Draft Red Herring Prospectus beginning on page 142 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Malpani Pipes & Fittings Limited, an ISO 9001:2015 certified company based in Ratlam, Madhya Pradesh, manufactures a range of high-grade plastic pipes. Our products include High-Density Polyethylene (HDPE) Pipes, Medium-Density Polyethylene (MDPE) Pipes, and Linear Low-Density Polyethylene (LLDPE) Pipes, all marketed under the brand name . The company is also engaged in the trading of granules and PVC pipes, as well as the sale of services.

We have manufacturing plant located in central India i.e. Ratlam, Madhya Pradesh. Our plant is well equipped with essential machinery, infrastructure, and an in-house testing facility, which ensures that our product conforms to the requisite standards.

We have a dedicated in-house testing facility to ensure our products adhere to stringent quality standards. Additionally, in case of supply to any government project or under some welfare policy to farmers, we are required to get our products test from third part laboratories. These agencies include the Central Institute of Petrochemicals Engineering & Technology (CIPET), SGS, Bureau Veritas, Dr. Amin Controllers Pvt. Ltd., Rail India Technical and Economic Service, and Certification Engineers International Limited (CEIL). This verification process is a mandatory requirement set by the government.

Our pipes are engineered to meet a wide range of applications, including irrigation, potable water supply, sewerage, and drainage systems. They are also well-suited for boreholes and tube wells for underground water extraction. Furthermore, our pipes support infrastructure projects such as the installation of long-distance electrical cables and optical fibers.

For more details, please refer chapter titled "Business Overview" on page 91 of this Draft Red Herring Prospectus.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

After the date of last financial period i.e., March 31, 2024 there is no any significant development occurred in the Company except mentioned below:

1. Company has Converted from Private Limited to Limited on July 29, 2024.

2. The company has increased its authorized share capital from Rs. 7,50,00,000/- consisting of 75,00,000 Equity shares of Rs. 10 each to Rs. 1 2,00,00,000/- consisting of 1,20,00,000 Equity shares of Rs. 10/- each on April 25, 2024.

3. Company has allotted 54,67,500 Equity Shares as bonus shares on August 31, 2024.

4. Oxyzo Financial Services Limited has sanctioned loan of Rs. 1500.00 Lakhs to the company on June 28, 2024

5. ICICI Bank sanctioned OD facility of Rs. 60.00 Lakhs for Temporary period Upto September 27, 2024 on August 28, 2024.

6. The company has received a Purchase Order totaling of Rs. 11371.21 Lakhs after March 31, 2024. Details of this order are mentioned in Business Overview section on page 91 of this Draft Red Herring Prospectus.

7. Company has Purchased Extrusion Line 80/75 MM Screw High Speed HDPE & MDPE Pipe Machinery, Co-Extruder and Jockey Extruder amounting to Rs. 1 57.25 Lakhs dated May 30, 2024.

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

Our Companys future results of operations could be affected potentially by the following factors:

1. Changes in Laws and Regulations that apply to our Industry.

2. Changes in Fiscal, Economic or Political conditions in India

3. Failure to adapt the changing technology in our industry of operation may adversely affect our business

4. Failure to comply with regulations prescribed by authorities of the jurisdiction in which we operate

5. Competition with existing and new entrants.

6. Any slowdown or shutdown in our manufacturing operations or strikes, work stoppages or increased wage demands by our employees that could interfere with our operations.

7. Our ability to retain our key managements persons and other employees;

8. Companys ability to successfully implement its growth strategy and expansion plans;

9. Failure to comply with the quality standards and requirements of our customers

10. Our inability to get the raw material at competitive price and transfer the upward revision in the price of raw material to the customers. 11. Exchange rate Fluctuation may affect the cost of Raw Material.

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under Chapter titled "Restated Financial Information" beginning on page 142 of the Draft Red Herring Prospectus.

RESULTS OF KEY OPERATIONS ( in lakhs)

Particulars	For the year ended on
	31.03.2024	31.03.2023	31.03.2022
Income from continuing operations
Revenue from operations
Manufacturing Turnover	12,596.83	7,423.55	3,076.32
Trading Turnover	1,369.00	761.00	303.00
Sale of Services	127.17	49.12	101.94
Other Operating Income	3.18	11.42	9.32
Total Revenue	14,096.18	8,245.09	3,490.58
% of growth	70.96	136.21
Other Income	20.05	11.67	3.09
% total Revenue	0.14	0.14	0.09
Total Revenue	14,116.23	8,256.76	3,493.67
	70.97	136.33
Expenses
Cost of Material Consumed	10,125.42	6,522.47	2762.22
% of Revenue from operations	80.38	87.86	89.79
Cost of Goods Traded	1,334.78	746.04	297.67
Change in Inventory	155.29	(171.86)	(87.36)
Employee benefits expense	183.52	174.96	119.74
% Increase/(Decrease)	4.89	46.12
Finance Costs	261.88	133.34	51.32
% Increase/(Decrease)	96.40	159.82
Other expenses	968.13	532.17	209.58
% Increase/(Decrease)	81.92	153.92
Depreciation and amortisation expenses	84.81	42.82	21.86
% Increase/(Decrease)	98.06	95.88
Total Expenses	13,113.83	7,979.94	3,375.03
% to total revenue	92.90	96.65	96.60
EBDITA	1,329.04	441.31	188.73
% to total revenue	9.41	5.34	5.40
Restated profit before tax from continuing operations	1,002.40	276.82	118.64
Exceptional Item
Total tax expense	262.68	68.79	29.57
Restated profit after tax from continuing operations (A)	739.72	208.03	89.07
% to total revenue	5.24	2.52	2.55

COMPARISON OF F.Y. 2023-24 WITH F.Y. 2022-23:

Income from Operations

In the F.Y. 2023-24, the Companys total revenue from Operation was Rs. 1 4096.18 Lakhs, which is increased by 70.96 % in compare to total Income from operations of Rs. 8245.09 Lakhs in F.Y. 2022-23.The total revenue includes manufacturing Turnover of Rs. 1 2596.83 lakhs, Trading turnover of Rs. 1 369.00 lakhs, Sale of Service of Rs. 1 27.17 lakhs and Other Operating revenue of Rs. 3.18 lakhs in FY 2023-24 as against manufacturing Turnover of Rs. 7423.55 lakhs , Trading turnover of Rs. 761.00 lakhs, Sale of Service of Rs. 49.12 lakhs and Other Operating revenue of Rs. 11.42 lakhs in FY 2022-23. The trading turnover includes revenue from imported raw material (Granules) and PVC Pipes. The increase in revenue for FY 2024 was attributed to a rise in business activity.

Other Income

The other Income for the FY 2023-24 was Rs. 20.05 lakhs which was Rs. 1 1.67 lakhs in the FY 2022-23. The other income includes interest earned on the fixed deposit.

Expenditure:

Cost of Material Consumed

The Cost of Material Consumed for F.Y. 2023-24 was Rs. 1 0,125.42 Lakhs against the cost of Material Consumed of Rs. 6,522.47 Lakhs in F.Y. 2022-23. The cost of material consumed was 80.38 % of the total revenue from operations in F.Y 2023-24 as against 87.86 % of total revenue from Operations in F.Y 2022-23.

Employee Benefits Expenses:

The Employee expenses for F.Y. 2023-24 was Rs. 1 83.52 Lakhs against the expenses of Rs. 1 74.96 Lakhs in F.Y. 2022-23 showing increase by 4.89%. The increase in the employee cost was marginal due to yearly increment of the employees.

Finance Cost:

The Finance Cost for the F.Y. 2023-24 was Rs. 261.88 Lakhs against the cost of Rs. 1 33.34 Lakhs in the F.Y. 2022-23 showing increase of 96.40 %. The finance cost was increased on account of overall increase of the Borrowings. The total outstanding of the borrowings as on March 31.2024 was Rs. 3028.87 lakhs as against Rs. 1959.26 lakhs as on March 31, 2023. The cash inflow from the long-term borrowings and short-term borrowings in the FY 2023-24 was Rs. 1069.61 lakhs resulting in to higher finance cost.

Other Expenses

Other Expenses increased to Rs. 968.13 Lakhs for F.Y. 2023-24 against Rs. 532.17 Lakhs in F.Y. 2022-23 showing increase of 81.92 %. The Increase in the Other expenses in the FY 2023-24 was on account of increase of the business by 70.96 % in comparison to FY 2022-23. The increase in the cost of Freight and packing expenses, Electricity Expenses and charges related to clearance of imported material in comparison to FY 2022-23 due to increase of business .

Depreciation and Amortisation Expenses:

The Depreciation for F.Y. 2023-24 was Rs. 84.81 Lakhs as compared to Rs. 42.82 Lakhs for F.Y. 2022-23. The depreciation increased by 98.06 % in F.Y. 2023-24 as compared to F.Y. 2022-23. The depreciation in FY 2023-24 was increased on account of addition of the Fixed assets by Rs. 410.93 lakhs in FY 2023-24 which was Rs. 1 27.43 lakhs in FY 2022-23.

EBIDTA

The EBIDTA for F.Y. 2023-24 was Rs. 1 329.04 Lakhs as compared to Rs. 441.31 Lakhs for F.Y. 2022-23. The EBIDTA was 9.41 % of total Revenue in FY 2023-24 as compared to 5.34 % in F.Y. 2022-23. EBIDTA has improved due to improves in material consumption ratios to sales from 87.86 % in FY 2022-23 to 80.38 % in FY 2023-24 and increase in the business by 70.97 % in FY 2023-24 in comparison to 136.33 % in FY 2022-23. The increase in the capacity utilization in FY 2023-24 in comparison of FY 2022-23 was also contributed in increase in the EBIDTA of the Company

Profit after Tax (PAT)

PAT is Rs. 739.72 lakhs for the F.Y. 2023-24 in compared to Rs. 208.03 lakhs in F.Y. 2022-23. The PAT was 5.24 % of total revenue in F.Y. 2023-24 compared to 2.52 % of total revenue in F.Y. 2022-23. The Profit margin has increased on account of increase of business by 70.97 % and optimize the utilization of installed capacity of the plant.

COMPARISON OF F.Y. 2022-23 WITH F.Y. 2021-22:

Income from Operations

In the F.Y. 2022-23, the Companys total revenue was Rs. 8245.09 lakhs, which is increased by 136.21 % in compare to total Income from operations of Rs. 3490.58 lakhs in F.Y. 2021-22.The total revenue includes manufacturing Turnover of Rs. 7423.55 lakhs , Trading turnover of Rs. 761.00 lakhs, sale of service of Rs. 49.12 lakhs and other operating revenue of Rs. 1 1.42 lakhs in FY 2022-23 as against manufacturing Turnover of Rs. 3076.32 lakhs , Trading turnover of Rs. 303.00 lakhs, sale of service of Rs. 1 01.94 lakhs and other operating revenue of Rs. 9.32 lakhs in FY 2021-22. The trading turnover includes revenue from was the turnover of the imported raw material (Granules) and PVC Pipes. The trading turnover includes revenue from imported raw material (Granules) and PVC Pipes. The increase in revenue for FY 2023 was attributed to a rise in business activity.

Other Income

The other Income for the FY 2022-23 was Rs. 1 1.67 lakhs which was Rs. 3.09 lakhs in the FY 2021-22. The other income includes interest earned on the fixed deposit.

Expenditure:

Cost of Material Consumed

The Cost of Material Consumed for F.Y. 2022-23 was Rs. 6522.47 lakhs against the cost of Material Consumed of Rs. 2762.22 lakhs in F.Y. 2021-22. The cost of material consumed was 87.96 % of the total revenue from operations in F.Y 2022-23 as against 89.79 % of total revenue from Operations in F.Y 2021-22.

Employee Benefits Expenses:

The Employee expenses for F.Y. 2022-23 was Rs. 1 74.96 lakhs against the expenses of Rs. 1 19.74 lakhs in F.Y. 2021-22 showing increase by 46.12%. The Company had 36 No of employees in the FY 2022-23 as against 16 No of employees in the FY 2021-22. The Increase in no of employees and annual increment in the employee salary increase the employee benefit expenses.

Finance Cost:

The Finance Cost for F.Y. 2022-23 was Rs. 1 33.34 lakhs against the cost of Rs. 51.32 Lakhs in the F.Y. 2021-22 showing an increase of 159.82 %. The finance cost was increased on account of overall increase of the Borrowings. The total outstanding of the borrowings as on March 31, 2023 was Rs. 1 959.26 lakhs as against Rs. 897.61 lakhs as on March 31.2022. The cash inflow from the long-term borrowings and short-term borrowings in the FY 2022-23 was Rs. 1061.65 lakhs resulting in to higher finance cost.

Other Expenses

Other Expenses increased to Rs. 532.17 lakhs for F.Y. 2022-23 against Rs. 209.58 Lakhs in F.Y. 2021-22 showing increase of 153.92%. The Increase in the Other expenses in the FY 2022-23 was on account of increase of the business by 136.21 % in comparison to FY 2021-22. The increase in the cost of Freight and packing expenses, Electricity Expenses and charges related to clearance of imported material in comparison to FY 2021-22 due to increase of business.

Depreciation and Amortisation Expenses:

The Depreciation for F.Y. 2022-23 was Rs. 42.82 lakhs as compared to Rs. 21.86 lakhs for F.Y. 2021-22. The depreciation was increased by 95.88 % in F.Y. 2022-23 as compared to F.Y. 2021-22. The depreciation in FY 2022-23 was high on account of the addition of fixed assets of Rs. 572.07 lakhs in F.Y. 2022-23.

EBIDTA

The EBIDTA for F.Y. 2022-23 was Rs. 441.31 lakhs as compared to Rs. 1 88.73 lakhs for F.Y. 2021-22. The EBIDTA was 5.34 % in FY 2022-23 of total Revenue as compared to 5.40 % in FY 2021-22.

Profit after Tax (PAT)

PAT is Rs. 208.03 lakhs for F.Y. 2022-23 as compared to Rs. 89.07 lakhs in F.Y. 2021-22. The PAT was 2.52 % of total revenue in F.Y. 2022-23 compared to 2.55 % of total revenue in F.Y. 2021-22. The PAT margin was decreased though the business was increased by 136.21 % on account of increase in the employee benefit cost, finance cost and depreciation.

CASH FLOW

Particulars	March 31, 2024	March 31, 2023	March 31, 2022
Net cash from Operating Activities	(559.35)	(565.28)	46.16
Net cash flow from Investing Activities	(666.29)	(144.55)	(573.26)
Net Cash Flow Financing Activities	999.25	942.25	543.73

Cash flow March 31, 2024

The Company has Negative Cash flow from operating on account of Increase of inventory, Increase of Trade Receivables, and Increase of GST Receivables due to growth of business and reduction of the other liabilities more than the profit earned by the Company. The Company had invested in the fixed assets resulting into negative cash flow from investing activities. The Company had enhanced the long-term borrowings and enhanced the short-term borrowing and raised the funds through issue of share capital for purchase of fixed assets and increase in the current assets.

Cash flow March 31, 2023

The Company has Negative Cash flow from operating on account of Increase of current assets due to growth of business and increase of other liabilities more than the profit earned by the Company. The Company had invested in the fixed assets resulting into negative cash flow from investing activities. The Company had borrowed long term funds for financing the purchase of fixed assets and enhanced the short term borrowing for working capital requirement for purchase of fixed assets and increase in the current assets.

Cash flow March 31, 2022

The Company has positive Cash flow from operating on account of Increase of current assets which was financed through increase in the current liabilities and net change in working capital is less than the profit earned by the Company. The Company had invested in the fixed assets resulting into negative cash flow from investing activities. The Company had borrowed long term funds for financing the purchase of fixed assets.

Information required as per Item 11 (II) (C) (iv) 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

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

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page 21 of this Draft Red Herring Prospectus. To our knowledge, except as we have described in this Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

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

Income and sales of our Company on account of major activities derives from manufacturing of HDPE piles. And MDPE Pipes.

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 sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page 21 in this Draft Red Herring 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.

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

7. Total turnover of each major industry segment in which the issuer company operated.

The Company is in the business of manufacturing, the relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page no 83 of this Draft Red Herring Prospectus.

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

Our Company has not announced any new products or business segment.

9. The extent to which business is seasonal.

Our business is not seasonal.

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

Our top 10 buyers and suppliers constitute majority of our business which is reproduce in Chapter Business Overview on page 91 of Draft Red Herring Prospectus.

	Purchases/Sales
Particulars	2023-24	%	2022-23	%	2021-22	%
Top 10 Buyers	7950.60	56.40	4246.62	51.50	1,778.46	50.95
Top 10 Suppliers	8225.03	58.35	4961.05	60.17	1892.84	54.23

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Business Overview" beginning on pages 83 and 91, respectively of this Draft Red Herring Prospectus.