Mehul Telecom Ltd Management Discussions

OPERATIONS

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 29 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 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 July 07, 2025 which is included in this Draft Red Herring 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 incorporated as "Mehul Telecom Private Limited", a private limited company under the provisions of Companies Act, 2013 vide Certificate of Incorporation dated May 17, 2023 issued by Registrar of Companies, Central Registration Centre. We acquired the running business of M/s Mehul Telecom (erstwhile proprietorship firm of our Promoter, Mehul Vasantbhai Raymagiya) with effect from April 21, 2024, as per the Business Transfer Agreement dated May 14, 2024. The proprietorship firm, founded by our Promoter, Mehul Vasantbhai Raymagiya, was in the same business as our Company, sale of multi-brand smart phones and accessories from the financial year 2007-2008. Later on, our Company was converted into a Public Limited Company pursuant to special resolution passed at Extra-ordinary General Meeting by the shareholders of our

Company held on February 28, 2025 and the name of our Company was changed to "Mehul Telecom Limited". A fresh Certificate of Incorporation consequent upon Conversion from Private Limited Company to Public Limited Company dated March 20, 2025 was issued by the Registrar of Companies, Ahmedabad. The Corporate Identification Number of our Company is U46524GJ2023PLC141259.

The main object of the company is:

1. To takeover, carry on and continue the business and affairs of the erstwhile Sole Proprietorship firm M/s. MEHUL TELECOM with all its assets and liabilities including contractual rights and obligations

2. To carry on the business of exporters, importers, buyers, distributors, sellers including retail and whole sale trade, processors and or dealers in all or any types of electrical and electronic products, Telecom Products, Smart Phones, Mobile Devices, Tablets, Telecom Accessories and other related gadgets such as Mobile Phone Batteries, Travel Chargers, Car Chargers, Power Banks, USB Cables, Universal Battery Charger etc. and related activities and providing related servicing.

Commencement of Business: The company received certificate of commencement of operations on July 13, 2023.

The Promoters of our company, Mehul Vasantbhai Raymagiya & Raymagiya Hemali Mehulbhai are associated with the company since its incorporation. In this dynamic and extremely competitive business environment, we have developed a business model that derives revenue from two major business verticals with our offerings ranging from Mobile handsets and Accessories. Our promoters have combined experience of more than 19 years in the retail distribution, sales and marketing industry, which is the driving force behind the growth achieved by the company.

Our Company is engaged in multi-brand retail selling of Smart Phones and Allied accessories from manufacturers like MI, Samsung, Vivo, Oppo, Realme, Nokia, OnePlus, Redmi, Nothing, Tecno, Intel, Infinix, Xiaomi and other popular brands. In addition to handsets, we retail connected lifestyle products and peripherals such as wearables, audio devices, and power solutions like speakers, smartwatch, ear phones, head phones, tablets, mobile covers, phone chargers, screen guards, power banks, phone warranty plans, fire sticks, car holder clamps, pen drive etc. of various brands. Our stores support omnichannel checkout including UPI, mobile wallets, and integrated POS terminals. We operate under the brand name "Mehul Telecom".

Over the years, we have grown our business by focusing on our brands. In the year 2008, Mehul Telecom (Proprietorship) business operations began. We opened our First COCO Store at Chavdi Chowk and we started our first FOFO Store in FY 2019-20. As on date of this Draft Red Herring Prospectus, we operate a total of 64 stores across the state of Gujarat. We have developed our business by improving business of the existing stores and opening new stores simultaneously. For more details of this growth, please refer to heading titled "Major events" in the chapter titled "History and Corporate Matters" beginning on page 149 of this Draft Red Herring Prospectus.

We mainly operate under the brand name of

We primarily sell smart mobile handsets of all the major brands, accessories for mobile handsets, tablets and data cards under one roof. Out of 64 stores, 5 stores are Company owned Company Operated retail outlets ("COCO Model") and 59 stores are under franchisee owned and Franchisee operated retail model ("FOFO Model") distributed in more than 15 districts in Gujarat.

OUR BUSINESS MODEL

Our Business Model comprised of two models:

a) Sale through Owned Stores (COCO Model): Under this model, we sale mobile handsets and mobile accessories through our owned stores. As on the date of filing of DRHP, we manage 5 stores where we showcase our range of mobile phones and accessories, emphasizing a personalized, hands-on experience for customers strategically located in high-traffic areas across State of Gujarat. Each store is fully operated and maintained by the Company, covering all operational aspects, including staffing, management, and strategic direction, to ensure consistency in service quality and brand experience across our retail footprint. These stores serve as hubs for showcasing the latest smart phones, providing hands-on experiences, and delivering top-notch customer services. Our company directly operates its outlets or facilities. The company is responsible for all aspects of the operation, including staffing, management, maintenance, and overall business strategy.

b) Sale through Franchise Branch Stores (FOFO Model): As on the date of filing of this Draft Red Herring Prospectus, we distribute mobile phones and accessories through 59 Franchise Owned Franchise Operated outlets under the FOFO model. In this structure, our Company licenses its brand name to franchise partners in different cities. While each outlet operates independently under the ownership and management of the franchisee, it utilizes our brand, ensuring alignment with our brand identity and service standards across all locations.

Our hybrid store model allows rapid expansion while maintaining brand control, with franchisees benefiting from our procurement and operational support. All the stores under COCO Model as well as FOFO Model are branded as "Mehul Telecom".

Quantification of Shops increased:

Year	Period	Own Store	Franchisee Store	Total Store
2022-2023	01/04/2022 TO 31/03/2023	3	53	56
2023-2024	01/04/2023 TO 31/03/2024	4	53	57
2024-2025	01/04/2024 To the Date of filling DRHP	5	59	64

Increase in Profit Margin (Year on Year):

Company is engaged in multi-brand retail selling of Smart Phones and allied accessories from manufacturers like MI, Samsung, Vivo, Oppo, Realme, Nokia, OnePlus, Redmi, Nothing, Tecno, Intel, Infinix, Xiaomi and other popular Brands. The business of the Company is high volume-low margin business.

Revenue from operations of our Company was 12,088.66 Lakhs, 10,719.83 Lakhs and . 8,015.19 Lakhs in FY 2024-25, FY 2023-24 and FY 2022-23 respectively. Profit after tax of company was 603.94 Lakhs, 219.46 Lakhs and 51.44 Lakhs in FY 2024-25, FY 2023-24 and FY 2022-23 respectively amounting to PAT Margin of 5.00% for FY 2024-25, 2.05% for FY 2023-24 and 0.64% for FY 2022-23.

The Companys profitability is largely dependent on achieving sales targets set by various mobile phone manufacturers. With a consistent rise in sales, the Companys purchasing power has strengthened, enabling it to benefit from additional trade margins offered by manufacturers upon meeting or exceeding those targets. As turnover has grown in subsequent years, the Company has experienced a corresponding improvement in its profit margins.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO LAST AUDITED BALANCE SHEET

After the date of last audited accounts i.e. March 31, 2025, the Directors of our Company confirms 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.

FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS

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

1. Expansion of our distribution network:

As we look to grow our number of stores in the future, we expect our new stores to help provide accessibility to "Mehul Telecom" brand to a larger number of customers, which helps us to enhance our brand awareness in the locations where our stores open. This also enables us to enhance our purchasing power with our suppliers and obtain better pricing for the products that we procure for our customers.

2. Cost of Goods:

Cost of goods sold which comprises of Purchase of Traded Goods and Changes in Inventories is the largest component of our expenses, representing 88.99%, 92.71% and 93.61% of our total revenue, in FY 2024-25, FY 2023-24 & FY 2022-23 respectively. Therefore, any change in the market prices of smart phones, electrical accessories or any part(s) used in the manufacturing of the same for e.g. semiconductor chips, will have a significant and direct impact on our profitability. Our cost of goods is also impacted by the quality that we offer in our stores. Our results of operations are therefore affected by our ongoing ability to procure quality goods at an optimum price.

3. Consumer spending, demographics and general economic and market conditions in India:

The consumer spending patterns, demographics, and overall economic conditions in India can significantly impact our Company as higher disposable income levels enable consumers to spend more on discretionary items like mobile phones. During periods of economic growth, when disposable income rises, there is typically an uptick in consumer demand for upgraded or premium mobile devices, while during recession there may be a shift towards more budget-friendly options rather than premium flagship models.

4. Competition:

We compete within the mobile retail industry. The mobile retail industry in India is competitive, and we generally compete on the basis of product, after sale service, quality, price and location. The industry is often also affected by various factors, including changes in consumer tastes, economic conditions, demographic and technological trends and consumer disposable income. Due to increased competition, we could experience downward pressure on prices, lower demand for our products, reduced margins, an inability to take advantage of new business opportunities, including finding suitable store locations and a loss of market share.

5. Other Factors: i. Our dependence on limited number of suppliers for a significant portion of our revenues; ii. Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition; iii. The performance of the financial markets in India and globally; iv. Our ability to expand our geographical area of operation; v. Concentration of ownership among our Promoters. vi. Government Policies vii. Companys ability to successfully implement its growth strategy and expansion plans viii. Political Stability of the Country;

KEY OPERATIONAL AND FINANCIAL PERFORMANCE INDICATORS

Key Performance Indicators (KPIs) are imperative to the Financial and Operational performance evaluation of the Company.

However, KPIs disclosed below shall not be considered in isolation or as substitute to the Restated Financial information. In the opinion of our Management the KPIs disclosed below shall be supplementary tool to the investor for evaluation of the Company

The KPIs disclosed below have been approved by a resolution of our Audit Committee dated July 08, 2025 and the members of the Audit Committee have verified the details of all KPIs pertaining to the Company. Further, the members of the Audit Committee have confirmed that there are no KPIs pertaining to our Company that have been disclosed to any investors at any point of time during the three years period prior to the date of filing of the Draft Red Herring Prospectus. Further, the KPIs herein have been certified by M/s. S V P S & Co Chartered Accountants by their certificate dated July 08, 2025.

The KPIs of our Company have been disclosed in the sections "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" starting on pages 121 and 239, respectively. We have described and defined the KPIs, as applicable, in "Definitions and Abbreviations" beginning on page 1.

Our Company confirms that it shall continue to disclose all the KPIs included in this section on a periodic basis, at least once in a year (or any lesser period as determined by the Board of our Company), for a duration of one year after the date of listing of the Equity Shares on the Stock Exchange or till the complete utilization of the proceeds of the Issue as per the disclosure made in the Objects of the Issue Section, whichever is later or for such other duration as may be required under the SEBI (ICDR) Regulations, 2018.

Set forth below are KPIs which have been used historically by our Company to understand and analyse the business performance, which in result, help us in analyzing the growth of various verticals of the Company that have a bearing for arriving at the Basis for the Issue Price

Financial KPIs of our Company

(Amount in Lakh)

Particulars	Financial Year
	2024-25	2023-24	2022-23
Revenue from Operations ( in Lakhs)	12,088.66	10,719.83	8,015.19
Growth in Revenue from Operations (YoY %)	12.77%	33.74%	25.38%
EBITDA ( in Lakhs)	801.79	303.90	73.35
EBITDA Margin (%)	6.63%	2.83%	0.92%
Profit After Tax ( in Lakhs)	603.94	219.46	51.44
PAT Margin (%)	5.00%	2.05%	0.64%
RoE (%)	59.84%	99.32%	40.95%
RoCE (%)	47.16%	42.43%	30.05%
Current Ratio	2.62	1.37	1.61
Net Capital Turnover Ratio (in times)	5.71	20.27	19.18
Number of Operational Stores	64	57	56
Averages Sales per Stores	188.89	188.06	143.12

Source: The Figure has been certified by our Peer Reviewed Auditors M/s. S V P S Co., Chartered Accountants vide their certificate dated July 08, 2025.

Notes:

13. The figures pertaining to Profit and Loss items used in the calculation of the ratios have been taken from the Proforma Statement of Profit and Loss for the full financial year. For the financial year 2024 25, the figures include the results of Mehul Telecom Limited for the period from April 01, 2024, to March 31, 2025, and those of Mehul Telecom (erstwhile proprietorship of Mehul Vasantbhai Raymagiya) for the period from April 01, 2024, to April 21, 2024. For the financial year 2023 24, the figures comprise the results of Mehul Telecom Limited for the period from May 17, 2023, to March 31, 2024, along with the figures of the erstwhile proprietorship for the period from April 01, 2023, to March 31, 2024. For the financial year 2022 23, the figures pertain solely to Mehul Telecom (erstwhile proprietorship of Mehul Vasantbhai Raymagiya).

14. The figures relating to Balance Sheet items used in the ratio calculations as at the end of each financial year have been extracted from the Restated Statement of Assets and Liabilities of the respective entity as on the relevant dates. Specifically, the figures as on March 31, 2025, are taken from Mehul Telecom Limited, while the figures as on March 31, 2024, and March 31, 2023, are taken from Mehul Telecom (erstwhile proprietorship of Mehul Vasantbhai Raymagiya)

15. Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements.

16. Growth in Revenue from Operations (%) is calculated as a percentage of Revenue from Operations of the relevant period/year minus Revenue from Operations of the preceding period/year, divided by Revenue from Operations of the preceding period/year.

17. EBITDA is calculated as profit for the period / year, plus tax expenses (consisting of current tax, deferred tax and current taxes relating to earlier years), finance costs and depreciation and amortization expenses reduced by other income.

18. EBITDA Margin (%) is calculated as EBITDA divided by Revenue from Operations.

19. Profit After Tax Means Profit for the period/year as appeared in the Restated Financial Statements.

20. PAT Margin (%) is calculated as Profit for the period/year as a percentage of Revenue from Operations.

21. RoE (Return on Equity) (%) is calculated as net profit after tax for the period/year divided by Average Shareholder

Equity.

22. RoCE (Return on Capital Employed) (%) is calculated as earnings before interest and taxes divided by Sum of total equity, non-current borrowings and current borrowings as at the year end.

23. Current Ratio is a liquidity ratio that measures our ability to pay off its short-term obligations (those which are due within one year) using its current assets (those which are convertible to cash within one year) and is calculated by dividing the current assets by current liabilities.

24. Net Capital Turnover Ratio quantifies our effectiveness in utilizing our working capital and is calculated by dividing our revenue from operations with our working capital (i.e., current assets less current liabilities).

Explanation for KPI metrics

KPI	Explanations
Revenue from Operations ( in Lakhs)	Revenue from Operations is used by our management to track the revenue profile of the business and in turn helps assess the overall financial performance of our Company and size of our business.
Gross Profit Margin (%)	Gross Profit Margin is an indicator of the profitability on sale of products manufactured by the Company.
EBITDA ( in Lakhs)	EBITDA provides information regarding the operational efficiency of the business.
EBITDA Margin (%)	EBITDA Margin is an indicator of the operational profitability and financial performance of our business.
Profit After Tax ( in Lakhs)	Profit after tax provides information regarding the overall profitability of the business.
PAT Margin (%)	PAT Margin is an indicator of the overall profitability and financial performance of our business.
RoE (%)	RoE provides how efficiently our Company generates profits from average shareholders funds.
RoCE (%)	ROCE provides how efficiently our Company generates earnings from the closing capital employed in the business.
Current Ratio	It assesses companys ability to pay off its short term liabilities (due within a year) using its current assets (assets convertible to cash within a year).

 

KPI	Explanations
Net Capital Turnover Ratio	This metric enables us to track the how effectively company is utilizing its working capital to generate revenue.

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies and Notes to accounts, "Annexure D" beginning under Chapter titled "Restated Financial Statements" beginning on page 173 of this Draft Red Herring Prospectus. Our Company has not deviated from statutorily prescribed manner for recording sales and revenues.

PRINCIPAL COMPONENTS OF OUR STATEMENT OF PROFIT AND LOSS

The following descriptions set forth information with respect to the key components of our statement of profit and loss.

Our Income

Revenue from Operations

Our revenue from operations primarily consists of sale of products.

The sale of products consists of selling of Smart Phones and allied accessories from manufacturers like MI, Samsung, Vivo, Oppo, Realme, Nokia, OnePlus, Redmi, Nothing, Tecno, Intel, Infinix, Xiaomi and other popular Brands.

Other Income

The other income of our Company constitutes less than 1% of the total income.

The key components of our other income are:

(i) Commission income &

(ii) Reimbursement of Sales promotion Services.

Our Expenses

Our expenses primarily consist of the following:

1. Purchases of stock-in-trade consisting of stock, required for the reselling of smart phones and other accessories.

2. Changes in inventories of stock-in-trade are an adjustment of the opening and closing stock of stock-in-trade at the end of the financial year;

3. Employee benefits expenses consist of salaries and wages, gratuity expense and remuneration paid to Directors/KMPs;

4. Depreciation and amortization expenses comprising of depreciation on tangible assets and amortization of intangible assets.

5. Other expenses primarily include rent, merchant service fees, commission and other miscellaneous expenses.

Our Tax Expenses

Elements of our tax expense are as follows:

1. Current tax: Our current tax is the amount of tax payable based on the taxable profit for the year as determined in accordance with the applicable tax rates and the provisions of the Income Tax Act, 1961.

2. Deferred tax: Deferred tax is recognized based on the difference between taxable profit and book profit due to the effect of timing differences. Our deferred tax is measured based on the applicable tax rates and tax laws that have been enacted or substantively enacted by the relevant balance sheet date.

RESULTS OF OUR OPERATION

(Amount in Lakh)

Particulars	For the year ended March 31, 2025*	% of Total Income	For the year ended March 31, 2024**	% of Total Income	For the year ended March 31, 2023	% of Total Income
Revenue from operations	12,088.66	99.89%	10,719.83	99.84%	8,015.19	99.85%
Other income	13.06	0.11%	16.88	0.16%	12.13	0.15%
Total Revenue	12,101.72	100.00%	10,736.71	100.00%	8,027.33	100.00%
Expenses:
Purchase of Traded Goods	11,422.62	94.39%	10,612.84	98.85%	7,427.27	92.52%
Changes in Inventories	(653.55)	-5.40%	(658.67)	-6.13%	87.32	1.09%
Employee benefits expense	99.62	0.82%	41.78	0.39%	46.71	0.58%
Finance costs	4.47	0.04%	8.68	0.08%	1.91	0.02%
Depreciation and amortization expense	4.91	0.04%	15.12	0.14%	12.73	0.16%
Operating and Other expenses	418.18	3.46%	419.99	3.91%	380.54	4.74%
Total expenses	11,296.25	93.34%	10,439.74	97.23%	7,956.48	99.12%
Profit before tax	805.46	6.66%	296.97	2.77%	70.84	0.88%
Tax expense:
(1) Current tax	205.73	1.70%	79.04	0.74%	20.49	0.26%
(2) Deferred tax	(4.21)	-0.03%	(1.53)	-0.01%	(1.08)	-0.01%
Profit (Loss) for the period (X	603.94	4.99%	219.46	2.04%	51.44	0.64%

*Includes balances for the Period between April 01, 2024 to April 21, 2024 for the Proprietorship concern and period up to March 31, 2025 for the Company. **Includes balances for the period upto March 31, 2024 for the Proprietorship concern and period between May 17, 2023 to March 31, 2024 for the Company.

FINANCIAL PERFORMACE OF THE COMPANY

COMPARISON OF FOR FY 2025 VIS-?-VIS FY 2024:

REVENUE:

Our total income increased by 12.71% from 12,101.72 Lakhs in FY 2025 to 10,736.71 Lakhs in FY 2024, primarily due to an increase in our revenue from operations as discussed below:

Revenue from operations

Our Company is engaged in multi-brand retail selling of Smart Phones and Allied accessories from manufacturers like MI, Samsung, Vivo, Oppo, Realme, Nokia, OnePlus, Redmi, Nothing, Tecno, Intel, Infinix, Xiaomi and other popular brands. The Total Revenue from operations for the year ended on FY 2024-25 was 12,088.66 Lakh as compared to 10,719.83 Lakh during the FY 2023-24. Revenue from operations increased by 12.77% in FY 2024-25. Revenue from Operations increased mainly on account of increase in number of stores of both types i.e., Owned Stores (COCO Model) and Franchisee operating under FOFO Model in Gujarat resulting in increased sales. Out of total revenue from operations in FY 2024-25, revenue from the Company Owned stores constitutes 56.11% and Revenue from the Franchisee operating under FOFO stores constitutes 43.89%, whereas in FY 2023-24 it was 59.30% and 40.70% of the Revenue from Operations respectively.

Particulars of Revenue Segment wise

(Amount in Lakh)

	For the year ended March 31
Particulars	2025		2024
	Revenue	%	Revenue	%
Revenue from Owned stores [COCO]	6,782.74	56.11	6,356.97	59.30
Revenue from Franchisee operating stores [FOFO]	5,305.92	43.89	4,362.86	40.70
Total Revenue	12,088.66	100.00	10719.83	100.00

Other income

Other income of the company was 13.06 lakhs and 16.88 lakhs for FY 2024-25 and FY 2023-24 respectively. Commission and reimbursement of sales promotion services income were the main constituents for Other Income for the year FY 2024-25 and FY 2023-24. Income from commission increased to 8.53 Lakhs in FY 2024-25 from 1.86 Lakhs in FY 2023-24, whereas Reimbursement of Sales Promotion Income decreased to 2.59 Lakhs in FY 2024-25 from 14.79 Lakhs in FY 2023-24.

EXPENDITURE:

Our total expenses increased by 8.20% to 11,296.25 lakhs for the FY 2024-25 from 10,439.74 lakhs for the FY 2023-24, primarily due to the reasons discussed below:

Cost of Goods sold (COGS)

Our cost of goods sold (which is the aggregate of our purchase of stock in trade and changes in inventories of stock in trade) makes up a large portion of our operating expenses. During the year ended on March 31, 2025, and March 31, 2024 our cost of goods sold (purchase of stock in trade and changes in inventories of stock in trade) amounted to 10,769.07 Lakhs, and 9,954.17 Lakhs, respectively, which represents 88.99%, and 92.71%, of our total revenue for the respective periods. Stock in trade consists of stocks of various mobile phones and mobile accessories. The increase in COGS is primarily attributable to a higher requirement for inventory to meet growing customer demand.

Change in inventories of Stock in trade

Our opening stock of Stock in trade was 1,168.98 lakhs as at April 01, 2024, while it was 510.30 lakhs as at April 01, 2023. Our closing stock of Stock in trade was 1,822.52 lakhs as at March 31, 2025, while it was 1,168.98 lakhs as at March 31, 2024. The changes in inventories of Stock in trade decreased to (653.55) lakhs in FY 2024-25 from (658.67) lakhs in FY 2023-24 were primarily in proportion with the growth in our Companys business. The main reason for this decline was increase in our Companys requirement for stock to meet demand from our customers as company stores/ franchisee count increases every year.

Employee Benefit Expenses

Employee Benefit expenses increased to 99.62 Lakhs for FY 2024-25 from 41.78 Lakh for FY 2023-24 showing an increase of 138.42% which shows primarily increase in Salary and wages, Gratuity and Contribution to Provident and other funds. Salaries and wages were increased to 91.40 Lakhs in FY 24-25 from 41.05 Lakhs in FY 23-24 showing an increase of 122.66%. Further, Contribution to Provident and other funds and gratuity expenses amounts to 8.22 Lakhs in FY 2024-25. This was mainly attributable to an increase in salary of employees during the year to support the greater scale of our business during FY 2024-25.

Finance Cost

Finance expense were 4.47 Lakhs in FY 2024-25 as against 8.68 Lakhs in FY 2023-24 showing decrease of 48.48%. The decline in finance cost is mainly due to decrease in interest expenses from 7.66 Lakhs in FY 2023-24 to 4.47 Lakhs.

As of March 31, 2024, the proprietorship of Mehul Vasantbhai Raymagiya had outstanding working capital and term loan facilities, which resulted in higher interest obligations during that period. However, following the transition to the Company structure, borrowings were significantly reduced. As of March 31, 2025, the Company maintained minimal debt levels, leading to a substantial decline in interest expenses. This reduction in borrowings has been a key factor in lowering overall finance costs in FY 2024 25.

Depreciation

The Depreciation and amortization expense for FY 2024-25 was 4.91 lakhs as against 15.12 lakhs for FY 2023-24 showing decrease of 67.52% mainly on account of decrease in property, plant and equipment in Financials of the company in comparison to the financials of Erstwhile Proprietorship of Mehul Vasantbhai Raymagiya.

Other Expenses

Other Expenses increased to 418.18 Lakhs for FY 2024-25 from 419.99 lakh for FY 2023-24 showing a small decrease of 0.43% which is due to decrease in Selling & Distribution Expenses.

Profit before Tax

As a result of the foregoing, we recorded an increase of 171.23% in our profit before tax, which amounted to 805.46 lakhs in FY 2024-25, as compared to 296.97 lakhs in FY 2023-24. The Profit before Tax for the FY 2024-25 was 6.66% of the total revenue and it was 2.77% of total revenue for the FY 2023-24.

Tax Expenses

Our total tax expenses increased to 201.52 Lakhs in FY 2024-25 from 77.51 Lakhs in FY 2023-24, primarily due to an increase in current tax to 205.73 Lakhs in FY 2024-25. The increase in current tax was mainly on account of an increase in our restated profit before tax to 805.46 Lakhs in FY 2024-25 from 296.97 Lakhs in FY 2023-24.

Profit after Tax (PAT)

As a result of the foregoing, we recorded an increase of 175.20% in our profit for the period from 219.46 lakhs in the FY 2023-

24 to 603.94 lakhs in the FY 2024-25. The Profit after Tax for the FY 2024-25 was 5.00% of the total revenue and it was 2.04% of total revenue for the FY 2023-24. The increase in Profit after Tax is mainly due to two reasons i.e., increase in revenue resulting in higher profit compared to the previous financial year.

COMPARISON OF FY 2023-24 WITH FY 2022-23:

REVENUE:

Our total income increased by 33.75% from 8,027.33 Lakhs in FY 2022-23 to 10,736.71 Lakhs in FY 2023-24, primarily due to an increase in our revenue from operations and other income as discussed below:

Revenue from operations

Our Company is engaged in multi-brand retail selling of Smart Phones and allied accessories from manufacturers like MI, Samsung, Vivo, Oppo, Realme, Nokia, OnePlus, Redmi, Nothing, Tecno, Intel, Infinix, Xiaomi and other popular Brands. The Total Revenue from operations for the year ended on FY 2023-24 was 10,719.83 Lakh as compared to 8,015.19 Lakh during the FY 2022-23. Revenue from operations increased by 33.74% in FY 2023-24. Income from Operations increased mainly on account of increase in number of stores of both types i.e., Owned Stores and Franchise operating under FOFO Model in Gujarat resulting in increased sales. Out of total revenue from operations in FY 2023-24, Revenue from Owned Stores constitutes 59.30% and Revenue from Franchise operating under FOFO Model constitutes 40.70%, whereas in FY 2022-23 it was 57.07% and 42.93% of revenue from operations respectively.

Particulars of Revenue Segment wise

(Amount in Lakh)

	For the year ended March 31
Particulars	2024		2023
	Sales	%	Sales	%
Revenue from Owned Stores	6356.97	59.30	4574.21	57.07
Revenue from Franchise operating under FOFO Model	4362.86	40.70	3440.98	42.93
Total Revenue	10719.83	100.00	8015.19	100.00

Other Income:

Other income of the company were 16.88 lakhs and 12.13 lakhs for FY 2023-24 and FY 2022-23 respectively. Commission and Reimbursement of Sales promotion Services income were the main constituents for Other Income for the year FY 2023-24 & FY 2022-23. Income from commission decreased to 1.86 Lakhs in FY 2023-24 from 2.27 Lakhs in FY 2022-23,whereas

Reimbursement of Sales Promotion Income was increased to 14.79 Lakhs in FY 2023-24 from 5.25 Lakhs in FY 2022-23.

EXPENDITURE:

Our total expenses increased by 31.21% to 10,439.74 lakhs for the FY 2023-24 from 7,956.48 lakhs for the FY 2022-23, primarily due to the reasons discussed below:

Cost of Goods sold

Our cost of goods sold (which is the aggregate of our purchase of stock in trade and changes in inventories of stock in trade) makes up a large portion of our operating expenses. During the year ended on March 31, 2024 and March 31, 2023 our cost of goods sold (purchase of stock in trade and changes in inventories of stock in trade) amounted to 9,954.17 Lakhs and 7,514.59 Lakhs respectively, which represents 92.71%%, and 93.61%, of our total revenue for the respective periods. Stock in trade consists of stock of various mobile phones and mobile accessories. The increase in COGS is primarily attributable to a higher requirement for inventory to meet growing customer demand.

Change in inventories of Stock in trade

Our opening stock of Stock in trade was 510.30 lakhs as at April 01, 2023, while it was 597.62 lakhs as at April 01, 2022. Our closing stock of Stock in trade was 1,168.98 lakhs as at March 31, 2024, while it was 510.30 lakhs as at March 31, 2023. The changes in inventories of Stock in trade decreased to (658.67) lakhs in FY 2023-24 from 87.32 lakhs in FY 2022-23 were primarily in proportion with the growth in our Companys business. The main reason for this decline was the increase in our Companys requirement for stock to meet demand from our customers as our branch/franchisee count increases every year.

Employee Benefit Expenses

Employee Benefit expenses increased to 41.78 Lakhs for FY 2023-24 from 46.71 Lakh for FY 2022-23 showing decrease of 10.55% which shows primarily decrease in includes Salary and wages, Gratuity and Contribution to Provident and other funds. Salaries and wages were decreased to 41.05 Lakhs from 46.71 Lakhs showing a decrease of 12.12%. Further, Contribution to Provident and other funds and gratuity expenses amounts to 0.73 Lakhs in FY 2023-24. This was mainly attributable to a decrease in the number of employees during the year.

Finance Cost

Finance expense were 8.68 Lakhs in FY 2023-24 as against 1.91 Lakhs in FY 2022-23 showing an increase of 354.98%. The increase in finance cost is mainly due to an increase in interest expenses from 1.23 Lakhs in FY 2022-23 to 7.66 Lakhs in FY 2023-24. Interest Expenses increased due to availment of Cash Credit in F.Y. 2023-24.

Depreciation

The Depreciation and amortization expense for FY 2023-24 was 15.12 lakhs as against 12.73 lakhs for FY 2022-23 showing an increase of 18.79% mainly on account of an increase in property, plant and equipment in F.Y. 2023-24.

Other Expenses

Other Expenses increased to 419.99 Lakhs for FY 2023-24 from 380.54 lakh for FY 2022-23 showing an increase of 10.36% which is due to increase in Merchant Service Fees, Subvention Charges, Selling & Distribution Expenses with respect to F.Y. 2022-23.

Profit before Tax

As a result of the foregoing, we recorded an increase of 319.19% in our profit before tax, which amounted to 296.97 lakhs in FY 2023-24, as compared to 70.84 lakhs in FY 2022-23. The Profit before Tax for FY 2023-24 was 2.77% of the total revenue and it was 0.88% of total revenue for FY 2022-23.

Tax Expenses

Our total tax expenses increased to 77.51 Lakhs in FY 2023-24 from 19.41 Lakhs in FY 2022-23, primarily due to an increase in current tax to 79.04 Lakhs in FY 2023-24. The increase in current tax was mainly on account of an increase in our restated profit before tax to 296.97 Lakhs in FY 2023-24 from 70.84 Lakhs in FY 2022-23.

Profit after Tax (PAT)

As a result of the foregoing, we recorded an increase of 326.65% in our profit for the period from 51.44 lakhs in the FY 2022-23 to 219.46 lakhs in the FY 2023-24. The Profit after Tax for the FY 2023-24 was 2.04% of the total revenue and it was 0.64% of total revenue for the FY 2022-23. The increase in Profit after Tax is mainly due to increase in revenue resulting into higher profit as compared to previous financial year.

DISCUSSION ON THE STATEMENT OF CASH FLOWS

The following table sets forth certain information relating to the Company Mehul Telecom Limiteds statement of cash flows for the periods indicated:

(Amount in Lakh)

	For the Period/Financial Year Ended
Particulars	March 31, 2025	March 31, 2024
Net cash flows (used in)/generated from operating activities	(1,128.69)	(9.00)
Net cash flows (used in) investing activities	(17.91)	0.00
Net cash flows generated from financing activities	1,545.31	10.00
Net increase/(decrease) in cash and cash equivalents	398.70	1.00

Operating activities

1. For the year ended March 31, 2025, net cash used in operating activities was 1,128.69 Lakhs. This comprised of the profit before tax of 769.30 Lakhs, which was primarily adjusted for depreciation and amortization expenses of 4.37 Lakhs, Other expenses written off in Reserve & Surplus of 8.22 Lakhs, and finance cost of 2.83 Lakhs. The resultant operating profit before working capital changes was 784.73 Lakhs, which was primarily adjusted for a decrease in inventories purchased during the period of 1,822.52 Lakhs, decrease in trade receivables of 658.83 Lakhs, increase in trade payables of 1,080.53 Lakhs, increase in Other Current Liabilities of 23.59 Lakhs, increase in short term provisions of 197.19 Lakhs and decrease in Loans & Advances & Other assets of 529.94 Lakhs.

2. For the year ended March 31, 2024, net cash used in operating activities was 9.00 Lakhs. This comprised of the loss before tax of 0.66 Lakhs, which was primarily adjusted for an increase in trade payables of 0.29 Lakhs and decrease in Loans & Advances & Other assets of 8.62 Lakhs.

Investing Activities

1. For the year ended March 31, 2025, net cash used in investing activities was 17.91 Lakhs, which primarily comprised of cash used for the purchase of property, plant, and equipment (including capital work in progress) of 17.01 Lakhs (Plant & Machinery amounting to 7.10 lakhs, Furniture & Fittings amounting to 8.85 lakhs & Computer amounting to 1.06 lakhs) & increase in Long Term Loans & advances of 0.90 Lakhs pertaining to Security Deposits.

2. For the year ended March 31, 2024, there is no movement in cash flow from investing activities.

Financing activities

1. For the year ended March 31, 2025, net cash generated from financing activities was 1,545.31 Lakhs, which predominantly comprised net issue of share capital of 1,127.34 Lakhs, increase of non-current liabilities of 413.63 Lakhs, increase of borrowing of 7.17 Lakhs and finance cost paid of 2.83 Lakhs.

2. For the year ended March 31, 2024, net cash generated from financing activities was 10.00 Lakhs, which comprises of issue of share capital of 10.00 Lakhs.

The following table sets forth certain information relating to Mehul Telecom (Erstwhile Proprietorship Firm of Mehul Vasantbhai Raymagiya)s statement of cash flows for the periods indicated:

	For the Period/Financial Year Ended
Particulars	April 21, 2024	March 31, 2024	March 31, 2023
Net cash flows (used in)/generated from operating activities	30.51	(154.19)	(199.09)
Net cash flows (used in) investing activities	16.12	(131.42)	(98.16)
Net cash flows generated from financing activities	(24.58)	341.53	361.12
Net increase/(decrease) in cash and cash equivalents	22.04	55.92	63.87

Operating activities

1. For the period ended April 21, 2024, net cash generated from operating activities was 30.51 Lakhs. This comprises of the profit before tax of 36.16 Lakhs, which was primarily adjusted for depreciation and amortization expenses of 0.54 Lakhs, Profit on sale of assets of 1.94 Lakhs and finance cost of 1.64 Lakhs. The resultant operating profit before working capital changes was 40.27 Lakhs, which was primarily adjusted for an increase in inventories purchased during the period of 1,168.98 Lakhs, decrease in trade receivables of 1,663.55 Lakhs, increase in trade payables of 304.15 Lakhs, decrease in Other Current Liabilities of 31.82 Lakhs, increase in short term provisions of 9.54 Lakhs and increase in Loans & Advances & Other assets of 212.47 Lakhs.

2. For the year ended March 31, 2024, net cash used in operating activities was 154.19 Lakhs. This comprises of the profit before tax of 297.63 Lakhs, which was primarily adjusted for depreciation and amortization expenses of 15.12 Lakhs, Other expenses written off in Reserve & Surplus of 0.92 Lakhs, and finance cost of 8.68 Lakhs. The resultant operating profit before working capital changes was 320.52 Lakhs, which was primarily adjusted for a decrease in inventories purchased during the period of 658.67 Lakhs, increase in trade receivables of 25.52 Lakhs, increase in trade payables of 273.92 Lakhs, increase in Other Current Liabilities of 56.47 Lakhs, increase in short term provisions of 58.55 Lakhs and decrease in Loans & Advances & Other assets of 151.45 Lakhs.

3. For the year ended March 31, 2023, net cash used in operating activities was 199.09 Lakhs. This comprises of the profit before tax of 70.84 Lakhs, which was primarily adjusted for depreciation and amortization expenses of 12.73 Lakhs, Other expenses written off in Reserve & Surplus of 13.94 Lakhs, Profit on sale of assets of 3.18 Lakhs and finance cost of 1.91 Lakhs. The resultant operating profit before working capital changes was 74.73 Lakhs, which was primarily adjusted for an increase in inventories purchased during the period of 87.32 Lakhs, decrease in trade receivables of 84.73 Lakhs, decrease in trade payables of 225.72 Lakhs, increase in Other Current Liabilities of 11.32 Lakhs, increase in short term provisions of 20.49 Lakhs and decrease in Loans & Advances & Other assets of 62.00 Lakhs.

Investing Activities

1. For the period ended April 21, 2024, net cash generated from investing activities was 16.12 Lakhs, which primarily comprises of cash generated from sale of the purchase of property, plant, and equipment (including capital work in progress).

2. In FY 2023-24, net cash used in investing activities was 131.42 Lakhs, which primarily comprises of cash used for the purchase of property, plant, and equipment (including capital work in progress) of 36.38 Lakhs & investment in non-current assets of 95.04 Lakhs.

3. In FY 2022-23, net cash used in investing activities was 98.16 Lakhs, which primarily comprises of cash generated for the purchase of property, plant, and equipment (including capital work in progress) of 3.41 Lakhs & investment in non-current assets of 101.57 Lakhs.

Financing activities

1. For the period ended April 21, 2024, net cash used in financing activities was 24.58 Lakhs, which predominantly comprises decrease of proprietors capital of 3.14 Lakhs, decrease of non-current liabilities of 3.00 Lakhs and finance cost paid of 1.64 Lakhs and net repayments made to borrowings of 16.79 Lakhs.

2. In FY 2023-24, net cash generated from financing activities was 341.53 Lakhs, which predominantly comprises of increase of non-current liabilities of 90.33 Lakhs and finance cost paid of 8.68 Lakhs, which was partially offset by proceeds received from borrowings of 303.97 Lakhs and decrease in proprietors capital of 44.08 Lakhs.

3. In FY 2022-23, net cash generated from financing activities was 361.12 Lakhs, which predominantly comprises of increase of non-current liabilities of 426.14 Lakhs and finance cost paid of 1.91 Lakhs, decrease of borrowings of 49.57 Lakhs and decrease in proprietors capital of 13.55 Lakhs.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations: 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.

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

Our business has been subject to, 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 29 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.

Income and Sales on account of major product/main activities

Income and sales of our Company mainly consists of sale of mobile phones and allied accessories.

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.

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

Other than as described in "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 29, 121 and 239 respectively, to our knowledge there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

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 29 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.

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

The Company is in the business of sale of mobile phones and allied accessories. The relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 99 of this Draft Red Herring Prospectus.

Our Company has not announced any new services or business services.

The extent to which business is seasonal.

Our Companys business is partially seasonal. During festivals & discount offers, there is a surge in sales. Customers buying behavior is influenced by festivals and promotional periods.

Any significant dependence on a single or few suppliers

The major suppliers are the manufactures of different smartphones and accessories. Year-wise break up of purchases from our top suppliers is given as under:

( in Lakh, except percentages)

Particulars	Financial Year 2024-25 (Mehul Telecom Ltd)		Period from April 01, 2024 to April 21, 2024* (Mehul Telecom)		Financial Year 2023-24		Financial Year 2022-23
	Purchase	% of total Purchases	Purchase	% of total Purchases	Purchase	% of total Purchases	Purchase	% of total Purchases
Top - 1	1,431.52	11.85%	113.50	14.56%	1,115.80	10.51%	1,015.57	13.67%
Top - 5	4,448.87	36.84%	333.84	42.83%	4,514.27	42.54%	3,342.04	45.00%
Top - 10	7,094.81	58.75%	505.87	64.90%	7,045.92	66.39%	4,664.65	62.80%

* The Business of the proprietorship firm Mehul Telecom was taken over by the Company with effect from April 21, 2024.

Competitive conditions.

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Our Business" beginning on pages 99 and 121, respectively of this Draft Red Herring Prospectus.