MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS
You should read the following discussion of our financial condition and results of operations together with our Financial Statements as Restated which is included in this Red Herring Prospectus. The following discussion and analysis of our financial condition and results of operations is based on our Financial Statements as Restated, for the year ended March 31, 2025, 2024 and 2023 including the related notes and reports, included in this Red Herring Prospectus is prepared in accordance with requirements of the Companies Act, 2013 and restated in accordance with the SEBI (ICDR) Regulations, 2018, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. Our Financial Statements, as restated have been derived from our audited statutory financial statements. Accordingly, the degree to which our Financial Statements as Restated will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Ind AS, Companies Act, SEBI Regulations and other relevant accounting practices in India.
This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these Forward-Looking Statements as a result of certain factors such as those described under chapters titled "Risk Factors" and "Forward Looking Statements" beginning on pages 37 and 26 respectively of this Red Herring Prospectus.
Our Financial Year ends on March 31 of each year. Accordingly, all references to a particular Financial Year are to the 12 months ended March 31 of that year.
Our company was originally incorporated as "Gaisu Forge Private Limited" on July 25, 1986, as a private limited company under the provisions of the Companies Act, 1956 pursuant to a Certificate of Incorporation issued by Registrar of Companies, Punjab, Himachal Pradesh and Chandigarh. Subsequently on May 3, 1995, the name of our Company was changed to "Munish Forge Limited" and it was converted into a public limited company pursuant to Section 23(1) of The Companies Act, 1956. Thereafter, on June 6, 2002, our Company was converted from a public limited company to a private limited company under the name "Munish Forge Private Limited". Eventually, our Company was converted into a public limited company pursuant to shareholders resolution passed at the extraordinary general meeting held on November 12, 2024. A fresh certificate of incorporation reflecting the conversion to "Munish Forge Limited" was issued by the Registrar of Companies, Centre Processing Centre, on December 17, 2024. The Corporate Identification Number of our Company is U28910PB1986PLC006950. The company has its registered office at Village Gobindgarh, Adjoining Phase - VII, Focal point, Ludhiana-141010, Punjab, India.
We are dedicated manufacturer of different types of flanges, Scaffolding components like coupler, ledger, steel pack, Adjustable props & jacks and Ground Engaging Tools, Under Chassis Suspension parts, Jacks, Tractors parts, track chains, bomb shells and fence post, as per customer specifications and International Standard catering to the requirements of various industries such as Defense, Oil and Gas, Tractor, Automobile, Agriculture implements, Construction and Infrastructure.
For more details kindly refer our chapter titled "Our Business" on page 166 of this Red Herring Prospectus.
Significant Developments Subsequent to the Last Financial Year
In the opinion of the Board of Directors of our Company, since the date of the last financial statements disclosed in this Red Herring Prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the profitability of our Company or the value of its assets or its ability to pay its material liabilities within the previous twelve months except:
The company got converted from private to public company vide shareholders resolution passed at the extraordinary general meeting held on November 12, 2024. Fresh Certificate of Incorporation pursuant to conversion dated December 17, 2024 has been issued pertaining to change of name from "Munish Forge Private Limited" to "Munish Forge Limited".
The Company has increased its Authorized Share Capital from ^12,24,00,000, comprising ^11,24,00,000 divided into 1,12,40,000 equity shares of Rs.10 each and Rs.1,00,00,000 divided into 1,00,000 preference shares of Rs.100 each, to ^25,00,00,000 comprising ^24,00,00,000 divided into 2,40,00,000 equity shares of Rs.10 each and Rs.1,00,00,000 divided into 1,00,000 preference shares of Rs.100 each, pursuant to the resolution passed at its members meeting held on August 26, 2024.
The Company has issued 67,45,473 fully paid Equity Shares of Rs.10/- each pursuant to Bonus Issue allotted in the proportion of 0.7:1 on September 5, 2024 vide resolution passed in the Extraordinary General Meeting on September 4, 2024.
The Company has issued 13,32,000 fully paid Equity Shares of Rs.10/- each pursuant to Private Placements (Preferential Allotment) allotted on March 16, 2025, vide resolution passed in the Extraordinary General Meeting on March 15, 2025. Pursuant to Private Placements Munish Forge has acquired the 50% ownership in the Forgeco Limited- UK.
The Board of our Company has approved to raise funds through initial public offering in the Board meeting held on March 25, 2025.
The members of our Company approved proposal of Board of Directors to raise funds through initial public offering in the extra ordinary general meeting held on March 26, 2025.
The Company has reclassify its Authorized Share Capital from ^25,00,00,000 comprising 1,00,000 Preference Shares of Rs.100 each and 2,40,00,000 Equity Shares of Rs.10 each, to ^25,00,00,000 comprising 2,50,00,000 Equity Shares of Rs.10 each, by merging the Preference Share Capital with the Equity Share Capital, pursuant to a resolution passed at the members meeting held on March 26, 2025.
Factors Affecting Our Results of Operations
Our companys future results of operations could be affected potentially by the following factors:
1. Raw Material Risk
2. Revenue Dependency on Key Product
3. Customer Dependency
4. Single Manufacturing Location Risks
5. Regulatory Risks
6. International Operations Risks
7. Manufacturing and Labour Risks
8. Leadership Dependence
9. Competitive Risks
10. Litigation risks
11. Geographical Revenue Concentration
12. Supplier Dependency Risks
Our business is subjected to various risks and uncertainties, including those discussed in the section titled Risk Factors beginning on page 37 of this Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:
Key Performance Indicators of our Company
Key Financial Indicators:
(Rs. in Lakhs) | |||
Key Financial Performance |
For the Financial year ended March 31, 2025 | For the Financial year ended March 31, 2024 | For the Financial year ended March 31, 2023 |
Revenue from operations(1) |
17,544.60 | 15,988.71 | 16,012.47 |
EBITDA(2) |
2,436.16 | 1,143.38 | 913.68 |
EBITDA Margin(3) |
13.89% | 7.15% | 5.71% |
PAT |
1430.13 | 438.92 | 196.72 |
PAT Margin(4) |
8.15% | 2.75% | 1.23% |
Networth(5) |
6,740.29 | 4,052.16 | 3,594.05 |
RoE %(6) |
21.22% | 10.83% | 5.47% |
RoCE% (7) |
16.44% | 9.89% | 7.06% |
Notes:
1. Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements
2. EBITDA is calculated as Profit before tax + Depreciation + Finance Costs - Other Income.
3. EBITDA Margin is calculated as EBITDA divided by Revenue from Operations.
4. PAT Margin is calculated as PAT for the period/year divided by revenue from operations.
5. Net worth as defined under Regulation 2(1)(hh) of the SEBIICDR Regulations means the aggregate value of the paid- up share capital and all reserves created out of the profits and securities premium account and debit or credit balance of profit and loss account, after deducting the aggregate value of the accumulated losses, deferred expenditure and miscellaneous expenditure not written off, as per the audited balance sheet, but does not include reserves created out of revaluation of assets, write-back of depreciation and amalgamation
6. Return on Equity is ratio of Profit after Tax and Shareholder Equity
7. Return on Capital Employed is calculated as EBIT i.e. Profit before tax + Finance Cost - Other Income divided by capital employed, which is defined as closing shareholders equity plus total debt (total of short term borrowing and long term borrowing).
Key Operational Indicators *
(Rs. in Lakhs) | ||||
Key Operational Performance* |
Unit |
For the Financial Year ended on March 31, 2025 | For the Financial Year ended on March 31, 2024 | For the Financial Year ended on March 31, 2023 |
Revenue from operations (1) |
in Rs. lakhs |
17,544.60 | 15,988.71 | 16,012.47 |
Number of Customers (2) |
nos. |
167 | 146 | 168 |
Average Revenue from operations per customer (3=1/2) |
in Rs. lakhs |
105.06 | 109.51 | 95.31 |
No. of repetitive customers (4) |
nos. |
69 | 28 | 35 |
% of repetitive customers (5) |
in % |
41.32% | 19.18% | 20.83% |
Revenue from repetitive customer (6) |
in Rs. lakhs |
14486.23 | 6834.17 | 7388.72 |
% of Revenue from repetitive customer (7=6/1) |
% |
82.57% | 42.74% | 46.14% |
Employee Benefit Cost (8) |
in Rs. lakhs |
1306.36 | 933.65 | 890.59 |
Total Annual Manpower (Nos.) (9) |
nos. |
794 | 657 | 578 |
Average Annual Manpower Cost (10=8/9) |
in Rs. lakhs |
1.65 | 1.42 | 1.54 |
*As certified by Vinay & Associates, Chartered Accountants, pursuant to their certificate dated September 24, 2025.
For further detail on Key Performance Indicators of our company, please refer Chapter Titled "Basis of Offer Price" on page 120 of this Red Herring Prospectus.
STATEMENT OF SIGNIFICANT POLICIES
1. CORPORATE INFORMATION
a. Munish Forge Limited is a Public Company domiciled in India originally incorporated as "Gaisu Forge Private Limited" having Corporate Identification Number U28910PB1986PLC006950.Our Company was originally incorporated on July 25, 1986, as a Private Limited Company. Our registered office is Village Gobindgarh, Adjoining Phase-VII, Focal Point, Ludhiana. The Company is engaged in manufacture components like Flange, Scaffolding, Auto parts, tank tracks chains, bomb shells, fence post as per customer specifications and International Standard catering to the requirements of Indian Army and various industries such as Defense, Oil and Gas, Tractor, Automobile, Construction and Infrastructure. .
b. The Companys manufacturing facilities are located at Village Gobindgarh, Adjoining Phase-VII, Focal Point, Ludhiana 141010, Punjab, India.
1. SIGNIFICANT ACCOUNTING POLICIES
2.1. Basis of Preparation
a. The financial statements of the Company have been prepared in accordance with and in compliance, in all material aspects, with Indian Accounting Standards (IND AS) notified under section 133 of the Companies Act 2013 read with the Companies (Indian Accounting Standards) Rules, as amended and other provisions of the act. The presentation of the financial statements is based on IND AS Schedule III of the Companies Act 2013.The financial statements have been prepared on a historical cost basis, except for certain financial instruments that are measured at fair value at the end of each reporting period.
b. The financial statements are presented in Indian Rupees (INR) and all values are rounded to nearest lacs (INR 00,000), except when otherwise indicated.
c. Current and non-current classification :
All assets and liabilities have been classified as current or non-current based on the Companys normal operating cycle as per the criteria set out in the Schedule III to the Act. The companys operating cycle is considered to be period of twelve months.
2.2 Use of Estimates
The preparation of financial statements in conformity with Ind AS, which requires the management to make judgements, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities, at the end of the reporting period. Although these estimates are based on the managements best knowledge of current events and actions, uncertainty about these assumptions and estimates could not result in the outcomes requiring the material adjustments to the carrying amount of assets or liabilities in future periods.
2.3 Revenue Recognition
Revenue is recognized at fair value of the consideration received or receivable. The amount disclosed as revenue is inclusive of and net of returns, trade discounts, Goods & Service Tax related taxes and amount collected on behalf of third parties.
The company recognizes revenue when the amount of revenue can be measured reliably and it is probable that the economic benefits associated with the transaction will flow to the entity.
i. Sale of Goods
Revenue is recognized when there is reasonable assurance that significant risk and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated cost can be reliably estimated, there is no continuing effective control or managerial involvement with the goods, and the amount of revenue can be measured reliably. Revenue is recognized in respect of export sales in similar manner.
ii. Export Incentives
Revenue in respect of export incentives/benefits are accounted for on accrual basis post export sales
iii. Interest
Interest income from a financial asset is recognised when it is probable that the economic benefits will flow to the Company and the amount of income can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that assets net carrying amount on initial recognition.
iv. Insurance Claim
Claims with insurance companies are accounted on accrual basis to the extent, no significant uncertainty exists and these are measurable and ultimate collection is reasonably certain.
v. Compensation Received
Keeping in view the certainty factor about the payment to be received, company has decided to consider the same as income on receipt basis.
vi. Duty Drawback income is recognised on accrual basis post export sales
vii. Commission income is recognised on accrual basis.
2.4 INVENTORIES
a) Basis of valuation:
i. Inventories other than scrap materials are valued at lower of cost and net realizable value after providing cost of obsolescence, if any. The comparison of cost and net realizable value is made on an item-by-item basis.
ii. Inventory of scrap materials have been valued at net realizable value.
b) Method of Valuation:
i. Cost of raw materials has been determined by using First in First out (FIFO) method comprising of all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
ii. Stores and spares are valued at lower of historical cost or net realizable value. However, materials & other items held for use in the production of inventories are not written below cost if the finished products in which they will be incorporated are expected to be sold at or above cost.
iii. Work in progress is valued at raw material cost plus conversion cost depending upon the stage of completion.
iv. Finished goods are valued at lower of historical cost or net realizable value. Cost of inventories comprises of cost of purchase, cost of conversion and other costs incurred in bringing them to their respective present location and condition. By products are valued at net realizable value.
v. Cost of traded goods has been determined by using First In First Out (FIFO) method and comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.
2.5 FINANCIAL INSTRUMENTS
i. A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.
ii. The Company classifies its financial assets in the following measurement categories:
Those to be measured subsequently at fair value (either through other comprehensive income, or through profit or loss)
Those measured at amortised cost
iii. Initial recognition and measurement
On initial recognition, all the financial assets and liabilities are recognized at their fair value plus or minus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability except financial asset or financial liability measured at fair value through profit or loss account. Transaction costs of financial asset and liabilities carried at fair value through profit and loss are immediately recognized in the Statement of Profit or Loss.
iv. Subsequent Measurement (Non Derivative Financial Instrument)
(A) Current versus Non-Current Classification
The Company presents assets and liabilities in the balance sheet based on current/non-current classification.
An asset is treated as current when it is:
Expected to be realised or intended to be sold or consumed in normal operating cycle;
Held primarily for the purpose of trading;
Expected to be realised within twelve months after the reporting period, or
Cash or Cash Equivalent unless restricted from being exchanged or used to settle liability for atleast twelve months after the reporting period.
All other assets are classified as non-current.
A liability is treated as current when:
It is expected to be settled in normal operating cycle;
It is held primarily for the purpose of trading;
It is due to be settled within twelve months after the reporting period, or
There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.
All other liabilities are classified as non-current.
Deferred Tax Assets and Liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between the acquisition of assets for processing and their realisation in cash and cash equivalents. The Company has identified twelve months as its operating cycle.
(B) Fair Value Measurement
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:
In the principal market for the asset or liability, or
In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Company.
The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
Fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:
Level 1 inputs are quoted prices in active markets for identical assets or liabilities that entity can access at measurement date;
Level 2 inputs are inputs, other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 inputs are unobservable inputs for the asset or liability.
For assets and liabilities that are recognised in the financial statements on a recurring basis, the Company determines whether transfers have occurred between levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.
(C) Foreign Currency
(i) Functional and Presentation Currency
The financial statements of the Company are presented using Indian Rupee (Rs.), which is also our functional currency
i.e. currency of the primary economic environment in which the company operates.
(ii) Transactions and Balances
Foreign currency transactions are translated into the respective functional currency using the exchange rates at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rates are recognised in profit or loss.
2.6 Use of Estimates and Judgments
In preparing the standalone financial statements, the Management has to make certain assumptions and estimates that may substantially impact the presentation of the Companys financial position and/ or results of operations.
The estimates and judgments used in the preparation of the standalone financial statements are continuously evaluated by the Company and are based on historical experience and various other assumptions and factors (including expectations of future events) that the Company believes to be reasonable under the existing circumstances. Although the Company regularly assesses these estimates, actual results may differ from these estimates. Changes in estimates are recorded in the periods in which they become known.
2.7 Summary of Material accounting policies
(a) Property, Plant & Equipment
Measurement at recognition:
An item of property, plant and equipment that qualifies as an asset is measured on initial recognition at cost. Following initial recognition, items of property, plant and equipment are carried at its cost less accumulated depreciation and accumulated impairment losses.
The cost of an item of property, plant and equipment comprises of its purchase price including import duties and other non-refundable purchase taxes or levies, directly attributable cost of bringing the asset to its working condition for its intended use and the initial estimate of decommissioning, restoration and similar liabilities, if any. Any trade discounts and rebates are deducted in arriving at the purchase price. Cost includes cost of replacing a part of a plant and equipment if the recognition criteria are met. Expenses directly attributable to new manufacturing facility during its construction period are capitalized if the recognition criteria are met. Expenditure related to plans, designs and drawings of buildings or plant and machinery is capitalized under relevant heads of property, plant and equipment if the recognition criteria are met.
Costs in nature of repairs and maintenance are recognized in the Statement of Profit and Loss as and when incurred.
Capital work in progress and Capital advances:
Cost of assets not ready for intended use, as on the balance sheet date, is shown as capital work in progress. Advances given towards acquisition of fixed assets outstanding at each balance sheet date are disclosed as Other Non-Current Assets.
Transition to Ind AS
On transition to Ind AS, the Company has elected to consider the carrying value of all its property, plant and equipment appearing in the financial statements prepared in accordance with Accounting Standards notified under Section 133 of the Act, read together with Rule 7 of the Companies (Accounts) Rules, 2014, and used the same as deemed cost in the Opening Ind AS Balance Sheet as at 1st April 2022.
Depreciation and Amortisation
Depreciation on each part of an item of property, plant and equipment is provided using the SLM Method based on the useful life of the assets as prescribed in Schedule II to the Act after reducing 5% salvage value. Property Plant and Equipment
The Estimated useful lives of the assets are as follows:
Asset Class |
Useful Life (in Years) |
Building |
30 |
Building (Tubewell) |
5 |
Furniture & Fixtures |
10 |
Intangible Assets (Software) |
6 |
Machinery |
15 |
Machinery (Electric Fitting) |
10 |
Machinery (Computer) |
3 |
Motor Vehicles (Scooter, cycle) |
10 |
Motor Vehicles |
8 |
Office Equipment |
5 |
The estimated useful life, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis.
Derecognition:
The carrying amount of an item of property, plant and equipment is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an item of property, plant and equipment is measured as the difference between the net disposal proceeds and the carrying amount of the item and is recognized in the Statement of Profit and Loss when the item is derecognized
(b) Investment property
Properties held to earn rentals and/or capital appreciation are classified as investment property and are measured and reported at cost, including transaction costs and borrowing costs capitalised for qualifying assets. Policies with respect to depreciation, useful life and derecognition are followed on the same basis as stated for PPE above.
(c) Intangible Assets Measurement at recognition:
Intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and accumulated impairment loss, if any.
The Company had elected to consider the carrying value of all its intangible assets appearing in the financial statements prepare in accordance with Accounting Standards notified under the section 133 of the Act, read together with Rule 7 of the Companies (Accounts) Rules, 2014 and used the same as deemed cost in the opening Ind AS Balance sheet prepared on 1st April, 2022.
Amortisation:
Intangible Assets with finite lives are amortised on a written down value basis over the estimated useful economic life. The amortisation expense on intangible assets with finite lives is recognized in the Statement of Profit and Loss.
The amortisation period and the amortisation method for an intangible asset with finite useful life is reviewed at the end of each financial year. If any of these expectations differ from previous estimates, such change is accounted for as a change in an accounting estimate.
Derecognition:
The carrying amount of an intangible asset is derecognized on disposal or when no future economic benefits are expected from its use or disposal. The gain or loss arising from the Derecognition of an intangible asset is measured as the difference between the net disposal proceeds and the carrying amount of the intangible asset and is recognized in the Statement of Profit and Loss when the asset is derecognized
2.8 Impairment of assets
i) Financial Assets
The company recognizes loss allowances using the expected credit loss (ECL) model for the financial assets which are not fair valued through profit or loss.
Loss allowance for trade receivables with no significant financing component is measured at an amount equal to lifetime ECL. For all other financial assets expected credit losses are measured at an amount equal to the 12 month ECL unless there has been a significant increase in credit risk from initial recognition in which case those are measured at lifetime ECL. The amount of expected credit losses (or reversal) that is required to adjust the loss allowance at the reporting date to the amount that is required to be recognised is recognized as an impairment gain or loss in statement of profit or loss.
ii) Non-Financial Assets
Intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are evaluated for recoverability whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. For the purpose of impairment testing, the recoverable amount (i.e. the higher of the fair value less cost to sell and the value-in-use) is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. In such cases, the recoverable amount is determined for cash generating unit to which the asset belongs.
If such assets are considered to be impaired, the impairment to be recognized in the statement of profit and loss is measured by the amount by which the carrying value of the assets exceeds the estimated recoverable amount of the asset. An impairment loss is reversed in the statement of profit and loss if there has been a change in the estimates used to determine the recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net off any accumulated amortization or depreciation) had no impairment loss been recognized for the asset in prior year.
2.9 Foreign exchange transactions/translation
a) Initial recognition
Foreign currency transactions are recorded in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
b) Conversion
Foreign currency monetary items are reported using the closing rate. Non-monetary items which are carried in terms of historical cost denominated in a foreign currency are reported using the exchange rate at the date of the transaction; and non-monetary items which are carried at fair value or other similar valuation denominated in a foreign currency are reported using the exchange rates that existed when the values were determined.
c) Forward exchange contracts not intended for trading or speculation purposes
The premium or discount arising at the inception of forward exchange contracts is amortized as expense or income over the life of the contract. Exchange differences on such contracts are recognized in the statement of profit and loss in the year in which the exchange rates change. Any profit or loss arising on cancellation or renewal of forward exchange contract is recognized as income or as expense for the year.
2.10 Employee benefits
i. Short Term Employee Benefits
Short Term Employee Benefits are recognized as an expense on an undiscounted basis in the statement of Profit and loss of the year in which the related service is rendered.
ii. Post Employee Benefits
a) Defined Contribution Plans
i) Provident Fund & ESI
The company makes contribution to Statutory Provident Fund and Employee State Insurance in accordance with Employees Provident Fund and Miscellaneous Provisions Act, 1952 and Employee State Insurance Act, 1948 which is a defined contribution plan and contribution paid or payable is recognized as an expense in the period in which services are rendered by the employee.
b) Defined Benefit Plans
Gratuity
The company provides for gratuity, a defined benefit retirement plan ("The Gratuity Plan") covering eligible employees of the company. The gratuity plan provides a lump-sum payment to vested employees at retirement, death, incapacitation or termination of employment, of an amount based on the respective employees salary and the tenure of employment with the company.
For defined benefit retirement benefit plans, the cost of providing benefits is determined using the projected unit credit method, with actuarial valuations being carried out at the end of each annual reporting period.
Remeasurement, comprising actuarial gains and losses, the effect of the changes to the asset ceiling (if applicable) and the return on plan assets (excluding net interest), is reflected immediately in the balance sheet with a charge or credit recognised in other comprehensive income in the period in which they occur.
Remeasurement recognised in other comprehensive income is reflected immediately in retained earnings and is not reclassified to profit or loss. Past service cost is recognised in profit or loss in the period of a plan amendment. Net interest is calculated by applying the discount rate at the beginning of the period to the net defined benefit liability or asset. Defined benefit costs are categorised as follows:
service cost (including current service cost, past service cost, as well as gains and losses on curtailments and settlements);
net interest expense or income; and
Remeasurement
The Company presents the first two components of defined benefit costs in profit or loss in the line item Employee benefits expense. Curtailment gains and losses are accounted for as past service costs.
The retirement benefit obligation recognised in the balance sheet represents the actual deficit or surplus in the Companys defined benefit plans. Any surplus resulting from this calculation is limited to the present value of any economic benefits available in the form of refunds from the plans or reductions in future contributions to the plans. A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.
2.11 Taxes on income
Income tax expense comprises current tax and deferred tax. Income tax expense is recognized in net profit in the Statement of Profit and Loss except to the extent that it relates to items recognized directly in equity or other comprehensive income, in which case, it is also recognized in equity or other comprehensive income respectively.
Current tax comprises the expected tax payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years. It is measured using tax rates enacted or substantively enacted at the reporting date.
Deferred tax is recognized in respect of temporary differences arising between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes (including those arising from consolidation adjustments such as unrealized profit on inventory etc.).
Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be used.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized; such reductions are reversed when the probability of future taxable profits improves.
Unrecognized deferred tax assets are reassessed at each reporting date and recognized to the extent that it has become probable that future taxable profits will be available against which they can be used.
2.12 Borrowing cost
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalized as part of the cost of the respective asset. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
2.13 Provisions, contingent liabilities and contingent assets
A provision is recognized when there is a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of obligation. A contingent liability is recognized for:
i. a present obligation that arises from past events but is not recognized as a provision because either the possibility that an outflow of resources embodying economic benefits will be required to settle the obligation is remote or a reliable estimate of the amount of the obligation cannot be made; and
ii. a possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the company. Contingent assets are neither accounted for nor disclosed in the financial statements. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, when appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a finance cost.
2.14 Earnings per share
Basic earnings per share are calculated by dividing the net profit for the year attributable to equity shareholders by the weighted average number of equity shares outstanding during the year. For the purpose of calculating diluted earnings per share, the net profit for the year attributable to equity shareholders and the weighted average number of shares outstanding during the year are adjusted for the effects of all dilutive potential equity shares.
2.15 Cash and cash equivalents
Cash and cash equivalents comprises cash at bank and in hand
2.16 Disclosure as required by Indian Accounting Standard (Ind AS 101) first time adoption of Indian Accounting Standards
These are Companys first financial statements prepared in accordance with Ind AS. The accounting policies set out in Note 2 have been applied in preparing the financial statements for the year ended March 31, 2024, the comparative information presented in these financial statements for the year ended March 31, 2023 and in the preparation of an opening Ind AS balance sheet as at April 1, 2022 the Companys date of transition).
In preparing its opening Ind AS balance sheet, the Company has adjusted the amounts reported previously in financial statements prepared in accordance with accounting standards notified under Companies (Accounting Standards) Rules, 2006 (as amended and other relevant provisions of the Act (previous GMP or Indian GAAP). An explanation of how the transition from previous GAAP to Ind AS has affected the Companys financial position, financial performance and cash flows is set out in the following tables and notes.
A. Exemptions and exceptions availed
1. Deemed cost
Ind AS 101 permits a first time adopter to elect to fair value of its property, plant and equipment as recognized in financial statements as at the date of transition to Ind AS, measured as per previous GAAP and use that as its deemed cost as at the date of transition or apply principles of Ind AS retrospectively. Ind AS 101 also permits the first time adopter to elect to continue with the carrying valued for all of its property, plant and equipment as recognized in the financial statements as at the date of transition to Ind AS. This exemption can be also used for intangible assets covered by Ind AS 38. The Company has elected to consider fair value of its property, plant and equipment as its deemed cost on the date of transition to Ind aS.
2. Ind AS mandatory exceptions
i. Estimates - An entity estimates in accordance with Ind AS at the date of transition to Ind AS shall be consistent with estimates made for the same date in accordance with previous GAAP (after adjustments to reflect any difference in accounting policies), unless there is objective evidence that those estimates were in error. Ind AS estimates at April 1, 2022 are consistent with the estimates as at the same date made in conformity with previous GAAP.
ii. Derecognition of financial assets and financial liabilities Ind AS 101 requires a first time adopter to apply the derecognition provisions of Ind AS 109 prospectively for transactions occurring on or after the date of transition to
Ind AS. Accordingly, the Company has applied the derecognition requirement for financial assets and financial liabilities in Ind AS 109 prospectively for transactions occurring on or after date of transition to Ind AS.
iii. Derecognition of financial assets and financial liabilities Ind AS 101 requires an entity to assess classification and measurement of financial assets on the basis of facts and circumstances that exist on the date of transaction to Ind AS. Accordingly, the Company has applied the above requirement prospectively.
iv. Derecognition of financial assets and financial liabilities Ind AS 101 requires an entity to asses and determine the impairment allowance on financial assets as per Ind AS 109 using the reasonable and supportable information that is available without undue cost or effort to determine the credit risk at the date that financial instruments which were initially recognized and compare that to the credit risk at the date of transition to Ind AS. The Company has applied this exception prospectively
2.17 Events after reporting date
Where events occurring after the balance sheet date provide evidence of conditions that existed at the end of the reporting period, the impact of such events is adjusted within the financial statements. Otherwise, events after the balance sheet date of material size or nature are only disclosed.
2.18 Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the Balance Sheet, if there is a currently enforceable legal right to offset the recognised amounts and there is an intention to settle on a net basis, or to realise the assets and settle the liabilities simultaneously.
2.19 Use of Critical Estimates, Judgments And Assumptions
The preparation of the Companys financial statements requires the management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of contingent liabilities. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
2.20 Recent Accounting Pronouncements
Ministry of Corporate Affairs ("MCA") notifies new standard or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the financial year beginning from 1 April 2025, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.
Discussion on Results of Operation
The following discussion on results of operations should be read in conjunction with the Restated Financial Results of our Company for the financial years ended on March 31 2025, 2024 and 2023.
Results of Our Operations
The following table sets forth select financial data from our Financial Statements as Restated Profit and Loss for the financial years ended on March 31 2025, 2024 and 2023 the components of which are also expressed as a percentage of total revenue for such periods:
(% in lakhs) | ||||||
Particulars |
For the year ended 31.03.2025 | % of Total income | For the year ended 31.03.2024 | % of Total income | For the year ended 31.03.2023 | % of Total income |
I. Revenue from Operations |
17,544.60 | 98.22 | 15,988.71 | 98.95 | 16,012.47 | 99.35 |
II. Other Income |
318.79 | 1.78 | 169.37 | 1.05 | 105.48 | 0.65 |
III. Total Income (I+II) |
17,863.38 | 100.00 | 16,158.08 | 100.00 | 16,117.95 | 100.00 |
IV. Expenses |
||||||
Cost of materials consumed |
12,764.69 | 71.46 | 13,041.07 | 80.71 | 9,634.24 | 59.77 |
Changes in inventories of finished goods |
-1,307.11 | -7.32 | -1,182.98 | -7.32 | 1,310.20 | 8.13 |
Employees Benefits Expenses |
1,306.36 | 7.31 | 933.65 | 5.78 | 890.59 | 5.53 |
V. Finance Cost |
483.85 | 2.71 | 459.05 | 2.84 | 472.40 | 2.93 |
VI. Depreciation and Amortization |
338.35 | 1.89 | 276.44 | 1.71 | 305.63 | 1.90 |
Other Expenses |
2,344.49 | 13.12 | 2,053.59 | 12.71 | 3,263.77 | 20.25 |
VII. Total Expenses |
15,930.64 | 89.18 | 15,580.82 | 96.43 | 15,876.82 | 98.50 |
VIII. Profit/(Loss) Before tax (III-VII) |
1,932.75 | 10.82 | 577.26 | 3.57 | 241.13 | 1.50 |
IX. Tax Expense: |
||||||
Current Tax |
(489.76) | -2.74 | (210.05) | -1.30 | (94.78) | -0.59 |
Deferred Tax |
(13.05) | -0.07 | 71.71 | 0.44 | 52.15 | 0.32 |
Earlier Years Tax |
- | - | - | - | (1.78) | -0.01 |
X. Total Tax Expense |
-502.81 | -2.81 | -138.34 | -0.86 | -44.41 | -0.28 |
XI. Profit/(Loss) after tax (VIII-X) |
1,429.93 | 8.00 | 438.92 | 2.72 | 196.72 | 1.22 |
XII. Share in Profit/(Loss) after Tax of Joint Venture (Net) |
0.20 | 0.00 | - | - | - | - |
XIII. Profit/(Loss) for the period (I-XII) |
1,430.13 | 8.01 | 438.92 | 2.72 | 196.72 | 1.22 |
Overview of Revenue and expenditure
Total Income: Our total income comprises of revenue from operations and other income.
Revenue from operations: Our revenue from operations comprises of Sale of finished goods including Exports and Other Operating Revenue which consist of revenue from freight income.
Other Income: Our other income consists of Interest Income and Other Non- Operating Income which includes Profit on sale of assets, Rental Income, LD Charges and consultancy Income.
Expenses: Our expenses comprise of Cost of Material Consumed, Change in Inventories, Employee Benefit Expenses, Finance Cost, Depreciation and Amortisation Expenses and Other Expenses.
Cost of Raw Material Consumed: Our Raw Material consumed consists of change in stock of Raw Material, Purchases of Raw materials and Direct Expenses.
Direct Expenses: Direct Expenses consists of manufacturing expenses, freight, cartage & octroi, electricity consumed, store consumed, plating expense, wages.
Changes in Inventories: Our Changes in Inventories comprises of change in Stock of Finished goods from the beginning of the year to the end of the year.
Employee Benefit Expenses: Our employee benefit expense consists of Salaries & Bonus, Contribution to provident and other funds, Directors Remuneration and Gratuity.
Finance Cost: Our finance costs comprise of Interest on Bank Loan and bank charges.
Depreciation and amortisation expenses: Tangible assets are depreciated over periods corresponding to their estimated useful lives. Depreciation includes depreciation charged on Property, Plant & Equipment & Intangible Assets excluding freehold land.
Other expenses: Auditors Remuneration, Cartage and Freight Outward, Custom Duty, Handling Charges, packing and forwarding, repair and maintenance, misc. expenses includes additional GST, Sales Tax, Adjustment account, Advertisement Expenses, Annual maintenance charges, Bad debts, Building repair account, CSR expenses, Charity and donation, Cleaning, Consultancy Charges, Commission, computer repair and maintenance, conveyance, cost audit fees and others, covid-19 expenses, Diwali expenses, Exhibition, Expected credit loss, fees and taxes, foreign tour, furniture repair, group gratuity insurance, GST penalty, Inspection charges, Insurance, Insurance car, ISO expense, Legal expenses, loss on sale of DEPB, Loading and unloading charges, Membership fees, misc. expenses, Newspaper and periodicals, packing expenses consumed, photocopy, postage and forwarding, preliminary expenses write off, property tax, quality control exp, rebate and discounts, rent, Sales promotion account, sample sale, shop expenses, software expenses, stationery and printing, subscription, telephone exp, travelling exp, temple exp, training exp, vehicle expenses, water tax, weighment charges.
Tax Expenses: Income taxes are accounted for in accordance with Indian Accounting Standard - 12 on "Income Taxes" ("Ind AS-12"), prescribed under the Companies (Accounting Standards) Rules, 2006. Our Company provides for current tax as well as deferred tax, as applicable.
Provision for current taxes is made at the current tax rates after taking into consideration the benefits available to our Company under the provisions of the Income Tax Act, 1961.
Deferred tax arises from the timing differences between book profits and taxable profits that originate in one period and are capable of reversal in one or more subsequent periods and is measured using the tax rates and laws applicable as of the date of the financial statements. Our Company provides for deferred tax asset/liability on such timing differences subject to prudent considerations in respect of deferred tax assets.
COMPARISON OF FY2024-25 WITH FY2023-24
Income
Total Income: Our Total Income increased by Rs.1,705.30 lakhs, from Rs.16,158.08 lakhs for the financial Year ended on March 31, 2024 to Rs.17,863.38 lakhs for the financial Year ended on March 31, 2025 showing a growth of 10.55% , detailed analysis of the same is as below:
Revenue from operations
1. Analysis of Revenue From Operations
(Rs. in Lakhs) | ||
Particulars |
FY 2024-25 | FY 2023-24 |
Revenue from Operations |
||
From Sale of Products |
17,185.30 | 15,629.96 |
From Other operating revenue |
359.30 | 358.75 |
Total Revenue from Operations |
17,544.60 | 15,988.71 |
2. QUANTITY AND PRICE ANALYSIS (OF MANUFACTURED PRODUCTS)
Particulars |
FY 2024-25 | FY 2023-24 |
Quantity Sold (in M. Tons) |
17,435.67 | 14,763.97 |
Average Selling Price per unit (t in lakhs) |
0.98 | 1.06 |
3. JUSTIFICATION FOR CHANGE IN REVENUE
Particulars |
Amount (Rs. in Lakhs) |
Increase/(Decrease) in quantity sold (of manufactured products) |
2,671.70 |
Increase/(Decrease) in average selling price |
-0.08 |
There has been no drop in sales for the year 2024-25. We sold 17,435.67 M. Tons of goods this year, which is significantly higher than the 14,763.97 M. Tons sold in 2023-24. This reflects an increase in sale quantity of 18.10%, or 2,671.70 M. Tons (from 14,763.96 to 17,435.67). In the year 2023-24, our average selling price was Rs.1.06 lakhs per M. Ton, whereas the average selling price for year 2024-25 is Rs.0.98 lakhs per M.Ton. Therefore there is a loss of Rs. 0.08 lakhs per m. Ton leading to loss of Rs. 1,355.46 lakhs of revenue.
Other Income
Our total other income increased by Rs.149.42 lakhs from Rs.169.37 lakhs for the financial Year ended on March 31, 2024, to Rs.318.79 lakhs for the financial Year ended on March 31, 2025, representing an increase of 88.22% mainly because of increase in Interest Income by Rs.242.16 lakhs. Apart from these our other non operating Income has decreased by Rs.92.74 lakhs.
Expenses
Our Total Expenses was Rs.15,930.64 lakhs for the year ended March 31, 2025 as compared to Rs.15,580.82 lakhs for the year ended March 31, 2024, representing increase of 2.25% due to the factors described below:
Cost of Raw Material Consumed
Our Cost of Materials Consumed is decreased by Rs.276.38 lakhs from Rs.13,041.07 lakhs for the financial Year ended on March 31, 2024 to Rs.12,764.69 lakhs for the financial Year ended on March 31, 2025. This is mainly attributable to decrease in material purchases as there was more inventory at the beginning of the year. Lower purchase during FY 202425 leads to an decrease in closing inventory for FY 2024-25.
Changes in Inventories
As of March 31, 2025, the change in inventories of finished goods and work in progress stood at Rs.(1,307.11) Lakhs, reflecting a considerable decrease of 10.45% from March 31, 2024. This rise was mainly attributed to a greater volume of Finished Goods and Work in Progress that remained unsold and was held by the company during FY 25.
Employee Benefits Expenses
Our Employee Benefit Expenses rose by Rs.372.71 lakhs, increasing from Rs.933.65 lakhs for the fiscal year ending March 31, 2024, to Rs.1,306.36 lakhs for the fiscal year ending March 31, 2025, which reflects a growth of 39.92% attributed to salary hikes for employees. The rise in employee benefits expenses is directly associated with the increase in production and annual salary increments.
Finance Costs
Our finance costs increased by Rs.24.80 lakhs, totaling Rs.483.85 lakhs for the year ended March 31, 2025, compared to Rs.459.05 lakhs for the financial year ending March 31, 2024. This increase of 5.40% was on account of increase in interest expenses.
Depreciation and Amortization Expense
Our Depreciation and Amortization Expenses increased by Rs.61.91 lakhs, from Rs.276.44 lakhs for the financial Year ended on March 31, 2024, to Rs.338.35 lakhs for the financial Year ended on March 31, 2025, representing an increase of 22.40% due to normal wear and tear during FY 24-25.
Other Expenses
Our Other Expenses have seen a significant reduction of t290.91 lakhs, decreasing from t2,053.59 lakhs for the financial year ending March 31, 2024, to t2,344.49 lakhs for the financial year ending March 31, 2025. This increase of 14.17% can be attributed to several key factors such as cartage & freight outward, custom duty, handling charges, repair & maintenance and miscellaneous expenses.
Profit Before Tax
Our Profit/(Loss) before Tax increased by Rs.1,355.49 lakhs, from Rs.577.26 lakhs for the financial Year ended on March 31, 2024, to Rs.1,932.72 lakhs for the financial Year ended on March 31, 2025, representing a growth of 234.82% due to increase in revenue from operations and other income.
Total Tax Expenses
Our Tax expenses increased by Rs.364.47 lakhs, from Rs.138.34 lakhs for the financial Year ended on March 31, 2024, to Rs.502.81 lakhs for the financial Year ended on March 31, 2025. on account of increase in profitability.
Profit After Tax
A. Details of Change in PAT Margin
Particulars |
Year ended on March 31, 2025 (Rs. in Lakhs) | % of Revenue from Operations (A) | Year ended on March 31, 2024 (Rs. in Lakhs) | % of Revenue from Operations (B) | Net change in % (A-B) |
Revenue from Operations |
17,544.60 | 100.00 | 15,988.71 | 100.00 | - |
Profit After Tax (PAT) |
1,436.92 | 8.19 | 469.78 | 2.94 | 5.25 |
B. Justification for Change in PAT Margin
Particulars |
Year ended on March 31, 2025 (Rs. in Lakhs) | % of Revenue from Operations (A) | Year ended on March 31, 2024 (Rs. in Lakhs) | % of Revenue from Operations (B) | Net change in % (A-B) |
Other income |
318.79 | 1.82% | 169.37 | 1.06% | 0.76% |
Cost of Materials Consumed |
12764.69 | 72.76% | 13,041.07 | 81.56% | -8.81% |
Employee Benefits Expense |
1306.36 | 7.45% | 933.65 | 5.84% | 1.61% |
Other Expenses |
2344.49 | 13.36% | 2,053.59 | 12.84% | 0.52% |
Finance Costs |
483.85 | 2.76% | 459.05 | 2.87% | -0.11% |
Depreciation and Amortisation Expense |
338.35 | 1.93% | 276.44 | 1.73% | 0.20% |
Tax Expenses |
502.81 | 2.87% | 138.34 | 0.87% | 2.00% |
Net Change in PAT Margin |
1436.92 | 8.19% | 469.78 | 2.94% | 5.25% |
1 Other income has marginally increased from 1.06% in FY 2023-24 to 1.82% in FY 2024-25 leading to marginal increase in PAT margin by 0.76%.
(2> The Cost of Materials Consumed has decreased by 8.81 % on account of the Opening Inventory of Raw Material for FY24-25 was Rs.12,764.69 Lakhs which was comparatively lower. Since the company was using the inventory available with relatively higher rate, the proportion of cost of material consumed and purchase of raw material increased and hence considering the net impact of cost of material consumed and changes in inventory decreased. The inventory of finished goods has also increased by 124.13 lakhs on account of increase in production of other materials.
<3> Employee Benefit Expenses has marginally increased from 5.84% in FY 2023-24 to 7.45% in FY 2024-25, on account of increase in business operations and revenue leading to marginal decrease in PAT margin by 1.61 %.
4 Other expenses have increased from 12.84% in FY 2023-24 to 13.36% in FY 2024-25, mainly due to increase in cartage & freight outward, custom duty leading to increase in PAT margin by 0.52%.
(5> Finance costs has marginally decreasedfrom 2.87% in FY2023-24 to 2.76% in FY2024-25, on account of increase in business operations and revenue leading to marginal increase in PAT margin by 0.11 %.
(6> Depreciation and Amortisation have marginally increased from 1.73% in FY 2023-24 to 1.93% in FY 2024-25, leading to marginal increase in PAT margin by 0.20%.
<7> Tax expenses have increased from 0.87% in FY 2023-24 to 2.87% in FY 2024-25, on account of Increase in profitability leading to decrease in PAT margin by 2.00%.
COMPARISON OF FY2023-24 WITH FY2022-23 Income
Total Income: Our Total Income increased by Rs. 40.13 lakhs, from Rs. 16,117.95 lakhs for the financial Year ended on March 31, 2023 to Rs. 16,158.08 lakhs for the financial Year ended on March 31, 2024 showing a nominal growth of 0.25%
, detailed analysis of the same is as below:
Revenue from operations
1. Analysis of Revenue From Operations
(Rs. in Lakhs) | ||
Particulars |
FY 2023-24 | FY 2022-23 |
Revenue from Operations |
||
From Sale of Products |
15,629.96 | 15,659.85 |
From Other operating revenue |
358.75 | 352.62 |
Total Revenue from Operations |
15,988.71 | 16,012.47 |
2. QUANTITY AND PRICE ANALYSIS (OF MANUFACTURED PRODUCTS)
Particulars |
FY 2023-24 | FY 2022-23 |
Quantity Sold (in M. Tons) |
14,763.97 | 11,158.19 |
Average Selling Price per unit (Rs. in Lakhs) |
1.06 | 1.40 |
3. JUSTIFICATION FOR CHANGE IN REVENUE
Particulars |
Amount (Rs. in Lakhs) |
Increase/(Decrease) in quantity sold (of manufactured products) |
3,605.78 |
Increase/(Decrease) in average selling price |
-0.34 |
There has been no drop in sales for the year 2023 -24. We sold 14,763.967 M. Tons of goods this year, which is significantly higher than the 11158.19 M. Tons sold in 2022-23. This reflects an increase in sale quantity of 32.31%, or 3605.77 M. Tons (from 11158.19 to 14763.96). In the year 2022-23, our average selling price was Rs.1.40 lakhs per M. Ton, whereas
the average selling price for year 2023-24 is Rs.1.06 lakhs per M.Ton. Therefore there is a loss of Rs. 0.34 lakhs per m. Ton leading to loss of Rs. 5,019.75 lakhs of revenue.
Other Income
Our total other income increased by Rs.63.89 lakhs from Rs.105.48 lakhs for the financial Year ended on March 31, 2023, to Rs.169.37 lakhs for the financial Year ended on March 31, 2024, representing an increase of 60.57% mainly because company have obtained a settlement of Rs. 50.00 Lakh from Mr. Ajay Sahni, the proprietor of Krishna Petrochem, through an out-of-court agreement based on mutual consent. We also received a late delivery charge penalty refund of Rs. 51.82 Lakh from the Government of India, which had been deducted in previous years. Apart from these our other Income has decreased by Rs.38.79 lakhs.
Expenses
Our Total Expenses was Rs.15,580.82 lakhs for the year ended March 31, 2024, as compared to Rs.15,876.82 Lakhs for the financial year March 31, 2023, representing decrease of 1.86% due to the factors described below:
Cost of Raw Material Consumed
Our Cost of Materials Consumed is increased by Rs.3,406.83 lakhs, from Rs.9,634.24 lakhs for the financial Year ended on March 31, 2023, to Rs.13,041.07 lakhs for the financial Year ended on March 31, 2024. This is mainly attributable to increase in material purchases and other direct expenses.
During the Financial year 2023-24, Company has manufactured 12316 M. Tons whereas in the year 2022-23, against 9085 M. Tons. There is increase in manufacturing of 3231/- M. Tons as compared to 2022-23. Higher purchase during FY 2024 leads to an increase in closing inventory for FY 2024.
Changes in Inventories
As of March 31, 2024, the change in inventories of finished goods and work in progress stood at Rs.(1,182.98) Lakhs, reflecting a considerable decrease of 190.29 % from March 31, 2023. This rise was mainly attributed to a greater volume of Finished Goods and Work in Progress that remained unsold and was held by the company during FY 24.
Employee Benefits Expenses
Our Employee Benefit Expenses rose by Rs.43.07 lakhs, increasing from Rs.890.59 lakhs for the fiscal year ending March 31, 2023, to Rs.933.65 lakhs for the fiscal year ending March 31, 2024, which reflects a growth of 4.84% attributed to salary hikes for employees. The rise in employee benefits expenses is directly associated with the increase in production and annual salary increments.
Finance Costs
Our finance costs decreased by t13.35 lakhs, totalling t459.05 lakhs for the year ended March 31, 2024, compared to t472.40 lakhs for the financial year ending March 31, 2023. This reduction is attributed to the optimal utilization of our working capital facility and repayment of loans.
Depreciation and Amortization Expense
Our Depreciation and Amortization Expenses decreased by Rs.29.19 lakhs, from Rs.305.63 lakhs for the financial Year ended on March 31, 2023, to Rs.276.44 lakhs for the financial Year ended on March 31, 2024, representing an decrease of 9.55% due to normal wear and tear during FY 23-24.
Other Expenses
Our Other Expenses have seen a significant reduction of t1,210.18 lakhs, decreasing from t3,263.77 lakhs for the financial year ending March 31, 2023, to t2,053.59 lakhs for the financial year ending March 31, 2024. This decline of 14.62% highlights our commitment to cost efficiency, with these expenses representing 20.25% of total revenue in FY 2023 and dropping to 12.71% in FY 2024. This reduction can be attributed to several key factors that demonstrate our proactive management strategies. Notably, customs duty has decreased significantly, falling from t804.67 lakhs in FY 2023 to t460.65 lakhs in FY 2024. Furthermore, our sea freight outward costs have been effectively cut from t1,294.69 lakhs in FY 2023 to t469.94 lakhs in FY 2024.
Profit Before Tax
Our Profit/(Loss) before Tax increased by Rs.336.13 lakhs, from Rs.241.13 lakhs for the financial Year ended on March 31, 2023, to Rs.577.26 lakhs for the financial Year ended on March 31, 2024, representing a growth of 139.40% due to decrease in other expenses like custom duty and & Sea freight outward.
Total Tax Expenses
Our Tax expenses increased by Rs.93.93 lakhs, from Rs.44.41 lakhs for the financial Year ended on March 31, 2023, to Rs.138.34 lakhs for the financial Year ended on March 31, 2024, on account of increase in profitability.
Profit After Tax
A. Details of Change in PAT Margin
Particulars |
Year ended on March 31, 2024 (Rs. in Lakhs) | % of Revenue from Operations (A) | Year ended on March 31, 2023 (Rs. in Lakhs) | % of Revenue from Operations (B) | Net change in % (A-B) |
Revenue from Operations |
15,988.71 | 100.00% | 16,012.47 | 100.00% | - |
Profit After Tax (PAT) |
438.92 | 2.75% | 196.72 | 1.23% | 1.52% |
B. Justification for Change in PAT Margin
Particulars |
Year ended on March 31, 2024 (Rs. in Lakhs) | % of Revenue from Operations (A) | Year ended on March 31, 2023 (Rs. in Lakhs) | % of Revenue from Operations (B) | Net change in % (A-B) |
Other income |
169.37 | 1.06% | 105.48 | 0.66% | 0.40% |
Cost of Materials Consumed |
13,041.07 | 81.56% | 9,634.24 | 60.17% | 21.39% |
Employee Benefit Expenses |
933.65 | 5.84% | 890.59 | 5.56% | 0.28% |
Other Expenses |
2053.59 | 12.84% | 3263.77 | 20.38% | (7.54%) |
Finance Cost |
459.05 | 2.87% | 472.4 | 2.95% | (0.08%) |
Depreciation and Amortization |
276.44 | 1.73% | 305.63 | 1.91% | (0.18%) |
Tax Expenses |
138.34 | 0.87% | 44.41 | 0.28% | 0.59% |
Net Change in PAT Margin |
438.92 | 2.75% | 196.72 | 1.23% | 1.52% |
1 Other income has marginally increased from 0.66% in FY 2022-23 to 1.06% in FY 2023-24 leading to marginal increase in PAT margin by 0.40%.
(2> The Cost of Goods Sold has increased by 21.39% on account of the Opening Inventory of Raw Material for FY 2324 was Rs.382.75 Lakhs which was comparatively lower. The company utilised the said inventory during the period and hence changes in inventory decreased. Since the company was using the inventory available, the proportion of cost of material consumed and purchase of raw material increased and hence considering the net impact of cost of material consumed and changes in inventory decreased. The inventory of finished goods has also increased by 1,182.98 lakhs on account of increase in production.
<3> Employee Benefit Expenses has marginally increased from 5.56% in FY 2022-23 to 5.84% in FY 2023-24, on account of increase in business operations and revenue leading to marginal decrease in PAT margin by 0.28%.
(4> Other expenses have decreased from 20.38% in FY 2022-23 to 12.84% in FY 2023-24, mainly due to decrease in cartage & freight outward, custom duty leading to increase in PAT margin by 7.54%.
<5> Finance costs has marginally decreasedfrom 2.95% in FY2022-23 to 2.87% in FY2023-24, on account of increase in business operations and revenue leading to marginal increase in PAT margin by 0.08%.
6 Depreciation and Amortisation have marginally decreased from 1.91% in FY 2022-23 to 1.73% in FY 2023-24, leading to marginal increase in PAT margin by 0.18%.
(7) Tax expenses have increased from 0.28% in FY 2022-23 to 0.87% in FY 2023-24, on account of Increase in profitability leading to decrease in PAT margin by 0.59%.
Changes in Cash Flows
The table below summaries our cash flows from our Restated Financial Statements for the financial years ended 2025, 2024 and 2023:
(Rs. in Lakhs) | |||
For the financial year ended March 31, |
|||
Particulars |
2025 | 2024 | 2023 |
Net cash (used in)/ generated from operating Activities |
552.45 | 429.62 | 1,975.80 |
Net cash (used in)/ generated from investing Activities |
(1,048.51) | (465.97) | (43.37) |
Net cash (used in)/ generated from financing Activities |
798.83 | (764.93) | (1,364.26) |
Net increase/ (decrease) in cash and cash Equivalents |
302.78 | (801.28) | 568.17 |
Cash and Cash Equivalents at the beginning of the period |
320.35 | 1,121.52 | 553.35 |
Cash and Cash Equivalents at the end of the Period* |
623.04 | 320.21 | 1,121.52 |
*Cash and Cash Equivalents include cash and bank balances in current and Cash credit accounts.
Operating Activities Financial year 2024-25
Our net cash generated from operating activities was Rs. 552.45 Lakhs for the financial year ended March 31, 2025. Our operating profit before working capital changes was Rs. 2,484.82 lakhs which was primarily adjusted against (i) an increase in other financial liabilities by Rs. 353.84 lakhs, (ii) increase in non-current assets by Rs. 465.72 lakhs, (iii) increase in Trade Receivable by Rs. 424.82 Lakhs, (iv) increase in other current assets by Rs. 124.90 Lakhs, (v) increase in Inventories by Rs. 1,226.61 Lakhs, (vi) increase in trade payables by Rs. 331.98 Lakhs, (vii) increase in other current liabilities by Rs. 89.08 Lakh, which was further (viii) decreased by payment of Tax paid during the year of Rs. 465.22 Lakhs.
Financial year 2023-24
Our net cash generated from operating activities was Rs. 429.62 Lakhs for the financial year ended March 31, 2024. Our operating profit before working capital changes was Rs. 1,278.15 lakhs which was primarily adjusted against (i) an decrease in non-current assets by Rs. 15.84 lakhs, (ii) decrease in Trade Receivable by Rs. 115.25 Lakhs, (iii) increase in other current assets by Rs. 84.31 Lakhs, (iv) increase in Inventories by Rs. 1,229.63 Lakhs, (v) increase in trade payables by Rs. 500.08 Lakhs, (vi) decrease in other financial liabilities by Rs. 64.86 Lakhs, (vii) increase in other current liabilities by Rs. 26.76 Lakhs, which was further (viii) decreased by payment of Tax paid during the year of Rs. 127.67 Lakhs.
Financial year 2022-23
Our net cash generated from operating activities was Rs. 1,975.80 Lakhs for the financial year ended March 31, 2023. Our operating profit before working capital changes was Rs. 934.47 lakhs which was primarily adjusted against (i) an increase in non-current assets by Rs. 2.17 lakhs, (ii) decrease in Trade Receivable by Rs. 199.74 Lakhs, (iii) decrease in other current assets by Rs. 335.23 Lakhs, (iv) decrease in Inventories by Rs. 1,290.46 Lakhs, (v) decrease in trade payables by Rs. 514.84 Lakhs, (vi) increase in other financial liabilities by Rs. 0.88 Lakhs, (vii) decrease in other current liabilities by Rs. 177.04 Lakhs, which was further (viii) decreased by payment of Tax paid during the year of Rs. 90.96 Lakhs. .
Investing Activities
Financial year 2024-25
Our net cash used in investing activities was Rs. 1,048.51 Lakhs for the financial year ended March 31, 2025. This was primarily due to Interest Income of Rs. 323.07 Lakhs, Purchases of Property, Plant & Equipment amounting to Rs. 1,372.19 Lakhs, Rent Received Rs. 0.11 Lakhs and Proceeds from sale of Property, Plant & Equipment amounting to Rs. 0.50 Lakhs.
Financial year 2023-24
Our net cash used in investing activities was Rs. 465.97 Lakhs for the financial year ended March 31, 2024. This was primarily due to Interest Income of Rs. 21.68 Lakhs, Net purchases of Property, Plant & Equipment amounting to Rs. 591.93 Lakhs, proceeds from sale of property, plant and machinery amounting to Rs. 102.48 Lakhs, rent received of Rs. 1.80 Lakhs.
Financial year 2022-23
Our net cash used in investing activities was Rs. 43.37 Lakhs for the financial year ended March 31, 2023. This was primarily due to Interest Income of Rs. 19.47 Lakhs, Net purchases of Property, Plant & Equipment amounting to Rs. 372.39 Lakhs, proceeds from sale of property, plant and machinery amounting to Rs. 304.90 Lakhs, rent received of Rs. 4.65 Lakhs.
Financing Activities
Financial year 2024-25
Net cash generated from financing activities for the financial year ended March 31, 2025, was Rs. 798.83 Lakhs, which was primarily due to interest paid of Rs. 483.85 Lakhs, Receipt of Borrowings of Rs. 761.05 Lakhs, Repayment of Long-Term Borrowings Rs. 204.57 Lakhs Net Receipt of Short-Term Borrowings was Rs. 747.78 Lakhs and Principal Payment of Lease Liabilities was Rs. 21.58 Lakhs.
Financial year 2023-24
Net cash used in financing activities for the financial year ended March 31, 2024, was Rs. 764.93 Lakhs, which was primarily due to interest paid of Rs. 459.05 Lakhs, Net Repayment of Borrowings of Rs. 194.61 Lakhs, Repayment of LongTerm Borrowings Rs. 421.11 Lakhs and Receipt from Long Term Borrowings Rs.309.84 Lakhs.
Financial year 2022-23
Net cash used in financing activities for the financial year ended March 31, 2023, was Rs. 1,364.26 Lakhs, which was primarily due to interest paid of Rs. 472.40 Lakhs, Repayment of Long-Term Borrowings of Rs. 176.60 Lakhs, Receipt from Long Term Borrowings Rs. 189.26 Lakhs and Net Repayment of Short-Term Borrowings of Rs. 904.51 Lakhs
Other Key Ratios
The table below summaries key ratios in our Restated Financial Statements for the financial years ended March 31, 2025, 2024 and 2023:
For the financial year ended March 31, |
|||
Particulars |
2025 | 2024 | 2023 |
Fixed Asset Turnover Ratio |
4.78 | 7.43 | 6.65 |
Current Ratio |
1.33 | 1.42 | 1.42 |
Debt Equity Ratio |
0.89 | 1.16 | 1.40 |
Inventory Turnover Ratio |
2.36 | 3.12 | 2.29 |
Fixed Asset Turnover Ratio: This is defined as revenue from operations divided by total fixed assets based on Financial Statements as Restated.
Current Ratio: This is defined as current assets divided by current liabilities, based on Financial Statements as Restated.
Debt Equity Ratio: This is defined as total debt divided by total shareholder funds. Total debt is the sum of long-term borrowings, short-term borrowings and current maturities of long-term debt, based on Financial Statements as Restated.
Inventory Turnover Ratio: This is defined as cost of goods sold divided by average inventory based on Financial Statements as Restated.
Financial Indebtedness
As on March 31, 2025, the total outstanding borrowings of our Company is as below. For further details, refer to the chapter titled "Statement of Financial Indebtedness" beginning on page 286 of this Red Herring Prospectus.
(Rs. in Lakhs) | |
Particulars |
Outstanding as on 31.03.2025 |
Loans from Banks |
5,241.15 |
Loans from Related Party |
779.26 |
Total |
6,020.41 |
Related Party Transactions
Related party transactions with our promoters, directors and their entities and relatives primarily relate to purchase and sale of products and services, Intercorporate or directors loans taken and repaid. For further information, please refer to the chapter titled "Financial Statements as Restated on page 263 of this Red Herring Prospectus.
Off-Balance Sheet Items
We do not have any other off-balance sheet arrangements, derivative instruments or other relationships with any entity that have been established for the purposes of facilitating off-balance sheet arrangements.
Qualitative Disclosure about Market Risk
Financial Market Risks
Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk. We are exposed to interest rate risk, inflation and credit risk in the normal course of our business.
Interest Rate Risk
Our financial results are subject to changes in interest rates, which may affect our debt service obligations and our access to funds.
Effect of Inflation
We are affected by inflation as it has an impact on the raw material cost, wages, etc. In line with changing inflation rates, we rework our margins so as to absorb the inflationary impact.
Credit Risk
We are exposed to credit risk on monies owed to us by our customers. If our customers do not pay us promptly, or at all, we may have to make provisions for or write-off such amounts.
Reservations, Qualifications and Adverse Remarks
Except as disclosed in chapter titled "Financial Statements as Restated" beginning on page 263 of this Red Herring Prospectus, there have been no reservations, qualifications and adverse remarks.
Details of Default, if any, including therein the Amount Involved, Duration of Default and Present Status, in Repayment of Statutory Dues or Repayment of Deposits or Repayment of Loans from any Bank or Financial Institution.
Except as disclosed in chapter titled "Financial Statements as Restated" beginning on page 263 of this Red Herring Prospectus, there have been no defaults in payment of statutory dues and interest thereon or repayment of deposits and interest thereon or repayment of loans from any bank or financial institution and interest thereon by the Company.
FACTORS THAT MAY AFFECT THE RESULTS OF THE OPERATIONS
a. Unusual or infrequent events or transactions
There are no transactions or events, which in our best judgment, would be considered unusual or infrequent that have significantly affected operations of the Company.
b. Significant economic changes that materially affected or are likely to affect income from continuing operations
There are no significant economic changes that materially affected Companys operations or are likely to affect income from continuing operations. Any slowdown in the growth of Indian economy or future volatility in global commodity prices, could affect the business including the future financial performance, shareholders funds and ability to implement strategy and the price of the Equity Shares.
c. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations
Other than as disclosed in the chapter titled "Risk Factors " beginning on page 37 of this Red Herring Prospectus to our knowledge, there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.
d. Future changes in relationship between costs and revenues in case of events such as future increase in labour or material cost or prices that will cause material change
According to our knowledge, there are no future relationship between cost and income that would be expected to have a material adverse impact on our operations and revenues. However, increase in the cost of the goods in which the Company deals, will affect the profitability of the Company. Further, the Company may not be able to pass on the increase in prices of the services to the customers in full and this can be offset through cost reduction.
e. The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased prices
The increase in revenue is by and large linked to increase in volume of all the activities carried out by the Company.
f. Total turnover of each major industry segment in which the Issuer Company operates
Our Company is primarily engaged in manufacturing forged and cast products.
Relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 132 of this Red Herring Prospectus.
g. Status of any Publicly Announced New Business Segments
Except as disclosed elsewhere in the Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments.
h. Seasonality of the Business
The business of our company is not seasonal, hence there is no impact of seasonality on our turnover and operations. However, one of the industries that we cater to, i.e., construction industry slows down its operations typically during monsoon due to unfavorable weather conditions.
i. Any significant dependence on a single or few suppliers or customers
We depend on external suppliers for all the raw materials required and typically purchase raw materials on a purchase order basis and place such orders with them in advance based on our projected requirements. As a result, the success of our business is significantly dependent on maintaining good relationships with our suppliers. The absence of long-term supply contracts subjects us to risks such as price volatility caused by various factors viz. commodity market fluctuations, currency fluctuations, climatic and environmental conditions, transportation cost, changes in domestic regulatory changes and trade sanctions. If we cannot fully offset the increase in raw material prices with an increase in the prices for our products, we will experience lower profit margins, which in turn may have a material adverse effect on our results of operations, and financial condition and ultimately lead to a liquidity crunch. In the absence of such contracts, we are also exposed to the risk of unavailability of raw materials in desired quantities and qualities, in a timely manner.
j. Competitive Conditions
We face competition from existing and potential organized and unorganized competitors, which is common for any business. We have, over a period, developed certain competitive strengths which have been discussed in section titled "Our Business" beginning on page 166 of this Red Herring Prospectus.
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1860-267-3000 / 7039-050-000
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+91 9892691696
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