N R Vandana Tex Industries Ltd Management Discussions

The following discussion and analysis of our financial condition and results of operations for the financial years endedon 2024, 2023 and 2022 is based on, and should be read in conjunction with, our Restated Financial Statements, including the schedules, notes and significant accounting policies thereto, included in the chapter titled "Restated Financial Statements" beginning on page 182 of this Draft Red Herring Prospectus. Our Restated Financial Statements have been derived from our audited financial statements and restated in accordance with the SEBIICDR Regulations and the ICAI Guidance Note.

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in this Draft Red Herring Prospectus. You should also read the section titled "Risk Factors" beginning on page 28 of this Draft Red Herring Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us " or "our " refers to NR Vandana Tex Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for the financial years ended on 2024, 2023 and 2022 included in this Draft Red Herring Prospectus beginning on page 182 of this Draft Red Herring Prospectus.

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates,expectations or prediction may be "Forward Looking Statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to our operations include, among others, economic conditions affecting demand/supply and price conditions in domestic and overseas market in which we operate, changes in Government Regulations, Tax Laws and other Statutesand incidental factors.

BUSINESS OVERVIEW

We are engaged into designing, manufacturing and wholesale business of cotton textile products including a variety of high-quality cotton sarees, salwar suits and bed sheets. Our products are recognised in textile industry under our own brand name "Vandana" and "Tanaya". Our Company have been awarded "Best Debutant - Apparels by Ajio Business Partnership Meet - 2022. Our Company operates into B2B business model, focusing on selling our products through a network of 499 wholesalers as of June 30, 2024 spread across 31 states and union territories in India and through a channel of B2B e-commerce platform.

The table below sets forth our revenue from operations from our distribution channels, for the periods indicated:

Particulars	For the period ended June 30, 2024		For the Financial year 2024		For the Financial year 2023		For the Financial year 2022
	Revenue (Rs in Lakhs)	% of total revenue from operations	Revenue (Rs in Lakhs)	% of revenue from operations	Revenue (Rs in Lakhs)	% of revenue from operations	Revenue (Rs in Lakhs)	% of revenue from operations
Network of Wholesalers	4509.13	74.20	15511.52	70.47	15619.06	80.00	17175.12	96.94
Online	1568.25	25.80	6499.28	29.53	3905.08	20.00	542.21	3.06
Total	6077.38	100.00	22,010.80	100.00	19,524.14	100.00	17,717.33	100.00

Our manufacturing process includes cutting, dyeing, embroidery, sewing, embellishments, finishing, inspection and packing. We also outsource certain manufacturing on job work from time to time and provides the technical specifications such as designs, pattern, quality, fabric etc. to them who, based on our specifications begin the manufacturing process. As on June 30, 2024 we had engaged 104 job workers for our manufacturing process. As on June 30, 2024 we have presence in 30 states and union territories and has generated revenue 2.67% from the South region, 0.70% from the North region, 77.06% from the East region and 19.57% from the west region. Further, we are actively engage with potential clients through direct visits and leverages strong local market connections to expand our reach.

For more details, please refer chapter titled "Our Business" beginning on page 126 of this Draft Red Herring Prospectus.

SIGNIFICANT DEVELOPMENTS AFTER MARCH 31, 2024

In the opinion of the Board of Directors of our Company, since the date of the stub period in this Draft 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 next twelve months. However, following material events have occurred after the last audited period:

1. Pursuant to a resolution passed by our Board and our Shareholders on September 20, 2024, our Company has increased the authorized capital from existing Rs. 10,00,00,000 (Rupees Ten Crore) divided into 1,00,00,000 (One Crore) Equity Shares of Rs. 10 each to Rs. 23,50,00,000/- (Rupees Twenty-Three Crore and Fifty Lakh) divided into 2,35,00,000 (Two Crore Thirty-Five Lakh) Equity Shares of Rs. 10 each.

2. Pursuant to a resolution passed by our Board on September 24, 2024 and our Shareholders on September 28, 2024, our Company has issued bonus shares in the ratio of 424:100 i.e.; for every 100 equity share held, 424 bonus equity share has been issued.

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subject to various risks and uncertainties, including those discussed in the section titled "Risk FactorS" on page 28 beginning of this Draft Red Herring Prospectus.

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

• Raw Material Cost

Our raw materials like grey fabric, ready-to-use bleached or dyed fabric, and printed fabrics, etc. Any increase in raw material prices may affect our procurement of raw materials and will result in corresponding increases in our product costs, while the increase in the selling price of the finished products may not be in proportionate to the increase in raw material price. We do not enter into formal arrangements or contracts with certain of our suppliers and instead issue purchase orders to source our materials on an as-needed basis to such suppliers. Such change in pricing may adversely affect our sales, cash flow and our overall profitability.

Our Companys cost of raw material consumed 59.92 %, 67.00 %, 75.18 % and 57.53 % of our revenues from operation for the period ended June 30, 204 and in Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively. Our cost of goods sold is impacted by the amount of raw materials procured and the price at which we procure such raw materials and may fluctuate from time to time. The availability and price of our raw materials may be subject to a number of factors beyond our control, including macro and micro economic factors, seasonal factors, environmental factors and changes in Government policies and regulations.

• Dependency on Job workers for manufacturing of our Products

We outsource partial manufacturing of our products to job workers, primarily under non-exclusive contract manufacturing agreement. We have not entered into long term job work agreements with our job workers and we have also not entered into job work agreements with few of our job workers, with such job workers we enter into purchase order. After approval of design by us, the raw material is purchased and sent to job work for bleaching, printing, embellishments and other. After job work, the finished product is ironed & packed at our facility and sent for dispatch. During the period ended June 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, we have engaged 104, 159, 166 and 178 job workers. Expenditure incurred by us during the period ended June 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022 in relation to job workers was Rs 1,354.62 Lakhs, Rs 5201.54 Lakhs, Rs 4423.69 Lakhs and Rs 4132.96 Lakhs respectively.

Our contract manufacturers do not manufacture products exclusively for us and accordingly, some of them may choose to manufacture products for other parties, including our competitors, at any time, which may lead to conflicts of interest that exacerbate the risks mentioned above. In addition, they may manufacture products identical to ours, and we may not be able to prevent the same, in the absence of adequate intellectual property protections, which in turn may adversely affect our business, results of operations, financial condition and cash flows.

• Changes in laws, government policies and regulations relating to the sectors in which we operate;

Our business and revenues are dependent on policies and regulations in relation to the manufacturing activities. Any adverse changes in government policies, subsidies and benefits could materially and adversely affect our financing, capital expenditure, revenues, development or operations relating to our existing and proposed capacities as well as our ability to participate and compete with our peers. Further, policies not limited to our services rendered but largely affecting India could also affect the manner in which we carry out and intend to carry out our operations.

• Disruption in our manufacturing process;

Our facility at Kolkata are subject to operating risks, such as shutdowns due to the breakdown or failure of equipment, power supply or processes, performance below expected levels of output or efficiency, adequate utilisation rates, obsolescence of equipment, labour disputes, strikes, lockouts, industrial accidents, disruption by extremist groups, or any other reason, and the need to comply with the directives and regulations of the Government of India ("GoI") and relevant state government authorities. We are heavily reliant on floor workers at our unit, including those workers who are hired on a daily wage / per piece basis and are not on a fixed payroll. Our inability to continue to procure such services or any disputes with this group of labour would severely affect our operations and may cause a under-utilisation of our capacities or a total shut down. Our operations involve a significant degree of integration, and our results of operations are dependent on the successful operation of each facility.

• Relationship with Wholesalers

We sell our product to network of wholesalers. We had a network of 499, 893, 886 and 826 wholesalers for the period ended June 30, 2024, in the Fiscal 2024, Fiscal 2023 and Fiscal 2022. From April 1, 2021, to June 30, 2024, we catered to 3104 customers out of which 393 customers were new partnerships with key wholesalers, significantly increasing our distribution network and increasing our sales reach. Our top ten customers contribute to a substantial portion of our revenues for the period ended June 30, 2024, March 31, 2024, March 31, 2023 and March 31, 2022. The table below sets forth details of revenue generated from our largest customer, top 5 customers and top 10 customers for our products for period ended June 30, 204, Fiscal 2024, 2023 and 2022 of our revenue from operations.

(Rs. In Lakhs)

Period	Revenue from Largest Customer	% Contribution of largest customer to revenue from operations	Revenue from Top 5 Customer s	% Contribution of top 5 to revenue from operations	Revenue from Top 10 Customers	% Contribution of top 10 to revenue from operations
For the period ended June 30, 2024	506.69	8.34%	1146.30	18.86%	1579.81	25.99%
Fiscal 2024	590.70	2.68%	2416.04	10.98%	3850.56	17.49%
Fiscal 2023	519.99	2.66%	2034.25	10.41%	3312.00	16.96%
Fiscal 2022	881.06	4.97%	2883.18	16.28%	4390.93	24.78%

However, the composition and revenue generated from these clients might change as we continue to add new customers in normal course of business. Any decline in our quality standards, growing competition and any change in the demand for our products by these customers may adversely affect our ability to retain them. Also, any delay or default in payment by these customers may adversely affect our business, financial condition and results of operations

SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, "Annexure VII" beginning under "Restated Financial Statements" on page 182 of this Draft Red Herring Prospectus.

The scale of our operations and vast distribution network along with our customers confidence have had a significant impact on our revenues and profitability. Set out below are a few key performance indicators

(Rs in Lakhs)

Particulars	As on June 30,2024	March 31, 2024	March 31, 2023	March 31, 2022
Revenue from Operations	6,077.38	22,010.80	19,524.14	17,717.33
Revenue Growth	-	12.74	10.20	11.65
Revenue CAGR (1)	-		11.46%
Total Income	6,080.84	22,021.22	19,560.16	17,719.76
Operating EBITDA (2)	456.26	1,385.50	976.79	775.71
EBITDA Margin (%) (3)	7.51%	6.29%	5.00%	4.38%
PAT	203.59	429.40	179.94	181.41
PAT Margin (%)(4)	3.35%	1.95%	0.92%	1.02%
Net Worth(5)	2,719.54	2,515.95	1,726.50	1,546.56
Net Debt(6)	6,124.61	6,591.76	6,111.19	3,980.47
Net Debt to Operating EBITDA(7)	13.42	4.76	6.26	5.13
Net Debt to Equity (Gearing Ratio) (8)	2.01	2.32	2.98	2.12
Return on Equity (RoE)(%) (9)	6.91	17.54	9.16	11.32
Return on Capital Employed (RoCE)(%) (10)	4.33%	13.82%	11.22%	12.22%
EPS(11)	1.19	2.56	1.18	1.19
Operating Cash Flow(12)	977.64	(50.25)	(1,281.97)	(326.87)

Notes:

(1) Revenue CAGR is calculated by dividing the Revenue from operation for the FY 2024 by the Revenue from operation for the FY 2022, raising it to the power of one divided by the number of compounding periods i.e. 2 years, and subtracting by one.

(2) Operating EBITDA is calculated as Profit before tax +Depreciation+ Interest Expenses - Other Income .

(3) Operating EBITDA Margin is calculated as Operating EBITDA divided by Revenue from operation.

(4) PAT Margin is calculated as PAT for the period/year divided by revenue from operations.

(5) Net Worth is calculated by subtracting a companys Equity Shareholders fund and free reserves excluding capital reserves.

(6) Net Debt is calculated as Short-term debt + Long-term debt - Cash and Cash Equivalents.

(7) Net Debt to Operating EBITDA is calculated as Net Debt divided by Operating EBITDA.

(8) Net Debt to Equity is calculated as Net Debt divided by Net Worth .

(9) Return on Equity is ratio of Profit after Tax and Average Shareholder Equity.

(10) Return on Capital Employed (RoCE) is calculated as EBIT divided by capital employed, which is defined as shareholders equity plus total borrowings [Current & Non - Current]

(11) Diluted EPS is calculated as PAT divided by outstanding number of equity shares (Post bonus issue).

(12) Operating Cash Flow is calculated as PBT +/- Adjustment of non-cash items +/- Adjustment of nonoperating Profit and losses +/- Changes in Working Capital - Direct tax Paid.

COMPONENTS OF INCOME AND EXPENDITURE Total Revenue

Our total revenue is divided into revenue from operations and other income.

Revenue from operations consists of Sale of Products (Manufacturing), Sale of Products (Trading).

Other income consists of Interest Income on Fixed Deposit, Profit on Sale of Fixed Assets, Rent Received, Insurance Claim Received, Scheme from E-Commerce Operators, Other Indirect Income.

Total Expenses

Our total expenses comprise of Cost of materials consumed, Purchase of stock-in-trade, Changes in Inventories of Finished Goods, Manufacturing Expenses, Employee benefits expense, Finance costs, Depreciation and amortisation expense, other expenses.

Finance Costs Finance costs includes Interest expense, Processing Charges, Other Borrowing Costs.

Purchase in Stock in trade

Purchase in Stock in trade comprise of purchase of fabrics.

Employee benefits expenses

Employee benefit expenses comprise of Salary, Wages, Bonus & Allowance, Directors remuneration, Staff Welfare Expense, Contribution to provident and other funds and Provision for Gratuity.

Depreciation, Amortization & Impairment Expenses

Depreciation and amortization expenses primarily include Depreciation and Amortisation expense.

Other Expenses

Other expenses include Selling and Distribution Cost which includes Brokerage & Commission, Advertisement & Subscription, Business Promotion Expense, Modelling & Poster Expenses, Packaging & Forwarding Expense, Sales Support Service, and Establishment Expenses which includes Bank Charges & Commission, Loading & Unloading charges, Payment to Auditors , Travelling & Conveyance, Motor Car Expenses, Rent, Insurance, Shop Expenses, Electrical Charges, Security Expenses, Computer Expense, Postage & Stamps, Legal & Trademark Expense, Filing Fees, Municipality/Property Tax, Printing & Stationery, Donation, Telephone Charges, Repairs & Maintenance which includes for Plant & Machinery, for Others, Consultancy/ Professional Fees, General Expense, Sundry Balance Written off, Rates & Taxes.

Result of Stub Period

Particulars	As on June 30, 2024	% of Total Revenue
Revenue
Revenue from Operations	6,077.38	99.94
Other Income	3.46	0.06
Total Income	6,080.84	100.00
Expenses
Cost of materials consumed	3,855.20	63.40
Purchase of stock-in-trade	-
Changes in Inventories of Finished Goods	(248.63)	(4.09)
Particulars	As on June 30, 2024	% of Total Revenue
Manufacturing Expenses	1,690.81	27.81
Employee benefits expense	99.04	1.63
Finance Cost	181.56	2.99
Depreciation and amortisation expense	12.38	0.20
Other expenses	227.76	3.75
Total expenses	5,818.12	95.68
Profit before tax	262.72	4.32
Tax expense
Current tax	62.2	1.02
Deferred tax (credit)/charge	0.15	0.00
Earlier Year Taxes	-	-
Profit for the period / year	200.37	3.30
Share of Profit/(Loss) of associates	1.69	0.03
Profit/(Loss) for the period	202.06	3.32

Financial Performance

Total Income:

Our Companys Total Income for period ended on June 30, 2024 was Rs6,080.84 Lakhs which consist of Revenue from Operations of Rs6,077.38 Lakhs and other Income of Rs3.46 Lakhs

Total Expenses:

The total expenditure for stub period ended on June 30, 2024 was Rs 5,818.12 Lakhs which is 95.68 % of the total revenue for the stub period. The major expenditure which is part of the total expenditure is Cost of Material Consumed of Rs 3855.20 Lakhs (63.40%) and Manufacturing Expenses of Rs 1,690.81 Lakhs (27.81%).

Profit after tax;

The profit after Tax for the stub period was Rs 200.37 lakhs representing 3.30 % of the total revenue.

Profit after tax;(Includine share of profit from our Associate)

The profit after Tax for the stub period was Rs 202.06 lakhs representing 3.32 % of the total revenue.

RESULTS OF OPERATIONS

The following discussion on results of operations should be read in conjunction with the Restated Financial Statements of our Company for the financial years ended on 2024, 2023 and 2022:

(Rs in Lakhs)

Particulars	For the Year ended on March 31, 2024	% of Total Revenue	For the Year ended on March 31, 2023	% of Total Revenue	For the Year ended on March 31, 2022	% of Total Revenue
Revenue
Revenue from Operations	22,010.80	99.95	19,524.14	99.82	17,717.33	99.99
Other Income	10.42	0.05	36.02	0.18	2.43	0.01
Total Income	22,021.22	100.00	19,560.16	100.00	17,719.76	100.00
Expenses
Particulars	For the Year ended on March 31, 2024	% of Total Revenue	For the Year ended on March 31, 2023	% of Total Revenue	For the Year ended on March 31, 2022	% of Total Revenue
Cost of materials consumed	13,523.01	61.41	14,403.37	73.64	10,676.39	60.25
Purchase of stock-in-trade	-	-	-	-	1,514.40	8.55
Changes in Inventories of Finished Goods	(367.19)	(1.67)	(2,557.64)	(13.08)	(940.48)	(5.31)
Manufacturing Expenses	5,854.51	26.59	5,373.16	27.47	4,853.47	27.39
Employee benefits expense	319.81	1.45	315.68	1.61	262.15	1.48
Finance Cost	784.29	3.56	698.36	3.57	495.53	2.80
Depreciation and amortisation expense	49.51	0.22	51.84	0.27	48.94	0.28
Other expenses	1,295.16	5.88	1,012.78	5.18	566.64	3.20
Total expenses	21,459.10	97.45	19,297.55	98.66	17,477.04	98.63
Profit before tax	562.12	2.55	262.61	1.34	242.72	1.37
Tax expense
Current tax	141.18	0.64	62.40	0.32	59.64	0.34
Deferred tax (credit)/charge	1.23	0.01	5.40	0.03	1.49	0.01
Earlier Year Taxes	1.47	0.01	18.74	0.10	0	0.00
Profit for the period / year	418.24	1.90	176.07	0.90	181.59	1.02
Share of Profit/(Loss) of associates	10.49	0.05	12.71	0.06	6.59	0.04
Profit/(Loss) for the period	428.73	1.95	188.78	0.97	188.18	1.06

COMPARISON OF FINANCIAL YEAR ENDED 2024 TO FINANCIAL YEAR ENDED 2023 Income

Total Income:

Our total income increased by 12.58% from t 19,560.16 Lakhs for the financial year March 31, 2023 to 22,021.22 Lakhs for the financial year ended March 31, 2024 due to the factors described below:

Revenue from Operations.

Our income from Revenue from Operations was increased by 12.74% to t 22,010.80 Lakhs for the FY 2024 from t 19,524.14 Lakhs for the FY 2023. This was on account of an increase in due to introduction of new product i.e Bed Sheet and increase in online sale and sale from existing customer and addition of new customer.

Other Income

Other income decreased by 71.07% from t 36.02 Lakhs in FY 2023 to t 10.42 Lakhs in FY 2024 due to decrease in interest received from Fixed Deposit and decrease in incentive from E-Commerce Operator.

Expenditure

Total Expenses:

Our total expenses increased by 11.20% to t 21,459.10 Lakhs for the FY 2024 from t 19,297.55 Lakhs for the FY 2023 due to the factors described below:

Cost of materials consumed

Our Cost of materials consumed was decreased by 6.11% from 14,403.37 Lakhs in FY 2023 to t 13,523.01 Lakhs for the FY 2024. This was due to increase in closing stock of raw material.

Changes in Inventories of Finished Goods

Our Inventories of Finished Goods was decreased by 85.64% from t2,557.64 Lakhs in FY 2023 to t 367.19 Lakhs in FY 2024. This was as result of prior order received at end of FY 22-23 leading to an increase in production and stock accumulation at the close of that fiscal year.

Manufacturing Expenses

Our Manufacturing Expenses was increased by 8.96% from t 5,373.16 Lakhs in FY 2023 to 5,854.51 Lakhs in FY 2023. This was on account of increase in printing expense due to increase in sale and processing expense.

Employee benefits expense

The Employee Benefit Expenses increased by 1.31% from t 315.68 Lakhs in FY 2023 to t 319.81 Lakhs in FY 2024. This increase was mainly due to increase in salaries, wages and bonus to employees.

Finance costs

The Finance costs increased by 12.30% from t 698.36 Lakhs in FY 2023 to t 784.29 Lakhs in FY 2024. This was primarily due to increase in interest on loans from increased borrowings.

Depreciation and amortisation expense

The Depreciation and Amortization expenses Goods was decreased by 4.49% from t 51.84 Lakhs in FY 2023 to t 49.51 Lakhs in FY 2024.

Other expenses

Other expenses increased by 27.88% from t 1,012.78 Lakhs in FY 2023 to t 1,295.16 Lakhs in FY 2024. This was on account of due to primarily increase in (i) Advertisement and subscription from t 25.19 Lakhs to t 39.84 Lakhs (ii) Sale Support Service from t 154.34 to t 638.08 Lakhs.

Profit before Tax

Our profit before tax increased by 114.05 % to t562.12 Lakhs for the FY 2024 from t 262.61 Lakhs for the FY 2023.

Tax Expenses

Our total tax expense has increased by 66.26% to t 143.88 Lakhs in FY 2024 from t 86.54 Lakhs in the FY 2023.

Profit after Tax

After accounting for taxes at applicable rates, our Profit after Tax increased by 127.11% to t 428.73 Lakhs in FY 2024 from t 188.78 Lakhs in FY 2023. This was due to increase in revenue from operations which was supported by (i) increase in revenue from online sales on B2B platfrom from t 3905.08 Lakhs in FY 2023 to t6499.28 Lakhs in FY 2024 representing 66.43 YoY growth (ii) increase in sale from Bedsheets from t 1.00 Lakhs in FY 2023 to t96.56 Lakhs in FY 2024 representing 9556% YOY growth. With introduction of new product from Bedsheet and drastic increase in sales from online sale of products and marginal increase in sale from network of wholesaler, there has been increase in revenue from operations and consequently on PAT. COMPARISON OF FINANCIAL YEAR ENDED 2023 TO FINANCIAL YEAR ENDED 2022 Income

Total Income:

Our total revenue increased by 10.39% from t 17,719.76 Lakhs for the financial year March 31, 2022 to t 19,560.16 Lakhs for the financial year ended March 31, 2023 due to the factors described below: Revenue from Operations.

Our income from Revenue from Operations was increased by 10.20% to t 19,524.14 Lakhs for the FY 2023 from t 17,717.33 Lakhs for the FY 2022. This was on account of an increase in sale to existing customer and addition of new customer.

Other Income

Other income increased by 1382.30% from t 2.43 Lakhs in FY 2023 to t 36.02 Lakhs in FY 2024 due to increase in interest income on Fixed Deposit and increase in incentive from e-commerce operator.

Expenditure

Total Expenses:

Our total expenses increased by 10.42 % to t 19,297.55 Lakhs for the FY 2023 from t 17,477.04 Lakhs for the FY 2022 from due to the factors described below:

Cost of materials consumed

Our Cost of materials consumed was increased by 34.91% from t 10,676.39 Lakhs for the FY 2022 to t 14,403.37 Lakhs in FY 2023. This was due to increase in purchase of raw material so as to meet increase in demand of product.

Purchase of stock-in-trade

During FY22, our Purchase of Stock in trade was t 1,514.40 Lakhs that translated to 8.55% of Total Revenue. Changes in Inventories of Finished Goods

Our Inventories of Finished Goods was increased by 171.95% from t 940.48 Lakhs in FY 2022 to t 2557.64 Lakhs in FY 2023. This was as result of prior order received at end of FY 22-23 leading to an increase in production and stock accumulation at the close of the fiscal year.

Manufacturing Expenses

Our Manufacturing Expenses was increased by 10.71 % from t 4,853.47 Lakhs in FY 2022 to t 5,373.16 Lakhs in FY 2023. This was primarily due to increase in printing and packaging expense.

Employee benefits expense

The employee benefit expenses increased by 20.42 % from t 262.15 Lakhs in FY 2022 to t 315.68 Lakhs in FY 2023. This increase was mainly due to increase in director remuneration, recruitment of new employee and due to change in gratuity policy to accrual basis from cash basis.

Finance costs

The Finance costs increased by 40.93% from t 495.53 Lakhs in FY 2022 to t 698.36 Lakhs in FY 2023. This was on account of due to increase in requirement of working capital for which we have obtain a new cash credit facility.

Depreciation and amortisation expense

The Depreciation and Amortization expenses Goods was decreased by 4.49% from Rs 495.53 Lakhs in FY 2022 to Rs 698.36 Lakhs in FY 2023. This was as result of addition of Fixed Assets.

Other expenses

Other expenses increased by 78.73% from Rs 566.64 Lakhs in FY 2022 to Rs 1,012.78 Lakhs in FY 2023. This was on account of increase in packaging expense due to increase in sale and increase in sale support service

Profit before Tax

Our profit before tax increased by 8.19 % to Rs 262.61 Lakhs for the FY 2023 from Rs 242.72 Lakhs for the FY 2022.The increase was mainly due to increase in sale and other income.

Tax Expenses

Our total tax expense has increased by 41.57% to Rs 86.54 Lakhs in FY 2023 from Rs 61.13 Lakhs in the FY 2022. This was as result of increase in profit which lead to increase in current tax and payment of earlier year tax.

Share of Profit/(Loss) of associates

After accounting for taxes at applicable rates, our Share of Profit of associates increased by 92.87% to Rs 12.71 Lakhs in FY 2023 from Rs 6.59 Lakhs in FY 2022.

Profit after Tax

After accounting for taxes at applicable rates, our Profit after Tax increased by 0.32% to Rs 188.78 Lakhs in FY 2023 from Rs 188.18 Lakhs in FY 2023. This was due to increase in revenue from operations which was supported by (i) increase in revenue from online sales on B2B platfrom from Rs 542.21 Lakhs in FY 2023 to Rs3905.08 Lakhs in FY 2024 representing 620.22% YoY growth (ii) marginal sale from salwar suits. With drastic increase in sales from online sale of products and marginal increase in sale from network of wholesaler, and salwar suits there has been increase in revenue from operations offset by increase in expense resulted in decrease in PAT.

CASH FLOWS

The table below is our cash flows for period ended June 30, 2024 and for the financial years ended on 2024, 2023 and 2022:

(Z in Lakhs)

Particulars	As on June 2024	For the financial year ended on March 31,
		2024	2023	2022
Net cash (used)/from operating activities	977.64	(50.25)	(1,281.97)	(326.88)
Net cash (used)/from investing activities	(328.94)	(1.08)	(150.39)	(23.47)
Net cash (used)/from financing activities	214.58	(40.09)	1,716.39	323.11

Cash Flows from Operating Activities

For the period ended on June 30, 2024

Our net cash generated from operating activities was Rs 977.64 Lakhs for the period ended June 30, 2024. Our operating profit before working capital changes was Rs 454.57 Lakhs for the period ended June 30, 2024 which was primarily adjusted against Depreciation of Rs 12.38 Lakhs, Finance Costs of Rs 181.56 Lakhs, offset by provision for gratuity of Rs 2.06 Lakhs and Interest Income of Rs 3.10 Lakhs.

The main adjustments to operating profit before working capital changes included adjustments for increase in (i) inventories by Rs 35.18 Lakh and (ii) increase in trade and other payable by Rs 398.86 Lakhs, and decrease in (i) trade and other receivables Rs 201.49 Lakhs. Tax paid for June 30, 2024 amount to Rs 42.09 Lakhs.

For the year ended on March 31, 2024

Our net cash used from operating activities was Rs 50.25 Lakhs for the year ended March 31, 2024. Our operating profit before working capital changes was Rs 1391.53 Lakhs for the year ended March 31, 2024 which was primarily adjusted against Depreciation of Rs 49.51 Lakhs, Finance Costs of Rs 784.29 Lakhs, Provision for Gratuity of Rs 3.96 Lakhs offset by Interest Income of Rs 8.35 Lakhs.

The main adjustments to operating profit before working capital changes included adjustments for increase in (i) inventories by Rs 1591.49 Lakh and (ii) increase in trade and other payable by Rs 319.44 Lakhs, and (iii) trade and other receivables by Rs 83.49 Lakhs. Tax paid for March 31, 2024 amount to Rs 86.24 Lakhs.

For the year ended on March 31, 2023

Our net cash used from operating activities was Rs 1281.97 Lakhs for the year ended March 31, 2023. Our operating profit before working capital changes was Rs 1002.52 Lakhs for the year ended March 31, 2023 which was primarily adjusted against Depreciation of Rs 51.84 Lakhs, Finance Costs of Rs 698.36 Lakhs, Provision for Gratuity of Rs 3.73 Lakhs and offset by Interest Income of Rs 12.65 Lakhs and profit on sale of fixed asset for Rs 1.37 Lakhs.

The main adjustments to operating profit before working capital changes included adjustments for increase in (i) inventories by Rs 2832.19 Lakh and (ii) increase in trade and other payable by Rs 1438.54 Lakhs, and (iii) trade and other receivables by Rs 809.69 Lakhs. Tax paid for March 31, 2023 amount to Rs 81.14 Lakhs

For the year ended on March 31, 2022

Our net cash used from operating activities was Rs 326.87 Lakhs for the year ended March 31, 2022. Our operating profit before working capital changes was Rs 784.75 Lakhs for the year ended March 31, 2022 which was primarily adjusted against Depreciation of Rs 48.94 Lakhs, Finance Costs of Rs 495.53 Lakhs, Provision for Gratuity of Rs 9.04 Lakhs which was offset by Interest Income of Rs 2.24 Lakhs and profit on sale of fixed asset for Rs 0.19 Lakhs.

The main adjustments to operating profit before working capital changes included adjustments for increase in (i) inventories by Rs 456.69 Lakh and, (ii) trade and other receivables by Rs 110.97 Lakhs (iii) decrease in trade and other payable by Rs 483.58 Lakhs. Tax paid for March 31, 2022 amount to Rs 60.39 Lakhs

Cash Flows from Investing Activities

For the period ended June 30, 2024

Net cash flow used from investing activities for the period ended June 30, 2024 was Rs 328.94 Lakhs. This was primarily on account of purchase of Fixed Assets Rs 0.59 Lakhs, capital advances of Rs 331.45 Lakhs and received of interest of income Rs 8.35 Lakhs.

For the year ended on March 31, 2024

Net cash flow used from investing activities for the year ended March 31, 2024 was Rs 1.08 Lakhs. This was primarily on account of purchase of Fixed Assets Rs 9.43 Lakhs and received of interest of income Rs 8.35 Lakhs.

For the year ended on March 31, 2023

Net cash flow used from investing activities for the year ended March 31, 2023 was Rs 150.39 Lakhs. This was primarily on account of purchase of Fixed Assets Rs 166.69 Lakhs which was then offset by sale of fixed assets, sale of investment and received of Interest Income amounting at Rs 3.60 Lakhs, Rs 0.05 Lakhs and Rs 12.65 Lakhs respectively.

For the year ended on March 31, 2022

Net cash flow used from investing activities for the year ended March 31, 2022 was Rs 23.47 Lakhs. This was primarily on account of purchase of Fixed Assets Rs 25.90 Lakhs which was then offset by sale of fixed assets and received of Interest Income amounting at Rs 0.19 Lakhs and Rs 2.24 Lakhs respectively.

Cash Flows from Financing Activities

For the period ended June 30, 2024

Net cash flow generated from financing activities for the period ended June 30, 2024 was Rs 214.58 Lakhs. This was primarily on account of net proceeds from Long Term Borrowings of Rs 103.84 Lakhs, Short Term Borrowings of Rs 292.30 Lakhs and offset by payment of Finance Cost of Rs 181.56 lakhs.

For the year ended March 31, 2024

Net cash flow used from financing activities for the year ended March 31, 2024 was Rs 40.09 Lakhs. This was primarily on account of net proceeds from Long Term Borrowings of Rs 297.52 Lakhs, Short Term Borrowings of Rs 446.68 Lakhs and offset by payment of Finance Cost of Rs 784.29 lakhs.

For the year ended March 31, 2023

Net cash flow generated from financing activities for the year ended March 31, 2023 was Rs 1,716.39 Lakhs. This was primarily on account of net proceeds from Long Term Borrowings of Rs 1,031.22 Lakhs, Short Term Borrowings of Rs 1,383.53 Lakhs and offset by payment Finance Cost of Rs 698.36 lakhs.

For the year ended March 31, 2022

Net cash flow generated from financing activities for the year ended March 31, 2022 was Rs 323.11 Lakhs. This was primarily on account of proceeds from Long Term Borrowings of Rs 239.23 Lakhs, Short Term Borrowings of Rs 579.41 Lakhs and offset by payment Finance Cost of Rs 495.53 lakhs.

Detailed rationale for Increase in Total Income of the Company:

The companys total income has shown a consistent upward trend over the past financial years, attributed to the following key factors:

1. Expansion of Operations: The company has strategically expanded its operational capacities, leading to higher production levels and increased revenue generation across its product/service portfolio.

2. Market Penetration and Growth: Focused efforts on penetrating new markets and enhancing the companys market share in existing geographies have significantly contributed to revenue growth.

3. Enhanced Efficiency and Cost Optimization: The company has implemented advanced processes and technology-driven solutions, resulting in improved operational efficiencies, reduced costs, and higher margins.

4. Diversification of Revenue Streams: The company has diversified its revenue base by introducing new products/services and leveraging synergies from strategic business units.

5. Improved Demand and Pricing Strategies: Favorable market conditions, coupled with effective pricing strategies, have enabled the company to capitalize on increased demand and optimize its revenue potential.

This steady growth is reflected in the following profit figures:

• FY 2021-22: ^17,717.33 Lakhs

• FY 2022-23: ^19,524.14 Lakhs

• FY 2023-24: ^22,021.22 Lakhs

• Upto June 30th, 2024: Rs6,080.84 Lakhs

These figures underscore the companys robust financial health affirming sustainable growth and value creation for stakeholders.

Detailed rationale for Increase in Profit after Tax of the Company:

Further, the companys Profit After Tax (PAT) has exhibited a significant improvement during the stated period, driven by the following factors:

1. Enhanced Operational Efficiencies: The company has implemented cost-effective measures, streamlined its operations, and optimized resource utilization, leading to better margins and improved profitability.

2. Revenue Growth: A steady increase in total income, driven by market expansion and robust demand, has directly contributed to higher PAT.

3. Cost Rationalization: Focused efforts on reducing operational and administrative expenses have had a favorable impact on the companys net earnings.

4. Strategic Pricing Policies: The adoption of competitive and dynamic pricing strategies has maximized revenue potential while maintaining profitability.

5. Tax Optimization: Improved financial planning and effective utilization of available tax benefits and exemptions have resulted in optimized tax liabilities, contributing to higher net profits.

The improvement in PAT is evident from the following figures:

• FY 2021-22: ^181.58 Lakhs

• FY 2022-23: Rs176.08 Lakhs

• FY 2023-24: Rs418.24 Lakhs

• Up to June 30th, 2024: U200.36 Lakhs

These figures underscore the companys financial resilience, highlighting its capability to sustain prof itability. RELATED PARTY TRANSACTIONS

Related party transactions with certain of our promoter, directors and their entities and relatives primarily relate to remuneration, salary, commission and issue of Equity Shares. For further details of related parties kindly refer chapter titled "Restated Financial Statements beginning on page 182 of this Draft Red Herring Prospectus.

OFF-BALANCE SHEET ITEMS

We do not have any other off-balance sheet arrangements, derivative instruments or other relationships with any entitythat have been established for the purposes of facilitating off-balance sheet arrangements.

QUALIFICATIONS OF THE STATUTORY AUDITORS WHICH HAVE NOT BEEN GIVEN EFFECT TO IN THE RESTATED FINANCIAL STATEMENTS

The Restated Financial Statements do not contain any qualifications which have not been given effect in the restatedfinancial statements.

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 in future andour access to funds.

Effect of Inflation

We are affected by inflation as it has an impact on the salary, wages, etc. In line with changing inflation rates, we reworkour 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.