Narmadesh Brass Industries Ltd Management Discussions

You should read the following discussion and analysis of financial condition and results of operations together with our financial statements included in this Draft Prospectus. The following discussion relates to our Company and is based on our restated financial statements. Our financial statements have been prepared in accordance with Ind AS and other applicable provisions of the Companies Act. Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward looking statement" 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 Statutes and incidental factors.

You should read the following discussion and analysis of financial condition and results of operations together with our financial statements included in this Draft Prospectus/ Prospectus. The following discussion relates to our Company and is based on our restated financial statements. Our financial statements have been prepared in accordance with Indian Accounting Standards and other applicable provisions of the Companies Act.

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward looking statement" 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 Statutes and incidental factors.

INDUSTRY OVERVIEW

Brass Market size was valued at USD 6.2 Billion in 2024 and is projected to reach USD 8.9 Billion by 2033, exhibiting a CAGR of 4.9% from 2026 to 2033.

The brass market, a vital segment of the global metals industry, encompasses the production and distribution of brass, an alloy primarily composed of copper and zinc. This market has witnessed steady growth due to its unique properties, such as corrosion resistance, durability, and attractive appearance. According to the U.S. Geological Survey, the global consumption of brass is projected to reach approximately 2 million metric tons by 2026. The demand is fueled by various industries, including construction, automotive, and electronics, which utilize brass in a myriad of applications.

According to 6W research, the India Brass Market size is expected to grow at a significant CAGR of 4.3% during the forecast period 2025-2031.The brass market in India plays a significant role in the countrys industrial landscape, driven by its versatility and utility in various sectors. Brass, an alloy of copper and zinc, is widely used in manufacturing due to its corrosion resistance, malleability, and aesthetic appeal. Key applications of brass include plumbing fixtures, electrical components, decorative items, and precision engineering. India is not only a major consumer of brass products but also a growing exporter, supported by a robust manufacturing base and skilled labor. The market is influenced by factors such as industrial growth, urbanization, and demand from end-user industries.

BUSINESS OVERVIEW

We are engaged in manufacturing diverse range of brass products catering to both domestic and international market. Our product offering includes brass rods, brass billets, agricultural sprayer parts, garden fittings, ball valves, non-return valves (NRVs), turning components and plumbing fittings, sanitary fittings, brass compression fittings etc. Our manufacturing facility and warehouse is located in two plots attached to each other at Jamnagar, Gujarat. Our manufacturing premises span 6,293.03 sq.mt and total premises (incl manufacturing and warehouse) span 12,299.34 sq. mt in Gujrat and are equipped with the technology.

Our total income as restated were 8,805.02 lakhs, 7,906.11 lakhs and 6,009.21 lakhs for the Financial Year 2024-25, 2023-24 and 2022-23 respectively. Further, our Profit after Tax had been recorded at 566.65 lakhs, 709.61 lakhs and 89.36 lakhs for the financial year 2024-25, 2023-24 and 2022-23 respectively.

Significant Developments after March 31, 2025 that may affect our Future Results of Operations

The Directors confirm that there have been no events or circumstances since the date of the last financial statements as disclosed in the Draft Prospectus which materially or adversely affect or is likely to affect the profitability of our Company, or the value of our assets, or our ability to pay liabilities within next twelve months.

FACTORS AFFECTING OUR RESULT OF OPERATIONS

Our financial condition and results of operations are affected by numerous factors and uncertainties, including those discussed in the section titled "Risk Factors" on page no 23 of this Draft Prospectus. The following is a discussion of certain factors that have had, and we expect will continue to have, a significant effect on our financial condition and results of operations:

Any adverse changes in central or state government policies;

Fluctuation in price of brass-our raw materials

Loss of one or more of our key customers and/or suppliers;

An increase in the productivity and overall efficiency of our competitors;

Our reliance on third party suppliers for our raw materials;

General economic and business conditions in the markets in which we operate and in the local, regional and national economies;

Changes in political and social conditions in India or in countries that we may enter, the monetary and interest rate policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

The performance of the financial markets in India and globally;

Occurrences of natural disasters or calamities affecting the areas in which we have operations;

Market fluctuations and industry dynamics beyond our control;

Our ability to compete effectively, particularly in new markets and businesses;

Changes in foreign exchange rates or other rates or prices;

Significant accounting policies

a. Accounting Convention: -

The Financial statements of the Company have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 (as amended) and presentation requirements of Division II of Schedule III to the Companies Act, 2013, (Ind AS compliant Schedule III), as applicable to the financial statements. For all periods up to and including the year ended March 31, 2023, the Company prepared its financial statements in accordance with Indian GAAP, including accounting standards notified under the section 133 of the Companies Act 2013, read together with paragraph 7 of the Companies (Accounts) Rules, 2014.

The accounting policies have been consistently applied by the Company in the preparation of the financial statements. These financial statements have been prepared for the Company as a going concern on the basis of relevant Ind AS that are effective as at March 31, 2025.

These financial statements have been prepared and presented under the historical cost convention with the following exceptions: -

certain financial assets and liabilities

defined benefit plans plan assets measured at fair value

share-based payments.

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 restated financial information has been prepared for inclusion in the Draft Prospectus and Prospectus ("DP" or

"P" "offer document") to be filed by the Company with the Securities and Exchange Board of India (‘SEBI), Stock

Exchange (SE) and other regulatory bodies in connection with proposed Initial Public Offering of its equity shares of face value of Rs 10 each of the Company comprising a fresh issue and offer for sale of equity shares (the "Issue"), in accordance with the requirements of:

Section 26 of part I of Chapter III of the Act relevant provisions of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements Regulations, 2018, issued by the Securities and Exchange Board of India (SEBI) as amended in pursuance of the Securities and Exchange Board of India Act, 1992; and

Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India ("ICAI").

The Restated financial information has been compiled from:

The audited financial statement of the Company as at March 31, 2025 which have been approved by the Board of Directors at their meeting held on 23rd May, 2025.

The audited financial statement of the Company as at March 31, 2024 which have been approved by the Board of Directors at their meeting held on 27th May, 2024.

The audited financial statement of the Company as at October 29, 2023 which have been approved by the Board of Directors at their meeting held on 26th May, 2024.

The audited financial statement of the Company as at March 31, 2023 which have been approved by the Board of Directors/Partners at their meeting held on 14th August, 2023.

The accounting policies adopted in the preparation of financial statements are consistent with those of previous year.

b. Functional and Presentation Currency

The functional and presentation currency of the company is Indian rupees. This financial statement is presented in Indian rupees.

All amounts disclosed in the financial statements and notes are rounded off to lakhs the nearest lakhs with two decimals in compliance with Schedule III of the Act, unless otherwise stated.

c. Compliance with Ind AS

The financial statements have been prepared in accordance with Ind AS notified under the Companies (Indian Accounting Standards) Rules, 2015.

d. Use of Estimates and Judgments

The preparation of the Ind AS financial statements in conformity with the generally accepted accounting principles in India requires management to make estimates and assumptions that affect the reported amount of assets and liabilities as of the Balance Sheet date, reported amount of revenue and expenses for the year and disclosure of contingent labilities and contingent assets as of the date of Balance Sheet. The estimates and assumptions used in these Ind AS financial statements are based on managements evaluation of the relevant facts and circumstances as of the date of the Ind AS financial statements. The actual amounts may differ from the estimates used in the preparation of the Ind AS financial statements and the difference between actual results and the estimates are recognized in the period in which the results are known/materialize.

Estimates and underlying assumptions are reviewed at each balance sheet date. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in future periods affected.

Key information regarding significant areas of estimation uncertainty and critical judgments in applying accounting policies, which have the most substantial impact on the amounts recognized in the financial statements, is outlined below.

Valuation of Financial Instruments;

Evaluation of recoverability of deferred tax assets/Liabilities;

Useful lives of property, plant and equipment;

Measurement of recoverable amounts of cash-generating units;

Obligations relating to employee benefits;

Provisions and Contingencies;

Provision for income taxes, including amount expected to be paid/recovered for uncertain tax positions;

Recognition of Deferred Tax Assets/Liabilities

e. Current versus Non-Current Classification

The Company presents assets and liabilities in the Balance Sheet based on current/ non-current classification.

An asset / liability is treated as current when it is: -

Expected to be realised or intended to be sold or consumed or settled in normal operating cycle.

Held primarily for the purpose of trading.

Expected to be realised / settled within twelve months after the reporting period, or.

Cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.

There is no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period.

All other assets and liabilities are classified as non-current.

Deferred tax assets and liabilities are classified as non-current assets and liabilities respectively.

ACCOUNTING POLICIES:

(A) Property, Plant and Equipment

All items of property, plant and equipment are stated at historical cost less accumulated depreciation. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Cost includes purchase price, non-recoverable taxes and duties, labour cost and direct overheads for self-constructed assets and other direct costs incurred up to the date the asset is ready for its intended use.

Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.

The residual values, useful lives and method of depreciation of Property, Plant & Equipment is considered as 5% of original cost.

(B) Depreciation of Property, Plant and Equipment:

Depreciation is provided on the Stright Line Method (SLM) over the estimated useful lives of the assets considering the nature, estimated usage, operating conditions, past history of replacement, anticipated technological changes, manufacturers warranties and maintenance support. The Company provides pro-rata depreciation from the day the asset is put to use and for any asset sold, till the date of sale.

Projects under commissioning and other Capital work-in-progress are carried at cost comprising of direct and indirect costs, related incidental expenses and attributable interest. Depreciation is not recorded on capital work-in-progress until construction and installation are complete and the asset is ready for its intended use.

An item of property, plant and equipment is derecognized on disposal. Any gain or loss arising from derecognition of an item of property, plant and equipment is included in profit or loss.

The following useful lives apply to different types of tangible assets:

Asset	Years
Plant and Machinery	15 years
Furniture and fixtures	10 years
Computers	3 years

The useful lives are reviewed at least at each year end. Changes in expected useful lives are treated as changes in accounting estimates.

(C) Intangible Assets

Intangible assets are stated at cost of acquisition net of recoverable taxes, accumulated amortization, and impairment losses, if any. Such costs include purchase price, borrowing cost, and any cost directly attributable to bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the intangible assets.

Gains or losses arising from derecognition of an Intangible Asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of profit and loss when the asset is derecognized. Currently, the Company does not have any intangible assets.

(D) Impairment of assets

Goodwill and intangible assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the assets carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an assets fair value less costs of disposal and value in use. Currently, the Company does not have any goodwill or intangible assets in its books.

The Company assesses at each balance sheet date whether there is any indication that an asset may be impaired. If any such indication exists, the Company estimates the recoverable amount of the asset. If such recoverable amount of the asset or the recoverable amount of the cash-generating unit to which the asset belongs is less than its carrying amount, the carrying amount is reduced to its recoverable amount. The reduction is treated as an impairment loss and is recognized in the statement of profit and loss. If at the balance sheet date there is an indication that a previously assessed impairment loss no longer exists, the recoverable amount is reassessed and the asset is reflected at the recoverable amount subject to a maximum of depreciable historical cost.

(E) Leases

The Company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration

Company as a lessee:

The Company applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Company recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Right of use assets:

The Company recognizes right-of use assets ("RoU Assets") at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the lease term.

If ownership of the leased asset transferred to the company at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment. Refer to the accounting policies in section Impairment of non-financial assets.

Lease Liabilities

At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating the lease, if the lease term reflects the Company exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the Company uses its incremental borrowing rate at the lease commencement date in case the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

(F) Impairment of non-financial assets

The Company assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Company estimates the assets recoverable amount. An assets recoverable amount is the higher of an assets or cash-generating units (CGU) fair value less costs of disposal and its value in use. Recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are independent of those from other assets or group of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations are corroborated by valuation multiples or other available fair value indicators.

A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the assets recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the statement of profit and loss unless the asset is carried at a revalued amount, in which case, the reversal is treated as a revaluation increase.

(G) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to Chief Operating Decision Maker (CODM). The Company has identified its Managing Director as CODM who is responsible for allocating resources and assessing performance of the operating segments and makes strategic decisions.

The Company is operating in single business segments i.e. Manufacturing and trading of Brass items. Hence, reporting requirement of Segment reporting is not applicable.

(H) Statement of Cashflow

Cash Flows of the Group are reported using the indirect method, whereby profit before tax is adjusted for the effects of transactions of a noncash nature, any deferrals or accruals of past or future operating cash receipts or payments and item of income or expenses associated with investing or financing Cash Flows. The cash flows from operating, investing and financing activities of the Company are segregated.

(I) Cash and cash equivalents

Cash and cash equivalents comprises cash on hand, demand deposits and highly liquid investments with an original maturity of up to three month that are readily convertible into cash and which are subject to an insignificant risk of changes in value.

(J) Inventories

Inventories include raw material, Work-in-Progress and Finished goods are valued at lower of cost or NRV, whichever is lower.

Raw Material and Components - Cost include cost of purchases and other costs incurred in bringing the inventories to their present location and condition. Value is derived based on Cost or NRV, whichever is lower as per First-In-First-Out basis.

Work-in-progress/ Finished Goods - Cost includes cost of direct material, labor, other direct cost (Including variable costs). Value is derived based on Cost or NRV, whichever is lower as per First-In-First-Out basis.

Net Realizable value (NRV) represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale. Adequate allowance is made for obsolete and slow-moving items.

(K) Foreign Currency Transactions

Foreign exchange transactions are recorded at the exchange rate prevailing on the date of the transactions. Year-end monetary assets and liabilities denominated in foreign currencies are translated at the year-end foreign exchange rates. Non- Monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of transaction. Non-monetary items, measured at fair value denominated in a foreign currency are translated using the exchange rates that existed when the fair value was determined.

Exchange differences arising on settlement or translation of monetary items are recognized in the Statement of Profit and Loss. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e. translation differences on items whose fair value gain or loss is recognized in other comprehensive income (OCI) or profit and loss are also recognized in OCI or profit and loss, respectively).

(L) Income Taxes

The tax expense for the period comprises of current tax and deferred income tax. Tax is recognized in Statement of Profit and Loss, except to the extent that it relates to items recognized in the Other Comprehensive Income or in Equity. In which case, the tax is also recognized in Other Comprehensive Income or Equity.

Current tax: -

Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the taxation laws prevailing in the respective jurisdictions. Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis.

Deferred tax: -

Deferred tax is recognized using the balance sheet approach. Deferred tax assets and liabilities are recognized for deductible and taxable temporary differences arising between the tax base of assets and liabilities and their carrying amount in financial statements.

Deferred tax asset is recognized to the extent that it is probable that taxable profit will be available against which such deferred tax assets can be realized. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized.

(M) Provisions and Contingencies

Provisions:

Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and there is a reliable estimate of the amount of the obligation. Provisions are measured at the best estimate of the expenditure required to settle the present obligation at the Balance sheet date and are discounted to its present value as appropriate.

Contingent Liabilities:

Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence of which will be confirmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the company or a present obligation that arises from past events where it is either not probable that an outflow of resources will be required to settle or a reliable estimate of the amount cannot be made, is termed as a contingent liability.

(N) Revenue recognition

Revenue is measured at fair value of the consideration received or receivable. Revenue is recognized when (or as) the Company satisfies a performance obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as) the customer obtains control of that asset.

When (or as) a performance obligation is satisfied, the Company recognizes as revenue the amount of the transaction price (excluding estimates of variable consideration) that is allocated to that performance obligation.

The Company applies the five-step approach for recognition of revenue:

Identification of contract(s) with customers;

Identification of the separate performance obligations in the contract;

Determination of transaction price;

Allocation of transaction price to the separate performance obligations; and

Recognition of revenue when (or as) each performance obligation is satisfied.

(O) Other income:

Interest: Interest income is calculated on effective interest rate, but recognised on a time proportion basis taking into account the amount outstanding and the rate applicable.

Dividend: Dividend income is recognised when the right to receive dividend is established.

(P) Finance Cost

Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use. based on borrowings incurred specifically for financing the asset or the weighted average rate of all other borrowings, if no specific borrowings have been incurred for the asset.

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.

Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost.

All other borrowing costs are charged to the Statement of Profit and Loss for the period for which they are incurred.

(Q) Earnings per share (EPS):

Basic EPS is calculated by dividing the net profit or loss for the period attributable to equity shareholders by the weighted average number of equity shares outstanding during the period. For the purpose of calculating diluted EPS, the net profit or loss for the period attributable to equity shareholders and the weighted average number of additional equity shares that would have been outstanding are considered assuming the conversion of all dilutive potential equity shares. Earnings considered in ascertaining the EPS is the net profit for the period and any attributable tax thereto for the period.

(R) Financial Risk Management Objectives and policies

The Companys financial liabilities, other than derivatives, comprise borrowings, capital creditors and trade and other payables. The main purpose of these financial liabilities is to finance the company operations. The companys financial assets include trade and other receivables and cash & cash equivalents. The management ensures that risks are identified, measured and managed in accordance with Risk Management Policy. The market risks, liquidity risks and credit risks are further explained below:

Market risk

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The companys exposure to the risk of changes in market interest rates relates primarily to the debt obligations.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates.

Equity price risks

There is no investment and hence there are no equity price risks exposure to the company.

Credit risks

Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The company is exposed to credit risk from its operating activities (primarily trade receivables).

Liquidity risks

The companys primary sources of liquidity are cash, cash equivalents, and operating cash flow. The company believes its working capital is sufficient to meet current obligations; therefore, no liquidity risk is perceived

(S) Fair Value Measurement:

The Company measures financial instruments at fair value at each Balance Sheet date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability at the measurement date. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole.

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

(T) Financial Instruments:

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.

Financial assets:

Initial recognition

Financial assets are recognised when the Company becomes a party to the contractual provisions of the instruments. Financial assets other than trade receivables and other specific assets are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets carried at fair value through profit or loss are initially recognised at fair value, and transaction costs are expensed in the Statement of Profit and Loss.

Subsequent measurement

Financial assets, other than equity instruments, are subsequently measured at amortized cost, fair value through other comprehensive income or fair value through profit or loss on the basis of both:

The entitys business model for managing the financial assets and

The contractual cash flow characteristics of the financial asset.

De-recognition

The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire, or it transfers rights to receive cash flows from an asset, it evaluates if and to what extent it has retained the risks and rewards of ownership. When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred control of the asset, the Company continues to recognize the transferred asset to the extent of the Companys continuing involvement. In that case, the Company also recognises an associated liability. The transferred asset and the associated liability are measured on a basis that reflects the rights and obligations that the Company has retained.

Financial Liabilities:

Initial Recognition and Subsequent Measurement

All financial liabilities are recognised initially at fair value and in case of borrowings and payables, net of directly attributable cost. Financial liabilities are subsequently carried at amortized cost using the effective interest method. For trade and other payables maturing within one year from the Balance Sheet date, the carrying amounts approximate fair value due to the short maturity of these instruments. Changes in the ammortised value of liability are recorded as finance cost.

De-recognition

A financial liability is de-recognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the statement of profit or loss.

(U) Exemption Availed on First time adoption of Ind AS 101

Ind AS 101 allows first-time adopters certain exemptions from the retrospective application of certain requirements under Ind AS. The Company has availed the following material exemptions:

On transition to Ind AS, the Company has elected to continue with the carrying value of all its property, plant and equipment and intangible assets recognized as measured as per the previous GAAP and use that carrying value as the deemed cost of property, plant and equipment and intangible assets.

RESULTS OF OUR OPERATIONS

( in lakhs)

Particulars	Year ended March 31, 2025	% of Total Income	Year ended March 31, 2024	% of Total Income	Year ended March 31, 2023	% of Total Income
INCOME:
Revenue from Operations	8,772.09	99.63%	7,888.45	99.78%	5,996.18	99.78%
Other Income	32.93	0.37%	17.66	0.22%	13.03	0.22%
Total Income (A)	8,805.02	100.00%	7,906.11	100.00%	6,009.21	100.00%
EXPENSES:
Cost of Materials Consumed	7,928.30	90.04%	6,669.55	84.36%	5,563.27	92.58%
Change in Inventories of Work in Progress and Finished Goods	(506.13)	(5.75)%	(355.64)	(4.50)%	(108.06)	(1.80)%
Employee benefit expenses	214.68	2.44%	197.52	2.50%	173.90	2.89%
Finance costs	144.95	1.65%	98.63	1.25%	46.07	0.77%
Depreciation and amortization	75.31	0.86%	74.48	0.94%	50.29	0.84%
Other expenses	241.41	2.74%	253.94	3.21%	166.74	2.77%
Total Expenses (B)	8,098.52	91.98%	6,938.48	87.76%	5,892.21	98.05%
Net Profit/(Loss) before exceptional items	706.50	8.02%	967.63	12.24%	117.00	1.95%
Exceptional items	-	-	-	-	-	-
Net Profit / (Loss) before tax	706.50	8.02%	967.63	12.24%	117.00	1.95%
Less: Tax expense
(i) Current tax	110.23	1.25%	226.80	2.87%	18.14	0.30%
(ii) Adjustment for prior years	25.78	0.29%	-	-	-	-
(iii) Deferred tax	3.84	0.04%	31.22	0.39%	9.49	0.16%
Total Tax Expense	139.85	1.59%	258.02	3.26%	27.63	0.46%
Net Profit / (Loss) after tax	566.65	6.44%	709.61	8.98%	89.36	1.49%
Other Comprehensive Income
Items that will not be reclassified to profit or loss	-	-	324.45	4.11%	-	-
Income tax relating to items that will not be reclassified to profit or loss	-	-	-	-	-	-
Items that will be reclassified to profit or loss	-	-	-	-	-	-
Income tax relating to items that will be reclassified to profit or loss	-	-	-	-	-	-
Total Comprehensive Income for the period	566.65	6.44%	1,034.06	13.11%	89.36	1.49%

Main Components of our Profit and Loss Account

Income

Our total income comprises of revenue from Sale of Products, Sale of Services and other income.

Revenue from Operations

Our revenue from operations as a percentage of total income was 99.63%, 99.78% and 99.78% for the year ended 2024-25, 2023-24 and 2022-23 respectively.

Other Income

Our other income comprises of interest income, foreign fluctuation income and sundry balances written off. Other income, as a percentage of total income was 0.37%, 0.22% and 0.22% for the year ended 2024-25, 2023-24 and 2022-23 respectively.

Expenditure

Our total expenditure primarily consists of raw material consumed, change in inventories, employee benefit expenses, finance cost, depreciation and ammortisation expenses and other expenses.

Cost of Raw Material Consumed

It consists of cost of raw materials consumed and other direct expenses.

Change in Inventories

It comprises of change in work-in-progress and finished goods.

Employee Benefit Expenses

Employee benefit expenses comprise of salaries, employee welfare expenses, contribution to PF etc

Depreciation and Amortization Cost

Depreciation and Amortization Expenses consist of depreciation on the Tangible assets of our company i.e. Buildings, Furniture & Fixtures, Plant & Machinery and Computer and Software.

Finance costs

Finance cost includes Interest on Borrowings and processing expenses.

Other Expenses

Other expenses include Legal & professional expenses, Power and Fuel, Rent, Job work expenses, Insurance expense,

Auditors fees, Bank charges and Miscellaneous expenses.

Provision for Tax

The provision for current tax is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

Components of Balance Sheet

Long term Borrowings

The Long-term Borrowings consist of secured loans from HDFC Bank and have increased by 4.18% from F.Y 2023-24 to F.Y 2024-25. The borrowings have decreased by 11.17% due to repayment of loans.

Short-term Borrowings

The Short-term Borrowings consist of current maturity of secured loans and cash credit loans from HDFC Bank and unsecured loans from promoters. The increase of 9.54% is due to increase in cash credit loans utilized during F.Y 2024-25. The significant increase of 339.23% is due to unsecured loans availed from promoters and others and increase in cash credit loans utilized during F.Y 2023-24.

Trade Payables

Trade payables have increased by 115.48% this is mainly due to corresponding increase in credit purchases of goods and also machines during the year 2024-25. With the increase in companys operations there is more requirement of raw materials, goods, or services and capex to meet growing demand. This led to an increase in credit purchases, resulting in higher trade payables. The fall of 49.48% in trade payables during 2023-24 as compared to 2022-23 is due to payment of creditors at the year end of 2023-24.

Trade Receivables

The significant increase of 116.93% in trade receivables during F.Y 2024-25 as compared to F.Y 2023-24 and the significant increase of 209.81% in trade receivables during F.Y 2023-24 as compared to F.Y 2022-23 is attributed in terms that the Company has grown in terms of revenue year on year with more addition in credit sales and thereby there is increase debtors. The company has offered more flexible payment terms to its customers to retain customers, attract new customer, fetch more orders and thereby increase its revenue.

Inventories

The Inventories has risen by 25.59% during F.Y 2024-25 as compared to F.Y 2023-24 and the increase of 46.22% during F.Y 2023-24 as compared to F.Y 2022-23 is attributed with increase in revenue orders, purchases made during the year. With the increase in revenue, the inventories level has risen to meet the customer demands and ensure timely delivery. Further, the nature of our manufacturing industry and products we deal, we may not always rely on just-intime inventory systems, as delays in procuring raw materials could halt production.

Details of change in the Revenue, EBITDA and PAT year on year are as below:

Details of rise in percentage term for the key financial indicators are as below:

Particulars	F.Y 2024-25	F.Y 2023-24
Revenue from Operation	8,772.09	7,888.45
Percentage rise in Revenue from Operation year on year	11.20%
EBITDA	926.76	1,140.74
Percentage rise in EBITDA year on year	(18.76%)
PAT	566.65	709.61
Percentage rise in PAT year on year	(20.15%)

 

Particulars	F.Y 2023-24	F.Y 2022-23
Revenue from Operation	7,888.45	5,996.18
Percentage rise in Revenue from Operation year on year	31.56%
EBITDA	1,140.74	213.36
Percentage rise in EBITDA year on year	434.64%
PAT	709.61	89.37
Percentage rise PAT Margin year on year

Rationale for increase/ decrease in Revenue, EBITDA and PAT from F.Y 2022-23 to F.Y 2023-24 to F.Y 2024-25:

During the F.Y 2024-25, our Company has focused on export sales and expanded its revenue in international market. Our export sales increased to Rs. 2,363.48 lakhs in F.Y 2024-25 from 450.80 lakhs in F.Y 2023-24. To establish a strong presence in the export market, we adopted a strategic approach of selling our products at attractive and competitive pricing with lower profit margins, which has temporarily impacted our EBITDA and led to decrease in overall profitability in F.Y 2024-25 as compared to F.Y 2023-24. We believe, this expansion will help us set our presence and increase our customer base, and over the coming years, we can earn higher profits from such sales.

During FY 2024-25, our company faced challenges due to volatility in the prices of key raw materials, particularly brass, copper, and zinc. The rising production costs, along with competitive market pressures and fall in material price during sales dealings kept our sales prices lower, resulted in compressed profit margins and impacted our overall profitability.

During the F.Y 2023-24, our Company has scaled up its valve manufacturing components and tries to enter and capture more market share. Our sales from brass valves component increased to Rs. 2,465.28 lakhs in F.Y 2023-24 from 943.05 lakhs in F.Y 2022-23. This expansion helped us to increase our market presence in sales of valves components and also create opportunity from such items and has led to increase in our profit margins and overall profits in F.Y 2023-24 as compared to F.Y 2022-23.

During the F.Y 2023-24, our Company has grown in terms of business operations, turnover and overall profits. Our company has grown in terms of revenue for 31.56% year on year in F.Y 2023-24 from F.Y 2022-23.The growth in revenue has also contributed to grown in profits earned through economies of scale.With the bulk purchase orders to the vendors, our Company was able to source raw materials at a comparatively better rate in F.Y 2023-24 as compared to F.Y 2022-23.resulting in decrease in cost of material consumed.

Details of cost as a percentage of revenue are as below:

(Rs in lakhs)

Particulars	F.Y 2024-25	F.Y 2023-24	F.Y 2022-23
Cost of Material consumed (a)	7,928.30	6,669.55	5,563.27
Change in Inventories (b)	(506.13)	(355.64)	(108.06)
Total Cost (a+b)	7,422.17	6,313.91	5,455.21
Revenue from Operations	8,772.09	7,888.45	5,996.18
Cost as a % of Revenue	84.61%	80.04%	90.98%

F.Y 2024-25 compared with F.Y 2023-24

Components of Profit and Loss Accounts

Income

In F.Y 2024-25, our total income increased by 883.64 lakhs or 11.20%, to 8,772.09 lakhs in F.Y 2024-25 from 7,888.45 lakhs in F.Y 2023-24. The increase in the year 2024-25 is on account of addition of new customers and repetitive orders from existing customers. Revenue from Sales of products had increased to 8,365.52 lakhs in FY 2024-25 as compared to 7,334.34 lakhs in FY 2023-24 on account of additional orders executed.

Other income increased by 15.27 lakhs or 86.46 % to 32.93 lakhs in F.Y 2024-25 from 17.66 lakhs in F.Y 2023-24 as we recorded duty drawback income on exports sales in F.Y 2024-25.

Cost of Material Consumed

Cost of material consumed increased by 1,258.75 lakhs or 18.87% to 7,928.30 lakhs in F.Y 2024-25 from 6,669.55 lakhs in F.Y 2023-24 as we purchased bulk quantity of raw materials to meet the requirement of production house.

Change in Inventories of Work in Progress and Finished Goods

Change in Inventories of Work in Progress and Finished Goods were (506.13) lakhs in F.Y 2024-25 as compared to (355.64) Lakhs in F.Y 2023-24.

Employee Benefit Expenses

Employee Benefit Expenses increased by 17.16 lakhs or 8.69 % to 214.68 lakhs in F.Y 2024-25 from 197.52 lakhs in F.Y 2023-24. This increase was mainly due to increase in salaries.

Finance Costs

Finance Costs increased by 46.32 lakhs or 46.97% to 144.95 lakhs in F.Y 2024-25 from 98.63 lakhs in F.Y 2023-24. This increase was mainly due to increase in borrowing and interest cost on secured loans.

Depreciation Expenses

Depreciation expenses were 75.31 lakhs in F.Y 2024-25 as compared to 74.48 Lakhs in F.Y 2023-24.

Other Expenses

Other expenses decreased by 12.53 lakhs or 4.93 % to 241.41 lakhs in F.Y 2024-25 from 253.94 lakhs in F.Y 2023-24. The expenses majorly consisted of job work expenses, insurance expenses, export clearing etc incurred during the year.

Profit/ (Loss) before Tax

The change in brass market material price has led to decrease in our Profit before tax by 261.13 lakhs or 26.99 % to 706.50 lakhs in F.Y 2024-25 from 967.63 lakhs in F.Y 2023-24.

Tax Expenses

The Companys tax expenses had decreased by 118.17 lakhs to 139.85 lakhs in the F.Y 2024-25 from 258.02 lakhs in F.Y 2023-24 as tax liability decreases with fall in profits.

Profit/ (Loss) after Tax

After accounting for taxes at applicable rates, our Profit after Tax decreased by 142.96 lakhs or 18.81% to 566.65 lakhs in F.Y 2024-25 from 709.61 lakhs in F.Y 2023-24. The reason for change in profit is explain above. Further, our industry is affected by fluctuation in price of raw material i.e brass for all its products, which also has led to over fall in profit.

F.Y 2023-24 compared with F.Y 2022-23

Income

In F.Y 2023-24, our total income increased by 1,892.27 lakhs or 31.56%, to 7,888.45 lakhs in F.Y 2023-24 from 5,996.18 lakhs in F.Y 2023-24. The increase in the year 2023-24 is on account of addition of new customers and repetitive orders from existing customers. Revenue from Sales of products had increased to 7,334.34 lakhs in FY 2023-24 as compared to 5,996.18 lakhs in FY 2022-23 on account of additional orders executed

Other income increased by 4.63 lakhs or 35.51% to 17.66 lakhs in F.Y 2023-24 from 13.03 lakhs in F.Y 2022-23 majorly on account of subsidy income in F.Y 2023-24.

Cost of Material Consumed

Cost of material consumed increased by 1,106.28 lakhs or 19.89%, to 6,669.55 lakhs in F.Y 2023-24 from 5,563.27 lakhs in F.Y 2022-23 as we purchased bulk quantity of raw materials in line with increase in revenue orders to meet the requirement of production house.

Change in Inventories of Work in Progress and Finished Goods

Change in Inventories of Work in Progress and Finished Goods were (355.64) Lakhs in F.Y 2023-24 as compared to

(108.06) Lakhs in F.Y 2022-23

Employee Benefit Expenses

Employee Benefit Expenses increased by 23.62 lakhs or 13.59%, to 197.52 lakhs in F.Y 2023-24 from 173.90 lakhs in F.Y 2022-23. This decrease was mainly due to increase in salaries and staff welfare expenses.

Finance Costs

Finance Costs increased by 52.56 lakhs or 114.07%, to 98.63 lakhs in F.Y 2023-24 from 46.07 lakhs in F.Y 2022-23. This increase was mainly due to increase in borrowing which increased our interest cost during the year.

Depreciation Expenses

Depreciation expenses were 74.48 lakhs in F.Y 2023-24 as compared to 50.29 Lakhs in F.Y 2022-23.

Other Expenses

Other expenses increased by 87.20 lakhs or 52.29% to 253.94 lakhs in F.Y 2023-24 from 166.74 lakhs in F.Y 2022-23. The increase majorly consisted of power and fuel expenses, job work expenses, legal and professional factory repairing expenses etc incurred during the year.

Profit/ (Loss) before Tax

The significant increase in scale of operations has led to increase in our Profit before tax by 850.63 lakhs or 727.05% to 967.63 lakhs in F.Y 2023-24 from 117.00 lakhs in F.Y 2022-23.

Tax Expenses

The Companys tax expenses had increased by 230.38 lakhs to 258.02 lakhs in the F.Y 2023-24 from 27.63 lakhs in F.Y 2022-23 as tax liability increases with rise in profits earned during the year.

Profit/ (Loss) after Tax

After accounting for taxes at applicable rates, our Profit after Tax increased by 620.25 lakhs or 694.06% to 709.61 lakhs in F.Y 2023-24 from 89.36 lakhs in F.Y 2022-23 along with reasons mentioned above, factor such as increase in orders, growth in revenue by delivering the order as per schedules, economies of scale with rise in business and decrease in cost over years, continuous investment in machines for manufacturing brass products and better fund management has led to rise in profit margin.

Cash Flows

( in lakhs)

	For the year ended March 31
Particulars	2025	2024	2023
Net Cash from Operating Activities	112.92	(790.51)	(284.63)
Net Cash used Investing Activities	(416.13)	(360.35)	(257.62)
Net Cash from in Financing Activities	79.24	1,376.21	536.58
Net Increase / (Decrease) in Cash and Cash equivalents	(223.97)	225.34	(5.67)

Cash Flows from Operating Activities

Net cash generated in operating activities for the year ended March 31, 2025 was 112.92 lakhs as compared to the PBT of 706.50 lakhs for the same period. This difference is primarily due to increase in trade receivables and inventories.

Net cash used in operating activities for the year ended March 31, 2024 was 790.51 lakhs as compared to the PBT of 967.63 lakhs for the same period. This difference is primarily due to increase in other current assets, trade receivables and inventories.

Net cash used in operating activities in for the year ended March 31, 2023 was 284.63 lakhs as compared to the PBT of 117.00 lakhs for the same year. This difference is primarily due to payment of trade and other payables

Cash Flows from Investment Activities

For the year ended March 31, 2025 the net cash used in investing activities was 416.13 lakhs. This was majorly on account of addition in plant and machinery.

For the year ended March 31, 2024 the net cash used in investing activities was 360.35 lakhs. This was majorly on account of addition in plant and machinery.

For the year ended March 31, 2023, the net cash used in investing activities was 257.62 lakhs. This was majorly on account of addition in plant and machinery.

Cash Flows from Financing Activities

Net cash generated from financing activities for the year ended March 31, 2025 was 79.24 lakhs. This was on account of proceeds from short-term borrowings and finance cost incurred during the year.

Net cash generated from financing activities in for the year ended March 31, 2024 was 1,376.21 lakhs. This was majorly on account of proceeds from short-term borrowings.

Net cash generated from financing activities in for the year ended March 31, 2023 was 536.58 lakhs. This was on account of proceeds from loans and partners capital addition.

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 in future and our 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 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.

OTHER MATTERS

1. Unusual or infrequent events or transactions

Except as described in this Draft Prospectus, during the years under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

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

Other than as described in the Section titled "Financial Information" and chapter titled "Managements Discussion and Analysis of Financial Conditions and Results of Operations" on page no. 154 and 195 respectively of this Draft Prospectus respectively, to our knowledge there are no significant economic changes that materially affected or are likely to affect income from continuing Operations.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations

Other than as described in the chapter titled "Risk Factors" and "Managements Discussion and Analysis of Financial Conditions and Result of Operations" on page no. 23 and 195 respectively of this Draft Prospectus respectively, best 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.

4. Future relationship between Costs and Income

Other than as described in the chapter titled "Risk Factors" on page no. 23 of this Draft Prospectus, best to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

5. The extent to which material increases in revenue or income from operations are due to increased volume, introduction of new services or increased prices

Increase in revenues is by and large linked to increase in delivery of orders and volume of business activity thereby, completing and receiving more orders for our products.

6. Status of any publicly announced new services or business segments

Please refer to the chapter titled "Our Business" on page no. 105 of this Draft Prospectus.

7. The extent to which the business is seasonal.

Our business is not seasonal in nature.

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

For F.Y 2024-25, the revenue from our top 5 and top 10 customers constituted approximately 74.97 % and 87.59% respectively of the revenue from operations. For F.Y 2024-25, the purchases from our top 5 and top 10 suppliers constituted approximately 55.71 % and 67.69% respectively of the total purchases. For F.Y 2023-24, the revenue from our top 5 and top 10 customers constituted approximately 61.36% and 80.52% respectively of the revenue from operations. For F.Y 2023-24, the purchases from our top 5 and top 10 suppliers constituted approximately 55.30 % and 73.95 % respectively of the total purchases. For further details, please refer chapter "Our Business" on page no. 105 of this Draft Prospectus.

9. Competition Conditions

We face competition from various domestic and international players in the market. We intend to continue competing rigorously to capture more market share and manage our growth in an optimal way. We expect that our commitment to quality, past record of timely execution and transparency will provide us with an edge over our competitors. Further we believe that our competition also depends on several factors which include changing business framework, government policy, competitive price, delivery at given timeline and established relationship with suppliers, brand recognition etc. For further details, please refer chapter "Our Business" on page no. 105 of this Draft Prospectus.