Om Freight Forwarders Ltd Management Discussions

(16) The total Number of commercial vehicles (comprising trailers, payloaders, tippers, forklifts, Hydra, Cranes) owned by Company.

Key Performance Indicators and Non-GAAP Financial Measures

We use certain supplemental Non-GAAP Measures and certain operational performance indicators such as volume of cargo handled, handling TEUs annually and number of customers served to review and analyse our financial and operating performance from period to period, to evaluate our business, and for forecasting purposes. Although these Non-GAAP Measures, financial and operational performance indicators and other industry measures are not a measure of performance calculated in accordance with applicable accounting standards, our management believes that they are useful to an investor in evaluating us because they are widely used measures to evaluate a companys operating and financial performance.

Further, our management believes that when taken collectively with financial measures prepared in accordance with Ind AS, these Non-GAAP Measures, financial and operational performance indicators and other industry measures may be helpful to investors because they provide an additional tool for investors to use in evaluating our ongoing results and trends. Presentation of these Non- GAAP Measures, financial and operational performance indicators and other industry measures should not be considered in isolation from, or as a substitute for, analysis of our historical financial performance, as reported and presented in our Restated Consolidated Financial Information set out in this Red Herring Prospectus. These Non-GAAP Measures, financial and operational performance indicators and other industry measures are not defined under, or presented in accordance with, Ind AS and have limitations as analytical tools which indicate, among other things, that they do not reflect our cash expenditures or future requirements for capital expenditure or contractual commitments; changes in, or cash requirements for, our working capital needs; and the finance cost, or cash requirements. Although depreciation and amortization are non-cash charges, the assets being depreciated and amortised will often have to be replaced in the future, and these measures do not reflect any cash requirements for such replacements.

These Non-GAAP Measures, financial and operational performance indicators and other industry measures may differ from similar titled information used by other companies, who may calculate such information differently and hence their comparability with those used by us may be limited. Therefore, these Non-GAAP Measures, financial and operational performance indicators and other industry measures should not be viewed as substitutes for performance or profitability measures under Ind AS or as indicators of our operating performance, financial condition, cash flows, liquidity or profitability. Set out below are definitions of, and reconciliation to GAAP measures pertaining to, certain key Non-GAAP Measures presented in this Red Herring Prospectus, along with a brief explanation of their calculation. Also see “Risk Factors - This Red Herring Prospectus includes certain Non-GAAP Measures, financial and operational performance indicators and other industry measures related to our operations and financial performance. The Non-GAAP Measures and industry measures may vary from any standard methodology that is applicable across the Indian shipping and logistics industry and, therefore, may not be comparable with financial or industry related statistical information of similar nomenclature computed and presented by other companies.” on page 42.

EBIT, EBITDA and EBITDA Margin

“EBIT” is defined as earnings before interest, taxes and exceptional item. “EBITDA” is defined as earnings before interest, taxes, depreciation and amortisation and exceptional item less other income. “EBITDA Margin” is defined as our EBITDA during a given period as a percentage of revenue from operations during that period. The table below reconciles our profit for the particular period/year to EBIT and EBITDA, for the periods indicated, and sets out our EBITDA Margin, for the periods indicated.

(T million, unless otherwise specified)

*The EBITDA Margin has increased by 164.11% from 2.91% in Fiscal 2024 to 7.69% in Fiscal 2025. While, EBITDA Margin decreased by 58.84% from 7.07% in Fiscal 2023 to 2.91% in Fiscal 2024. The primary reason for such reduction due to increase in cost of services as a percentage of revenue from operations.

Profit After Tax and Profit After Tax Margin (%)

“Profit After Tax” means profit for the year / period and provides information regarding the overall profitability of the business. “Profit After Tax Margin” quantifies our efficiency in generating profits from our revenue and is calculated by dividing our profit for the year by our revenue from operations during the relevant year/period. The table below sets out our Profit Margin, for the periods indicated.

(Z million, unless otherwise specified)

*The PAT Margin has increased by 78.03% from 2.52% in Fiscal 2024 to 4.49% in Fiscal 2025. The primary reason for such increase is due to cost optimisation leading to reduced cost of service as a percentage of revenue from operations. The PAT margin decreased by 56.25% from 5.76% in Fiscal 2023 to 2.52% in Fiscal 2024, due to increase in cost of services as a percentage of revenue from operations.

Return on Equity (%)

Return on equity (“RoE”) is calculated as restated profit after tax for the year divided by average total equity and is expressed as a percentage. The table below sets out the reconciliation of our RoE to our profit, for the periods indicated

(Z million, unless otherwise specified)

*Our RoE increased by 90.18%, from 7.11% in Fiscal 2024 to 13.53% in Fiscal 2025, primarily driven by a significant rise in our Profit After Tax, which increased by Z116.45 million from Z103.45 million in Fiscal 2024 to Z219.90 million in Fiscal 2025. Previously, RoE had declined by 67.19%, from 21.63% in Fiscal 2023 to 7.11% in Fiscal 2024, mainly due to an increase in average total equity and a decrease in profit after tax during that period.

Return on Capital Employed (%)

Return on Capital Employed (“RoCE”) is calculated as earnings before interest and tax (EBIT) divided by Capital Employed and is expressed as a percentage. The table below sets out the reconciliation of our RoCE to our profit, for the periods indicated.

(Z million, unless otherwise specified)

* Our RoCE increased by 62.52% to 15.80% in Fiscal 2025from 9.72% in Fiscal 2024 primarily due to an increase in earnings before interest and tax. Our RoCE decreased by 25.74% to 9.72% in fiscal 2024from 35.46% in Fiscal 2023 primarily due to increase in our total capital employed as compared to EBIT.

Fixed Asset Turnover Ratio (in Times)

“Fixed Asset Turnover Ratio” is calculated by dividing the revenue from operations by the total fixed assets. It evaluates how effectively a companys assets are employed to generate sales, indicating operational efficiency. A higher ratio suggests better utilization of assets in generating revenue. The table below sets out the calculation of our Fixed Asset Turnover ratio, for the periods indicated

(Z million, unless otherwise specified)

*Our Fixed Asset Turnover Ratio declined by 11.84%, from 5.67 times in Fiscal 2024 to 5.00 times in Fiscal 2025, primarily due to a proportionally higher increase in total fixed assets compared to the increase in revenue from operations. Previously, the ratio had decreased significantly by 65.80%, from 16.58 times in Fiscal 2023 to 5.67 times in Fiscal 2024, mainly as a result of a decline in revenue from operations combined with an increase in total fixed assets.

Debt to Equity Ratio (in Times)

“Debt to Equity Ratio” evaluates our financial leverage and is calculated by dividing our total borrowings by total equity. The table below sets out the calculation of our Debt-to-Equity ratio, for the periods indicated:

(Z million, unless otherwise specified)

*Our Debt-to-Equity Ratio remained constant at 0.17 times in fiscal 2024 and in fiscal 2025. Our Debt-to-Equity Ratio increased by 142.86% to 0.17 times in fiscal 2024from 0.07 times in fiscal 2023. This increase was primarily due to increase in the total borrowing.

Debt Service Coverage Ratio

“Debt Service Coverage Ratio” evaluate our ability to meet its debt obligations (both principal and interest) with its operating income. The table below sets out the calculation of our Debt Service Coverage Ratio, for the periods indicated:

(Z million, unless otherwise specified)

*Our Debt Service Coverage Ratio increased by 265.74% from 2.22 times in Fiscal 2024 to 8.13 times in Fiscal 2025, primarily due to increase in increase in earnings available for debt service and decrease in debt service of the company. While, for Fiscal 2024, our Debt Service Coverage Ratio increased by 110.40% from (21.35) times in Fiscal 2023 to 2.22 times in Fiscal 2024, primarily due to decrease in principal payments.

Current Ratio (in Times)

“Current Ratio” is used to provide insight into whether a company can meet its immediate financial obligations using its readily available assets. A ratio above 1 suggests the company has enough assets to cover its short-term debts. The table below sets out the calculation of our Current Ratio, for the periods indicated:

(€ million, unless otherwise specified)

*Our Current Ratio decreased by 7.66%, from 1.70 times in Fiscal 2024 to 1.57 times in Fiscal 2025, primarily due to a 20.26% increase in current liabilities, which outpaced the 11.04% increase in current assets. While, the Current Ratio had improved to 1.70 times in Fiscal 2024from 1.56 times in Fiscal 2023, mainly due to a reduction in current liabilities during that period.

Significant factors affecting our results of operations and financial condition:

• Global Trade Demand: Fluctuations in global trade volumes impact freight forwarding and customs clearance.

• Customs Regulations: Changes in customs policies and regulations influence clearance times and costs.

• Supply Chain Disruptions: Disruptions due to geopolitical tensions, pandemics, or natural disasters affect logistics.

• Technological Advancements: Implementation of new technologies such as automation, AI, and IoT in logistics enhances efficiency.

• Infrastructure Development: Investments in transportation infrastructure (e.g., roads, ports, airports) improve logistics efficiency.

• E-commerce Growth: Rising demand for e-commerce drives increased logistics services, especially for last-mile deliveries.

• Fuel Price Variations: Fluctuations in fuel prices affect transportation costs, particularly in road and sea freight.

• Regulatory Compliance: Compliance with environmental and safety standards affects operations, costs, and service offerings.

• Workforce Availability and Skills: Skilled labor shortages or labor disputes can impact service delivery.

• Market Demand for Project Cargo: Increased infrastructure and heavy industries demand specialized project cargo handling.

• Customer Expectations for Speed and Efficiency: Growing demand for faster and more reliable deliveries forces operational innovation.

• Economic Growth: Economic expansion leads to higher demand for logistics services, particularly in manufacturing and trade.

• Competition: Intense competition from both local and global logistics providers can impact market share.

• Digital Transformation: Adoption of digital toll collection, tracking systems, and automated workflows impacts efficiency and costs.

• Sustainability Trends: Growing emphasis on sustainability in logistics requires investments in eco-friendly solutions and carbon reduction.

Background and Corporate Information

Om Freight Forwarders Limited (Corporate identification number: U43299MH1995PLC089620) the company was incorporated on June 16, 1995. 101 Jayant Apartments, A wing, Opp. Sahar Cargo Complex, Sahar Andheri East, Mumbai, Maharashtra, India, 400099. The Holding Company is engaged in Custom House Agency services, Fright Booking & Freight Forwarding, Transportation services, Vessel Agency Service, Warehousing Services, Other supporting Services.

The Restated Consolidated Financial Information comprise of financial statements of the holding Company and its Associate (details below), collectively referred as the ‘the Group.

Material Accounting Policies and Other Explanatory Information

1. Basis of preparation, general information and statement of compliance with Ind AS

The Restated Consolidated Financial Information of the Group comprise of the Restated Consolidated Statement of Assets and Liabilities as of March 31, 2025, March 31, 2024 and March 31, 2023, the Restated Consolidated Statement of Profit and Loss (including Other Comprehensive Income), the Restated Consolidated Statement of Cash Flow and the Restated Consolidated Statement of Changes in Equity for the years ended March 31, 2025, March 31, 2024 and March 31, 2023, and the summary statement of material accounting Policies and Explanatory Information (Collectively, the ‘Restated Financial Information). These Restated Consolidated Financial Information of the Group has been approved by the Board of Directors of the Holding Company on September 01, 2025 and have been specifically prepared by the Management of the Holding Company for the purpose of inclusion in the Red Herring Prospectus (‘DRHP) in connection with the proposed Initial Public Offering (‘IPO) of its equity shares (referred to as the ‘Offer).

The Restated Consolidated Financial Information comply in all material aspects with Indian Accounting Standards (Ind AS) notified under the Companies Act, 2013 (‘the Act), read with Companies (Indian Accounting Standards) Rules, 2015 (as amended) and other applicable guidance.

The Restated Consolidated Financial Information has been prepared by the Management of the Holding Company to comply in all material respects with the requirements of:

a) Section 26 of Part I of Chapter III of the Companies Act, 2013 (‘the Act).

b) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018, as amended (the SEBI ICDR Regulations); and

c) The Guidance Note on Reports in Company Prospectuses (Revised 2019) issued by the Institute of Chartered Accountants of India (ICAI), as amended (the Guidance Note).

These Restated Consolidated Financial Information have been compiled by the Management from:

a) Audited Financial Statements of the Group as at and for the year ended March 31, 2025 prepared in accordance with the Indian Accounting Standards (‘Ind AS) specified under Section 133 of the Act and other accounting principles generally accepted in India, except for the presentation of comparative financial information in accordance with Ind AS 34, (the “Special Purpose Consolidated Interim Financial Statements”) which have been approved by the Board of Directors at their meeting held on September 01, 2025.

b) Special Purpose Audited Consolidated Financial Statements of the Group as at and for years ended March 31, 2025, March 31, 2024 and March 31, 2023 prepared in accordance with the Indian Accounting Standards (referred to as ‘Ind AS) as prescribed under Section 133 of the Act read with Companies (Indian Accounting Standards) Rules 2015, as amended, and other accounting principles generally accepted in India, which have been approved by the Board of Directors at their meeting held on September 01, 2025.

The accounting policies have been consistently applied by the Holding Company in preparation of the Restated Consolidated Financial Information and are consistent with those adopted in the preparation of Audited Special Purpose Consolidated Interim Financial Statements as at and for the six months period ended March 31, 2025.

In accordance with the principles of Ind AS 8, Accounting Policies, Changes in Accounting Estimates and Errors and Paragraph 40A of Ind AS 1, Presentation of Financial Statements, the management has restated the comparative financial information for correction of certain material prior period errors pertaining to deferred tax liabilities on fair valuations of certain investments, offsetting of tax assets and tax liabilities, recognition of prepaid CSR expenses, related tax impact and certain balance sheet reclassifications/regroupings.

As required under Ind AS 33 - Earnings per share, the effect of such bonus issue is adjusted to the weighted average number of equity shares outstanding during the reporting periods for the purpose of computing earnings per equity share for all the period presented retrospectively. As a result, the effect of such bonus issue has been considered in this Restated Consolidated Financial Information for the purpose of calculating earnings per equity share (Refer Note 29 for further details).

These Restated Consolidated Financial Information do not reflect the effects of the events that occurred subsequent to the respective dates of board meetings held for approval of Consolidated Interim Financial Statements as at and for years ended March 31, 2025, March 31, 2024 and March 31, 2023, except for the bonus issue as mentioned above.

The Restated Consolidated Financial Information have been prepared so as to contain information/disclosures and incorporating adjustments set out below in accordance with the SEBI ICDR Regulations.

a) Adjustments to the profits or losses of the earlier periods and of the period in which the change in the accounting policy has taken place is recomputed to reflect what the profits or losses of those periods would have been if a uniform accounting policy was followed in each of these periods, if any;

a) Adjustments for reclassification of the corresponding items of income, expenses, assets, liabilities and cash flows, in order to bring them in line with the groupings as per the Special Purpose Consolidated Financial Statements as at and for the year ended March 31, 2025, as per the requirements of the SEBI ICDR Regulations, if any; and,

b) The resultant impact of tax due to the aforesaid adjustments, if any.

The Restated Consolidated Financial Information are presented in ? and all values are stated as ? million, except when otherwise indicated.

A. Basis of measurement

The Restated Consolidated Financial Information have been prepared on going concern basis in accordance with accounting principles generally accepted in India. Further, the Restated Consolidated Financial Information have been prepared on historical cost basis except for certain financial assets and financial liabilities which are measured at fair value.

B. Significant accounting judgements, estimates and assumptions

The preparation of the companys financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, the accompanying disclosures, and the disclosure of contingent liabilities. Uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

C. Critical accounting estimates and assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the company. Such changes are reflected in the assumptions when they occur.

i) Taxes

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the

amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

ii) Defined benefit obligation (DBO)

The cost of the defined benefit gratuity plan, other post-employment benefits and the present value of the gratuity obligation are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate; future salary increases and mortality rates. Due to the complexities involved in the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. All assumptions are reviewed at each reporting date.

iii) Contingent liabilities

Contingent liabilities may arise from the ordinary course of business in relation to claims against the Company, including legal, contractor and other claims. By their nature, contingencies will be resolved only when one or more uncertain future events occur or fail to occur. The assessment of the existence, and potential quantum, of contingencies inherently involves the exercise of significant judgement and the use of estimates regarding the outcome of future events.

iv) Property Plant and Equipment

Useful lives and residual values are determined by the management at the time the asset is acquired and reviewed at each financial year end. The lives are based on historical experience with similar assets as well as anticipation of future events, which may impact their life, such as changes in technical or commercial obsolescence arising from changes or improvements in production or from a change in market demand of the product or service output of the asset.

v) Impairment of non-financial assets

In assessing impairment, management estimates the recoverable amount of each asset or cash-generating unit based on expected future cash flows and uses an interest rate to discount them. Estimation uncertainty relates to assumptions about future operating results and the determination of a suitable discount rate.

vi) Recoverability of trade receivable

Judgements are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, realised credit loss in previous years, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.

vii) Lease

Company as a lessor

Lease income from operating leases where the Group is a lessor is recognised in income on a straight-line basis over the lease term unless the receipts are structured to increase in line with expected general inflation to compensate for the expected inflationary cost increases. The respective leased assets are included in the balance sheet based on their nature.

Company as a lessee

The Ministry of Corporate Affairs (“MCA”) notified the new Ind AS 116 "Leases" with the date of initial application being April 1, 2019.

The Group recognises a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the site on which it is located, less any lease incentives received. Certain lease arrangements include the option to extend or terminate the lease before the end of the lease term.

The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the rights of use of assets are periodically reduced by impairment losses, if any, and adjusted for certain re-measurements of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using incremental borrowing rate. For leases with reasonably similar characteristics, the Group, on a lease-by-lease basis, may adopt the incremental borrowing rate specific to the lease or the incremental borrowing rate for the portfolio as a whole. Lease payments included in the measurement of the lease liability comprise fixed payments, including in-substance fixed payments, amounts expected to be payable under a residual value guarantee and the exercise price under a purchase option that the Group is reasonably certain to exercise, lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option.

The lease liability is subsequently remeasured at amortised cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate if there is a change in the Groups estimate of the amount expected to be payable under a residual value guarantee, or if Group changes its assessment of whether it will exercise a purchase, extension or termination option.

When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Lease liability and the right of use asset will be separately presented in the balance sheet and lease payments will be classified as financing activities. The Group has elected not to recognise right-of-use assets and lease liabilities for short term leases that have a lease term of less than or equal to 12 months and assets with no purchase option and assets with low value leases. The Group recognises the lease payments associated with these leases as an expense in a consolidated statement of profit and loss over the lease term. The related cash flows are classified as operating activities.

The Group has made use of the following practical expedients available in its transition to Ind AS 116 -

a) The Group has applied a single discount rate to a portfolio of leases of similar assets in similar economic environment. Consequently, the Group has recorded its lease liability using the present value of remaining lease payments, discounted using the incremental borrowing rate at the date of initial application and the right-of-use asset at its carrying amount as if the standard had been applied since the commencement date of the lease but discounted using the incremental borrowing rate at the date of initial application.

b) The Group excluded the initial direct costs from measurement of the RoU asset

c) The Group does not recognize RoU assets and lease liabilities for leases with less than twelve months of lease term and low-value assets on the date of initial application.

viii)Fair value measurement

Management uses valuation techniques to determine the fair value of financial instruments (where active market quotes are not available) and non-financial assets. This involves developing estimates and assumptions consistent with how market participants would price the instrument. For unquoted investments, which lack an active market, fair value is determined based on carrying value, and these investments are classified as Level 3 in accordance with Ind AS. Management bases its assumptions on observable data as far as possible; however, when such data is not available, the best information available is used. Estimated fair values may differ from actual prices that would be achieved in an arms length transaction at the reporting date.

Significant Accounting Policies

2.1 Current versus non-current classification

The Group presents assets and liabilities in the balance sheet based on current/ non-current classification. An asset is treated as current when it is: ^•