Palred Technologies Ltd Management Discussions.

The Company has three subsidiaries, Palred Electronics Private limited {(formerly known as Palred Online Technologies Private Limited} (PEP), Palred Technology Services Private Limited (PTS) and Palred Retail Private limited (PRP). Palred together with its subsidiaries, is hereinafter referred to as "the Group." The Company is a Public Limited Company incorporated and domiciled in India having its registered office in Hyderabad,

Telangana. The Company is listed on Bombay Stock Exchange of India Limited and National Stock Exchange of India Limited.

1.SUBSIDIARIES:

Palred Electronics Private Limited (PEP)

(Formerly known as Palred Online Technologies Private Limited (POT) Palred Electronics Private Limited (PEP) owns & operates an electronics / mobile accessories brand called pTron. Living by the slogan of #BeLoudBeProud - pTron is a lifestyle electronics & audio accessories brand offering high-quality audio & technology products that enhances life. pTron aims to make technology simple, affordable and accessible to all with gadgets that are easy-to-use yet futuristic & aesthetically modern, at pocket-friendly prices. Over the last couple of years the name pTron has become synonymous to quality mobile accessories backed by warranty at super affordable prices. We have extended our portfolio to include a wide range of audio products such as wireless neckbands, wireless earphones, wired & wireless headsets, wired earphones, and more. pTrons strength lies in its wide range of products whose quality is backed by warranty but offers them at competitive prices in the branded accessories category for the mid-market. pTron hassold 2.8 million units in FY 21 and targets to sell 5 million units in FY 22. It is one of the largest selling brands on Amazon.

We are an Indian company and an Indian brand and proud about it. We are confident that pTron as an Indian brand can be built successfully in India and in future as a global brand. We have our own office in China and we have built the capabilities to design, create a BOM (bill of materials/SKD kits), assemble them through contract manufacturers in China and import them currently. Over the last 3 years, PEP has gained in-depth knowledge of this business and we have already transferred some value addition to India such as Packing, testing and repair/refurbishing. The

Company has 35,000 leased Warehouse / Fulfilment Centre in Kurnool. The facility employees 200+ direct & contract employees. pTron commissioned its manufacturing facility in the same premises in August 2020. With rigorous R&D pTron manufactured Indias First True Wireless Earbuds from the India plant along with Power banks. pTron is committed to delight its customers with amazing, affordable, and well-built products that disrupts the fast paced lifestyle and audio accessories segment. We recognize the importance of strong QC & QA capabilities to continue meeting customer and stakeholders demand, leading to the establishment of a word-class brand. There is a strong emphasis on quality & assurance across all levels of design, manufacturing and assembly in terms of production test development, meticulous failure analysis, reliability testing, optimized final assembly, test, and pack processes from firmware programming and board test through customization, labeling, and packaging. pTron aims to add more products to the Made in India portfolio

& reduce dependency on its Chinese counterpart without compromising on the quality. The team is constantly working on adding multiple new products to the portfolio inv the accessories & the audio category. For constant development and strengthening of our facilities, we are rigorously adding more machinery to the Kurnool facility and upgrading the skill set of the employees to be able to provide state-of-the-art products to our consumers. pTron is positioned in mid-market segment which is characterized by low-price (Rs.500 to Rs.1200 depending on the product category), good quality, high volume & high margin products with warranty. It has more than 200 SKUs as of now and plan to add more products in the following categories.

• Expanding Audio category and introducing new technology

• Introducing new products with Active noise reduction features like ANC, ENC, CVC, DSP and other noise reduction technologies will focus on promoting the noise reduction function of headphones.

• Gaming Audio Products - Low Latency & Clear Communication

• Introducing IOT app for - Personalized equalizer, Play music and other information. Can be merged with Fitness IOT, will also be used in promoting new launches

• Expanding Mobile power accessories, Power banks, QC chargers, Car chargers, Cables, Qi Chargers

• Introducing affordable Smart watches

• PC & Camera accessories

Palred Technology Services Private Limited (PTS

PTS offers a bouquet of Products through its brand "Xmate" that is exclusively available on Amazon.in. Xmate Sells products like Bluetooth headsets, Bluetooth speakers, wired headsets, chargers and cables, Computer Accessories, Cameras & Camera Accessories etc. The brand faced many challenges during the last year and this year because of high advertisement costs and competition from other big brands. The Company was not able to achieve desired growth and it continues to make losses. Hence, the Company has decided to exit "Xmate" brand business.

Palred Retail Private Limited (PRP)

Palred Retail Private Limited owns ecommerce website, ptron. in and www.LatestOne.com that specialize in selling of tech and mobile accessories such as Bluetooth speakers and headsets, cables, power banks, headsets, smart watches, fashion accessories etc.

FINANCIAL PERFORMANCE:

A. Sources of Funds

1. Equity Share Capital

As on 31st March 2021, the Company has only one class of issued shares – Equity Shares of Par value of Rs. 10/- per share. The Authorised Capital of the Company is Rs. 35,00,00,000/- (Thirty Five Crores) divided into (a) 2,80,38,800 (two Crore Eighty Lacs Thirty Eight Thousand Eight Hundred Only) shares of Rs. 10/- (Rupees Five Only) each and (b) 6,96,120 (Six Lakhs Ninety Six Thousand One Hundred and Twenty) Preference Shares of Rs.100/- each. The Paid up Equity Share Capital of the Company as on date of this report is Rs. 9,73,25,660 (Nine Crores Seventy

Three Lakhs Twenty Five Thousand Six Hundred and Sixty) divided into 97,32,566 Equity Share of Rs. 10/- per share.

2. Other Equity:

2.1. Securities Premium Account:

The balance in Securities Premium Account as on March 31, 2021 was Rs. 6720.30 Lakhs as compared to the balance in Securities Premium Account as on March 31, 2020 was Rs. 6720.30 Lakhs.

2.2. Capital reserve:

On a Standalone and Consolidated Basis, the Balance as at March 31, 2021, amounted to Rs. 142.80 Lakhs which was the same as previous year.

2.3. General Reserve:

On a Standalone and Consolidated Basis, the balance as at March 31, 2021 stood at Rs. 1325.24 Lakhs which is the same as previous year.

2.4. Retained Earnings:

On a Standalone Basis, the balance as at March 31, 2021 stood at Rs. (6567.18) as compared to Rs. (6133.33) Lakhs in previous year, and Consolidated Basis, the balance as at March 31, 2021 stood at Rs. (6229.26)as compared to Rs. (6462.45) as Lakhs in previous year.

3. Liabilities:

3.1. Non-current Liabilities:

Standalone

Consolidated

Particulars 2021 2020 2021 2020
Other Financial liabilities 0 0 3000000 2000000
Employee ben- efit obligations 1348918 1276257 4143963 2996731
Total 1348918 1276257 7143963 4996731

The Company provides for gratuity for employees in India as per the Payment of the Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary per month computed proportionally for 15 days salary multiplied for the number of the years of service. The gratuity plan is unfunded.

3.2. Current Liabilities:

Standalone

Consolidated

Particulars 2021 2020 2021 2020
Financial Liabilities
Borrowings 0 0 27,86,71,391 12,09,41,732
Lease Liabil- ities 0 8,06,502 2,23,98,523 1,93,38,874
Trade paya- bles 0 0 1,80,84,270 2,74,55,516
Other Finan- cial liabilities 66,30,326 65,93,680 2,91,51,863 2,11,46,238
Other Cur- rent liabilities 1,95,977 2,26,152 17,45,105 22,12,788
Employee benefit obli- gations 33,297 26,943 85,401 3,31,346
Total Current Liabilities 68,59,600 76,53,277 35,01,36,554 19,14,26,499

On standalone basis, the Company has reduced its total current liabilities to Rs. 68.59 Lakhs stood as on 31st March, 2020 as compared to Rs. 76.53 Lakhs in the previous year.

On consolidated basis, the Company has increased its total current liabilities to Rs. 1720.87 Lakhs stood as on 31st March, 2021 as compared to Rs. 3277.38 Lakhs in the previous year.

B. Application of Funds: 1. Non- Current Assets:

Standalone

Consolidated

Particulars 2021 2020 2021 2020
Property plant & Equipment 7,14,653 9,55,913 36,61,831 41,71,485
Right of use of Assets 0 7,42,603 2,13,19,843 1,79,28,076
Goodwill (Consolida- tion) 0 0 0 0
Intangible Assets Financial Assets 0 0 6,26,931 7,42,410
Investments 8,05,62,462 1280,76,900 0 0
Deposits 0 0 34,32,377 28,75,827
Other non- current assets 2,55,44,312 242,38,762 3,42,57,881 313,87,066
Total Non-Current Assets 1068,21,428 1540,14,178 6,32,98,863 5,71,04,864

Investments in Subsidiaries/ associates

Palred Electronics Private Limited (formerly known as Palred Online Technologies Private Limited):

During the period under report, the Company has not invested in Palred Electronics Private Limited.

The Company holds 78.17% stake in the said subsidiary.

Palred Technology Services Private Limited:

During the period under report, the Company has not invested in Palred Technology Services Private Limited.

The Company holds 100% stake in the said subsidiary.

Palred Retail Private Limited:

During the period under report, the Company has not invested in Palred Retail Private Limited.

The Company holds 83.71% stake in the said subsidiary.

2. Current Investments, Cash and Cash Equivalents:

On a standalone basis, balance in current investments is Rs. 22.95 Lakhs as March 31, 2021 compared to Rs. 28.67 as at March 31, 2020. The cash and bank balance stand at Rs. 1451.63 Lakhs as at March 31, 2021 as compared to Rs. 1456.02 Lakhs as at March 31, 2020.

On a consolidated basis, balance in current investments is Rs. 22.95 Lakhs as March 31, 2021 compared to 28.67 Lakhs as at March 31, 2020. The cash and bank balance stand at Rs. 1825.50 Lakhs as at March 31, 2021 as compared to Rs. 1852.55 Lakhs as at March 31, 2020.

III. RESULTS OF OUR OPERATIONS: 1. Income:

On a standalone basis, the Company has earned Rs. 151.01 Lakhs as Income from Operations & Rs. 81.17 Lakhs as Other Income from Dividend and interest from non-trade investments. On a Consolidated basis, the Company has earned revenues of Rs. 11700.22 Lakhs from operations and Rs. 177.94 Lakhs from other income sources.

As on date of this report, the Company has invested Rs.

453.00 Lakhs in Palred Electronics Private Limited (formerly known as Palred Online Technologies Private Limited) and Rs. 304.00 Lakhs in Palred Retail Private Limited. Investment in Palred Technology Services Private Limited has Net carrying Value Rs. 805.62 Lakhs as on date. Palred Electronics Private Limited (formerly known as Palred Online Technologies Private Limited) has earned a total revenue of Rs. 10602.13 Lakhs in FY 2020-21 as compared to Rs. 3496.15 Lakhs in FY 2019-20 resulting in 203.25% increase in net revenue year on year basis.

Palred Technology Services Private Limited has earned a total Revenue of Rs. 568.99 Lakhs in FY 2020-2021 as compared to Rs. 677.37 Lakhs in FY 2019-2020 resulting in 16% reduction in net revenue year on year basis.

Palred Retail Private Limited has earned a total Revenue of Rs. 1413.56 Lakhs in F.Y. 2020-21 as compared to Rs. 914.78 Lakhs in FY 2019-2020 resulting in to growth of 55.50% in Net Revenue. Thus on a consolidated basis, the total revenue of the Company is Rs. 11878.17 Lakhs compared to Rs. 4712.26 Lakhs in previous year.

2. Expenditure:

On a Standalone Basis, the expenditure incurred towards employee benefit expenses is Rs. 93.41 Lakhs as against Rs.

108.99 Lakhs of previous year and Other Expenses are Rs. 87.70 Lakhs as against Rs. 84.24 Lakhs of previous year. On a Consolidated Basis, the Total Expenditure is Rs. 11536.12 Lakhs as against Rs. 5172.96 Lakhs of previous year.

3. Operating Profit:

On a standalone basis, the company has earned operating loss of Rs.433.84 Lakhs as against loss of Rs. 8.83 lakhs profit in previous year.

On a Consolidated Basis, the company has incurred operating profit of Rs. 342.04 Lakhs as compared to loss of Rs. 460.70

Lakhs of previous Year.

4. Depreciation and Amortisation:

On a standalone basis, we provided Rs. 9.46 Lakhs and Rs. 11.31 Lakhs for the years ended March 31, 2021 and March 31, 2020 respectively.

On a consolidated basis, we provided Rs. 71.36 Lakhs and Rs. 75.66 Lakhs for the years ended March 31, 2021 and March 31, 2020 respectively.

5. Net Profit/Loss after tax:

On a standalone basis, the company has earned net loss of Rs. 433.63 Lakhs as against Loss of 11.77 lakhs in previous year.

On a Consolidated Basis, the company has incurred net profit of Rs. 340.12 Lakhs as compared to loss of Rs. 481.77 Lakhs of previous Year.

6. Liquidity:

On a standalone basis, the company has operations in F.Y. 2020-21. The Company has utilized Rs. 85.90 Lakhs from investing activities during 2020-2021 compared to generation of Rs. 135.86 Lakhs during 2019-2020. The Company has also used Rs.89.98 Lakhs from operating activities during 2020-2021 compared to Rs. 139.22 Lakhs during 2019-2020.

On a Consolidated Basis, the net cash used in operations is

Rs. (1250.99) Lakhs as against (835.72) Lakhs net cash used in previous Year.

7. Related Party Transactions:

These have been discussed in detail in notes to the standalone Financial Statements in Annual report.

8. Events occurring after Balance Sheet Date- NIL

IV. STRATERGY, OUTLOOK, OPPORTUNITIES AND THREATS: A. Objective and Strategy:

Palred Group aims to become a market leader in various products of Consumer Electronics business in India.The Company aims to achieve this unique position by combination of following factors:

i. Creation of Innovative Products that are geared towards customer needs and that can be produced economically

ii. Focus on enhancing customer benefit in terms of products and services as well as on close consumer contact

iii. Proactive identification of future needs and technical applications

iv. High value addition through combination of technology, systems & processes

v. Simplification of a complex business involving continuously changing products and thousands of stock keeping units (SKU)/items.

vi. End-to-end integration and implementation of Systems, Processes and Automation for efficient and scalable operations.

vii. High quality Products backed by warranty

viii. Steady and continuous development of brand (PTron)

b. Outlook, Risks and Concerns:

The Consumer Products Industry has been experiencing very intense competition for many years and we are operating in a market that is changing very quickly.

B. Intellectual Property Infringement:

As product development depends on the intellectual property created by its employees, we need to ensure that the same do not infringe any other proprietary technology rights. We have intellectual property rights to take care of trade secrets, copyright and trademark laws and confidentiality agreements for our employees, third parties offering only limited protection. The steps taken by us as well as laws of most advanced countries do not offer effective protection of intellectual property rights. Third parties could claim infringement of property rights against the Company or also assert the same against our customers, which would require protracted defence and costly litigations on behalf of our customers.

C. Risks and risk management and their implementation:

The systematic analysis, evaluation and management of potential risks are decentralized within the Palred Group. Every organizational unit is responsible for detailing its own risk register, which it must then use to establish countermeasures for managing risks. The purpose is to identify and avert potential damage to the company at an early stage. All registers are centrally coordinated and aggregated so the Management Team has an overview at all times of the most significant the measures being taken to manage them. Within the scope of independent audits, the Audit Department monitors the individual corporate entities with regard to early risk identification and compliance management by performing random inspections. The Management Team is informed directly and immediately of the findings.

The risks of procuring certain parts and components, product compliance and IT security are among the most important issues for which the Palred Group is taking countermeasures. IT security risks are addressed through technical and organizational measures. Effective customer management minimize the impact of potential defaults on receivables.

Financial Performance

Prudent Financial Planning, effective resource allocation and ensured that tight the cash flows of the

Company remain healthy. The ability of the Company to raise credit remains unimpaired.

V. INTERNAL CONTROL SYSTEMS AND ADEQUACY:

The Company has adopted strong and automated internal business controls and a process framework that is not only adequate for its current size of operations but can effectively support increases in growth and complexity across our business operations. A well established and empowered system of internal financial audits and automated prudent financial control, flexibility in terms of process changes to enable course correction.

Internal auditors submits reports and updates to the audit committee of the Board, which conducts frequent reviews and provides direction and operational guidance on new processes to be implemented to further enhance efficiencies within the

Company.

The Company is in the process of implementing Enterprise Resource Planning along with various business controls which would have automatic internal control systems to identify errors and also provide better MIS.

VI. HUMAN RESOURCES: A. Objective and Strategy:

Capability building, Talent Management and Employee Engagement remain the key focus of your companys Human Resource Strategy. Your Company has continued to build on its capabilities in getting the right talent to support the different technology areas. They are backed by robust management training schemes, hiring of key management personnel, and sales training.

Human Resources are the most valuable asset for the Company and Palred Technologies continues to seek, retain and enrich the best available talent. The Human Resource plays an important role in the growth and success of the Organization. Your Company has maintained cordial and harmonious relations with all the employees.

The Company provides an environment which encourages initiative, innovative thinking and rewards performance. The Company ensures training and development of its personnel through succession planning, job rotation, on-the-job training and various trainings and workshops.

B. Culture, Values and Leadership

Your Company has a written code of conduct and ethics to make employees aware of ethical requirements and Whistle Blower Policy for reporting violations, if any.

Your Company has internal structured succession planning to take care of loss of any member of senior management or other key management personnel. Since inception your Company is committed to developing next generation leaders and conduct personality development and development work of skills acquired by them over the years. Your Company encourages an "Equal Employment Opportunity Policy" which discourages discrimination for employment on account of sex, race, colour, religion, physical challenge and so on.

As the Company operates in a niche industry that requires high techno functional expertise. The employees constantly need to enhance their technical and functional knowledge and so regular training sessions on specific technical skills and domain knowledge were conducted.

VII. CAUTIONARY STATEMENT:

Statements in the "Management Discussion and Analysis" describing the companys objectives, estimates, expectations or projections may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations; include Government regulations, patent laws, tax regimes, economic developments within India and countries in which the Company conducts business, litigation and otherprocedures ensures allied factors.

VIII.DETAILS OF SIGNIFICANT CHANGES (I.E., CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN THE KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREOF:

Standalone basis

Particulars 2020-21 2019-20 Remarks
Debtors Turnover Ratio 9.13 3 The Company has increased its revenue due to income from operations as compared to F.Y. 2019-20.
Inventory Turnover Ratio 0 0
Interest Cov- erage Ratio 0 0
Current Ratio 23.00 21.00 The Liabilities have been decreased due to de-recog- nition of lease liability lead to increase in Current ratio.
Debt Equity Ratio 0 0.00
Operating Profit Margin Ratio 0 0
Net Profit Margin Ratio (2.00) (0.04) The Company has increased its revenue due to income from operations as com- pared to F.Y. 2018-19.
Debtors Turnover Ratio 4 7.30 Major business in B2B than B2C
Inventory Turnover Ratio 3 3.67 No significant change
Interest Cov- erage Ratio 2.25 (3.88) Huge difference due to high usage of Overdrafts in FY 2020-21.
Current Ratio 2 2.21 The Liabilities have in- creased due to lease liabili- ties due to which the Current ratio for the F.Y. 2018-19 has decreased.
Debt Equity Ratio 1 0.45 OD is more
Operating Profit Margin Ratio 0.30 0.35 Higher trade discount in 2020-21
Net Profit Margin Ratio 0.03 (0.09) Major business in B2B than B2C

Return on Net Worth:

Standalone basis

Consolidated Basis

Particulars 2020-21 2019-20 2020-21 2019-20
Return on Net (0.17) 0.00 0.12 (0.16)
Worth

There is an increase in Return in Return on Net Worth ratio as the loss has been reduced in F.Y.2020-21.

IX. DISCLOSURE OF ACCOUNTING TREATMENT:

During the preparation of Financial Statement of F.Y. 2020-21the treatment as prescribed in an Accounting Standard has been followed by the Company. There is no discrepancy in Accounting

Treatment as followed by the Company in current financial year as compared to previous financial year.

Certificate of Non-Disqualification of Directors

[Pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015]

To,

The Board of Directors Palred Technologies Limited H. No. 8-2-703/2/b, Plot.No.2 Road.No.12, Banjara Hills, Hyderabad, Telangana-500034

I have examined the relevant registers, records, forms, returns and disclosures received from Palred Technologies Limited having

CIN L72200TG1999PLC033131 and having registered office at H.No. 8-2-703/2/b, plot.no.2 road.no.12, banjara hills Hyderabad,

Telangana-500034(hereinafter referred to as ‘the Company), produced before me by the Company for the purpose of issuing this

Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10 (i) of the Securities Exchange Board of

India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In my opinion and to the best of my information and according to the verifications (including Directors Identification status at the portal www.mca.gov.in) as considered necessary and explanations furnished to me by the Company & its officers, I hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on March 31, 2021 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange

Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority.

S. No DIN No Name of the Director Designation
1 00055870 Mrs. PalemSupriya Reddy Chairperson& Managing Director
2 00001401 Mr.PalemSrikar Reddy Non-Executive Director
3 07072774 Mrs.Stuthi Reddy Non-Executive Director
4 07010804 Mr. M. V. L.N. MURTHY Non-Executive Director
5 03089889 Mr. S. Vijaya Saradhi Independent Director
6 07185499 Mr. Atul Sharma Independent Director
7 07274527 Mrs. Richa Patnaik Independent Director
8 08792778 Ms. Aakanksha Independent Director

Ensuring the eligibility of for the appointment/continuity of every Director on the Board is the responsibility of themanagement of the

Company. Our responsibility is to express an opinion on these based on our verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the

Company.

For S.S. Reddy & Associates
Sd/-
Place: Hyderabad S. Sarveswar Reddy
Date: 14.08.2021 Practicing Company Secretary
UDIN: A012611C000821914 C.P.No.7478