PAN HR Solution Ltd Management Discussions

OF OPERATIONS

You should read the following discussion and analysis of financial condition and results of operations together with our financial statements included in this Draft Red Herring 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 GAAP, the 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.

BUSINESS OVERVIEW

Our Company operates on a B2B model having PAN India presence providing human resource, staffing services and compliance solutions to customers in E-commerce, logistics, manufacturing, information technology and other sectors which enables them in streamlining the hiring process, reduces administrative burden, and ensuring suitable candidates. We offer range of services i.e. Manpower services, Payroll services, Facility management, staffing solutions, Compliance Audit and E-commerce Logistics which enables us to design and deliver a range of customized solutions suited to the specific needs of our customers, which strengthens our customer acquisition and retention capabilities. We currently operate under a "Collect and Pay" Model, wherein the consideration is first received from the Customer/Principal Employer and subsequently disbursed to the respective personnel or beneficiaries. As on August 31, 2025, we have 9,393 personnel deployed at various locations of our customers.

Till date, we have served to approximately 25 customers, who are well-established and renowned companies having presence in national and regional operations. We have been awarded from our clients for providing the services. For further details on awards see "Our History and Certain Corporate Matters" on page 117.

Our Key Performance Indicators for the last three Fiscals are as follows:

( In Lakhs except ratios)

Key Performance Indicator	Financial Year	Financial Year	Financial Year
	2025	2024	2023
Revenue from Operations	28,318.88	28,107.99	25,610.28
EBITDA	686.23	518.81	536.59
EBITDA Margin (%)	2.42	1.84	2.09
PAT	494.61	420.94	384.23
PAT Margin (%)	1.75	1.50	1.50
ROE (%)	30.76	32.25	45.36
ROCE (%)	38.09	40.46	42.67
Trade Receivable days	17	18	10
Trade Payable days	22	26	16

Explanation for KPI metrics

KPI	Description
Revenue from Operations	Revenue from operations represents the total turnover of the business as well as provides information regarding the year over year growth of our Company
EBITDA	EBITDA provides information regarding the operational efficiency of the business and is considered by the management as an important element to monitor business growth in absolute term irrespective of the sales mix.
EBITDA Margin (%)	EBITDA Margin is an indicator of the operational profitability and financial performance of our business.
PAT	Profit after tax provides information regarding the overall profitability of the business.
PAT Margin (%)	PAT Margin is an indicator of the overall profitability and financial performance of our business in reference to the turnover.
ROE (%)	RoE provides how efficiently our Company generates profits from shareholders funds
ROCE (%)	RoCE provides how efficiently our Company generates earnings from the capital employed in the business.
Trade Receivable Days	Trade receivable days provides the average number of days to collect payments from customers
Trade Payable Days	Trade payable days provides the average number of days to collect payments from customers

FACTORS AFFECTING OUR RESULT OF OPERATIONS

Except as otherwise stated in this Draft Red Herring Prospectus, the following important factors could cause actual results to differ materially from the expectations include, among others:

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

? We may not be able to sustain our historical growth rates, and our historical performance may not be indicative of our future growth or financial results.

? Any change in government policies resulting in increase in taxes payable by us.

? We have entered into related party transactions in the past and may continue to do so in the future.

? Our ability to retain our Key Management Personnel and other employees.

? Changes in laws and regulations that apply to the industries in which we operate.

? Companys ability to successfully implement its growth strategy and expansion plans.

? Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate.

? Conflicts of interest with the promoter group and other related parties.

? We may face significant competition in our business. An inability to compete effectively may lead to loss of business or reduced operating margins.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to the chapter titled "Restated Financial Statements" beginning on page 138 of this Draft Red Herring Prospectus.

RESULTS OF OUR OPERATIONS:

( . In Lakhs)

Particulars	For the year ended March 31, 2025	% of Total Income	For the year ended March 31, 2024	% of Total Income	For the year ended March 31, 2023	% of Total Income
Revenue from Operations	28,318.88	99.84	28,107.99	99.70	25,610.28	99.90
Other Income	44.18	0.16	83.91	0.30	25.26	0.10
Total Income	28,363.06	100.00	28,191.90	100.00	25,635.54	100.00
Expenditure
Costs of Services rendered	26,635.56	93.91	26,509.86	94.03	24,203.23	94.41
Employee Benefit Expenses	789.95	2.79	853.41	3.03	679.85	2.65
Finance Costs	6.03	0.02	2.92	0.01	3.42	0.01
Depreciation and Amortization Expenses	38.88	0.14	35.96	0.13	21.39	0.08
Other Expenses	207.14	0.73	225.91	0.80	190.61	0.74
Total expenses	27,677.56	97.58	27,628.06	98.00	25,098.50	97.91
Restated profit/(Loss) before Exceptional and Extraordinary Item and Tax	685.50	2.42	563.84	2.00	537.04	2.09
Exceptional Item	-	-	-	-	-	-
Restated profit/(Loss) before Extraordinary Item and Tax	685.50	2.42	563.84	2.00	537.04	2.09
Extraordinary Item	-	-	-	-	-	-
Restated profit/(Loss) before Tax	685.50	2.42	563.84	2.00	537.04	2.09
Tax Expenses
- Current Tax	188.12	0.66	148.52	0.53	153.42	0.60
- Deferred Tax	2.77	0.01	(5.62)	(0.02)	(0.61)	(0.00)
Total Tax Expense	190.89	0.67	142.90	0.51	152.81	0.60
Restated profit/(Loss) after Tax	494.61	1.74	420.94	1.49	384.23	1.50

KEY COMPONENTS OF COMPANYS PROFIT AND LOSS STATEMENT

? Revenue from operations: Our revenue of operation comprises of revenue from sale of services.

? Other income: Other income comprises of Interest from Fixed Deposits, Interest on Income Tax.

? Expenses: Our expenses comprise of Cost of Services rendered, Employee Benefit Expenses, Finance Costs, Depreciation and Amortization Expenses and other expenses.

? Costs of services rendered: Costs of services rendered comprises of employee salary expenses, Staff Welfare Expenses, Insurance, Professional Tax & License Fees, Contribution to provident and other funds.

? Employee benefits expense: The employees benefit expenses included Salaries and wages, Staff welfare expenses, Directors Remuneration, Gratuity Expense, Provident Fund and Employee state insurance corporation.

? Finance cost: The finance cost includes Interest Expenses which comprises of Interest on Loan from Banks & Financial Institutions and interest on others.

? Depreciation and amortization expense: Depreciation includes Depreciation and Amortization Expenses.

? Other Expenses: Other Expenses mainly includes include Bad debts written off, Recruitment and verification expense, GST expense, Power and fuel, Repair & Maintenance, Business promotion Expenses, Travelling & conveyance Expenses, Miscellaneous expenses etc. FINANCIAL YEAR 2025 COMPARED WITH FINANCIAL YEAR 2024

Total Income

Total income for the financial year 2024-25 was 28,363.06 Lakhs whereas in financial year 2023-24 it was 28,191.90 Lakhs representing an increase of 0.61%. The reason of such increase was due to increase in the turnover from the sale of services and other income namely interest from fixed deposit and income tax.

Revenue from Operations

During the financial year 2024-25 the net revenue from operation of our Company increased to 28,318.88 Lakhs as against 28,107.99 Lakhs in the financial year 2023-24 representing an increase of 0.75% which was due to increase in the sale of services.

Other Income

During the financial year 2024-25 the other income of our Company decreased to 44.18 Lakhs as against 83.91 lakhs in the financial year 2023-24 representing a decrease of 47.34% which was mainly due to interest from fixed deposit and on income tax

Cost of services rendered

During the financial year 2024-25 the costs of services rendered increased to 26,635.56 lakhs as against 26,509.86 lakhs in the financial year 2023-24 representing an increase of 0.47%.

Employee Benefit Expenses

During the financial year 2024-25 the employee benefit expenses of our Company was 789.95 Lakhs and 853.41 lakhs in the financial year 2023-24 representing a decrease of 7.44% due to salaries and wages and contribution to provident fund and other funds.

Finance Costs

During the financial year 2024-25 the finance cost of our Company increased to 6.03 Lakhs as against 2.92 Lakhs in the financial year 2023-24 representing increase of 106.38% which was due to increase in interest from loans from bank and financial institution and others.

Depreciation and Amortization Expenses

During the financial year 2024-25 the depreciation of our company was 38.88 Lakhs as against 35.96 Lakhs during the financial year 2023-24 representing increase of 8.13% primarily due to increase in depreciation and amortization expenses.

Other Expenses

During the financial year 2024-25 the other expenses of our company decreased to 207.14 Lakhs as against 225.91 Lakhs during the financial year 2023-24. The decrease in other expenses was 8.31% which was due to bad debts written off, intangible assets written off, CSR expenses, power and fuel, rent and traveling & conveyance expenses.

Restated profit/(loss) before tax

During the financial year 2024-25 the Profit before tax increased to 685.50 Lakhs as against 563.84 Lakhs during the financial year 2023-24. The increase in Profit before tax was around 21.58%.

Tax Expenses

During the financial year 2024-25 tax expenses of our company increased to 190.89 Lakhs as against 142.90 Lakhs during the financial year 2023-24 due to increase in current tax expenses.

Restated profit/(loss) after tax

As a result of the foregoing factors, our profit after tax for the year increased by 17.50% from net profit 420.94 lakhs in financial year 2023-24 to net profit of 494.61 Lakhs in financial year 2024-25.

FINANCIAL YEAR 2024 COMPARED WITH FINANCIAL YEAR 2023

Total Income

Total income for the financial year 2023-24 was 28,191.90 Lakhs whereas in financial year 2022-23 it was 25,635.54 Lakhs representing an increase of 9.97% which was due to increase in the turnover from sale of services.

Revenue from Operations

During the financial year 2023-24 the revenue from operation of our Company increased to 28,107.99 Lakhs as against 25,610.28 Lakhs in the Financial Year 2022-23 representing an increase of 9.75% due to sale of services.

Other Income

During the financial year 2023-24 the other income increased to 83.91 lakhs as against 25.26 lakhs in the Financial Year 2022-23 representing an increase of 232.21% which was primarily due to Interest from Fixed deposits and interest on income tax.

Cost of services rendered

During the financial year 2023-24 the costs of services rendered increased to 26,509.86 lakhs as against 24,203.23 lakhs in the financial year 2022-23 representing an increase of 9.53% due to increase salaries and wages including but not limited to Employees Salary Expenses, Staff Welfare Expenses, Insurance premiums, Professional Tax & License Fees and contributions to provident and other funds.

Employee Benefit Expenses

During the financial year 2023-24 the employee benefit expenses of our Company increased to 853.41 Lakhs as against 679.85 lakhs in the financial year 2022-23 representing an increase of 25.53% which was primarily due to increase in salaries & wages including employees salaries, director remuneration staff welfare and contribution to funds like EPF, ESIC and Gratuity.

Finance Costs

During the financial year 2023-24 the finance cost of our Company decreased to 2.92 Lakhs as against 3.42 lakhs in the financial year 2022-23 representing decrease of 14.39% which was primarily due to decrease in interest expenses.

Depreciation and Amortization Expenses

During the financial year 2023-24 the depreciation of our company increases to 35.96 Lakhs as against 21.39 Lakhs during the financial year 2022-23. representing increase of 68.14% primarily due to decrease in depreciation on property plant and equipment and amortization of intangible assets.

Other Expenses

During the financial year 2023-24 the other expenses of our company increased to 225.91 Lakhs as against

190.61 Lakhs during the financial year 2022-23. The increase in other expenses was around 18.52 % which was mainly due to increase in power and fuel, travelling & conveyance expenses, rent and Business Promotion Expenses.

Restated profit/(loss) before tax

During the financial year 2023-24 the Profit before tax increased to 563.84 as against 537.04 Lakhs during the financial year 2022-23. The increase in Profit before tax was around 4.99%.

Tax Expenses

During the financial year 2023-24 tax expenses of our company increased to 142.90 Lakhs as against 152.81 Lakhs during the financial year 2022-23. This was primarily due to increase in current tax expenses.

Restated profit/(loss) after tax

As a result of the foregoing factors, our profit after tax for the year increased by 9.55% from net profit of 384.23 Lakhs in financial year 2022-23 to net profit 420.94 lakhs in financial year 2023-24.

Cash Flows

(Amount in lakhs)

Particulars	For the year ended March 31
	2025	2024	2023
Net Cash from Operating Activities	(145.38)	86.76	599.32
Net Cash from Investing Activities	44.65	465.98	(577.47
			)
Net Cash used in Financing Activities	(88.90)	(289.66)	(18.68)

Cash Flows from Operating Activities

Net cash from operating activities for financial year 2024-25 was at (145.38) lakhs as compared to the Profit

Before Tax at 685.50 lakhs while for financial year 2023-24 net cash from operating activities was at 86.76 lakhs as compared to the Profit Before Tax at 563.84 lakhs. Net cash from operating activities for financial year 2023-24 was at 86.76 lakhs as compared to the Profit Before Tax at 563.84 lakhs while for financial year 2022-23 net cash from operating activities was at 599.32 lakhs as compared to the Profit Before Tax at 537.04 Lakhs.

Cash Flows from Investment Activities

In the financial year 2024-25, the net cash from investing activities was 44.65 lakhs. This was mainly due to interest income. In the financial year 2023-24, the net cash from investing activities was 465.98 lakhs. This was on due to decrease in other non current assets. In the financial year 2022-23, the net cash from investing activities was (577.47) lakhs. This was on due to purchase of property plant and equipment and intangible assets and Movement in other non current assets.

The details are as under (Year-wise)

(Amount in lakhs)

Particulars	2025	2024	2023
(Purchase)/Sale of Property, Plants and Equipment and intangible assets	(10.28)	(47.16)	(117.48)
(Increase)/Decrease Other Non Current Assets	3.01	391.23	(416.01)
Purchase/(Sale) of Non-Current Investments	7.74	38.00	(69.24)
Interest Income Received	44.18	83.91	25.26

Cash Flows from Financing Activities

In the financial year 2024-25, the net cash from financing activities was (88.90) lakhs. This was on account of interim dividend paid and issue of share capital.

In the financial year 2023-24, the net cash from financing activities was (289.66) lakhs. This was on account of interim dividend paid and short-term borrowings.

In the financial year 2022-23, the net cash from financing activities was (18.68) lakhs. This was on account of interim dividend paid and short-term borrowings.

The details are as under: (Year-wise)

(Amount in lakhs)

Particulars	2025	2024	2023
Increase/(Decrease) in Long Term Borrowings	-	-	(4.77)
Increase/(Decrease) in Short Term Borrowings	(2.77)	(56.74)	59.51
Issue of share Capital	119.89	-	-
Interim Dividend Paid	(200.00)	(230.00)	(70.00)
Interest Expenses Paid	(6.02)	(2.92)	(3.42)
Net cash flow from financing activities	(88.90)	(289.66)	(18.68)

OTHER MATTERS

Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. Except as disclosed in this Draft Red Herring Prospectus there are no unusual or infrequent events or transactions in our Company.

Significant economic changes affecting income from continuing operations

There are no significant economic changes that may materially affect or likely to affect income from continuing operations.

Known trends or uncertainties impacting sales, revenue, or income

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 26 of the Draft Red Herring Prospectus in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

Future changes in the relationship between costs and revenues

Other than as described in the sections "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Conditions and Results of Operations" on pages 26, 100 and 175 respectively of this Draft Red Herring Prospectus to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices

Increases in our revenues are by and large linked to increases in the volume of business.

Total turnover of each major industry segment in which our Company operates

Our business activity primarily falls within a single business segment i.e. Staffing and Human Resources, as disclosed in "Restated Financial Statements" on page 138 of this Draft Red Herring Prospectus, we do not follow any other segment reporting.

Status of any publicly announced New Services or Business Segment

Except as disclosed in the Chapter "Our Business", on page 100 of this Draft Red Herring Prospectus our Company has not announced any new product or service.

Seasonality of business

Our business is not subject to seasonality.

Any significant dependence on a single or few customers

Our business is significantly dependent on few customers. Our Top 10 customers contributed 98.76 % of our total revenue from our operations for the year ended March 31, 2025.

Competitive Condition

We face competition from existing and potential competitor. We have, over a period of time, developed certain competitive strengths which have been discussed in section titled "Our Business" on page 100 of this Draft Red Herring Prospectus.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL PERIOD

In the opinion of the Board of Directors of our Company, since the date of the last financial statements disclosed in this Draft Red Herring Prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the business activities, except as disclosed below:

Our Company has issued bonus shares which was approved by the Board of the Directors on September 17, 2025 and by shareholder of the Company on September 17, 2025.

The Company has approved the Restated Financial Statements for the financial year ending March 31, 2025, March 31, 2024, and March 31, 2023 in the Board meeting dated September 24, 2025.

The Offer has been authorized by our Board of Directors pursuant to a resolution passed at its meeting held on September 24, 2025 and by our Shareholders pursuant to a special resolution passed pursuant to the Companies Act, 2013 at the Extra Ordinary General meeting held on September 24, 2025 to raise funds by making an Initial Public Offering.

Our Company has approved the Draft Red Herring Prospectus vide resolution in the Board Meeting dated September 30, 2025.

The Company has approved the Financial Statements for the period ended March 31, 2025 on September 17, 2025.