panache digilife ltd share price Management discussions

Forward looking statement

Statements in this Management Discussion and Analysis of Financial Condivon and Results of Opera_ons of the Company describing the Companys objecives, expecta_ons or predic_ons may be forward looking within the meaning of applicable securi_es laws and regula_ons. Forward looking statements are based on certain assump_ons and expecta_ons of future events.

The Company cannot guarantee that these assump_ons and expecta_ons are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, informa_on or events. Actual results may di er materially from those expressed in the statement. Important factors that could in uence the Companys opera_ons include changes in government regula_ons, tax laws, economic developments within the country and such other factors globally. The nancial statements are prepared under historical cost conven_on, on accrual basis of accoun_ng, and in accordance with the provisions of the Companies Act, 2013 and the Indian Accoun_ng Standards ("Ind AS"), as no_ ed under the Companies (Indian Accoun_ng Standards) (Amendment) Rules 2016 issued by Ministry of Corporate A airs in respect of sec_ons 133 of Companies Act 2013. The management of Panache Digilife Limited has used es_mates and judgments rela_ng to the nancial statements on a prudent and reasonable basis, in order that the nancial statements re ect in a true and fair manner, the state of a airs and pro t for the year. The following discussions on our nancial condi_on and result of opera_ons should be read together with our audited standalone & consolidated nancial statements and the notes to these statements included in the annual report. Unless otherwise speci ed or the context otherwise requires, all references herein to "we", "us", "our", "the Company", "Panache" are to Panache Digilife Limited and its subsidiaries and associates.

We are pleased to present our performance highlights for FY2022-23 and business outlook for this year:

WORLD ECONOMIC OUTLOOK : WAR SETS BACK THE GLOBAL RECOVERY

Tentave signs in early 2023 that the world economy could achieve a so landing with in aon coming down and growth steady have receded amid stubbornly high in aon and recent nancial sector turmoil. Although in aon has declined as central banks have raised interest rates and food and energy prices have come down, underlying price pressures are proving scky, with labor markets ght in a number of economies. Side e ects from the fast rise in policy rates are becoming apparent, as banking sector vulnerabilies have come into focus and fears of contagion have risen across the broader nancial sector, including nonbank nancial instu ons. Policymakers have taken forceful acons to stabilize the banking system. In parallel, the other major forces that shaped the world economy in 2022 seem set to connue into this year, but with changed intensies. Debt levels remain high, limi ng the ability of scal policymakers to respond to new challenges. Commodity prices that rose sharply following Russias invasion of Ukraine have moderated, but the war connues, and geopolical tensions are high. Infec ous COVID-19 strains caused widespread outbreaks last year, but economies that were hit hard most notably China appear to be recovering, easing supply-chain disrup ons. Despite the llips from lower food and energy prices and improved supply-chain funconing, risks are rmly to the downside with the increased uncertainty from the recent nancial sector turmoil.

The baseline forecast, which assumes that the recent nancial sector stresses are contained, is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before rising slowly and seling at 3.0 percent ve years out the lowest medium-term forecast in decades. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternave scenario with further nancial sector stress, global growth declines to about 2.5 percent in 2023 the weakest growth since the global downturn of 2001, barring the inial COVID-19 crisis in 2020 and during the global nancial crisis in 2009 with advanced economy growth falling below 1 percent. The anemic outlook re ects the ght policy stances needed to bring down in aon, the fallout from the recent deterioraon in nancial condions, the ongoing war in Ukraine, and growing geo economic fragmenta on. Global headline in aon is set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices, but underlying (core) in aon is likely to decline more slowly. In aons return to target is unlikely before 2025 in most cases. Once in aon rates are back to targets, deeper structural drivers will likely reduce interest rates toward their pre-pandemic levels.

Risks to the outlook are heavily skewed to the downside, with the chances of a hard landing having risen sharply. Financial sector stress could amplify and contagion could take hold, weakening the real economy through a sharp deterioraon in nancing condi ons and compelling central banks to reconsider their policy paths. Pockets of sovereign debt distress could, in the context of higher borrowing costs and lower growth, spread and become more systemic. The war in Ukraine could intensify and lead to more food and energy price spikes, pushing in aon up. Core in aon could turn out more persistent than ancipated, requiring even more monetary ghtening to tame. Fragmenta on into geopolical blocs has the scope to generate large output losses, including through its e ects on foreign direct investment.

Policymakers have a narrow path to walk to improve prospects and minimize risks. Central banks need to remain steady with their ghter an -in a on stance, but also be ready to adjust and use their full set of policy instruments including to address nancial stability concerns as developments demand. Fiscal policymakers should buress monetary and nancial policymakers acons in geng in aon back to target while maintaining nancial stability. In most cases, governments should aim for an overall ght stance while providing targeted support to those struggling most with the cost-of-living crisis. In a severe downside scenario, automac stabilizers should be allowed to operate fully and temporary support measures be ulized as needed, scal space perming. Medium-term debt sustainability will require well med scal consolidaon but also debt restructuring in some cases. Currencies should be allowed to adjust to changing fundamentals, but deploying capital ow management policies on oulows may be warranted in crisis or imminent crisis circumstances, without subs tu ng for needed macroeconomic policy adjustment. Measures to address structural factors impeding supply could ameliorate medium-term growth. Steps to strengthen mullateral coopera on are essen al to make progress in crea ng a more resilient world economy, including by bolstering the global nancial safety net, miga ng the costs of climate change, and reducing the adverse e ects of geo economic fragmentaon.

(Source: WORLD ECONOMIC OUTLOOK: A ROCKY RECOVERY Interna_onal Monetary Fund : April 2023)

INDIA ECONOMIC OUTLOOK

This year began with the ancipa on that runaway in aon, aggressive policy rate hikes, and high commodity prices might topple a few major economies into recession in 2023. We are halfway past 2023 and, while the world is sll in the woods, the probability of a recession this year has trimmed. Labor markets in several advanced countries remain ght, while the largest economy, the United States, is seeing a rebound in consumer con dence and spending. Risk spreads are declining on both sides of the Atlanc a er the recent banking crisis in the United States.

India, meanwhile, enjoys a Goldilocks moment as it sees its economic acvity gaining momentum amid connuing global uncertaines. The last quarters GDP data was pleasantly surprising but not completely unexpected. The GDP growth in the fourth quarter has pushed up the full-year GDP growth of FY2022 23 to 7.2%, 200 basis points (bps) higher than the earlier es mate. The recently released Annual Economic Review for the month of May 2023 highlighted that the post pandemic quarterly trajectories of consump on and investment have crossed pre pandemic levels. Evidently, economists and analysts are bullish about the Indian economy. Our growth forecasts for FY 2023-24 remain similar to our April forecast, although higher-than-expected growth in FY 2022-23 has raised our base for comparison. That said, we have raised our lower limit of the range given the buoyancy of the economy. We expect India to grow between 6% and 6.3% in FY 2023-24 and have a stronger outlook therea er. In fact, if global uncertaines recede, we expect growth to surpass 7% over the next two years.

There are mulple downside risks to our forecasts, but we nd the uncertaines around the acons of the central banks of major economies and the oil price movements this past quarter par cularly interes ng. In this edi on, we highlight the signi cance of these developments and their future implicaons for India.

Indian economy enters a Goldilocks period not too

good, not bad either

India grew by 6.1% in the last quarter, which is approximately ~100 bps higher than what the market had ancipated. While the overall growth was broad-based, many sectors such as construc on and agriculture experienced more-than-expected growth. In fact, strong growth in manufacturing proved to be a reassuring development as modest growth in the sector in previous quarters had been a concern for policymakers.

On the expenditure side, exports performed well despite global headwinds, while imports recorded their slowest growth since December 2020, primarily because of easing crude oil prices bringing down Indias import bills. Private consumpon, the largest component of Indias nal demand, with a modest growth of 7.5% in FY 2022-23, emerged as the weakest link in overall growth. The share of private consumpon in GDP fell in the last quarter and was the lowest in the past seven quarters, dragged down by weak rural demand. However, things might be changing on that front as well.

Urban demand condions have remained resilient, as evidenced by the sales of mid- to high-end segments of automobiles, the number of UPI transacons, and domesc air passenger tra c data. Rural demand, which was lagging, has also been rising lately, as seen in the sales of tractors, IIP nondurable goods, and Mahatma Gandhi Na onal Rural Employment Guarantee Act data. Overall, the rst-quarter data of FY 2024 insls con dence in the improving health of the economy. In aon in the rst quarter was 4.5%, the lowest since the quarter of September 2019. Goods and

Services Tax collecons remain strong, suggesng that revenue buoyancy will aid in improving the budgeted scal de cit rao to GDP. At the same me, Indias external account has been improving, thanks to the falling import bills as oil prices ease. Interesngly, the credit-deposit ra o has connued to improve strongly from the lows of the pandemic despite the rising interest rates. A deeper dive reveals that most of the lending is happening in the industry and services sector. This points to improving investment, which means that the supply side is gearing up to meet the rising demand.

Adelante (step forward) and Atras (step backward)

the salsa of central banks

Central banks around the world are fran cally dancing to the tune of in aon, which seems to be coming under control, although is sll far from being tamed completely. Between the three major central banks the US Federal Reserve (Fed), the European Central Bank (ECB), and the Bank of England (BoE) the policy rates have been raised by 1440 bps within a span of 18 months. Yet, the 12-month average in aon a er the rst policy rate hike is signi cantly higher than the 12-month average in aon prior to the hike in these countries. Instead, liquidity condions have ghtened too quickly in countries that had ultra-loose monetary policies for over a decade. Since these countries also host a large share of global investors, such an aggressive measure has unnerved the senments, leading to capital oulows from emerging countries.

Compara vely, India has had be er success in taming in a on with rela vely lesser policy ghtening. The Reserve Bank of India (RBI) intervened in May 2022 and has increased the policy rate six mes in 11 months since, increasing the repo rate by 250 bps. The in aon in June 2023 was 4.8%, considerably lower than the last scal year.

The only major country that has de ed the global trend of raising or pausing policy rates is China, which cut its key policy rate (a much-awaited acon) in response to low in aon (again an excepon) and a weaker economic economy. It also increased liquidity in the market by injecng CNY 2 billion into the market through short-term bonds. For those who may seek reassurance about the declining in aon in the United States and the European Union in the past few months, here is a spoiler: The headline in aon levels remain above the central banks target level of 2%. Moreover, core in aon (a er adjusng for food and fuel prices) remains resilient, sugges ng there isnt enough tangible evidence of a stabilizing or declining in aon.

Atras seems unlikely for central banks, but Adelante

may also be challenging

The US Feds aggressive policy-rate hikes have had a signi cant impact on the US banking sector. In the rst ve months of 2023, the sector saw 18 defaults worth US$ 21 billion. This number and volume of defaults are higher than all of 2021 and 2022 combined. Also, higher policy rates translate into higher mortgage rates, which is a source of concern for the US real estate sector. House prices and demand have been moderang in the United States lately. That does not bode well for an economy where housing (investment and services) accounts for 15% to 18% of GDP. In addion to this, the recent resoluon of the debt-ceiling crisis will also have added repercussions. Due to the resoluon of the debt-ceiling crisis, the US Treasury will issue more bonds worth US$ 1.1 trillion in short-dated Treasury securies by the end of 2023. This will drive up the bond yields and squeeze cash out of banks, which in turn will compel banks to raise their deposit rates. Besides, cheaper Treasury securies will put further pressure on banks assets as they hold these securies.

India to be in sync?

A moderaon in the rate hikes by the United States a er a spree of rate hikes since February 2022 is a posive news for India. It has reduced the pressures on the RBI to maintain an interest di erenal needed for the currency carry trade (leveraging the interest-rate arbitrage) and to aract foreign investment (which has declined due to ghter global liquidity condions).

Chinas easing of monetary policy has led to a depreciaon of the Renminbi against the US dollars. A depreciated CNY will surely bene t Indian importers, who now pay a lesser amount for the same quanty of imports. However, cheaper products are likely to increase Indias dependence on China for crical inputs. This is likely to adversely impact the overall trade de cit with China, which is already a concern for India. For a naon that has seen its trade de cit with China go up sharply, a depreciang INR against the Chinese currency could make the de cit worse.

Are oil prices on a slippery slope?

Global crude oil prices have been trending down over the past few weeks owing to increased oil ows from Russia into the global markets, rising US producon, and concerns over oil demand amid a weak economic outlook this year. This is despite the two cuts in oil producon by the Organizaon of the Petroleum Exporng Countries (OPEC) naons since October 2022. Crude prices have been shed more than 40% as of June 2023 since the Russian invasion of Ukraine in February 2022. While WTI fell below US$ 70 per barrel this week (US$ 67.1 per barrel on June 12) before going up again, Brent prices have hovered around US$ 75 per barrel. To reverse this trend, Saudi Arabia, the top producer in the OPEC cartel, has recently unanimously decided to cut producon by another one million barrels per day from July and further limit the supply in 2024. These measures will likely keep prices volale for a while, although the short-term outlook seems to be bearish.

Since India is a heavy importer of oil and oil products, lower oil prices will reduce import bills and aid in decreasing input costs for products that depend on crude oil or its derivaves, thereby reducing in aonary pressures.

What lies ahead

The rst-quarter data points to further building on the posive momentum in the economic data. We connue to remain opmis c about the economy this year and expect India to grow between 6.0% and 6.3% during FY 2023-24 in our baseline scenario, followed by 6.6% and 7.2% over the next two years as the global economy turns buoyant. However, if downside risks weigh on the economic fundamentals and outlook, we may see a substanal economic slowdown. For more on our opmis c and pessimisc scenarios, read "Key assumpons."

The rst-quarter data points to further building on the posive momentum in the economic data. We connue to remain opmis c about the economy this year and expect India to grow between 6.0% and 6.3% during FY2023 24 in our baseline scenario, followed by 6.6% and 7.2% over the next two years as the global economy turns buoyant. However, if downside risks weigh on the economic fundamentals and outlook, we may see a substanal economic slowdown. For more on our opmis c and pessimisc scenarios, read "Key assumpons."

(source: h_ps://www2.deloi_e.com/us/en/insights/econo my/asia-paci c/india-economic-outlook.html)

Electronics System Design &

Manufacturing (ESDM) Industry in India

The Indian electronics system design and manufacturing (ESDM) sector is one of the fastest growing sectors in the economy and is witnessing a strong expansion in the country. The ESDM market in India is well known internaonally for its potenal for consumpon and has experienced constant growth

INTRODUCTION

The ESDM market in India is well known internaonally for its potenal for consumpon and has experienced constant growth. Indian manufacturers are a rac ng the a en on of mul naonal corpor aons due to shi ing global landscapes in electronics design and manufacturing capabilies, as well as cost structures. Companies from all over the world are striving to develop local capacies in India not only to serve the domesc market but also to cater to internaonal markets. The Electronics System Design & Manufacturing (ESDM) industry includes electronic hardware products and components relang to informaon technology (IT), o ce automa on, telecom, consumer electronics, aviaon, aerospace, defence, solar photovoltaic, nano electronics and medical electronics. The industry also includes design-related acvies such as product designing, chip designing, Very Large-Scale Integraon (VLSI), board designing and embedded systems.

India witnessed a substanal spike in demand for electronic products in the last few years; this is mainly a ributed to Indias posi on as second-largest mobile phone manufacturer worldwide and surge in internet penetraon rate. The Government of India a ributes high priority to electronics hardware manufacturing, as it is one of the crucial pillars of Make in India, Digital India and Start-up India programmes.

The Electronics System Design & Manufacturing (ESDM) sector plays a vital role in the governments goal of generang US$ 1 trillion of economic value from the digital economy by 2025. With various government inia ves aiming to boost domes c manufacturing, India has already started witnessing inial movement with increased produ con and assembly acvies across products such as mobile phones and other consumer electronics.

MARKET SIZE

The Indian electronics manufacturing industry is projected to reach US$ 520 billion by 2025. The demand for electronic products is expected to rise to US$ 400 billion by 2025 from US$ 33 billion in FY20. Electronics market has witnessed a growth in demand with market size increasing from US$ 145 billion in FY16 to US$ 215 billion in FY19 the market witnessed a growth of 14% CAGR from 2016-19. Electronics system market is expected to witness 2.3x demand of its current size (FY19) to reach US$ 160 billion by FY25. The top products under the

ESDM sector with the highest CAGR include IT/OA at 54%, followed by industrial electronics at 38% and automove electronics at 10%.

In India, smartphone shipments from India crossed 168 million units in CY 2021, and in 2022, smartphone shipments from India are expected to reach ~190 million. 5G device shipments are expected to increase by 129% YoY, from 28 million in CY 2021 to about 64 million in CY 2022. Electronics design segment, growing at 20.1%, was 22% of the ESDM market size in FY19; it is ancipated to be 27% of the ESDM market size in FY25.

INVESTMENTS

Major Government inia ves such as ‘Digital India, ‘Make in India and supporve policies including favorable FDI Policy for electronics manufacturing have simpli ed the process of se ng up manufacturing units in India.

Post COVID, the Government of India aims to increase Indias contribuon by around US$ 400 billion worth of electronics goods including exports worth US$ 120 billion, which would account for 9-10% of the overall global value chains, from the current supply potenal of 1-2%.

Union Budget 2023-24 has allocated Rs. 16,549 crore (US$ 2 billion) for the Ministry of Electronics and Informaon Technology, which is nearly 40% higher on year. The budget for FY23 had allocated Rs. 14,300 crore (US$ 1.73 billion) for the IT ministry. The rst-of-its-kind in India Electropreneur Park (EP) set up by MEITY and IESA started in 2016 and created 51 hardware products, 51 patents, and 23 startups were funded. The EP will grow to be a hub with 20 spoke centres aimed to promote innovaon and create unicorns in ESDM by o ering access to a holisc ecosystem to accelerate the governments agship schemes like Startup India and Make in India.

STPI Signs MoUs to strengthen tech startup ecosystem: AIC STPINEXT Inia ves (STPINEXT), a special purpose vehicle of So ware Technology Parks of India (STPI), an organisaon under the Ministry of Electronics and Informaon Technology (MeitY) has signed two memorandums of understanding (MoUs), one with HDFC Bank, and another with Excelpoint Systems India Pvt. Ltd., a niche technology player for fostering entrepreneurship and nurturing tech startups in the country. These partners would play crical role in suppor ng and handholding the startups in the growth journey through technical guidance & assistance, mentoring, pitching to investors, funding support, and market connect & access etc.

Some of the investments/ developments in the Electronics System Design & Manufacturing (ESDM) sector in the recent past are as follows:

The cumula ve FDI equity in ow in the Electronics industry is US$ 3.75 billion during the period April 2000-December 2022.

In FY23, the exports of electronic goods were recorded at US$ 23.57 billion as compared to US$ 15.66 billion during FY22, registering a growth of 50.52%.

India is one of the largest consumer electronics markets in Asia Paci c Region and is home to considerable talent for electronic chip design and embedded soware. India has c ommied to reach US$ 300 billion worth of electronics manufacturing and exports of US$ 120 billion by 2025-26.

Major Government inia ves such as ‘Digital India, ‘Make in India and supporve policies including favourable FDI Policy for electronics manufacturing have simpli ed the process of se ng up manufacturing units in India.

India is the second fastest digi zing economy amongst the 17 leading economies of the world. The Government of India aims to make Electronics Goods amongst Indias 2-3 top ranking exports by 2026. Electronics Goods exports are expected to increase from the projected US$ 15 billion in 2021-22 to US$ 120 billion by 2026.

Exports of electronic goods stood at US$ 2.0 billion in September 2022.

During April 2022 - February 2023, the imports of electronics goods stood at US$ 70.07 billion, whereas exports stood at US$ 20.69 billion.

Imports of electronics goods stood at US$ 7.14 billion in September 2022.

A nine-member task force has been constuted by the Ministry of Electronics and Informaon Technology (MeitY) in March, 2023 with the primary goal of making India a ‘product developer and manufacturing naon, as per a report. The members of task force are some of the veterans from the Indian electronic industry, including HCL Founder Mr. Ajay Chowdhary, Lava Internaonal Chairman Mr. Hari Om Rai, and Boat Lifestyle Co-Founder Mr. Aman Gupta, among others.

In March 2023, the Government approved se ng up of the Electronics Manufacturing Cluster (EMC) at Hubli-Dharwad in Karnataka, worth US$ 22 million (Rs. 180 crore) and is expected to create about 18,000 jobs.

As global companies are leveraging the well-developed manufacturing system in the State, Tamil Nadu has emerged as one of the major electronics hardware manufacturing and exporng States in the country. The state is well posioned to achieve a US$ 100 billion ESDM industry in the next ve years.

The India Cellular and Electronics Associaon in February 2023 signed a memorandum of understanding with the U ar Pradesh government to facilitate investments as the electronics manufacturing and skill hub to cater to domes c demand and exports. The government has set a target to achieve US$ 300 billion of electronics manufacturing by 2025-26, out of which US$ 75-100 billion of electronics manufacturing is expected from UP.

Mitsubishi Electric India would invest Rs. 1,891 crore (US$ 230.9 million) to build an air condioner and compressor factory in Tamil Nadu. This facility will generate over 2,000 jobs, 60% of which would be held by women.

Vedanta Group signed memorandums of understanding (MoUs) with 20 Korean companies from the display glass industry for the development of an electronics manufacturing hub in India. The MoUs were signed at the Korea Biz-Trade Show 2023 event organised by KOTRA, in collabora on with Koreas Ministry of Trade, Industry, and Energy.

In November 2022, Voltas entered into a technology license agreement with Denmarks Vesrost Soluons to develop, manufacture, sell and service medical refrigera on and vaccine storage equipment including ice lined refrigerators, vaccine freezers and ultra-low temperature freezers to the India market.

Voltas announced plans of Rs. 400 crore (US$ 50.10 million) capex under PLI scheme to manufacture components for white goods in May 2022.

In March 2022, Reliance announced that it would invest US$ 220 million in a joint venture with Sanmina Corp, a US- listed company for making electronic products in the Asian countries.

Intel has invested over US$ 7 billion in design and R&D facilies in the country to date.

GOVERNMENT INITIATIVES

The Government of India has adopted few inia ves for the ESDM sector in the recent past, some of these are as follows:

Union Budget 2023-24 has allocated Rs. 16,549 crore (US$ 2 billion) for the Ministry of Electronics and Informaon Technology, which is nearly 40% higher on year. The budget for FY23 had allocated Rs. 14,300 crore (US$ 1.73 billion) for the IT ministry.

The Government a aches high priority to electronics hardware manufacturing, and it is one of the important pillars of both "Make in India" and "Digital India" programme of Government of India.

The Naonal Policy on Electronics (NPE) 2019 envisions to posion India as a global hub for ESDM by encouraging and driving capabilies in the Country for developing core components, including chipsets and by creang an enabling environment for the industry to compete globally.

By 2030, ADIF, a think tank for IT start-ups, aims to put India among the top three start-up ecosystems in the world, with emphasis on expanding the knowledge base, encouraging collaboraon and outlining the best policies.

As per Union Budget 2022-23, the Ministry of Electronics and Informa on Technology (MeitY) has been allocated Rs. 14,300 crore

(US$ 1.85 billion). In the allocated budget, revenue expenditure allocaon is Rs. 13,911.99 crore (US$ 1.8 billion) and capital expenditure allocaon is Rs. 388.01 crore (US$ 50.4 million).

Ministry of Electronics & Informa on Technology (MeitY) has announced "Scheme for Promo on of Semiconductor Eco-System" in India with a massive outlay of Rs. 76,000 crore (US$ 9.48 billion) in 2022.

Under the produc on-linked incen ve (PLI) scheme for IT Hardware Products, the Ministry of Electronics and Informaon Technology has approved 14 quali ed applicants. To manufacture these products in India, the government will o er incenves of US$ 983.76 million over the next four years. In this duraon, producon worth US$ 21.62 billion and exports of US$ 8.06 billion are expected.

In September 2022, MeitY Startup Hub (MSH), an inia ve of the Ministry of Electronics & Informa on Technology (MeitY), and Meta announced the launch of an accelerator programme to support and accelerate XR technology startups across India.

Ministry of Electronics & Informa on Technology (MeitY) has announced "Scheme for Promo on of Semiconductor Eco-System" in India with a massive outlay of Rs. 76,000 crore (US$ 9.48 billion) in 2022.

As per Union Budget 2022-23, the Ministry of Electronics and Informaon Technology (MeitY) has been allocated Rs. 14,300 crore (US$ 1.85 billion).

In the allocated budget, revenue expenditure allocaon is Rs. 13,911.99 crore (US$ 1.8 billion) and capital expenditure allocaon is Rs. 388.01 crore (US$ 50.4 million).

About 80% of the Producon-Linked Incen ve scheme (PLI) to encourage manufacturing in the country, which covers 14 industries and has a total investment of Rs 3 lakh crore (US$ 38.99 billion), is concentrated in only three sectors: electronics, automobiles, and solar panel producon.

PLI scheme for large scale electronics manufacturing launched by Ministry of Electronics and Informaon Technology (MeitY) in April 2020 has been extended from exisng ve years band (FY21 - FY25) to six years (FY21-FY26).

O cials from New Delhi and Taipei recently negoated a proposal to set up a semiconductor facility worth US$ 7.5 billion in India; the facility will supply everything from 5G devices to electric cars.

To accelerate quantum compung-led research & development and enable new scien c discoveries, the Ministry of Electronics and Informa on Technology (MeitY), in collaboraon with Amazon Web Services (AWS), will establish a quantum compung applicaons lab in the country.

A fund of Rs. 3.2 crore (US$ 433.46 thousand) for three years has been approved by the Department of Electronics, IT, BT, Science & Technology.

Under the PLI scheme for IT Hardware, the approved enterprises are es mated to manufacture equipment worth >US$ 21.62 billion over the next four years. Of the total producon, foreign companies have suggested producon worth US$ 11.38 billion, whereas domesc enterprises have planned a producon of US$ 10.20 billion.

ROAD AHEAD

Local electronics design and producon are being posi vely in uenced by ongoing domes c consump on, changing dynamics in the global supply chain, and a plethora of policy inia ves to assist indigenous manufacturing in the current period is most advantageous. The smooth implementaon of new inia ves and the reversal of restricve laws will go a long way toward boos ng internaonal business con dence in Indias business environment and a rac ng manufacturing investments. Fueled by strong policy support, huge investments by public and private stakeholders and a spike in demand for electronic products, the ESDM sector in India has bright prospects ahead of it and is predicted to reach US$ 220 billion by 2025, expanding at 16.1% CAGR between 2019-2025.

References: Media reports, Ministry of Electronics and Informaon Technology (MeitY), Make in India, Invest India, Union Budget 2022-23, Union Budget 2023-24, Press Informaon Bureau, News Arcles

(Source: h_ps://www.ibef.org/industry/electronics-

system-design-manufacturing-esdm)

Produc_on Linked Incen_ve Scheme

2.0 for IT Hardware

On May 17, 2023, the Union Cabinet, which was chaired by the Prime Minister, Mr. Narendra Modi, approved the Producon Linked Incenve Scheme 2.0 for IT Hardware. The budgetary outlay of the scheme is US$ 2.06 billion (Rs. 17,000 crore).

For many major internaonal companies, India is quickly becoming a reliable supply chain partner. Large companies of IT hardware have expressed a strong interest in seng up manufacturing facilies in India. This is further supported by the naons strong IT services sectors high demand.

India has become the worlds second-largest manufacturer of mobile phones and the exports of mobile phones crossed a major milestone of US$ 11 billion. Furthermore, due to the great success of the Producon Linked Incenve Scheme (PLI) for mobile phones, PLI Scheme 2.0 was approved.

Electronic devices like laptops, tablets, all-in-one PCs, servers, and ultra-small form factor devices are covered under the PLI Scheme 2.0. The tenure of the scheme is six years.

(Source: h_ps://www.ibef.org/news/cabinet-has-approved-produc_on-linked-incenvve-scheme-2-0-for-it-hardware)

STANDALONE & CONSOLIDATED

FINANCIAL OVERVIEW

The Standalone performance of the Company for the

nancial year ended March 31, 2023 is as follows:

Total revenue from operaons at Rs. 111.80 crore for the year ended March 31, 2023, as against Rs. 85.91 crore for the corresponding previous period, an increase by 30.13%.

The Cost of Raw Materials for the nancial year ended March 31, 2023 were Rs 98.89 crore as against Rs 74.43 crore for the corresponding previous period, an increase by 32.86%.

The Employee expenses for the nancial year ended March 31, 2023 were Rs 3.61 crore as against Rs 3.68 crore for the corresponding previous period, decreasing by 2.10%.

The other expenses for the nancial year ended March 31, 2023 were Rs 3.70 crore as against Rs 3.34 crore for the corresponding previous period, increasing by 10.64%.

The EBIDTA (earnings before interest, depreciaon and tax) was Rs 5.60 crore for the year ended March 31, 2023 as against Rs 4.45 crore for the corresponding previous period, an increase by 25.79%.

The depreciaon for the nancial year ended March 31, 2023 was Rs 0.79 crore, as against Rs 0.70 crore for the corresponding previous period, an increase by 13.29%.

The EBIT (earnings before interest and tax) were Rs 6.24 crore for the year ended March 31, 2023 as against Rs 6.40 crore for the corresponding previous period, decreasing by 2.46%.

The PAT (pro t a er tax) were Rs 1.85 crore for the year ended March 31, 2023 as against Rs 2.10 crore for the corresponding previous period, decreasing by 11.66%.

The interest for the nancial year ended March 31, 2023 was Rs 3.93 crore as against Rs 3.27 crore for the corresponding previous period, increase of 20.01%.

The EPS (Earning Per Share) for the nancial year ended March 31, 2023 stood at Rs 1.54 for a face value of Rs 10 per share, as against Rs 1.75 for the corresponding previous period.

The Consolidated Figures for the Company include nancials of its Subsidiary Technofy Digital Private Limited and an Associate company ICT Infratech Private Limited. Technofy Digital Private Limited As decided during the F.Y.2020-21 the underlying Land Assets are being mone zed for which the Subsidiary had to get various legal and compliance clearances from the authories. The Land Asset had to be subdivided into 50 smaller plots so that those could be sold to prospecve buyers. During FY 2022-23, a total of 15 plots were sold and the funds received from such sales were used to repay the debts of nancial creditors. The process of selling the remaining plots is underway and the management expects to sell the remaining plots in FY 2023-24 and to repay all the Loans taken by the Subsidiary. Technofy Digital Private Limited is sll categorized as not a going concern.

ICT Infratech Private Limited - The operaons in FY 2022-23 were nominal resulng in a con tribuon of a nominal loss of Rs 0.0052 Crore for FY 2022-23.

The Consolidated performance of the Company for

the nancial year ended March 31, 2023 is as follows:

Total revenue from operaons at Rs. 111.80 crore for the year ended March 31, 2023, as against Rs. 85.91 crore for the corresponding previous period, an increase by 30.13%.

The Cost of Raw Materials for the nancial year ended March 31, 2023 were Rs 98.89 crore as against Rs 74.43 crore for the corresponding previous period, an increase by 32.86%.

The Employee expenses for the nancial year ended March 31, 2023 were Rs 3.61 crore as against Rs 3.68 crore for the corresponding previous period, decreasing by 2.10%.

The other expenses for the nancial year ended March 31, 2023 were Rs 3.70 crore as against Rs 3.34 crore for the corresponding previous period, increasing by 10.64%.

The EBIDTA (earnings before interest, depreciaon and tax) was Rs 5.60 crore for the year ended March 31, 2023 as against Rs 4.45 crore for the corresponding previous period, an increase by 25.79%.

The depreciaon for the nancial year ended March 31, 2023 was Rs 0.79 crore, as against Rs 0.70 crore for the corresponding previous period, an increase by 13.29%.

The EBIT (earnings before interest and tax) were Rs 5.70 crore for the year ended March 31, 2023 as against Rs 5.78 crore for the corresponding previous period, decreasing by 0.88%.

The interest for the nancial year ended March 31, 2023 was Rs 3.93 crore as against Rs 3.27 crore for the corresponding previous period, an increase of 20.02%.

The PAT (pro t a er tax) from con nuing operaons were Rs. 1.32 crore for the year ended March 31, 2023 as against Rs 1.46 crore for the corresponding previous period, decreasing by 9.59%.

The PAT (pro t aer tax) from disco nnuing operaons were Rs. (0.49) crore for the year ended March 31, 2023 as against Rs (0.66) crore for the corresponding previous period, a decrease in loss by 26.07%.

The Total PAT for the Company stood at Rs 0.82 crore for the year ended March 31, 2023 as against Rs 0.80 crore for the corresponding previous period.

The EPS (Earning Per Share) (from connuing operaons) for the nancial year ended March 31, 2023 was Rs 1.09 for a face value of Rs 10 per share, as against Rs 1.22 for the corresponding previous period.

RESOURCES AND LIQUIDITY

As on March 31, 2023 the standalone net worth stood at Rs 36.35 crore and the standalone debt was at Rs 34.19 crore.

The cash and cash equivalents at the end of March 31, 2023 were Rs. 0.23 crore.

The total debt to equity rao of the Company stood at 0.96 as on March 31, 2023.

BUSINESS PERFORMANCE

Key Developments during the year

Focusing your companys opera ons on the manufacturing of IT hardware and electronic devices can be a strategic move with various poten al bene ts. There is a substanal and growing market demand for IT hardware and electronic devices in India or your target markets. To cater to the Target Markets, we have developed a product porolio within the IT hardware and electronic devices segments which includes laptops, desktops, mobile devices, peripherals, consumer electronics, and more.

Considering the focus on manufacturing IT hardware and electronic devices, your Company had signed a leer of intent ("the LOI") for manufacture and supply of Laptop Devices to Nexstgo Technologies India Pvt. Ltd under its Brand name AVITA. We had delivered some Made in India Laptop devices under the above arrangement during FY 2022-23. This order provided an impetus for Panaches plans in complying and implemenng its commitment to the Make in India ini a ves promoted by the Government of India and incenvized under the Producon Linked Incenve Scheme for IT Hardware. In October 2022, Panache Digilife Limited had signed an agreement with Revamp Moto Private Limited for the Integraon of their Modular Electric Vehicles (EV) at our Bhiwandi Facility. Panache had to focus on quality product assembly, process opmisa on, and indigenisaon of components while Revamp Moto was to work on new product development (NPD), Research and Development (R&D), new technologies, and generang IPs. Your Company is the Approved Party under the PLI Scheme for Telecom and Networking Products and in November 2022, we had received the approval for addi on of New Telecom Products under the Scheme. Your Company has plans to venture in the Telecom Products and suitable disclosures would be made in the future about the Manufacturing Plans in the Telecom Products space. Panache Digilife Limited has collaborated with V.E.S Instute of Technology under the esteemed Chips to Startup Programme ("C2S") of Ministry of Electronics and Informaon Technology ("MeitY") to promote Make in India inia ve.

The primary focus of this C2S programme is the development of ASICs (Applica on-Speci c Integrated Circuits) and SoCs (System-on-Chips) speci cally designed for programmable gain ampli ers and recon gurable ADCs (Analog-to-Digital Converters) which will cater to a wide range of applica ons, o er enhanced performance and exibility in various industries. Under the C2S Programme, MeitY will grant an aid of Rs. 74.32 lakhs along with contribu on of Rs. 8.27 lakhs from Panache Digilife Limited to V.E.S. Ins tute of Technology which will be disbursed over a period of 3 years.

Panache Digilife Limited is proud to support and be a part of VESITs innovave research in this eld. By fostering collabora on between academia and industry, this collabora on aims to accelerate technological advancements and bring forth soluons that can address the evolving needs of the market.

The success of your company in these sectors will depend on factors like product quality, innovaon, market posi oning, and e ec ve marke ng strategies. Connuously adapt to changing market condi ons and consumer preferences to remain compeve and achieve long-term growth in the IT hardware and electronic devices manufacturing industry.

RISKS AND CONCERNS

The irony of managing risks in the computer hardware industry is that risk exposures come from everywhere except the hardware: third-party outsourcing, currency uctua ons, unstable poli cal and economic systems in countries hosng factories, and intellectual-property risks related to patents. The days when risk exposures were limited to the electric shocks of soldering circuit boards into black boxes have gone the way of the oppy disk and 16-megabyte memory chips.

The Company faces the following risks and

concerns:

Economic Risk

Indias economy will grow about 6% this scal year with a small increase in private investment, according to a Reuters poll of economists who said lower growth and high in a on were the biggest risks to the outlook. While that was expected to be faster than other major economies, India needs higher growth and investment to create enough jobs for the millions of people joining the workforce every year.

A moderate global economic outlook and the high risk of below-average rainfall in India this year, which threatens agricultural producon and food supplies, suggest Asias third-largest economy may grow by less than expected but sll generate high in aon.

Compe_ on Risk

In terms of demand, Indians have an insa able appete for two things: gold and electronics and parcularly in electronics, they want the latest and greatest. India aims to become a hub for manufacturing and exporng electronics globally. To promote this the Government has inia ves like the Producon Linked Incenve (PLI) Scheme which is gaining tracon as more and more Companies are applying for it. Aer the tepid response to the PLI 1.0 the government has promoted a new PLI 2.0 Scheme which aims to increase the parcipa on of more companies. This creates s compeon from established players as well as new entrants in the PLI Scheme to cater the same set of Brand oriented Customers.

Supply Chain Disrup_on Risk

Supply chain risk connues to be the primary cause of concern for enterprises globally. As enterprises con nue to expand their supply chains, the expansion also brings in a fair amount of risk due to supply chain disrupons led a multude of factors such as natural disasters, pandemics, geopolical instability, as well as cyber threats. Miga ng these supply chain risks requires enterprises to stay prepared at all mes with a comprehensive risk management plan, so that they can stay ahead of the compeon even during disrupons.

The hardware industry supply chain involves a high degree of specializa on and interdependence among suppliers, manufacturers and distributors. What this means is that any disrupon or delay at any point in the supply chain could have a serious impact on a manufacturers ability to deliver products to its customers on me. The unavailability of raw materials could a ect almost all other industries, with many being automacally forced to cut down on their ambious plans to make their products tech-laden and feature rich.

Credit Risk

Credit risk arises from the possibility that customers may not be able to sele their obligaons as agreed. We periodically assess the nancial reliability of customers, considering the nancial condi on, current economic trends, analysis of historical bad debts and ageing of accounts receivable. Individual risk limits are set accordingly

Technology Related Risk

Any organiza on including your company faces various Technology related Risks such as Technical obsolescence. Funconal obsolescence.

Architectural obsolescence. Inventory obsolescence. Style obsolescence.

Technological obsolescence is very intricate to our industry as it is ever evolving. Given the dynamic technology environment, it is cri cal for the Companys survival and growth, to be in tune with changing technology paradigms; and keep upgrading resources and processes at all mes.

The Company has diversi ed this risk well and thus is not dependent on any single technology or pla orm. At the same me, the Company has a range of technologies and has developed competencies on various pla orms and operang environments. It thus o ers a wide range of technology opons to clients to choose from, for their business needs.

INTERNAL CONTROL SYSTEMS AND

ADEQUACY

Panache Digilife has robust internal control systems and further these are evaluated from me to me in order to take addional measures if necessary, in consonance with the changes in the Companies Act, 2013. The Company has adopted policies and procedures for ensuring orderly and e cient conduct of its business, including safeguarding of its assets, prevenon and detec on of fraud, error reporng mechanism and ensuring accuracy and completeness of nancial statements. Based on the results of assessments carried out by Management, no reportable material weaknesses or signi cant de ciencies in the design or operaon of internal nancial controls were observed. The Board opines that the internal controls adopted and implemented by the Company for prepara on of nancial statements are adequate and su cient. For the year 2022-23, M/s. SSPK & Associates, Chartered Accountants were appointed as the Internal Auditors by the Board of Directors. The Board of Directors at its meeng held on May 24, 2023, upon recommendaon of Audit Commiee has approved the appointment of M/s. Sanket Sangoi & Associates, Chartered Accountants, (FRN: 137348W), as the Internal Auditor of the Company for the FY 2023-24. The Audit Commiee reviews reports submied by Internal Auditor. Sugges ons for improvement are considered and the Audit Commiee reviews on the corr ecve acons taken by the Management. The Internal Auditor report directly reports to Audit Commiee.

HUMAN RESOURCES

Our people strategies are geared towards creang an unparalleled employee experience through diverse learning opportunies, great careers, and a strong brand. We believe in crea ng an inclusive environment that welcomes everyone and nurtures an overall sense of belonging.

The Company has necessary policies / Code of Conduct Human Relaons and Industrial Relaons policies in force. These are reviewed and updated regularly in line with the Companys strategic plans. The Company connually conducts training programs for the development of employees. The Company aims to develop the potenal of every individual associated with the Company as a part of its business goal. Respecng the experienced and mentoring the young talent has been the bedrock for the Companys successful growth. The Companys employees age bracket represents a healthy mix of experienced and willing-to-experience employees.

Your Company has maintained its manpower strength which stands at 39 employees in FY2023 from 43 in FY2022. Consequently, the Employee bene t expenses were in line with those of the previous years gures.

OUTLOOK

On the backdrop of your company being selected under the Produc on Linked Incen ve Schemes under IT Hardware and Telecom & Networking Products, we are now focusing on the development of products and introduc on of new devices in categories covered under the respec ve PLI schemes. These schemes entail signi cantvestment in Producon Capacies over the next few years which will enable us to increase the localizaon content and ensure Import substuon for those products.

We are now focusing on catering to end consumer IT products segment like the laptops and All in One Pcs which is a fast-moving category with signi cantly higher volumes. Our focus in the next few years is to consolidate our manufacturing experience and concentrate on the Consumer oriented products while sll catering to our B2B customer segments.

Further, in line with the Telecom PLI Products your company has plans to introduce Telecom products like Routers, PoE Switches to start o with.

We will be applying for the proposed Producon Linked Incenve Scheme for IT Hardware 2.0 which is longer period.

We are vying to e-up with further pares to enlarge our customer base and to gradually increase the capacity uliza on of our manufacturing facility.

The Company is also evaluang the opon of seng up of manufacturing facility for further ver cal integraon in the producon of components at a completely new setup or at the current manufacturing facility at Bhiwandi.

SIGNIFICANT CHANGES IN

FINANCIAL RATIOS

During the year, on a standalone basis, the signi cant change in the nancial ra os compared to the previous year, which are more than 25% as compared to the previous year are summarized below; repurposed with be er incenve structure and for a