Peshwa Wheat Limited Management Discussions

The following discussion and analysis of our financial condition and results of operations for the period ended on June 30, 2024 and for the Fiscal Years 2024, 2023, and 2022 on the basis of Restated Financial and should be read in conjunction with, our Restated Financial Statements, including the schedules, notes and significant accounting policies thereto, included in the chapter titled "Restated Financial Statements" beginning on page 174 of this Red Herring Prospectus. Our Restated Financial Statements have been derived from our audited financial statements and restated in accordance with the SEBI ICDR Regulations and the ICAI Guidance Note. Our financial statements are prepared in accordance with AS. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in this Red

Herring Prospectus. You should also read the section titled "Risk Factors" beginning on page 27 of this Red Herring Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Indian

Emulsifier Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for the period ended on June 30, 2024 and for the Fiscal Years 2024, 2023, and 2022 on the basis of Restated Financial included in this Red Herring Prospectus beginning on page 174 of this Red Herring Prospectus.

Note:

Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward Looking Statements" 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.

BUSINESS OVERVIEW

Our Company was originally formed as a Partnership Firm under the Partnership Act, 1932 ("Partnership Act") in the name and style of "M/s. Peshwa Wheat" pursuant to Deed of Partnership dated September 13, 2017. "Peshwa Wheat" was thereafter converted from Partnership Firm to a Public Limited Company under Part I chapter XXI of the Companies Act, 2013 with the name and style of "Peshwa Wheat Limited" and received a certificate of incorporation dated, December 26, 2023 issued by the Registrar of Companies, Central Registration Centre having Corporate Identification Number of our Company as U10797MP2023PLC069079. Our registered office is situated at 711, Shekhar Central, 4/5, Block No. 1, Manoramaganj, A.B. Road, Indore Manorama Ganj, Indore 452 001, Madhya Pradesh, India.

Our Company is engaged in the processing and trading of wheat products such as wheat flour, organic wheat flour products and allied flour products. Spanning over 990 sq. mts. at Plot No. 05, Industrial Growth Centre Apparel Cluster, Survey Number 137/1/1/1/1 P, Village Bijepur, Tehsil Depalpur, Distt. Indore, the company undertakes production of various Wheat products such as Whole Wheat Flour, Sortex Wheat, Rawa/Suji, Maida, Daliya and so on. Our company is also engaged in supply and distribution of fruits and vegetables within the state of Madhya Pradesh. The Company markets the Wheat products under the brand name of ‘Shahi Peshwa‘, ‘Peshwa Maharaj‘, ‘Royal Peshwa‘ and ‘Peshwa Gold‘. We have filed for trademark registration of our brand name of ‘Shahi Peshwa‘ and ‘Peshwa Maharaj‘ and we will apply for the trademark application for ‘Royal Peshwa‘ and ‘Peshwa Gold‘ in future. Our Company has major presence in small packing product segment (50 kg, 30kg, 10kg, 5kg). We also utilize the by-products and waste materials, such as wheat bran, generated during our manufacturing process as cattle feed. This approach ensures that our manufacturing unit operates with zero waste and zero discharge. Our Company is having state of the art modern machinery in our wheat processing plant in Indore, India, with an installed capacity of 170 Tons/Day as of June 30, 2024.

Wheat processing into flour involves several key steps. First, harvested wheat grains are cleaned to remove impurities such as stones, chaff, and other foreign materials. The cleaned wheat is then tempered with water to achieve the desired moisture content, making it easier to separate the bran and germ from the endosperm. Next, the wheat is milled through a series of rollers that progressively break down the grain into finer particles. The endosperm is ground into flour, while the bran and germ are sifted out and collected as by-products. The resulting flour is then subjected to quality control checks to ensure it meets specified standards before packaging and distribution. The by-products of this process, primarily bran, are not wasted. Bran, rich in fiber, is often sold as a nutritional supplement for human consumption or as animal feed. The by-products are valuable commodities, generating additional revenue streams and contributing to waste minimization in the wheat processing industry.

Our company’s main aim is to grow relationships with our customers that we can serve successfully by providing them a point of difference, adding value and ultimately, providing profitable growth for both parties. Our customers are supported by a highly skilled, enthusiastic, can-do culture team throughout the whole business. Our endeavor is to maintain an efficiently sound business in order to provide a secured future to our fellow employees while stressing on the continual improvement of our highly ranked products for a constantly enhanced customer satisfaction.

Certifications and Recognition: -

State License under Food Safety and Standard Authority of India (FSSAI). Centre License under Food Safety and Standard Authority of India (FSSAI). International Organization for Standardization 22000:2018 (ISO)

SIGNIFICANT DEVELOPMENTS AFTER JUNE 30, 2024

Except as mentioned below, In the opinion of the Board of Directors of our Company, since June 30, 2024, there have not arisen any circumstance that materially or adversely affect or are likely to affect the profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

1. The members of the Company approved the appointment of M/s Doshi Doshi & Co., Chartered Accountants as the Peer Reviewed Statutory Auditor of the Company in the first Board Meeting of the Company on December 26, 2023 and Re-appointed on Annual General Meeting held on July 23, 2024.

2. The Board of the Company has approved to raise funds through Initial Public Offering in their meeting held on July 22, 2024.

3. The members of the Company approved proposal of Board of Directors to raise funds through Initial Public Offering in the Extra-Ordinary General Meeting held on July 23, 2024.

4. The Registered Office of the Company was changed from rom "Plot No.5,Apparel Cluster,Bijepur, Dhar Road, Indore City-2,Indore,Indore,Madhya Pradesh,India,452002." to "711, Shekhar Central, 4/5, Block No. 1, Manoramaganj, A.B. Road, Indore Manorama Ganj, Indore 452 001, Madhya Pradesh, India by Board on July 23, 2024.

KEY PERFORMANCE INDICATORS OF OUR COMPANY*

As per Restated Financial Statements

( in Lakhs)

		For the period ended 31. 03. 2024
Key Financial Performance	30.06.2024	26.12.2023- 31.03.2024	01.04.2023- 25.12.2023	31.03.2023	31.03.2022
Revenue from Operations (1)	5,081.82	4,379.30	4,433.68	1,414.06	428.20
EBITDA (2)	562.74	689.99	150.59	177.67	39.78
EBITDA Margin (%) (3)	11.07%	15.76%	3.40%	12.56%	9.29%
PAT	403.91	498.23	69.02	99.55	12.57
PAT Margin (%) (4)	7.95%	11.38%	1.56%	7.04%	2.94%
Return on equity (%) (5)	22.58%	41.81%	11.58%	33.28%	12.40%
Return on capital employed (%) (6)	27.13%	42.38%	16.98%	41.74%	12.34%
Debt-Equity Ratio (times) (7)	0.58	0.50	0.70	0.85	1.37
Net fixed asset turnover ratio (times) (8)	9.44	9.96	12.07	4.40	1.56
Current Ratio (times) (9)	5,081.82	4,379.30	4,433.68	1,414.06	428.20

*As certified by M/s Doshi Doshi & Co., Chartered Accountants, by way of their certificate dated July 29, 2024.

Notes:

10. Revenue from Operations is used by our management to track the revenue profile of the business and in turn helps to assess the overall financial performance of our Company and volume of our business.

11. EBITDA provides information regarding the operational efficiency of the business.

12. EBITDA Margin (%) is an indicator of the operational profitability and financial performance of our business. 13. PAT Margin (%) is an indicator of the overall profitability and financial performance of the business.

14. Return on equity (ROE) is a measure of financial performance.

15. Return on capital employed is a financial ratio that measures our company’s profitability in terms of all of its capital. 16. Debt / Equity Ratio is used to measure the financial leverage of the Company and provides comparison benchmark against peers.

17. Net fixed asset turnover ratio is indicator of the efficiency with which our company is able to leverage its assets to generate revenue from operations.

18. The current ratio is a liquidity ratio that measures our company’s ability to pay short-term obligations or those due within one year.

DISCUSSION ON RESULT OF OPERATIONS

The following discussion on results of operations should be read in conjunction with the Restated Financial Statements for the period June 30, 2024, December 25, 2023, and for the financial years ended on March 31, 2024, 2023 and 2022.

Restated Financials

( in Lakhs)

							31. 03.2024
Particulars	30.06.24		% of Total revenue
					26.12.23 to 31.03.24		% of Total reven ue		01.04.23 25.12.23		to % of Total reven ue			31.03.23					% of Total revenue		31.03.22		% of Total revenue
Revenue
Revenue from operations	5,081.82		99.97%		4,379.30		99.97%		4,433.68		100.00%					1,414.06			99.66%		428.20		100.00%
Other income	1.46		0.03%		1.45		0.03%		0.01		0.00%			4.85					0.34%		-		0.00%
Total Revenue (A)	5,083.28		100.00 %		4,380.76 100.00%				4,433.69				100.00%				1,418.91		100.00%		428.20		100.00%
Expenses
Cost of materials consumed	3,019.45		59.40%		4,293.32		98.00%		4,347.06		98.05%				1,167.45				82.28%		370.16		86.44%
Purchase of Stock in Trade	707.84		13.92%		-		0.00%		-		0.00%			-					0.00%		-		0.00%
Changes in inventories of Finished Goods, WIP and Traded Goods	745.25		14.66%		-726.93		-16.59%		-124.49		-2.81%			-3.84					-0.27%		-19.50		-4.55%
Employee Benefits Expense	20.26		0.40%		27.21		0.62%		20.55		0.46%			30.41					2.14%		19.57		4.57%
Finance Costs	16.43		0.32%		14.17		0.32%		29.75		0.67%			20.48					1.44%		12.32		2.88%
Depreciation and amortisation Expense	9.94		0.20%		9.26		0.21%		14.76		0.33%			17.38					1.22%		14.78		3.45%
Other Expenses	26.27		0.52%		95.71		2.18%		39.96		0.90%			42.37					2.99%		18.21		4.25%
Total Expenses (B)	4,545.45		89.42%		3,712.73		84.75%		4,327.59		97.61% 1,274.26								89.81%		415.53		97.04%
PROFIT BEFORE TAX	537.83		10.58%		668.02		15.25%		106.09		2.39%			144.65					10.19%		12.67		2.96%
Tax Expense Current tax		134.69		2.65%		159.64		3.64%		37.07		0.84%						45.11		3.18%		0.11		0.03%
Deferred tax (credit)/charge		-0.77		-0.02%		10.15		0.23%		-		0.00%						-		0.00%		-		0.00%
Total Tax Expenses		133.92		2.63%		169.79		3.88%		37.07		0.84%						45.11		3.18%		0.11		0.03%
Profit for the period / year		403.91		7.95%		498.23		11.37%		69.02		1.56%						99.55		7.02%		12.57		2.94%

Revenue from operations:

Revenue from operations mainly consists of revenue from sale of manufactured and sale of Wheat, flour and Trading of Fruits and vegetables. Our Company is engaged in the manufacturing of wheat products such as wheat flour, organic wheat flour products and allied flour products.

Other Income:

Other income primarily comprises of interest on FDR.

Total Expenses:

Total expenses consist of operating cost like Cost of Raw Material consumed, Purchase of Stock in trade, Change in inventories of finished goods, stock in trade, Employee benefits expense, Finance costs, Depreciation and amortization expenses and other expenses.

Cost of Material consumed

Cost of Material consumed expenses primarily comprises of Purchase of raw material and change in stock of raw material and finished goods.

Change in inventories of finished goods and stock in trade

Change in inventories of finished goods and stock in trade comprises of increase/ (decrease) in stock of finished goods.

Employee benefits expense:

Employee benefits expense primarily comprises of Salaries, wages & bonus expenses to Staff and Directors, Staff welfare expenses, labour welfare fund and Employers Contribution to PF and Gratuity.

Finance Costs:

Our finance cost includes Interest expenses, Loan Processing Charges and Bank charges.

Depreciation and Amortization Expenses:

Depreciation includes depreciation on building, Plant & machinery, Computers, furniture and fixtures, Electrical Installations, Motor Vehicles and office equipment.

Other Expenses:

Other Expenses consists of Processing Charges, Freight Forwarding, Power & Fuel, Rates & Taxes, Insurance expenses, Manpower Expense, legal and professional expenses, Commission Expense, Rent, CSR Expenses, travelling & Conveyance expenses, repair and maintenance, Freight & Forwarding, auditor fees and miscellaneous expenditure.

FINANCIAL PERFORMANCE HIGHLIGHTS FOR THE PERIOD ENDED JUNE 30, 2024

Total Income:

Total income for the period ended June 30, 2024 stood at 5,083.28 Lakhs. The total income consists of revenue from operations and other income.

Revenue from Operations

During the period ended June 30, 2024 the net revenue from operation of our Company was 5,081.82 Lakhs from sale of manufactured and sale of Wheat and Flour and trading of Fruits and vegetables.

Other Income:

During the period ended June 30, 2024 the other income of our Company stood at 1.46 Lakhs. The main components of the other income are from interest on FDR.

Total Expenses

Total expenses consist of cost like cost of material consumed, change in inventories of finished goods and stock in trade, employee benefits expense, finance costs, depreciation and amortization expenses and other expenses. During the period ended June 30, 2024 the total expenses of our Company stood at 4,545.45 Lakhs.

Cost of Material consumed

During the period ended June 30, 2024 the Cost of Material consumed expenses of our Company stood at 3,019.45 Lakhs. Our Cost of Material consumed expenses primarily comprises of Purchase of material and other attributable costs related to purchase of raw material.

Purchase

During the period ended June 30, 2024 the Purchase of Stock in trade of our Company stood at 707.84 Lakhs. Our Purchases of Stock in trade primarily comprises of Fruits & Vegetables for trading.

Change in inventories of finished goods

During the period ended June 30, 2024, change in inventories of finished goods, and stock in trade of our Company stood at 745.25 Lakhs. Our Change in inventories of finished goods and stock in trade comprises of increase/(decrease) in finished goods.

Employee benefits expense:

During the period ended June 30, 2024, the employee benefit expenses of our Company stood at 20.26 Lakhs. The main components of Salaries, wages & bonus expenses, Director’s remuneration, Staff welfare expenses, labour welfare fund and Gratuity.

Finance Costs:

During the period ended June 30, 2024, the finance cost expenses of our Company stood at 16.43 Lakhs. Our finance cost includes Interest expenses and Bank charges.

Depreciation and Amortization Expenses:

During the period ended June 30, 2024, the Depreciation and amortization charges of our Company stood at 9.94 Lakhs, during the period the company has capitalized the fixed assets amounting to 46.60 lakhs.

Other Expenses:

During the period ended June 30, 2024, the Other Expenses of our Company stood at 26.27 Lakhs. Other Expenses consists of Power & Fuel, Rates & Taxes, Insurance expenses, legal and professional expenses, Rent, CSR Expenses, travelling & Conveyance expenses, repair and maintenance, auditor fees and miscellaneous expenditure.

Restated Profit before tax:

The Company reported Restated profit before tax for period ending June 30, 2024 of 537.83 Lakhs.

Restated profit after tax:

The Company reported Restated profit after tax for period ending June 30, 2024 of 403.91 Lakhs.

FINANCIAL YEAR 2024 COMPARED TO FINANCIAL YEAR 2023

Our Company was originally formed as Partnership Firm, under the Partnership Act 1932 ("Partnership Act") in the name and style of "M/s. Peshwa Wheat" pursuant to Deed of Partnership dated September 13, 2017. Peshwa wheat was thereafter converted from Partnership Firm to a Public Limited Company under the Companies Act, 2013 with the name and style of

"Peshwa Wheat Limited vide Registration no 069079 under the provisions of the Companies Act, 2013, pursuant to a certificate of incorporation issued by the Registrar of Companies, Gwalior dated December 26, 2023. The financial highlights for the fiscal year 2023-24 are presented in comparison with the previous fiscal year 2022-23. The period under review for FY 2023-24 is divided into two phases: from April 1, 2023, to December 25, 2023, during which the entity operated as a partnership firm, and from December 26, 2023, to March 31, 2024, following its conversion into a company.:

Total Income:

Total income for the financial year 2023-24 stood at 8,814.44 Lakhs whereas in Financial Year 2022-23 the same stood at 1,418.91 Lakhs representing an increase of 521.21%. The main reason of increase was increase in the volume of business operation of the company.

Revenue from Operations

During the financial year 2023-24 the net revenue from operation of our Company increased to 8,812.98 Lakhs as against 1,414.06 Lakhs in the Financial Year 2022-23 representing an increase of 523.24%.

Other Income:

During the financial year 2023-24 the other income of our Company was 1.46 Lakhs as against 4.85 Lakhs in the Financial Year 2022-23 representing a decrease of 69.84% which was due to reduction of interest on FDR.

Total Expenses:

The total expense for the financial year 2023-24 increased to 8,040.33 Lakhs from 1,274.26 lakhs in the Financial Year 2022-23 representing an increase of 530.98%. Such increase was due to increase in business operations of the Company. Major reason for such increase is due to Purchases, depreciation due to additions in machinery, and rent expense of the warehouses which is directly related to Sale of the products.

Cost of material consumed:

The Cost of material consumed for the financial year 2023-24 increased to 11,167.45 lakhs from 7,472.94 lakhs in the Financial Year 2022-23 representing an increase of 640.11%. Such increase was due to increase in business operations of the Company. major contributor for such increase is due to increase in Purchases of Raw materials.

Purchase of Stock in Trade:

There were no Purchases of Stock in Trade for the financial year 2023-24 and in the Financial Year 2022-23.

Change in inventories of finished goods and work in progress:

The closing inventories of finished goods and work in progress for the financial year 2023-24 was (851.42) lakhs as compared to (3.84) lakhs in the Financial Year 2022-23 representing a increase in change in inventories of 22097.83%. Reason for increase in Inventory position is due to higher Closing Stock of Inventory vis-?-vis Opening Stock of Inventory.

Employee benefits expense:

Our Company has incurred 47.76 Lakhs as Employee benefits expense during the financial year 2023-24 as compared to 30.41 Lakhs in the financial year 2022-23. The decrease of 57.04% was due to decrease in: (i) Directors Remuneration from Nil in financial year 2022-23 to 9.00 lakhs in financial year 2023-24; and (ii) Gratuity expense from Nil in financial year 2022-23 as compared to 1.85 lakhs in the financial year 2023-24.

Finance Cost:

Our Company has incurred 43.92 Lakhs as finance cost during the financial year 2023-24 as compared to 20.48 Lakhs in the financial year 2022-23. The increase of 114.47% was due to increase in term loan and vehicle loan during the of FY 2023-2024.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2023-24 stood at 24.01 Lakhs as against 17.38 Lakhs during the financial year 2022-23. The increase in depreciation was around 38.17% which was due to purchase of Motor Vehicles, Plant & Machinery, Office Equipment and Furniture & Fixtures.

Other Expenses:

Our Company has incurred 135.67 Lakhs during the Financial Year 2023-24 on other expenses as against 42.37 Lakhs during the financial year 2022-23. There was an increase of 220.18% mainly due (i) increase in Rates and taxes expense by 100.00% from Nil in financial year 2022-23 to 7.94 lakhs in financial year 2023-24, (ii) increase in Repair & Maintenance expense by 100.00% from Nil in financial year 2022-23 to 16.86 lakhs in financial year 2023-24, (iii) increase in Travelling & Conveyance from 9.14 lakhs in financial year 2022-23 to 29.52 lakhs in financial year 2023-24 an increase of 222.91% as compared with previous year.

Restated profit before tax:

Net profit before tax for the financial year 2023-24 increased to 774.12 Lakhs as compared to 144.65 Lakhs in the financial year 2022-23. The increase of 435.15% was majorly due to factors as mentioned above.

Restated profit for the year:

As a result of the foregoing factors, our profit after tax for the year increased by 469.85 % from net profit of 99.54 Lakhs in in financial year 2022-23 to net profit 567.25 lakhs in financial year 2023-24.

FINANCIAL YEAR 2023 COMPARED TO FINANCIAL YEAR 2022

Total Income:

Total income for the financial year 2022-23 stood at 1,418.91 Lakhs whereas in Financial Year 2021-22 the same stood at 428.20 Lakhs representing an increase of 231.37%. The main reason of increase was increase in the volume of business operation of the company.

Revenue from Operations

During the financial year 2022-23 the net revenue from operation of our Company increased to 1,414.06 Lakhs as against 428.20 Lakhs in the Financial Year 2021-22 representing an increase of 230.23%.

Other Income:

During the financial year 2022-23 the other income of our Company was to 4.85 Lakhs as against Nil in the Financial Year 2021-22 representing an increase of 100.00% which was due to increase of interest on FDR and other operating income.

Total Expenses:

The total expense for the financial year 2022-23 increased to 1,274.26 Lakhs from 415.53 lakhs in the Financial Year 2021-22 representing an increase of 206.66%. Such increase was due to increase in business operations of the Company. Major reason for such increase is due to Cost of materials consumed, changes in inventories which is directly related to Sale of the products.

Cost of material consumed:

The Cost of material consumed for the financial year 2022-23 increased to 1,167.45 lakhs from 370.16 lakhs in the Financial Year 2021-22 representing an increase of 215.39%. Such increase was due to increase in business operations of the Company. Major contributor for such increase is due to increase in Purchases of Raw materials.

Purchase of Stock in Trade:

There were no Purchases of Stock in Trade for the financial year 2022-23 and in the Financial Year 2021-22.

Change in inventories of finished goods and work in progress:

The closing inventories of finished goods and work in progress for the financial year 2022-23 was (3.84) lakhs as compared to (19.50) lakhs in the Financial Year 2021-22 representing a decrease in change in inventories of 80.33%. Reason for Decrease in Inventory position is due to higher Closing Stock of Inventory vis-?-vis Opening Stock of Inventory.

Employee benefits expense:

Our Company has incurred 30.41 Lakhs as Employee benefits expense during the financial year 2022-23 as compared to 19.57 Lakhs in the financial year 2021-22. The increase of 55.42% was due to decrease in: (i) Increase in salaries and bonus from 18.50 lakhs in financial year 2021-22 to 26.98 lakhs in financial year 2022-23; and (ii) Staff Welfare from 1.88 lakhs in financial year 2021-22 as compared to 3.44 lakhs in the financial year 2022-23.

Finance Cost:

Our Company has incurred 20.48 Lakhs as finance cost during the financial year 2022-23 as compared to 12.32 Lakhs in the financial year 2021-22. The increase of 66.16% was due to increase in term loan and vehicle loan during the of FY 2022-2023.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2022-23 stood at 17.38 Lakhs as against 14.78 Lakhs during the financial year 2021-22. The increase in depreciation was around 17.62% which was due to purchase of Building, Motor Vehicles, Plant & Machinery, Office Equipment and Furniture & Fixtures and Installations of Electrical equipment.

Other Expenses:

Our Company has incurred 42.37 Lakhs during the Financial Year 2022-23 on other expenses as against 18.21 Lakhs during the financial year 2021-22. There was an increase of 132.75% mainly due (i) increase in Power & Fuel expense by 246.37% from 8.72 lakhs in financial year 2021-22 to 30.21 lakhs in financial year 2022-23, (ii) increase in Travelling & Conveyance expense by 35.29% from 6.76 lakhs in financial year 2021-22 to 9.14 lakhs in financial year 2022-23.

Restated profit before tax:

Net profit before tax for the financial year 2022-23 increased to 144.65 Lakhs as compared to 12.67 Lakhs in the financial year 2021-22. The increase of 1,041.83% was majorly due to factors as mentioned above.

Restated profit for the year:

As a result of the foregoing factors, our profit after tax for the year increased by 692.67 % from net profit of 12.56 Lakhs in in financial year 2021-22 to net profit 99.54 lakhs in financial year 2022-23.

RELATED PARTY TRANSACTIONS

Related party transactions with certain of our promoter, directors and their entities and relatives primarily relate to remuneration, salary, commission and issue of Equity Shares. For further details of related parties kindly refer chapter titled

" Restated Financial Statements" beginning on page 174 of this Draft Red Herring Prospectus.

OFF-BALANCE SHEET ITEMS

We do not have any other off-balance sheet arrangements, derivative instruments or other relationships with any entity that have been established for the purposes of facilitating off-balance sheet arrangements.

QUALIFICATIONS OF THE STATUTORY AUDITORS WHICH HAVE NOT BEEN GIVEN EFFECT TO IN THE RESTATED FINANCIAL STATEMENTS

There are no qualifications in the audit report that require adjustments in the Restated Financial Statements.