Picturepost Studios Ltd Management Discussions

<dhhead>MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS </dhhead>

The following discussion and analysis of our financial condition and results of operations for the period July 11, 2023 to March 31, 2024, for the period ended July 10, 2023 and financial years ended on 2023 and 2022 is based on, 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 158 of this Draft 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.

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in this Draft Red Herring Prospectus. You should also read the section titled "Risk Factors" beginning on page 27 of this Draft 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 Picturepost Studios Limited (formerly known as Picturepost Studios Private Limited), our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements for the period July 11, 2023 to March 31, 2024, for the period ended July 10, 2023 and financial years ended on 2023 and 2022 included in this Draft Red Herring Prospectus beginning on page 158 of this Draft 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 market in which we operate, changes in Government Regulations, Tax Laws and other Statutes and incidental factors.

BUSINESS OVERVIEW

Picturepost Studios Limited ("Company or Picturepost Studios or PPS") is a creative and innovative post-production Company specializing in film editing, Computer Generated Imagery ("CGI"), visual effects ("VFX"), video conversion, grading, film and Commercial mastering of channels and digital platforms. Our Company was established in the year 2019 as a Limited Liability Partnership ("LLP") under the name and style of "Prodace Solutions LLP",

LLP deed dated August 29, 2019 was entered into with the initial partners, Mr. Purab Kohli, Mr. Bharat Mody, Mr. Ibrahim Husain Khatri and M/s. Kustard Technologies. Thereafter, the current two of the Promoters, Mr. Shailendra Ishwardas Chandgotia and Ms. Deepa Shailendra Chandgothia, Executive Directors of our Company were appointed as the Designated Partners in the LLP and the initial partners had exited the LLP vide Supplementary Deed-1 dated March 25, 2021, Thereafter the name was changed from Prodace Solutions LLP to Picturepost Studios LLP vide Certificate of Incorporation issued consequent upon name change dated August 26, 2022 which was then converted into a Private Limited Company vide a Certificate of Incorporation dated June 01, 2023.

Our Company is currently promoted by Mr. Parish Tekriwal, Chairman and Managing Director, Mr. Shailendra Ishwardas Chandgotia, Executive Director, Ms. Pooja Shailendra Chandgothia, Chief Financial Officer and Ms. Deepa Shailendra Chandgothia, Executive Director. Our Promoters manage and control the major affairs of our Business Operations with their considerable experience in our Industry. For more details, please see the chapter titled, "Our Management" and "Our Promoter and Promoter Group" on page 135 and 188 of this Draft Red Herring Prospectus.

Picturepost Studios, with a team of professionals, offer a wide range of services to cater to the diverse needs of the entertainment industry. We are one of the visual effects Company covering the entire spectrum of post- production requirements ranging from digital intermediates and visual effects to online editorials and operates as a studio, specializing in Films, Web series and advertisements, With a strong focus on high-end colour grading, motion design, visual effects, and online editing. We push creative boundaries and embrace innovation. Our commitment to delivering cutting-edge solutions and adapt to evolving technologies has propelled us to rapid success. We specialize in creating visual experiences that captive audience around the world.

Post-production is a part of the process of filmmaking, video production and photography. Post-production includes all stages of production occurring after principal photography or recording individual program segments. Our studio has specialized equipment, software, and skilled professionals to enhance the quality of the footage and bring the Directors vision to life. we ensure that the final product meets industry standards and effectively communicates the intended message to the audience. Overall, post-production studios play a vital role in transforming raw footage into a polished, professional film or video project. Our services portfolio allows Producers, Directors and Filmmakers to build bespoke addressing disparate aspects of advertisements or films for end viewers.

For the period July 11, 2023 to March 31, 2024, our Company’s Total Income and Restated Profit after tax were Rs.2212.17 Lakhs and Rs 292.13 Lakhs respectively. For the period ended July 10, 2023, our Company’s Total Income and Restated Profit after tax were Rs.442.57 Lakhs and Rs. 51.43 Lakhs respectively. For the year ended March 31,

2023, our Company’s Total Income and Restated Profit after tax were Rs.1085.35 Lakhs and Rs. 59.97 Lakhs respectively, compared to our Company’s Total Income and Restated Profit after tax were Rs.29.00 Lakhs and Rs.

21.69 Lakhs respectively, over previous year ended i.e. March 31, 2022.

 

Key Performance Indicators of our Company.

( in lakhs)

Key Financial Performance	July 11, 2023 to March 31, 2024	July 10, 2023	March 31, 2023	March 31, 2022
Revenue from Operations (1)	2,197.85	441.51	1,084.84	29.00
EBITDA (2)	520.41	93.34	107.96	21.69
EBITDA Margin (%) (3)	23.68%	21.14%	9.95%	74.79%
PAT	292.13	51.43	59.97	21.69
PAT Margin (%) (4)	13.29%	11.65%	5.53%	74.79%
Return on equity (%) (5)	68.03%	37.83%	104.79%	(213.61%)
Return on capital employed (%) (6)	26.75%	13.68%	17.20%	1495.86%
Debt-Equity Ratio (times) (7)	0.79	1.65	2.42	-
Current Ratio (times) (8)	0.80	1.12	1.25	1.20

 

As certified by M/s Vinay Bhushan & Associates, Chartered Accountants, Peer Reviewed Auditors through their certificate dated May 21, 2024.

Notes:

1) Revenue from operation means revenue from sale of our products

2) EBITDA is calculated as Profit before tax + Depreciation + Finance Costs Other Income

3) EBITDA Margin is calculated as EBITDA divided by Revenue from Operations

4) PAT Margin is calculated as PAT for the period/year divided by revenue from operations

5) Return on Equity is calculated by comparing the proportion of net income against the amount of average shareholder equity

6) Return on Capital Employed is calculated as follows: Profit before tax + Finance Costs Other Income (EBIT) divided by (Tangible Net Worth + Total Debt + Deferred Tax Liabilities)

7) Debt to Equity ratio is calculated as Total Debt divided by equity

8) Current Ratio is calculated by dividing Current Assets to Current Liabilities

Explanation for KPI metrics

Key Financial Performance	Explanations
Financial KPIs
Revenue from Operations	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
EBITDA	EBITDA provides information regarding the operational efficiency of the business
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 the business
Return on equity (%)	Return on equity (ROE) is a measure of financial performance
Return on capital employed (%)	Return on capital employed is a financial ratio that measures our company’s profitability in terms of all of its capital
Debt-Equity Ratio (times)	Debt / Equity Ratio is used to measure the financial leverage of the Company and provides comparison benchmark against peers
Current Ratio (times)	The current ratio is a liquidity ratio that measures our company’s ability to pay short-term obligations or those due within one year

 

Operational KPI’s of the Company:

Key Financial Performance	July 11, 2023 to March 31, 2024	July 10, 2023	March 31, 2023	March 31, 2022
Revenue split between domestic and exports
Domestic Market (in Lakhs)	2160.85	441.51	1084.84	29.00
Export Market (in Lakhs)	37.00	-	-	-
Domestic Market (%)	98.32%	100%	100%	100%
Export Market (%)	1.68%	-	-	-

 

SIGNIFICANT DEVELOPMENTS AFTER MARCH 31, 2024

In the opinion of the Board of Directors of our Company, since the date of the period ended March 31, 2024 as disclosed in this Draft Red Herring Prospectus, 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.

 

FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subject to various risks and uncertainties, including those discussed in the section titled "Risk Factors" on page 27 beginning of this Draft Red Herring Prospectus.

Our Company’s future results of operations could be affected potentially by the following factors:

Changes in laws and regulations relating to the industry in which we operate;

Our ability to successfully implement our growth strategy and expansion plans;

Our ability to meet our further capital expenditure requirements;

Our ability to attract and retain personnel;

Conflict of Interest with affiliated companies, the promoter group and other related parties;

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

Changes in government policies and regulatory actions that apply to or affect our business;

Changes in political and social conditions in India, the monetary and interest rate policies of India and other countries;

Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

The occurrence of natural disasters or calamities;

Our inability to maintain or enhance our brand recognition;

Changes in customer demands, tastes and preferences;

Other factors beyond our control; and

Our ability to manage risks that arise from these factors.

 

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 158 of this Draft Red Herring Prospectus.

 

COMPONENTS OF INCOME AND EXPENDITURE

Revenue from operations: Revenue from operations mainly consists from Sales of services.

 

Other Income: Other Income Consist of Interest Income, Refund of Duty Drawback, Rental Income, etc.

 

Expenses: Company’s expenses consist of Operating Expenses, Employee Benefit Expenses, Depreciation Expenses,

Finance Cost & Other Expenses.

 

Operating Expenses: Operating Expenses consist of Contractual Expenses.

 

Employee Benefits Expense: Employee benefit expenses includes Salaries and Wages, Directors Remuneration & Staff Welfare expenses etc.

 

Finance Cost: Finance Cost includes Interest paid on borrowings, Bank Charges & Commission.

 

Depreciation and Amortization Expense: We recognize Depreciation and Amortization expense on a WDV Basis as per the rates set forth in the Companies Act, 2013, as applicable.

 

Other Expenses: Other expenses include Rent, Repair & Maintenance, Factory Expenses, Power and Fuel Expenses, Commission expenses etc.

 

RESULTS OF OPERATIONS

The following discussion on results of operations should be read in conjunction with the Restated Financial Statements of our Company for the period July 11, 2023 to March 31, 2024, for period ended July 10, 2023 and for the financial years ended on 2023 and 2022:

 

( in Lakhs)

		For The Year Ended 31st March
Particulars	Period July 11, 2023 to March 31, 2024	% of Total Revenue	Period ended July 10, 2023	% of Total Revenue	2023	% of Total Revenue	2022	% of Total Revenue
Revenue:
Revenue from
Operations	2,197.85	99.35%	441.51	99.76%	1,084.84	99.95%	29.00	100.00%
Other income	14.32	0.65%	1.06	0.24%	0.51	0.05%	0.00	0.00%
Total revenue	2,212.17	100.00%	442.57	100.00%	1,085.35	100.00%	29.00	100.00%
Expenses:
Operating Expenses	1,009.97	45.66%	228.63	51.66%	514.70	47.42%	0.00	0.00%
Employee Benefits
Expenses	216.09	9.77%	7.09	1.60%	40.49	3.73%	7.00	24.14%
Finance costs	43.84	1.98%	6.22	1.41%	6.77	0.62%	0.00	0.00%
Depreciation and
Amortization	136.93	6.19%	13.18	2.98%	15.09	1.39%	0.00	0.00%
Other expenses	451.38	20.40%	112.43	25.40%	421.68	38.85%	0.31	1.07%
Total Expenses	1,858.21	84.00%	367.55	83.05%	998.73	92.02%	7.31	25.21%
Profit before exceptional and extraordinary items and tax	353.96	16.00%	75.00	16.95%	86.61	7.98%	21.69	74.79%
Exceptional Items	-	-	-	-	-	-	-	-
Profit before extraordinary items and tax	353.96	16.00%	75.00	16.95%	86.61	7.98%	21.69	74.79%
Extraordinary items	-	-	-	-	-	-	-	-
Profit before tax	353.96	16.00%	75.00	16.95%	86.61	7.98%	21.69	74.79%
Tax expense:
Current tax	71.52	3.23%	24.24	5.48%	25.04	2.31%	-	-
Deferred Tax	-9.69	-0.44%	-0.67	-0.15%	1.6	0.15%	-	-
Net Total Tax
Expenses	61.83	2.79%	23.57	5.33%	26.64	2.45%	-	-
Profit /(Loss) for the period from continuing operations	292.13	13.21%	51.43	11.62%	59.97	5.53%	21.69	74.79%

 

COMPARISON OF PERIOD JULY 11, 2023 TO MARCH 31, 2024 AND PERIOD ENDED JULY 10, 2023 TO FINANCIAL YEAR ENDED 2023

 

Revenue from Operation

Revenue from operations for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to 2197.85 lakhs and 441.51 lakhs respectively. Cumulatively generated the revenue from operations of 2,639.36 lakhs for Fiscal 2024. In Fiscal 2023 the revenue from operation was Rs 1,084.84 lakhs. The increase in revenue from operation is of 1,554.52 lakhs i.e., 143.29%. This was primarily due to company has started providing services to OTT sectors such as Netflix, Disney+, Amazon Prime etc. The company has also started its DI division which brought it with good banners and projects. This strategic expansion has pivotal role in the shift of revenue from operations by 143.29%.

 

Other Income

Other Income for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to 14.32 lakhs and 1.06 lakhs respectively. Cumulatively generated the other income of 15.38 lakhs for fiscal 2024. In fiscal 2023 it was 0.51 lakhs. The increase was majorly due to receipt of rental income of 12.50 lakhs and interest income of 1.02 lakhs.

Operating Expenses

Operating Expenses for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to

1,009.97 lakhs and 228.63 lakhs respectively. Cumulatively incurred the operating expenses of 1238.60 lakhs for Fiscal 2024. In fiscal 2023 it was 514.70 lakhs, thus there is increase of 140.65%. This basically include the contractual expenses incurred by the company to hire the professionals with certain expertise for the various post-production assignments. Every project requires professional with different expertise and hence the company has to hire the professionals considering the need of the post production project to be delivered as per the requirement of the client.

 

Employee Benefit Cost

Employee benefit expenses for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to 216.09 lakhs and 7.09 lakhs respectively. Cumulatively incurred the employee benefit expenses of 223.18 lakhs for Fiscal 2024. In fiscal 2023 it was 40.49 lakhs, thus there is increase of 451.19%. This basically include salary and wages of 172.89 lakhs managerial remuneration of 31.50 lakhs, gratuity expenses of 3.38 lakhs and staff welfare expenses of 15.40 lakhs. This cost has risen primarily due to the need of human resource in the organisation to deliver post production services in timely manner.

 

Finance Cost

Finance cost for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to 43.84 lakhs and 6.22 lakhs respectively. Cumulatively incurred the finance cost of 50.06 lakhs for Fiscal 2024. In fiscal 2023 it was 6.77 lakhs, thus there is increase of 639.43%. This is due to the increase in the borrowing by 282.62 lakhs due to increase in need of working capital in the business.

 

Depreciation and Amortization

Depreciation for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to 136.93 lakhs and 13.18 lakhs respectively. Cumulatively incurred the depreciation and amortization of 150.11 lakhs for Fiscal 2024. In fiscal 2023 it was 15.09 lakhs. The increase is primarily due to the purchase of fixed assets during the year of 675.58 lakhs.

 

Other Expenses

Other expenses for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to

451.38 lakhs and 112.43 lakhs respectively. Cumulatively incurred the other expenses of 563.81 lakhs for Fiscal 2024. In fiscal 2023 it was 421.68 lakhs. This was primarily due to commission expenses incurred of 119.35 lakhs in fiscal 2024 which was 3.66 lakhs in fiscal 2023, computer and software expense of 22.66 lakhs in fiscal 2024, which was 1.93 lakhs in fiscal 2023, office expenses of 11.39 lakhs in fiscal 2024 to 2.13 lakhs in fiscal 2023

 

Profit Before Tax

The Profit before tax for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to 353.96 lakhs and 75.00 lakhs respectively. Cumulatively profit before tax was of 428.96 lakhs for Fiscal 2024. Previously in fiscal 2023 the same was 86.61 lakhs.

 

Tax Expenses

Tax expenses for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to 61.83 lakhs and 23.57 lakhs respectively. Cumulatively tax expenses were of 85.40 lakhs for Fiscal 2024. Previously in fiscal 2023 the tax expenses were of 26.64 lakhs.

 

Profit After Tax

The Profit after tax for the period July 11, 2023 to March 31, 2024 and period ended July 10, 2023 was amounting to

292.13 lakhs and 51.43 lakhs respectively. Cumulatively profit before tax was of 343.56 lakhs for Fiscal 2024. Profit after tax was 59.97 lakhs in fiscal 2023. The increase in PAT is basically due to the revenue growth and the cost reduction in the business. Also, Outsourcing work to other post production studios helped us to increase our profit margins.

 

COMPARISON OF FINANCIAL YEAR ENDED 2023 TO FINANCIAL YEAR ENDED 2022

 

Revenue from Operation

Revenue from operations had increased by 99.95% from 29.00 lakhs in Fiscal 2022 to 1084.84 lakhs in Fiscal 2023.

This increase was primarily due to company focused on hiring strong talent of pool of artists and technical team to attract more clients in fiscal 2023. Secondly in fiscal 2023 company had launched a computer graphics division, which was a crucial addition in the services offerings. This made company’s studio a one stop shop for all clients. Prior to this in fiscal 2022 company was operating only on a commission basis and were outsourcing all the services.

 

Other Income

Other income had increased to 0.51 lakhs in Fiscal 2023 due to receipt of interest income of 0.34 lakhs and balance written off of 0.16 lakhs.

 

Operating Expense

Operating expenses had increased to 514.70 Lakhs. This was Nil in fiscal 2022 as company was operating by outsourcing of all its services.

 

Employee Benefit Expenses

Employee benefit expenses had increased by 478.43% from 7.00 lakhs in Fiscal 2022 to 40.49 lakhs in Fiscal 2023. This increase was primarily due to increase in salary & wages to 18.00 Lakhs as company has started its post-production services during the fiscal 2023.

 

Finance Cost

Finance Cost had increased to 6.77 lakhs in Fiscal 2023. This increase was primarily due to increase in interest on borrowings and bank charges as company had borrowed 273.40 lakhs during fiscal 2023.

 

Depreciation and Amortization Expenses

Depreciation of 15.09 lakhs is charged in Fiscal 2023. Since in the year 2023 company has made capex of 85.26

Lakhs.

 

Other Expenses

Other expenses were 421.68 lakhs in Fiscal 2023. The increase was primarily due to company had started its post-production services and incurred all the related expenses. Other Expenses majorly include advertisement and sales promotion expenses of 56.73 lakhs, legal and professional fees of 114.24 lakhs, rent of 223.77 lakhs in Fiscal 2023.

 

Tax Expenses

The Company’s tax expenses were 26.64 lakhs in Fiscal 2023. This includes current tax expenses of 25.04 lakhs and deferred tax expenses of 1.60 lakhs.

 

Profit after Tax

After accounting for taxes at applicable rates, our Company reported a net profit of 59.97 lakhs in Fiscal 2023 as compared to net profit of 21.69 in Fiscal 2022. This was due to company had shifted from outsourcing model to actually delivering the post-production service.

 

CASH FLOWS

The table below is our cash flows for the period ended March 31, 2024 and July 10, 2023 and financial years ended on 2023 and 2022:

 

( in lakhs)

Particulars	March 31, 2024	July 10, 2023	March 31, 2023	March 31, 2022
Net Cash from Operating Activities	119.75	115.39	(23.22)	25.63
Net Cash from Investing Activities	(693.21)	(92.68)	(287.08)	(27.45)
Net Cash from Financing Activities	569.36	(23.52)	319.57	1.52

 

Cash Flows from Operating Activities

Net cash from operating activities as at March 31, 2024 was 119.75 lakhs as compared to the Profit Before Tax at 353.96 lakhs. This was primarily due to adjustments against, changes in Working Capital of ( 359.97) lakhs & Income Tax Paid of 44.87.

Net cash from operating activities as at July 10, 2024 was 115.39 lakhs as compared to the Profit Before Tax at 75.00 lakhs. This was primarily due to adjustments against, changes in Working Capital of 46.06 lakhs & Income Tax Paid of 25.02.

Net cash from operating activities as at March 31, 2023 was ( 23.22) lakhs as compared to the Profit Before Tax at

86.61 lakhs while for fiscal 2022 net cash from operating activities was at 25.63 lakhs as compared to the Profit Before Tax at 21.69 Lakhs. This was primarily due to adjustments against, changes in Working Capital of ( 131.35) lakhs & Income Tax Paid.

 

Cash Flows from Investing Activities

As at March 31, 2024, the net cash invested in Investing Activities was ( 693.21) lakhs. This was mainly on account of Purchases of Fixed Assets of 675.58 lakhs, long term loans & advance of 31.15 lakhs and rental income of 12.50 lakhs.

As at July 10, 2023, the net cash invested in Investing Activities was ( 92.68) lakhs. This was mainly on account of Purchases of Fixed Assets of 92.73 lakhs.

As at March 31, 2023, the net cash invested in Investing Activities was ( 287.08) lakhs. This was mainly on account of Purchases of Fixed Assets of 85.26 lakhs and non-current investment of 202.16 lakhs.

As at March 31, 2022, the net cash invested in Investing Activities was (27.45) lakhs. This was mainly on account of loans and advances made of 27.45 lakhs.

 

Cash Flows from Financing Activities

As at March 31, 2024, the net cash from financing activities was 569.36 lakhs. This was on account of repayment of long-term proceeds from Short-Term Borrowings, security deposits, interest paid on borrowings and proceeds from issue of share capital.

As at July 10, 2023, the net cash from financing activities was ( 23.52) lakhs. This was on account of repayment of long-term Borrowings, interest paid on borrowings and withdrawal of partner’s capital.

As at March 31, 2023, the net cash from financing activities was 319.57 lakhs. This was on account of proceeds from

Long Term Borrowings, interest paid on borrowings and withdrawal of partner’s capital.

As at March 31, 2022, the net cash from financing activities was 1.52 lakhs. This was on account of proceeds from partner’s capital.

 

RELATED PARTY TRANSACTIONS

Related party transactions with certain of our promoter, directors and their entities and relatives primarily relate to remuneration, salary, contractual expenses, interest expenses and loans given and loans accepted. For further details of related parties kindly refer chapter titled "Restated Financial Statements" beginning on page 158 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

The Restated Financial Statements do not contain any qualifications which have not been given effect in the restated financial statements.

 

QUALITATIVE DISCLOSURE ABOUT MARKET RISK

 

Financial Market Risks

Market risk is the risk of loss related to adverse changes in market prices, including interest rate risk. We are exposed to interest rate risk, inflation and credit risk in the normal course of our business.

 

Interest Rate Risk

Our financial results are subject to changes in interest rates, which may affect our debt service obligations in future and our access to funds.

 

Effect of Inflation

We are affected by inflation as it has an impact on the salary, wages, etc. In line with changing inflation rates, we rework our margins so as to absorb the inflationary impact.

 

Credit Risk

We are exposed to credit risk on monies owed to us by our customers. If our customers do not pay us promptly, or at all, we may have to make provisions for or write-off such amounts.

 

OTHER MATTERS

Details of Default, if any, Including Therein the Amount Involved, Duration of Default and Present Status, in Repayment of Statutory Dues or Repayment of Debentures or Repayment of Deposits or Repayment of Loans from any Bank or Financial Institution

Except as disclosed in chapter titled "Restated Financial Statements" beginning on page 158 of this Draft Red Herring Prospectus, there have been no defaults in payment of statutory dues or repayment of debentures and interest thereon or repayment of deposits and interest thereon or repayment of loans from any bank or financial institution and interest thereon by the Company.

 

Material Frauds

There are no material frauds, as reported by our statutory auditor, committed against our Company, in the last three Fiscals.

 

Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, during the period/ years under review there have been no transactions or events, which in our best judgment, would be considered "unusual" or "infrequent".

 

Significant Economic Changes that Materially Affected or are Likely to Affect Income from Continuing Operations

Indian rules and regulations as well as the overall growth of the Indian economy have a significant bearing on our operations. Major changes in these factors can significantly impact income from continuing operations. There are no significant economic changes that materially affected our Company’s operations or are likely to affect income from continuing operations except as described in chapter titled "Risk Factors" beginning on page 27 of this Draft Red Herring Prospectus.

 

Known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations

Other than as described in the section titled "Risk Factors" and chapter titled "Management’s Discussion and Analysis of Financial Conditions and Results of Operations", beginning on page 27 and 163 of this Draft Red Herring Prospectus respectively to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our company from continuing operations.

 

Future relationship between Costs and Income

Other than as described in the section titled "Risk Factors" beginning on page 27 of this Draft Red Herring Prospectus, to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

Significant proportion of our total revenue have historically been derived from a limited number of Customers. The % of Contribution of our Customers vis a vis the revenue from operations for the period July 11, 2023 to March 31, 2024, for the period ended July 10, 2023 and for the financial years ended March 31, 2023 and 2022 and are as follows:

Particulars	For the period July11, 2023 to March 31, 2024	For the period ended July 10, 2023	For the year ended March 30, 2023	For the year ended March 30, 2022
Top Ten Customers	75.04	76.38	81.69	100
(% of revenue from operations)

 

Status of any publicly announced new products or business segments

Please refer to the chapter titled "Our Business" beginning on page 106 of this Draft Red Herring Prospectus for new business segments.

 

The extent to which the business is seasonal

Our business is not seasonal in nature.

 

Competitive Conditions

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Our Business" beginning on pages 90 and 106, respectively of the Draft Red Herring Prospectus.