Piotex Industries Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Prospectus. You should also read the section entitled "Risk Factors" beginning on page 20 and "Forward Looking Statements" beginning on page 14, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our restated financial statements for the period ended March 31, 2024, March 31, 2023 and March 31, 2022 including the schedules and notes thereto and the reports thereto, which appear in the section titled "Financial Information of our company" on Page No. 132 of the Prospectus. The financial statements presented and discussed herein have been prepared to comply in all material respects with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended), the relevant provisions of the Companies Act and SEBI (Issue of Capital and Disclosure Requirements) Regulations. Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year/financial year are to the twelve-month period ended on March 31 of that year. The forward-looking statements contained in this discussion and analysis is subject to a variety of factors that could cause actual results to differ materially from those contemplated by such statements.

Overview

Our company is in business of contract manufacturing and trading of yarn, fabric and cotton bales. Our Products are used for various purposes such as garments & home furnishings, etc. We engage in trading of cotton bales. We also manufacture cotton yarn through out-sourcing model (Job-work) which are almost always in demand by the garment manufacturing industry.

The company is engaged mainly in 2 activities:

1. Trading of Cotton Bales, Synthetic Fiber, Cotton Yarn and Fabric: The company was established in Oct 2019, and till then the company has started trading business of Cotton Bales and Cotton Yarn in the textile hub of Maharashtra viz. Malegaon, Ichalkaranji and Bhiwandi. Also company supply the cotton yarn to Burhanpur and Ahmedabad. This business is already going on day to day, and also added fabric trading business from 2022-23. Also Company has a Sole Selling Agency agreement with Babasaheb Deshmukh Industies Private Limited for their finished product i.e. Cotton Yarn.

2. In the same way company started manufacturing through job work and Fabric Weaving job in which company provides the Yarn to jobworkers and weaving unit and they do the process of weaving on contracted charges and return the finished goods. The finished goods i.e. Fabric is then sold to customers.

Our Company was originally incorporated on October 24, 2019 as "Piotex Industries Private Limited" under the provisions of the Companies Act, 2013 with the Registrar of Companies, Central Registration Centre. Subsequently our Company was converted into Public Limited Company and name of company was changed from "Piotex Industries Private Limited" to "Piotex Industries Limited" vide fresh certificate of incorporation dated August 11, 2023 issued by the Registrar of Companies, Pune.

Our registered office is situated at F/II Block, Plot No. 16/2, M.I.D.C., Pimpri, Pune, Maharashtra--411018, India.

We ensure the consistent quality of the Cotton Yarn as from the beginning we have the power of selection and control of raw material from the farm. Our company also focuses in high quality of yarn and fabrics utilizing best technology, at the most competitive prices and maintaining long term association with our clients. The level of advancement in job work process determines the productivity of machines and labour, which in turn, determines the production and profitability of our Company. Our technical team is equipped with modern technology and processing techniques by virtue of which we are able to ensure quality output.

The companys team of skilled professionals comprises project managers and quality assurance specialists. The vast experience and expertise in their respective domains enable them to deliver solutions that are of the highest quality and meet the highest industry standards.

Our Business Process includes production & use of yarn during the manufacturing process. We endeavour to satisfy customers by continuous improvement through process innovation and quality maintenance. We focus on producing quality product to increase customer satisfaction and develop a positive brand image in the industry. Our management and team have enabled us to maintain continuing customer relations, ensuring repeat order flows.

Our Promoter and key managerial personnel have been instrumental in the growth of our business and actively advise us on corporate strategy and planning. We have a strong management team with significant industry experience. Our Promoters, Mr.

Abhay Shriram Asalkar and Mr. Yogesh Omprakash Nimodiya have 25 years of experience each in textile industry, thus vast experience of the Directors have been instrumental in determining the vision and growth strategies for our Company. We further believe that our market position has been achieved by adherence to the vision of our Promoter and senior management team and their experience of over a decade in the industry in which our Company operates.

For the year period ended March 31, 2024 our Companys Total Income and Restated Profit after tax were Rs. 11893.88 Lakhs and Rs. 300.80 Lakhs and year ended March 31, 2023, our Companys Total Income and Restated Profit after tax were Rs. 8667.21 Lakhs and Rs. 288.75 Lakhs. For the year ended March 31, 2022, our Companys Total Income and Restated Profit after tax were

Rs. 8046.39 Lakhs and Rs. 74.29 Lakhs.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to Restated Standalone Financial Statements under chapter titled "Restated Financial Statements" beginning on page 132 of this Prospectus.

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 20 of this Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. Disruption in our business process.

2. Our ability to successfully implement our strategy, our growth and expansion, technological changes.

3. Fail to attract, retain and manage the transition of our management team and other skilled & unskilled employees;

4. Our ability to protect our intellectual property rights and not infringing intellectual property rights of other parties;

5. Ability to respond to technological changes;

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

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

8. Our ability to effectively manage a variety of business, legal, regulatory, economic, social and political risks associated with our operations;

9. Recession in the market;

10. Changes in laws and regulations relating to the industries in which we operate; 11. Effect of lack of infrastructure facilities on our business;

12. Our ability to meet our capital expenditure requirements;

13. Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition; 14. Failure to obtain any approvals, licenses, registrations and permits in a timely manner;

15. Changes in political and social conditions in India or in countries that we may enter, 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; 16. Occurrence of natural disasters or calamities affecting the areas in which we have operations;

17. Conflicts of interest with affiliated companies, the promoter group and other related parties; 18. The performance of the financial markets in India and globally;

19. Any adverse outcome in the legal proceedings in which we are involved; 20. Our ability to expand our geographical area of operation;

21. Concentration of ownership among our Promoters.

RESULTS OF OUR OPERATION

			For the year ended
Particulars	March 31, 2024	% of Total Income	March 31, 2022	% of Total Income	March 31, 2021	% of Total Income
Revenue from Operations	11,845.92	99.60	8,600.58	99.23	8,022.18	99.70
Other Income	47.96	0.40	66.63	0.77	24.20	0.30
Total Income (A)	11,893.88	100.00	8,667.21	100.00	8,046.39	100.00
EXPENDITURE
Cost of Material Consumed	376.49	3.17	-	-	-	-
Purchase of Stock in Trade	11,004.39	92.52	7,308.96	84.33	8,567.93	106.48
Changes in inventories of Finished Goods, WIP and Traded Goods	8.02	0.07	847.86	9.78	(808.77)	(10.05)
Employee benefits expense	42.28	0.36	10.94	0.13	21.22	0.26
Finance costs	24.65	0.21	90.21	1.04	38.76	0.48
Depreciation and amortization expense	2.23	0.02	0.19	0.00	-	-
Other expenses	33.86	0.28	17.03	0.20	127.36	1.58
Total Expenses (B)	11,491.92	96.62	8,275.20	95.48	7,946.49	98.76
Profit before
Exceptional	401.96	3.38	392.01	4.52	99.90	1.24
Items(A-B)
Exceptional Items	-	-	--	--	--	--
Profit Before Tax	401.96	3.38	392.01	4.52	99.90	1.24
Tax expense :
(i) Current tax	101.29	0.85	103.07	1.19	25.61	0.32
(ii) Deferred tax	(0.12)	(0.00)	0.19	0.00	-	-
Total Tax Expenses	101.17	0.85	103.26	1.19	25.61	0.32
Profit for the year	300.80	2.53	288.75	3.33	74.29	0.92

Review of Restated Financials,

Key Components of Companys Profit and Loss Statement

Revenue from Sale of Services:

Revenue from operations mainly consists from Revenue from Sale of Products i.e. Cotton Yarn & Textile Items.

Other Income:

Other Income Consist of Interest Income, Discount Received & Other Misc. Incomes etc.

Expenses:

Companys expenses consist of, Cost of Material Consumed, Purchase of Stock in Trade, Changes in Inventories of WIP, Finished goods & Stock in Trade, Employee benefit expenses, Finance Cost, Depreciation and Amortization expenses & Other Expenses.

Cost of Material Consumed:

Cost of material consumed mainly consist Opening Stock of Raw Material, Purchase of Raw Material Less Closing Stock of Raw Material available at the end of reporting period.

Purchase of Stock in Trade:

Purchase of Stock in Trade consist of Items purchase for Trading purpose only.

Change in Inventory of WIP, Finished Goods & Stock in Trade:

Change in Inventory of WIP, Finished goods & Stock in Trade consist of Difference between opening & closing Stock.

Employee Benefits Expense:

Employee benefit expenses includes Salaries and Wages, Staff Welfare Expenses & Contribution to statutory funds.

Finance Cost:

Finance Cost mainly consist of Interest on borrowings & other Finance Cost such as Loan processing fees, bank charges etc.

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/ Companies Act, 1956, as applicable.

Other Expenses:

Other Expenses includes Audit Fees, Commission Expenses, Facility Usage Charges, Freight, Insurance, Labour Charges, Legal & Professional Expenses, Rates & Taxes, Rent etc.

Fiscal 2024 compared with Fiscal 2023

Revenue from Operation

Revenue from operations had increased by 37.73% from 8600.58 lakhs in Fiscal 2023 to 11845.92 lakhs in Fiscal 2024. The change was primarily due to increase in sales of products.

Other Income

Other income had decreased by 28.01 % from 66.63 lakhs in Fiscal 2023 to 47.96 lakhs in Fiscal 2024 due to decrease in Interest Income which decreased from 52.87 lakhs in fiscal 2023 to 42.00 lakhs in fiscal 2024, Decrease in other Misc Income from 12.64 Lakhs in Fiscal 2023 to 5.47 Lakhs in Fiscal 2024.

Cost of Material Consumed

Cost of Material Consumed had increased by 100.00% from Rs. NIL in Fiscal 2023 to Rs. 376.49 Lakhs.

Purchase of Stock in Trade

Purchase of Stock in Trade during the year has been increased by 50.56% from Rs. 7308.96 lakhs in Fiscal 2023 to Rs. 11004.39 Lakhs in fiscal 2024 due to higher volume in trading during the year

Change in Inventories of WIP, Finished Goods & Stock in Trade

Change in Inventory of WIP, Finished Goods & Stock in Trade has been decrease by 99.05% from Rs. 847.86 Lakhs in Fiscal 2023 to Rs. 8.02 Lakhs in Fiscal 2024 due to Decrease in Inventory holding level by the company.

Employee Benefit Expenses

Employee benefit expenses had increased by 286.28% from Rs. 10.94 Lakhs in Fiscal 2023 to Rs. 42.28 Lakhs in Fiscal 2024 majorly due to increase in Salary & Wages from Rs. 10.43 lakhs in Fiscal 2023 to Rs. 41.03 Lakhs in Fiscal 2024.

Finance Costs

Finance Costs had decreased by 72.67% from 90.21 lakhs in Fiscal 2023 to 24.65 Lakhs in Fiscal 2024. This was primarily due to decrease in Interest Expenses from Rs. 89.84 Lakhs in Fiscal 2023 to Rs. 24.19 Lakhs in Fiscal 2024.

Depreciation and Amortization Expenses

Depreciation had increased by 1059.06% from 0.19 Lakhs in Fiscal 2023 to 2.23 lakhs in Fiscal 2024 since in previous fiscal 2023, the depreciation has been charged for the days used in previous fiscal instead of full year .

Other Expenses

Other expenses had decreased by 98.81% from 17.03 lakhs in Fiscal 2023 to 33.86 lakhs in Fiscal 2024. The increase was primarily due to increase in Labour Charges, Freight, etc.

Tax Expenses

The Companys tax expenses had decreased from 103.26 lakhs in the Fiscal 2023 to 101.17 lakhs in Fiscal 2024. This was primarily due to decrease in Current Tax whiche was decreased from 103.07 Lakhs in fiscal 2023 to 101.29 Lakhs in fiscal 2024.

Profit after Tax

After accounting for taxes at applicable rates, our Company reported a net profit of 300.80 lakhs in Fiscal 2024 as compared to a net profit of 288.75 lakhs in Fiscal 2024.

Fiscal 2023 compared with Fiscal 2022

Revenue from Operation

Revenue from operations had increased by 7.21% from 8022.18 lakhs in Fiscal 2022 to 8600.58 lakhs in Fiscal 2023. The change was primarily due to increase in sales of products.

Other Income

Other income had increased by 175.28 % from 24.20 lakhs in Fiscal 2022 to 66.63 lakhs in Fiscal 2023 due to increase in

Interest Income which increased from 9.58 lakhs in fiscal 2022 to 52.87 lakhs in fiscal 2023, Increase in other Misc Income from 7.50 Lakhs in Fiscal 2022 to 12.64 Lakhs in Fiscal 2023.

Purchase of Stock in Trade

Purchase of Stock in Trade during the year has been decreased by 14.69% from Rs. 8567.93 lakhs in Fiscal 2022 to Rs. 7308.96 Lakhs since company has Higher opening stock at the beginning of the year.

Change in Inventories of WIP, Finished Goods & Stock in Trade

Change in Inventory of WIP, Finished Goods & Stock in Trade has been increase by 204.83% from Rs. (808.77) Lakhs in Fiscal 2022 to Rs. 847.86 Lakhs in Fiscal 2023 due to Decrease in Inventory holding level by the company.

Employee Benefit Expenses

Employee benefit expenses had decreased by 48.41% from Rs. 21.22 Lakhs in Fiscal 2022 to Rs. 10.94 Lakhs in Fiscal 2023 majorly due to decrease in Salary & Wages from Rs. 21.04 lakhs in Fiscal 2022 to Rs. 10.43 Lakhs in Fiscal 2023.

Finance Costs

Finance Costs had increased by 132.75% from 38.76 lakhs in Fiscal 2022 to 90.21 Lakhs in Fiscal 2023. This was primarily due to increase in Interest Expenses from Rs. 35.54 Lakhs in Fiscal 2022 to 89.84 Lakhs in Fiscal 2023.

Depreciation and Amortization Expenses

Depreciation had increased by 100% from NIL in Fiscal 2022 to 0.19 lakhs in Fiscal 2023 due to addition of Property Plant & Equipments during the year.

Other Expenses

Other expenses had decreased by 86.63% from 127.36 lakhs in Fiscal 2022 to 17.03 lakhs in Fiscal 2023. The decrease was primarily due to decrease in commission expenses, Bank Charges, Freight, Insurance Expenses, Labour charges, & Other Misc. Expenses.

Tax Expenses

The Companys tax expenses had increased from 25.61 lakhs in the Fiscal 2022 to 103.26 lakhs in Fiscal 2023. This was primarily due to increase in Current Tax whiche was increased from 25.61 Lakhs in fiscal 2022 to 103.07 Lakhs in fiscal 2023.

Profit after Tax

After accounting for taxes at applicable rates, our Company reported a net profit of 288.75 lakhs in Fiscal 2023 as compared to a net profit of 74.29 lakhs in Fiscal 2022.

Cash Flows

( in lakhs)

	For the year ended March 31,
Particulars	2024	2023	2022
Net Cash from Operating Activities	(243.96)	282.97	(348.97)
Net Cash from Investing Activities	(42.05)	(12.50)	0.15
Net Cash used in Financing Activities	246.99	(246.48)	268.90

Cash Flows from Operating Activities

Net cash from operating activities for fiscal 2024 was at (243.96) lakhs as compared to the Profit Before Tax at 401.96 lakhs while for fiscal 2023 Net cash from operating activities was at 282.97 lakhs as compared to the Profit Before Tax at 392.01 Lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital.

Net cash from operating activities for fiscal 2023 was at 282.97 lakhs as compared to the Profit Before Tax at 392.01 lakhs while for fiscal 2022 Net cash from operating activities was at (348.97) lakhs as compared to the Profit Before Tax at 99.90 Lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital.

Cash Flows from Investment Activities

In fiscal 2024, the net cash invested in Investing Activities was (42.05) lakhs. This was mainly on account of increase in non current assets.

In fiscal 2023, the net cash invested in Investing Activities was (12.50). lakhs. This was mainly on account of Purchases of Fixed Assets.

In fiscal 2022, the net cash invested in Investing Activities was 0.15 lakhs. This was mainly on account of decrease in Non Current Assets.

Cash Flows from Financing Activities

In fiscal 2024, the net cash from financing activities was 246.99. lakhs. This was on account of Proceeds from Borrowings & issue of share capital

In fiscal 2023, the net cash from financing activities was (246.48) lakhs. This was on account of proceeds from Borrowings.

In fiscal 2022, the net cash from financing activities was 268.90 lakhs. This was on account of Repayment of Borrowings & Finance Cost.

Information required as per Item (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

1. Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. There are no Unusual or infrequent events or transactions in our Company. The transactions are as per usual business operations.

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Except for any change in economic policy affecting our industry in India, there are no other significant economic changes that may materially affect or likely to affect income from continuing operations.

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

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 20 in the Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues

Our Companys future costs and revenues will be determined by growth of industry in which we operate.

5. Increases in net sales or revenue and Introduction of new products or services or increased sales prices

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

6. Status of any publicly announced New Products or Business Segment

Our Company has not announced any new Product.

7. Seasonality of business

Our Companys business is not seasonal.

8. Dependence on few customers/ clients

The percentage of contribution of our Companys Top Customers/Clients for the year ended March 31, 2024 is as follows:

Particulars	Customers
Top Ten (%)	97.74%

9. Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Business Overview" beginning on pages

79 and 92, respectively of the Prospectus.

10. Details of material developments after the date of last balance sheet i.e. March 31, 2024

After the date of last Balance sheet i.e. March 31, 2024, no material events have occurred after the last audited period.