Platinum Industries Ltd Management Discussions

You should read the following discussion and analysis of our financial condition and results of operations, and our assessment of the factors that may affect our prospects and performance in future periods, together with our Restated Financial Statements for the Financial Years 2023, 2022 and 2021 including the notes thereto and reports thereon, each included in this Draft Red Herring Prospectus. Unless otherwise stated, financial information used in this section is derived from the Restated Financial Statements.

While we have historically prepared our financial statements in accordance with Indian GAAP, in accordance with applicable law, we have adopted Indian Accounting Standards (Ind AS) with effect from April 01, 2021, with a transition date of April 01, 2020. This section includes a discussion of financial results for the Financial Years 2023, 2022 and 2021 which were prepared under Ind AS. For the purposes of transition to Ind AS, we have followed the guidance prescribed in "Ind AS 101 - First Time adoption of Indian Accounting Standard". The Restated Financial Statements, prepared and presented in accordance with Ind AS and in accordance with the requirements of Section 26 of the Companies Act, the SEBI ICDR

Regulations and the "Guidance Note on Reports in Company Prospectus (Revised 2019)" issued by the

ICAI.

Ind AS differs in certain material respects from Indian GAAP, IFRS and U.S. GAAP. Accordingly, the degree to which our financial statements will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Ind AS. As a result, the Restated Financial Statements may not be comparable to our historical financial statements.

This discussion and analysis contain forward-looking statements that reflect our current views with respect to future events and our financial performance, which are subject to numerous risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. You should also read "Forward-Looking Statements" and "Risk Factors" on pages 25 and 36, respectively, which discuss a number of factors and contingencies that could affect our business, financial condition and results of operations. Our Financial Year ends on March 31 of each year and accordingly, references to Financial Year, are to the 12-month period ended March 31 of the relevant year.

Unless the context otherwise requires, in this section, references to "we", "us", "our", "the Company" or "our Company" refers to Platinum Industries Limited.

Unless otherwise indicated, industry and market data used in this section has been derived from industry publications, in particular, the report titled "Assessment of the PVC stabilizers industry" dated June 2023

(the "CRISIL Report"), prepared and issued by CRISIL and exclusively commissioned and paid for by us in connection with the Issue. Unless otherwise indicated, financial, operational, industry and other related information derived from the CRISIL Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, see "Risk Factor No. 37 Industry information included in this Draft Red Herring Prospectus has been derived from an industry report exclusively commissioned and paid for by us for such purpose at an agreed fee for the purpose of the Issue. There can be no assurance that such third-party statistical, financial and other industry information is Either complete or accurate." on page 149. Also see, "Currency Conventions, Currency of Presentation, Use of Financial Information, Industry and Market Data" on page 21.

OVERVIEW

We are a multi-product company engaged in the business of manufacturing stabilizers. Our business segment includes PVC stabilizers, CPVC additives and lubricants. We operate in the speciality chemicals industry. Our products find their application in PVC pipes, PVC profiles, PVC fittings, electrical wires and cables, SPC floor tiles, Rigid PVC foam boards, packaging materials, etc. The Indian speciality chemicals industry, accounting for ~26% of the overall chemicals industry (excluding pharmaceuticals), was worth $29 billion in fiscal 2020. The industry expanded at 6.7% CAGR over fiscals 2015-20, driven by an increase in domestic offtake from various end-user industries and rising exports. However, in fiscal 2021, the industry declined 3.4% on-year because of a slowdown in economic activity and the consequent decline in demand from end-user industries. The industry exhibited recovery in fiscal 2022 with an estimated worth of $33.5 billion. The Indian speciality chemical industry is expected to reach $51 billion by fiscal 2026, growing at 11.1% CAGR over 2022-26. (Source: CRISIL Report)

According to the CRISIL Report, we are the third largest player of PVC stabilizer in terms of sales with an 8.00% market share for the financial year 2021-22 in the domestic market. Amongst the considered peers in the industry, our Company has in the fiscal 2022 recorded the highest Revenue CAGR (FY20-FY22), EBITDA margin, PAT margin, return ratios (ROE and ROCE) and gross fixed asset turnover ratio of 53.0%, 12.2%, 9.7%, 220.4%, 76.5%, 58.2% and 39.6, respectively. Our gross margin improved significantly between fiscals 2020 and 2022, from 15.6% to 23.8%, thereby recording the 2^nd highest gross margin vis-?-vis all peers in fiscal 2022. (Source: CRISIL Report) For details, please see "Our Industry- Benchmarking with Indian Peers" on page 178 of this Draft Red Herring Prospectus.

PVC stabilizers are chemical additives used in the production of polyvinyl chloride (PVC) based products to enhance the performance and durability of PVC. These stabilizers enhance the thermal stability of PVC by allowing it to withstand heat without significant degradation or loss of physical properties. They prevent the discoloration, embrittlement, and degradation of PVC caused by UV exposure, ensuring the longevity and aesthetics of PVC-based applications. It also improves the mechanical properties of PVC, such as its impact strength, tensile strength, and flexibility. PVC stabilizers thus, contribute to the overall durability and performance of PVC products, making them suitable for a wide range of applications.

In recent times, there has been a noticeable shift in the trends and preferences within the PVC stabilizer industry, particularly in sectors such as potable water distribution, agriculture, constructions, medical consumables, wires and cables. Traditionally, lead-based PVC stabilizers were commonly utilized for their stabilizing properties. However, concerns regarding the potential health effects associated with lead have led to a change in the industry landscape. To address these concerns, there has been a gradual transition towards the usage of calcium zinc-based PVC stabilizers. Calcium-zinc stabilizers offer a viable alternative as they provide effective stabilization while eliminating the health risks associated with lead. Calcium-zinc stabilizers have gained popularity due to their improved environmental and safety profiles. We have also recognized the significance of this industry shift and have responded by gradually transitioning from lead-based PVC stabilizers to calcium zinc-based and calcium organic based stabilizers. This transition allows us to align with current market demands and adhere to evolving safety and environmental regulations. By offering calcium zinc-based stabilizers and calcium organic based stabilizers, we provide our customers with products that meet their performance requirements while prioritizing health and sustainability.

CPVC additives, or chlorinated polyvinyl chloride additives, are chemical substances added to enhance the properties and performance of chlorinated polyvinyl chloride (CPVC) materials. CPVC additives improve the heat and chemical resistance of CPVC materials, allowing them to withstand higher temperatures compared to standard PVC and withstand exposure to a wide range of chemicals and corrosive substances. CPVC Additives also provide flame retardant properties to CPVC materials. This makes CPVC suitable for applications that involve hot water handling such as plumbing systems, industrial pipes, and fire sprinkler systems and for use in chemical processing plants, laboratories, and industrial applications where resistance to chemicals is crucial. CPVC Additives also improve the mechanical strength and toughness of CPVC materials. They enhance the impact resistance, tensile strength, and dimensional stability, making CPVC suitable for demanding applications where durability and strength are required.

Lubricants (PE Wax and Lubpack) are an integral part of PVC formulation. We manufacture both internal and external lubricants. Internal lubricants are used for the reduction of the friction between the molecules of PVC by lowering the melt viscosity. External lubricants help in the metal release effect, mold release effect, reduction in the friction.

We provide customized products and solutions directly to our customers and also through our network of distributors. We also undertake trading activities of associated commodity chemicals such as Titanium dioxide and PVC/CPVC resin. We export our products to other countries also. As on the date of this draft red herring prospectus we have a distribution network of 12 spread across India.

Our Manufacturing Facility is located at Palghar, Maharashtra which is spread across an aggregate parcel of land admeasuring about 21,000 sq. ft. ("Manufacturing Facility"). As on the date of this Draft Red Herring Prospectus, our Manufacturing Facility has obtained ISO 9001:2015 certification for quality management systems. Our Manufacturing Facility which is strategically situated in close proximity to JNPT (Nhava Sheva) Port, Maharashtra (JNPT) from where we receive our supply of imported raw materials as well as export of finished goods to the international market.

We invest in R&D activities to create a differentiating factor and sustainability in our products and services vis-?-vis our competitors. In addition to our manufacturing facilities at Palghar, Maharashtra we have a dedicated in-house R&D facility located at Gut no.181/11 to 181/26, village Dhansar, Palghar, Maharashtra ("R&D Facility"). Our R&D Facility is equipped with analytical laboratory infrastructure for various developmental activities which includes process, finished products and other raw materials. We share our R&D facility with our group companies. We also have technical collaboration agreement with HMS Concept E.U. which is a sole proprietorship concern of Dr. Horst Michael Schiller, who is an internationally renowned scientist with over three decades of experience in the PVC industry.

Our business model is aimed at consistently expanding our product portfolio by introducing new products to cater to multiple end-use applications. With strict focus on product quality and good track record in the distributor network, we have an established brand image which helps us in penetrating new product categories.

Our Company was originally incorporated as a Limited Liability Partnership in the year 2016 under the provisions of the Limited Liability Partnership Act, 2008 under the name and style of "Platinum Industries LLP". In July 2020, our limited liability partnership was converted into a Private Limited company registered under the Companies Act. We initially started manufacturing lead-based stabilizers and mixed metal-based stabilizers and subsequently diversified by manufacturing Low lead stabilizers, organic stabilizers, CPVC Additives and lubricants.

Krishna Dushyant Rana, our Managing Director and Parul Krishna Rana, our Executive Director are the Promoters of our Company. Our Promoters have combined experience of over two decades in the chemical industry and act as a driving force of our Company. Our Company has grown consistently over the last few years under their leadership.

We, through our subsidiary Platinum Stabilizers Egypt LLC, intend to establish a project in Egypt, which shall be spread over an aggregate parcel of land admeasuring about 10,000 sq. mts ("Proposed Facility 1") and shall venture into manufacturing of PVC stabilizers (both lead based and non-lead based). Further, we are in a process of setting up a new manufacturing facility at Palghar, Maharashtra which shall be spread across an aggregate parcel of land admeasuring about 14,800 sq. mts. ("Proposed Facility 2"), (collectively referred to as the "Proposed Facilities") which shall be used to manufacture of PVC stabilizers (non-lead based). For further information, see "Our Business - Proposed Facilities" and "Objects of the Issue" on pages 194 and 107, respectively. The table below sets forth certain key operational and financial metrics for the periods indicated:

( in Million, except percentages)

		As of and for the Fiscal
Sr No.	Metric	2023	2022	2021
Financial Metrics
1	Revenue From operations ( in Millions)	2,314.81	1,881.56	892.69
2	Total Income ( in Millions)	2,325.55	1,892.38	895.30
3	Operating EBITDA ( in Millions)	538.57	253.54	75.63
4	Operating EBITDA Margin (%)	23.27%	13.47%	8.47%
	Profit/(loss) after tax for the year/ period	375.84	177.48	48.15
5	( in Millions)
6	Net profit Ratio/ Margin (%)	16.24%	9.43%	5.39%
7	Return on Equity (ROE) (%)	90.02%	132.39%	138.63%
8	Debt To Equity Ratio	0.28	1.09	0.73
9	Interest Coverage Ratio	24.49	16.13	18.37
10	ROCE (%)	56.85%	52.51%	74.28%
11	Current Ratio	1.87	1.29	1.04
12	Net Capital Turnover Ratio	6.07	11.01	98.30
Operational Metrics
	Number of customers served (B2B	273	273	120
1	segment)
2	Number of distributors	13	11	12
	Cost of goods sold as % of revenue from	62.61%	76.24%	79.58%
3	operations
4	Total metric ton sales done	12,364.68	10,028.59	6,494.73
5	Sales realization per metric ton	189.29	183.82	137.25

Notes: a) Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements. b) Operating EBITDA refers to earnings before interest, taxes, depreciation, amortisation, gain or loss from discontinued operations and exceptional items. Operating EBITDA excludes other income. c) Operating EBITDA Margin refers to EBITDA during a given period as a percentage of revenue from operations during that period. d) Net Profit Ratio/Margin quantifies our efficiency in generating profits from our revenue and is calculated by dividing our net profit after taxes by our revenue from operations. e) Return on equity (RoE) is equal to profit for the year divided by the average total equity and is expressed as a percentage. f) Debt to equity ratio is calculated by dividing the debt (i.e., borrowings (current and non-current) and current maturities of long-term borrowings) by total equity (which includes issued capital and all other equity reserves). g) Interest Coverage Ratio measures our ability to make interest payments from available earnings and is calculated by dividing EBIT by finance cost. h) RoCE (Return on Capital Employed) (%) is calculated as EBIT divided by capital employed. Capital employed is calculated as net worth and total debt including lease liabilities. i) Current Ratio is a liquidity ratio that measures our ability to pay short-term obligations (those which are due within one year) and is calculated by dividing the current assets by current liabilities. j) Net Capital Turnover Ratio quantifies our effectiveness in utilizing our working capital and is calculated by dividing our revenue from operations by our working capital (i.e., current assets less current liabilities).

SIGNIFICANT FACTORS AFFECTING OUR FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled

"Risk Factors" beginning on page 36 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

RESULTS OF OPERATIONS

The following table sets forth detailed total income data from our restated consolidated statement of profit and loss for the Fiscals 2023, 2022 and 2021, the components of which are also expressed as a percentage of revenue from operations for such years.

	Fiscal 2023			Fiscal 2022				Fiscal 2021
Particulars	Rs. in Millions		%	Rs. in Millions			%	Rs. in Million s			%
i. Sale of Product
Sale of Manufactured Products	2313.29		99.47	1879.69			99.33	891.41			99.57
ii. Other operating revenues:
Other operating revenue	1.52		0.07	1.87			0.10	1.27			0.14
Total Revenue from Operations (i+ii)	2314.81		99.54	1881.56			99.43	892.69			99.71
Other Income
Gain on foreign exchange fluctuation	5.95		0.26	5.79			0.31	1.67			0.19
Interest on Fixed Deposits	2.87		0.12	1.21			0.06	0.31			0.03
Interest on intercorporate deposits	1.52		0.07	-			-	-			-
Interest on VAT refund	-		-	0.04			-	-			-
Liabilities no longer required written back	-		-	1.73			0.09	-			-
Miscellaneous income	0.26		0.01	0.84			0.04	-			-
Notional interest on financial assets carried at amortized cost	0.14		0.01	0.13			0.01	0.12			0.01
Gain on waiver of lease payments during Covid period	-		-	-			-	0.52			0.06
Gain / (loss) on discontinuing leasehold premises	-		-	1.09			0.06	-			-
iii. Total Other Income	10.74	0.46			10.82	0.57			2.61	0.29
Total Income (i+ii+iii)	2325.55	100.00			1892.38	100.00			895.30	100.00

Our Companys total income increased to 2,325.55 million in Fiscal 2023 from 1,892.38 million in Fiscal 2022 and 895.30 million in Fiscal 2021. The increase in Fiscal 2023 over Fiscal 2022 is 22.89%, while the growth in total income in Fiscal 2021 over Fiscal 2020 is 111.37%.

Product wise bifurcation of revenue (on Standalone basis):

Product Category	Fiscal 2022-23		Fiscal 2021-22		Fiscal 2020-21
	(Rs.)	(%)	(Rs.)	(%)	(Rs.)	(%)
PVC Stabilizers
Lead based stabilizers	274.48	11.73	318.97	17.30	293.03	32.87
Non-Lead based	923.16	39.44	457.29	24.81	227.38	25.51
stabilizers
CPVC Additives	177.48	7.58	139.75	7.58	92.46	10.37
Lubricants	626.08	26.75	397.07	21.54	149.43	16.76
Trading Sales(1)	318.26	13.60	522.07	28.32	123.24	13.83
Others(2)	21.10	0.90	8.32	0.45	5.87	0.66
Total	2,340.56	100.00	1,843.48	100.00	891.41	100.00

Geographical area wise bifurcation of revenue (on Standalone basis):

Product	Fiscal 2022-23		Fiscal 2021-22		Fiscal 2020-21
Category	(Rs.)	(%)	(Rs.)	(%)	(Rs.)	(%)
Domestic	2,210.85	94.46	1,721.99	93.50	843.71	94.65
Exports	129.71	5.54	119.62	6.50	47.70	5.35
Total	2,340.56	100.00	1,841.61	100.00	891.41	100.00

The major products of our Company are Lead based stabilizers, Non Lead based stabilizers, CPVC Additives, Lubricants which pegged a sales figure of 2,001.2 million, 1,313.08 million, and 762.3 million for the Fiscal 2023, 2022 and 2021 respectively.

For Fiscal 2023, our Company has revenue from operation of 2,340.56 million of which domestic sales, export sales 93.96%, and 6.04% respectively. For The same figure for Fiscal 2022 stood at 92.37%, and 7.27% respectively of total income of 1,843.47 million. The same figures for Fiscal 2021 stood at 94.46%, 5.54% and respectively of the total Income of 891.41 million.

The following table sets forth select financial data from our restated Consolidated statement of profit and loss for the Financials years 2023, 2022 and 2021, the components of which are also expressed as a percentage of total income for such years.

	Fiscal 2023		Fiscal 2022		Fiscal 2021
Particulars	Rs. in Millions	% of Total Income	Rs. in Millions	% of Total Income	Rs. in Millions	% of Total Income
Income
Revenue from operations	2314.81 99.54%		1881.56	99.43%	892.69	99.71%
Other income	10.74	0.46%	10.82	0.57%	2.61	0.29%
Total income	2325.55	100.00%	1892.38	100.00%	895.30	100.00%
Expenditure
Cost of materials consumed	1282.60	55.15%	873.13	46.14%	590.27	65.93%
Changes in inventories of finished goods and work- in-progress	-27.46	-1.18%	-4.08	-0.22%	1.07	0.12%
Purchase of stock in trade	135.81	5.84%	508.05	26.85%	115.18	12.86%
Employee benefit expenses	82.11	3.53%	38.06	2.01%	32.99	3.69%
Finance Cost	21.69	0.93%	15.84	0.84%	3.85	0.43%
Depreciation and Amortization	18.27	0.79%	8.92	0.47%	7.44	0.83%
Other Expenses	303.18	13.04%	212.86	11.25%	77.54	8.66%
Total expenses	1816.18	78.10%	1652.78	87.34%	828.35	92.52%
Profit before tax	509.36	21.90%	239.60	12.66%	66.95	7.48%
- Current tax	137.37	5.91%	64.17	3.39%	19.08	2.13%
- Deferred tax	-3.85	-0.17%	-2.05	-0.11%	-0.28	-0.03%
Net Profit for the year	375.84	16.16%	177.48	9.38%	48.15	5.38%

Cost of materials consumed.

Cost of materials consumed comprises raw material costs incurred in production of stearic acid, litharge, and polyethylene waxes. The primary raw materials are used in the manufacture of our products stearic acid, litharge, and polyethylene waxes. Raw materials consumed represent a significant majority of our total expenditure. Cost of materials consumed accounted for 55.15%, 46.14%, and 65.93% of our total income for the Fiscal 2023, Fiscal 2022 and Fiscal 2021 respectively.

Changes in inventories of finished goods and work-in-progress

Changes in inventories of finished goods, work-in-progress and stock in trade consists of costs attributable to an increase or decrease in inventory levels during the relevant financial period in finished goods, stock-in-progress and stock in trade. Changes in inventories of finished goods and work-in-progress accounted for (1.18%), (0.22%), and (0.12%) of our total income for the Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.

Employee benefits expense

Employee benefits expense includes (i) salaries and wages, and remuneration to director; (ii) contribution to provident fund and ESIC, (iii) Gratuity, other staff welfare expenses amongst other expenses for staffers at plants and at office. Employee benefits expense accounted for 3.53%, 2.01% and 3.69% of our total income for Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.

Finance costs

Finance costs include interest expense on borrowings, finance lease obligations, incorporate deposits, statutory dues, income tax and bank charges & other borrowing costs. Finance costs accounted for 0.93%, 0.84% and 0.43% of our total income for Fiscal 2023, Fiscal 2022, and Fiscal 2021, respectively.

Depreciation and amortization expenses

Depreciation represents depreciation on our property, plant and equipment. Amortization represents amortization of right of use assets. Depreciation is calculated on a written down value method over the estimated useful life of all assets, these lives are in accordance with Schedule II to the Companies Act, 2013 or as per the best estimation of the management. The estimated useful lives, residual value and depreciation method are reviewed at the end of each reporting period, with the effect of any change in estimate accounted for on a prospective basis.

Depreciation and amortization expense accounted for 0.79%, 0.47%, and 0.83% of total income for the Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.

Other expenses

Other expenses include factory expense such as, consumables and stores consumed, consumption of power & fuel, rent, repair & maintenance- plant & machinery and building, electricity expenses, other direct expenses, commission, freight & forwarding charges, technical consultancy fees, insurance, legal & professional fees, travelling and conveyance, miscellaneous expenses. Other expenses accounted for 13.04%, 11.25% and 8.82% of our total income for the Fiscal 2023, Fiscal 2022 and Fiscal 2021, respectively.

Fiscal 2023 compared with Fiscal 2022

Total income

The total income increased by 433.17 million, or 22.89 %, from 1892.38 million in Fiscal 2022 to

2325.55 million in Fiscal 2023. This was primarily due to an increase in our revenue from operations.

Revenue from Operations

Revenue from operations increased by 433.25 million, or 23.03%, from 1881.56 million in Fiscal 2022 to 2,314.81 million in Fiscal 2023. This was primarily attributed to an increase in revenue from Non lead based stabilizers by 101.88% to 923.16 million for Fiscal 2023 from 457.29 million for Fiscal 2022, increase in revenue from lubricants by 57.67% to 626.08 million for Fiscal 2023 from 397.07 million for Fiscal 2022, and increase in revenue from CPVC Additives by 27.00% to 177.48 million for Fiscal

2023 from 139.75 million for Fiscal 2022.This increase was majorly attributed due to increase in production capacity and increase in volume of units sold in these products.

Other Income

Our other income decreased by 0.09 million or by 0.79% from 10.82 million in Fiscal 2022 to 10.74 million in Fiscal 2023. This increase was driven by an increase in net gains on foreign exchange fluctuation, increase in interest on fixed deposits and increase in interest on corporate deposits which is 0.16 million, 1.65 million and 1.52 million from fiscal year 2022 to fiscal year 2023. This was partially offset by a decrease in Liabilities written back, miscellaneous income, loss on discontinuing leasehold premises which cumulatively account for decrease in other income by 3.39 million form the fiscal 2022 to fiscal 2023.

Total Expenditure

Total expenses increased by 163.40 million or by 9.89% from 1652.78 million in Fiscal 2022 to 1816.18 million in Fiscal 2023. This increase was primarily driven by 409.47 million or by 46.90% increase in cost of materials consumed and 44.06 million, 90.31 million increase in employee benefits expenses and other expenses respectively this was offset to some extent by decrease in purchases of stock-in-trade from 508.05 million in fiscal 2022 to 135.81 million in fiscal 2023.

Cost of materials consumed.

Cost of material consumed increased by 409.47 million or by 46.90% from 873.13 million in Fiscal 2022 to 1282.60 million in Fiscal 2023. The surge in demand for finished products and the expansion of production in non-lead-based stabilizers, CPVC additives, and lubricants resulted in a rise in raw material procurement from 963.78 million in Fiscal 2022 to 1,371.23 million in Fiscal 2023.

Changes in Inventories of Finished Goods & Work-in-Progress.

Change in inventories of finished goods, work in progress was a reduction of 4.08 million for Fiscal 2022 as compared to a reduction of 27.46 million for Fiscal 2023, primarily attributable to a higher inventory of finished goods and work in progress at the end of Fiscal 2023.

Purchase of stock in trade.

The purchase of stock in trade declined by 372.25 million for Fiscal 2022 it was 508.05 million as compared to 135.81 million for Fiscal 2023.

Employee benefits expense

Employee benefits expense increased by 44.06 million or by 115.76% from 38.06 million in Fiscal 2022 to 82.11 million in Fiscal 2023. This was primarily due to a general increase in the salaries and wages, including remuneration paid to the directors which together was 34.01 million in fiscal 2022 and 76.66 million in fiscal 2023. Employee benefit expenses contributed 2.01% of the total revenues for the Fiscal 2022 vis-?-vis 3.53% of the total revenues for the Fiscal 2023.

Finance costs

Finance costs increased by 5.85 million or by 36.92% from 15.84 million in Fiscal 2022 to 21.69 million in Fiscal 2023. This was due to increase in interest expenses on vehicle loan, cash credit facility and inter corporate deposit from 7.90 million and in Fiscal 2022 to 15.78 million in Fiscal 2023 respectively.

Depreciation and amortization expense

Our depreciation and amortization expense increased by 9.34 million or 104.70%, from 8.92 million in Fiscal 2022 to 18.27 million in Fiscal 2023. The increase in depreciation was primarily due addition in tangible asset by 16.14 million and due addition in right to use assets by 41.08 million.

Other expenses

Other expenses increased by 90.31 million or by 42.43% from 212.86 million in Fiscal 2022 to 303.18 million in Fiscal 2023. This was primarily due to

an increase in commission expenses to 132.38 million in Fiscal 2023 from 77.29 million in Fiscal 2022 primarily to increase in our operations.

an increase in sales promotion expenses to 23.26 million in Fiscal 2023 from 6.02 million in Fiscal

2022 our focus on increasing our brand presence and increase the sales of product.

an increase in technical consultancy fees on sales to 22.02 million in Fiscal 2023 from 13.33 million in Fiscal 2022.

an increase in power and fuel, travelling and conveyance and miscellaneous expenses b 12.25 million in Fiscal 2023 compared to Fiscal 2022.

Tax expense

Our total tax expense increased by 71.40 million or by 114.94% from 62.12 million in Fiscal 2022 to 133.52 million in Fiscal 2023. This was largely driven by a increase in current tax of 73.20 million which was offset by decrease in deferred tax by 1.80 million in Fiscal 2023.

Profit/(Loss) for the year

For the various reasons discussed above, and following adjustments for tax expense, we recorded an increase in our profit by 198.36 million or by 111.77% from 177.48 million in Fiscal 2022 to 375.84 million in

Fiscal 2023. Profit after tax as a percentage of total revenue stood at 16.16% for Fiscal 2023 versus 9.38% for Fiscal 2022.

Fiscal 2022 compared with Fiscal 2021

Total income

Our total revenue increased by 433.17 million, or by 22.89%, from 1892.38 million in the Fiscal 2021, to 2325.55 million in the Fiscal 2022. This was primarily due to an increase in our revenue from operations aided by an increase in other income as well.

Revenue from Operations

Our revenue from operations increased by 1091.54 million or by 59.85% from 1823.69 million in Fiscal 2021 to 2915.23 million in Fiscal 2022. This was primarily attributed to an increase in revenue from Non lead based stabilizers by 101.11% to 457.29 million for Fiscal 2022 from 227.38 million for Fiscal 2021, increase in revenue from lubricants by 165.72% to 397.07 million for Fiscal 2022 from 149.43 million for Fiscal 2021, and increase in revenue from CPVC Additives by 51.15% to 139.75 million for Fiscal 2022 from 92.46 million for Fiscal 2021.This increase was majorly attributed due to increase in production capacity and increase in volume of units sold in these products.

Other Income

Our other income increased by 8.21 million or by 314.47% from 2.61 million in Fiscal 2021 to 10.82 million in Fiscal 2022.

This increase was driven by an increase in net gains on foreign exchange fluctuation, which is 5.79 million for Fiscal 2022 as compared to 1.67 million in the Fiscal 2021. an increase in interest on fixed deposits, which is 1.21 million for the Fiscal 2022 as compared to 0.31 million in the Fiscal 2021 an increase in Liabilities no longer required written back, which is 1.73 million for the Fiscal 2022 as compared to nil in the Fiscal 2021

an increase in Gain on discontinuing leasehold premises, which is 1.09 million for the Fiscal 2022 respectively as compared to nil in the Fiscal 2021.

Total Expenditure

Total expenses increased by 822.98 million or by 99.18% from 829.80 million in Fiscal 2021 to

1,652.78 million in Fiscal 2022. This increase was primarily driven increase in cost of materials consumed by 282.86 million, increase in purchase of stock in trade by 392.87 million and 135.32 million, 11.99 million, 5.06 million increase in other expenses, finance cost and employee benefit expenses respectively.

Cost of materials consumed.

Cost of material consumed increased by 282.86 million or by 47.92% from 590.27 million in Fiscal 2021 to 873.13 million in Fiscal 2022. This was primarily due to an increase in the raw material purchase from

594.17 million in Fiscal 2021 to 963.78 million in Fiscal 2022 to produce the increase in demand for finished products and due to increase in production.

Changes in Inventories of Finished Goods & Work-in-Progress.

Change in inventories of finished goods, work in progress was of 1.07 million for Fiscal 2021 as compared to a reduction of 4.08 million for Fiscal 2022, primarily attributable to a higher inventory of finished goods and work in progress at the end of Fiscal 2022.

Purchase of stock in trade.

The purchase of stock in trade increased by 392.87 million for Fiscal 2021 it was 115.18 million as compared to 508.05 million for Fiscal 2022.

Employee benefits expense

Employee benefits expense increased by 5.06 million or by 15.35% from 32.99 million in Fiscal 2021 to 38.06 million in Fiscal 2022. This was primarily due to a general increase in the salaries and wages by

4.79 million. Employee benefit expenses contributed 3.69% of the total revenues for Fiscal 2021 vis-?-vis 2.01% of the total revenues for the Fiscal 2022.

Finance costs

Finance costs increased by 11.99 million or 311.06% from 3.85 million in Fiscal 2021 to 15.84 million in Fiscal 2022. This was due to increase in interest expenses on vehicle loan, cash credit facility and inter corporate deposit from 1.02 million and in Fiscal 2021 to 7.90 million in Fiscal 2022 respectively.

Depreciation and amortization expense

Our depreciation and amortization expense increased by 1.49 million or 19.97%, from 7.44 million in Fiscal 2021 to 8.92 million in Fiscal 2022. The increase in depreciation was primarily due addition in tangible asset by 11.48 million and due net addition in right to use assets by 2.53 million.

Other expenses

Other expenses increased by 135.32 million or by 174.52% from 77.54 million in Fiscal 2021 to 212.86 million in Fiscal 2022. This was primarily due to

an increase in freight & forwarding charges to 73.66 million in Fiscal 2022 from 21.61 million in

Fiscal 2021 primarily due to increase in our operations.

an increase in Commission to 77.29 million in Fiscal 2022 from 26.51 million in Fiscal 2021 due to our focus on increasing our brand presence and increase the sales of product.

an increase in provision for expected credit loss, which is 7.97 million for the Fiscal 2022 respectively as compared to almost nil in the Fiscal 2021. an increase in sales promotion expenses, travelling, legal and professional fees & conveyance and power and fuel expenses, which is 28.44 million aggregating for the Fiscal 2022 respectively as compared to almost 11.86 million in the Fiscal 2021.

Tax expense

Our total tax expense increased by 43.32 million or by 230.40% from 62.12 million in Fiscal 2021 to 18.80 million in Fiscal 2022. This was largely driven by a reduction in current tax by 45.08 million and decrease in deferred tax by 1.77 million in Fiscal 2022 due to increase in profit before tax because of reasons mentioned above.

Profit/(Loss) for the year

For the various reasons discussed above, and following adjustments for tax expense, we recorded an increase in our profit by 129.33 million or by 268.60% from 48.15 million in Fiscal 2021 to 177.48 million in

Fiscal 2022. Profit after tax as a percentage of total revenue stood at 9.38% for Fiscal 2022 versus 5.38% for Fiscal 2021.

Cash Flows

The following table sets forth certain information relating to our cash flows under Ind AS for the Fiscal 2023, Fiscal 2022 and Fiscal 2021:

(All amounts in million)

Particulars	Fiscal 2023	Fiscal 2022	Fiscal 2021
Net cash (used in)/ generated from operating activities	383.55	(148.96)	32.76
Net cash (used in)/ generated from investing activities	(367.31)	(49.51)	(13.09)
Net cash (used in)/ generated from financing activities	4.74	190.01	(11.73)
Net increase/ (decrease) in cash and cash equivalents	20.98	(8.46)	7.95
Cash and Cash Equivalents at the beginning of the period	1.02	9.48	1.53
Cash and Cash Equivalents at the end of the period	22.00	1.02	9.48

Net cash generated from operating activities

Net cash generated from operating activities in the Fiscal 2023 was 383.55 million and our profit before tax that period was 509.36 million. The difference was primarily attributable to depreciation of 18.27 million, Finance costs of 21.69 million, and thereafter change in working capital of (23.31) million respectively, resulting in gross cash generated from operations at 522.26 million. We have income tax paid of 138.72 million.

Net cash generated from operating activities in Fiscal 2022 was (148.96) million and our profit before tax that period was 239.60 million. The difference was primarily attributable to Depreciation of 8.92 million,

Finance costs of 15.84 million, Provision for expected credit loss of 7.97 million and thereafter change in working capital of (393.24) million respectively, resulting in gross cash generated from operations at (123.10) million. We have income tax paid of 25.86 million.

Net cash generated from operating activities in the Fiscal 2021 was 32.76 million and our profit before tax that period was 66.95 million. The difference was primarily attributable to Depreciation of 7.44 million, Finance costs of 3.85 million, and thereafter change in working capital of (29.49) million respectively, resulting in gross cash generated from operations at 48.67 million. We have income tax paid of 15.91 million.

Net cash used in investing activities

In the Fiscal 2023, our net cash used in investing activities was (367.31) million, which was primarily for Purchase of property, plant & equipment (including capital work in progress) of 267.94 million. Investment in Bank deposits of 91.75 million and leasehold improvement of 12.01 million during the said year.

In the Fiscal 2022, our net cash used in investing activities was (49.51) million, which was primarily for Purchase of property, plant & equipment (including capital work in progress) of 11.30 million. Investment in Bank deposits of 38.50 million and leasehold improvement of 0.94 million during the said year

In the Fiscal 2021, our net cash used in investing activities was (13.09) million, which was primarily for Purchase of property, plant & equipment (including capital advances) of 16.31 million. We also received Bank deposits placed (having original maturity of more than 3 months) of 2.40 million during the year, sale of property, plant & equipment 1.62 million and leasehold improvement of 1.11 million during the said year

Net cash generated from/ used in financing activities.

In the Fiscal 2023, our net cash used in financing activities was 4.74 million. This was primarily due to proceeds received from minority shareholders 100.00 million, repayment of 76.67 million as borrowing and lease liabilities (net), payment of interest 18.59 million.

In the Fiscal 2022, our net cash used in financing activities was 190.01 million. This was primarily due to proceeds of 204.43 million as borrowing (net) and payment of interest 14.42 million.

In the Fiscal 2021, our net cash used in financing activities was (11.73) million. This was primarily due to proceeds from borrowings(net) of 18.21 million and payment of interest 2.38 million and distribution of profit in while the company was limited liability partnership of 27.57 million

LIQUIDITY AND CAPITAL RESOURCES

We fund our operations primarily with cash flow from operating activities and borrowings / credit facilities from banks. Our primary use of funds has been to pay for our working capital requirements and capital expenditure and for the expansion of our manufacturing facilities. We evaluate our funding requirements regularly considering the cash flow from our operating activities and market conditions. In case our cash flows from operating activities do not generate sufficient cash flows, we may rely on other debt or equity financing activities, subject to market conditions.

Our Company had Consolidated cash and cash equivalents of 22.00 million as of March 31, 2023, 1.02 million as of March 31, 2022, and 9.48 million as of March 31, 2021.

We have long term borrowings and long term lease liability of 10.44 million and 39.15 million as of March 31, 2023 and Short term borrowing and short term lease liability of 163.85 million and 5.02 million as of March 31, 2023 of as per restated Consolidated financial statement.

The following table sets forth certain information relating to our outstanding indebtedness as of March 31, 2023, on a Consolidated basis:

(All amounts in million)

Category of Borrowings	Sanctioned amount as at June 15, 2023*	Outstanding amount as at June 15, 2023*
Secured Loans
Fund based facilities
Vehicle Loans	8.00	7.74
Working Capital Limits
- Bank of Maharashtra		Nil
- Fund based	55.00	Nil
- Non-fund based (Bank Guarantee)	45.00	43.20
- Kotak Mahindra Bank
-Bank Overdraft	11.70	Nil
Unsecured Loans
Inter-Corporate Loans	-	116.53
Total	224.70	124.27

For further and detailed information on our indebtedness, see "Risk Factor No 28 "Our business is working capital intensive. Our net working capital requirements as of March 31, 2023, 2022 and 2021 were 458.44 million, 386.12 million, and 34.82 million, respectively. If we experience insufficient cash flows from our operations or are unable to borrow to meet our working capital requirements, it may materially and adversely affect our business and results of operations.

" on pages 52 and "Financial Indebtedness" on page 320 of this Draft Red Herring Prospectus

CONTINGENT LIABILITIES

As of March 31, 2023, the estimated amount of contingent liabilities are as follows:

Particulars	As at March 31, 2023	As at March 31, 2022	As at March 31, 2021
a) Bank Guarantee	43.20	36.47	-
b) Capital Commitment (against land)	-	74.02	76.50
TOTAL	43.20	110.49	76.50

For further information on our contingent liabilities and commitments, see "Note 35 Contingent

Liabilities" under the chapter "Restated Financial Statements" on page 281.

OFF-BALANCE SHEET ARRANGEMENTS

We do not have any off-balance sheet arrangements that have or which we believe reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenue or expenses, operating results, liquidity, capital expenditure or capital resources.

RELATED PARTY TRANSACTIONS

We enter into various transactions with related parties in the ordinary course of business. For further information relating to our related party transactions, see ""Financial Information- Note 32 Related Party Transactions" on page 279 of this Draft Red Herring Prospectus.

(All amounts in million)

Name of the Party	Nature of Transaction	Year ended March 31, 2023	Year ended March 31, 2022	Year ended March 31, 2021
Dushyant Rana	Remuneration Salary	1.52 2.74	- 1.20	- 1.20
Krishna Rana	Remuneration Salary	4.06 7.94	- 0.60	- 0.55
	Loan taken	-	-	63.16
	Loan repaid	-	0.10	63.26
Parul Rana	Purchase of Shares of Subsidiary Company	-	0.20	-
	Remuneration	14.40	7.20	7.20
	Loan taken	-	-	5.72
Bhavna Mehta	Loan repaid	-	-	5.72
	Remuneration	0.26	-	0.90
Samish Dalal	Director sitting fees	0.01	-	-
Geeta Rana	Salary	1.20	-	-
Rahul Mehta	Salary	0.03	0.40	0.28
Krishnan Bhalaji	Salary	3.78	-	-
	Salary	0.25	-	-
Narendra Raval	Professional Fees	0.35
Bhagyashree Mallawat	Salary	0.27	-	-
Addplast Chemicals LLC	Purchases	17.55	-	-
	Purchases	-	16.75	27.91
	Sales	-	9.60	66.49
DBR Plastics Private Limited	Loan taken	1.50	156.84	-
	Loan repaid	38.00	-	-
	Interest on Loan	11.55	5.52	-
	Purchases	-	1.72	0.15
DBR Chemicals Private Limited	Loan repaid	-	-	-
	Loan taken	-	1.50	4.15
First Orgacon Private Limited	Loan repaid	5.65
	Purchase	-	8.71	58.74
	Sales	57.13	284.05	-
	Purchases	43.95	105.76	-
	Commission Paid	10.05
Rivaan Plastchem Private Limited	Loan Given	45.31
	Interest on Loan	1.52
	Loan repaid	46.83	-	-

Non-GAAP Measures

In addition to our results determined in accordance with Ind AS, we believe the following non-GAAP measures are useful to investors in evaluating our operating performance and liquidity. We use the following non-GAAP financial information to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that Non-GAAP financial information, when taken collectively with financial measures prepared in accordance with Ind AS, may be helpful to investors because it provides an additional tool for investors to use in evaluating our ongoing operating results and trends and in comparing our financial results with other companies in our industry because it provides consistency and comparability with past financial performance. However, our management does not consider these Non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with Ind AS.

Reconciliation of Profit/(loss) for the period/year to our Operating EBITDA

Particulars	For the year ended 31st March, 2023	For the year ended 31st March, 2022	For the year ended 31st March, 2021
Restated profit/(loss) for the period/year	375.84	177.48	48.15
attributable to equity shareholders (I)
Add:
Finance Cost (II)	21.69	15.84	3.85
Total Tax Expense (III)	133.52	62.12	18.80
Depreciation (IV)	18.27	8.92	7.44
Less:
Other Income	10.74	10.82	2.61
EBITDA (VII=I+II+III+IV)	538.58	253.54	75.63

Operating EBITDA is calculated as the sum of restated profit/ (loss) for the period, total tax expenses, finance costs, depreciation and amortisation expense reduced and other income.

Reconciliation of Restated Profit/(loss) for the period from continuing operations to EBITDA Margin

Particulars	For the year ended 31st March, 2023	For the year ended 31st March, 2022	For the year ended 31st March, 2021
EBITDA (I)	538.58	253.54	75.63
Revenue from Operations (II)	2,314.81	1,881.56	892.69
EBITDA margin (I/II)	23.27%	13.47%	8.47%

EBITDA Margin is calculated by dividing EBITDA by revenue from operations.

Reconciliation of Capital Turnover Ratio

Particulars	For the year ended 31st March, 2023	For the year ended 31st March, 2022	For the year ended 31st March, 2021
Equity Share capital as per Restated Ind AS financial statements (I)	402.53	10.53	10.53
Other Equity as per Restated Ind AS financial statements (II)	216.26	212.84	34.19
Revenue from Operations (III)	2,314.81	1,881.56	892.69
Capital Turnover Ratio {IV=III/(I+II)}	3.74	8.42	19.96

Capital Turnover ratio is calculated by dividing Revenue from operations by Equity share capital and security premium.

Reconciliation of Total Debt to Equity Ratio attributable to equity holders ratio

Particulars	For the year ended 31st March, 2023	For the year ended 31st March, 2022	For the year ended 31st March, 2021
Total Borrowings	174.29	242.42	32.61
Equity attributable to equity	618.79	223.37	44.72
holders
Total borrowings/Equity attributable to	0.28	1.09	0.73
equity holders ratio

Total Debt to Equity Ratio is calculated by dividing Total borrowing by Equity attributable to equity shareholders.

Reconciliation of Restated Profit/(Loss) margin

Particulars	For the year ended 31st March, 2023	For the year ended 31st March, 2022	For the year ended 31st March, 2021
Restated Profit/(loss) for the period/year (I)	375.84	177.48	48.15
Revenue from operations	2,314.81	1,881.56	892.69
Restated Profit/(Loss) margin (III=I/II)	16.24%	9.38%	5.39%
(in%)

Profit Margin Ratio is calculated by dividing Profit/(loss)for the period/year by Revenue from operations.

Reservations, Qualifications and Adverse Remarks by the statutory auditors

There are no reservations, qualifications and adverse remarks by our Statutory Auditors since incorporation.

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

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 for the Fiscal 2023, Fiscal 2022 and Fiscal 2021.

Material Frauds

There are no material frauds, as reported by our statutory auditor, committed against our Company, since incorporation.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risks: foreign currency risk, interest risk and other price risk such as commodity risk.

Foreign currency risk

The Group is exposed to currency risk on account of its operating activities. The functional currency of the Group is Indian Rupee. Our exposure are mainly denominated in USD & EURO. The USD exchange rate has changed substantially in recent periods and may continue to fluctuate substantially in the future. The

Groups business model incorporates assumptions on currency risks and ensures any exposure is covered through the normal business operations. This intent has been achieved in all years presented. The Group has put in place a Financial Risk Management Policy to Identify the most effective and efficient ways of managing the currency risks.

Exposure to currency risk

The currency profile of financial assets and financial liabilities:

(in USD.)

Particulars	31 March 2023	31 March 2022	31 March 2021
Financial assets
Trade Receivables	4,53,580.94	3,09,821	2,20,461
Net exposure for assets	4,53,580.94	3,09,821.30	2,20,460.75
Financial liabilities
Trade Payables	2,42,135.36	3,11,400	37,149.55
Net exposure for liabilities	2,42,135.36	3,11,400.00	37,149.55
Net exposure (Assets - Liabilities)	2,11,445.59	1,578.70	1,83,311.20

Sensitivity analysis

A reasonably possible strengthening / (weakening) of the Indian ^Rupee against US dollars at 31st March would have affected the measurement of financial instruments denominated in US dollars and affected profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact of forecast sales and purchases. In cases where the related foreign exchange fluctuation is capitalised to fixed assets, the impact indicated below may affect the Groups income statement over the remaining life of the related fixed assets or the remaining tenure of the borrowing respectively.

Impact of movement on Profit or (loss) and Equity:

(in USD.)

Effect in INR - Millions (before tax)	31 March 2023	31 March 2022	31 March 2021
1% movement
Strengthening	-0.17	0.00	0.13
Weakening	0.17	0.00	0.13

Commodity and other price risk

The Group is not exposed to the commodity risk.

Interest risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate because of changes in market interest rates.

Exposure to interest rate risk:

The Groups exposure to market risk for changes in interest rates relates to fixed deposits and borrowings from banks.

The interest rate profile of the Groups interest-bearing financial instruments as reported to the management of the Group is as follows:

( in Millions)

Particulars	31 March 2023	31 March 2022	31 March 2021
Fixed-rate instruments:
Financial asset (Bank deposits)	132.85	41.10	2.60
Financial liabilities (Borrowings)	138.00	-494.97	32.61
	270.85	-453.86	35.21
Variable-rate instruments:
Financial liabilities (Borrowings)	36.29	737.38	-
	36.29	737.38	-

Fair value sensitivity analysis for fixed-rate instruments

The Groups fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in IND AS 107, since neither the carrying amount nor the future cash flow will fluctuate because of a change in market interest rates.

The following table demonstrates the sensitivity to a reasonably possible change in interest rates on that portion of borrowings affected. With all other variables held constant, the Groups loss before tax is affected through the impact on floating rate borrowings, as follows:

Particulars	31 March 2023	31 March 2022	31 March 2021
Increase in basis points	50 basis points	50 basis points	50 basis points
Effect on loss before tax, increase by	0.18	3.69	-
Decrease in basis points	50 basis points	50 basis points	50 basis points
Effect on loss before tax, decrease by	0.18	3.69	-

The assumed movement in basis points for the interest rate sensitivity analysis is based on the currently observable market environment, showing a significantly higher volatility than in prior years.

Exposure to liquidity risk

Liquidity risk is the risk that the Group will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. The Groups approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Groups reputation.

The table below summarises the maturity profile of the Groups financial liabilities at the balance sheet date based on contractual undiscounted repayment obligations.

( in Millions)

		Contractual cash flows
Particulars	One year or less	1 - 5 years	More than 5 years	Total
As at 31 March 2023
Non - derivative financial liabilities
Borrowings	163.85	10.44	-	174.29
Lease liabilities	5.02	39.15	-	44.17
Trade payables	167.48	-	-	167.48
Other financial liabilities	51.57	-	-	51.57
	387.93	49.59	-	437.51
As at 31 March 2022
Non - derivative financial liabilities
Borrowings	237.40	5.02	-	242.42
Lease Liabilities	4.63	16.06	-	20.68
Trade payables	274.66	-	-	274.66
Other financial liabilities	28.24	-	-	28.24
	544.92	21.08	-	565.99
As at 31 March 2021
Non - derivative financial liabilities
Borrowings	25.73	6.88	-	32.61
Lease Liabilities	3.23	14.75	-	17.99
Trade payables	193.81	-	-	193.81
Other financial liabilities	8.92	-	-	8.92
	231.70	21.63	-	253.34

Credit Risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Groups receivables from customers and investment securities. The carrying amounts of financial assets represent the maximum credit exposure.

Capital Management

The Group manages the capital structure by a balanced mix of debt and equity. Necessary adjustments are made in the capital structure considering the factors vis-a-vis the changes in the general economic conditions, available options of financing and the impact of the same on the liquidity position. Higher leverage is used for funding more liquid working capital needs and conservative leverage is used for long-term capital investments. The Group calculates the level of debt capital required to finance the working capital requirements using traditional and modified financial metrics including leverage/gearing ratios and asset turnover ratios.

As of balance sheet date, leverage ratios is as follows:

Particulars	March 31, 2023	March 31, 2022	March 31, 2021
Total borrowings	174.29	242.42	32.61
Less: Cash and cash equivalents	22.00	1.02	9.48
Adjusted net debt	152.29	241.40	23.14
Total Equity	618.79	223.37	44.72
Adjusted net debt to adjusted equity ratio	0.25	1.08	0.52
(times)

General

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk and commodity risk. Financial instruments affected by market risk include borrowings and bank deposits. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimizing the return.

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

1. Unusual or infrequent events or transactions

As on date, there have been no unusual or infrequent events or transactions including unusual trends on account of business activity, unusual items of income, change of accounting policies and discretionary reduction of expenses.

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

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 36, there are no 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 36, 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 demand/supply situation, both of the end products as well as the raw materials, government policies and budget constraints of our customer(s).

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 business and also dependent on the price realization on our products.

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

Except as disclosed elsewhere in the Draft Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new products or business segments.

7. Total Turnover of Each Major Industry Segment in Which the Issuer Operates

Our business is primarily in manufacturing of viz. PVC Stabilizers, CPVC Additives and Lubricants and is a single reportable segment of "Heat Stabilizers & related products". Details of the industry turnover and other relevant information is disclosed in the section "Industry Overview" beginning on page 149.

8. Seasonality of business

Our Companys business is not seasonal in nature.

9. Any Major Dependence on a single or few suppliers or customers

The % of contribution of our Companys suppliers vis-?-vis the total revenue from operations respectively as of for the Fiscal 2021, 2022 and 2023 is as follows:

	Top Suppliers as a percentage (%) of total purchases
Particulars	Fiscal 2023	Fiscal 2022	Fiscal 2021
Top 5	18.31%	30.85%	32.05%
Top 10	31.53%	45.86%	49.19%

The % of contribution of our Companys customers vis-?-vis the total revenue from operations respectively as of for the Fiscal 2021, 2022 and 2023 is as follows:

	Top Customers as a percentage (%) of revenues
Particulars	Fiscal 2023	Fiscal 2022	Fiscal 2021
Top 5	77.85%	73.68%	79.93%
Top 10	86.49%	83.41%	87.71%

10.Competitive conditions:

Competitive conditions are as described under the chapters "Industry Overview" and "Our Business" beginning on pages 149 and 181 respectively.