Positron Energy Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 28, which discusses several factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year" or "FY") are to the twelve-month period ended March 31 of that year.

The financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated which is included in this Draft Red Herring Prospectus under the section titled "Restated Financial Information" beginning on page 173 of this Draft Red Herring Prospectus. The restated financial statements have been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. We do not provide a reconciliation of our restated financial statements to US GAAP or IFRS and we have not otherwise quantified or identified the impact of the differences between Indian GAAP and U.S. GAAP or IFRS as applied to our restated financial statements.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors such as those described under "Risk Factors" and "Forward Looking Statements" beginning on pages 28 and 18 respectively, and elsewhere in this Draft Red Herring Prospectus Accordingly, the degree to which the financial statements in this Draft Red Herring Prospectus will provide meaningful information depend entirely on such potential investors level of familiarity with Indian accounting practices. Please also refer to section titled "Certain Convention, Presentation of Financial, Industry and Market data" beginning on page 16 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Our Company for the initially 11 years were mere engaged in the Management & Technical Advisory Services of Oil and Gas Industry. Later on, in the FY 2018-19, our promoters planned to commence the aggregation business of Coal Bed Methan Gas (CBM) for supplying to industrial unit. After having successful business of CBM Gas aggregation also, as per the demand of industrial units, our Company in July 2022 decided to aggressively commence the business of Natural Gas aggregation for such industrial unit.

Our Company was started by our Promoters Mr. Rajiv Menon, Mr. Manav Bahri and Mr. Sujit K Sugathan. Our Promoters have combined experience of more than 45 years in the Gas and Oil Industry. Our Promoters have been pillars of our Companys growth and have built a strong value and eco - system. With their enriching experience and progressive thinking, we aim to continue to grow in the Oil & Gas industry.

We are engaged in Management & Technical Advisory Services of Oil and Gas Industry. We provide end to end solutions for Gas distribution to the Industries across India. We provide Management Consultancy Services like commercial and financial advisory, technical services including Project Management and O&M (Operation and Management) Services, across the Gas Sector in India. We have successfully developed a Gas aggregation business volume of 35 MMSCM (approx), especially Natural Gas. Our technical qualifications and empanelment with most industrial customers attest to our reliability and competence. Moreover, distribution of Natural gas is facilitated through common carrier pipeline networks operated by major public and private sector players in the Indian market.

Our Company is an ISO 9001:2015 and ISO 45001:2018 certified company. The quality certification is towards providing consultancy services, O&M services to the Oil & Gas sector. We have in-house capabilities to deliver a project from conceptualization to completion with fast turnaround time from acquisition to launch to completion, which focuses on de-risking and improving return on investment. Our core competence lies in professional management and attracting and retaining talent to maximize value creation. Since incorporation, we have provided services to major companies which are engaged in the Oil & Gas Sector, including both PSUs and private companies. Our Company has demonstrated a prominent presence in the Oil and Gas Sector and has developed significant expertise and competencies in this field. Our Company aims to leverage its strength and continue expansion into the Oil and Gas sector lead our company to desired growth trajectory.

In addition to our operational endeavours, our business is secured with the Indian Gas Exchange (IGX) through its clearing member. This client membership enables us to source natural gas on-demand for our short-term requirements from the free market, where prices are determined through a transparent exchange mechanism. Moreover, it also provides flexibility to offload excess Gas if necessary. Our current portfolio includes a substantial daily volume of 4000-5000 MMBTU of gas from various sources. We engage in long-term contracts linked with formulas, determined through mutual discussions with our customers.

Our services are consistent round the year. We are a quality conscious company. We are constantly striving to expand our service portfolio and we always look forward to complementing projects of our clients

Our Company has entered into collaboration agreement with ICOM North America LLC (New Hudson, MI) for installation of ICOM Dual Fuel LNG conversion systems in on-road trucks weighing over 3.5 tons in India. The new system will result in reduction in emissions with the utilization of LNG contributing to environmental sustainability. The dual-fuel system allows for cost-effective operation with the flexibility of fuel ratios. The product has undergone thorough testing under Indian operating conditions, ensuring optimal performance and reliability. We are currently in the process of obtaining technical approvals from the Automotive Research Association of India (ARAI).

The financial performance of the company for stub period and last three years as per restated consolidated financial Statement:

(Rs. in lakhs)

Particulars	For the Period / Year ended on
	November 30, 2023	March 31, 2023	March 31, 2022	March 31, 2021
Revenue from Operations (Rs. in Lakhs)	8000.34	5142.64	869.04	341.00
Growth in Revenue from Operations (%)	-	491.76%	154.85%	-
Gross Profit (Rs. in Lakhs)	1174.19	850.61	458.48	217.65
Gross Profit Margin (%)	14.68%	16.54%	52.76%	63.83%
EBITDA (Rs. in Lakhs)	699.46	299.74	88.97	38.92
EBITDA Margin (%)	8.74%	5.83%	10.24%	11.41%
Profit After Tax (Rs. in Lakhs)	533.63	212.80	57.98	22.84
PAT Margin (%)	6.67%	4.14%	6.67%	6.70%
RoE (%)	63.65%	46.19%	16.97%	7.35%
RoCE (%)	42.78%	26.37%	11.33%	4.99%
Net Fixed Asset Turnover (In Times)	39.59	24.43	4.74	3.77
Operating Cash Flows (Rs. in Lakhs)	978.98	99.09	(69.17)	(152.19)

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO LAST AUDITED BALANCE SHEET:

After the date of last audited financial statements i.e. November 30, 2023, the Directors of our Company confirm that, there have not been any significant material developments except mentioned below:

The Board of Directors in their meeting held on January 03, 2024 approved resolution for increasing authorized capital from Rs. 50.00 lakhs divided into 5,00,000 shares of Rs. 10/- each to Rs. 800.00 lakhs divided into 80,00,000 shares of Rs. 10/- each which was subsequently approved by Members of Company in the Extra-Ordinary General Meeting held on January 04, 2024.

• The Board of Directors in their meeting held on February 02, 2024 approved resolution for issue of Bonus equity shares in the ratio of 15:01 (Fifteen) new equity share of Rs. 10/- each for every 1 (One) existing fully paid-up shares of Rs. 10/- each to existing shareholders of the company which was subsequently approved by Members of Company in the Extra-Ordinary General Meeting held on February 10, 2024. Pursuant to which our company has allotted 52,05,000 Bonus Equity Shares on February 12, 2024.
• Our Company was converted from a Private Limited Company to Public Limited company vide Special resolution passed in the Extra-Ordinary General Meeting of the company dated December 23, 2023 and consequently, the name of our Company was changed to "Positron Energy Limited" and a fresh certificate of incorporation dated January 02, 2024 was issued to our Company by the Registrar of Companies, Ahmedabad having Corporate Identification Number U01403GJ2008PLC052932.
• Our Company has sold 13,675 Equity Shares in Positron Gas Limited resulting in sale of Associate Company w.e.f. December 04, 2023. After such transaction, Company holds Nil Equity shares in Associate Company.

Our Companys future results of operations could be affected potentially by the following factors:

Cost of Goods Sold (Purchase of Stock In Trade) Sale price of natural gas;

• Sourcing and transportation of natural gas;
• Credit worthiness of our commercial and industrial customers;
• Customer spending, demographics and general economic and market conditions in India;
• Competition;
• COVID-19 Pandemic;
• Natural Calamities e.g., Tsunami;
• Political Stability of the Country;
• Our dependence on limited number of customers for a significant portion of our revenues;
• Any failure to comply with the financial and restrictive covenants under our financing arrangements;
• Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner;
• Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition;
• Conflicts of interest with affiliated companies, the promoter group and other related parties;
• The performance of the financial markets in India and globally;
• Our ability to expand our geographical area of operation;
• Concentration of ownership among our Promoters.

For Significant accounting policies please refer Significant Accounting Policies and Notes to accounts, Annexure IV beginning under Chapter titled "Restated Financial Information" beginning on page 173 of this Draft Red Herring Prospectus.

The following table sets forth detailed total income data from our restated Consolidated Statement of profit and loss for the stub period ended on November 30, 2023 and Financial Year ended on March 31, 2023, 2022 and 2021, the components of which are also expressed as a percentage of total Income for such period.

(Rs. in Lakhs)

Particular	November 30, 2023		March 31, 2023		March 31, 2022		March 31, 2021
	Rs. in Lakhs	% of Total Income	Rs. in Lakhs	% of Total Income	Rs. in Lakhs	% of Total Income	Rs. in Lakhs	% of Total Income
Revenue from operations	8,000.34	99.24	5,142.64	98.85	869.04	96.90	341.00	96.46
Other Income	60.99	0.76	59.97	1.15	27.81	3.10	12.50	3.54
Total Income	8,061.33	100.00	5,202.61	100.00	896.85	100.00	353.51	100.00
Expenses
Purchase of stock- in-trade	6,818.85	84.59	4,572.33	87.89	512.87	57.19	123.35	34.89
Changes in inventories of Stock-in-Trade	7.30	0.09	-280.30	-5.39	-102.32	-11.41	0.00	0.00
Employee benefits expense	271.75	3.37	292.70	5.63	186.20	20.76	102.64	29.04
Depreciation and amortisation expenses	17.78	0.22	31.11	0.60	22.44	2.50	19.48	5.51
Finance Costs	31.09	0.39	41.87	0.80	15.48	1.73	4.25	1.20
Other Expenses	192.37	2.39	258.17	4.96	183.31	20.44	88.18	24.94
Total Expenses	7,339.14	91.04	4,915.88	94.49	817.99	91.21	337.90	95.58
Profit/(Loss) Before Extra- Ordinary Items and Tax	722.19	8.96	286.72	5.51	78.86	8.79	15.61	4.42
Exceptional Items	0.00	0.00	0.00	0.00	0.00	0.00	13.31	3.77
Share in profit of Associates	-10.61	-0.13	0.00	0.00	0.00	0.00	-1.22	-0.35
Profit before Tax	711.58	8.83	286.72	5.51	78.86	8.79	27.70	7.84
Total tax expense	177.95	2.21	73.93	1.42	20.87	2.33	4.86	1.37
Profit and Loss for the Year as Restated	533.63	6.62	212.80	4.09	57.98	6.47	22.84	6.46

REVIEW OF RESULTS OF OPERATIONS FOR THE PERIOD ENDED NOVEMBER 30, 2023: TOTAL INCOME:

Revenue from operations (RFO)

Our company is engaged in Management & Technical Advisory Services and Natural Gas Aggregation and Sales. We provide end to end solutions for Gas Distribution to the Industries across India and the globe. We provide Management Consultancy Services, including commercial and financial advisory, and also technical services including Project Management and O&M (Operation and Management) Services, across the Oil & Gas Sector in the country and overseas. The Total Revenue from operations for the period ended on November 30, 2023 was Rs. 8,000.34 Lakhs. Details of product-service wise bifurcation of revenue and geography wise revenue bifurcation is as follows:

Product-wise Revenue from operations:

(Rs. in lakhs)

Particulars	For the period ended November 30, 2023	% of RFO
(A) Sale & Supply of Goods
CBM Gas	326.07	4.08
Natural Gas	6,977.48	87.21

 

Particulars	For the period ended November 30, 2023	% of RFO
LNG Duel Fuel Kit	-	-
(B) Sale of Services
Management Consultancy Fees	696.78	8.71
Erection and Commissioning income	-	-
Total	8,000.34	100.00

Geography-wise Revenue from operations:

(Rs. in lakhs)

Particulars	For the period ended November 30, 2023	% of RFO
Domestic Sales
Andhra Pradesh	800.44	10.01
Assam	78.39	0.98
Bihar	3.15	0.04
Daman	118.72	1.48
Gujarat	3,935.71	49.19
Haryana	259.24	3.24
Jharkhand	326.07	4.08
Karnataka	1,826.74	22.83
Kerala	57.05	0.71
Ladakh	4.05	0.05
Madhya Pradesh	3.06	0.04
Maharashtra	123.47	1.54
Punjab	145.17	1.81
Rajasthan	6.14	0.08
Tamil Nadu	34.98	0.44
Uttar Pradesh	178.55	2.23
West Bengal	69.43	0.87
Export
Rwanda	29.97	0.37
Total	8,000.34	100.00

Other Income:

Other income of the company was Rs. 60.99 lakhs constituting 0.76% of Total Income for the period ended November 30, 2023. Other Income mainly includes Interest Income on FDR & Others and Lease Rent Income from Plant & Equipment.

EXPENDITURE:

Purchases of Stock-In-Trade

Our Purchases of Stock-In-Trade were Rs. 6,818.85 lakhs representing 84.59% of Total Income for the period ended November 30, 2023. Purchases of Stock-In-Trade includes CNG Kit Equipment and Natural Gas.

Changes in inventories of Stock-In-Trade

Changes in inventories of Stock-In-Trade were Rs. 7.30 lakhs representing 0.09 % of Total Income for the period ended November 30, 2023. Stock-in-trade includes CNG Kit Equipment and Natural Gas. Opening stock of Stock-In-Trade as on April 01, 2023 was Rs. 382.62 lakhs and closing stock of Stock-In-Trade as on November 30, 2023 was Rs. 375.32 lakhs.

Employee Benefit Expenses

Employee Benefit expenses were Rs. 271.75 lakhs representing 3.37 % of Total Income for the period ended November 30, 2023. Employee Benefit Expenses mainly includes Salaries and Wages, staff welfare expenses and contribution to provident fund and other funds.

Finance Cost

Finance expense were Rs. 31.09 lakhs representing 0.39% of Total Income for the period ended November 30, 2023. Finance costs include interest expense on borrowings from Bank & others and other borrowing costs related to Bank Guarantee taken from Bank.

Depreciation and Amortization

The Depreciation and amortization expense were Rs. 17.78 lakh representing 0.22% of Total Income for the period ended November 30, 2023. Depreciation mainly includes depreciation on our buildings, computers & data processing units, Electricals Installations & Equipment, Plant & Equipment, Furniture and Fixtures, and Office Equipment.

Other Expenses

Other Expenses were Rs. 192.37 lakhs representing 2.39% of Total Income for the period ended November 30, 2023. Other expense mainly includes Conveyance & Petrol Expense, Project Expense, Office Expense, Rent Expense, Professional Fees to Directors, Travelling Expense, Parking Service Charges, Imbalance Management Services and Labour Expense.

Profit before Extra-Ordinary Items and Tax

Our companys Profit before Exceptional Items and Tax for the period ended November 30, 2023 was 8.96% of the total income. The Profit before Exceptional Items and Tax was Rs. 722.19 lakhs for the period ended November 30, 2023.

Profit after Tax (PAT)

Our company recorded PAT was Rs. 533.63 lakhs for the period ended November 30, 2023. Profit after Tax was 6.62% of Total Income of our company for the period ended on November 30, 2023.

RESULTS OF OUR OPERATION

The following table sets forth detailed total income data from our Restated Standalone Statement of Profit and Loss for the financial years 2023, 2022 and 2021, the components of which are also expressed as a percentage increase from previous year.

(Rs. in Lakhs)

Particular	For the Year end on March 31,
	2023	2022	2021
Revenue from operations	5,142.64	869.04	341.00
Total Revenue from Operation	5,142.64	869.04	341.00
% of growth	491.76%	154.85%
Other Income	59.97	27.81	12.50
% of growth	115.62%	122.40%
Total Income	5,202.61	896.85	353.51
% of growth	480.10%	153.70%
Expenses
Purchase of stock-in-trade	4572.33	512.87	123.35
% of growth	791.52%	315.78%
Change in Inventories of Stock in Trade	-280.30	-102.32	0.00
% of growth	-173.95%	-
Employee benefits expense	292.70	186.20	102.64
% Increase/(Decrease)	57.20%	81.41%
Depreciation and amortisation expenses	31.11	22.44	19.48
% Increase/(Decrease)	38.60%	15.20%
Finance Costs	41.87	15.48	4.25
% Increase/(Decrease)	170.44%	264.43%

 

Particular	For the Year end on March 31,
	2023	2022	2021
Other expenses	258.17	183.31	88.18
% Increase/(Decrease)	40.84%	107.89%
Total Expenses	4,915.88	817.99	337.90
% to Total Income	94.49%	91.21%	95.58%
Profit before Tax and Exceptional Items	286.72	78.86	15.61
% to Total Income	5.51%	8.79%	4.42%
Exceptional Items	0.00	0.00	13.31
Share in profit of Associates	0.00	0.00	(1.22)
Profit before Tax	286.72	78.86	27.70
Total tax expense	73.93	20.87	4.86
Profit and Loss after tax for the Year as Restated	212.80	57.98	22.84
% to Total Income	4.09%	6.47%	6.46%

COMPARISON OF FY 2022-23 WITH FINANCIAL YEAR 2021-22:

TOTAL INCOME:

Revenue from operations (RFO)

Our company is engaged in Management & Technical Advisory Services and Natural Gas Aggregation and Sales. We provide end to end solutions for Gas Distribution to the Industries across India and the globe. We provide Management Consultancy Services, including commercial and financial advisory, and also technical services including Project Management and O&M (Operation and Management) Services, across the Oil & Gas Sector in the country and overseas. Company has started with Gas Aggregation and Sale of Natural Gas from July 2022 due to which Our Revenue from Operation has increased from Rs. 869.04 Lakhs in FY 2021-22 to Rs. 5,142.64 Lakhs in FY 2022-23 showing a growth of 491.76% from previous year. Details of product-service wise bifurcation of revenue and geography wise revenue bifurcation is as follows:

Product-wise Revenue from operations:

(Rs. in Lakhs)

Particulars	For the year ended March 31, 2023	% of RFO	For the year ended March 31, 2022	% of RFO
(A) Sale & Supply of Goods
CBM Gas	713.03	13.87	427.70	49.22
Natural Gas	3,869.17	75.24	-	-
LNG Duel Fuel Kit	42.37	0.82	-	-
(B) Sale of Services
Management Consultancy Fees	515.81	10.03	369.33	42.50
Erection and Commissioning income	-	-	72.00	8.29
Other Services	2.26	0.04	-	-
Total	5,142.64	100.00	869.04	100.00

Geography-wise Revenue from operations:

(Rs. in Lakhs)

Particulars	For the year ended March 31, 2023	% of RFO	For the year ended March 31, 2022	% of RFO
Domestic Sales
Bihar	57.23	1.11	69.03	7.94
Chattisgarh	3.35	0.07	-	0.00

 

Particulars	For the year ended March 31, 2023	% of RFO	For the year ended March 31, 2022	% of RFO
Delhi	22.99	0.45	-	0.00
Gujarat	2,917.44	56.73	234.48	26.98
Haryana	4.81	0.09	-	0.00
Jharkhand	713.03	13.87	427.70	49.22
Karnataka	8.50	0.17	-	0.00
Kerala	13.55	0.26	-	0.00
Madhya Pradesh	64.79	1.26	10.96	1.26
Maharashtra	417.27	8.11	21.84	2.51
Odisha	8.50	0.17	-	0.00
Punjab	467.45	9.09	30.34	3.49
Rajasthan	4.59	0.09	15.72	1.81
Tamil Nadu	43.71	0.85	-	0.00
Telangana	19.00	0.37	-	0.00
Uttar Pradesh	376.43	7.32	58.96	6.79
Total	5,142.64	100.00	869.04	100.00

Other Income:

Other income of the company increased to Rs. 59.97 lakhs in FY 2022-23 from Rs. 27.81 Lakhs in FY 2021-22 showing an increase of 115.62% from previous year i.e. FY 2021-22. Interest Income on FDR & Others, Lease Rent Income from Plant & Equipment and Land & Building, were the main constituents of the Other Income. Other income increased mainly due to increase in Interest Income from Fixed Deposits earmarked for Bank guarantee and Lease Rental Income.

EXPENDITURE:

Purchases of Stock-In-Trade

Our Purchases of Stock-In-Trade increased to Rs. 4,572.33 lakhs in FY 2022-23 from Rs. 512.87 Lakhs in FY 2021-22. Purchases of Stock-In-Trade includes CNG Kit Equipment and Natural Gas. With increase in Revenue from operation, Purchases of Stock-In-Trade increased mainly due to Purchase of Natural Gas. Purchases of Stock-In-Trade as a percentage of Revenue from Operation stood at 88.91%.

Changes in inventories of Stock-In-Trade

Our opening Inventory of Stock-In-Trade was Rs. 102.32 lakhs as at April 01, 2022, while it was Nil as at April 01, 2022. Our closing Inventory of Stock-In-Trade was Rs. 382.62 lakhs as at March 31, 2023, while it was Rs. 102.32 lakhs as at March 31, 2022. The changes in Inventory of Stock-In-Trade decreased to Rs. (280.30) lakhs in FY 2022-23 from Rs. (102.32) lakhs in FY 2021-22. Stock-in-trade includes CNG Kit Equipment and Natural Gas.

Employee Benefit Expenses

Employee Benefit expenses was Rs. 292.70 Lakhs in FY 2022-23 as compared to Rs. 186.20 Lakhs in FY 2021-22 showing an increase of 57.20% from previous year i.e. FY 2021-22. Employee Benefit Expenses mainly includes Salaries and Wages, staff welfare expenses and contribution to provident fund and other funds. The increase was mainly attributable to an increase in the number of employees during the year to support the greater scale of our business.

Finance Cost

Finance expenses increased to Rs. 41.87 Lakhs in FY 2022-23 as against Rs. 15.48 Lakhs in FY 2021-22 showing an increase of 170.44%. Finance costs include interest expense on interest on Loans, and other Borrowing Cost. Increase in finance cost is mainly due to increase in other borrowing costs in FY 2022-23 which related to Bank charges for Bank Guarantee taken by Company.

Depreciation and amortization expense

The Depreciation and amortization expense increased to Rs. 31.11 Lakhs in FY 2022-23 as against Rs. 22.44 Lakhs in FY 2021-22 showing an increase of 38.60%. Depreciation mainly includes depreciation on our buildings, computers & data processing units, Electricals Installations & Equipment, Plant & Equipment, Furniture and Fixtures, and Office Equipment. Increase was mainly due to addition in Plant & Equipment.

Other Expenses

Other Expenses increased to Rs. 258.17 Lakhs in FY 2022-23 from Rs. 183.31 Lakhs for FY 2021- 22 showing an increase of 40.84%. Other expense mainly includes Conveyance & Petrol Expense, GST Reversal on Input Expense, Project Expense, Office Expense, Rent Expense, Professional Fees to Directors, Travelling Expense, Conveyance & Petrol Expense, Legal & Professional Expense, Office Expense, Rent Expense, Repairs & Maintenance Expense. Other expenses increased mainly due to non-recurring expense i.e. GST Reversal on Input Expense.

Profit before Tax

As a result of the reasons mentioned above, we recorded an increase of 263.60% in our profit before tax, which amounted to Rs. 286.72 Lakhs in FY 2022-23, as compared to Rs. 78.86 Lakhs in FY 2021-22. The Profit before Tax for the FY 2022- 23 was 5.51% of the total Income as compared to 8.79% of total Income in FY 2021-22.

Profit after Tax (PAT)

As a result of the reasons mentioned above, we recorded an increase of 266.99% in our profit after tax from Rs. 57.98 Lakhs in the FY 2021-22 to Rs. 212.80 Lakhs in the FY 2022-23. The Profit after Tax for the FY 2022-23 was 4.09% of the total income as against 6.47% of total income for the FY 2021-22.

COMPARISON OF FY 2021-22 WITH FINANCIAL YEAR 2020-21:

TOTAL INCOME:

Revenue from operations (RFO)

Our company is engaged in Management & Technical Advisory Services and Natural Gas Aggregation and Sales. We provide end to end solutions for Gas Distribution to the Industries across India and the globe. We provide Management Consultancy Services, including commercial and financial advisory, and also technical services including Project Management and O&M (Operation and Management) Services, across the Oil & Gas Sector in the country and overseas. Companys Revenue from operation has increased from Rs. 341.00 lakhs in FY 2020-21 to Rs. 869.04 lakhs in FY 2021-22 showing a growth of 154.85% from previous year i.e. FY 2020-21. Revenue from Operation increased mainly due to increase in our operations in Sale of CBM Gas and Management Consultancy Fees and non-recurring Erection and Commissioning income. Details of product-service wise bifurcation of revenue and geography wise revenue bifurcation is as follows:

Product-wise Revenue from operations:

(Rs. in Lakhs)

Particulars	For the year ended March 31, 2022	% of RFO	For the year ended March 31, 2021	% of RFO
(A) Sale & Supply of Goods
CBM Gas	427.70	49.22	142.02	41.65
(B) Sale of Services
Management Consultancy Fees	369.33	42.50	198.98	58.35
Erection and Commissioning income	72.00	8.29	-	-
Total	869.04	100.00	341.00	100.00

Geography-wise Revenue from operations:

(Rs. in Lakhs)

Particulars	For the year ended March 31, 2022	% of RFO	For the year ended March 31, 2021	% of RFO
Domestic Sales
Bihar	69.03	7.94	59.95	17.58
Gujarat	234.48	26.98	49.35	14.47
Jharkhand	427.70	49.22	142.02	41.65
Madhya Pradesh	10.96	1.26	3.08	0.90
Maharashtra	21.84	2.51	33.33	9.77
Punjab	30.34	3.49	9.50	2.79
Rajasthan	15.72	1.81	3.35	0.98
Uttar Pradesh	58.96	6.79	28.42	8.33

 

Particulars	For the year ended March 31, 2022	% of RFO	For the year ended March 31, 2021	% of RFO
West Bengal	-	0.00	12.00	3.52
Total	869.04	100.00	341.00	100.00

Other Income:

Other income of the company increased to Rs. 27.81 lakhs in FY 2021-22 from Rs. 12.50 Lakhs in FY 2020-21 showing an increase of 122.40% from previous year i.e. FY 2020-21. Interest Income on FDR & Others, Lease Rent Income from Plant & Equipment and Land & Building, Capital Gain were the main constituents of the Other Income. Other income increased mainly due to increase in Lease Rental Income.

EXPENDITURE:

Purchases of Stock-In-Trade

Our Purchases of Stock-In-Trade increased to Rs. 512.87 lakhs in FY 2022-23 from Rs. 123.35 Lakhs in FY 2021-22. Purchases of Stock-In-Trade also increased as a percentage of total income to 57.19% in FY 2021-22 from 34.89% in FY 2020-21, same is being reversed through increase in closing stock-in-trade bringing Net cost to 45.78% of Total Income. Increase was mainly due to increase in Sale of CBM Gas. Purchases of Stock-In-Trade includes CNG Kit Equipment and Natural Gas.

Changes in inventories of Stock-In-Trade

Our opening Inventory of Stock-In-Trade was Nil as at April 01, 2021 and as at April 01, 2020. Our closing Inventory of Stock-In-Trade was Rs. 102.32 lakhs as at March 31, 2022, while it was Nil as at March 31, 2021. The changes in Inventory of Stock-In-Trade decreased to Rs. (102.32) lakhs in FY 2021-22 from Rs. Nil in FY 2020-21. Stock-in-trade includes CNG Kit Equipment and Natural Gas.

Employee Benefit Expenses

Employee Benefit expenses was Rs. 186.20 Lakhs in FY 2021-22 as compared to Rs. 102.64 Lakhs in FY 2020-21 showing an increase of 81.41% from previous year i.e. FY 2020-21. Employee Benefit Expenses mainly includes Salaries and Wages, staff welfare expenses and contribution to provident fund and other funds. The increase was mainly attributable to an increase in the number of employees during the year to support the greater scale of our business.

Finance Cost

Finance expenses increased to Rs. 15.48 Lakhs in FY 2021-22 as against Rs. 4.25 Lakhs in FY 2020-21 showing an increase of 264.43%. Finance costs include interest expense on interest on Loans, and other Borrowing Cost. Increase in finance cost is mainly due to increase in Interest expense.

Depreciation and amortization expense

The Depreciation and amortization expense increased to Rs. 22.44 Lakhs in FY 2021-22 as against Rs. 19.48 Lakhs in FY 2020-21 showing an increase of 15.20%. Depreciation mainly includes depreciation on our buildings, computers & data processing units, Electricals Installations & Equipment, Plant & Equipment, Furniture and Fixtures, and Office Equipment.

Other Expenses

Other Expenses increased to Rs. 183.31 Lakhs in FY 2021-22 from Rs. 88.18 Lakhs for FY 2020- 21 showing an increase of 107.89%. Other expense mainly includes Conveyance & Petrol Expense, GST Reversal on Input Expense, Project Expense, Office Expense, Rent Expense, Professional Fees to Directors, Travelling Expense, Conveyance & Petrol Expense, Legal & Professional Expense, Office Expense, Rent Expense, Repairs & Maintenance Expense. Other expenses increased mainly due to Project Expense and Professional Fees to Directors.

Profit before Tax

As a result of the reasons mentioned above, we recorded an increase of 405.21% in our profit before tax, which amounted to Rs. 78.86 Lakhs in FY 2021-22, as compared to Rs. 15.61 Lakhs in FY 2020-21. Percentage increase is substantially high due to small base i.e. Rs. 15.61 Lakhs. The Profit before Tax for the FY 2021-22 was 8.79% of the total Income as compared to 4.42% of total Income in FY 2020-21.

Profit after Tax (PAT)

As a result of the reasons mentioned above, we recorded an increase of 153.88% in our profit after tax from Rs. 22.84 Lakhs in the FY 2020-21 to Rs. 57.98 Lakhs in the FY 2021-22. The Profit after Tax for the FY 2021-22 was 6.47% of the total income as against 6.46% of total income for the FY 2020-21.

DISCUSSION ON THE STATEMENT OF CASH FLOWS

The following table sets forth certain information relating to our Companys statement of cash flows for the periods indicated:

(Amount Rs. in Lakhs)

Particulars	For the Period / Financial Year Ended
	November 30, 2023	March 31, 2023	March 31, 2022	March 31, 2021
Net cash flows generated/ (used) from operating activities	978.98	99.09	(69.17)	(152.19)
Net cash flows generated/ (used in) investing activities	81.11	(60.09)	(60.22)	(72.06)
Net cash flows generated/ (used in)/generated from financing activities	(5.66)	333.77	233.76	78.98
Net increase/(decrease) in cash and cash equivalents	1,054.43	372.77	104.38	(145.27)

Operating activities:

For the period ended November 30, 2023

Net cash generated from operating activities was Rs. 978.98 Lakhs. This comprised of the profit before tax of Rs. 711.58 Lakhs, which was primarily adjusted for Depreciation & Amortization Expense of Rs. 17.78 Lakhs, Finance Cost of Rs. 31.09 lakhs and Finance Income of Rs. 60.99 lakhs. The resultant operating profit before working capital changes was Rs. 699.46 Lakhs, which was primarily adjusted for a change in inventories by Rs. 7.30 lakhs, other assets and Loans and Advance by Rs. 4.47 lakhs, increase in Trade Receivable by Rs. 1,741.52 lakhs, increase in Trade Payable amounting to Rs. 2,187.00 Lakhs, and income tax paid of Rs. 177.73 Lakhs.

For Financial Year 2022-23

Net cash generated from operating activities was Rs. 99.09 Lakhs. This comprised of the profit before tax of Rs. 286.72 Lakhs, which was primarily adjusted for depreciation and amortization expenses of Rs. 31.11 Lakhs, finance cost of Rs. 41.87 Lakhs and Finance Income of Rs. 59.97 lakhs. The resultant operating profit before working capital changes was Rs. 299.74 Lakhs, which was primarily adjusted for an increase in trade receivables of Rs. 780.41 Lakhs, Inventories of Rs. 280.30 Lakhs, increase in trade payables of Rs. 949.21 Lakhs and increase in Loans & Advances & Other Assets of Rs. 15.30 Lakhs and income tax paid of Rs. 73.85 Lakhs.

For Financial Year 2021-22

Net cash used in operating activities was Rs. (69.17) Lakhs. This comprised of the profit before tax of Rs. 78.86 Lakhs, which was primarily adjusted for depreciation and amortization expenses of Rs. 22.44 Lakhs, finance cost of Rs. 15.48 Lakhs, and Finance Income of Rs. 27.81 lakhs. The resultant operating profit before working capital changes was Rs. 88.97 Lakhs, which was primarily adjusted for an increase in trade receivables of Rs. (73.94) Lakhs, Inventories of Rs. (102.32) lakhs, Short Term Loan & Advance/Other Current Assets of Rs. (12.94) Lakhs, increase in trade payables and other liabilities of Rs. 49.47 Lakhs and income tax paid of Rs. (18.41) Lakhs.

For Financial Year 2020-21

Net cash used in operating activities was Rs. (152.19) Lakhs. This comprised of the profit before tax of Rs. 27.70 Lakhs, which was primarily adjusted for depreciation and amortization expenses of Rs. 19.48 Lakhs, finance cost of Rs. 4.25 Lakhs, Exceptional Item of Rs. 13.31 lakhs and Financial Income of Rs. 12.50 lakhs. The resultant operating profit before working capital changes was Rs. 25.73 Lakhs, which was primarily adjusted for an increase in trade receivables of Rs. (45.17) Lakhs, decrease in Other Current Asset of Rs. (7.60) lakhs, decrease in trade payables and other liability of Rs. (120.64) Lakhs and income tax paid of Rs. (4.51) Lakhs.

Investing Activities

For the period ended November 30, 2023

Net cash generated from investing activities was Rs. 81.11 Lakhs, which primarily comprised of cash used for the purchase/Sale of fixed assets (Net) of Rs. (10.93) Lakhs, proceeds from Interest and Other Income of Rs. 60.99 Lakhs and change in Non-Current Assets of Rs. 31.05 Lakhs.

For Financial Year 2022-23

Net cash used in investing activities was Rs. (60.09) Lakhs, which primarily comprised of cash used for the purchase/Sale of fixed assets (Net) of Rs. (20.99) Lakhs, proceeds from Interest and Other income of Rs. 59.97 Lakhs and change in Non- Current Assets of Rs. (99.06) Lakhs.

For Financial Year 2021-22

Net cash used in investing activities was Rs. (60.22) Lakhs, which primarily comprised of cash used for the purchase/Sale of fixed assets (Net) of Rs. (86.94) Lakhs, proceeds from Interest and Other income of Rs. 27.81 Lakhs and change in Non- Current Assets of Rs. (1.09) Lakhs.

For Financial Year 2020-21

Net cash used in investing activities was Rs. (72.06) Lakhs, which primarily comprised of cash used for the purchase/Sale of fixed assets (Net) of Rs. (140.86) Lakhs, proceeds from Interest and Other income of Rs. 12.50 Lakhs, Decrease in Investment of Rs. 65.81 lakhs and change in Non-Current Assets of Rs. (9.52) Lakhs.

Financing activities

For the period ended November 30, 2023

Net cash used in financing activities was Rs. (5.66) Lakhs, which predominantly comprised increase of long-term borrowings of Rs. 19.18 Lakhs, repayment of short-term borrowings of Rs. 1.34 Lakhs, increase in Long term provisions and finance cost paid of Rs. (31.09) Lakhs.

For Financial Year 2022-23

Net cash inflow from financing activities was Rs. 333.77 Lakhs, which predominantly comprised increase of long-term borrowings of Rs. 373.32 Lakhs and short-term borrowings of Rs. 0.16 Lakhs, increase in Long term provisions of Rs. 2.16 lakhs and finance cost paid of Rs. (41.87) Lakhs.

For Financial Year 2021-22

Net cash inflow from financing activities was Rs. 233.76 Lakhs, which predominantly comprised increase of long-term borrowings of Rs. 231.65 Lakhs and short term borrowings of Rs. 16.87 lakhs, and finance cost paid of Rs. (15.48) Lakhs.

For Financial Year 2020-21

Net cash generated from financing activities was Rs. 78.98 Lakhs, which predominantly comprised increase of long-term borrowings of Rs. 114.80 Lakhs and repayment of short term borrowing of Rs. (32.12) lakhs, increase in Long term provisions of Rs. 0.54 lakhs and finance cost paid of Rs. (4.25) Lakhs.

INDEBTNESS

As at November 30, 2023, we had total outstanding indebtedness of Rs. 762.33 Lakhs, which comprises of long-term borrowings amounting to Rs. 738.95 Lakhs and Current maturity of long-term borrowing of Rs. 23.38 Lakhs. The following table sets out our indebtedness as of November 30, 2023 and March 31, 2023, 2022 and 2021.

(Amount Rs. in Lakhs)

Particulars	For the Period/Financial Year Ended on
	November 30, 2023	March 31, 2023	March 31, 2022	March 31, 2021
Long term borrowing (excluding current maturity)	738.95	719.78	346.45	114.80
Short term borrowings (Current maturity of long-term borrowing)	23.38	22.04	21.88	5.01
Total	762.33	741.82	368.33	119.81

RELATED PARTY TRANSACTIONS

For further information please refer "Annexure – IX - Related Party Disclosure" under section "Restated Financial Information" beginning from page no. 173 of this Draft Red Herring Prospectus.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the course of undertaking our business, we are exposed to the following risks arising from financial instruments, which include credit risk, liquidity risk and market risk. Our primary focus is to achieve better predictability of financial markets and seek to minimize potential adverse effects on our financial performance.

Credit Risk

Credit risk is the risk that a customer or counterparty to a financial instrument will fail to perform or fail to pay amounts due causing financial loss. The potential activities where credit risks may arise include from cash and cash equivalents, security deposits or other deposits and principally from credit exposures to customers relating to outstanding receivables. The maximum credit exposure associated with financial assets is equal to the carrying amount.

Our exposure to credit risk is influenced mainly by the individual characteristics of each customer and the geography in which it operates. Credit risk is managed through credit approvals, establishing credit limits, and continuously monitoring the creditworthiness of customers to which our Company grants credit terms in the normal course of business.

Liquidity Risk

Liquidity risk is the risk that we will encounter difficulty in meeting the obligations associated with its financial liabilities that are proposed to be settled by delivering cash or other financial asset. Our financial planning has ensured, as far as possible, that there is sufficient liquidity to meet the liabilities whenever due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our reputation. We have practiced financial diligence and syndicated adequate liquidity in all business scenarios.

Market Risk

Market risk is the risk that results in changes in market prices, such as foreign exchange rates, interest rates and equity prices, which will affect our income or the value of our holdings of financial instruments. Our operations result in us being exposed to foreign currency risk on account of trade receivables, trade payables and borrowings. The foreign currency risk may affect our income and expenses, or our financial position and cash flows. The objective of our management of foreign currency risk is to maintain this risk within acceptable parameters, while optimizing returns.

EFFECT OF INFLATION

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

1. Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions to the best of our knowledge which may be described as "unusual" or "infrequent".

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

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page no. 28 of the Draft Red Herring Prospectus. To our knowledge, except as we have described in the Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

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 titled "Risk Factors" beginning on page no. 28 in this Draft Red Herring 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, in case of events such as future increase in labour or material costs or prices that will cause a material change are known.

Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page no. 28 in this Draft Red Herring Prospectus, there are no known factors that may adversely affect our business prospects, results of operations and financial condition.

5. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or increased sales prices.

Our company is engaged in Management & Technical Advisory Services and Natural Gas Aggregation and Sales. We provide end to end solutions for Gas Distribution to the Industries across India and the globe. We provide Management Consultancy Services, including commercial and financial advisory, and also technical services including Project Management and O&M (Operation and Management) Services, across the Oil & Gas Sector in the country and overseas. From July 2022 Company has started with Gas Aggregation and Sale of Natural Gas. Further, Increases in revenues are

by and large linked to increase in sales of products sold by our company and also dependent on the price realization of our products.

6. Total turnover of each major industry segment in which the issuer company operated.

Our company is engaged in Management & Technical Advisory Services and Natural Gas Aggregation and Sales. We provide end to end solutions for Gas Distribution to the Industries across India and the globe. We provide Management Consultancy Services, including commercial and financial advisory, and also technical services including Project Management and O&M (Operation and Management) Services, across the Oil & Gas Sector in the country and overseas. Relevant Industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page no. 95 of this Draft Red Herring Prospectus.

7. Status of any publicly announced new products or business segment.

Our company is engaged in Management & Technical Advisory Services and Natural Gas Aggregation and Sales. We provide end to end solutions for Gas Distribution to the Industries across India and the globe. We provide Management Consultancy Services, including commercial and financial advisory, and also technical services including Project Management and O&M (Operation and Management) Services, across the Oil & Gas Sector in the country and overseas. Otherwise as stated in the Draft Red Herring Prospectus and in the section "Business Overview" appearing on page no. 109, our company has not publicly announced any new business segment till the date of this Draft Red Herring Prospectus.

8. The extent to which business is seasonal.

Our company is engaged in Management & Technical Advisory Services and Natural Gas Aggregation and Sales. We provide end to end solutions for Gas Distribution to the Industries across India and the globe. We provide Management Consultancy Services, including commercial and financial advisory, and also technical services including Project Management and O&M (Operation and Management) Services, across the Oil & Gas Sector in the country and overseas. Business of our company to that extent is not seasonal in nature. Hence, our business is not subject to seasonality or cyclicality.

9. Any significant dependence on a single or few suppliers or customers.

The percentage of contribution of our Companys customer vis-?-vis the total revenue from operations on consolidated basis respectively for the period ended on November 30, 2023 and for the year ended on March 31, 2023, March 31, 2022 and March 31, 2021 is as follows:

Particulars	% contribution to revenue from operations
	For the Period November 30, 2023	For the year ended March 31, 2023	For the year ended March 31, 2022	For the year ended March 31, 2021
Top 1 Customer	27.25	21.03	49.22	38.90
Top 3 Customers	65.98	47.21	71.14	64.63
Top 5 Customers	80.06	65.46	84.61	80.20
Top 10 Customers	91.03	87.55	95.42	95.70

 

Particulars	% contribution to Purchases
	For the Period November 30, 2023	For the year ended March 31, 2023	For the year ended March 31, 2022	For the year ended March 31, 2021
Top 1 Supplier	83.09	48.73	80.05	100.00
Top 3 Suppliers	93.57	86.18	96.82	100.00
Top 5 Suppliers	98.18	94.70	97.42	100.00
Top 10 Suppliers	99.94	99.83	97.77	100.00

10. Competitive conditions:

We face competition from existing and potential competitors which is common for any business. We have, over a period, developed certain competitors who have been discussed in section titles "Business Overview" beginning on page no. 109 of this Draft Red Herring Prospectus.