Rajesh Power Services Ltd Management Discussions

The company was originally formed as a partnership firm in the name and style of “RAJESH TRADERS” pursuant to a deed of partnership dated May 5, 1971 Registration certificate issued by Registrar of Firms, , Ahmedabad having Registered No. GUJ/AHD/32515 under the provisions of the Indian Partnership Act,

1932. Subsequently, the partnership firm was converted to Private Limited Company “RAJESH POWER SERVICES PRIVATE LIMITED” on 10th February, 2010 under the provisions of companies act, 1956 with the registrar of companies, Ahmedabad bearing registration no. 059536. Then the company was converted from RAJESH POWER SERVICES PRIVATE LIMITED to RAJESH POWER SERVICES LIMITED and fresh certificate of incorporation was issued on June 26, 2024 by the registrar of companies, Ahmedabad. The Corporate Identification Number of the Company is U31300GJ2010PLC059536.

The company is into business of Engineering, Procurement and Construction (EPC) contracting and providing services to power transmission and distribution utilities companies. The company under takes PEC contacts for to laying EHV/HV/LV underground cable networks, setup solar Power plants and setting up of substations. The company offers services to Renewable Power sector (solar power) and Non-Renewable Power sector.

Our revenue model in Renewable and Non-Renewable Energy Sector summarized as below:

	Service offerings of Rajesh Power Services Limited.
Turnkey Projects	Operations and Maintenance	Consultancy Services
	Utility Services
(Renewable energy & Non Renewable energy sector )	(Renewable energy & Non Renewable energy sector )	(Renewable energy & Non Renewable energy sector )

Rajesh Power Services Limited was founded by Mr. Kurang Panchal and Mr. Rajendra Patel in year 2010. Mr. Kurang Panchal and Rajendra Patel joined the partnership business started by their father Mr. Ramchandra Panchal and Mr. Baldevbhai Patel in 1971. Our Managing Director Mr. Rajendra Baldevbhai Patel and Mrs. Kurang Ramchandra Panchal are actively involved in business activities of the Company. They actively participate in timely execution of the customer’s orders and are the guiding force behind the growth and business strategy of our Company. Our promoters together have industry experience of many years and possess rich business intellect in the business circle of Gujarat. For details about the promoter family track record of this business please see “History and Certain Corporate Matters” on page no.186 of this Draft Red Herring Prospectus.

We operate in India through our Registered office at 380/3, Siddhi House, Opp. Lal Bunglows, B/H Sasuji Dinning Hall, Off C.G. Road, Navrangpura Ahmedabad Gujarat- 380006, India.

Significant Developments after March 31, 2024 that may affect our Future Results of Operations

The Directors confirm that there have been no events or circumstances since the date of the last financial statements as disclosed in the Prospectus which materially or adversely affect or is likely to affect the profitability of our Company or the value of our assets, or our ability to pay liabilities within next twelve months.

STANDALONE RESULTS OF OUR OPERATIONS

			For the year ended March 31,
Particulars	2024	% of Total Income	2023	% of Total Income	2022	% of Total Income
INCOME:
Revenue from Operations	28,496.98	96.58%	20,717.94	98.11%	14,680.88	98.29%
Other Income	1,009.09	3.42%	399.63	1.89%	255.96	1.71%
Total income	29,506.07	100.00%	21,117.57	100.00%	14,936.84	100.00%
EXPENDITURE:
Cost of materials consumed	-	0.00%	-	0.00%	-	0.00%
Purchase of stock -in-trade/ Traded Goods	20,705.78	70.17%	17,346.95	82.14%	11,468.69	76.78%
Changes in inventories of finished goods, work-in-progress and stock-in-trade	40.85	0.14%	(890.64)	(4.22%)	(761.03)	(5.09%)
Employee benefits expense	2,891.07	9.80%	2,127.60	10.08%	2,238.89	14.99%
Finance costs	928.54	3.15%	847.03	4.01%	751.80	5.03%
Corporate Social Responsibility expenditures	11.00	0.04%	10.85	0.05%	11.34	0.08%
Depreciation and amortization expense	69.83	0.24%	93.71	0.44%	167.09	1.12%
Other expenses	1,452.69	4.92%	722.34	3.42%	619.86	4.15%
Total expenses	26,099.76	88.46%	20,257.84	95.93%	14,496.64	97.05%
Net Profit / (Loss) before Tax and extra-ordinary items	3,406.31	11.54%	859.73	4.07%	440.20	2.95%
Exceptional Items	-	-	-	-	-	-
Net Profit / (Loss) before Tax	3,406.31	11.54%	859.73	4.07%	440.20	2.95%
Less: Tax Expense
Current tax	777.58	2.64%	169.79	0.80%	95.08	0.64%
Deferred tax	26.44	0.09%	14.79	0.07%	0.52	0.00%
Total Tax Expense	804.02	2.72%	183.00	0.87%	95.60	0.64%
Net Profit / (Loss) after tax	2,602.29	8.82%	675.15	3.20%	344.60	2.31%

Main Components of our Profit and Loss Account Income Revenue from Operations

Our Revenue from Operations are mainly consisting from Sale of services of EPC contracts which includes revenue from turnkey projects, O&M Services, Utility Services Cable & Equipment Testing and Design and Consultancy Services; which as a percentage of total income were 96.58 %, 98.11 % and 98.29 % respectively, fiscal years 2024, 2023 and 2022.

Other Income

Our other income comprises of Interest income on Deposits and other loans and advances, Profit/(Loss) from partnership, and Miscellaneous income. Other income, as a percentage of total income were 3.42 %, 1.89 % and 1.71 % respectively, for the fiscal years 2024, 2023 and 2022.

Expenditure

Our total expenditure primarily consists of Purchase of Products, Changes in inventories, Employee Benefit Expenses, Finance Cost, Depreciation & Amortisation Expenses and Other Expenses.

Purchase of Stock in Trade

Purchase of Product are primarily in relation to purchases materials, consumables and other products for executing EPC contracts.

Employee Benefit Expenses

Expenses in relation to employee’s remuneration and benefits include salary & wages, directors remuneration, Gratuity and staff welfare expenses.

Finance Costs

Finance Cost primarily consists of Interest cost on Bank loan and other loans, Other Borrowing Cost & Bank charges.

Depreciation and Amortization Expenses

Depreciation and Amortization Expenses primarily consist of depreciation on the tangible assets and intangible assets of our Company which primarily includes Building, Furniture and Fixtures, Plant and Machinary, Office equipments, Electrical Installations and equipment, Motor Vehicles and Computers etc.

Other Expenses

Other expenses primarily include Rent, Office Expense, Selling & Distribution, Rates & Taxes, Commission, Legal and Professional Fees, Travelling and Conveyance, Insurance & Repairs and Maintenance etc.

Provision for Tax

The provision for current taxation is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

REVIEW OF RESULTS OF OPERATIONS FOR THE FINANCIAL YEAR ENDED MARCH 31, 2024, 2023 AND 2022

Fiscal 2024 compared with Fiscal 2023

Total Income/Revenue

Our Total income/Revenue is increased by 8,388.50 lakhs or 39.72% from 21,117.57 Lakhs in FY 2022-23 to

29,506.07 Lakhs in FY 2023-24, primarily due to an increase in our revenue from operations and profit from partnership firm.

Revenue from Operations

In Fiscal 2024, Revenue from Operations had increased by 7,779.05 lakhs or 37.55 %, from 20,717.94 lakhs in Fiscal 2023 to 28,496.98 lakhs in Fiscal 2024. The increase in the Fiscal 2024 was due to Increase in the sale Sale of EPC contact services. There is strong revenue growth as a result of center and states’ healthy awarding and capital outlays for infrastructure segment. Further the company expects substantial increase in revenue from operations due to robust order books. For more details about our order book, please refer

“Additional working capital” under chapter titled “Object of the issue” beginning from page no.99 of DRHP

Other income

In Fiscal 2024, Other Income had increased by 609.46 lakhs or 152.51%, from 399.63 lakhs in Fiscal 2023 to 1009.09 lakhs in Fiscal 2024. The increase was maily due to the increase in profit received from partnership firm. In Fiscal,2024 there is an increase of Rs.585.48 lakhs in profit received from partnership firm compare to Fiscal 2023. Further Interest income has also been increased in Fiscal 2024 compare to Fiscal 2023.

Purchase of stock in trade

Purchase of stock in trade are primarily in relation to purchases materials/ products used in providing EPC contract services. In Fiscal 2024, Purchase of stock in trade increased by 3,358.83 lakhs or 19.36%, from 17,346.95 in Fiscal 2023 to 20705.78 in Fiscal 2024. This was in line with the increased Sales of EPC contract Services by our Company.

Employee Benefit Expenses

Our staff cost had increased by 763.47 lakhs or 35.88 %, from 2127.60 lakhs in Fiscal 2023 to 2891.07 lakhs in Fiscal 2024. This increase was mainly due to incease in number of employees & increase in Remuneration of employees and directord in normal course of business.

Finance Cost

Finance cost during the year had increased by 81.51 lakhs or 9.62 % from 847.03 lakhs in Fiscal 2023 to 928.54 lakhs in Fiscal 2024 due to increase in Long Term and Short Borrowing (OD/CC Facility) during Fiscal 2024.

Depreciation and Amortization Expenses

Depreciation expenses had decreased by 23.88 lakhs from 93.71 lakhs in Fiscal 2023 to 69.83 lakhs in Fiscal 2024. This decreased was on account of change in depreciation method. The company shifted from Written down Value (WDV) Method to Straight Line Method (SLM) method of of Depreciation in FY 2022-23.

Other Expenses

Other expenses had increased by 730.34 lakhs or 101.11 % from 722.34 lakhs in Fiscal 2023 to 1452.69 lakhs in Fiscal 2024. The increase was primarily due to the increase in legal & Professional fees, Selling & Ditribution expenses, Rent, Insurance expenses.

Profit before Tax

Due to increase in our revenues, our Profit before tax had increased by 2546.58 lakhs or 296.21% from 859.73 lakhs in Fiscal 2023 to 3406.31 lakhs in Fiscal 2024.

Profit after Tax

After accounting for taxes at applicable rates, our Profit after Tax had increased by 1927.15 lakhs or 285.44 %, from 675.15 lakhs in Fiscal 2023 to 2602.29 lakhs in Fiscal 2024. The increase in profit after tax is due to increase revenue from operations and other income. This was in line with the increased total income of the company.

Fiscal 2023 compared with Fiscal 2022

Total Income/Revenue

Our Total income/Revenue is increased by 6180.73 lakhs or 41.38% from 14,936.84 Lakhs in FY 2021-22 to

21,117.57 Lakhs in FY 2023-24, primarily due to an increase in our revenue from operations and other income.

Revenue from Operations

In fiscal 2023, Revenue from Operations had increased by 6037.06 lakhs or 41.12%, 14680.88 Lakhs in FY 2021-22 to 20717.94 Lakhs in FY 2023-24. The increase in the Fiscal 2023 was mainly due to increase in the sale of Services.

Other income

In Fiscal 2023, Other Income had increased by 143.67 lakhs or 56.13 %, from 255.96 lakhs in Fiscal 2022 to 399.63 lakhs in Fiscal 2023. The increase was due to the increase in Interest income, Foreign Currency Fluctuation Gain & Miscellaneous Income.

Purchase of stock in trade

Purchase of Stock in trade are primarily in relation to purchases of materials and products used in providing EPC contract services. In Fiscal 2023, Purchase of Stock in trade increased by 5878.26 lakhs or 51.25 %, from

11468.69 in Fiscal 2022 to 17346.95 in Fiscal 2023. The increase in purchase of Stock in trade was due to revenue from Sale of Services is in line with the Fiscal 2023.

Employee Benefit Expenses

Our staff cost had decreased by 111.29 lakhs or 4.97 %, from 2238.89 lakhs in Fiscal 2022 to 2127.60 lakhs in Fiscal 2023. This decrease was mainly due to decease in Directos’ remunaration.

Finance Cost

Finance cost during the year had increased by 95.23 lakhs or 12.67 % from 751.80 lakhs in Fiscal 2022 to 847.03 in Fiscal 2023 due to increase in Long term borrowing and short term borrowing taken for working capital purposes.

Depreciation and Amortization Expenses

Depreciation expenses had decreased by 73.38 lakhs from 167.09 lakhs in Fiscal 2022 to 93.71 lakhs in Fiscal 2023. This decreased was on account of change in Depreciation method from Written down Value (WDV) Method to Straight line method from Fiscal 2023.

Other Expenses

Other expenses had increased by 102.48 lakhs or 16.53 % from 619.86 lakhs in Fiscal 2022 to 722.34 lakhs in Fiscal 2023. The increase is due to the increase in Legal & Professional Fees, Office Rent, Office & General Expenses etc. for FY 2022-23.

Profit before Tax

Due to increase in our revenues, our Profit before tax had increased by 419.52 lakhs or 95.30 % from 440.20 lakhs in Fiscal 2022 to 859.73 lakhs in Fiscal 2023.

Profit after Tax

After accounting for taxes at applicable rates, our Profit after Tax had increased by 330.55 lakhs or 95.92 %, from 344.60 lakhs in Fiscal 2022 to 675.15 lakhs in Fiscal 2023. The increase in profit after tax is due to increase in margin from sale of services & other income.

Cash Flows

( in lakhs)

	For the year ended March 31,
Particulars
	2024	2023	2022
Net Cash from Operating Activities	(1,466.24)	1,535.79	651.91
Net Cash from Investing Activities	629.69	(543.15)	(1,903.40)
Net Cash used in Financing Activities	829.30	(1,157.20)	604.16
Net Increase / (Decrease) in Cash and Cash equivalents	(7.25)	(164.57)	(647.34)

Cash Flows from Operating Activities

The main reason of negative cashflow from operating activities is substantial increase in Trade Receivables and Fixed Deposit with Bank held as margin money against guarantee.

Trade Receivable:

In Fiscal 2024 there is substantial increase of Rs.1552.03 lakhs in trade receivables compare to Fiscal 2023.The

Company’s substantial revenue is from Government entities. Normally such contracts involve comparatively longer realization period of around 3.00 to 3.50 months. With increase in revenue the company need to invest additional funds for funding the outstanding trade receivables.

Fixed Deposit with Bank held as margin money against guarantee:

In Fiscal 2024 there is substantial increase of Rs.1912.93 lakhs in Fixed Deposit with Bank held as margin money against guarantee compare to Fiscal 2023. The company need to give Fixed Deposits held with Bank as margin money against guarantee to Government, Semi Government & other Government entities contracts as performance guarantee. With the increase in business the cash accruals are invested in fixed deposits for additional bank guarantee.

Shortfall in cashflow is due to increase in profitable business substantially funded through unsecured loan from directors, relative of directors and group entities as quasi equity with nominal interest to comply with requirement of Companies Act, 2013 and Income Tax Act, 1961. The company funds the short fall in cash flow by quasi equity, instead of availing additional working capital facilities from banks as it is involving creation of security, collateral security in addition to personal guarantee of all promoters. Further, rate of interest for such facilities from bank is higher & involving other charges.

Details of funding of increase in Trade Receivable and FDs held as margin money against guarantee:

( in lakhs)

	For the year ended March 31,
Particulars
	2024	2023	2022
Increase/(decrease) in Trade Receivable	1,552.03	141.60	1,800.85
g	1,912.93	393.64	-
margin money against guarantee)
Total	3,464.96	535.24	1,800.85
Funded through:
Increase in Borrowings from directors, relative of directors and group entities	991.53	-	975.42
Increase Borrowings from Banks	888.10	-	418.58
Advances from customers	955.60	-	-
Internal Accruals	629.73	535.24	406.85
Total	3,464.96	535.24	1,800.85

Cash Flows from Investment Activities

In fiscal year 2024, the net cash inflow from Investing Activities was 629.69 lakhs. This was on account of Sale of Non- current investment, Interest Income & profit from partnership firm.

In fiscal year 2023, the net cash invested in Investing Activities was 543.15 lakhs. This was on account of Purchase of Non-Current Investment, Interest Income & profit from partnership firm.

In fiscal year 2022, the net cash invested in Investing Activities was 1903.40 lakhs. This was on account of purchase of fixed assets, Purchase of Non-Current Investment, Interest Income & Dividend Income.

Cash Flows from Financing Activities

Net cash from financing activities in fiscal year 2024 was 829.30 lakhs. This was on account of Proceeds from long term / short term borrowings, payment of dividend & Payment of interest.

Net cash from financing activities in fiscal year 2023 was (1157.20) lakhs. This was on account of Repayment of long term / short term borrowings, payment of dividend & Payment of interest

Net cash from financing activities in fiscal year 2022 was 604.16 lakhs. This was on account of Proceeds from long term / short term borrowings, payment of dividend & Payment of interest.

OTHER MATTERS

? Unusual or infrequent events or transactions

Except as described in this Prospectus, during the periods under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

? Significant economic changes that materially affected or are likely to affect income from continuing Operations

Other than as described in the Section titled “Financial Information” and chapter titled “Management’s Discussion and Analysis of Financial Conditions and Results of Operations”, beginning on page nos.

SECTION VII - FINANCIAL STATEMENTS 219 and 256 of this Draft Red Herring Prospectus respectively, to our knowledge, there are no significant economic changes that materially affected or are likely to affect income from continuing Operations.

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

Other than as described in the chapter titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Conditions and Result of Operations”, beginning on page nos. 24 and 256 of this Draft Red Herring Prospectus respectively to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our company from continuing operations.

? Future relationship between Costs and Income

Other than as described in the chapter titled “Risk Factors” beginning on page no.24 of this Draft Red Herring Prospectus, to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

? The extent to which material increases in revenue or income from operations are due to increased volume, introduction of new products or services or increased prices

Increases in revenues are by and large linked to increases in introduction of new projects and volume of business activity carried out by the Company.

? Total turnover of each major industry segment in which our Company operates.

Our Company is engaged in the business EPC contracts which includes revenue from turnkey projects, O&M Services, Utility Services Cable & Equipment Testing and Design and Consultancy Services relevant industry data, as available, has been included in the chapter titled “Industry Overview” beginning on page no. 137 of this Prospectus.

? Status of any publicly announced new products or business segments

Please refer to the chapter titled “Our Business” beginning on page no. 155 of this Draft Red Herring Prospectus.

? The extent to which the business is seasonal.

Our business is not seasonal in nature