Rappid Valves India Ltd Management Discussions

The following discussion and analysis of our financial condition and results of operations for the financial years ended on 2024, 2023 and 2022 is based on, and should be read in conjunction with, our Restated Financial Statements, including the schedules, notes and significant accounting policies thereto, included in the chapter titled "Restated Financial Statements" beginning on page 202 of this Draft Red Hering Prospectus (DRHP). Our Restated Financial Statements have been derived from our audited financial statements and restated in accordance with the SEBI ICDR Regulations and the ICAI Guidance Note.

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in this Draft Red Hering Prospectus (DRHP). You should also read the section titled "Risk Factors" beginning on page 29 of this Draft Red Hering Prospectus (DRHP), which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Rappid Valves (india) Limited. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for the financial years ended on 2024, 2023 and 2022 included in this Draft Red Hering Prospectus (DRHP) beginning on page 202 of this Draft Red Hering Prospectus (DRHP).

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward Looking Statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to our operations include, among others, economic conditions affecting demand/supply and price conditions in domestic and overseas market in which we operate, changes in Government Regulations, Tax Laws and other Statutes and incidental factors.

OVERVIEW

Rappid Valves (India) Limited recognized by its brand name "Rapid" or by "Rappid Valves also known as a "Company" being an Engineering Company is primarily engaged in the manufacturing of Valve solutions. Our extensive product portfolio encompasses a vast range of valves which includes Ball valves, Gate Valves, Globe Valves, Butterfly Valves. Check Valves, Double Block valves, Strainer Valves and Marine Valves which are manufactured using ferrous and non-ferrous materials, sizes ranging from 15mm to 600mm catering to diverse requirement. Our Company was established in the year 2002 vide Certificate of Incorporation dated May 24, 2002 as a Private Limited Company under the name Rapid Valves (India) Private Limited with Mr. Gaurav Vijay Dalal and Ms. Usha Vijay Dalal as the initial subscribers of our Company.

Key Performance Indicators of our Company.

( in lakhs)

Key Financial Performance	For the Financial Year ended
	March 31, 2024	March 31, 2023	March 31, 2022
Revenue from Operations (1)	3,651.25	1,639.91	1,214.11
EBITDA (2)	735.83	233.48	194.51
EBITDA Margin (%)(3)	20.15%	14.24%	16.02%
PAT	413.27	45.56	28.98
PAT Margin (%)(4)	11.32%	2.78%	2.39%
Return on Equity (%)(5)	53.88%	31.69%	-82.09%
Debt to Equity Ratio (times) (6)	0.90	3.18	(39.67)
Current Ratio (times) (7)	1.48	1.04	0.80

Explanation of KPIs:

(1) Revenue from operations means the revenue from operations as appearing in the restated financial information. (2) EBITDA is calculated as Profit before tax + Depreciation + Interest Expenses + Preference dividend Other Income. (3) EBITDA Margin is calculated as EBITDA divided by Revenue from Operations. (4) PAT Margin is calculated as PAT for the year divided by revenue from operations.

(5) Return on Equity is calculated by comparing the proportion of net income against the amount of average shareholder equity. (6) Debt to Equity ratio is calculated as Long Term Debt + Short Term Debt divided by equity. (7) Current Ratio is calculated by dividing Current Assets to Current Liabilities.

Explanation for KPI metrics

Key Financial	Explanations
Performance
Revenue Operations	from Revenue from Operations is used by our management to track the revenue profile of the business and in turn helps to assess the overall financial performance of our Company and volume of our business
EBITDA	EBITDA provides information regarding the operational efficiency of the business
EBITDA Margin	EBITDA Margin (%) is an indicator of the operational profitability and financial performance of our Business
PAT	Profit after tax provides information regarding the overall profitability of the business
PAT Margin	PAT Margin (%) is an indicator of the overall profitability and financial performance of our business.

Operational KPIs of the Company:

( in lakhs)

Key Financial Performance	March 31, 2024	March 31, 2023	March 31, 2022
Revenue Split between Domestic sales and Export sales
Domestic sales*	3,695.50	1,545.50	1,296.98
Export sales*	-	0.72	4.09
Domestic sales (%)	100%	99.95%	99.69%
Export sales (%)	-	0.05%	0.31%

* As per Restated financial statements

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to the chapter titled "Restated Financial Statements" beginning on page 202 of this Draft Red Hering Prospectus (DRHP).

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 29 of this Draft Red Hering Prospectus (DRHP). Our results of operations and financial conditions are affected by numerous factors including the following:

Some events may have material impact quantitatively;

Some events may have material impact qualitatively instead of quantitatively.

Some events may not be material individually but may be found material collectively.

Some events may not be material at present but may be having material impact in future.

RESULTS OF OUR OPERATION

	For The Year Ended 31st March
Particulars	2024	% of Total Revenue	2023	% of Total Revenue	2022	% of Total Revenue
Revenue:
Revenue from operations	3,651.25	99.76%	1,639.91	99.79%	1,214.11	99.91%
Other income	8.81	0.24%	3.51	0.21%	1.13	0.09%
TOTAL INCOME	3,660.06	100.00%	1,643.42	100.00%	1,215.24	100.00%
Expenses:
(a) Cost of Material Consumed	2,998.44	81.92%	1,373.94	83.60%	924.68	76.09%
(b) Purchase of stock-in-trade	-	0.00%	-	0.00%	-	0.00%
(c) Increase/Decrease in Stock in trade	(335.88)	-9.18%	(188.70)	-11.48%	(27.00)	-2.22%
(d) Employee benefits expense	103.09	2.82%	63.06	3.84%	48.10	3.96%
(e) Finance costs	140.29	3.83%	144.06	8.77%	146.16	12.03%
(f) Depreciation and	51.34	1.40%	30.15	1.83%	20.49	1.69%
amortisation expense
(g) Other expenses	149.76	4.09%	158.13	9.62%	73.82	6.07%
TOTAL EXPENSES	3,107.04	84.89%	1,580.64	96.18%	1,186.25	97.61%
Profit / (Loss) before tax	553.01	15.11%	62.78	3.82%	28.99	2.39%
Tax expenses:
(a) Current tax expense	137.2	3.75%	8.00	0.49%	-	-
(b) Earlier year Tax	0.84	0.02%	-	0.00%	-
(c) Deferred tax expense / (benefit)	1.67	0.05%	9.22	0.56%	0.01	0.00%
Net tax expense/(benefit)	139.71	3.82%	17.22	1.05%	0.01	0.00%
Preference Share Dividend	0.03	0.00%	-	-	-	-
Profit / (Loss) for the year	413.27	11.29%	45.56	2.77%	28.98	2.38%

Review of Restated Financials,

Key Components of Companys Profit and Loss Statement

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

Other Income: Other Income Consist of Interest Income, Discount Received & Other Misc. Income.

Expenses: Companys expenses consist of, Cost of Material Consumed, Changes in Inventories of Finished Goods &

Stock in Trade, Depreciation Expenses, Employee Benefit Expenses, Finance Cost & Other Expenses.

Cost of Material Consumed: Cost of Material Consumed consist of Opening Stock, Purchase of Raw Material, Direct Expenses & Closing Stock.

Change in inventory of Stock in Trade: Change in inventory of Stock in Trade consists of difference between opening & closing value of Stock.

Employee Benefits Expense: Employee benefit expenses includes Salaries and Wages, Directors Remuneration & Contribution to Statutory Funds, Gratuity Expenses etc.

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

Depreciation and Amortization Expense: We recognize Depreciation and Amortization expense on a SLM Basis as per the rates set forth in the Companies Act, 2013/ Companies Act, 1956, as applicable.

Other Expenses: Other expenses include Rent, Repair & Maintenance, Travelling & Conveyance etc.

Fiscal 2024 compared with Fiscal 2023

Revenue from Operation

Revenue from operations for FY 2023-24 amounted to 3,651.25 lakhs while revenue for FY 2022-23 was 1,639.91 lakhs. Revenue in FY 2023-24 was higher by 122.65% from FY 2022-23.

In FY 2023-24, the company generated sales from clients which were engaged in the Marine, Shipbuilding, EPC and OEM industries. The cumulative sales from these industries contributed to 2068.7 lakhs which is around 56.66% of the sales of FY 2023-24. Further, the company received funding or 500.00 lakhs from Maharashtra Defence and

Aerospace Venture fund which helped to boost sales during FY 2023-24. Industry wise revenue bifurcation of Rappid Valves indicating sales growth during FY 2022-23 and FY 2023-24 has been summarized in the table below:

Industry	FY 2022-23	FY 2023-24
Marine	8.40	1,069.80
Ethanol, Breweries and Industrial Wastewater Treatment	1,343.30	1,098.80
Shipbuilding & Repair	-	401.00
EPC & OEM	15.10	597.90
Fire Safety	1.30	125.30
Chemicals	90.20	113.00
Steel	17.80	81.40
Others	163.70	164.00
Total	1,639.80	3,651.20

Other Income

Other Income in FY 2023-24 amounts to 8.81 Lakhs the same was 3.51 lakhs in FY 2022-23.

Cost of Material Consumed

Cost of Material Consumed had increased by 118.24% from 1,373.94 lakhs in FY 2022-23 to 2,998.44 lakhs in

FY 2023-24. This increase was due to increase in purchases during the year.

Change in inventory of Stock in trade

Change in inventory of Stock in tradehad increased by 78.00% from (118.70) lakhs in FY 2022-23 to (335.88) lakhs in FY 2023-24. This increase was primarily due to higher closing inventories during the year. Increase in sales and new orders were the main driving force where the company had to keep inventory in hand to meet the additional demand from customers as well execute new orders.

Employee Benefit Expenses

Employee benefit expenses has increased by 63.48% from 63.06 lakhs in FY 2022-23 to 103.09 lakhs in FY 2023-24. This increase was due to increase in salaries and wages, directors remuneration and staff welfare expenses during

FY 2023-24.

Finance Cost

Finance Cost has decreased by 2.62 % from 144.06 lakhs in FY 2022-23 to 140.29 lakhs in FY 2023-24.

Depreciation and Amortization Expenses

Depreciation has increased by 70.28% from 30.15 lakhs in FY 2022-23 to 51.34 lakhs in FY 2023-24. The company charges depreciation on WDV basis. Depreciation increased as the company made additions to their fixed assets during FY 2023-24.

Other Expenses

Other expenses have decreased by 5.29% from 158.13 lakhs in FY 2022-23 to 149.76 lakhs in FY 2023-24.

Tax Expenses

The Companys total tax expenses have increased from 17.22 lakhs in FY 2022-23 to 139.71 lakhs in FY 2023-24. Increase in profits have attracted more tax liability during FY 2023-24.

Profit After Tax

The Profit after tax for FY 2023-24 was 413.27 Lakhs representing 11.29% of Total Revenue as compared to 45.56 Lakhs representing 2.77% of Total Revenue in FY 2022-2023. In FY 2023-24 the Profit After Tax (PAT) has seen substantial growth. This can be attributed to the significant increase in sales. Timely payments to our suppliers have also resulted in cash discounts, further contributing to our profitability. Additionally, the bulk procurement of raw materials resulted in cost savings, thereby enhancing the companys profit margin. On the other hand, the companys fixed cost has remained constant. All these factors in totality have led to a considerable increase in the PAT for FY 2023-24.

Fiscal 2023 compared with Fiscal 2022

Revenue from Operation

Revenue from operations for FY 2022-23 amounted to 1,639.91 lakhs while revenue for FY 2021-22 was 1,214.11 lakhs. Revenue in FY 2022-23 was higher by 35.07 % from FY 2021-22. The revenue growth was mainly influenced by Praj Industries. Praj was the companys largest customer during FY 2021-22 and FY 2022-23. FY 2022-23 saw new orders from Praj which led to revenue growth.

Other Income

Other Income in FY 2022-23 amounted to 3.51 lakhs the same was 1.13 lakhs in FY 2021-22. Increase in other income was due to increase in interest income during FY 2022-23.

Cost of Material Consumed

Cost of Material Consumed had increased by 48.59 % from 924.68 lakhs in FY 2021-22 to 1,373.94 lakhs in FY

2022-23. This increase was due to increase in purchases during the year.

Change in inventory of Stock in trade

Change in inventory of Stock in tradehad increased by 598.89% from (27.00) lakhs in FY 2021-22 to (188.70) lakhs in FY 2022-23. This increase was primarily due to higher closing inventories during the year. Increase in sales and new orders were the main driving force where the company had to keep inventory in hand to meet the additional demand from customers as well execute new orders.

Employee Benefit Expenses

Employee benefit expenses has increased by 31.10% from 48.10 lakhs in FY 2021-22 to 63.06 lakhs in FY 2022-23. This increase was due to increase in salaries and wages, directors remuneration during FY 2022-23.

Finance Cost

Finance Cost has decreased by 1.44% from 146.16 lakhs in FY 2021-22 to 144.06 lakhs in FY 2022-23. This increase was primarily due to increase in Interest on borrowings during the year.

Depreciation and Amortization Expenses

Depreciation has increased by 47.14% from 20.49 lakhs in FY 2021-22 to 30.15 lakhs in FY 2022-23. The company charges depreciation on WDV basis. During FY 2022-23, the company made additions in their fixed assets which lead to increase in depreciation during the year.

Other Expenses

Other expenses have increased by 114.21 % from 73.82 lakhs in FY 2021-22 to 158.13 lakhs in FY 2022-23.

Tax Expenses

The Companys total tax expenses have increased from 0.01 lakhs in FY 2021-22 to 17.22 lakhs in FY 2022-23. Increase in profits have attracted more tax liability during FY 2022-23.

Profit After Tax

The profit after tax in FY 2022-23 was 45.56 lakhs while the same was 28.98 lakhs in FY 2021-22. Total expenses as a percentage to total income was 96.18% in FY 2022-23 as compared to 97.61% in FY 2021-22. Increase in top line growth also contributed to increase in the margin of the company.

Cash Flows

( in Lakhs)

Particulars	March 31, 2024	March 31, 2023	March 31, 2022
Net Cash from Operating Activities	(107.33)	(42.79)	113.76
Net Cash from Investing Activities	(264.76)	(91.07)	(3.66)
Net Cash from Financing Activities	465.37	166.00	(128.34)

Cash Flows from Operating Activities

Net cash from operating activities for FY 2023-24 was at ( 107.33) lakhs as compared to the Profit Before Tax at 553.01 lakhs while for FY 2022-23 net cash from operating activities was at ( 42.79) lakhs as compared to the Profit Before Tax at 62.78 Lakhs. This was primarily due to adjustments against, changes in Working Capital & Income

Tax Paid.

Net cash from operating activities for FY 2022-23 was at ( 42.79) lakhs as compared to the Profit Before Tax at

62.78 lakhs while for FY 2021-22 net cash from operating activities was at 113.76 lakhs as compared to the Profit

Before Tax at 28.99 Lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital & Income Tax Paid.

Cash Flows from Investment Activities

In FY 2023-24, the net cash invested in Investing Activities was (264.76) lakhs. This was mainly on account of

Purchases of Fixed Assets.

In FY 2022-23, the net cash invested in Investing Activities was (91.07) lakhs. This was mainly on account of

Purchases of Fixed Assets.

In FY 2021-22, the net cash invested in Investing Activities was (3.66) lakhs. This was mainly on account of

Purchases of Fixed Assets.

Cash Flows from Financing Activities.

In FY 2023-24, the net cash from financing activities was 465.37 lakhs. This was on account of proceeds from issue of share capital.

In FY 2022-23, the net cash from financing activities was 166.00 lakhs. This was on account of proceeds from issue of share capital.

In FY 2021-22, the net cash from financing activities was (128.34) lakhs. The company did not have any new borrowings during the year and only paid interest on the existing borrowings leading to negative cash flow from financing activities.

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

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

1. Unusual or infrequent events or transactions

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

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

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

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

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 29 in the Draft Red Herring Prospectus (DRHP), in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues

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

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

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

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

Our Company has not announced any new Product.

7. Seasonality of business

Our Companys business is not seasonal.

8. Dependence on few customers/ clients

The percentage of contribution of our Companys Top Customers/Clients is as follows:

(Figures in %)

Particulars	March 31, 2024	March 31, 2023	March 31, 2022
Top Ten Customers (% of revenue from operations)	87.76%	90.90%	99.80%

9. Competitive conditions

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Our Business" beginning on pages 120 and 142, respectively of the Draft Red Hering Prospectus (DRHP).

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

After the date of last Balance sheet i.e. March 31, 2024, the following material events have occurred after the last audited period.

1. The Company was converted from Private Limited Company to Public Limited Company vide certificate of incorporation dated June 20, 2024.
2. b. The Board of our Company has approved to raise funds through Initial Public Offering in the board meeting held on June 26, 2024.
3. c. The members of our Company approved proposal of Board of Directors to raise funds through initial public offering in the EOGM held on June 27, 2024.
4. d. The Company has allotted 3,02,184 equity shares through the board resolution July 10, 2024, via conversion of optionally convertible preference shares through preferential allotment into equity shares.
5. e. Company has re-classified its authorized capital from 883.00 Lakhs comprising of: 4,98,000 Optionally Convertible Preference Shares of face value of 100/- each; and 38,50,000 Equity Shares of face value of 10/- each to 883.00 Lakhs divided into 88,30,000 Equity Shares of 10/- each vide Resolution passed by its shareholders in Extra Ordinary General Meeting held on July 10, 2024.