Rosmerta Digital Services Ltd Management Discussions

(Rs. In Thousand)

Particulars	For the Period ended		For the Period ended		For the Period ended		For the Period ended
	30 June 2024	%age of Total Income	March 31, 2024	%age of Total Income	March 31, 2023	%age of Total Income	March 31, 2022	%age of Total Income
INCOME:
Revenue from operations	3,97,814	100.00 %	8,41,900	100.00 %	2,97,891	100.00%	20,270	100.00%
Other income	2	0.00%	7	0.00%	-	0.00%	-	0.00%
Total Income (A)	3,97,816	100.00 %	8,41,907	100.00 %	2,97,891	100.00%	20,270	100.00%
EXPENSES :
Purchase of traded goods & services	1,92,979	48.51%	4,07,992	48.46%	53,572	17.98%	464	2.29%
Change in inventory in traded goods	(762)	(0.19)%	2,497	0.30%	(5774)	(1.94)%	(241)	(1.19)%
Employee benefits expense	42,286	10.63%	1,36,522	16.22%	1,20,507	40.45%	14,912	73.57%
Finance costs	2,499	0.63%	10,695	1.27%	6,549	2.20%	334	1.65%
Depreciation and amortization expense	501	0.13%	1,765	0.21%	1,579	0.53%	19	0.09%
Other expenses	58,436	14.69%	1,41,262	16.78%	99,120	33.27%	4,862	23.99%
Total expenses (B)	2,95,939	74.39%	7,00,733	83.23%	2,75,553	92.50%	20,350	100.39%
Profit/ Loss before tax for the year (C) =(A-B)	1,01,877	25.61%	1,41,174	16.77%	22,338	7.50%	(80)	(0.39)%
Tax expense
(i) Current tax	26,027	6.54%	37,815	4.49%	7,193	2.41%	38	0.19%
(ii) Deferred tax assets	(299)	(0.08)%	(2293)	(0.27)%	(1042)	(0.35)%	183	0.90%
Total tax expense for the year/ period (D)	25,728	6.47%	35,522	4.22%	6,151	2.06%	221	1.09%
Profit/ Loss for the year/ period (E)=(C-D)	76,149	19.14%	1,05,652	12.55%	16,187	5.43%	(301)	(1.48)%

Our Significant Accounting Policies

For Significant accounting policies please refer " Significant Accounting Policies", under Chapter titled "Restated Financial Statements" beginning on page 294 of the Draft Red Herring Prospectus.

Overview of Revenue & Expenditure

The following discussion on results of operations should be read in conjunction with the Restated Financial statements for the Financial years 2023-24, Financial Year 2022- 2023, Financial Year 2021-22. Our revenue and expenses are reported in the following manner:

Revenues

? Revenue of operations

Our Companys revenue is primarily generated from Sale of services and sale of products.

? Other Income

Other Income includes interest income on fixed deposit and others.

Expenditure

Our total expenditure primarily consists of Purchases of traded goods, Change in inventory in traded goods, Employee benefit expense, Finance Costs, Depreciation and amortization expense, and Other Expenses.

? Cost of Good Sold (COGS)

The Cost of good sold (COGS) means Purchases of traded goods includes purchases of goods in which we are dealing means automobiles and spare parts plus opening Inventory subtracting the Closing Inventory of the traded goods (Change in Inventory).

? Employee benefit expense

The Employee benefit expense includes Salaries and wages for employees, directors and KMPs, and Staff welfare expenses.

? Finance Cost

Finance cost expense include interest on Financial Liabilities, Interest on lease Liability.

? Depreciation and Amortization Expenses

Depreciation Expenses majorly includes depreciation on Furniture & Fixtures, Vehicles, Computers and Office Equipments and Amortization expenses includes on intangible assets.

? Other Expenses

Other Expenses include major expenses on Business Support Expenses, RTO Services, Wages to contractor, Consultancy Fees, Rent, Travelling Expenses and other expenses.

Revenues

? Total Income

Total Income which includes Revenue from Operations & other income for the quarter ended June 30, 2024, stands at Rs. 3,97,816 Thousands representing 100.00% of Total Income.

? Revenue of operations

Net revenue from operations for the quarter ended June 30, 2024 was Rs. 3,97,814 Thousands representing almost 100% of Total Income.

Reason: The revenue from operations includes

Particulars	Qtr ending 30th June 2024
Sale of Services	1,93,616
Sale of Products	2,04,198
Total	3,97,814

Sale from services include income from registration services given to OEMs which have increased in the periods as stated below:

Particulars	Qtr ending 30th June 2024
Vehicle Registered	82,975

? Other Income

Other Income for the quarter ended June 30, 2024, stood at Rs. 2 Thousands which represents 0.00% of Total Income.

Expenditure

? Total Expenses

Total Expenses for the quarter ended June 30, 2024, stood at Rs. 2,95,939 Thousands which represents 74.39% of Total Income

? Cost of Good Sold

Cost of Good Sold which is the sum of Purchase of Traded Goods & Change in Inventory. Thus, for the quarter ended 30^th June 2024 it stood at Rs. 1,92,217 Thousands which represents 48.32 % of Total Income.

(Rupees In Thousand)

Particulars	Qtr ending 30th June 2024
Purchases Cost	1,92,979
Add: Opening stock	3,518
Less: Closing Stock	(4,280)
COGS	1,92,217

? Employee benefit expense

The Employee benefit expense for the quarter ended June 30, 2024 stands at Rs. 42,286 Thousands representing 10.63% of Total Income

The Total Employee Expenses constitutes of:

(Rupees In Thousand)

Particulars	Qtr ending 30th June 2024
Salary ,wages & allowance	38,933
Contribution to provident and other fund	2,272
Gratuity expenses	980
Staff welfare	101
Total	42,286

? Finance Cost

The Finance Cost for the quarter ended 30^th June 2024, stood at Rs. 2,499 Thousands which represents 0.63% of Total Income. This includes Interest cost of Financial Liabilities measured at amortized cost i.e. Rs. 2,483 Thousands & Interest on Lease Liability i.e. Rs. 16 Thousands

? Depreciation and Amortization Expenses

The Depreciation and Amortization Expenses for the quarter ended 30^th June 2024 stood at Rs. 501 Thousands representing 0.13% of Total Income.

? Other Expenses

The Other Expenses for the quarter ended June 30, 2024, stood at Rs. 58,436 Thousands which represents 14.69% of Total Income

Other Expenses constitutes of:

Particulars (Rs. Thousands)	Qtr ending 30th June 2024
Payment to auditors*	250
Power and fuel	1,588
Repairs and maintenance on Other	29
Rent	6,367
Travelling and conveyance	1,801
Communication expenses	2,078
Consultancy expenses	4,995
Postage and courier charges	1,502
Consumables expenses	930
Printing and stationery	399
Fitment expenses	12
Wages to contractor	3,619
Registration services expenses	8,042
Service expenses	2,542
Advertisement expenses	2,779
Business support expenses	1,447
Corporate social responsibility expense	300
HSRP Delivery Charges	19,153
Misc expenses	604
Total	58,436

? Restated Profit before Tax

The restated profit before tax for the quarter ending June 30, 2024 was Rs. 1,01,877 Thousands representing 25.61% of Total Income

? Tax Expense

Tax Expense for the quarter ending June 30, 2024 stood at 25,728 Thousand representing 6.47% of Total Income

? Restated Profit after Tax

The restated profit after tax for the quarter ending June 30, 2024 stood at Rs. 76,149 Thousand which is 19.14% of Total income.

FISCAL YEAR ENDED MARCH 31, 2024, COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2023 (BASED ON RESTATED STANDALONE FINANCIAL STATEMENTS)

Revenues

? Total Income

Total Income for the year ended March 31, 2024, stood at Rs. 8,41,907 Thousands whereas for the year ended March 31, 2023 it stood at Rs 2,97,891 Thousands representing an increase of 182.62%.

Reason: The increase in total income of the company is due to a significant increase in revenue from operations of the company.

? Revenue of operations

Net revenue from operations for the year ended March 31, 2024, stood at Rs. 8,41,900 Thousands whereas for the year ended March 31,2023 it stood at Rs. 2,97,891 Thousands representing an increase of 182.62%.

Reason: The significant increase in company revenue because increase in the company revenue from service and product.

(Rupees In Thousand)

Particulars	FY 2023-24	FY 2022-23	%age Increase
Sale of Services	4,16,278	2,39,751	73.63%
Sale of Products	4,25,622	58,140	632.06%
Total	8,41,900	2,97,891	182.62%

It should be noted that the Sale of Products i.e Stores & Spares segment was initiated in mid of FY 2022-23.

Sale from services include income from registration services given to OEMs which have increased in the periods as stated below:

Particulars	FY 2023-24	FY 2022-23
Vehicle Registered	2,50,329	1,01,430

? Other Income

Other Income for the year ended March 31, 2024, stood at Rs. 7 Thousands whereas in the Financial Year 2021-22 it stood at Rs. Nil.

Reason: The Increase in other income is due to Interest on deposits company has made with banks.

Expenditure

? Total Expenses

Total Expenses for the year ended March 31, 2024 stood at Rs. 7,00,733 Thousands which is 83.23% of Total Income for the year. For the year ended March 31, 2023 it stood at Rs. 2,75,553 Thousands which represents 92.50% of Total Income for the year. There is an increase of 154.30% Y-o-Y from year 2023 to 2024.

? Cost of Good Sold

Cost of Good Sold constitutes of Purchase of Traded Goods & Change in Inventory. For the year ending 31^st March 2024 the COGS stood at Rs. 4,10,489 Thousands which represent 48.76% of Total Income for the year. For the year ending 31^st March 2023, the COGS stood at Rs. 47,798 Thousands which represents 16.05% of Total Income. There is a total increase of 518.33% over the year.

(Rupees In Thousand)

Particulars	FY 2024	FY 2023
Purchases Cost	4,07,992	53,572
Opening stock	6,015	241
Closing stock	(3,518)	(6,015)
COGS	4,10,489	47,798

Reason:- The COGS are related to Sale of Products under revenue from operations. The revenue from Sale of product was Rs. 4,25,622 Thousands in Financial Year 2023-24. The same for the FY 2022-2023 was Rs. 58,140 Thousands. Thus, increase in COGS is in line with increase in Sale of Products.

? Employee benefit expense

The Employee benefit expense for the year ending March 31, 2024, stood at Rs. 1,36,522 Thousands whereas in year ending March 31, 2023, it stood at Rs. 1,20,507 Thousands representing an increase of 13.29%.

Reason: Employee expenses were fully utilized in in Employee benefit expenses in the financial year 2024 as compared to financial year 2023. The increase in the salary and wages of employees and Staff Welfare Expense is also increased.

(Rupees In Thousand)

Particulars	FY 2024	FY 2023
Salary ,wages & allowance	1,28,212	1,13,893
Contribution to provident and other fund	4,319	3,259
Gratuity expenses	3,409	2,496
Staff welfare	582	859
Total	1,36,522	1,20,507

? Finance Cost

The Finance Cost for the year ending March 31, 2024, stood at Rs. 10,695 Thousands whereas in the year ending March 31, 2023 it stood at Rs. 6,549 Thousands representing an increase of 63.31% from the previous years.

Reason: The increase in Financial Cost is due to the borrowings taken from holding company at the rate of 8% per annum. It could be verified from outstanding borrowings as at end of financial years.

Particulars (Rs. Thousands)	As at 31st March 2024	As at 31st March 2023
Borrowings from Rosmerta	1,49,901	1,31,828
Technologies Limited
Financial Cost	10,695	6,549

? Depreciation and Amortization Expenses

The Depreciation and Amortization Expenses for the year ending March 31, 2024, stood at Rs. 1,765 Thousands whereas at the year ending March 31, 2024 it stood at Rs. 1,579 Thousands representing an increase of 11.79%.

Reason: There has been an addition of Rs. 1062 thousand in Financial Year 2022-23 and addition of Rs. 1206 Thousands in Financial year 2023-24. This addition has a direct effect on the depreciation schedule of the company.

? Other Expenses

The Other Expenses for the year ended March 31, 2024, stood at Rs. 1,41,262 Thousands whereas for the year ending March 31, 2023 it stood at Rs. 99,120 Thousands representing an increase of 42.52%.

Reason: Major increase in other expenses could be seen in due to increase Power & Fuel, Rent, Business Support Expenses, RTO Services Charges and Services Expenses. Are as follows-

(Rupees In Thousand)

Particulars	March 31, 2024	March 31, 2023	%age Increase
Payment to auditors*	750	250	200%
Power and fuel	3,526	1,313	169%
Repairs and maintenance	74	192	-61%
Rent	29,110	16,440	77%
Travelling and conveyance	6,269	8,961	-30%
Communication expenses	4,411	4,587	-4%
Provision for Doubtful debts	4,015	-	0%
Bank charges	16	47	-66%
Consultancy expenses	4,376	5,202	-16%
Postage and courier charges	674	379	78%
Consumables expenses	380	815	-53%
Printing and stationery	1,503	1,550	-3%
Fitment expenses	157	664	-76%
Wages to contractor	10,937	41,445	-74%
Registration services expenses	20,357	5,464	273%
Service expenses	10,529	3,996	163%
Business promotion expenses	7,276	5,446	34%
Business Support Expenses	35,796	-	0%
Misc expenses	1,107	2,369	-53%
Total	1,41,262	99,120	43%

? Restated Profit before Tax

The restated profit before tax for the year ending March 31, 2024, stood at Rs. 1,41,174 Thousands which is 16.77% of Total income for the year whereas for the year ending March 31, 2023 it stood at Rs. 22,338 Thousands which represents 7.50% of Total Income for the year. This shows an overall increase of 531.99% from year to year.

? Tax Expense

Tax Expense for the year ending March 31, 2024, stood at Rs. 35,522 Thousands out of which Current Tax being Rs. 37,815 Thousands and Deferred Tax being negative Rs. 2,293 Thousands. The Tax expense represents 4.22% of Total Income for the year. The same in year ending March 31, 2023 stood at Rs. 6,151 Thousands out of which Current Tax being Rs. 7,193 and Deferred Tax being Rs. (1,042) Thousands which represents 2.06% of Total Income for the year. There is an increase of 477.50% from year to year.

? Restated Profit after Tax

The restated profit after tax for the year ending March 31, 2024, stood at Rs. 1,05,652 Thousands which is 12.55% of Total income for the year. For the year ending March 31, 2023, it stood at Rs. 16,187 Thousands which is 5.43% of the Total Income for the year. There is an overall increase of 552.70%

Reason: Major increase is due to increase in Sale from services which forms major portion of companys bottomline. The sale of spares actually started from August 2022 in full set that has increased many fold in financial year 2023-24.

FISCAL YEAR ENDED MARCH 31, 2023, COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2022 (BASED ON RESTATED FINANCIAL STATEMENTS)

Revenues

? Total Income

Total Income for the year ended March 31, 2023 it stood at Rs. 2,97,891 Thousands whereas for the year ended March 31, 2022 it stood at Rs. 20,270 Thousands representing an increase of 1369.62%

Reason: The company was incorporated on 14^th September 2021 but revenue booking had started on 29^th January 2021. Thus, the Total revenue for the Financial Year 2021-22 is for a quarter period only.

? Revenue of operations

Net revenue from operations for the year ended March 31, 2023 it stood at Rs. 2,97,891 Thousands whereas for the year ended March 31, 2022 it stood at Rs. 20,270 Thousands representing an increase of 1369.62%

Reason: The increase in company revenue because increase in the company revenue from service and product.

(Rupees In Thousand)

Particulars	FY 2023-24	FY 2022-23	%age Increase
Sale of Services	2,39,751	20,207	1086.47%
Sale of Products	58,140	63	92185.47%
Total	2,97,891	20270	1369.62%

Sale from services include income from registration services given to OEMs which have increased in the periods as stated below:

Particulars	FY 2023-24	FY 2022-23
Vehicles Registered	1,01,430	13,555

? Other Income

Other Income for the year ending March 31, 2023 and the year ending March 31, 2022, stood at Rs. Nil

Expenditure

? Total Expenses

Total Expenses for the year ended March 31, 2023 stood at 2,75,553 Thousands which is 92.50% of Total Income for the year. For the year ended March 31, 2022 it stood at Rs. 20,350 Thousands which represents 100.39% of Total Income for the year. There is an increase year on year of 1254.07%

? Cost of Good Sold

Cost of Good Sold constitutes of Purchase of Traded Goods & Change in Inventory. For the year ending 31^st March 2023, the COGS stood at Rs. 47,798 Thousands which represents 16.05% of Total Income for the year. For the year ending 31^st March 2022, the COGS stood at Rs. 223 Thousands which represents 1.10% of Total Income. There is a total increase of 13,741.54% over the year.

Particulars	FY 2023	FY 2022
Purchases Cost	53,572	464
Opening stock	241	0
Closing stock	(6,015)	(241)
COGS	47,798	223

Reason:- The COGS are related to Sale of Products under revenue from operations. The revenue from Sale of product was Rs. 58,140 Thousands in Financial Year 2022-23. The same for the FY 2021-22 was Rs. 63 Thousands. Thus, increase in COGS is in line with increase in Sale of Products.

? Employee benefit expense

The Employee benefit expense for the year ending March 31, 2023, it stood at Rs. 1,20,507 Thousands whereas in year ending March 31, 2022, it stood at Rs. 14,912 Thousands representing an increase of 708.12%.

Reason: Employee expenses were fully utilized in in Employee benefit expenses in the financial year 2022-23 as compared to financial year 2023. The overall increase in Employee benefit is as follows:

Particulars	FY 2023	FY 2022
Salary ,wages & allowance	1,13,893	14,116
Contribution to provident and other fund	3,259	295
Gratuity expenses	2,496	378
Staff welfare	859	123
Total	1,20,507	14,912

? Finance Cost

The Finance Cost for the year ending March 31, 2023, stood at Rs. 6,549 Thousands whereas in the year ending March 31, 2022 it stood at Rs. 334 Thousands representing an increase of 1860.78% from the previous years.

Reason: The increase in Financial Cost is due to the borrowings taken from holding company at the rate of 8% per annum. It could be verified from outstanding borrowings as at end of financial years.

Particulars (Rs. Thousands)	As at 31st March 2023	As at 31st March 2022
Borrowings from group companies	1,31,828	43,921
Financial Cost	6,549	334

? Depreciation and Amortization Expenses

The Depreciation and Amortization Expenses for the year ending March 31, 2023, stood at Rs. 1,579 Thousands whereas at the year ending March 31, 2022 it stood at Rs. 19 Thousands representing an increase of 8210.53%.

Reason: The company was incorporated on 14^th September 2021 and the machinery was bought post that to a tune of Rs. 4500 Thousand. The same were put to use in Financial year 2021-22 and the depreciation was thus calculated as per days of put to use.

? Other Expenses

The Other Expenses for the Period ended March 31, 2023, stood at Rs. 99,120 Thousands whereas in year ending March 31, 2022 it stood at Rs. 4,862 Thousands representing an increase of 1938.67%.

Reason: Major increase in other expenses could be seen in due to increase Power & Fuel, Rent, Business Support Expenses, RTO Services Charges and Services Expenses are as follows:

Particulars	March 31, 2023	March 31, 2022	%age Increase
Payment to auditors*	250	250	0.00%
Power and fuel	1,313	113	1061.95%
Repairs and maintenance	192	50	284.00%
Rent	16,440	343	4693.00%
Travelling and conveyance	8,961	2,320	286.25%
Communication expenses	4,587	604	659.44%
Bank charges	47	15	213.33%
Consultancy expenses	5,202	534	874.16%
Postage and courier charges	379	19	1894.74%
Consumables expenses	815	12	6691.67%
Printing and stationery	1,550	141	999.29%
Fitment expenses	664	385	72.47%
Wages to contractor	41,445	-	0.00%
Registration services expenses	5,464	-	0.00%
Service expenses	3,996	-	0.00%
Advertisement expenses	5,446	-	0.00%
Misc expenses	2,369	76	3017.11%
Total	99,120	4,862	1938.67%

? Restated Profit before Tax

The restated profit before tax for the year ending March 31, 2023 it stood at Rs. 22,338 Thousands which represents 7.50% of Total Income for the year whereas for the year ending March 31, 2022 it stood at Rs. (80) Thousands which represents (0.39)% of Total Income for the year.

? Tax Expense

Tax Expense for the year ending March 31, 2023 stood at Rs. 6,151 Thousands out of which Current Tax being Rs. 7,193 and Deferred Tax being Rs. (1,042) Thousands which represents 2.06% of Total Income for the year. Tax Expense for the year ending March 31, 2022, stood at Rs. 221 Thousands out of which Current Tax being Rs. 38 Thousands and Deferred Tax being Rs. 183 Thousands. The Tax expense represents 1.09% of Total Income for the year.

? Restated Profit after Tax

The restated profit after tax for the year ending March 31, 2023, stood at Rs. 16,187 Thousands which is 5.43% of Total income for the year. For the year ending March 31, 2022, it stood at Rs. (301) Thousands which is (1.48)% of the Total Income for the year.

Reason: The company was incorporated on 14^th September 2021. The operations of business in regards to Sale from Services started during the period and company served for almost 13,555 vehicles during the year. FY 2021-22 being the first half year of operations company was still setting up the infrastructure which would give benefit to the company in future years.

INFORMATION REQUIRED AS PER ITEM (II) (C) (I) OF PART A OF SCHEDULE VI TO THE SEBI REGULATIONS:

1. Unusual or infrequent events or transactions

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

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

Other than as described in the section titled Risk Factors beginning on page 28 of this Draft Red Herring Prospectus, to our knowledge there are no known significant economic changes that have or had or are expected to have a material adverse impact on revenues or income of our Company 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.

Other than as described in this Draft Red Herring Prospectus, particularly in the sections Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 28 and 296, respectively, to our knowledge, there are no known trends or uncertainties that are expected to have a material adverse impact on our revenues or income from continuing operations.

4. Income and Sales on account of major product/main activities

The income and sales of our Company on account of major activities derives from the business of Vehicle Registration Services, Sale of Automotive components & Other Vehicle Services related Activities.

5. Future changes in the relationship between costs and revenues, in case of events such as future increase in cost of service, manpower or products that will cause a material change are known.

Our Companys future costs and revenues can be indirectly impacted by an increase in the cost of services, manpower & cost of products.

6. Future relationship between Costs and Income

Our Companys future costs and revenues will be determined by competition, demand/supply situation,interest rates quoted by banks & others.

7. The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices.

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

8. Total turnover of each major industry segment in which the issuer company operates.

The Company operates in the Services Industry. Relevant industry data, as available, has been included in the chapter titled "Our Industry" beginning on page 143 of this Draft Red Herring Prospectus.

9. Status of any publicly announced new products or business segments.

Our Company has not announced any new services and segment / scheme, other than disclosure in this Draft Red Herring Prospectus.

10. The extent to which the business is seasonal.

Our business is not seasonal in nature. However, customers preferences are high on festive seasons, thus impacting our sales.

11. Competitive Conditions

We face competition from existing and potential competitors, which is common for any business. We have, over a period of time, developed certain competitive strengths which have been discussed in the section titled Our Business on page 175 of this Draft Red Herring Prospectus.