S D Retail Ltd Management Discussions

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 27 and "Forward Looking Statements" beginning on page 18, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our restated financial statements for the year, March 31, 2024, March 31, 2023 and March 31, 2022 including the schedules and notes thereto and the reports thereto, which appear in the section titled "Financial Information of our company" on Page No. 194 of the Red Herring Prospectus. The financial statements presented and discussed herein have been prepared to comply in all material respects with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended), the relevant provisions of the Companies Act and SEBI (Issue of Capital and Disclosure Requirements) Regulations. Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year/financial year are to the twelve-month period ended on March 31 of that year. The forward-looking statements contained in this discussion and analysis is subject to a variety of factors that could cause actual results to differ materially from those contemplated by such statements.

OVERVIEW

Our company is in the business of designing, manufacturing, outsourcing, marketing, and retailing sleepwear under the brand name "SWEET DREAMS". SWEET DREAMS is a sleepwear-focused company offering a wide portfolio of stylish and comfortable sleepwear for the entire family, celebrating the transition from work to home life and catering to every aspect of downtime.

The combination of comfort, style, and functionality places SWEET DREAMS in a unique position within a habit-forming apparel category, where our clothes are worn daily by our customers in similar time-ranges. This brand is targeted primarily at the modern Indian womans sleepwear requirements since she is most engaged with this category across various retail channels. In addition, we also sell sleepwear for men and kids, whose casual clothes are predominantly purchased by the women in the house. We offer one of the widest portfolios of sleepwear products among apparel retailers in India in terms of fabrics, colours, and styles. Our sleepwear products includes Pyjamas, Night Sets, Nighties, T-shirts, etc.

We design our products to cater to men and women across all age groups including kids (from age 2 Year to 16 Year) and fits that are suitable to various body types and physiques. In addition, we are in adjacent categories such as loungewear, workout wear, athleisure, and work leisure pants.

Our Company was originally incorporated as "S D Retail Private Limited" vide registration no. 146313 under the provisions of the Companies Act 1956 pursuant to Certificate of Incorporation dated May 14, 2004, issued by Registrar of Companies, Mumbai, Maharashtra. Further, the registered office of our Company was shifted from Mumbai, Maharashtra to Ahmedabad, Gujarat w.e.f. February 9, 2009. Subsequently our Company was converted into Public Limited Company and name of company was changed from "S D Retail Private Limited" to "S D Retail Limited" vide fresh certificate of incorporation dated June 19, 2024 issued by the Registrar of Companies, Central Registration Centre. The Corporate Identity Number of our Company is U52520GJ2004PLC056076.

We have constructed well-established infrastructural facility and manufacturing unit that is equipped with all the necessary machines and tools that are required for a modern manufacturing unit. Machinery that is equipped in our infrastructure is operated by our highly experienced team of professionals. Backed by sound manufacturing facility, we are capable of undertaking bulk requirements of our clients and deliver within stipulated time schedule. Also, our majority of our manufacturing is outsourced to the Jobworkers (on contract manufacturing basis) who manufacture products as per the design and requirement of our Company. The Contract manufacturing enable us to cater bulk orders and deliver the products to our customers on time.

We achieve varied price points through our two product lines: Essentials and Fashion. Our Essentials product line is characterized by limited print or design, is relatively insulated from changes in fashion trends, lower ASPs, high repeat purchases and is sold throughout the year. Our Fashion product line on the other hand is characterized by seasonal designs, low repeat purchases, higher ASPs and is sold seasonally (Autumn/Winter and Summer seasons).

We have a multi-channel distribution network. The table below gives a channel-wise breakup of revenue.

(? in Lakhs)

Notes:

1. EBO includes kiosks and franchise stores
2. MBOs and others include sales through multi-brand outlets and garment fairs, exhibitions, events, etc. and scrap sales.
3. Others include sales to employees and sale of clearance stock to traders, etc.

We sold our products through distributors, exclusive brand outlets (EBOs), and multi-brand outlets (MBOs) located across various states and union territories in India. We also sell our products through e-commerce platforms such as Myntra, AJIO, Nykaa, Flipkart, Amazon, and our own website. We sell our products across India and internationally through multiple distribution channels.

We also have a vast distribution network setup with MBOs covering a large geography in India and helping us achieve scale. Our sales pipeline for General Trade differs for the Fashion and Essentials product lines. For the Fashion product line, we organize a bi-annual roadshow for our retail partners for the Summer and Autumn/Winter seasons presenting them with newest designs and booking orders at the venue. For the Essentials product line, we treat it as a replenishment product line with year-long production where our sales staff visits our retail partners periodically and books orders. Our salesforce is led by a National Sales Manager (NSM) with Regional Sales Managers (RSMs) and on ground staff. Our key SISs are manned by our own sales staff, which provides us an opportunity to have direct contact with the consumer. In the past two years, we have undertaken the journey of building a network of existing 23 exclusive brand outlets ("EBOs") as of March 31, 2024. Our cluster-based approach to opening and operating EBOs allows us to pursue the COFO model which results in better ROI. We have learned that retailing through EBOs creates better brand recall. Our EBOs are located in airports, high streets, malls, residential market areas in major metros, and other large cities.

Sleepwear has unique characteristics that differentiate it from other apparel categories. Firstly, it is a habit-forming category where an individuals bedtime begins with them changing into their sleepwear. As such, we like to think that we are part of our customers sleep rituals, i.e. activities that take place before sleeping. Secondly, we are a frequent wear and wash category where our customers laundry their sleepwear after every wear for hygiene reasons, which increases abrasion with the clothes and purchase cycles. Lastly, our pyjama sets benefit from occasion-wear habits like pyjama parties, airport outfits, and hotel stays due to an increasing trend in preference towards casual wear in younger generations. This trend not only positions us within the 70-hour/week wear- time sleepwear market but also allows us to tap into the 55-hour/week wear-time casual wear segment, potentially displacing the wear-share and wardrobe-share of the traditional casual wear with our versatile offerings. In essence, our approach is to create a product so appealing that it becomes a staple in everyday wardrobes, challenging the dominance of other casual wear categories and expanding the wear-time share and wardrobe-share of sleepwear in the fashion industry.

Our supply chain management covers several locations, including our warehouse in Ahmedabad. These facilities can handle a wide range of SKUs. By using ERP systems throughout our operations, we have been able to grow efficiently and keep track of our inventory in our warehouse. Modern equipment at these sites improves process efficiency, leading to cost savings. Good inventory management practices help us keep the right amount of stock across a variety of SKUs and our distribution network. Additionally, we use business intelligence reports from our system to watch market trends and customer preferences, which helps reduce write-offs.

Our Promoter and key managerial personnel have been instrumental in the growth of our business and actively advise us on corporate strategy and planning. We have a strong management team with significant industry experience. Our Managing Director, Mr. Hitesh Ruparelia and Whole Time Director, Mr. Utpal Ruparelia have 20 years of experience respectively in garment industry, thus vast experience of the Directors have been instrumental in determining the vision and growth strategies for our Company. We further believe that our market position has been achieved by adherence to the vision of our Promoter and senior management team and their experience of over a decade in the industry in which our Company operates.

Our financial performance indicators for the last three Fiscals are as follows:

(Amount in Rs. Lakhs, except % and ratios)

Notes:

1. Revenue from operations is the total revenue generated by the company from its operations.
2. Year-on-Year Growth in Revenue from Operations is the annual growth in revenue from operations compared with the previous years revenue from operations. It is calculated as (Revenue from operations of the current year / Revenue from operations of the previous year) * 100.
3. Gross Profit is Revenue from operations minus the cost of goods sold.
4. Gross Profit Margin is calculated as (Gross Profit / Revenue from Operations) * 100.
5. EBITDA is calculated as Profit before tax + Depreciation + Amortization + Finance cost – Other Income.
6. EBITDA Margin is calculated as (EBITDA / Revenue from Operations) * 100.
7. PAT (Profit After Tax) is the profit after taxes for the period.
8. PAT Margin is calculated as (PAT / Revenue from Operations) * 100.
9. ROCE (Return on Capital Employed) is calculated as EBIT (Profit before tax + Finance cost) divided by average capital employed ((opening capital employed + closing capital employed) / 2), where capital employed is defined as the average of Equity Fund plus debts plus lease liabilities.
10. ROE (Return on Equity) is calculated as (PAT / Average Shareholders Equity) ((opening equity + closing equity) / 2).

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to Restated Standalone Financial Statements under chapter titled "Restated Financial Statements" beginning on page 194 of this Red Herring Prospectus.

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 27 of this Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. Destructions in our manufacturing process, contract manufacturing and changes in price of raw material.
2. Our ability to successfully implement our strategy, our growth and expansion, technological changes.
3. Fail to attract, retain and manage the transition of our management team and other skilled employees;
4. Our ability to protect our intellectual property rights and not infringing intellectual property rights of other parties;
5. Ability to respond to technological changes;
6. Effect on our business due to seasonal sales of our Company in summer and winter season.
7. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;
8. Inability to successfully obtain registrations in a timely manner or at all;
9. General economic and business conditions in the markets in which we operate and in the local, regional and national economies;
10. Our ability to effectively manage a variety of business, legal, regulatory, economic, social and political risks associated with our operations;
11. Recession in the market;
12. Changes in laws and regulations relating to the industries in which we operate;
13. Our ability to expand our geographical area of operation
14. Effect of lack of infrastructure facilities on our business;
15. Failure to obtain any approvals, licenses, registrations and permits in a timely manner;
16. Changes in political and social conditions in India or in countries that we may enter, the monetary and interest rate policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;
17. Uncertainty in relation to continuing effect of the COVID-19 pandemic on our business and operations.
18. Occurrence of natural disasters or calamities affecting the areas in which we have operations;
19. Conflicts of interest with affiliated companies, the promoter group and other related parties;
20. The performance of the financial markets in India and globally;
21. Any adverse outcome in the legal proceedings in which we are involved;
22. Our ability to expand our geographical area of operation;
23. Concentration of ownership among our Promoters.

RESULTS OF OUR OPERATION

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, Profit on Sale of Fixed Assets, Rental Income, Foreign Exchange Fluctuation & Misc. Income etc.

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

Changes in inventories of Finished Goods, WIP & Stock in Trade: Changes in inventories of Finished Goods, WIP & Stock in Trade consist of difference between opening & closing Value of Stock.

Employee Benefits Expense: Employee benefit expenses includes Salaries and Wages, Contribution of Provident & Other Funds, Gratuity Expenses, Keyman Insurance Policies, Staff Welfare 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 WDV Basis as per the rates set forth in the Companies Act, 2013/ Companies Act, 1956, as applicable.

Other Expenses: Other expenses includes manufacturing expenses, Power & Fuel, Discount Expenses, Commission Expenses, Freight & Forwarding Charges, Insurance Expenses, Auditors Remuneration, Printing & Stationary Expenses, Professional & Consultancy Fees, Rent Expenses, Travelling Expenses, Manpower Supply Charges & Selling & Distribution Expenses etc.

Fiscal 2024 compared with Fiscal 2023 Revenue from Operation

Revenue from operations had increased by 20.34% from ? 13508.81lakhs in Fiscal 2023 to ? 16255.89 lakhs in Fiscal 2024 was due to increase in sales of products & Export Incentive during the year. Reason for growth was mainly due to EBOs business, LFS business, Online business, doing well as compared to FY 23.

Other Income

Other income had increased by 20.90% from ? 60.94 lakhs in Fiscal 2023 to ? 72.59 lakhs in Fiscal 2024. Below are main reasons for Increase

• Profit on sale of Fixed Assets of Rs 20.83 lacs in Fiscal Year 2024 as compared to Rs 0.12 lacs in Fiscal Year 2023.
• Misc Income has increased from 11.30 Lakhs in Fiscal 2023 to 14.91 Lakhs in Fiscal 2024.
• Interest Income has increased from Rs. 1.69 Lakhs in Fiscal 2023 to Rs. 2.35 Lakhs in Fiscal 2024.

Above increase was partially compensated by reduction in Reversal of Provision for Bad & Doubtful Debts from 12.62 lacs in Fiscal 2023 to Rs. Nil Lakhs in Fiscal 2024.

Cost of Material Consumed

Cost of material consumed had increased by 8.79% from ? 6976.38lakhs in Fiscal 2023 to ? 7589.51 lakhs in Fiscal 2024. This increase was primarily due to Increase in Purchases which increased from Rs. 6936.20Lakhs in Fiscal 2023 to Rs. 7582.77 Lakhs in Fiscal 2024.

The increase in Material Consumed was mainly due to increase in revenue of company which has increased by 20.34% in Fiscal 2024 as compared to Fiscal 2023. There is reduction in cost material consumed as % of revenue earned in Fiscal 2024 as compared to Fiscal 2023 mainly on account of increased pricing of raw material in Fiscal 2023 transferred to consumer in Fiscal 2024 with better realisation.

Changes in Inventories of Finished Goods, WIP & Stock in trade

Changes in Inventories of Finished Goods, WIP & Stock in Trade for Fiscal 2024 was Rs (7.47) lacs as compared to (308.99) lacs in Fiscal 2023.

Employee Benefit Expenses

Employee benefit expenses had increased by 0.16% from ? 1486.02 lakhs in Fiscal 2023 to ? 1488.38 lakhs in Fiscal 2024. T Hence company has kept overall Employee Benefit expense stable and has ensured better productivity with similar cost as revenue has increase by 20.34% as compared to minor increase in employee cost.

Finance Cost

Finance Cost had increased by 49.17% from ? 196.40 lakhs in Fiscal 2023 to ? 292.97 lakhs in Fiscal 2024. This increase was primarily due to increase in Interest from Bank loans from Rs 60.53 lacs in Fiscal 2023 to Rs 146.63 lacs in Fiscal 2024. Further increase in finance cost is due to interest paid on Statutory Dues has increased from Rs 2.35 lacs in Fiscal 2023 to Rs 17.94 lacs in Fiscal 2024. Further aggregate interest on unsecured loans, Security Deposits and Bank Charges has reduced to Rs 128.40 lacs in Fiscal 2024 from Rs 133.52 lacs in Fiscal 2023. Increase in interest from Banks is mainly due to higher utilisation of borrowing facilities during the year.

Depreciation and Amortization Expenses

Depreciation has increased by 73.89% from ? 76.10 lakhs in Fiscal 2023 to ? 132.33 lakhs in Fiscal 2024. Major increase is due to increase in depreciation on leasehold improvements. As company has also major additions in leasehold improvements during the Fiscal 2024.

Other Expenses

Other expenses had increased by 27.30 % from ? 4559.84 lakhs in Fiscal 2023 to ? 5804.77 lakhs in Fiscal 2024. Increase was mainly on account of increase in extra discount from Rs 1118.41 lacs in Fiscal 2023 to Rs 1728.98 lacs in Fiscal 2024. This was due to increase in revenue of 20.34% and also increase in overall discount. Further Cash discount has increased from Rs 255.67 lacs in Fiscal 2023 to Rs 364.27 lacs in Fiscal 2024 due increase in revenue and higher discount offered to distributors. Further Commission has increased from Rs 64.42 lacs in Fiscal 2023 to Rs 246.55 lacs in Fiscal 2024. This was mainly due to increase in commission paid to franchisees in Fiscal 2024 due to opening of new stores. Further Rent has increased from Rs 160.01 lacs in Fiscal 2023 to Rs 374.60 lacs in Fiscal 2024. This was mainly due to opening of new stores and additional rental on exclusive stores and additional rental of corporate office.

Further aggregate of selling and distribution expense has increased from Rs 551.75 lacs in Fiscal 2023 to Rs 778.73 lacs in Fiscal 2024. This is due to higher promotional activities done by the company during the year. Further aggregate of all other admin expenses has increased by Rs 113.48 lacs during Fiscal 2024 as compared to Fiscal 2023. This includes Power & Fuel, Provision for Doubtful Debts, Freight and Forwarding Expense, Insurance Expense, Remuneration to Auditors, Printing and Stationery Expense, Professional and Consultancy fees, Rates and Taxes, General Repair & Maintenance, Security expenses, Director Sitting Fees, Telephone and Internet expense, Traveling expense, Manpower Supply charges, Misc expenses .This increase was partially compensated by reduction in manufacturing expenses from Rs 1320.72 lacs in Fiscal 2023 to Rs 1109.29 lacs in Fiscal 2024.

Tax Expenses

The Companys tax expenses had increased to ? 268.23 lakhs in the Fiscal 2024 as compared to to ? 152.93 lakhs in Fiscal 2023. This was primarily due to increase in current tax expenses during the year. Tax Expenses are directly proportional to Profit Before Tax hence since overall profit before tax in Fiscal 2024 has increased to Rs 1027.99 lacs as compared to Rs 583.11 lacs in Fiscal 2023 accordingly overall Tax Expense has also increased.

Profit after Tax After

Accounting for taxes at applicable rates, our Company reported a net profit of ? 759.76 lakhs in Fiscal 2024 as compared to a net profit of ? 430.17 lakhs in Fiscal 2023. Reasons for the increase in Profit after Tax is mainly due to the increase in overall revenue of the Company, further company has been able to pass on the increased prices of fabrics to consumers in Fiscal Year 2024 as compared to Fiscal Year 2023.

Fiscal 2023 compared with Fiscal 2022

Revenue from Operation

Revenue from operations had increased by 5.10% from ? 12852.93 lakhs in Fiscal 2022 to ? 13508.81 lakhs in Fiscal 2023 was due to increase in sales of products & Export Incentive during the year.

Reason for growth was mainly due to MBOs business doing well as compared to FY 22. Growth in business of MBOs business was compensated by degrowth in business of online business as compared to FY 22.

Other Income

Other income had increased by 189.77% from ? 20.72 lakhs in Fiscal 2022 to ? 60.04 lakhs in Fiscal 2023 majorly due to Increase in Rental Income which increased from 4.35 Lakhs in Fiscal 2022 to 17.69 Lakhs in Fiscal 2023, Reversal of Provision for Bad & Doubtful Debts from Nil in Fiscal 2022 to Rs. 12.62 Lakhs in Fiscal 2023 & Misc. Income from Rs. 1.64 Lakhs in Fiscal 2022 to Rs. 11.30 Lakhs in Fiscal 2023.

Reasons for growth in rental income was mainly due to let out of property in Mumbai for which rental income was received for the complete year as compared to FY 22. Reversal of provision for Bad and Doubtful Debts was due to recovery from some of the receivables which was considered doubtful in FY22.

Misc Income increased mainly on account of recovery of notice period from some the employees. Receipt of Royalty income received during the year.

One of the channel partners was offered to sell merchandise on third party portals as an experiment which has been discontinued for period ending 31^st March 2024. Miscellaneous income includes income earned from Royalty. Detailed income earned from Royalty Income is shown below.

Cost of Material Consumed

Cost of material consumed had increased by 10.44% from ? 6316.86 lakhs in Fiscal 2022 to ? 6976.38 lakhs in Fiscal 2023. This increase was primarily due to Increase in Purchases which increased from Rs. 6476.39 Lakhs in Fiscal 2022 to Rs. 6936.20 Lakhs in Fiscal 2023.

The increase in Material Consumed was mainly due to an increase in raw material prices and premium fabrics consumed in overall production. This increase in cost of material consumed was temporary and was not passed on to the customers. This had major impact on the overall profitability of the company.

Changes in Inventories of Finished Goods, WIP & Stock in trade

Changes in Inventories of Finished Goods, WIP & Stock in Trade had increased by 47.99% from ? (594.09) lakhs in Fiscal 2022 to ? (308.99) lakhs in Fiscal 2023. This decrease was primarily due to higher closing inventories during the year.

Changes in Inventories of Finished Goods, WIP and Stock in trade to be read along with Material Consumed and Revenue Earned. Overall total Cost of Changes in Inventory and Cost of material consumed has increased to 49.14% against revenue earned during Fiscal Year 2023 as against 44.45% in Fiscal Year 2022. Since the increase in cost was not passed on to the consumers.

Employee Benefit Expenses

Employee benefit expenses had increased by 14.89% from ? 1293.39 lakhs in Fiscal 2022 to ? 1486.02 lakhs in Fiscal 2023. This increase was primarily due to increase Salary Expenses which increased from Rs. 1171.12 Lakhs in Fiscal 2022 to Rs. 1352.62 Lakhs in Fiscal 2023, Contribution to Provident Fund which increase from 29.35 Lakhs in Fiscal 2022 to Rs. 32.39 Lakhs in Fiscal 2023, Gratuity Expenses from Rs. 6.90 Lakhs in Fiscal 2022 to 35.87 Lakhs in Fiscal 2023 etc & Decrease in Staff Welfare expenses from Rs. 26.02 Lakhs in Fiscal 2022 to Rs. 5.15 Lakhs in Fiscal 2023.

Increase in Employee expense was mainly due to increment which was given in FY 23 to all the employees of the company. Cost of manpower in LFS and SIS also increased due to stores being operational for complete year as compared to FY 22. In FY 2021- 22 due to second wave stores were closed for many days due to government restrictions.

Finance Cost

Finance Cost had increased by 14.95% from ? 170.85 lakhs in Fiscal 2022 to ? 196.40 lakhs in Fiscal 2023. This increase was primarily due to increase in Interest on Unsecured Loans from Rs. 90.64 Lakhs in Fiscal 2022 to Rs. 101.16 lakhs in Fiscal 2023 & Bank Charges from Rs. 6.78 Lakhs in Fiscal 2022 to Rs. 13.20 lakhs in Fiscal 2023.

Finance Cost increase is incidental to loans borrowed and accordingly since overall borrowings have increased from Rs 1844.13

lakhs to Rs 2051.31 lakhs accordingly finance cost has increased from Rs 170.85 lakhs to Rs 196.40 lakhs in Fiscal year 2023.

Depreciation and Amortization Expenses

Depreciation had decreased by 0.22% from ? 76.27 lakhs in Fiscal 2022 to ? 76.10 lakhs in Fiscal 2023. This increase is inconsequential as overall increase in fixed assets is less than 100 lakhs during the year.

Other Expenses

Other expenses had increased by 2.54% from ? 4446.90 lakhs in Fiscal 2022 to ? 4559.84 lakhs in Fiscal 2023. The minor increase was mainly due to increase in Labor & job Work charges, Cash Discount, Professional & Consultancy Expenses, General Repair & Maintenance Expenses, travelling expenses, Manpower Supply charges, Selling & Distribution Expenses etc in comparison of increase in sales.

Tax Expenses

The Companys tax expenses had increased by ? 152.42 lakhs in the Fiscal 2022 to ? 152.93 lakhs in Fiscal 2023. This was primarily due to increase in current tax expenses during the year.

Tax Expenses are directly proportional to Profit Before Tax but since Company had unabsorbed losses in Fiscal Year 2022 which were consumed actual tax liability was much lower despite higher profit.

Accordingly in Fiscal Year 2023 tax liability increased as all the losses of previous years were recovered in Fiscal Year 2022.

Profit after Tax

After accounting for taxes at applicable rates, our Company reported a net profit of ? 430.17 lakhs in Fiscal 2023 as compared to a net profit of ? 1011.06 lakhs in Fiscal 2022.

Reasons for the decrease in Profit after Tax is mainly due to the increase in consumption of materials against revenue generated. Since we didnt pass on the increased cost of material on the consumers our cost of material was higher which led to lower profit against in Fiscal Year 2023. Increase in revenue against cost of material was much lower and also increase in cost of manpower due to increment and other incidental reasons overall profitability was much lower.

One of the major reasons for decrease in PAT in FY 23 is mainly due to an increase in raw material prices and premium fabrics consumed in overall production. This increase in cost of material consumed was temporary and was not passed on to the customers.

This had major impact on the overall gross margins of the company. A detailed working for the same is prepared below to explain better.

Above working clearly demonstrates that company was not able to pass on the increased cost of material purchased and hence there was dip in profitability of the company in Fiscal Year 2023.

Further company had accumulated losses of previous years carried forward in income tax and hence direct tax for FY 22 as % of net profit is much lower as compared to Fiscal Year 2023. This helped in increasing overall profitability after tax of the Company. We have prepared below table for better understanding.

Cash Flows

(? in lakhs)

Cash Flows from Operating Activities

Net cash from operating activities for fiscal 2024 was at ? (1,219.11) lakhs as compared to the Profit Before Tax at ? 1,027.99 lakhs while for fiscal 2023 Net cash from operating activities was at ? 112.24 lakhs as compared to the Profit Before Tax at ?

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

Net cash from operating activities for fiscal 2023 was at ? 112.24 lakhs as compared to the Profit Before Tax at ? 583.11 lakhs while for fiscal 2022 Net cash from operating activities was at ? (251.52) lakhs as compared to the Profit Before Tax at ? 1163.48 Lakhs. This was primarily due to adjustments against adjustments against, changes in Working Capital & Income Tax Paid.

Net cash from operating activities for fiscal 2022 was at ? (251.52) lakhs as compared to the Profit Before Tax at ? 1163.48 lakhs while for fiscal 2021. This was primarily due to adjustments against adjustments against, changes in Working Capital & Income Tax Paid.

Cash Flows from Investment Activities

In fiscal 2024 the net cash invested in Investing Activities was ? (478.59) lakhs. This was mainly on account of Purchases of Fixed Assets.

In fiscal 2023, the net cash invested in Investing Activities was ? (132.65) lakhs. This was mainly on account of Purchases of Fixed Assets.

In fiscal 2022, the net cash invested in Investing Activities was ? (88.03) lakhs. This was mainly on account of Purchases of Fixed Assets.

Cash Flows from Financing Activities

In fiscal 2024, the net cash from financing activities was ? 2,031.06 lakhs. This was on account of proceeds of borrowings. In fiscal 2023, the net cash from financing activities was ? 37.85 lakhs. This was on account of repayment of borrowings.

In fiscal 2022, the net cash from financing activities was ? 304.36 lakhs. This was on account of proceeds from Borrowings\.

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 27 in the 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

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 services 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 Business is not seasonal in Nature but the sales is fluctuate due to summer and winter season.

8. Dependence on few customers/ clients

The percentage of contribution of our Companys Top Customers/Clients for the period ended March 31, 2024 is as follows:

Particulars	Customers
Top Ten (%)	39.99%

9. Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Business Overview" beginning on pages 124 and 137 respectively of the Red Herring Prospectus.

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. Our Company has passed a Board Resolution for Increase in Authorized Share Capital of the Company and make consequent alteration in Clause V of Memorandum of Association in Board Meeting held on April 26, 2024 and Shareholders Resolution in Extra Ordinary General Meeting held on April 27, 2024 for the same.
2. Our Company has passed a Shareholders Resolution to approve issuance of Bonus Shares in the Ratio of 10:1 in Extra Ordinary General Meeting held on April 27, 2024 and passed a Board Resolution dated May 1, 2024 for allotment of Bonus equity shares.
3. Our Company has passed a Board Resolution to change the address of the Registered office of the Company w.e.f. May 1, 2024 in Board Meeting held on April 26, 2024.
4. Our Company has passed a Board Resolution in Board Meeting dated May 11, 2024 and Shareholders Resolution in Extra Ordinary General Meeting held on May 13, 2024 for conversion of the Company from "Private Limited" to "Public Limited" and subsequently Alteration in Clause I of the Memorandum of Association of the Company.
5. Our Company has passed a Board Resolution for Adoption of New sets of Articles of Association in Board Meeting held On May 11, 2024 and Shareholders Resolution in Extra Ordinary General Meeting held on May 13, 2024.
6. Our Company has passed Board Resolution for appointment of Mr. Manish Kapoor as an Additional Independent Director of the Company in Board Meeting held on May 11, 2024.
7. Our Company has passed Board Resolution for appointment of Mr. Harshil Rajendrabhai Patel as an Additional Independent Director of the Company in Board Meeting held on May 11, 2024.
8. Our Company has passed Board Resolution for appointment of Ms. Poojaben Shah as Company Secretary and Compliance Officer of the Company in Board Meeting held on May 11, 2024 and Resignation on June 20, 2024 .
9. Our Company has passed Board Resolution for appointment of Mr. Ritesh Surendra Saraogi as Chief Financial Officer of the Company in Board Meeting held on May 11, 2024.
10. We have changed the designation of Mr. Hitesh Pravinchandra Ruparelia as Chairman cum Managing Director , Mr. Utpal Pravinchandra Ruparelia as Whole Time Director w.e.f June 20, 2024
11. Our Company has passed Board Resolution for appointment of Ms. Sakshi Singh Chauhan as Company Secretary and Compliance Officer of the Company in Board Meeting held on June 20, 2024
12. Regularisation of Additional Directors Mr. Manish Kapoor, Mr. Harshil Rajendrabhai Patel, Ms. Simran Bhasin as Directors vide Shareholders Resolution dated June 20, 2024
13. Our Company has constituted an Audit Committee ( "Audit Committee"), Nomination and Remuneration Committee and Stakeholders Relationship Committee vide Board Resolution dated June 20, 2024, as per applicable provisions of the Section 177 of the Companies Act, 2013 and also to comply with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 applicable upon listing of the Companys Equity shares on SME platform of NSE.
14. Our Company has passed a Board Resolution for Initial Public Offer in Board Meeting held on June 20, 2024 and Shareholders Resolution in Extra Ordinary General Meeting held on June 20, 2024.
15. Our Company has adopted Materiality Policy pursuant to Para 12(A)(1)(V) of Part A of Schedule VI of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 for pending litigations and adopted materiality policy, for disclosure of material creditors Pursuant to Para 12(A)(2) of Part A of Schedule VI of the Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 vide Board Resolution dated June 20, 2024.