Saraswati Saree Depot Ltd Management Discussions

RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations, and our assessment of the factors that may affect our prospects and performance in future periods, together with our Restated Financial Statements for the Financial Years 2024, 2023 and 2022 including the notes thereto and reports thereon, each included in this Red Herring Prospectus. Unless otherwise stated, financial information used in this section is derived from the Restated Financial Statements.

While we have historically prepared our financial statements in accordance with Indian GAAP, in accordance with applicable law, we have adopted Indian Accounting Standards (Ind AS) with effect from April 01, 2021, with a transition date of April 01, 2020. This section includes a discussion of financial results for the Financial Years 2024, 2023 and 2022 which were prepared under Ind AS. For the purposes of transition to Ind AS, we have followed the guidance prescribed in "Ind AS 101 - First Time adoption of Indian Accounting Standard". The Restated Financial Statements, prepared and presented in accordance with Ind AS and in accordance with the requirements of Section 26 of the Companies Act, the SEBI ICDR

Regulations and the "Guidance Note on Reports in Company Prospectus (Revised 2019)" issued by the

ICAI.

Ind AS differs in certain material respects from Indian GAAP, IFRS and U.S. GAAP. Accordingly, the degree to which our financial statements will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Ind AS. As a result, the Restated Financial Statements may not be comparable to our historical financial statements.

This discussion and analysis contain forward-looking statements that reflect our current views with respect to future events and our financial performance, which are subject to numerous risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements. You should also read "Forward-Looking Statements" and "Risk Factors" on pages 24 and 41, respectively, which discuss a number of factors and contingencies that could affect our business, financial condition and results of operations. Our Financial Year ends on March 31 of each year and accordingly, references to Financial Year, are to the 12-month period ended March 31 of the relevant year.

Unless the context otherwise requires, in this section, references to "we", "us", "our", "the Company" or "our Company" refers to Saraswati Saree Depot Limited.

Unless otherwise indicated, industry and market data used in this section has been derived from industry publications, in particular, the report titled "Assessment of apparel industry in India" dated July 2024 (the "CRISIL Report"), prepared and issued by CRISIL and exclusively commissioned and paid for by us in connection with the Offer. Unless otherwise indicated, financial, operational, industry and other related information derived from the CRISIL Report and included herein with respect to any particular year refers to such information for the relevant calendar year. For more information, see "Risk Factor No. 46 -Industry information included in this Red Herring Prospectus has been derived from an industry report from CRISIL Market Intelligence & Analytics, a division of CRISIL Limited which has been commissioned and paid by us for such purpose exclusively in connection with the Offer. " on page 70. Also see, "Currency Conventions, Currency of Presentation, Use of Financial Information, Industry and Market Data" on page

20 . OVERVIEW

We are a key player in sarees wholesale (B2B) segment (Source: CRISIL Report) and our origin into the sarees business dates back to the year 1966. We are also engaged in the wholesale business of other womens apparel wear such as kurtis, dress materials, blouse pieces, lehengas, bottoms, etc. On an average of more than 90% of our total revenues are generated from sale of sarees. In Fiscal 2024, we have served over 13,000 unique customers and our product catalogue consists of more than 3,00,000 different SKUs.

Saree is an ethnic wear garment which has its origin in India and is one of the most popular readymade garment in India which is wore on casual occasions as well as on festive occasions. A saree typically ranges from six to nine yards in length and can be worn in several ways. In India there are different kind of sarees which are prevalent with Indian women. The most prevalent sarees include silk sarees, cotton sarees, synthetic fibre sarees etc. apart from these prevalent fabric sarees, there are blends and mixture of fabrics in which sarees are available across the saree industry in India. The demand for saree market in India in recent years have come from growth in the wedding and celebration wear market. However, the industry is seeing the change in the consumer buying pattern as customers are seeking quality and premium products. The change in the buying pattern has resulted in players selling higher priced sarees than the value range sarees. This is expected to drive the growth for the market in the coming years. Saree industry in India is expected to grow at a 5-6% CAGR over fiscal 2024 to fiscal 2029 reaching Rs 650-675 billion by fiscal 2029. (Source: CRISIL Report).

The saree market in India has been traditionally dominated by small retail shops and unorganised players who usually have standalone outlets which is characterised by loyal customer group. The unorganised players usually have fewer number of SKUs, and many of these players stock the sarees based on the local or region specific demand. On the other hand, with rising aspiration of the countrys middle class and rising disposable income, the organised players are tapping in to this demand for branded and quality products. The organised retailers in particular are targeting the saree market with offerings in the mid to premium range. As the disposable income for people in India increases and large global and Indian brands across the industries make their way into the overall apparel market, the aspiration to wear branded apparel have increased in the Indian population. For sarees as well this aspiration has created an opportunity for organised branded players to launch their offerings to cater to this particular demand. (Source: CRISIL Report).

Our journey since 1966:

In the year 1966, Late Laxmandas Danomal Dulhani (the father of our promoter, Shankar Dulhani) along with his mother Late Dharmibai Danomal and three others had launched "M/s. Saraswati Sadi Depot", a partnership firm formed under the Indian Partnership Act, 1932, for undertaking trading of womens apparel wear.

The firm operated in this capacity until 1996. In 1993, the second generation of the Dulhani family entered the family business and decided to reorganize and consolidate their business operations. With a view to run entire business operations under a single entity, they merged four separate sole proprietorship businesses, namely M/s. Saraswati Sadi Depot (the sole proprietorship of Sujandas Dulhani), M/s. Swami Sadi Center (the sole proprietorship of Mahesh Dulhani), M/s. Ambica Sadi Center (the sole proprietorship of Shevakram Dulhani), and M/s. Geeta Textiles (the sole proprietorship of Shankar Dulhani) into a new partnership firm named "M/s. Saraswati Sadi Depot.

As a result of this consolidation, the Dulhani family gradually ceased conducting business under the original partnership firm, "M/s. Saraswati Sadi Depot," which had been operating since 1966. By 1996, no business activities were being carried out in the original firm, leading to its dissolution in that year.

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From 1993 onwards, all business operations were consolidated and conducted under the single entity known as "M/s. Saraswati Sadi Depot". This strategic move was aimed to streamline and centralize the Dulhani familys entire business operations within a single entity i.e "M/s. Saraswati Sadi Depot".

In the year 2002, Saraswati Sadi Depot hosted for the first time a special event known as "Utsav" before the joyous festival of Diwali, where it gathered customers from across regions to participate. During Utsav event, exclusive collection of products is presented with generous special offers made to its loyal customers. After consistent success over the years, the Utsav event became a permanent fixture of

Saraswati Sadi Depots business. During Utsav event, sales for upto 13-15% to the annual revenues are recorded.

The third generation of the Dulhani family brought with it new ideas and the business showed consistent growth, crossing 2,000 million in sales in fiscal 2014. Pursuant to growth in business, the partnership firm shifted its operations to the newly constructed Uchgaon premises at Kolhapur, Maharashtra in 2015 - a landmark in the firms history. The newly constructed complex spans over approx. 169,120 sq. ft. area having designated section for different varieties of sarees and other womens apparel wear within the complex for ease of shopping. The business expanded their product range to include ready-made garments in 2017 with the beginning of Kurti sales. Since then, the ready-mades portfolio has grown to include several other offerings such as bottoms, pyjamas, one-piece clothing and dresses. The Kurti business of the partnership firm has grown significantly and has been recognized with awards such as "Star of the Industry" and "Iconic Brand" at the annual Kurti Expo events. In Fiscal 2018, sales of M/s. Saraswati Sadi

Depot crossed 4,000 million mark. For its contributions to the commerce in the state of Maharashtra, the partnership firm was awarded with the "Achievers of South Maharashtra" award by the Times of India. The revenues and profit after tax of M/s. Saraswati Sadi Depot have grown at a CAGR of 9.07% from 2,229.17 in FY 2014 to 4,093.69 in FY 2021 and at a CAGR of 20.34% from 34.51 in FY 2014 to

126.12 in FY 2021, respectively.

With a view to give perpetual succession to the business, the Dulhani family incorporated Saraswati Saree Depot Private Limited in 2021. Pursuant to the Memorandum of Understanding dated March 30, 2021 executed between the partnership firm and our Company, the former has ceased to carry on the wholesale business and the same is being carried on by the latter.

After incorporation in 2021, our Company has been carrying on the business with the same core values and management team. In Fiscal 2024 our Company provided service to more than 13,000 unique customers and crossed 6,000 million in sales in Fiscal 2024.

Our sarees are sourced from different manufacturers across India. Over the years, we have developed relationships with these manufacturers in hubs like Surat, Varanasi, Mau, Madurai, Dharmavaram, Kolkata, and Bengaluru. We regularly source sarees and other womens apparel from more than 900 weavers/suppliers across different states in India. Currently, our product catalogue lists more than 300,000 different SKUs.

Details of M/s. Saraswati Sadi Depot for the period table below for the period indicated:

Particulars	Fiscal	Fiscal	Fiscal	Fiscal	Fiscal	Fiscal
	2023	2022	2021	2020	2019	2018
Total Income ( in million)	96.93	519.95	4,093.69	4,161.35	4,281.69	4,075.68
Profit/(loss) before tax for the year/ period ( in million)	47.47	115.96	190.43	227.92	219.43	182.24
Profit/(loss) after tax for the year/ period ( in million)	47.47	82.58	126.12	149.39	144.56	121.62

As per the latest partnership deed dated January 01, 2024, details of current Partners and their Profit-Sharing Ratio of M/s. Saraswati Sadi Depot is as per the table below:

Name of the Partner	Profit Sharing Ratio
Shankar Dulhani	10%
Mahesh Dulhani	10%
Anil Dulhani	7%
Vinod Dulhani	5%
Rajesh Dulhani	10%
Sujandas Dulhani	5%
Shevakram Dulhani	5%
Dinesh Dulhani	5%
Gulshan Dulhani	5%
Amar Dulhani	7%
Amit Dulhani	6%
Nikhil Dulhani	5%
Tushar Dulhani	5%
Gaurav Dulhani	5%
Tejas Dulhani	5%
Aryan Dulhani	5%
Total	100%

We currently operate from two stores which are located in Kolhapur, Maharashtra and Ulhasnagar, Maharashtra. The table below provides a break-up of the revenue earned by us in each store:

Category	Fiscals
	2024		2023		2022
	Revenue (? in million)	Percentage of total revenue from operations (%)	Revenue (? in million)	Percentage of total revenue from operations (%)	Revenue (? million)	Percentage of total revenue from operations (%)
Kolhapur	5,395.63	88.32	5,255.07	87.31	4,741.81	86.28
Ulhasnagar	713.41	11.68	763.84	12.69	753.96	13.72
Total	6,109.04	100.00	6,018.91	100.00	5,495.77	100.00

The table sets forth details of revenue earned by our Company during the peak seasons as compared to sales by our Company during the off-season:

Category	Fiscals
	2024		2023		2022
	Revenue (Rs in million)	Percentage of revenue from operations (%)	Revenue (Rs in million)	Percentage of revenue from operations (%)	Revenue (Rs in million)	Percentage of revenue from operations (%)
Festive Season of 3 months (September to November)	2,282.08	37.36	2,204.81	36.63	2,260.49	41.13
Wedding Season of 3 months (March to May)	1,561.84	25.57	1,633.94	27.15	886.09	16.12
Off-Season of 6 months (June to August and December to February)	2,265.13	37.08	2,180.16	36.22	2,349.19	42.75
Total	6,109.05	100.00	6,018.91	100.00	5,495.76	100.00

Set forth below is certain information on our geography-wise domestic revenue from operations for the periods indicated:

Zone	State	Fiscals
		2024		2023		2022
		Amount (Rs in million)	%	Amount (Rs in million)	%	Amount (Rs in million)	%
North	Uttar Pradesh	13.96	0.23	36.73	0.61	14.74	0.27
	Delhi	0.28	0.00	0.02	0.00	0.01	0.00
South	Karnataka	1,032.93	16.91	1,068.16	17.75	1,030.52	18.75
	Andra Pradesh	1.41	0.02	8.86	0.15	1.03	0.02
	Tamil Nadu	3.23	0.05	3.48	0.06	2.86	0.05
	Telangana	3.92	0.06	0.30	0.01	0.41	0.01
	Kerala	0.11	0.00	0.26	0.00	-	-
East	Odisha	1.55	0.03	1.19	0.02	0.66	0.01
	Chhattisgarh	0.09	0.00	0.11	0.02	0.34	0.01
	Bihar	0.25	0.00	0.60	0.01	0.05	0.00
	West Bengal	0.60	0.01	0.53	0.01	0.20	0.00
West	Maharashtra	4,824.79	78.98	4,641.39	77.11	4,222.63	76.83
	Gujarat	18.20	0.30	39.75	0.66	37.86	0.69
	Madhya Pradesh	0.55	0.01	0.99	0.02	0.33	0.01
	Rajasthan	0.10	0.00	0.64	0.01	0.76	0.01
	Dadra Nagar & Haveli	0.21	0.00	0.22	0.00	0.26	0.00
	Goa	206.86	3.39	214.67	3.57	183.11	3.33
Total		6,109.04	100.00	6,018.91	100.00	5,495.77	100.00

Our purchases from top five and top ten weavers/suppliers of our total purchases, are as follows:

( in Million)

Particulars	Fiscal 2024		Fiscal 2023		Fiscal 2022
	( )	%	( )	%	( )	%
Top 5 weavers/suppliers	937.51	17.25	824.01	15.19	1,112.37	19.51
Top 10 weavers/suppliers	1,395.68	25.68	1,241.34	22.89	1,528. 31	26. 81

The table below sets forth certain key operational and financial metrics for the periods indicated:

( in Million, except percentages)

Particulars	Fiscal 2024	Fiscal 2023	Fiscal 2022
Financial metrics
Revenue From operations ( in million)	6,109.04	6,018.91	5,495.76
Total Income ( in million)	6,125.80	6,035.18	5,503.08
EBITDA ( in million)	411.41	340.53	208.46
EBITDA Margin (%)	6.73%	5.66%	3.79%
Profit/(loss) after tax for the year/ period ( in million)	295.28	229.74	123.08
Net profit Ratio/ Margin (%)	4.83%	3.82%	2.24%
Return on Equity (ROE) (%)	58.88%	96.15%	196.81%
Debt To Equity Ratio	0.67	1.17	5.37
Interest Coverage Ratio	16.95	9.09	4.67
ROCE (%)	64.46%	98.03%	169.07%
Current Ratio	1.41	1.19	1.06
Net Capital Turnover Ratio	10.64	21.06	59.67
Operational metrics
Average net sales per customer	463,508.28	396,033.03	379,856.23
Net Sales per sq.ft. area in use	33,021.83	32,534.65	29,834.05
Total pieces sold for the year	16,076,129	15,707,221	14,772,335

For further details, please see section titled "Basis for Offer Price - Key Operational and Financial Performance Indicators" on page 131.

Significant factors affecting our financial condition and results of operations

A number of factors affect our financial condition and results of operations of which, the factors discussed below are particularly significant.

Sourcing and Supplier Relationships:

Establishing robust supplier relationships has been key aspect of our saree wholesale business. We have discovered that the quality and variety of our saree inventory rely significantly on these relationships. Throughout the years, we have nurtured partnerships with suppliers who consistently provide us with quality products. These connections not only ensure a consistent supply but also grant us access to a broad range of saree styles. In order to cultivate trust with our suppliers we need to maintain open communication and fairness in our transactions.

Inventory Management:

Effective management of our inventory has been key to the success of our saree wholesale business. Maintaining the right balance in inventory helps to prevent both overstocking and understocking. To address this, we have to implemented sufficient inventory control systems. These systems help us monitor sales trends and manage stock levels more efficiently. By doing so, we ensure that we have the stock in accordance with our customers requirements, optimizing cash flow and minimizing unnecessary costs linked to excess inventory.

Pricing Strategy:

Pricing our products presents a complex task in our saree wholesale business. It is essential to consider the competitive pricing in the market, along with the cost of goods and operational expenses. To determine our pricing, we have conducted thorough cost analyses and studied our target markets sensitivity to pricing. Regularly reviewing and adjusting our pricing strategy based on market dynamics, such as competitor pricing and customer feedback, has been pivotal in remaining competitive and ensuring profitability.

Product Seasonality:

Saree demand can exhibit pronounced seasonality, with peaks occurring during festival and wedding seasons. This seasonality can pose challenges in managing inventory since excess stock during off-peak seasons can tie up capital. Some sarees may only be suitable for specific seasons, limiting their sales potential and necessitating careful inventory management. Failing to sell seasonal or trendy sarees can result in aging inventory, potentially leading to financial losses for the company.

Religious Significance and Cultural Sensitivity:

Sarees are not solely fashion items but also hold religious and ceremonial significance in numerous cultures of India. Using religious symbols or patterns without a proper understanding or solely for commercial purposes can be deeply offensive to specific communities. Furthermore, insensitivity to cultural nuances and preferences in marketing or product choices can alienate potential customers and result in reputational damage to the company.

Non-GAAP Financial Measures

Reconciliation of EBITDA, Adjusted EBITDA and Adjusted EBITDA Margin to Profit for the year / period

The table below reconciles restated profit for the year / period to EBITDA. EBITDA is calculated as restated profit for the year / period plus tax expense, finance cost, depreciation and amortization expenses. Adjusted EBITDA calculated as EBITDA less other income, while Adjusted EBITDA Margin is the percentage of Adjusted EBITDA divided by revenue from operations.

( in Million, except percentage)

Particulars	Fiscal 2024	Fiscal 2023	Fiscal 2022
Profit for the year / period (A)	295.28	229.74	123.08
Total tax Expense (B)	98.44	78.98	41.81
Profit before tax (C=A+B)	393.71	308.72	164.89
Adjustments:
Add: Finance costs (D)	24.68	38.14	44.89
Add: Depreciation and amortization expense (E)	9.78	9.94	6.00
Earnings before interest, taxes, depreciation and amortization expenses (EBITDA) (G= C+D+E)	428.17	356.8	215.78
Less: Other income (F)	16.76	16.27	7.32
Adjusted Earnings before interest, taxes, depreciation and amortization expenses (Adjusted EBITDA) (H= G- F)	411.41	340.53	208.46
Revenue from operations	6109.03	6,018.91	5,495.76
Adjusted EBITDA Margin (EBITDA as a percentage of Revenue from operations) (J = H/I)	6.73%	5.66%	3.79%

Significant Accounting Policies

1.1 Basis for preparation of accounts

The accounts have been prepared in accordance with IND AS and Disclosures thereon comply with requirements of IND AS, stipulations contained in Schedule- III-Division II (revised) as applicable under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules 2014, Companies (Indian Accounting Standards) Rules, 2015 as amended from time to time, other pronouncements of ICAI, provisions of the Companies Act. Assets and liabilities have been classified as current or non-current as per the Companys normal operating cycle and other criteria set out in revised Schedule - III to the Companies Act, 2013.

1.2 Use of Estimates

IND AS enjoins management to make estimates and assumptions related to financial statements that affect reported amount of assets, liabilities, revenue, expenses and contingent liabilities pertaining to the year. Actual result may differ from such estimates. Any revision in accounting estimates is recognized prospectively in the period of change and material revision, including its impact on financial statements, is reported in the notes to accounts in the year of incorporation of revision.

1.3 Recognition of Income and Expenses

i. Revenue from sale contracts with customers is recognized when control of the goods or services are transferred to the customer at an amount that reflects the consideration entitled in exchange for those goods or services. The Company typically controls the goods or services before transferring them to the customer. Generally, control is transferred upon shipment of goods to the customer or when the goods are made available to the customer, provided transfer of title to the customer occurs and the Company has not retained any significant risks of ownership or future obligations with respect to the goods transported.

ii. Interest Income is recognized on time proportion basis taking into account the amount outstanding and the rate applicable. iii. Other incomes have been recognized on accrual basis in financial statements except for cash flow information.

1.4 Property, Plants and Equipment

The tangible assets are held for use in supply of goods or services or for administrative purposes. These are recognized and carried under cost model i.e. cost less accumulated depreciation and impairment loss, if any which is akin to recognition criteria under erstwhile GAAP. i. Cost includes freight, duties, taxes and other expenses directly incidental to acquisition, bringing the asset to the location and installation including site restoration up to the time when the asset is ready for intended use. Such Costs also include Borrowing Cost if the recognition criteria are met. ii. When a major inspection/repair occurs, its cost is recognized in the carrying amount of the plant and equipment as a replacement if the recognition criteria are satisfied. Any remaining carrying amount of the cost of previous inspection/repair is derecognized. iii. Depreciation has been provided on written down value method in terms of expected life span of assets as referred to in Schedule II of the Companies Act, 2013. iv. Components relevant to fixed assets, where significant are separately depreciated on written down value basis in terms of their life span assessed by technical evaluation in specific context. v. On sales of fixed assets any profit earned/loss sustained towards excess/shortfall of sale value Vis-a- vis carrying cost of assets is accounted for in statement of profit and loss.

1.5 Impairment of Non-Financial Assets

i. The Company assesses at each reporting date as to whether there is any indication that any Property

Plant and Equipment and Intangible Assets or group of Assets, called Cash Generating Units (CGU) may be impaired. If any such indication exists, the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs. ii. An impairment loss is recognised in the Statement of Profit and Loss to the extent, assets carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assets fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets. iii. The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

1.6 Financial Instruments

i. Financial Assets

Initial Recognition and Measurement

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Subsequent Measurement

For purpose of subsequent measurement, financial assets are classified in two broad categories: - Financial Assets at fair value - Financial Assets at amortized cost

Where assets are measured at fair value, gains and losses are either recognized entirely in the statement of profit and loss, or recognized in other comprehensive income.

A financial asset that meets the following two conditions is measured at amortized cost.

- Business Model Test: The objective of companys business model is to hold the financial asset to collect the contractual cash flows. - Cash Flow Characteristics Test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

A financial asset that meets the following two conditions is measured at fair value through OCI: - - Business Model Test: The financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets. - Cash Flow Characteristics Test: The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payment of principal and interest on the principal amount outstanding.

All other financial assets are measured at fair value through profit and loss.

All equity investments are measured at fair value in the balance sheet, with value changes recognized in the statement of profit and loss, except for those equity investments for which the entity has elected irrevocable option to present value changes in OCI.

Impairment of Financial Assets

The company assesses impairment based on expected credit losses (ECL) model at an amount equal to: - 12 months expected credit losses, or - Lifetime expected credit losses

Depending upon whether there has been a significant increase in credit risk since initial recognition.

However, for trade receivables, the company does not track the changes in credit risk. Rather, it recognizes impairment loss allowances based on lifetime ECLs at each reporting date, right from its initial recognition.

ii. Financial Liabilities

All financial liabilities are initially recognized at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

Financial liabilities are classified as measured at amortized cost or Fair Value Through Profit and Loss (FVTPL). A financial liability is classified as FVTPL if it is classified as held for trading, or it is a derivative or is designated as such on initial recognition. Financial Liabilities at FVTPL are measured at fair value and net gains or losses, including any interest expense, are recognized in statement of profit and loss. Other financial liabilities are subsequently measured at amortized cost using the effective interest method. Interest expense and foreign exchange gains and losses are recognized in statement of profit and loss. Any gain or loss on de-recognition is also recognized in statement of profit and loss.

1.7 Fair Value Measurement

The company measures financial instruments at fair value at each balance sheet date.

Fair Value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

- In the principal market for the asset or liability, or

- In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible by the company.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

- Level 1 - Quoted (unadjusted) market prices in active markets for identified assets or liabilities - Level 2 - Valuation techniques for which the lowest level of input that is significant to the fair value measurement is directly or indirectly observable - Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable

For the purpose of fair value disclosure, the Company has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

1.8 Inventories

Inventories are valued at the lower of cost or net realizable value. Cost includes purchase price, duties, transport & handing costs and other costs directly attributable to the acquisition and bringing the inventories to their present location and condition.

The cost in respect of trading goods and packing material is determined under the First In First Out method.

1.9 Employee Benefits

i. Short term employee benefits

Liabilities for wages and salaries, including non-monetary benefits that are expected to be settled wholly within 12 months after the end of the period are recognized in respect of employees services up to the end of the reporting period and are measured at the amounts expected to be incurred when the liabilities are settled. The liabilities are presented as current employee benefit obligations in the balance sheet.

ii. Long term/Post Separation employee benefit plan

Defined Contribution Plan:

The companys contributions to recognized Provident Fund and Labour Welfare Fund are charged to profit and loss account on accrual basis.

Defined Benefit Plan:

The Company accounts for the long term employee benefits, if any, in the form of gratuity and leave encashment on the defined benefits plans on actual payment basis, the liability being not significant on accrual basis.

1.10 Income Tax and Deferred Tax

The liability of company on account of Income Tax is computed considering the provisions of the Income Tax Act, 1961.

Deferred tax is provided using balance sheet approach on temporary differences at the reporting date as difference between the tax base and the carrying amount of assets and liabilities. Deferred tax is recognized subject to the probability that taxable profit will be available against which the temporary differences can be reversed.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity).

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

1.11 Provisions, Contingent Liability and Contingent Assets

Disputed liabilities and claims against the company including claims raised by fiscal authorities (e.g. Sales Tax, Income Tax, Excise etc.) pending in appeal or court for which no reliable estimate can be made and or involves uncertainty of the outcome of the amount of the obligation or which are remotely poised for crystallization are not provided for in accounts but disclosed in notes to accounts.

However, present obligation as a result of past event with possibility of outflow of resources, when reliable estimation can be made of the amount of obligation, if any, is recognized in accounts in terms of discounted value, if the time value of money is material using a current pre-tax rate that reflects the risk specific to the liability. No contingent asset is recognized by the company.

1.12 Foreign Currency Translation

The companys financial statements are presented in INR, which is also the companys functional currency.

i. Transactions in foreign currencies, if any, are recognized at rate of overseas currency ruling on the date of transactions. Gain/Loss arising on account of rise or fall in overseas currencies vis-?-vis functional currency between the date and that of payment is charged to Statement of Profit and Loss. ii. Monetary Assets in foreign currencies, if any, are translated into functional currency at the exchange rate ruling at the Reporting Date and the resultant gain or loss is accounted for in the Statement of Profit and Loss. iii. Non-Monetary items which are carried at historical cost denominated in a foreign currency, if any, are reported using the exchange rate at the date of transaction. iv. Impact of exchange fluctuation, if any, is separately disclosed in the notes to accounts.

1.13 Earnings Per Share

Basic Earnings per share is calculated by dividing:

- the net profit for the period attributable to equity shareholders

- by the weighted average number of equity shares outstanding during the period.

For the purpose of calculating diluted earnings per share: - the net profit for the period attributed to equity shareholders and the weighted average number of shares outstanding during the period - is adjusted for the effects of all dilutive potential equity shares.

1.14 Borrowing Costs

Borrowing cost, if any, that are directly attributable to the acquisition, construction, or production of a *qualifying asset are capitalized as a part of the cost of such asset till such time the asset is ready for its intended use or sale.

Borrowing cost consists of interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs also includes exchange differences, if any, to the extent regarded as an adjustment to the borrowing costs. All other borrowing costs are recognized as expense in the period in which they are incurred.

* A qualifying asset is an asset that necessarily requires a substantial period of time to get ready for its intended use or sale.

1.15 Cash and Cash Equivalents

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short- term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

The following table sets forth selected financial data from our statement of profit and loss for the period indicated, the components of which are also expressed as a percentage of total income for such years.

( in Million, except percentage)

Particulars	Fiscal 2024		Fiscal 2023		Fiscal 2022
	Amount	% of Total Income	Amount	% of Total Income	Amount	% of Total Income
Income from
Operations
Revenue from operations	6,109.04	99.73%	6,018.91	99.73%	5,495.76	99.87%
Other Income	16.76	0.27%	16.27	0.27%	7.32	0.13%
Total Income	6,125.80	100.00%	6,035.18	100.00%	5,503.08	100.00%
Expenses:
Purchase of Stock-in-	5,489.92	89.62%	5,425.05	89.89%	5,678.01	103.18%
Trade
Changes in inventories of finished goods, work-in-progress and Stock-in-Trade	(148.98)	-2.43%	-170.55	-2.83%	-757.50	-13.76%
Employee benefit expense	97.71	1.60%	99.44	1.65%	96.73	1.76%
Finance costs	24.68	0.40%	38.14	0.63%	44.89	0.82%
Depreciation and amortization expense	9.78	0.16%	9.94	0.16%	6.00	0.11%
Other expenses	266.14	4.34%	270.10	4.48%	220.10	4.00%
Total expenses	5,739.26	93.69%	5,726.46	94.88%	5,338.19	97.00%
Profit before tax and share of income from Associates	386.55	6.31%	308.72	5.12%	164.89	3.00%
Income from Associates	7.17	0.12%	-	-	-	-
Profit before tax	393.71	6.43%	308.72	5.12%	164.89	3.00%
- Current tax	98.44	1.61%	78.98	1.31%	41.81	0.76%
Profit for the year	295.28	4.82%	229.74	3.81%	123.08	2.24%

Fiscal 2024 compared to Fiscal 2023

Total income

Our total income increased by 90.63 million, or by 1.50%, from 6,035.18 million in the Fiscal 2023, to 6,125.80 million in the Fiscal 2024. This was primarily due to an increase in our revenue from operations and aided by increase in other income as well.

Revenue from Operations

Our revenue from operations increased by 90.13 million or by 1.50% from 6,018.91 million in Fiscal 2023 to 6,109.04 million in Fiscal 2024. This was primarily attributed to an increase in revenue from operations due to increase in number of units sold from 15.71 million units in Fiscal 2023 to 16.08 million units in Fiscal 2024.

Other Income

Our other income increased by 0.50 million or by 3.04% from 16.27 million in Fiscal 2023 to 16.76 million in Fiscal 2024. This increase was majorly driven by interest received from term deposits which is 9.76 million for the Fiscal 2024.

Total Expenditure

Total expenses increased by 12.80 million or by 0.22% from 5,726.46 million in Fiscal 2023 to 5,739.26 million in Fiscal 2024. This increase was primarily driven by 21.57 million due to change inventories of finished goods, work-in-progress and stock-in-trade, and 10.53 million increase in purchase of stock in trade. The above increase was offset to some extent by reduction in Employee benefits, finance cost and other expenses.

Purchase of stock in trade.

Purchase of stock in trade increased by 10.53 million or by 0.19% from 5,479.39 million in Fiscal 2023 to 5,489.92 million in Fiscal 2024. This was primarily due to a increase net purchase of units.

Changes in Inventories of Finished Goods & Work-in-Progress.

Change in inventories of finished goods, work in progress was a reduction of 170.55 million for Fiscal 2023 as compared to a reduction of 148.98 million for Fiscal 2024, primarily attributable to a higher inventory of finished goods and work in progress at the beginning of Fiscal 2024.

Employee benefits expense

Employee benefits expense decreased by 1.73 million or by 1.74% from 99.44 million in Fiscal 2023 to 97.71 million in Fiscal 2024. The main reason for this was due to reduction of salaries and bonus/ex gratia payments, which was setoff to some extent by a increase in directors salary.

Finance costs

Finance costs decreased by 13.46 million or by 35.30% from 38.14 million in Fiscal 2023 to 24.68 million in Fiscal 2024. This was due to decrease in interest expenses on unsecured loan because of decrease in outstanding principal amount of the loan.

Depreciation and amortization expense

Our depreciation and amortization expense decreased by 0.16 million or 1.56%, from 9.94 million in Fiscal 2023 to 9.78 million in Fiscal 2024. The decrease in depreciation was primarily due to reduced written down value of the assets.

Other expenses

Other expenses decreased by 3.96 million or by 1.47% from 270.10 million in Fiscal 2023 to 266.14 million in Fiscal 2024. This was primarily due to slight decrease in Advertisement, Contract charges, Discount on sales etc.

Income from Associates

Income from associate for FY 2024 was 7.17 million.

Tax expense

Our total tax expense increased by 19.46 million or by 26.96% from 78.98 million in Fiscal 2023 to 98.44 million in Fiscal 2024. This was largely driven by a increase in profit before tax which rose from 308.72 million in fiscal year 2023 to 393.71 million in fiscal year 2024.

Profit/(Loss) for the year

For the various reasons discussed above, and following adjustments for tax expense, we recorded an increase in our profit by 65.54 million or by 28.53% from 229.74 million in Fiscal 2023 to 295.28 million in Fiscal 2024. Profit after tax as a percentage of total revenue stood at 4.82% for Fiscal 2024 versus 3.81% for Fiscal 2023.

Fiscal 2023 compared to Fiscal 2022

Total income

Our total income increased by 9.67% ( 532.09 million), from 5,503.08 million in the Fiscal 2022, to 6,035.18 million in the Fiscal 2023. This was primarily due to an increase in our revenue from operations and aided by increase in other income as well.

Revenue from Operations

Our revenue from operations increased by 9.52% ( 523.15 million) from 5,495.76 million in Fiscal 2022 to 6,018.91 million in Fiscal 2023. This was primarily attributed to an increase in revenue from operations due to increase in number of units sold from 14.77 million units in Fiscal 2022 to 15.71 million units in Fiscal 2023.

Other Income

Our other income increased by 122.18% ( 8.95 million) from 7.32 million in Fiscal 2022 to 16.27 million in Fiscal 2023. This increase was majorly driven by interest received from customers, interest received from term deposits and interest on deposits (other) which is 4.39 million, 6.04 million and 1.11 million respectively for the Fiscal 2023 as compared to 0.80 million, 1.65 million and interest on deposit was not there respectively for the Fiscal 2022.

Total Expenditure

Total expenses increased by 7.27% ( 388.27 million) from 5,338.19 million in Fiscal 2022 to 5,726.46 million in Fiscal 2023. This increase was primarily driven by 586.95 million due to change inventories of finished goods, work-in-progress and stock-in-trade, and 4.39 million, 50.00 million and 3.93 million increase in cost of materials consumed, other expenses and depreciation and amortisation expenses respectively. The above increase was offset to some extent by reduction in Purchase of stock in trade and finance cost.

Purchase of stock in trade.

Purchase of stock in trade decreased by 4.34% ( 248.57 million) from 5,727.96 million in Fiscal 2022 to 5,479.39 million in Fiscal 2023. This was primarily a result of decrease in purchases due to utilization of surplus opening inventories.

Changes in Inventories of Finished Goods & Work-in-Progress

Change in inventories of finished goods, work in progress was a reduction of 757.50 million for Fiscal 2022 as compared to a reduction of 170.55 million for Fiscal 2023, primarily attributable to a higher inventory of finished goods and work in progress at the beginning of Fiscal 2023.

Employee benefits expense

Employee benefits expense increased by 2.80% ( 2.70 million) from 96.73 million in Fiscal 2022 to 99.44 million in Fiscal 2023. The main reason for this was an uptick in bonus/ex gratia payments, which was balanced out by a reduction in salaries, including the directors salary. This adjustment was a result of a restructuring of the salary and bonus components, as the company has now embraced a performance-based bonus approach to boost the sales. Employee benefit expenses contributed 1.76% of the total revenues for the Fiscal 2022 vis-?-vis 1.65% of the total revenues for the Fiscal 2023.

Finance costs

Finance costs decreased by 15.03% ( 6.75 million) from 44.89 million in Fiscal 2022 to 38.14 million in Fiscal 2023. This was due to decrease in interest expenses on unsecured loan because of decrease in outstanding principal amount of the loan.

Depreciation and amortization expense

Our depreciation and amortization expense increased by 65.53% ( 3.93 million), from 6.00 million in Fiscal 2022 to 9.94 million in Fiscal 2023. The Increase in depreciation was primarily due to increase in computer, computer software, plant and machinery and furniture.

Other expenses

Other expenses increased by 22.72% ( 50.00 million) from 220.10 million in Fiscal 2022 to 270.10 million in Fiscal 2023. This was primarily due to an increase in discount on sale to 95.91 million in Fiscal 2023 from 67.92 million in Fiscal 2022 to increase the sales volume.

There was a rise in contract charges from helpers and other individuals to 51.55 million in Fiscal 2023, up from 43.06 million in Fiscal 2022. This increase was a result of the companys decision to reduce its regular workforce and hire more employees on a contractual basis. an increase in professional fees, canteen lodging & boarding expenses and electricity expenses by 1.48 million, 1.56 million and 1.58 million respectively.

Tax expense

Our total tax expense increased by 88.89% ( 37.17 million) from 41.81 million in Fiscal 2022 to 78.98 million in Fiscal 2023. This was largely driven by increase in profit before tax which rose from 164.89 million in fiscal year 2022 to 308.72 million in fiscal year 2023.

Profit/(Loss) for the year

For the various reasons discussed above, and following adjustments for tax expense, we recorded an increase in our profit by 86.65% ( 106.66 million) from 123.08 million in Fiscal 2022 to 229.74 million in Fiscal 2023. Profit after tax as a percentage of total revenue stood at 3.81% for Fiscal 2023 versus 2.24% for Fiscal 2022.

Cash Flows

The following table sets forth selected information from our statement of cash flows for the periods indicated:

(in million)

Particulars	FY 2024	FY 2023	FY 2022
Net cash used/ generated from operating activities (A)	(85.40)	351.92	(412.13)
Net cash used/ generated from investing activities (B)	(2.34)	(43.72)	(37.85)
Net cash used/ generated from financing activities (C)	(4.07)	(290.03)	621.29
Net increase/ (decrease) in cash and cash equivalent (A+B+C)	(91.81)	18.17	171.32
Cash and cash equivalents at the beginning of the year	190.49	172.32	1.00
Cash and cash equivalents at the end of the year	98.68	190.49	172.32

Operating Activities

Fiscal 2024

Net cash used in operating activities in the Fiscal 2024, was 85.40 million. While our net profit before tax was 393.71 million, we had an operating profit before working capital changes of 421.01 million, primarily due to deprecation amounting to 9.78 million, and interest amount(net) amounting to 24.68 million. Our adjustments for working capital changes for the Fiscal 2024 are (405.82) million which was further reduced by direct tax paid of 100.57 million.

Fiscal 2023

Net cash flow from operating activities in the Fiscal 2023, was 351.92 million. While our net profit before tax was 308.72 million, we had an operating profit before working capital changes of 356.80 million, primarily due to deprecation amounting to 9.94 million, interest amount(net) amounting to 38.14 million. Our adjustments for working capital changes for the Fiscal 2023 are 74.11 million which was reduced by direct tax paid of 78.98 million.

Fiscal 2022

Net cash used in operating activities in the Fiscal 2022, was 412.13 million. While our net profit before tax was 164.89 million, we had an operating profit before working capital changes of 215.70 million, primarily due to deprecation amounting to 5.98 million, loss on sale of other assets 0.06 million and interest amount(net) amounting to 44.89 million. Our adjustments for working capital changes for the Fiscal 2022 are (571.20) million which was further reduced by direct tax paid of 41.81 million.

Investing Activities

Fiscal 2024

Net cash flow used in investing activities was 2.34 million in the Fiscal 2024, primarily on account Sale (Purchase) of Fixed Assets: NET of 9.51 million and Profit from Investment in partnership firm of 7.17 million respectively.

Fiscal 2023

Net cash flow used in investing activities was 43.72 million in the Fiscal 2023, primarily on account Sale (Purchase) of Fixed Assets: NET, Sale/(Purchase) of Investments of 8.72 million and 35.00 million respectively.

Fiscal 2022

Net cash flow used in investing activities was 37.85 million in the Fiscal 2022, Sale (Purchase) of Fixed Assets: NET of 37.85 million.

Financing Activities

Fiscal 2024

Net cash flow used in from financing activities in the Fiscal 2024 amounted to 4.07 million, Repayment

Loans and Advances from Directors, Repayment of Short Term Borrowings and Interest expenses paid,

174.95 million, 146.53 million and 24.68 million.

Fiscal 2023

Net cash flow used in from financing activities in the Fiscal 2023 amounted to 290.03 million, Repayment Loans and Advances from Directors, Repayment of Short Term Borrowings and Interest expenses paid, 119.72 million, 132.17 million and 38.14 million.

Fiscal 2022

Net cash flow used in from financing activities in the Fiscal 2022 amounted to 621.29 million, Repayment Loans and Advances from Directors, Repayment of Short Term Borrowings, Proceeds from Short term borrowing and Interest expenses paid, 294.67 million, 356.69 million, 14.82 million and 44.89 million.

Liabilities

Our total (current and non-current) liabilities as on March 31, 2024, March 31, 2023 and March 31, 2022, amounted to 1,410.27 million, 1,534.71 million and 1,575.23 million, respectively.

Indebtedness

The following table sets forth certain information relating to our outstanding indebtedness as on June 30, 2024:

Particulars	As on June 30, 2024
	( in million)
Long Term Borrowings	-
Term loans (secured)	-
Term loans (unsecured)	-
Total long term borrowings (including current maturities)
Short Term Borrowings	-
Secured	-
Unsecured	378.39
Total Short Term Borrowings	378.39
Total Borrowings	378.39

As on the date of this Red Herring Prospectus, there have been no defaults by our Company or our Subsidiaries in relation to any of the loans or borrowings availed by them.

Capital Expenditure

Our historical capital expenditures were primarily incurred towards purchase and maintenance of computer systems, software, vehicles, plants and machinery and furniture. We expect our future capital expenditures to be primarily used towards purchase of above-mentioned assets.

In the Fiscals 2024, 2023 and 2022 our capital expenditure for purchase of property, plant and equipment and computer systems (including other intangible assets, capital work in progress and capital advances) were 9.51, 8.72 million, 37.85 million, respectively.

For further details, please see section titled "Restated Financial Statements" on page 262 of this Red Herring Prospectus.

Contingent Liabilities

The following table sets forth the principal components of our contingent liabilities as on March 31, 2024: a. Guarantee provided by/on behalf of the company: NIL b. Claims against company not acknowledged as debts: NIL c. Other money for which the company is contingently liable: Penalties payable to ROC - 0.75 million

Off-Balance Sheet Arrangements

There are no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Related Party Transactions

We have engaged in the past, and may engage in the future, in transactions with related parties including with our Promoter, Directors, Key Managerial Personnel, Senior Management, our Subsidiaries and our Group Companies on an arms length basis. All the transactions with related parties are in compliance with the Companies Act, 2013, SEBI Listing Regulations, relevant accounting standards and other statutory compliances.

For details regarding our related party transactions, please see "Annexure J Related Party Transactions" under the chapter "Restated Financial Statements" on page 268 of this Red Herring Prospectus.

Capital Management

For the purpose of the Companys capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders. The primary objective of the Companys capital management is to maximize the shareholder value and to ensure the Companys ability to continue as a going concern.

The Company has not distributed any dividend to its shareholders. The Company monitors net debt i.e. total debt net off cash and cash equivalent. Total debt comprises of current borrowings.

The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets.

Particulars	As at 31st March 2024	As at 31st March 2023	As at 31st March 2022
Equity (A)	649.09	353.82	124.08
Borrowings	434.89	414.29	666.18
Less: Cash and Cash equivalents	(98.69)	(190.49)	(172.32)
Net Debt (B)	336.20	223.80	493.86
Net Debt to Equity (B / A)	51.80%	63.25%	398.02%

No changes were made in the objectives, policies or processes for managing capital during the years ended 31st March, 2024, 31st March, 2023 and 31st March, 2022.

Financial Risk Management

The Company is exposed to various financial risks. These risks are categorized into credit risk and liquidity risk. The Companys risk management is coordinated by the Board of Directors and focuses on securing long term and short term cash flows.

Credit Risk:

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Companys receivables from customers. Credit risk is managed through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of customers to which the Company grants credit terms in the normal course of business. The Company establishes an allowance for doubtful debts and impairment that represents its estimate of expected losses in respect of trade receivables.

Liquidity Risk:

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due. The Company manages its liquidity risk by ensuring, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risk to the Companys reputation.

Segment Reporting

The company has identified only one reportable segment viz. wholesale business of womens apparel wear such as kurtis, dress materials, blouse pieces, lehengas, bottoms and allied garments and reported taking into account nature of products and services, the differing risks and returns and the internal business reporting system. For further details, please see section titled "Financial Information" on page 238.

New products or business segments

Except as disclosed in this Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new products or new business segments.

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

Other than as disclosed in the Restated Financial Statements, we do not have any separate reportable business segments. For further details, please see section titled "Financial Information" on page 238. 294

Seasonality of business / cyclicality of business

Our business is subject to seasonality. Lower revenues in the festive period of any Fiscal may adversely affect our business, financial condition, results of operations and prospects. For further details please refer Risk Factor no.5 "Our business is subject to seasonality. Lower revenues in the festive period of any Fiscal may adversely affect our business, financial condition, results of operations and prospects."on page 24 of the RHP.

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

Changes in revenue in the last three Fiscals are as described in the sections "Managements Discussion and

Analysis of Financial Condition and Results of Operations Fiscal 2024, Fiscal 2023 compared to Fiscal 2022" above on pages 287, respectively.

Supplier or Customer Concentration

We do not have any material dependence on a single or few suppliers. We have a wide customer base and do not have any material dependence on any particular customer.

Competitive Conditions

We operate in a competitive environment. For further details regarding industry in which we operate and competitive conditions that we face across our various business, please see sections titled "Our Business",31, uted to eq rview" and "Risk Factors" on pages 179, 142 and 41, respectively.