Sat Kartar Shopping Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the financial year ended March 31, 2024 and financial year ended March 31, 2023, and for the financial year ended March 31, 2022. One should read the following discussion and analysis of our financial condition and results of operations in conjunction with our section titled "Financial Statements" and the chapter titled "Financial Information" on page 217 of the Draft Red Herring Prospectus. This discussion contains forward-looking statements and reflects our current views with respect to future events and our financial performance and involves numerous risks and uncertainties, including, but not limited to, those described in the section entitled "Risk Factors" on page 27 of this Draft Red Herring Prospectus. Actual results could differ materially from those contained in any forward-looking statements and for further details regarding forward-looking statements, kindly refer the chapter titled "Forward-Looking Statements" on page 16 of this Draft Red Herring Prospectus. Unless otherwise stated, the financial information of our Company used in this section has been derived from the Restated Financial Information. Our financial year ends on March 31 of each year. Accordingly, unless otherwise stated, all references to a particular financial year are to the 12-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to Sat Kartar Shopping Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Statements for the Financial Years 2024, 2023 & 2022 included in this Draft Red Herring Prospectus beginning on page 217 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Our company offers Ayurvedic products, and we are committed with the mission of promoting a healthier lifestyle. We aim to provide good quality ayurvedic products related to personal wellness of men & women and products related to address various diseases such diabetes, addiction, Joint pain, low immunity and others. By focusing on natural and holistic wellness solutions, we strive to enhance overall well-being and support a healthier lifestyle for our customers.

Our Company operates in B2C (Business-to-Consumer) segment, selling Ayurvedic products directly to consumer through our own D2C website as well as from other third-party websites such as Amazon, Flipkart ,1mg, Indiamart, TradeIndia, Healthmug, JioMart and other social media platforms. We follow a purely asset-light model. Instead of manufacturing our products ourselves, we engage with vendors who handle the manufacturing for us.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR

As per mutual discussion between the Board of the Company and BRLM, in the opinion of the Board of the Company there have not arisen any circumstances since the date of the last financial statements as disclosed inthe Draft Red Herring Prospectus and which materially and adversely affect or is likely to affect within the next twelve months except as follows:

The Board of Directors of our Company has approved and passed resolution on J u n e 2 6 , 2 0 2 4 to authorize the Board of Directors to raise the funds by way of Initial Public Offering.

The Shareholders of our company appointed Mr. Ved Prakash as Managing Director, in the Extra Ordinary General Meeting held on May 01, 2024.

The Board of our Company appointed Mr. Sunil Kumar Mehdiratta and Mr. Manoj Kumar Verma as Independent Directors in the Board Meeting held on January 20, 2024.

The shareholders of our Company appointed Ms. Richa Takkar as Non-Executive and Non- Independent Director in the Extra-Ordinary General Meeting held on January 01, 2024.

The board of directors in its meeting held on January 20, 2024 appointed Ms. Himanshu Malik as Company Secretary & Compliance officer of the Company w.e.f. January 20, 2024

The board of directors in its meeting held on May 01, 2024 appointed Mr. Devender Kumar Arora as Chief Financial Officer of the Company.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factor" beginning on page 27 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following: Changes, if any, in the regulations / regulatory framework / economic policies in India and / or in foreign countries, which affect national & international finance.

Companys results of operations and financial performance; Performance of Companys competitors; Significant developments in India‘s economic and fiscal policies;

Failure to adapt to the changing needs of ayurvedic industry and in particular government policies and regulations may adversely affect our business and financial condition; Volatility in the Indian and global capital market.

DISCUSSION ON RESULT OF OPERATION

(Amount in thousands)

Particulars	For the Period ending 31 March, 2024	% of total income	For the Period ending 31st March 2023	% of total income	For the Period ending 31st March 2022	% of total income
I Revenue from operations	12,79,093.27	99.84%	8,29,695.53	99.99%	5,19,189.18	99.25%
II Other Income	2,002.85	0.16%	78.27	0.01%	3,940.23	0.75%
III Total Income (I+II)	12,81,096.11	100.00%	8,29,773.80	100.00%	5,23,129.41	100.00%
IV Expenses:
Cost of Material Consumed	90,306.02	7.05%	49,576.12	5.97%	43,515.91	8.32%
Employee benefit expense	2,93,121.92	22.88%	2,08,073.90	25.08%	1,01,354.94	19.37%
Financial costs	5,178.94	0.40%	4,784.82	0.58%	4,601.30	0.88%
Depreciation and amortization expense	13,271.13	1.04%	13,160.61	1.59%	7,241.18	1.38%
Other expenses	7,93,272.34	61.92%	5,19,742.99	62.64%	3,51,366.00	67.17%
Total Expenses	11,04,844.32	86.24%	7,95,338.45	95.85%	5,08,079.34	97.12%
VI Exceptional Items	-	-	-	-	-	-
VII Profit before extraordinary items and tax	85,945.77	6.71%	34,435.35	4.15%	15,050.07	2.88%
VIII Extraordinary Items	-	-	-	-	-	-
IX. Profit before tax (VII-VIII)	85,945.77	6.71%	34,435.35	4.15%	15,050.07	2.88%
X. CSR Expense
Contribution for CSR	-	-	-	-	-	-
XI. Tax expense:
(I) Current tax	23,279.27	1.82%	9942.83	1.20%	1,749.38	0.33%
(II) Deferred tax	(885.93)	(0.07%)	(568.85)	(0.07%)	(568.12)	(0.11%)
(III) MAT credit	-	-	-	-	-	-
(IV) Last year excess provision Written Back	497.472	-	-	-	-	-
XII PROFIT/(LOSS)FROM	63,054.96	4.92%	25,061.37	3.02%	13,868.81	2.65%
THE PERIOD FROM CONTINUING OPERATIONS
XIII Profit/ (Loss) from discontinuing operations	-	-	-	-	-	-
XIV Tax expense of discounting operations	-	-	-	-	-	-
XV Profit/ (Loss) for the period (XI + XIV)	63,054.96	4.92%	25,061.37	3.02%	13,868.81	2.65%

Items for Restated Financial Statements

Our Significant Accounting Policies

For Significant accounting policies please refer "Significant Accounting Policies", under Chapter titled Restated Financial Statements beginning on page 217 of the Draft Red Herring Prospectus.

Overview of Revenue & Expenditure

The following discussion on results of operations should be read in conjunction with the Restated Financial Statements for the Financial Year 2024, 2023 & 2022.

Our revenue and expenses are reported in the following manner:

Revenues

Revenue from operations

Our companys source of revenue is primarily generated from selling ayurveda products to end consumers. However, it also consists of sale of TV slots for advertising which are initially bought by our company but could not carry out the same.

Other Income

Other income includes profit arising from sale of fixed assets, interest received is from fixed deposits and refund due from income authorities, and other non-operating income.

Expenditure

Our total expenditure primarily consists of cost of goods sold, employee benefit expenses, finance costs, depreciation, and other expenses.

Cost of Goods Sold

The cost of goods sold includes final products received from the manufacturer which are ready to be sold to end consumer.

Employment Benefit Expenses

Our employee benefits expense primarily comprises of salaries, remuneration to directors, sitting fees to directors, bonus and staff welfare expenses, incentives to employee.

Finance Cost

Our Finance Cost includes loan processing fees, interest on loan (Overdraft facility availed and used), interest on car Loan, loan processing fees and other charges.

Depreciation and Amortization Expenses

depreciation and amortization expenses on fixed assets majorly includes depreciation on motor car and computer.

Other Expenses

Other Expenses majorly includes expenses on advertisement, courier charges, legal and professional charges and rental charges etc.

Revenues

Total Income

Total income for the financial year 2023-24 stood at Rs. 12,81,096.11 thousand whereas in the financial year 2022-23 it stood at Rs. 8,29,773.80 thousand representing an increase of 54.39%.

Revenue from operations

Net revenue from operations for the financial year 2023-2024 stood at Rs. 12,79,093.27 thousand whereas for the financial year 2022-23, it stood at 8,29,695.53 thousand representing an increase of 54.16%.

Reason: Theres an increase in "revenue from operation" on account of increase in "sale of goods", due to growth in business.

Other Income

Other income for the financial year 2023-2024 stood at Rs. 2,002.85 thousand whereas for the financial year 2022-23, it stood at Rs. 78.27 thousand representing an increase of 2458.76%.

Reason: There is an increase in ‘other income majorly because of sale in fixed asset owned by the company, discount received from use of credit card on the business trip made by the business officials.

Expenditure

Total Expenses

Total expenses for the financial year 2023-2024 stood at Rs. 11,95,150.34 thousand whereas for the financial year 2022-23, it stood at Rs. 7,95,338.45 thousand representing an increase of 50.27%.

Cost of Goods Sold

Cost of Goods Sold for the Financial Year 2023-2024, stood at Rs. 90,306.02 thousand. Whereas in Financial Year 2022-23 it stood at Rs. 49,576.12 thousand representing an increase of 82.16%.

Reason: There is an increase in ‘cost of golds sold due to increases in revenue from operation of the company.

Employment Benefit Expenses

Employee benefit expenses for the financial year 2023-2024 stood at Rs. 2,93,121.92 thousand whereas for the financial year 2022-23, it stood at Rs. 2,08,073.90 thousand representing an increase of 40.87%.

Reason: There was an increase in ‘Employee benefit expenses due to an increase in Salaries, Directors Remuneration, bonus and staff welfare expenses and incentives to employees.

Finance Cost

Finance costs for the financial year 2023-2024 stood at Rs. 5,178.94 thousand whereas for the financial year 2022-23, it stood at Rs. 4,784.82 thousand representing an increase of 8.24%.

Reason: This was primarily due to an increase in interest on loan (overdraft facility received and availed).

Depreciation and Amortization Expenses

The depreciation and amortization expenses for the financial year 2023-2024 stood at Rs. 13,271.13 thousand whereas for the financial year 2022-23, it stood at Rs. 13,160.61 thousand representing an increase of 0.84%.

Reason: This increase is due to the addition of the fixed assets in the year 2023-24, therefore there is an increase in the fixed assets specifically computer and softwares.

Other Expenses

The other expenses for the financial year 2023-2024 stood at Rs. 7,93,272.34 thousand whereas for the financial year 2022-23, it stood at Rs. 5,19,742.99 representing an increase of 52.63% %.

Reason: There is an increase in ‘Other expenses because it includes variable costs also which increases with increase in turnover. The same is in line with increase in turnover which increase by 54.16% in 2023-24 to 2023-23.

Restated Profit before Tax

The restated profit before tax for the financial year 2023-2024 stood at Rs. 85,945.77 thousand whereas for the financial year 2023-24, it stood at Rs. 34,435.35 thousand representing an increase of 149.59%.

Restated Profit after Tax

The restated profit after tax for the financial year 2023-2024 stood at Rs. 63,054.96 thousand whereas for the financial year 2022-23, it stood at Rs. 25,061.37 thousand representing an increase of 151.60%.

Reason for change in the Revenue from operation and Profit after tax

(Amount in Thousands)

Particulars	For the period March 31, 2024	For the period March 31, 2023
Revenue from Operation	12,79,093.27	8,29,695.53
Change in %	54.16%
Profit after tax	63,054.96	25,061.37
Pat Margin in %	4.93%	3.02%

Reason of increase in revenue is that because there is an extensive increase in the sale of goods by 54.95% which the result of our marketing and advertisement expenditure, thereby increasing the demand of our products, the same can be shown below:

(Amount in Thousands)

Particulars	For the period March 31, 2024	For the period March 31, 2023
Sale of goods	12,76,246.68	8,23,631.91
Change in %	54.95%

Reason of Increase in PAT margin is that Profit before tax increased because of increase in sale of goods and some expenses are of fixed nature and that do not increase in proportion to increase in revenue. Due to efficient supply chain management which ensures product availability and reduces stockouts, thereby reduce the cost and increase the profit margin.

Revenues

Total Income

Total income for the financial year 2022-2023 stood at Rs. 8,29,773.80 thousand whereas in financial year 2021-22 stood at Rs. 5,23,129.41 thousand representing an increase of 58.62%.

Revenue of operations

Net revenue from operations for the financial year 2022-2023 stood at Rs. 8,29,695.53 thousand whereas for the financial year 2021-2022, it stood at Rs. 5,19,189.18 thousand representing an increase of 59.81%.

Reason: Theres an increase in ‘Revenue from operation due to increase in sale of goods due to business growth.

Other Income

Other Income for the financial year 2022-2023 stood at Rs. 78.27 thousand whereas for the financial year 2021-22, it stood at Rs. 3,940.23 thousand representing a decrease of (98.01%).

Reason: The decrease in ‘other income is majorly because there was loss on sale of fixed asset. Further, the interest received on fixed deposits and interest on refund to be received from income tax authorities also reduced by 48.32%. In the year 2021-22, there was a profit on sale of assets which is a specific event.

Expenditure

Total Expenses

Total expenses for the financial year 2022-2023 stood at Rs. 7,95,338.45 thousand whereas for the financial year 2021 - 2022, it stood at Rs. 5,08,079.34 thousand representing an increase of 56.54%.

Cost of Goods Sold

Cost of goods sold for the financial year 2022-2023, stood at Rs. 49,576.12 thousand whereas in financial year 2021-2022 it stood at Rs. 43,515.91 thousand representing an increase of 13.93%.

Reason: The reason for the increase in cost of goods sold is because this year we have increase the number of goods sold which required more expenditures on the cost of goods consumed.

Employment Benefit Expenses

Employee benefit expenses for the financial year 2022-2023 stood at Rs. 2,08,073.90 thousand whereas for the financial year 2021- 2022, it stood at Rs. 1,01,354.94 thousand representing an increase of 105.29%.

Reason: There was an increase in ‘Employee benefit expenses because of increase in Salary, Directors remuneration. Employee welfare expenses, bonuses and incentives paid to employees.

Finance Cost

Finance Cost for the financial year 2022-2023 stood at Rs. 4,784.82 thousand whereas for the financial year 2021-2022, it stood at Rs. 4,601.30 thousand representing an increase of 3.99%.

Reason: This was primarily due to an increase in bank charges, an increase in interest on car loan and loan processing fees.

Depreciation and Amortization Expenses

The depreciation and amortization expenses for the financial year 2022-2023 stood at Rs. 13,160.61 thousand whereas for the financial year 2021-2022, it stood at Rs. 7,241.18 thousand representing an increase of 81.75%.

Reason: This increase was due to the purchase of fixed of assets in the financial year 2022-23.

Other Expenses

The other expenses for the financial year 2022-2023 stood at Rs. 5,19,742.99 thousand whereas for the financial year 2021-2022, it stood at Rs. 3,51,366.00 thousand representing an increase of 47.92%.

Reason: There is an increase in ‘Other expenses because it includes variable cost also which increase with increase in turnover. The same is in line with increase in turnover which increase by 59.81% in 2022-23 to 2021-22.

Restated Profit before Tax

The restated profit before tax for the financial year 2022-2023 stood at Rs. 34,435.35 thousand whereas for the financial year 2021- 2022, it stood at Rs. 15,050.07 thousand representing an increase of 128.81%.

Restated Profit after Tax

The restated profit after tax for the financial year 2022-2023 stood at Rs. 25,061.37 thousand whereas for the financial year 2021-2022, it stood at Rs. 13,868.81 thousand representing a increase of 80.70%.

Reason for change in the Revenue from operation and Profit after tax

(Amount in Thousands)

Particulars	For the period March 31, 2023	For the period March 31, 2022
Revenue from Operation	8,29,695.53	5,19,189.18
Change in %	59.81%
Profit after tax	25,061.37	13,868.81
Pat Margin in %	3.02%	2.67%

Reason of increase in revenue is that because there is increase in the sale of goods by 63.83%, we have introduced new products and improved our existing products, which increase the demand for our products, thereby increase our revenue.

(Amount in Thousands)

Particulars	For the period March 31, 2023	For the period March 31, 2022
Sale of Goods	8,23,631.91	5,02,725.94
Change in % The reason for increase in the PAT in the year 2022-23 from 2021-2022 because there has been increase in sale of goods by 63.83% in the financial year 2022-23.	63.83%

1. Unusual or infrequent events or transactions:

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

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

Other than as described in the section titled Risk Factors beginning on page 27 of this Draft Red Herring Prospectus, to our knowledge there are no known significant economic changes that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

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

Other than as described in this Draft Red Herring Prospectus, particularly in the sections Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations on pages 27 and 249, respectively, to our knowledge, there are no known trends or uncertainties that are expected to have a material adverse impact on our revenues or income from continuing operations.

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

Income and sales of our Company on account of major activities derives from the business of sale of ayurvedic products to end consumers.

5. Future changes in relationship between costs and revenues, in case of events such as future increase in marketing or advertisement costs or prices that will cause a material change are known:

Our Companys future costs and revenues can be indirectly impacted by an increase in marketing and advertising costs as the company is required to continuously advertise and market on various platforms to promote its products with a view to increase its sale.

6. Future relationship between Costs and Income

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

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

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

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

The Company operates in the Ayurvedic Industry. Relevant industry data, as available, has been included in the chapter titled "Our Industry" beginning on page 106 of this Draft Red Herring Prospectus.

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

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

10. The extent to which the business is seasonal:

Our business does not depend to a certain extent on the seasonal, environmental and climate changes.

11. Competitive Conditions

We face competition from existing and potential competitors, which is common for any business. Over a period of time, we have developed certain competitive strengths which have been discussed in section titled Our Business on page 135 of this Draft Red Herring Prospectus.