SK Minerals & Additives Ltd Management Discussions

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our restated standalone financial statement ("restated financials statements") attached in the chapter titled "Financial Information of the Company" beginning on page 262. You should also read the section titled "Risk Factors" beginning on page 33 and the section titled "Forward Looking Statements" beginning on page 22, which discusses a number of factors and contingencies that could affect our financial condition and results of operations. The following discussion relates to us, and, unless otherwise stated or the context requires otherwise, is based on our Restated financial Statements.

Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditor dated April 22, 2025 which is included in this Draft Red Herring Prospectus under "Financial Statements ". The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.

BUSINESS OVERVIEW

As of this Draft Red Herring Prospectus, our company is engaged in the business of trading and limited manufacturing of specialty chemicals, with a primary focus on food and feed additives. Our product portfolio includes Glycinates and EDTAs in variants such as Zinc, Copper, and Magnesium, along with Mineral Mixtures, Calcium Propionate, Ferric Pyrophosphate, Technical Grade Urea, Virgin Base Oil, Magnesium Oxide, By-Pass Fat etc.

Our products cater to a wide range of industries, including food and bakery, animal feed, plywood, petroleum and other allied industries.

For more details, please refer to the chapter titled "Our Business" beginning on page 180.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR

In the opinion of the Board of Directors of our Company, there have not arisen, since the date of the last financial statements disclosed in this Draft Red Herring Prospectus i.e., October 31, 2024, any significant developments or any circumstance that materially or adversely affect or are likely to affect the profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months except as follows:

1. Mr. Mohit Jindal, was re - designated as Chairman & Managing Director on February 25, 2025.

2. Appointment of Mrs. Lakshmi Shankarnarayanan Iyer as an Additional Independent Director on February 25, 2025.

3. Appointment of Ms. Divya as Company Secretary and Compliance Officer as on March 10, 2025.

4. Appointment of Mr. Neeraj Kumar Tuli as Chief Financial Officer on March 10, 2025.

5. Mr. Rohit Jindal, was re - designated as an Executive Director on March 28, 2025.

6. Mr. Shubham Jindal was re - designated as an Executive Director on March 28, 2025.

7. Appointment of Mr. Rahul Gupta as an Additional Independent Director on March 28, 2025.

8. Appointment of Mr. Ramit Sikka as an Additional Independent Director on March 28, 2025.

9. Regularization of Mrs. Lakshmi Shankarnarayanan Iyer as an Independent Director on March 31, 2025.

10. Regularization of Mr. Rahul Gupta as an Independent Director on March 31, 2025.

11. Regularization of Mr. Ramit Sikka as an Independent Director on March 31, 2025.

12. Constitution of Audit Committee, Stakeholders Relationship Committee, Nomination & Remuneration and Corporate Social Responsibility Committee on April 02, 2025.

13. Resignation of Mr. Rahul Gupta as an Independent Director on April 10, 2025.

14. Appointment of Mr. Kapil Khera as an Additional Independent Director on April 10, 2025.

15. Regularization of Mr. Kapil Khera as an Independent Director on April 14, 2025.

16. Re- Constitution of Audit Committee, Stakeholders Relationship Committee, Nomination & Remuneration on April 17, 2025.

SIGNIFICANT 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 33. Our results of operations and financial conditions are affected by numerous factors including the following:

Important factors that could cause actual results to differ materially from our expectations include, among others.

• Demand of our products, which is influenced by many macro and micro economic factors.

• Availability of labour.

• Increased competition in our industry.

• Fluctuations in operating costs i.e. raw material, electricity cost, labour cost and other operating expenses;

• Ability to attract and retain best talent.

• Our failure to keep pace with rapid changes in technology, sales and marketing trends;

• Our ability to meet our capital expenditure requirements;

• Our dependence on our key personnel, including our Directors and senior management;

• Our ability to successfully implement our business strategy and plans;

• General economic and business conditions in the markets in which we operate and in the local, regional, national and international economies;

• Changes in political and social conditions in India, the monetary and interest rate policies of India and other countries;

• Changes in government policies and regulatory actions that apply to or affect our business;

• Inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

• The performance of the financial markets in India and globally;

• The occurrence of natural disasters or calamities;

• Other factors beyond our control;

• Our ability to manage risks that arise from these factors.

DISCUSSION ON RESULT OF OPERATION

The following discussion on results of operations should be read in conjunction with the restated financial results of our Company for the period/years ended October 31, 2024, March 31, 2024, March 31, 2023 and March 31, 2022.

Principal Components of Statement of Profit and Loss

Income

Our total income comprises revenue from operations & other income as mentioned below:

Revenue from Operations

Our revenue from operations primarily comprises the sale of trading of Industrial Chemical and Animal Feed Additives and manufacturing of Food and Animal Feed Additives.

Other Income

Other income includes primarily includes Interest on Deposits held with banks and Gain on foreign exchange fluctuations.

Expenses

Our total expenses include the below mentioned expenses:

Cost of Material Consumed

The Cost of Material Consumed primarily includes expenses related to consumption of raw material i.e. Chemicals such as propionic acid, lime, copper & chrome sulphate, formaldehyde, calcium chloride, boric acid, borax and phosphoric acid etc. for manufacturing Food and Animal Feed Additives.

Changes in Inventories (Finished goods &Work-in-Progress)

Changes in Inventories includes the Finished Goods and Work-in-Progress at the beginning of the year and finished goods and work-in -progress at the end of the year.

Employee benefit expenses

Our employee benefit expense primarily includes Salaries & Wages, Directors Remunerations, Contribution to Provident and Other Funds, Expenses for Gratuity and Leave Encashment and Staff Welfare Expenses.

Finance Cost

Our finance costs primarily include interest, other borrowing cost and bank charges.

Depreciation and Amortization Expense

Our depreciation and amortization primarily include depreciation of Factory Building, Plant & Equipments, Furniture & Fixtures, Vehicles, Office Equipments and Computers.

Other Expenses

Our other expenses primarily include expenditure incurred on Import Clearing Charges, Research & Development Expenses, Freight Outward Expenses, Power and Fuel, Repairs and Maintenance and Tender Fees.

Tax Expense

Our tax expenses primarily include Current Tax and Deferred Tax Expense/(Credit).

Results of Operations based on Restated Financial Statement

The following table sets forth select financial data from our restated statement of profit and loss & the components of which are also expressed as a percentage of total income.

								(Rs. in Lakhs)
Particulars	For the Period ended on October 31, 2024	% of Total revenue	For the FY ended March 31, 2024	% of Total revenue	For the FY ended March 31, 2023	% of Total revenue	For the FY ended March 31, 2022	% of Total revenue
I) Incomes
(a) Revenue From Operations	11,392.73	99.69	10,876.85	99.85	13,222.85	99.73	12,103.52	99.37
(b) Other Income	35.69	0.31	16.75	0.15	36.31	0.27	77.10	0.63
II) Total Incomes	11,428.42	100.00	10,893.60	100.00	13,259.17	100.00	12,180.63	100.00
III) Expenses
(a) Cost of Material Consumed	2,069.06	18.10	2,890.98	26.54	2,210.76	16.67	631.57	5.19
(b) Purchases of Stock in Trade	7,720.76	67.56	5,883.41	54.01	9,044.07	68.21	9,860.92	80.96
(c) Changes in inventories of finished goods	(479.10)	(4.19)	(309.69)	(2.84)	(133.55)	(1.01)	58.99	0.48
(d) Employee benefits expense	213.52	1.87	418.55	3.84	358.02	2.70	185.47	1.52
(e) Finance Cost	171.92	1.50	196.72	1.81	100.16	0.76	44.07	0.36
(f) Depreciation and amortization expense	64.24	0.56	89.10	0.82	50.86	0.38	24.21	0.20
(g) Other expenses	968.69	8.48	1,313.75	12.06	1,352.93	10.20	1,144.31	9.39
IV) Total Expenses	10,729.09	93.88	10,482.82	96.23	12,983.25	97.92	11,949.54	98.10
V) Profit Before Taxes (II-IV)	699.33	6.12	410.78	3.77	275.92	2.08	231.09	1.90
VI) Tax Expenses
(a) Current taxes	194.55	1.70	114.28	1.05	76.76	0.58	64.29	0.53
(b) Deferred tax expense / (credit)	4.04	0.04	(13.04)	(0.12)	9.67	0.07	0.06	0.00
(c) Tax adjustment of earlier years	-	-	-	-	-	-	-
VII) Total Taxes	198.59	1.74	101.24	0.93	86.43	0.65	64.35	0.53
VIII) Profit after Taxes	500.74	4.38	309.54	2.84	189.48	1.43	166.74	1.37

Execution is our Passion

FOR THE PERIOD ENDED ON OCTOBER 31, 2024

Income

The table below sets forth details in relation to our revenue for the period ended on October 31, 2024.

Particulars	For the period ended on October 31, 2024 (Rs. in Lakhs)	% of Total Income
Sale of Products
- Finished Goods	2,468.34	21.60
- Traded Goods	8,924.39	78.09
Revenue from Operations-A	11,392.73	99.69
Interest Income- From Deposits held with banks	20.20	0.18
Gain on Foreign Exchange Fluctuations	15.37	0.13
Miscellaneous Income	0.12	0.00
Other Income-B	35.69	0.31
Total Income -C=A+B	11,428.42	100.00

Our revenue during the period ended on October 31, 2024 is primarily derived from the Trading Income of Products i.e. Industrial Chemicals and Animal Feed Additives amounting to Rs. 8,924.39 lakhs and Sale of Manufactured Products i.e. Food and Animal Feed Additives amounting to Rs. 2,468.34 lakhs. Revenue from Other Income primarily includes Interest Income and Gain on Foreign Exchange Fluctuations amounting to Rs. 20.20 lakhs and Rs. 15.37 lakhs.

Expenses

Particulars	For the period ended on October 31, 2024	% of Total Income
	(Rs. in Lakhs)
Cost of Material Consumed	2,069.06	18.10
Purchases of Stock in Trade	7,720.76	67.56
Changes in Inventories of Finished Goods and Work-inProgress	(479.10)	(4.19)
Employee Benefits Expense	213.52	1.87
Finance Cost	171.92	1.50
Depreciation and Amortization Expense	64.24	0.56
Other Expenses	968.69	8.48
Total Expenses	10,729.09	93.88

Cost of Material Consumed

The table below sets forth details in relation to our cost of materials consumed for the period indicated below:

Particulars	For the period ended on October 31, 2024 (Rs. in Lakhs)	% of Total Income
Inventory of Raw Material at the beginning	64.10	0.56
Add: Purchases	2,086.18	18.25
less: Inventory of Raw Material at the end	81.22	(0.71)
Cost of Material Consumed	2,069.06	18.10

Purchases of stock in trade

Particulars	For the period ended on October 31, 2024 (Rs. in Lakhs)	% of Total Income
Purchases	7,720.76	67.56
Total	7,720.76	67.56

Change in inventories of Finished Goods and Work-in-Progress

The table below sets forth details in relation to changes in inventories for the period indicated below:

Particulars	For the period ended on October 31, 2024	% of Total
	(Rs. in Lakhs)
Opening Stock
Finished Goods-Traded	121.10	1.06
Finished Goods-Manufacturing	492.93	4.31
Opening Finished Stock	614.03	5.37
Work in Progress	26.14	0.23
Total Opening Stock (A)	640.17	5.60
Closing Stock
Finished Goods-Traded	412.43	3.61
Finished Goods-Manufacturing	674.23	5.90
Closing Finished Stock	1,086.66	9.51
Work in Progress	32.61	0.29
Total Closing Stock (B)	1,119.27	9.79
Total (A-B)	(479.10)	(4.19)

Employee benefits expense

Our Employee Benefits Expense was Rs.213.52 lakhs for the period ended on October 31, 2024, which was 1.87% of the Total Income.

Other expenses

Our Other Expenses were Rs.968.69 lakhs for the period ended on October 31, 2024, which was 8.48% of the Total Income.

EBITDA

For the period ended on October 31, 2024, our EBITDA was Rs.899.80 lakhs.

Finance cost

Our Finance Cost was Rs.171.92 lakhs for the period ended on October 31, 2024, which was 1.50% of the Total Income.

Depreciation and Amortisation Expense

Our Depreciation & Amortisation expense was Rs. 64.24 lakhs for the period ended on October 31, 2024, which was 0.56% of the Total Income.

Profit Before Tax

Our Profit Before Tax was Rs. 699.33 lakhs for the period on October 31, 2024, which was 6.12% of the Total Income.

Tax Expense

Our Tax Expense was Rs. 198.59 lakhs for the period ended on October 31, 2024, which was 1.74% of the Total Income.

Profit After Tax

Our Profit After Tax was Rs. 500.74 lakhs for the period ended on October 31, 2024, which was 4.38% of the Total Income.

FISCAL 2024 COMPARED TO FISCAL 2023

Income

The table below sets forth details in relation to our revenue in Fiscal 2024 and Fiscal 2023:

	Fiscal 2024	Fiscal 2023	% Increase/
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)	(decrease)
Sale of Products
- Finished Goods	3,411.68	2,568.16	32.85
- Traded Goods	7,465.17	10,654.69	(29.94)
Revenue from Operations-A	10,876.85	13,222.85	(17.74)
Interest Income- From Deposits held with banks	7.19	0.73	884.93
Gain on Foreign Exchange Fluctuations	8.53	34.58	(75.33)
Miscellaneous Income	1.03	1.00	3.00
Other Income-B	16.75	36.31	(53.87)
Total Income -C=A+B	10,893.60	13,259.17	(17.84)

Our Company, primarily earns its revenue from trading and sale of manufactured product i.e. Food & Animal Feed Additives and Industrial Chemicals. Additionally, Other Income primarily includes Interest Income and Gain on Foreign Exchange Fluctuations.

Our revenue from operations decreased by Rs. 2,346.00 lakhs or 17.74% to Rs. 10,876.85 lakhs in Fiscal 2024 as compared to Rs. 13,222.85 lakhs in Fiscal 2023. The revenue from operation decreased primarily due to decrease in revenue from trading operations. In Fiscal 2024, the Company faced challenges in procuring goods through imports due to Red Sea Crises, which arose from the ongoing armed conflict between the Houthi militant group and Israel. This geopolitical tension significantly disrupted global trade routes, particularly those passing through the Red Sea, making import-based procurement difficult. As a result, the Company experienced a decline in revenue from its trading operations.

Our revenue from sale of manufactured products i.e. Food and Animal Feed Additives increased by Rs. 843.52 lakhs or 32.85% to Rs. 3,411.68 lakhs in Fiscal 2024 as compared to Rs. 2,568.16 lakhs in Fiscal 2023. The increase in the sale from manufactured goods in due to Company efforts to transition from primarily trading company to predominantly manufacturing company. The installed capacity and utilized capacity in Fiscal 2024 were 2,700.00 Metric Tonne per annum and 1,914.43 Metric Tonne per annum respectively which were 1,700.00 Metric Tonne per annum and 1,417.69 Metric Tonne per annum in Fiscal 2023. The Company increased its installed capacity and utilized capacity by 58.82% and 20.90% respectively between Fiscal 2023 and Fiscal 2024.

The revenue from trading of products i.e. Industrial Chemical and Animal Feed Additives decreased by Rs. 3,189.52 lakhs or 29.94% to Rs. 7,465.17 lakhs in Fiscal 2024 from Rs. 10,654.69 lakhs in Fiscal 2023. The decrease in trading income is attributable to challenges faced by the Company in procuring goods through imports due to Red Sea Crises as explained above.

Other Income decreased by Rs. 19.56 lakhs or 53.87% to Rs. 16.75 lakhs in Fiscal 2024 compared from Rs. 36.31 lakhs in Fiscal 2023. This decrease in Other Income was primarily due to decrease in revenue from Gain on Foreign Exchange Fluctuations by Rs. 26.05 lakhs or 75.33% to Rs. 8.53 lakhs in Fiscal 2024 from Rs. 34.58 lakhs in Fiscal 2023.

Expenses

The table below sets forth details in relation to our total expenses in Fiscal 2024 compared to our total expenses in Fiscal 2023:

	Fiscal 2024	Fiscal 2023	% Increase/ (decrease)
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)
Cost of Material Consumed	2,890.98	2,210.76	30.77
Purchases of Stock in Trade	5,883.41	9,044.07	(34.95)
Changes in Inventories of Finished Goods	(309.69)	(133.55)	131.89
Employee Benefits Expense	418.55	358.02	16.91
Finance Cost	196.72	100.16	96.41
Depreciation and Amortization Expense	89.10	50.86	75.19
Other Expenses	1,313.75	1,352.93	(2.90)
Total Expenses	10,482.82	12,983.25	(19.26)

Our Total Expenses reduced by Rs. 2,500.43 lakhs or 19.26% to Rs. 10,482.82 lakhs in Fiscal 2024 compared to Rs. 12,983.25 lakhs in Fiscal 2023. This was primarily attributable to:

Cost of Material Consumed

The table below sets forth details in relation to our Cost of Materials Consumed for the periods indicated below:

	Fiscal 2024	Fiscal 2023	% Increase/
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)	(decrease)
Inventory of Raw Material at the beginning	52.86	97.94	46.03
Add: Purchases	2,902.22	2,165.68	34.01
less: Inventory of Raw Material at the end	(64.10)	(52.86)	21.26
Cost of Material Consumed	2,890.98	2,210.76	30.77

Our Cost of Materials Consumed increased by Rs. 680.22 lakhs or 30.77% to Rs. 2,890.98 lakhs in Fiscal 2024 compared to Rs. 2,210.76 lakhs in Fiscal 2023. However, the revenue from operations from sale of manufactured products increased by Rs. 843.52 lakhs or 32.85% to Rs. 3,411.68 lakhs in Fiscal 2024 as compared to Rs. 2,568.16 lakhs in Fiscal 2023. The higher growth in the revenue from sale of manufactured products as compared to Cost of Material Consumed, is mainly attributable to increase in the products prices due to higher demand and low supply arose from supply chain challenges due to Red Sea Crises along with better capacity utilization.

Purchases of Stock in Trade

	Fiscal 2024	Fiscal 2023	% Increase/ (decrease)
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)
Purchases	5,883.41	9,044.07	(34.95)
Total	5,883.41	9,044.07	(34.95)

Our Purchases of Stock in Trade reduced by Rs. 3,160.66 lakhs or 34.95% to Rs. 5,883.41 lakhs in Fiscal 2024 compared to Rs. 9,044.07 lakhs in Fiscal 2023.

Change in inventories of Finished Goods and Work-in-Progress

The table below sets forth details in relation to changes in inventories for the periods indicated below:

Particulars	Fiscal 2024 (Rs. in Lakhs)	Fiscal 2023 (Rs. in Lakhs)	% Increase/ (decrease)
Opening Stock
Finished Goods-Traded	77.03	147.47	(47.77)
Finished Goods-Manufacturing	212.48	30.49	596.88
Opening Finished Stock	289.51	177.96	62.68
Work in Progress	40.97	18.98	115.86
Total Opening Stock (A)	330.48	196.94	67.81
Closing Stock
Finished Goods-Traded	121.10	77.03	57.21
Finished Goods-Manufacturing	492.93	212.48	131.99
Closing Finished Stock	614.03	289.51	112.09
Work in Progress	26.14	40.98	(36.21)
Total Closing Stock (B)	640.17	330.49	93.70
Total (A-B)	(309.69)	(133.55)	131.89

Our inventory level for Finished Goods in Fiscal 2024 had increased by Rs. 324.52 lakhs or 112.09% from Rs. 289.51 lakhs in Fiscal 2023 to Rs. 614.03 lakhs in Fiscal 2024. The level of Work-in-Progress had reduced by Rs. 14.84 lakhs or 36.21% from Rs. 40.98 lakhs in Fiscal 2023 to Rs. 26.14 lakhs in Fiscal 2024. Together inventory of Finished Goods and Work-in-Progress increased 93.70% between F.Y. 2024 and F.Y 2023, due to anticipation of the higher demand of its product.

Employee benefits expense

Our Employee Benefits Expense increased by Rs. 60.53 lakhs or 16.91% to Rs. 418.55 lakhs in Fiscal 2024 from Rs. 358.02 lakhs in Fiscal 2023.The increase in Employee Benefit Expenses is primarily due to increase in Wages and Salaries by Rs. 19.88 lakhs or 7.24% to Rs. 294.61 lakhs in Fiscal 2024 from Rs. 274.73 lakhs in Fiscal 2023 and increase in Directors Remuneration by Rs. 31.68 lakhs or 47.28% to Rs. 98.68 lakhs in Fiscal 2024 as compared to Rs. 67.00 lakhs in Fiscal 2023. Further, as a percentage of our Revenue from Operations the Cost of Employee Benefit Expenses also increased to 3.85% in Fiscal 2024 from 2.71% in Fiscal 2023.

Other expenses

Our Other Expenses decreased by Rs. 39.18 lakhs or 2.90% to Rs. 1,313.75 lakhs in Fiscal 2024 as compared to Rs. 1,352.93 lakhs in Fiscal 2023. This decrease was primarily due to decrease in Import Clearing Charges which decreased Rs. 169.83 lakhs or 46.32% in Fiscal 2024 as compared to Fiscal 2023. The decrease in Import Clearing Charges is due to decrease in import of products due to Red Sea Crisis. Additionally, Incentive & Commission Charges decreased Rs.62.01 lakhs or 97.70% and Weight Difference charges decreased Rs. 57.18 lakhs or 68.87% between Fiscal 2023 and Fiscal 2024. The decrease in Other Expenses was partially offset with increase in Research & Development Expenses by Rs. 31.30 lakhs or 68.78%, Freight Outward Expenses by Rs. 110.93 lakhs or 25.46% and Power and Fuel by Rs. 60.72 lakhs or 96.70% between Fiscal 2023 and Fiscal 2024.

EBITDA

For the reasons described below, our EBITDA increased by Rs. 289.22 lakhs or 74.04% to Rs. 679.85 lakhs in Fiscal 2024 from Rs. 390.63 lakhs in Fiscal 2023.

Finance costs

The table below sets forth details in relation our finance cost for the periods indicated below:

	Fiscal 2024	Fiscal 2023	% Increase / (decrease)
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)
Interest expense on
(i) Work Capital Facilities	160.89	70.22	129.12
(ii) Term Loan	2.06	4.93	(58.22)
(iii) Unsecured Loan- Yes Bank	-	-	-
Bank charges	33.77	25.01	35.03
Finance cost	196.72	100.16	96.41

Our Finance Costs increased by Rs. 96.56 lakhs or 96.41% to Rs. 196.72 lakhs in Fiscal 2024 compared to Rs. 100.16 lakhs in Fiscal 2023. This rise was primarily driven by higher Interest Expenses due to increased utilization of working capital loans during the Fiscal 2024.

Depreciation and Amortisation Expense

Our Depreciation and Amortisation expense increased by Rs. 38.24 lakhs or 75.19% to Rs. 89.10 lakhs in Fiscal 2024 compared to Rs. 50.86 lakhs in Fiscal 2023. This increase was due to addition in Plant & Machinery amounting to Rs. 175.62 lakhs and addition to the Factory Building amounting to Rs. 125.88 lakhs during the Fiscal 2024.

Profit before Tax

Our Profit Before Tax increased by Rs. 134.86 lakhs or 48.88% to Rs. 410.78 lakhs in Fiscal 2024 as compared to Rs. 275.92 lakhs in Fiscal 2023. This growth was primarily driven by improved product margins, resulting from higher demand and constrained supply due to a decline in imports caused by the Red Sea Crisis along with the increase in the sale of manufactured products.

Tax Expenses

Our Tax Expenses increased by Rs. 14.81 lakhs or 17.14% to Rs. 101.24 lakhs in Fiscal 2024 compared to Rs. 86.43 lakhs in Fiscal 2023. The increase in the tax expenses is primarily attributable to increase in taxable income by Rs. 134.86 lakhs or 48.88% to Rs. 410.78 lakhs in Fiscal 2024 as compared to Rs. 275.92 lakhs in Fiscal 2023.

Profit for the Year

As a result of the foregoing factors, our profit for the year increased by Rs. 120.06 lakhs or 63.36% to Rs. 309.54 lakhs in Fiscal 2024 compared to Rs. 189.48 lakhs in Fiscal 2023.

• The revenue from sale of manufactured products increased by Rs. 843.52 lakhs or 32.85% to Rs. 3,411.68 lakhs in Fiscal 2024 from Rs. 2,568.16 lakhs in Fiscal 2023. The revenue from sale of manufactured products constituted 31.37% and 19.42% of the total revenue from operations in Fiscal 2024 and Fiscal 2023 respectively. The higher contribution of revenue from sale of manufactured goods pushed profit margins.

• The Red Sea crisis, which arose from the ongoing armed conflict between the Houthi militant group and Israel, had significantly disrupted import logistics and extended the procurement cycle by approximately two months. This disruption adversely impacted the Companys trading operations, resulting in a revenue decline of Rs.3,189.52 lakhs, representing a 29.94% decrease between Fiscal 2023 and Fiscal 2024. However, the supply constraints, coupled with increased demand, had enabled the Company to command higher prices for its products. As a result, profit margins had improved to 2.85% in Fiscal 2024, up from 1.43% in Fiscal 2023.

FISCAL 2023 COMPARED TO FISCAL 2022

Income

The table below sets forth details in relation to our revenue in Fiscal 2023 and Fiscal 2022:

	Fiscal 2023	Fiscal 2022	% Increase/ (decrease)
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)
Sale of Products
- Finished Goods	2,568.16	699.14	267.33
- Traded Goods	10,654.69	11,404.38	(6.57)
Revenue from Operations-A	13,222.85	12,103.52	9.25
Interest Income- From Deposits held with banks	0.73	0.06	1116.67
Gain on Foreign Exchange Fluctuations	34.58	75.86	(54.42)
Miscellaneous Income	1.00	1.18	(15.25)
Other Income-B	36.31	77.10	(52.91)
Total Income -C=A+B	13,259.17	12,180.63	8.85

Our Company primarily earns its revenue from trading and sale of manufactured products i.e. Food & Animal Feed Additives and Industrial Chemicals. Other Income primarily includes Interest Income and Gain on Foreign Exchange Fluctuations.

Our Revenue from Operations increased by Rs. 1,119.33 lakhs or 9.25% to Rs. 13,222.85 lakhs in Fiscal 2023 as compared to Rs. 12,103.52 lakhs in Fiscal 2022. This increase in revenue from operations was primarily due to increase in revenue from sale of manufactured products.

Our revenue from sale of manufactured products i.e. Food and Animal Feed Additives increased by Rs. 1,869.02 lakhs or 267.33% to Rs. 2,568.16 lakhs in Fiscal 2023 as compared to Rs. 699.14 lakhs in Fiscal 2022. This significant growth was primarily driven by a strategic shift undertaken by the Company to enhance its manufacturing capabilities and gradually transition from a purely trading entity to a predominantly manufacturing- focused organization. The installed capacity and utilized capacity in Fiscal 2023 were 1,700.00 Metric Tonne per annum and 1,417.00 Metric Tonne per annum respectively which were 875.00 Metric Tonne per annum and 726.00 Metric Tonne per annum respectively in Fiscal 2022. The Company increased installed capacity and utilized capacity by 94.29% and 95.18% respectively between Fiscal 2022 and Fiscal 2023

The revenue from trading of products i.e. Industrial Chemicals and Animal Feed Additives decreased by Rs. 749.69 lakhs or 6.57% to Rs. 10,654.69 lakhs in Fiscal 2023 from Rs. 11,404.38 lakhs in Fiscal 2022. The decrease in trading income is attributable to management focus in manufacturing activity and high margin traded products.

Other Income decreased by Rs.40.79 lakhs or 52.91% to Rs. 36.31 lakhs in Fiscal 2023 compared from Rs. 77.10 lakhs in Fiscal 2022. This decrease in other income was primarily due to decrease in revenue from Gain on Foreign Exchange Fluctuations by Rs.41.28 lakhs or 54.42% to Rs. 34.58 lakhs in Fiscal 2024 from Rs.75.86 lakhs in Fiscal 2023.

Expenses

The table below sets forth details in relation to our total expenses in Fiscal 2023 compared to our total expenses in Fiscal 2022:

	Fiscal 2023	Fiscal 2022	% Increase/ (decrease)
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)
Cost of Material Consumed	2,210.76	631.57	250.04
Purchases of Stock in Trade	9,044.07	9,860.92	(8.28)
Changes in Inventories of Finished Goods	(133.55)	58.99	(326.39)
Employee Benefits Expense	358.02	185.47	93.03
Finance Cost	100.16	44.07	127.27
Depreciation and Amortization Expense	50.86	24.21	110.08
Other Expenses	1,352.93	1,144.31	18.23
Total Expenses	12,983.25	11,949.54	8.65

Our Total Expenses increased by Rs. 1,033.71 lakhs or 8.65% to Rs. 12,983.25 lakhs in Fiscal 2023 compared to Rs. 11,949.54 lakhs in Fiscal 2022. This was primarily attributable to:

Cost of Material Consumed

The table below sets forth details in relation to our cost of materials consumed for the periods indicated below:

Particulars	Fiscal 2023 (Rs. in Lakhs)	Fiscal 2022 (Rs. in Lakhs)	% Increase/ (decrease)
Inventory of Raw Material at the beginning	97.94	-	100.00
Add: Purchases	2,165.68	729.51	196.87
less: Inventory of Raw Material at the end	(52.86)	(97.94)	(46.03)
Cost of Material Consumed	2,210.76	631.57	250.04

Our Cost of Materials Consumed increased by Rs. 1,579.19 lakhs or 250.04% to Rs. 2,210.76 lakhs in Fiscal 2023 compared to Rs. 631.57 lakhs in Fiscal 2022. However, the Revenue from Operations from sale of manufactured products increased by Rs. 1,869.02 lakhs or 267.33% to Rs. 2,568.16 lakhs in Fiscal 2023 as compared to Rs. 699.14 lakhs in Fiscal 2022. Cost of Material Consumed increased mainly due to increase in the revenue from sale of manufactured products.

Purchases of Stock in Trade

	Fiscal 2023	Fiscal 2022	% Increase/
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)	(decrease)
Purchases	9,044.07	9,860.92	(8.28)
Total	9,044.07	9,860.92	(8.28)

Our Purchases of Stock in Trade reduced by Rs. 816.85 lakhs or 8.28% to Rs. 9,044.07 lakhs in Fiscal 2023 compared to Rs. 9,860.92 lakhs in Fiscal 2022.

Change in inventories of finished goods and work-in-progress

The table below sets forth details in relation to changes in inventories for the periods indicated below:

Particulars	Fiscal 2023 (Rs. in Lakhs)	Fiscal 2022 (Rs. in Lakhs)	% Increase/ (decrease)
Opening Stock
Finished Goods-Traded	147.47	255.93	(42.38)
Finished Goods-Manufacturing	30.49	-	100.00
Opening Finished Stock	177.96	255.93	(30.47)
Work in Progress	18.98	-	100.00
Total Opening Stock (A)	196.94	255.93	(23.05)
Closing Stock
Finished Goods-Traded	77.03	147.47	(47.77)
Finished Goods-Manufacturing	212.48	30.49	596.88
Closing Finished Stock	289.51	177.96	62.68
Work in Progress	40.98	18.98	115.91
Total Closing Stock (B)	330.49	196.94	67.81
Total (A-B)	(133.55)	58.99	(326.39)

Our inventory level for Finished Goods in Fiscal 2023 had increased by Rs. 111.55 lakhs i.e. from Rs. 177.96 lakhs in Fiscal 2022 to Rs. 289.51 lakhs in Fiscal 2023. The level of work-in-progress had increased by Rs. 22.00 lakhs i.e. from Rs. 18.98 lakhs in Fiscal 2022 to Rs. 40.98 lakhs in Fiscal 2023.

Employee Benefits Expense

Our Employee Benefits Expense increased by Rs. 172.55 lakhs or 93.03% to Rs 358.02 lakhs in Fiscal 2023 from Rs. 185.47 lakhs in Fiscal 2022. The increase in Employee Befit Expenses is attributable to increase in Wages and Salaries by Rs. 130.61 lakhs or 90.63% to Rs. 274.73 lakhs in Fiscal 2023 from Rs. 144.12 lakhs in Fiscal 2022 and increase in Directors Remuneration by Rs. 32.30 lakhs or 93.08% to Rs 67.00 lakhs in Fiscal 2023 from Rs. 34.70 lakhs in Fiscal 2022. Further, as a percentage of our Revenue from Operation, the Cost of Employee Benefit Expenses also increased to 2.71% in Fiscal 2023 from 1.53% in Fiscal 2022.

Other expenses

Our Other Expenses increased by Rs. 208.62 lakhs or 18.23% to Rs. 1,352.93 lakhs in Fiscal 2023 as compared to Rs. 1.144.31 lakhs in Fiscal 2022. This increase was primarily due to increase in Research & Development Expenses by Rs. 45.51 lakhs or 100.00%, Power and Fuel expenses by Rs. 40.02 lakhs or 175.76%, Incentive & Commission Charges by Rs. 58.84 lakhs or 1,270.84%, Tender Fees by Rs. 30.98 lakhs or 885.14% and Weight Difference Charges by Rs. 74.76 lakhs or 903.99% between Fiscal 2022 and Fiscal 2023. The increased in other expenses was partially offset with decrease in Freight Outward Expenses by Rs. 94.85 lakhs or 17.88%, Miscellaneous Expenses by Rs. 11.02 lakhs or 37.57% and Travelling and Conveyance by Rs. 14.94 lakhs or 29.58% between Fiscal 2022 and Fiscal 2023.

EBITDA

For the reasons described above, our EBITDA increased by Rs.168.36 lakhs or 75.75% to Rs. 390.63 lakhs in Fiscal 2023 from Rs. 222.27 lakhs in Fiscal 2022.

Finance costs

The table below sets forth details in relation our finance cost for the periods indicated below:

	Fiscal 2023	Fiscal 2022	% Increase/
Particulars	(Rs. in Lakhs)	(Rs. in Lakhs)	(decrease)
Interest expense on
(i) Work Capital Facilities	70.22	32.47	116.27
(ii) Term Loan	4.93	-	100.00
(iii) Unsecured Loan- Yes Bank	-	1.55	(100.00)
Bank charges	25.01	10.05	148.86
Finance cost	100.16	44.07	127.27

Our Finance Costs increased by Rs. 56.09 lakhs or 127.27% to Rs. 100.16 lakhs in Fiscal 2023 compared to Rs. 44.07 lakhs in Fiscal 2022. This increase in the Finance Cost is in line with the increase in the total borrowing of the Company.

Depreciation and Amortisation Expense

Our Depreciation and Amortisation expense increased by Rs. 26.65 lakhs or 110.08% to Rs. 50.86 lakhs in Fiscal 2023 compared to Rs. 24.21 lakhs in Fiscal 2022. This increase was due to addition in plant & machinery amounting to Rs. 73.25 lakhs and Vehicles amounting to Rs. 28.83 lakhs during the Fiscal 2023.

Profit before Tax

Our Profit Before Tax increased by Rs. 44.83 lakhs or 19.40% to Rs. 275.92 lakhs in Fiscal 2023 as compared to Rs. 231.09 lakhs in Fiscal 2022. This increase in Profit Before Tax was primarily driven by higher revenue from the sale of manufactured products and an upward revision in product pricing.

Tax Expenses

Our Tax Expenses increased by Rs. 22.08 lakhs or 34.31% to Rs. 86.43 lakhs in Fiscal 2023 compared to Rs. 64.35 lakhs in Fiscal 2022. The increase in tax expenses during Fiscal 2023 is mainly on account of increase in Current Taxes by Rs. 12.47 lakhs or 19.40% to Rs. 76.76 lakhs in Fiscal 2023 from Rs. 64.29 lakhs in Fiscal 2022 and Deferred Tax Expense / (Credit) by Rs. 9.61 lakhs or 1,6,016.67% to Rs. 9.67 lakhs in Fiscal 2023 from Rs.

0.06 lakhs in Fiscal 2022. The increase in tax expenses was primarily due to increase in the taxable income

Profit for the Year

As a result of the foregoing factors, our profit for the year increased by Rs. 22.74 lakhs or 13.64% to Rs. 189.48 lakhs in Fiscal 2023 compared to Rs. 166.74 lakhs in Fiscal 2022.

• The revenue from sale of manufactured products increased by Rs. 1,869.02 lakhs or 267.33% to Rs. 2,568.16 lakhs in Fiscal 2023 from Rs. 699.14 lakhs in Fiscal 2022. The revenue from sale of manufactured products constituted 19.42% and 5.78% of the total revenue from operations in Fiscal 2023 and Fiscal 2022 respectively. The higher contribution of revenue from sale of manufactured products pushed profit margins.

• The Company revenue from trading of products by Rs. 749.69 lakhs or 6.57% to Rs. 10,654.69 lakhs in Fiscal 2023 from Rs. 11,404.38 lakhs in Fiscal 2022. However, the gross margins from trading of products increased to 16.90% in Fiscal 2023 from 14.39% in Fiscal 2022 due to focus of the Company on high margin products.

CASH FLOW BASED ON RESTATED FINANCIAL STATEMENTS

				(Rs.in Lakhs)
	For the Period / Financial Year ended
Particulars	October 31, 2024	March 31, 2024	March 31, 2023	March 31, 2022
Net cash generated from operating activities	(153.60)	(901.79)	(1119.01)	(400.97)
Net cash (used in)/generated from investing activities	(39.16)	(201.37)	(193.16)	(160.00)
Net cash (used in)/generated from financing activities	90.04	1288.42	1354.34	558.21
Net change in Cash and cash equivalents at the end of the year	(102.72)	185.26	42.17	(2.76)

For further details, kindly refer to the chapter titled "Restated Financial Statement" beginning on page 262.

Other Key Ratios

	For the Period / Financial Year ended
Ratios	October 31, 2024	March 31, 2024	March 31, 2023	March 31, 2022
Current Ratio	1.57	1.31	1.41	1.14
Debt-equity ratio	2.10	2.73	3.79	3.91
Debt service coverage ratio	0.25	0.21	0.17	0.21
Return on Equity	32.89%	32.67%	42.01%	59.14%
Net Capital Turnover ratio	7.34	10.76	21.13	52.99
Net profit margin	4.40%	2.85%	1.43%	1.38%
Return on capital employed	15.23%	12.45%	11.38%	14.44%

Methodology:

1. Current Ratio = Current Asset / Current Liability

2. Debt-Equity Ratio = Total Debt / Net Worth

3. Debt Service Coverage Ratio = EBIT/ Net Debt

4. Return on Equity Ratio = Profit After Tax / Net Worth

5. Working Capital Turnover Ratio = Revenue from Operations / Working Capital

6. Net Profit Ratio = (Profit After Tax / Revenue)

7. Return on Capital Employed= (EBIT/ Capital Employed)

OTHER MATTERS

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 33, to our knowledge there are no known significant economic changes that materially affected or are 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 revenue or income from continuing operations

Other than as described in the section titled "RiskFactors" beginning on page 33, to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

4. Future relationship between Costs and Income

Our Companys future costs and revenues will be determined by multiple factors such as industry preferences, economic activity, government policies and demand of our services.

5. The extent to which material increase/decrease in net revenue are due to increase/decrease in sale of our products.

Increase/Decrease in revenues are by and large linked to increase/decrease in volume of business activities carried out by the Company.

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

The Company is operating in Food & Feed Additives Industry and relevant industry data, as available, has been included in the chapter titled "Our Industry" beginning on page 121.

7. Status of any publicly announced new services or business segments

Our Company has not announced any new services or segment, other than through this Draft Red Herring Prospectus.

8. The extent to which the business is seasonal Our Company business is not seasonal in nature.

9. Any significant dependence on a single or few clients.

Our business is dependent on few clients. Our top five customers contributed 66.16%, 68.11%, 69.26% and 60.95% of total revenue from operations for the period/ financial years ended on October 31, 2024, March 31, 2024, March 31, 2023 and March 31, 2022 respectively.

10. Competitive Conditions

We face competition from existing and potential competitors which is common for any business. We have, over a period of time, developed certain competitive strengths which have been discussed in section titled "Our Business" beginning on page 180.