Teja Engineering Industries Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the year ended on March 31, 2025, March 31, 2024, and March 31, 2023. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Prospectus. You should also read the section entitled Risk Factors beginning on page no. 21 of this Draft Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and, is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year (Fiscal Year) are to the twelve-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 Teja Engineering Industries Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Statements Financial Years 2024-25, 2023-24, and 2022-23, included in this Draft Prospectus beginning on page no.151 of this Draft Prospectus.

BUSINESS OVERVIEW

Our company provides services across Operation & Maintenance (O&M) including Annual Maintenance Contracts (AMC), Erection & Commissioning (E&C) including project works, installation of stainless-steel tubing, Overhauling, Decommissioning & Recommissioning. We also undertake instrument calibration, nondestructive thickness testing of pressure vessels, and testing and servicing of safety relief valves (SRVs). We operate in the Oil & Gas, Power, and Energy sectors, supporting OEMs, CNG compressor packagers, and public sector undertakings involved in gas distribution and energy infrastructure. With a network extending across India, we provide technical knowledgeable manpower and execution support for CNG stations, gas compression plants, and natural gas distribution terminals. The companys role is to ensure smooth and efficient operation of energy infrastructure, though it does not manufacture equipment itself.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

After the date of last financial period i.e. March 31, 2025, there is no any significant development occurred in the Company except mentioned below.

1. Company has sanction Vehicle loan of Rs. 4.50 Lakhs from ICICI Bank Limited as per sanction letter dated July 11, 2025.

2. Company has sanction Vehicle loan of Rs. 4.00 Lakhs from ICICI Bank Limited as per sanction letter dated July 11, 2025.

3. Company has sanction Vehicle loan of Rs. 6.00 Lakhs from ICICI Bank Limited as per sanction letter dated July 18, 2025.

4. Company has sanction Vehicle loan of Rs. 7.50 Lakhs from ICICI Bank Limited as per sanction letter dated September 24, 2025

5. Company has sanction Business Loan of Rs. 55.00 Lakhs from ICICI Bank Limited as per sanction letter dated April 04, 2025.

6. Company has sanction Business Loan of Rs. 50.00 Lakhs from Axis Bank Limited as per sanction letter dated May 13, 2025.

7. Company has sanction Business Loan of Rs. 35.00 Lakhs from Godrej Finance Limited as per sanction letter dated April 04, 2025.

8. Company has sanction Business Loan of Rs. 75.23 Lakhs from L&T Finance Limited as per sanction letter dated September 23, 2025.

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

Our Companys future results of operations could be affected potentially by the following factors:

1. Changes in Laws and Regulations that apply to our Industry.

2. Our ability to retain our key employees and ither employees.

3. Our ability to grow our business

4. Our expertise in tending for the work of the PSUs

5. Any adverse legal Proceedings initiated against our promoters.

6. Changes in Fiscal, Economic or Political conditions in India.

7. Failure to comply with regulations prescribed by authorities of the jurisdiction in which we operate.

8. Competition with existing and new entrants.

9. The budgeted allocation of funds by the PSUs

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, Annexure-4A beginning under Chapter titled Restated Financial Information beginning on page no. 159 of the Draft Prospectus.

RESULTS OF KEY OPERATIONS

( in lakhs)

		For the year ended on
Particulars
	March 31, 2025	March 31, 2024 *	March 31, 2023
Income from continuing operations
Revenue from operations
Manufacturing Turnover	5,521.83	4,002.08	2,457.90
Total Revenue	5,521.83	4,002.08	2,457.90
% of growth	37.97	62.83
Other Income	1.49	0.06	-
% total Revenue	0.03	0.00	-
Total Revenue	5,523.32	4,002.14	2,457.90
% total Revenue	38.01	62.83
Expenses
Cost of Material Consumed	4,292.26	3,019.53	1764.02
% of Revenue	77.73	75.45	71.77
Employee benefits expense	215.86	240.00	193.54
% Increase/(Decrease)	(10.06)	24.01
Finance Costs	127.78	94.88	74.46
% Increase/(Decrease)	34.68	27.42
Depreciation and amortisation expenses	20.71	20.41	32.87
% Increase/(Decrease)	1.47	(37.91)
Other Expenses	328.93	283.00	221.64
% Increase/(Decrease)	16.23	27.68
Total Expenses	4,985.54	3,657.82	2,286.53
% to total revenue	90.26	91.40	93.03
EBDITA	686.27	459.61	278.70
% to total revenue	12.42	11.48	11.34
Restated profit before tax from continuing
operations	537.78	344.32	171.37
Exceptional Item
Total tax expense	136.19	91.70	44.86
Restated profit after tax from continuing
operations (A)	401.59	252.62	126.51
% to total revenue	7.27	6.31	5.15

*The business of the proprietorship firm was taken over by the Company. The business in the proprietorship firm was carried on up to June 30, 2023. The results of the key operation for the year ended on March 31, 2024 includes the financial of the proprietorship firm up to June 30,203 and Financial of the Company up to March 31, 2024. The Company is dealing with corporates and PSUs hence the business which was given to the proprietorship firm also continue after June 30, 2023. The said business though carried on in proprietorship firm was combined in the business of the company considering the proprietorship firm was doing business on behalf of the Company.

COMPARISON OF F.Y. 2024-25 WITH F.Y. 2023-24:

Income from Operations

Our company specializes in providing assistance and support services for projects in the Oil and Gas, Power and Energy. We focus on offering solutions such as project assistance, including Annual Maintenance Contracts (AMC), Comprehensive Maintenance Contracts (CMC), and Operation & Maintenance (O&M) services. In the F.Y. 2024-25, the Companys total revenue was 5,521.83 Lakhs, which is increased by 37.97% in compare to total revenue from operations of 4,002.08 Lakhs in F.Y. 2023-24.

Break up of revenue (in Lakhs)

	Revenue Break up	FY 2025	FY 2024*
O& M Service		5,166.76	3,645.34
E& C Service		134.48	164.63
Instrument & SRV Calibration		139.78	84.58
Other		80.81	107.53
Total		5,521.83	4,002.08

*The business of the proprietorship firm was taken over by the Company. The business in the proprietorship firm was carried on up to June 30, 2023. The results of the key operation for the year ended on March 31, 2024 includes the financial of the proprietorship firm up to June 30,203 and Financial of the Company up to March 31, 2024. The Company is dealing with corporates and PSUs hence the business which was given to the proprietorship firm also continue after June 30, 2023. The said business though carried on in proprietorship firm was combined in the business of the company considering the proprietorship firm was doing business on behalf of the Company.

Other Income

The other Income for the FY 2024-25 was 1.49 lakhs which was 0.06 lakhs in the FY 2023-24. In FY 2024-25 Other income comprised 1.44 Lakhs from Profit on sale of car which was Nil in previous year.

Expenditure:

Cost of Services Rendered and material consumed

The Cost of services rendered and Material Consumed for F.Y. 2024-25 was 4,292.26 Lakhs against the cost of services rendered and Material Consumed of 3,019.53 Lakhs in F.Y. 2022-23. The cost of services rendered and material consumed was 77.73 % of the total revenue from operations in F.Y 2024-25 as against 75.45% of total revenue from Operations in F.Y 2023-24. This rise is primarily due to higher procurement costs and an increase in service-related expenses.

Employee Benefits Expenses:

The employee expenses for FY 2024-25 amounted to 215.86 lakhs, compared to 240.00 lakhs in FY 2023-24.

Finance Cost:

The finance cost for FY 2024-25 stood at 127.78 lakhs, compared to 94.88 lakhs in FY 2023-24, reflecting an increase of 34.68%. This rise is attributed to the higher utilization of the working capital limit from banks. As of March 31, 2025, the outstanding short-term borrowings from banks amounted to 1,285.01 lakhs, compared to

1498.03 lakhs as of March 31, 2024.

Other Expenses

Other expenses for FY 2024-25 increased to 328.93 lakhs, compared to 283.00 lakhs in FY 2023-24, reflecting a 16.23% rise. The major components of these expenses include Travelling Expense, petrol expense and food and hotel charges.

Depreciation and Amortisation Expenses:

The Depreciation for F.Y. 2024-25 was 20.71 Lakhs as compared to 20.41 Lakhs for F.Y. 2023-24. The depreciation increased by 1.47% in F.Y. 2024-25 as compared to F.Y. 2023-24.

EBIDTA

The EBIDTA for F.Y. 2024-25 was 686.27 Lakhs as compared to 459.61 Lakhs for F.Y. 2023-24. The EBIDTA was 12.42% in F.Y. 2024-25 in compared to 11.48% in F.Y. 2023-24, showing improved operational efficiency.

Profit after Tax (PAT)

PAT is 401.59 Lakhs for the F.Y. 2024-25 in compared to 252.62 Lakhs in F.Y. 2023-24. The PAT was 7.27% of total revenue in F.Y. 2024-25 compared to 6.31% of total revenue in F.Y. 2023-24. The profit is increased on account of increase in the business by 37.97% in FY 2024-25 compared to FY 202-24. The increase in profit is primarily attributed to business growth and improved cost efficiency.

COMPARISON OF F.Y. 2023-24 WITH F.Y. 2022-23:

Income from Operations

Our company specializes in providing assistance and support services for projects in the Oil and Gas, Power and Energy. We focus on offering solutions such as project assistance, including Annual Maintenance Contracts (AMC), Comprehensive Maintenance Contracts (CMC), and Operation & Maintenance (O&M) services. In the F.Y. 2023-24, the Companys total revenue was 4002.08 Lakhs, which is increased by 62.83% in compare to total revenue from operations of 2457.90 Lakhs in F.Y. 2022-23. This growth is driven by an increase in the demand for O&M services and expanded client contracts on pan India basis in which we were not working in F.Y. 2022-23.

Break up of revenue (in Lakhs)

Revenue Break up	FY 2024*	FY 2023
O& M Service	3645.35	2166.28
E& C Service	164.63	139.63
Instrument & SRV Calibration	84.58	81.21
Other	107.53	70.79
Total	4,002.08	2.457.90

*The business of the proprietorship firm was taken over by the Company. The business in the proprietorship firm was carried on up to June 30, 2023. The results of the key operation for the year ended on March 31, 2024 includes the financial of the proprietorship firm up to June 30,203 and Financial of the Company up to March 31, 2024. The Company is dealing with corporates and PSUs hence the business which was given to the proprietorship firm also continue after June 30, 2023. The said business though carried on in proprietorship firm was combined in the business of the company considering the proprietorship firm was doing business on behalf of the Company.

Expenditure:

Cost of Services Rendered and material consumed

The Cost of services rendered and Material Consumed for F.Y. 2023-24 was 3019.53 Lakhs against the cost of services rendered and Material Consumed of 1764.02 Lakhs in F.Y. 2022-23. The cost of services rendered and material consumed was 75.45% of the total revenue from operations in F.Y 2023-24 as against 71.77% of total revenue from Operations in F.Y 2022-23. This rise is primarily due to higher procurement costs and an increase in service-related expenses.

Employee Benefits Expenses:

The employee expenses for FY 2023-24 amounted to 240.00 lakhs, compared to 193.54 lakhs in FY 2022-23, reflecting an increase of 24.01%. This rise in employee costs is primarily due to an expansion in the workforce to support the growing business volume.

Finance Cost:

The finance cost for FY 2023-24 stood at 94.88 lakhs, compared to 74.46 lakhs in FY 2022-23, reflecting an increase of 27.42%. This rise is attributed to the higher utilization of the working capital limit from banks. As of March 31, 2024, the outstanding short-term borrowings from banks amounted to 708.98 lakhs, compared to

411.01 lakhs as of March 31, 2023.

Other Expenses

Other expenses for FY 2023-24 increased to 283.00 lakhs, compared to 221.64 lakhs in FY 2022-23, reflecting a 27.68% rise. The major components of these expenses include Travelling Expense, petrol expense and food and hotel charges.

Depreciation and Amortisation Expenses:

The Depreciation for F.Y. 2033-24 was 20.40 Lakhs as compared to 32.87 Lakhs for F.Y. 2022-23. The depreciation decreased by 37.94% in F.Y. 2023-24 as compared to F.Y. 2022-23. The vehicle which was owned by the proprietor was not transferred to the Company hence the depreciation is reduced in FY 2023-24.

EBIDTA

The EBIDTA for F.Y. 2023-24 was 466.88 Lakhs as compared to 279.88 Lakhs for F.Y. 2022-23. The EBIDTA was 11.64% in F.Y. 2023-24 in compared to 11.38% in F.Y. 2022-23, showing improved operational efficiency.

Profit after Tax (PAT)

PAT is 257.19 Lakhs for the F.Y. 2023-24 in compared to 127.69 Lakhs in F.Y. 2022-23. The PAT was 6.41% of total revenue in F.Y. 2023-24 compared to 5.19% of total revenue in F.Y. 2022-23. The profit is increased on account of increase in the business by 62.83% in FY 2023-24 compared to FY 2022-23. The increase in profit is primarily attributed to business growth and improved cost efficiency.

CASH FLOW

Particulars	March 31, 2025	March 31, 2024	March 31, 2023
Net cash from Operating Activities	(92.26)	(943.65)	(77.26)
Net cash flow from Investing Activities	(462.63)	(232.42)	(134.27)
Net Cash Flow Financing Activities	639.92	1,196.97	216.95

Cash flow March 31, 2025

The company has negative cash flow from operating activities on account of increase of Inventory, Trade Receivable and decrease in trade payables and other current liabilities. The Company had invested in Fixed assets resulting in to Negative cash flow from investing activity. The Company had borrowed the funds from the bank and issued share capital for financing the increase in working capital requirement.

Cash flow March 31, 2024

The company has negative cash flow from operating activities on account of increase of Inventory, Trade Receivable and increase in trade payables and other current liabilities. The Company had invested in Fixed assets resulting in to Negative cash flow from investing activity. The Company had borrowed the funds from the bank and issued share capital for financing the increase in working capital requirement.

Cash flow March 31, 2023

The company has negative cash flow from operating activities on account of increase of Inventory, Trade Receivable and increase in trade payables and other current liabilities. The Company had invested in Fixed assets resulting in to Negative cash flow from investing activity. The Company had borrowed the funds from the bank and issued share capital for financing the increase in working capital requirement.

FREE CASH FLOW

( In Lakhs)

	For the Year	For the Year	For the Year
Particulars
	March 31, 2025	March 31, 2024	March 31, 2023
Net Cash flow from Operations	(92.26)	(943.65)	(77.26)
Less- Purchase of Fixed Assets (Net of sale
proceeds of Fixed Assets)	136.65	157.86	138.31
Add- Net Total Borrowings (net of repayment)	576.03	823.59	323.90
Less- Interest expense x (1-T)	95.43	69.62	54.97
Finance Cost	127.78	94.88	74.46
Free cash flow to Equity (FCFE)	251.69	(347.54)	53.36
BALANCE SHEET ITEMS
			( In Lakhs)
	For the year ended on
Particulars	March 31,	March 31,	March 31,
	2025	2024	2023
Long Term Borrowings
Term loan from Bank	18.40	-	198.22
Unsecured loan from related Parties and others	35.76	-	65.21
Total	54.16	-	263.43
Short term Borrowings
From Banks	1230.85	708.98	411.01
Total	1230.85	708.98	411.01
Trade Receivables
Undisputed - Considered good
Less than 6 Months	903.35	673.12	296.01
6 Months to 1 Year	0	39.65	76.94
Total	903.35	712.77	372.95
Trade Payables
MSME
Less than 1 year	58.49	-	-
1-2 years	-	-	-
Other Than MSME		-
Less than 1 year	92.67	158.87	116.48
1-2 years	-	-	-
2-3 years	-	-	-
More Than 3 Years	-	-
Total	151.16	158.87	116.48
Inventory
Work In Progress	1278.51	888.32	485.63
Total	1278.51	888.32	485.63
Long term loans and advances
Capital Advance	230.00	-	-
Other	-	-	-
Total	230.00	-	-
Short term loans and advances
Unsecured, considered good	0.00	107.65	80.6
Advance to Supplier of goods & services & Others	1.72	83.45	30.21
Total	1.72	191.10	110.81
Contingent Liabilities	0.00	0.00	0.00
Total	0.00	0.00	0.00

Long Term Borrowings

The long-term borrowings include the Term loan from Bank of Baroda, and loans from relatives and members.

Short term Borrowings

Short-term borrowings include the working capital limits availed by the Company as well as the current maturities of long-term borrowings. In FY 2024-25, the company had availed the loan from Bank of Baroda. The outstanding loan during FY 2024-25 of 1230.85 lakhs which was 708.98 Lakhs in FY 2023-24.

Trade Receivables

The Trade Receivables are considered good and the majority is due for less than 6 months and six months to One year. The outstanding trade receivables less than six months are 100 %, 94.44% and 79.37 % for the FY 2024-25, 2023-24 and 2022-23 respectively. The company is efficient in recovering the trade receivables and there is no bed debts in the year under review.

Trade Payables

The Trade Payables are for less than one year. The trade payables are 3.23%, 4.64% and 5.68% of the purchase made during FY 2024-25, 2023-24 and 2022-23 respectively.

Inventory

The inventory includes only work in progress for the operation.

Contingent Liabilities

There is no Contingent liabilities in the company.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations :

1. Unusual or infrequent events or transactions

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years

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

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in Factors Affecting our Results of Operations and the uncertainties described in the section entitled Risk Factors beginning on page no.21 of this Draft Prospectus. To our knowledge, except as we have described in this Draft Prospectus, there are no known factors which we expect to bring about significant economic changes.

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

Income and sales of our Company on account of major activities derives from providing assistance and support services for projects in the Oil and Gas, Power and Energy.

4. Whether the company has followed any unorthodox procedure for recording sales and revenues

Our Company has not followed any unorthodox procedure for recording sales and revenues.

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

Apart from the risks as disclosed under Section titled Risk Factors beginning on page no. 21 in this Draft Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

6. 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 revenues are by and large linked to increases in volume of business.

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

The Company is in the business of providing assistance and support services for projects in the Oil and Gas, Power and Energy, the relevant industry data, as available, has been included in the chapter titled Industry Overview beginning on page no. 91 of this Draft Prospectus.

8. Status of any publicly announced new products or business segment.

Our company is acquiring Natural Gas compressor package Equipment with Capacity 20000 SCMD to Operation of Gas Compressor and distribution services at gathering station for leasing out to Gas Stations operated by the big corporate or PSUs.

For further details, please refer to the chapter titled Object of the Issue and Business Strategies in the

Business Overview section on page no. 68 and 116 of this Draft Prospectus.

9. The extent to which business is seasonal.

Our business is not seasonal.

10. Any significant dependence on a single or few suppliers or customers.

11. Any significant dependence on a single or few suppliers or customers.

Our top 10 buyers and suppliers constitute majority of our business which is reproduce in Chapter Business Overview on page 102 of Red Herring Prospectus

				% Contribution to revenue
Particulars	2024-25	As a % of Sales	2023-24	As a % of Sales	June 30, 2024	As a % of Sales	2022-23	As a % of Sales
Top 1
	2140.74	38.77	2263.43	71.59	623.02	74.14	2106.01	85.68
Customer
Top 5
	5372.70	97.30	3128.5	98.95	835.72	99.44	2443.89	99.43
Customers
Top 10
	5463.68	98.95	3140.32	99.32	836.09	99.49	2456.37	99.94
Customers

				% Contribution to Purchases
Particulars	2024- 25	As a % of	2023- 24	As a % of	June 30,	As a % of	2022-23	As a % of Purchases
		Purchases		Purchases	2024	Purchases
Top 1
	345.60	43.30	204.20	51.03	52.36	38.53	201.59	39.76
Supplier
Top 5
	451.67	56.69	318.81	82.14	90.08	66.28	322.62	63.63
Supplier
Top 10
	489.54	61.34	334.39	88.33	96.32	70.87	359.36	70.88
Supplier

12. Competitive conditions.

Competitive conditions are as described under the Chapters titled Industry Overview and Business Overview beginning on pages 91 and 102, respectively of this Draft Prospectus.