Thinking Hats Entertainment Solutions Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the financial years ended March 31, 2024, 2023 and 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 Statement" on page 157 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 20 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 Thinking Hats Entertainment Solutions Limited, our Company. Unless otherwise indicated, financial information included herein are based on our Restated Financial Statements for the financial years ended March 31, 2024, 2023 and 2022 included in this Draft Red Herring Prospectus beginning on page 157 of this Draft Red Herring Prospectus

BUSINESS OVERVIEW

Thinking Hats has evolved from a premier concept development, event design and production company that specializes in live events, corporate, MICE (Meetings, Incentives, Conferences and Exhibitions), social and virtual events to an OTT content production and experiential marketing company with a strong focus on content development, intellectual property curation and tech centric product development.

With more than a decade of experience in creating events and experiences, Thinking Hats is a team of visionaries who convert clients dreams into reality. Our creative and personalized approach executes every event with the utmost professionalism and provides our clients with dependable solutions and the finest attention to detail. Thinking Hats began its event management and retail visual merchandising since incorporation and has been offering event management services related to Corporates Events, Corporate Meetings, Conference Management, Brands and Product Launches, Lifestyle and Fashion Events, Exhibitions & Fairs, Entertainment Show Management, Pan-India Ground Activations and Artist Management among others in India. Our Event Management services are offered from Media, Retail, Financial, Food, Education, Healthcare and Technology industries. We also provide prominent display and retail visual merchandise with a broad spectrum of offerings and in-store solutions to various retail stores.

Realising the opportunity in OTT space and the expertise of management team, our Company has ventured into production of OTT contents in the year 2019. Creativity and courage are the core values at Thinking Hats work culture. As a part of our storytelling expertise, Thinking Hats has produced two web series for OTT platforms i.e., "Aapkey Kamrey Me Koi Rehta Hai" and "Kathmandu Connection 2", and one Bengali Movie "Onek Diner Pore". Apart from movies and OTT web series, we also make short films for YouTube content and corporate event movies. We are also set to release soon three more exciting projects, out of which two web-series are under post-production phase presently titled ‘Tatkal and ‘Therapy Sherapy. Another untitled project is a mythological animation feature film is in pre-production stage.

For detailed information on the business of our Company please refer to "Our Business" beginning on page numbers 105 of this Draft Red Herring Prospectus.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST AUDITED FINANCIALS

After the date of last Audited accounts i.e. March 31, 2024, the Directors of our Company confirm that, there have not been any significant material developments.

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:

• We significantly rely on event management division for a significant amount of revenue, and any interruption or reduction in the customers in the said division may adversely affect our business and results of operations.

• We are exposed to claims from inadequate performance and defects that may affect the events managed by us and which may have an adverse effect on our business, financial conditions and results of operations.

• Our business is subject to occasional/ seasonal fluctuations that may affect our cash flows and business operations.

• We depend on our long term customers for a significant portion of our revenue, and any decrease in revenues or sales from any one of such key customers may adversely affect our business and results of operations.

• We typically do not have firm commitment with our customers. If our customers choose not to source their requirements from us, there may be a material adverse effect on our business, financial condition, cash flows and results of operations.

DISCUSSION ON RESULT OF OPERATION

Our Significant Accounting Policies

For Significant accounting policies please refer Significant Accounting Policies, under Chapter titled "Restated Financial Statements" beginning on page 157 of the Draft Red Herring Prospectus.

Overview of Revenue & Expenditure

Our revenue and expenses are reported in the following manner:

Revenues

• Revenue of operations

Our Companys revenue is primarily generated from:

• Event Management;

• Retail Visual Merchandising; and

• Digital Content Creation

• Other Income

Our other income mainly consists of interest income, discount received and other income.

The below table show our revenue for the fiscal 2024, 2023 and 2022:

(? In Lakhs)

	For the period ended
Particulars	March 31, 2024	March 31, 2023	March 31, 2022
Income
Revenue from Operations	2,663.18	2,214.75	1,160.19
% of total revenue	99.74%	99.41%	93.17%
Other income	6.94	13.05	85.01
% of total revenue	0.26%	0.59%	6.83%
Total Revenue	2,670.12	2,227.80	1,245.20

Expenditure

Our total expenditure primarily consists of cost of cost of materials consumed, cost of services received, changes in inventories of finish goods, employee benefits expenses, finance cost, depreciation and amortisation and other expenses.

• Cost of materials consumed and services received

This represents purchases related to retail visual merchandising and other direct expenses relating to events and retail management.

• Changes in Inventories of finish goods & work-in-progress

This relates to the cost of purchase of finish goods and work-in-progress.

• Employment Benefit Expenses

It includes salaries, wages, bonus and allowances, directors remuneration, contributions to welfare funds, provision for gratuity and other expenses.

• Other Expenses

It includes Bad debts, Auditors remuneration, Advertisement Expense, Bank Charges, Business Promotion Expense, Charity and Welfare, Commission and Brokerage, Data Management & Software Expense, Festival Expenses, Forwarding and Courier Expenses, Income Tax - Self Assessment FY22-23, Installation Charge, Insurance, Interest and Penalty on Statutory Dues, Legal and professional charge, License and Registration Fees, Listing Charge, Loan Processing Fee, Miscellaneous expenses, Office Expenses, Packaging Charges, Printing and stationery, Rent, Repairs and maintenance, - Others, Short & excess, Skill Development & Training, Telephone expenses, Travelling Expenses, and Water and Electricity charges.

• Finance Costs

Our finance costs mainly include processing charges and interest.

• Depreciation

Depreciation includes depreciation and amortization.

RESULTS OF OUR OPERATION

(In Lakhs)

Particulars	31-Mar-24	31-Mar-23	31-Mar-22
Incomes:
Revenue from Operations	2,663.18	2,214.75	1,160.19
% of total revenue	99.74%	99.41%	93.17%
% Increase/(Decrease)	20.25%	90.90%	-
Other income	6.94	13.05	85.01
% of total revenue	0.26%	0.59%	6.83%
% Increase/(Decrease)	(46.79%)	(84.65%)	-
Total Revenue	2,670.12	2,227.80	1,245.20
% Increase/(Decrease)	19.85%	78.91%	-
Expenses:
Cost of materials consumed and cost of services received	1,757.38	1,585.61	662.32
% of total revenue	65.82%	71.17%	53.19%
% Increase/(Decrease)	10.83%	139.40%	-
Change in Inventory (Finished goods/WIP)			309.12
% of total revenue	0.00%	0.00%	24.82%
% Increase/(Decrease)	-	(100.00%)	-
Employee Benefit expenses	251.86	221.81	153.31
% of total revenue	9.43%	9.96%	12.31%
% Increase/(Decrease)	13.55%	44.68%	-
Other Expenses	161.30	120.44	66.41
% of total revenue	6.04%	5.41%	5.33%
% Increase/(Decrease)	33.92%	81.36%	-
Total Expense	2,170.54	1,927.87	1,191.16
% of total revenue	81.29%	86.54%	95.66%
% Increase/(Decrease)	12.59%	61.85%	-
Profit before Interest, Depreciation and Tax	499.58	299.93	54.04
% of total revenue	18.71%	13.46%	4.34%
Depreciation and amortization Expenses	16.78	10.36	5.99
% of total revenue	0.63%	0.47%	0.48%
% Increase/(Decrease)	61.96%	72.97%	-
Profit before Interest and Tax	482.80	289.57	48.05
% of total revenue	18.08%	13.00%	3.86%
Financial Cost	52.49	15.00	0.14
% of total revenue	1.97%	0.67%	0.01%
% Increase/(Decrease)	249.92%	10348.82%	-
Profit before Tax and Extraordinary Expenses	430.31	274.57	47.91
% of total revenue	16.12%	12.32%	3.85%
Extraordinary Expenses	-	-	-
% of total revenue	-	-	-
% Increase/(Decrease)	-	-	-
Restated Profit/(Loss) before tax	430.31	274.57	47.91
% of total revenue	16.12%	12.32%	3.85%
% Increase/(Decrease)	56.72%	473.13%	-
Tax expenses/(income)
Current Tax	123.68	74.09	2.33
Deferred Tax	(2.53)	(0.31)	8.37
Total tax expenses	121.14	73.78	10.70
% of total revenue	4.54%	3.31%	0.86%
Restated profit/(loss) after Tax	309.16	200.79	37.21
% of total revenue	11.58%	9.01%	2.99%
% Increase/(Decrease)	53.97%	439.63%	-

* includes other income

Our income is dependent upon few major customers, details of the same is as following:

(? in lacs)

	Fiscal 2024		Fiscal 2023		Fiscal 2022
Particulars	Amount	Percentage (%)	Amount	Percentage (%)	Amount	Percentage (%)
Top 5 customers	1,697.90	63.75%	1,845.74	83.34%	1,069.26	92.16%
Top 10 customers	2,100.37	78.87%	2,094.66	94.58%	1,132.96	97.65%
International Sale	61.40	-	-	-	200.00	-

No. of jobs executed by our Company during the last three fiscal are as under:

Particulars	31-Mar-24	31-Mar-23	31-Mar-22
No. of jobs executed	~ 2,740	~ 2,160	~ 940

REVIEW OF OPERATIONS FOR THE PERIOD ENDED MARCH 31, 2024 Income from Operations

Our revenue from operations for the fiscal year ended March 31, 2024 was ?2,663.18 Lakhs which was about 99.74% of the total revenue and which comprises of revenue from Event Management, Retail Visual Merchandising, Digital Content Creation, and unbilled income of completed works. In the fiscal year ended March 31, 2024, our Company has rolled out more than 2,700 jobs as against close to 2,100 jobs in fiscal 2023, this has resulted in increased revenue and profitability.

Other Income

Our other income for the fiscal year ended March 31, 2024 was ? 6.94 Lakhs which was about 0.26% of the total revenue and which includes discount received and interest income.

Expenditure

Cost of materials consumed and cost of services received

The Cost of materials consumed and cost of services received for the period ended March 31, 2024 were ?1,757.38 Lakhs which was about 65.82% of the total revenue.

Changes in Inventories of finish goods & work-in-progress

The changes in inventories of finish goods & work-in-progress for the period ended March 31, 2024 were ? Nil Lakhs.

Employee Benefits expenses

The employee benefits expenses for the fiscal year ended March 31, 2024 were ? 251.86 Lakhs which was about 9.43% of the total revenue and which includes salaries, wages, bonus and allowances, directors remuneration, contributions to welfare funds, provision for gratuity and other expenses.

Other Expenses

Other Expenses for the fiscal year ended March 31, 2024 were ? 161.30 Lakhs which was about 6.04% of the total revenue and which includes bad debts, Auditors remuneration, Advertisement Expense, Bank Charges, Business Promotion Expense, Charity and Welfare, Commission and Brokerage, Data Management & Software Expense, Festival Expenses, Forwarding and Courier Expenses, Income Tax - Self Assessment FY22-23, Installation Charge, Insurance, Interest and Penalty on Statutory Dues, Legal and professional charge, License and Registration Fees, Listing Charge, Loan Processing Fee, Miscellaneous expenses, Office Expenses, Packaging Charges, Printing and stationery, Rent, Repairs and maintenance, Others Short & excess, Skill Development & Training, Telephone expenses, Travelling Expenses, and Water and Electricity charges.

EBIDTA

Our EBITDA for the fiscal year ended March 31, 2024 were ? 499.58 Lakhs.

Financial Costs

Financial costs for the period ended March 31, 2024 were ? 52.49 Lakhs which was about 1.97% of the total revenue and which consists of interest and other finance charges.

Depreciation

Depreciation for the fiscal year ended March 31, 2024 were ? 16.78 Lakhs which was about 0.63% of the total revenue and which consists of depreciation and amortization expenses.

Profit /(Loss) after Tax

PAT for the fiscal year ended March 31, 2024 was ? 309.16 Lakhs.

FISCAL YEAR ENDED MARCH 31, 2024 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2023 Income

Total revenue has increased by ?448.43 Lakhs and 20.25%, from ? 2,214.75 Lakhs in the fiscal year ended March 31, 2023 to ? 2,663.18 Lakhs in the fiscal year ended March 31, 2024. The increase in revenue was on account of increase in revenue from event management and retail visual merchandising. Further, in the fiscal year ended March 31, 2024, our Company has recorded a revenue of Rs.200.00 lakhs on account of co-production fee for OTT contents which we co-produced which was ? 29.50 Lakhs in fiscal 2023. In the fiscal year ended March 31, 2024, our Company has rolled out more than 2,700 jobs as against close to 2,100 jobs in fiscal 2023, this has resulted in increased revenue and profitability.

Expenditure

Total Expenditure increased by ? 286.59 Lakhs and 14.67%, from ? 1,953.23 Lakhs in the fiscal year ended March 31, 2023 to ? 2,239.82 Lakhs in the fiscal year ended March 31, 2024. Overall expenditure was increased mainly due to increase in volume of operation i.e. event management and retail visual merchandising and new OTT contents.

Cost of materials consumed and cost of services received

Cost of materials consumed and cost of services received increased by ?171.77 Lakhs and 10.83%, from ?1,585.61 Lakhs in the fiscal year ended March 31, 2023 to ? 1,757.38 Lakhs in the fiscal year ended March 31, 2024. Cost of materials consumed and cost of services received is increased on account of increase in volume of operation i.e. event management, retail visual merchandising and OTT.

Changes in Inventories of finish goods & work-in-progress

Changes in inventories of finish goods & work-in-progress was ? NIL in the fiscal year ended March 31, 2024 and the fiscal year ended March 31, 2023. Changes in Inventories of finish goods & work-in-progress was nil because our Company does not have any inventory in hand.

Employee Benefit Expenses

Employee Benefit Expenses in terms of value and percentage increased by ? 30.05 Lakhs and 13.55% from ^221.81 Lakhs in the fiscal year ended March 31, 2023 to ? 251.86 Lakhs in the fiscal year ended March 31, 2024. Overall employee cost was increased due to increase in staff strength and general increment in salary and incentives to employees.

Other Expenses

Other Expenses in terms of value and percentage increased by ? 40.85 Lakhs and 33.92% from ? 120.44 Lakhs in the fiscal year ended March 31, 2023 to ? 161.30 Lakhs in the fiscal year ended March 31, 2024. The increase was mainly on account of bad debts, Business Promotion Expense, Commission and Brokerage, Festival Expenses, Forwarding and Courier Expenses, Legal and professional charge, Packaging Charges, Rent, Repairs and maintenance and Water and Electricity.

EBIDTA

Profit before Interest, Depreciation and Tax has increased by ? 199.95 Lakhs and 66.56% from ?299.93 Lakhs in the fiscal year ended March 31, 2023 to ? 499.58 Lakhs in the fiscal year ended March 31, 2024. Profit before Interest, Depreciation and Tax was increased due to increase volume of our business operations and higher volume of sales. In the fiscal year ended March 31, 2024, our Company has rolled out more than 2,700 jobs as against close to 2,100 jobs in fiscal 2023, this has resulted in increased revenue and profitability.

Finance Costs

Finance Costs in terms of value and percentage increased by ? 37.49 Lakhs and 249.92% from ? 15.00 Lakhs in the fiscal year ended March 31, 2023 to ? 52.49 Lakhs in the fiscal year ended March 31, 2024. Finance Costs was increased mainly due to higher interest outgo on increased borrowings.

Depreciation & Amortization Expenses

Depreciation in terms of value increased by ? 6.42 Lakhs and 61.96% from ? 10.36 Lakhs in the fiscal year ended March 31, 2023 to ? 16.78 Lakhs in the fiscal year ended March 31, 2024. Increase in depreciation is due to increase in assets and is general in nature.

Net Profit after Tax

Net Profit has increased by ? 108.37 Lakhs and 53.97% from ? 200.79 Lakhs in the fiscal year ended March 31, 2023 to ? 309.16 Lakhs in the fiscal year ended March 31, 2024. Net profit was increased due to increase in revenue from operations and volume of our business through event management and retail visual merchandising. Further, in the fiscal year ended March 31, 2024, our Company has recorded a revenue of ?200.00 lakhs on account of co-production fee for OTT contents which we co-produced which was ? 29.50 Lakhs in fiscal 2023. In the fiscal year ended March 31, 2024, our Company has rolled out more than 2,700 jobs as against close to 2,100 jobs in fiscal 2023, this has resulted in increased revenue and profitability.

FISCAL YEAR ENDED MARCH 31, 2023 COMPARED WITH THE FISCAL YEAR ENDED MARCH 31, 2022 Income

Total revenue has increased by ? 1,054.56 Lakhs and 90.90%, from ? 1,160.19 Lakhs in the fiscal year ended March 31, 2022 to ? 2,214.75 Lakhs in the fiscal year ended March 31, 2023. Due to Covid, our sector was one of the worst hits due to government restrictions on mass gatherings and curbs on movements. However, with the help of our diversified nature of our business, we have sustained in FY2020-21 and recovered significantly in FY2022-23. We have also supported all our employees and stakeholders during those tough times of Covid 19. Post Covid, we focused on increasing the customer base and increasing the ticket size of the existing customers. The strategy of the Company was to offer bespoke solutions to the customer in the fast paced changing environment. This has resulted in increase in revenue from event management and retail visual merchandising. In the fiscal year ended March 31, 2023, our Company has rolled out more than 2,100 jobs as against close to 950 jobs in fiscal 2022, this has resulted in increased revenue and profitability.

Expenditure

Total Expenditure increased by ? 755.94 Lakhs and 63.14%, from ? 1,197.29 Lakhs in the fiscal year ended March 31, 2022 to ? 1,953.23 Lakhs in the fiscal year ended March 31, 2023. Overall expenditure was increased mainly due to increase in volume of operation i.e. event management and retail visual merchandising.

Cost of materials consumed and cost of services received

Cost of materials consumed and cost of services received increased by ? 923.29 Lakhs and 139.40%, from ?662.32 Lakhs in the fiscal year ended March 31, 2022 to ? 1,585.61 Lakhs in the fiscal year ended March 31, 2023. Cost of materials consumed and cost of services received was increased on account of increase in volume of operation i.e. event management, retail visual merchandising.

Changes in Inventories of finish goods & work-in-progress

Changes in inventories of finish goods & work-in-progress decreased by ? 309.12 in the fiscal year ended March 31, 2023 to ? Nil in the fiscal year ended March 31, 2023 as against ? 309.12 in the fiscal year ended March 31, 2022. Changes in Inventories of finish goods & work-in-progress was nil because our Company does not have any inventory in hand.

Employee Benefit Expenses

Employee Benefit Expenses in terms of value and percentage increased by ? 68.50 Lakhs and 44.68% from ?153.31 Lakhs in the fiscal year ended March 31, 2022 to ? 221.81 Lakhs in the fiscal year ended March 31, 2023. Overall employee cost was increased due to increase in staff strength and general increment in salary and incentives to employees.

Other Expenses

Other Expenses in terms of value and percentage increased by ? 54.03 Lakhs and 81.36% from ? 66.41 Lakhs in the fiscal year ended March 31, 2022 to ? 120.44 Lakhs in the fiscal year ended March 31, 2023. The increase was mainly on account of Advertisement Expense, Business Promotion Expense, Forwarding and Courier Expenses, Legal and professional charge, Office Expenses, Printing and stationery, Rent, Skill Development & Training and Travelling Expenses.

EBIDTA

Profit before Interest, Depreciation and Tax has increased by ? 245.89 Lakhs and 455.01% from ? 54.04 Lakhs in the fiscal year ended March 31, 2022 to ? 299.93 Lakhs in the fiscal year ended March 31, 2023. Profit before Interest, Depreciation and Tax was increased due to increase volume of our business operations and higher volume of sales post pandemic. With the help of our diversified nature of our business, we have sustained in FY2020-21 and recovered significantly in FY2022-23. We have also supported all our employees and stakeholders during those tough times of Covid 19. Post Covid, we focused on increasing the customer base and increasing the ticket size of the existing customers. The strategy of the Company was to offer bespoke solutions to the customer in the fast paced changing environment. This has resulted in increase in EBIDTA and revenue from event management and retail visual merchandising. In the fiscal year ended March 31, 2023, our Company has rolled out more than 2,100 jobs as against close to 950 jobs in fiscal 2022, this has resulted in increased revenue and profitability.

Finance Costs

Finance Costs in terms of value and percentage increased by ? 14.86 Lakhs and 10348.82% from ? 0.14 Lakhs in the fiscal year ended March 31, 2022 to ? 15.00 Lakhs in the fiscal year ended March 31, 2023. Finance Costs was increased mainly due to higher interest outgo on increased borrowings.

Depreciation & Amortization Expenses

Depreciation in terms of value increased by ? 4.37 Lakhs and 72.97% from ? 5.99 Lakhs in the fiscal year ended March 31, 2022 to ? 10.36 Lakhs in the fiscal year ended March 31, 2023. Increase in depreciation is due to increase in assets and is general in nature.

Net Profit after Tax

Net Profit has increased by ? 163.58 Lakhs and 439.63% from ? 37.21 Lakhs in the fiscal year ended March 31, 2022 to ? 200.79 Lakhs in the fiscal year ended March 31, 2023. With the help of our diversified nature of our business, we have sustained in FY2020-21 and recovered significantly in FY2022-23. We have also supported all our employees and stakeholders during those tough times of Covid 19. Post Covid, we focused on increasing the customer base and increasing the ticket size of the existing customers. The strategy of the Company was to offer bespoke solutions to the customer in the fast paced changing environment. This has resulted in increase in revenue from operations, Net profit and volume of our business through event management and retail visual merchandising. In the fiscal year ended March 31, 2023, our Company has rolled out more than 2,100 jobs as against close to 950 jobs in fiscal 2022, this has resulted in increased revenue and profitability.

Cash Flows

(Amount f in lacs)

	For the year ended March 31,
Particulars	2024	2023	2022
Net Cash from Operating Activities	145.13	233.57	97.86
Net Cash from Investing Activities	(408.05)	(561.60)	(150.63)
Net Cash used in Financing Activities	294.75	306.81	26.55

Cash Flows from Operating Activities

Net cash from operating activities for fiscal 2024 was at ? 145.13 lacs as compared to the EBIDTA at ?499.58 lacs, while for fiscal 2023, net cash from operating activities was at ? 233.57 lacs as compared to the EBIDTA at ?299.93 lacs. For fiscal 2022, the net cash from operating activities was ? 97.86 lacs compared to EBIDTA of ?54.94 lacs.

Cash Flows from Investment Activities

Net cash from investing activities for the fiscal 2024 was ? (408.05) lacs. This negative cash outflow is attributed to increase in investment in OTT contents under production which we are co-producing. Net cash from investing activities was at ?(561.60) lacs and ?(150.63) lacs and in the fiscal 2023 and 2022 attributed to increase in investment in OTT contents under production which we are co-producing.

Cash Flows from Financing Activities

Net cash from financing activities for fiscal 2024 was at ?294.75 lacs. The positive cash flow was on account of raising of additional fund through issue of equity shares. In fiscal 2023 was ? 306.81 lacs due increased loans and borrowings. For fiscal 2022, the net cash from financing activities was ? 26.55 lacs on account of loans and borrowings.

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 "Financial Information" and chapter titled "ManagementsDiscussion and Analysis of Financial Conditions and Results of Operations", beginning on Page 157 and 196 respectively of this Draft Red Herring Prospectus, to our knowledge there are no 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 chapter titled "Risk Factors" and "Managements Discussion and Analysis of Financial Conditions and Result of Operations", beginning on Page 27 and 196 respectively of this Draft Red Herring Prospectus, best 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

Other than as described in the chapter titled "Risk Factors" beginning on Page 27 of this Draft Red Herring Prospectus, best to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

5. Competition Conditions

Our Industry is fragmented consisting of large established players and small niche players. We compete with organized as well as unorganized sector on the basis of availability of product, price and product range. Further, there are no entry barriers in this industry and any expansion in capacity of existing manufacturers would further intensify competition. Industry is very competitive and we expect competition to continue and likely to increase in the future.