OPERATIONS
The following discussion is intended to convey the managements perspective on our financial condition and results of operations for the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023. Unless otherwise stated or unless the context requires otherwise, the financial information in this section has been derived from the Restated Consolidated Financial Statements.
Our Companys financial year commences on April 1 and ends on March 31 of the subsequent year, and references to a particular fiscal year are to the 12 months ended March 31 of that particular year. Unless otherwise indicated or the context otherwise requires, the financial information for the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, included herein is based on or derived from our Restated Consolidated Financial Statements included in this Draft Red Herring Prospectus. For further information, see Restated Consolidated Financial Statements on page 302. The Restated Consolidated Financial Statements is based on our audited financial statements and is restated in accordance with the Companies Act, 2013, and the SEBI ICDR Regulations. Our audited financial statements are prepared in accordance with Indian Accounting Standards, which differs in certain material respects with IFRS and U.S. GAAP. For details, see Risk Factors Significant differences exist between Ind AS and other accounting principles, such as U.S. GAAP and IFRS, which investors may be more familiar with and may consider material to their assessment of our financial condition on page 72.
Unless otherwise stated or the context otherwise requires, references in this section to we, us, or our are to Tonbo Imaging India Limited and our Joint Venture on a consolidated basis while our Company or the Company are to Tonbo Imaging India Limited on a standalone basis.
Unless otherwise indicated, industry and market data used in this section has been derived from the industry report titled Assessment of Global and Indian Defence Electronics and Technology Industry dated December 2025 (the F&S Report ) prepared and issued by Frost and Sullivan (India) Private Limited, appointed by us and exclusively commissioned and paid for by us to enable investors to understand the industry in which we operate in connection with the Offer. The data included herein includes excerpts from the F&S Report and may have been re-ordered by us for the purposes of presentation. Unless otherwise indicated, financial, operational, industry and other related information derived from the F&S Report and included herein with respect to any particular calendar year/ Fiscal refers to such information for the relevant calendar year/ Fiscal. Further, the F&S Report was prepared on the basis of information as of specific dates and opinions in the F&S Report may be based on estimates, projections, forecasts and assumptions that may be as of such dates. F&S Report has prepared this study in an independent and objective manner, and it has taken all reasonable care to ensure its accuracy and has further advised that it has taken due care and caution in preparing the F&S Report based on the information obtained by it from sources which it considers reliable. A copy of the F&S Report is available on the website of our Company at https://tonboimaging.com/main/industry-report/. For further information, see
Risk Factors Internal Risks Certain sections of this Draft Red Herring Prospectus disclose information from the industry report titled Assessment of Global and Indian Defence Electronics and Technology Industry which is a paid report and commissioned and paid for by us exclusively in connection with the Offer and any reliance on such information for making an investment decision in the Offer is subject to inherent risks. on page 65. Also see, Certain Conventions, Currency of Presentation, Use of Financial Information and Market Data Industry and Market Data and Industry Overview on pages 31 and 147, respectively.
OVERVIEW
We are a global defence electronics original equipment manufacturer ( OEM ). We design, develop and manufacture sensing, processing, communication and guidance systems for surveillance, reconnaissance, targeting, and control. We have developed a diversified product portfolio including thermal imaging cores, weapon sights, hand-held thermal imaging binoculars, targeting systems, missile seekers, fire control systems, missile guidance systems amongst others to enable autonomy on the battlefield.
The image below depicts the various functions of our product portfolio:
Our expertise spans design capabilities across electro optics and infrared systems ( EO/IR ) and embedded vision systems serving both Indian and global companies. As per the F&S Report, our Company is the fastest-growing defence technology player in India in terms of revenue, EBITDA and PAT margin growth (CAGR Fiscal 2023-2025) amongst the Listed Peers. As per the F&S Report, over the period FY23 to FY25, our Company was the largest manufacturer, in terms of sales value of thermal imaging systems to government and defense agencies in
India. In addition, our Companys market share of thermal imaging exports from India was 93%, positioning it as the largest exporter of thermal imaging systems from India in FY24-25.
With over 20,000 systems deployed across 24 countries, as of June 30, 2025, our Company is a recognized OEM providing a diverse suite of field-proven electro-optic products free from export restrictions under International
Traffic in Arms Regulations ( ITAR ). ITAR is a U.S. export control framework governing the sale, transfer, and sharing of defence related technology, data, and services. Our EO/IR portfolio is free from ITAR, enabling it to serve non-aligned and export sensitive markets more flexibly, as we design and develop our products within India, making us one of the few global OEMs capable of supplying cutting-edge technologies without geopolitical export limitations.
As per the F&S Report, our Company is one of the few companies in India with no dependence on external technology partners as we own 100% of our intellectual property, from optics to embedded software and electronics. The Government of India has introduced numerous policies under the Make in India initiative and the Atmanirbhar vision, introducing reforms to promote the indigenous design, development and manufacturing of defence equipment in the country, thereby reducing reliance on defence imports. Introduced in 2020, Indias
Defence Acquisition Procedure 2020 ( DAP 2020 ), Indigenously-Designed, Developed and Manufactured
( IDDM_h ) is a part of Indias Make in India initiative for defence. In order to be an eligible IDDM vendor under the DAP 2020, our Company is required to ensure that the control of the Company is with Indian citizens and at least half of the ex-factory cost of the products needs to originate from Indian design, development, production or value-addition, and limits the permissible foreign or non-indigenous content in the final product to a maximum of 50% of the overall contract value. We are a supplier under IDDM.
We were incorporated in 2003 as a subsidiary of a research company initially providing R&D and technology development services focused on designing intellectual property. In 2012, post the buyout of the erstwhile subsidiary of the research company by our Promoters, we transitioned into a defense-focused product manufacturing company, developing and supplying advanced electro-optic and electronic systems. As per the F&S Report, with over 20,000 systems deployed across 24 countries as of March 31, 2025, our Company offers a diverse suite of field-proven electro-optical solutions. Field-proven denotes systems that have been operationally validated in live combat and security environments, demonstrating reliability, durability, and mission effectiveness under real-world conditions.
Our products are divided into tactical systems and platform systems. The table below sets forth the revenue from operations generated from each product vertical in the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively:
| Products | For the three months ended June 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 | ||||
| Amount ( million ) | As a percentage of revenue from operations | Amount ( million ) | As a percentage of revenue from operations | Amount ( million ) | As a percentage of revenue from operations | Amount ( million ) | As a percentage of revenue from operations | |
| (%) | (%) | (%) | (%) | |||||
| Tactical systems | 381.06 | 55.49 | 3,622.96 | 77.24 | 3,592.69 | 83.90 | 792.87 | 81.88 |
| Platform systems | 296.69 | 43.20 | 1,010.53 | 21.54 | 127.00 | 2.97 | 41.87 | 4.32 |
| Others | - | 0.00 | 10.32 | 0.22 | 110.39 | 2.58 | 2.25 | 0.23 |
| Total sale of products and solutions | 677.75 | 98.69 | 4,643.82 | 98.99 | 3,830.08 | 89.45 | 836.99 | 86.44 |
| Revenue from operations # | 686.77 | 100.00 | 4,690.80 | 100.00 | 4,281.89 | 100.00 | 968.28 | 100.00 |
Note: We are yet to book revenue for our directed energy systems which are currently in the development stage. Comprise certain OEM component sales. # Our Revenue from operations is a sum of total sale of products and solutions and other operating revenue.
Our portfolio of products span the electromagnetic spectrum visible imaging based on what the human eye can see, to long wave infrared and multi-sensor imaging which are based on heat signatures of objects emitting infrared radiation. Our product portfolio is put forth below:
We are seeing an evolution of our business from being focussed on tactical systems and platform subsystems to offering integrated autonomous platform systems. These platform systems are solutions that bring together hardware and software components of multiple subsystems made by us into an integrated platform for battlefield deployment.
Our Company emphasizes miniaturisation, such as smallest form factor thermal weapon sights, scalable, modular payloads adaptable for remote weapons stations, loitering munitions, intelligence, surveillance, and reconnaissance ( ISR ) balloons and soldier - wearable systems. Our products are deployed in programs ranging from remote weapon stations ( RWS ) and missile seekers to situational awareness systems, optical reconnaissance payloads, and driver vision enhancement systems for armoured vehicles.
In the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, in addition to supply within India, we supplied our products to overseas customers in countries including Armenia, Romania, Slovenia, USA, Morocco, South Korea, UAE and the Philippines. As per the F&S report, our Company leads in export performance, with 65.52% of FY25 revenue from overseas markets, this positions us as the supplier with the highest percentage of revenue from exports among the listed defence peers in FY25. The table below sets our revenue from exports in the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively:
| Products | For the three months ended June 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 | ||||
| Amount ( million ) | As a percentage of revenue from operations | Amount ( million ) | As a percentage of revenue from operations | Amount ( million ) | As a percentage of revenue from operations | Amount ( million ) | As a percentage of revenue from operations | |
| (%) | (%) | (%) | (%) | |||||
| Revenue from exports | 44.89 | 6.54 | 3,073.38 | 65.52 | 2,081.46 | 48.61 | 180.64 | 18.66 |
Our customers include global militaries, law enforcement and homeland security agencies and other global defence OEMs. As of June 30, 2025, we have supplied to 24 countries including India, Armenia, Romania, Slovenia, USA, Morocco, South Korea, UAE and the Philippines. The map below sets forth our geographical footprint across the world as of June 30, 2025:
As of September 30, 2025, we had an order book of 2,665.70 million. The table below sets forth the breakdown of our order book from our domestic and overseas customers as of September 30, 2025:
| Particulars | Number of orders | Value ( million ) |
| Domestic customers | 29 | 2,133.10 |
| Overseas customers | 7 | 532.60 |
| Total | 36 | 2,665.70 |
Comprises only firm orders, which represent orders that have been contractually confirmed by customers, formally accepted by the Company, and are supported by binding documentation such as executed contracts or purchase orders.
From October 1, 2025 to November 30, 2025, we have received orders aggregating to 716.80 million.
As part of our efforts towards R&D, we have set up an R&D centre at Bengaluru, Karnataka where we have employed 93 engineers as of June 30, 2025, to undertake research, develop and experiment with new designs, technologies and equipment. Key technologies developed through our R&D efforts include, inter alia , micro-scanned optics, scene-based non-uniformity correction, thermal stereo vision systems for depth perception in low-light conditions, 3D imaging using single-detector thermal imagers, control systems for inertial stabilization and high accuracy pointing systems, fast steering mirror assemblies for dynamic beam alignment etc. Our R&D efforts also include use of alternative material such as polymers to reduce dependence on supply constraints in the defence sector as well as reducing costs to levels where commercial/consumer applications can be developed. We have ownership of a portfolio of intellectual property, which includes intellectual property solutions in relation to, inter alia, infrared imaging, night vision, computer vision and deep learning, precision stabilisation, autonomous fire control, directed energy, optical communications, high-altitude surveillance and missile seekers.
Our Company operates an asset light business model through horizontal integration: core design and intellectual property (both assigned to us and developed indigenously) ( IP ), while manufacturing is outsourced to certified electronics manufacturing services ( EMS ) partners, including, Kaynes Technology India Limited and Avalon
Technology and Services Private Limited. We prototype our pilot engineering units in our R&D centre, then scale production through EMS partners under non-exclusive contract manufacturing arrangements, issuing purchase orders that set out the required product specifications. Our R&D centre is ISO certified; it has the ISO 9001:2015 (quality management systems), ISO 14001:2015 (environmental management system) and ISO/IEC 27001:2022 (information security management system) and ISO 28000:2022 (security and resilience-security management systems requirements) for design, development, manufacture and servicing of electro optical systems and imaging cores in the areas of infrared imaging for use in defence, commercial, security and industrial applications. Our asset light business model minimises capital expenditure, enables scalable production, and keeps us lean and efficient, allowing us to focus on R&D.
We have received several awards including the Excellence in Tech Export Promotion - Medium Enterprises award by CNBC, Young Turks Startup of the Year award at the CNBC-TV 18 India Business Leader Awards and Marico Innovation Foundation award in the business category for Indias Best Innovations. Further, our operations comply with international standards for quality management system, environmental management system, information security management system and security and resilience-security management systems requirements for design, development, manufacture and servicing of electro optical systems and imaging cores in the areas of infrared imaging for use in defence, commercial, security and industrial applications.
Our Company was founded by technologists with prior experience in the U.S. Department of Defense and Sarnoff Corporation. Over the last 12 years, our Company has built a 293 member team including engineers with deep expertise in infrared imaging, optics, lasers, sensor fusion, and machine learning. The Promoters have worked together for over 20 years, overseeing multi-year global defence programs and pioneering next-generation military technologies. Our Promoter, Managing Director and Chief Executive Officer, Arvind Kondangi Lakshmikumar has over 20 years of experience in raising capital, running our product engineering teams globally and managing government and enterprise sales at our Company. Further, our Promoter, Executive Director and Chief Business and Revenue Officer, Ankit Kumar, has over 20 years of experience running our research and development programs in defence, surveillance and automotive safety globally and is a domain expert in optics, computer vision and machine learning automotive. Further, our Promoter, Executive Director and Chief Commercial Officer,
Cecilia DSouza has over 20 years of experience in finance, accounting and management of our multi-location international business and has a strong background in international accounting, mergers and acquisitions, procurement and operational logistics. We believe that the combined experience of our Promoters, our dynamic management team and our skilled employees position us well to capitalize on future growth opportunities.
We have established a track record of consistent revenue growth and profitability. We have managed our operations efficiently and our working capital days range from 152 to 280 days in a Fiscal. The table below sets forth certain financial information for the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively:
| Particulars | Unit | As of/For the | As of/ For the year ended March 31, | CAGR | ||
| three months ended June 30, 2025 | 2025 | 2024 | 2023 | (from Fiscal 2023 to Fiscal 2025) (%) | ||
| Revenue from Operations (1) | million | 686.77 | 4,690.80 | 4,281.89 | 968.28 | 120.10 |
| Revenue Growth (2) | % | NA | 9.55 | 342.22 | NA | - |
| Gross Profit (3) | million | 340.04 | 2,644.69 | 2,082.60 | 380.22 | 163.74 |
| Gross Profit | % | 49.51 | 56.38 | 48.64 | 39.27 | - |
| Margin (4) EBITDA (5) | million | 149.69 | 1,390.67 | 1,123.24 | 102.24 | 268.81 |
| EBITDA | % | 21.80 | 29.65 | 26.23 | 10.56 | - |
| Margin (6) | ||||||
| PAT (7) | million | 54.31 | 727.60 | 685.43 | 11.81 | 684.88 |
| PAT Margin (8) | % | 7.68 | 15.34 | 15.87 | 1.19 | - |
| ROCE % (9) | % | 1.92 | 27.36 | 67.76 | 14.33 | - |
| ROE % (10) | % | 1.10 | 20.20 | 52.72 | 4.02 | - |
| Net Tangible | Times | 2.78 | 19.16 | 89.47 | 31.18 | - |
| Fixed Asset | ||||||
| Turnover (x) (11) | ||||||
| Working Capital Days (12) | No of Days | 493 # | 280 | 152 | 211 | - |
Days
Not Annualized for the period ended June 30, 2025.
# Working Capital Days have been calculated basis 91 days for the period ended June 30, 2025.
Notes:
(1) Revenue from Operations means the Revenue from Operations for the year / period as appears in the Restated Consolidated Financial Statements. (2) Revenue Growth is calculated as a percentage of Revenue from Operations for current year minus Revenue from Operations for previous year divided by Revenue from Operations for previous year multiplied by 100. (3) Gross Profit is calculated as Revenue From Operation minus COGS; COGS is calculated as Cost of Materials Consumed plus Changes In Inventories of Finished Goods for the relevant period / year. (4) Gross Profit % is calculated as Gross Profit divided by Revenue from Operations. (5) EBITDA is calculated as Profit / (Loss) before Exceptional and Extraordinary items and Tax plus Finance Cost, Depreciation and Amortisation minus Other Income. (6) EBITDA Margin is calculated as EBITDA divided by Revenue from Operations. (7) PAT is Restated Profit for the year, net of tax as per Restated Consolidated Financial Statements. (8) PAT Margin is calculated as Restated Profit for the year, net of tax divided by Total Income.
(9) Return on Capital Employed (ROCE) % is calculated as Earnings before Interest and Taxes (EBIT) divided by Capital Employed; EBIT is calculated as EBITDA minus Depreciation and Amortization; Capital Employed is calculated as Total Equity minus Intangible Assets plus Long Term and Short Term Borrowings and Deferred Tax Liability.
(10) Return on Equity (ROE) % is calculated as Restated Profit for the year, net of tax divided by Average Shareholders Equity; Average Shareholders Equity is calculated as Total Equity as of the current year / period plus Total Equity as of the previous year / period divided by 2. (11) Net Tangible Fixed Asset Turnover is calculated as Revenue from Operations divided by Property, Plant and Equipment for the relevant period / year. (12) Working Capital Days is calculated as Inventory Turnover Days plus Trade Receivable Days minus Trade Payable Days. Inventory Days is calculated as Average Inventories divided by Cost of Goods Sold multiplied by number of days for the period / year. Trade Receivables Days is calculated as Average Trade Receivables divided by Revenue from Operations multiplied by number of days in the period / year. Trade Payables Days is calculated as Average Trade Payables divided by Purchases and Incidental Expenses multiplied by number of days in the period / year
SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION
The paragraphs below discuss certain factors that have had, and we expect will continue to have, a significant effect on our financial condition and results of operations.
1. Global and domestic demand for our products
Our Company is a global defence electronics OEM with a global first approach. We have a diverse range of clientele spanning across both domestic and international markets. Our products have been sold globally to customers in EU, US and Israel enabling adoption in India through a global first approach, underscoring their acceptance in some of the worlds most advanced defence markets as per the F&S Report. In the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, in addition to supply within India, we supplied our products to overseas customers in countries including Armenia, Romania, Slovenia, USA, Morocco, South Korea, UAE and the Philippines. Our global customer base spans Armenia, Romania, Slovenia, USA, Morocco, South Korea, UAE and the Philippines. As of June 30, 2025, we have deployed over 20,000 tactical systems and served customers across 24 countries. This extensive global deployment demonstrates that our technology is both battle-tested and globally trusted. As per the F&S report, our Company leads in export performance, with 65.52% of FY 2025 revenue from overseas markets, which positions our Company as the supplier with the highest % of revenue from exports among the listed defence peers in FY25.
We design and manufacture strategic defence electronic systems that are free of ITAR restrictions, positioning us among the few global defence OEMs capable of supplying advanced technologies without geopolitical export limitations. Our full EO/IR portfolio is entirely free from ITAR, enabling it to serve non-aligned and export sensitive markets more flexibly, as we design and develop our products within India, making us one of the few global OEMs capable of supplying cutting-edge technologies without geopolitical export limitations.
The table below sets forth details of the customers served outside India and revenue generated from such customers in the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively:
| Particulars | For the three months ended June 30, | For the year ended March 31, | ||
| 2025 | 2025 | 2024 | 2023 | |
| Revenue from customers located outside India ( million ) | 44.89 | 3,073.38 | 2,081.46 | 180.64 |
| Revenue from customers located outside | 6.54 | 65.52 | 48.61 | 18.66 |
| India as a percentage of the revenue from operations (%) | ||||
As put forth above, our approach so far has been focused on building these critical references outside India, even if it meant securing smaller initial orders or technology demonstrations. If we are unable to realise revenue from our international market despite our global footprint, our reputation and business may be adversely affected. We are also exposed to fluctuations in the performance of the defence electronics sector, in the aforementioned geographies, The defence electronics sector may perform differently in India and be subject to market and regulatory developments that are dissimilar to the markets in other parts of the world. Further, as other countries prioritize domestic defense production through mandates for domestic suppliers and offset obligations, the appetite for imported solutions may shrink or require deeper local partnerships. Simultaneously, domestic defense and paramilitary procurements in India, while growing, often involve highly price-sensitive bidding and lower margins. A shift in revenue mix away from exports towards Indian orders, particularly under increased domestic procurement mandates, could result in margin compression and impact our overall profitability profile.
As per the F&S Report, in recent years, geopolitical instability, such as border conflicts, rising regional tensions, and emerging non-state threats, has led to accelerated procurement through emergency purchase mechanisms and fast-track acquisitions. These mechanisms are designed to address immediate operational needs, leading to sudden spikes in demand for defence electronics. While this has created short-term demand spikes, such procurement cycles are episodic and may not be sustained if geopolitical tensions subside or governments revert to conventional, multi-year acquisition programs. The episodic nature of emergency procurement leads to fluctuations in order volumes and revenue, making it difficult for companies to forecast and plan long-term investments or resource allocation. Consequently, revenue visibility can be inconsistent, and conversion of opportunities from the broader Total Addressable Market ( TAM ) and Serviceable Addressable Market ( SAM ) often remains a prolonged, resource-intensive process in the absence of conflict-driven urgency.
2. Cost and Availability of Critical Components
The majority of our expense is attributed to the cost of materials consumed. For the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, our cost of materials consumed was 190.96 million, 2,153.09 million, 2,132.75 million and 707.87 million which constitutes 30.31%, 57.52%, 63.30%, and 74.06%, of our total expenses, respectively. Our critical components for manufacturing our products include uncooled and cooled infrared focal plane arrays, OLED micro displays, high-performance optics, and specialized coatings. We typically procure such materials through purchase orders and do not enter into any long-term agreements with our suppliers. We are thus exposed to fluctuations in availability and prices of our raw materials and we may not be able to effectively pass on all increases in cost of raw materials to our customers, which may affect our margins and results of operations. The price of our raw materials may fluctuate due to several reasons including market fluctuations, currency fluctuations, production and transportation costs and changes in domestic and international trade policies. Any inability on our part to procure sufficient quantities of raw materials and on commercially acceptable terms, could lead to a change in our manufacturing and sales volumes.
3. Design and Development of our Proprietary technologies
Our core strength lies in complete ownership of a large portfolio of unrestricted intellectual property with respect to infrared imaging, night vision, computer vision and deep learning, precision stabilization, autonomous fire control, directed energy, option communications, high altitude surveillance, missile seekers etc. We focus on design, creation and ownership of intellectual property. As per the F&S Report, our Company is one of few companies in India with no dependence on external technology partners as it owns 100% of its intellectual property, from optics to embedded software and electronics including critical subsystems for sighting systems, including proprietary video engines, AI-accelerated image processing, and sub-5 µrad multi-axis gimbal stabilization. This in-house development and control over our proprietary technologies ranging from advanced sensors and AI algorithms to high-power microwave systems, enables rapid innovation, seamless integration into next-generation platforms, and full control over our technology roadmap.
As of the date of this Draft Red Herring Prospectus, our Company has five patents and has applied for four patents. These five patents were assigned to us by CEAQ Singapore, which also transferred a trademark and multiple design rights, including those for multi-sensor imaging and real-time analytics. The transfer of the trademark, one application for registration of a new trademark under Class 9 and registration of the patents are pending approval with the Registrar of Trademarks and Indian Patent Office, respectively. For further details on our IP portfolio, see Our Business Intellectual Property Rights and Government and Other Approvals Intellectual Property on pages 261 and 428.
Our ongoing investment in R&D has been central to our growth, enabling us to develop cutting-edge technologies such as micro-scanned optics, thermal stereo vision, and high-accuracy pointing systems. Notable projects include advanced EO/IR gimbals, multi-spectral seekers, and robust free-space optical communication systems for defense applications. However, our future success depends on safeguarding our proprietary information; any leakage or unauthorized use could erode our competitive advantage and adversely impact our business. Additionally, the need to continually invest in new technologies and adapt to industry changes may result in significant costs that could affect our profitability.
4. Highly regulated industry
We operate in an industry which is highly regulated and our operations, including manufacturing are subject to stringent laws and regulations. We are required to obtain and maintain certain statutory and regulatory licences, registrations, permits and approvals under central, state and local government rules in India, generally for carrying out our business, like industrial licenses, environmental licenses etc.
The Government has introduced numerous policies under the Make in India initiative and the Atmanirbhar vision, introducing reforms to promote the indigenous design, development and manufacturing of defence equipment in the country, thereby reducing reliance on defence imports. The Ministry of Defence has introduced the SRIJAN portal to drive indigenization within the defence sector and over 30,000 previously imported items have been listed on the portal, inviting Indian manufacturers to participate in their production. The Ministry of Defence has set a target of achieving 70% self-reliance in weaponry by 2027, opening up substantial opportunities for industry stakeholders.
While the Government has implemented significant reforms in the defence sector, with a strong commitment to minimizing foreign dependence and building a robust domestic defence manufacturing base, in order to sell/export some of our products, our products must be approved by government agencies like the Department for Promotion of Industry and Internal Trade ( DPIIT ) and Department of Defence Production, Ministry of Defence, or
Directorate General of Foreign Trade in India and by the government agencies in the countries in which we do business. If there is any failure by us to comply with the applicable regulations or if the regulations governing our business are amended, it may reduce our revenue, increase costs, adversely affect our business, financial condition and results of operations. For instance, in order to sell our products in foreign jurisdictions, we are required to obtain export authorisations from the Directorate General of Foreign Trade ( DGFT ) as our products fall under the list of Special Chemicals, Organisms, Materials, Equipment, and Technologies ( SCOMET ). The export of SCOMET are permitted only if authorised by DGFT. There is no guarantee that in future we would always receive export authorisation to sell our products in other foreign jurisdictions which may impact our business, financial condition, cash flows and results of operations. For details with respect to the risks associated with failure to comply with stringent regulations, see Risk Factors - We operate in an industry which is highly regulated and are subject to stringent government regulations. If we fail to comply with the applicable regulations and rules prescribed by the Government of India and the relevant statutory or regulatory bodies or fail to obtain, maintain or renew our statutory and regulatory licenses, permits and approvals required for our business, our results of operations and cash flows may be adversely affected.
Further, under Indias Defence Acquisition Procedure 2020 ( DAP 2020 ), our Companys supplies are categorised as Indigenously-Designed, Developed and Manufactured ( IDDM_h ) and must comply with the IDDM cap, which limits the permissible foreign or non-indigenous content in the final product to a maximum of 50% of the overall contract value. Further, in order to supply as an IDDM under DAP 2020, our Company must be owned and controlled by resident Indian citizens. Once a vendor elects or is mandated to bid under this category, it becomes legally bound to demonstrate, at every stipulated milestone, that at least half of the ex-factory cost originates from Indian design, development, production or value-addition, supported by detailed cost sheets, certification from statutory auditors, and audit rights in favour of the Ministry of Defence. Failure to adhere to the cap not only exposes the vendor to disqualification, liquidated damages, and forfeiture of performance guarantees under the Defence Procurement Contract but may also trigger blacklisting and debarment under the MoDs Guidelines on Penalties and Debarment, thereby materially affecting the vendors eligibility for future government procurements. We are pursuing certain programmes under IDDM and thus are subject to the adverse impacts of failure to adhere to its cap and any change in such caps. For further details with respect to risks associated with changing laws, see Risk Factors - Changing laws, rules and regulations in India could lead to new compliance requirements that are uncertain.
SIGNIFICANT ACCOUNTING POLICIES
a. Basis of Preparation of the Restated Consolidated Financial Statements
1.1 Basis of Preparation and Presentation
The Financial Statements have been prepared on the historical cost basis except for the following assets and liabilities which have been measured at fair value amount
1 Certain Financial Assets and Liabilities (including derivative instruments, if any), and
2 Defined Benefit Plans - Plan Assets
The financial statements of the Group have been prepared to comply with the Indian Accounting standards (Ind AS), including the rules notified under the relevant provisions of the Companies Act, 2013.
Up to the year ended March 31, 2023, the Company has prepared its financial statements in accordance with the requirement of Indian Generally Accepted Accounting Principles (GAAP), which includes Standards notified under the Companies (Accounting Standards) Rules, 2006 and considered as Previous GAAP
The Groups Financial Statements are presented in Indian Rupees, in Millions, which is also its functional currency.
Standards notified but not yet effective
There are no new standards that are notified, but not yet effective, upto the date of issuance of the Financial Statements.
1.2 Basis of Consolidation
The Restated Summary Statements comprise of the financial statements of the Company and its subsidiaries. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee.
Specifically, the Company controls an investee if and only if the Company has:
- Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)
- Exposure, or rights, to variable returns from its involvement with the investee, and - the ability to use its power over the investee to affect its returns
Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Company has less than a majority of the voting or similar rights of an investee, the Company considers all relevant facts and circumstances in assessing whether it has power over an investee, including:
- The contractual arrangement with the other vote holders of the investee
- Rights arising from other contractual arrangements
- The Groups voting rights and potential voting rights
- The size of the Groups holding of voting rights relative to the size and dispersion of the holdings of the other voting rights holders
1.3 Basis of Consolidation (continued)
The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the period are included in the restated summary statements from the date the Group gains control until the date the Group ceases to control the subsidiary. The restated summary statements are prepared using uniform accounting policies for like transactions and other events in similar circumstances. If a member of the Group uses accounting policies other than those adopted in the restated summary statements for like transactions and events in similar circumstances, appropriate adjustments are made to the restated summary statements in preparing the restated summary statements to ensure conformity with the Groups accounting policies.
Consolidation procedure:
(a) The restated summary statements have been prepared using the principles of consolidation as per Ind AS 110 Consolidated financial statements, to the extent applicable.
(b) Combine like items of assets, liabilities, equity, income, expenses and cash flows of the parent with those of its subsidiaries. For this purpose, income and expenses of the subsidiary are based on the amounts of the assets and liabilities recognised in the Ind AS restated summary statements at the acquisition date.
(c) Offset (eliminate) the carrying amount of the parents investment in each subsidiary and the parents portion of equity of each subsidiary.
(d) Eliminate in full Intra-Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between entities of the Group (profits or losses resulting from Intra-Group transactions that are recognised in assets, such as inventory and property, plant and equipment are eliminated in full). Intra-Group losses may indicate an impairment that requires recognition in the Ind AS restated summary statements. Ind AS 12 Income Taxes applies to temporary differences that arise from the elimination of Profit and Loss resulting from Intra-Group transactions.
(e) Non-controlling interests in the net assets (excluding goodwill) of consolidated subsidiaries are identified separately from the equity attributable to shareholders of the Company. The interest of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests proportionate share of the fair value of the acquirees identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis.
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the Company and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the summary statements of subsidiaries to bring their accounting policies in line with the Groups accounting policies. All Intra-Group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
- Derecognises the assets (including goodwill) and liabilities of the subsidiary
- Derecognises the carrying amount of any non-controlling interests
- Derecognises the cumulative translation differences recorded in equity
- Recognises the fair value of the consideration received
- Recognises the fair value of any investment retained
- Recognises any surplus or deficit in profit or loss
- Reclassifies the parents share of components previously recognised in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Group had directly disposed of the related assets or liabilities.
(a) Fair Value Measurement
Some of the Groups accounting policies and disclosures require the measurement of fair values, for both financial and non- financial assets and liabilities.
The Group has an established control framework with respect to the measurement of fair values. This includes a financial reporting team that has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values.
The financial reporting team regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as pricing services, is used to measure fair values, then the financial reporting team assesses the evidence obtained from the third parties to support the conclusion that these valuations meet the requirements of Ind AS, including the level in the fair value hierarchy in which the valuations should be classified.
Fair values are categorised into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as follows.
Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (ie. as prices) or indirectly (ie. derived from prices)
Level 3: Inputs for the asset or liability that are not based on observable market data (unobservable inputs)
When measuring the fair value of an asset or a liability, the Group uses observable market data as far as possible if the inputs used to measure the fair value of an asset or a liability fall into different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement.
The Group recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred.
(b) Current and Non-Current Classification
An asset is classified as current if: i. It is expected to be realized or sold or consumed in the Groups normal operating cycle; ii. It is held primarily for the purpose of trading;
iii. It is expected to be realized within twelve months after the reporting period; or It is cash or cash equivalent unless it is restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period.
A liability is classified as current if:
(a) It is expected to be settled in normal operating cycle;
(b) It is held primarily for the purpose of trading;
(c) It is expected to be settled within twelve months after the reporting period;
(d) It has no unconditional right to defer the settlement of the liability for at least twelve months after the reporting period. All other liabilities are classified as non-current.
Deferred tax assets and liabilities are classified as non-current assets and liabilities.
The operating cycle is the time between acquisition of assets for processing / trading / assembling and their realization in cash and cash equivalents. The Group has identified twelve months as its operating cycle.
(c)Property, Plant and Equipment
a) Tangible Assets
Property, Plant and Equipment are stated at cost, net of recoverable taxes, trade discounts and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent costs relating to day-to-day servicing of the item are not recognised in the carrying amount of an item of property, plant and equipment; rather, these costs are recognised in profit or loss as incurred.
Property, Plant and Equipment which are significant to the total cost of that item of Property, Plant and Equipment and having different useful life are accounted separately.
Other Indirect Expenses incurred relating to project, net of income earned during the project development stage prior to its intended use, are considered as pre-operative expenses and disclosed under Capital Work in Progress.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
Depreciation methods, estimated useful lives and residual value
Depreciation is recognized so as to write off the cost of assets less their residual values over their useful lives as prescribed under Part C of Schedule Il of the Companies Act 2013, using the straight-line method, except in respect of leasehold improvement for which the Group has estimated the useful life of Ten years based on the initial lease term. The estimated useful lives, residual values and depreciation method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for on a prospective basis. Depreciation for assets purchased / sold during a period is proportionately charged for the period of use.
The useful life has been assessed based on technical evaluation, taking into account the nature of the asset and the estimated usage basis managements best judgement of economic benefits from those classes of assets
The residual values, useful lives and methods of depreciation of Property, Plant and Equipment are reviewed at each financial year end and adjusted prospectively, if appropriate.
Derecognition
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from continued use of intangible asset. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in statement of profit and loss when the asset is de- recognized.
Gains or losses arising from derecognition of a Property, Plant and Equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the Statement of Profit and Loss when the asset is derecognised.
b) Capital Work-in-Progress and Capital Advances
Cost of Property, Plant and Equipment not ready for intended use, as on the balance sheet date, is shown as a Capital Work-in- Progress. The Capital Work-in-Progress is stated at cost. Any expenditure in relation to survey and investigation of the properties is carried as Capital Work-in-Progress. Such expenditure is either capitalized as cost of the projects on completion of construction project or the same is expensed in the period in which it is decided to abandon such project. Any advance given towards acquisition of Property, Plants and Equipment outstanding at each balance sheet date is disclosed as Other Non-Current Assets
c) Intangible Assets
Intangible Assets are stated at cost of acquisition net of recoverable taxes, trade discount and rebates less accumulated amortisation/depletion and impairment losses, if any. Such cost includes purchase price, borrowing costs, and any cost directly attributable to bringing the asset to its working condition for the intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the Intangible Assets.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.
Cost of intangible assets under development as at the reporting date are disclosed as intangible assets under development.
Amortization
The amortization expenses on Intangible assets with the finite lives are recognized in the Statement of Profit and Loss. The Groups intangible assets comprises assets with finite useful life which are amortised on a straight-line basis over the period of their expected useful life as tabulated below:
The amortization period and the amortization method for an intangible asset with finite useful life is reviewed at each financial year end and adjusted prospectively, if appropriate.
Derecognition
An intangible asset is derecognized on disposal, or when no future economic benefits are expected from continued use of intangible asset. Gains or losses arising from de-recognition of an intangible asset, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognized in statement of profit and loss when the asset is de- recognized.
(d) Impairment of Non-Financial Assets - Property, Plant and Equipment and Intangible Assets
The Group assesses at each reporting date as to whether there is any indication that any Property, Plant and Equipment and Intengible Assets or group of Assets, called Cash Generating Units (CGU) may be impaired. if any such indication exists, the recoverable amount of an asset or CGU is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the CGU to which the asset belongs
An impairment loss is recognised in the Statement of Profit and Loss to the extent, assets carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assets fair value less cost of disposal and value in use. Value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the assets carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortization, if no impairment loss had been recognized directly in other comprehensive income and presented within equity.
The impairment loss recognised in prior accounting period is reversed if there has been a change in the estimate of recoverable amount
There are no losses from impairment of assets to be recognized in the financial statements.
(e)Inventories
Inventories comprise of Raw Materials and Finished Goods are stated at the lower of cost or net realizable value.
Cost of inventory comprises all costs of purchase including duties and taxes, freight inwards and other expenditure directly attributable to acquisition and to bring the inventories to its present location and condition. Cost of finished goods include cost of materials consumed and cost of conversion. Cost of raw materials is determined on FIFO basis.
Net realizable value represents the estimated selling price for inventories less estimated cost necessary to make the sale.
(f) Cash and cash equivalents
Cash and cash equivalents in the Restated Consolidated Statement of Assets and Liabilities comprise of cash at banks and on hand and short-term deposits with an original maturity of three months or less, which are subject to an insignificant risk of changes in value.
(g) Share Capital
Equity share capital represents the amount received from shareholders towards subscribed capital, net of share issue expenses (if any).
Any premium received over and above the face value of shares is classified under securities premium reserve. The Company is a private limited company and its shares are not publicly traded.
(h) Leases
The Group assesses at contract inception whether a contract is, or contains, a lease i.e., if the contract conveys the right to control the use of an identified asset for a period in exchange of consideration.
(i) The Group as a Lessee
The Group, as a lessee, recognises a right-of-use asset and a lease liability for its leasing arrangements, if the contract conveys the right to control the use of an identified asset.
The contract conveys the right to control the use of an identified asset, if it involves the use of an identified asset and the Group has substantially all of the economic benefits from use of the asset and has right to direct the use of the identified asset. The cost of the right-of-use asset shall comprise of the amount of the initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred. The right-of-use assets is subsequently measured at cost less any accumulated depreciation, accumulated impairment losses, it any, and adjusted for any remeasurement of the ease llability. The right-of-use assets are depreciated using the straight-line method from the commencement date over the shorter of lease term or useful life of right-of-use asset.
The Group measures the lease liability at the present value of the lease payments that are not paid at the commencement date of the lease. The lease payments are discounted using the interest rate implicit in the lease, if that rate can be readily determined, if that rate cannot be readily determined, the Group uses incremental borrowing rate
(ii) The Group as a Lessor
Leases for which the Group is a lessor is classified as a finance or operating lease. Whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee, the contract is classified as a finance lease. All other leases are classified as operating leases.
For operating leases, rental income is recognized on a straight-line basis over the term of the relevant lease.
(i) Borrowing Costs
Borrowing costs include exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for its intended use.
Interest income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.
All other borrowing costs are charged to the Statement of Profit and Loss for the period for which they are incurred.
(j) Employee Benefits
(a) Short Term Employee Benefits
The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised as an expense during the period when the employees render the services.
(b) Post-Employment Benefits
(a) Defined Contribution Plans
The group recognises contribution payable to the provident fund scheme as an expense, when an employee renders the related service, if the contribution payable to the scheme for service received before the balance sheet date exceeds the contribution already paid, the deficit payable to the scheme is recognised as a liability. If the contribution already paid exceeds the contribution due for services received before the balance sheet date, then excess is recognised as an asset to the extent that the pre- payment will lead to a reduction in future payment or a cash refund.
(b) Defined Benefit Plans
(a) Gratuity Scheme: The group pays gratuity to the employees who have completed five years of service with the group at the time of resignation/superannuation. The gratuity is paid @ 15 days basic salary and cearness allowances for every completed year of service as per the Payment of Gratuity Act, 1972. The lability in respect of gratuity and other post-employment benefits is calculated using the Projected Unit Credit Method and spread over the period during which the benefit is expected to be derived from employees services.
Remeasurement gains and losses arising from adjustments and changes in actuarial assumptions are recognised in the period in which they occur in Other Comprehensive Income.
(c)Other Long Term Employee Benefits
Entitlement to annual leave is recognized when they accrue to employees.
(k) Taxation
Income tax expense represents the sum of the tax currently payable and deferred tax
(a) Current tax
Current tax is measured at the amount expected to be paid to the tax authorities in accordance with the provisions of Income Tax Act, 1961. Current tax assets and current tax liabilities are offset when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle the asset and the liability on a net basis.
(b) Deferred Tax
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.
Deferred tax assets are recognised and carried forward only if it is probable that sufficient future taxable income will be available against which such deferred tax assets can be realised. Deferred tax assets and liabilities are measured at the tax rates that have been enacted or substantively enacted as on the balance sheet date. Deferred tax assets and deferred tax liabilities are offset when there is a legally enforceable right to set off assets against liabilities representing current tax.
Current and deferred tax for the year
Current and deferred tax is recognised in statement of profit and loss, except to the extent that it relates to items recognised in Other comprehensive income. In this case, the tax is also recognised in Other comprehensive income.
(l) Provisions, Contingent Liabilities and Contingent Assets
Provisions are recognized if, as a result of a past event, the Group has a present legal or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre tax rates that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognized as a finance cost.
Contingent liabilities are not recognized in the Ind AS Financial Statements but are disclosed in notes. Contingent asset is neither recognized nor disclosed in the Ind AS Financial Statements.
(m) Revenue Recognition
Revenue from contracts with customers is recognised when control of the goods or services are transferred to the customer at an amount that reflects the consideration entitled in exchange for those goods or services.
The Group has generally typically controls the goods or services before transferring them to the customer.
Generally, control is transferred upon shipment of goods to the customer or when the goods is made available to the customer, provided transfer of title to the customer occurs and the group has not retained any significant risks of ownership or future obligations with respect to the goods shipped.
Revenue from rendering of services is recognised on when the services are rendered and related cost are incurred over time by measuring the progress towards complete satisfaction of performance obligations at the reporting period.
Revenue is measured at the amount of consideration which the Group expects to be entitled to in exchange for transferring distinct goods or services to a customer as specified in the contract, excluding amounts collected on behalf of third parties (for example taxes and duties collected on behalf of the government) Consideration is generally due upon satisfaction of performance obligations and a receivable is recognised when it becomes unconditional
Export Incentives
Export incentive revenues are recognized when the right to receive the credit is established and there is no significant uncertainty regarding the ultimate collection.
Interest Income
Interest Income from a Financial Asset is recognised using effective interest rate method.
Dividend Income
Dividend Income is recognised when the Groups right to receive the amount has been established.
Surplus / (Loss) on disposal of Property, Plant and Equipment / Investment
Surplus or loss on disposal of property, plant and equipment or investment is recorded on transfers of title from the Group, and is determined as the difference between the sale price and carrying value of the property, plant and equipment or investment and other incidental expenses.
Rental Income
Rental income arising from operating lease on investments properties is accounted for on a straight-line basis over the lease term except the case where the incremental lease reflects inflationary effect and rental income is accounted in such case by actual rent for the period.
Insurance Claim
Claim receivable on account of insurance is accounted for to the extent the Group is reasonably certain of their ultimate collection.
Other Income
Revenue from other income is recognized when the payment of that related income is received or credited.
(n) Foreign Currency Transactions and Translation
Transactions in foreign currencies are recorded at the exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency closing rates of exchange at the reporting date. Exchange differences arising on settlement or translation of monetary items are recognised in the Statement of Profit and Loss except to the extent of exchange differences which are regarded as an adjustment to interest costs on foreign currency borrowings that are directly attributable to the acquisition or construction of qualifying assets which are capitalized as cost of assets.
Non-monetary items that are measured in terms of historical cost in a foreign currency are recorded using the exchange rates at the date of the transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates on the date when the fair value was measured. The gain or loss arising on translation of non-monetary items measured at fair value is treated in line with the recognition of the gain or loss on the change in fair value of the item (i.e, translation differences on items whose fair value gain or loss is recognised in Other Comprehensive Income or the Statement of Profit and Loss are also recognised in Other Comprehensive Income or Statement of Profit and Loss, respectively).
(o) Government Grants and Subsidies
Grants in the nature of subsidies which are non-refundable are recognized as income where there is reasonable assurance that the group will comply with all the necessary conditions attached to them. Income from grants is recognized on a systematic basis over periods in which the related costs that are intended to be compensated by such grants are recognized
Refundable government grants are accounted in accordance with the recognition and measurement principle of Ind AS 109, Financial Instruments. It is recognized as income when there is a reasonable assurance that the group will comply with all necessary conditions attached to the grants. Income from such benefit is recognized on a systematic basis over the period of the grants during which the group recognizes interest expense corresponding to such grants.
(p) Financial Instruments Financial Assets
(A) Initial Recognition and Measurement
All Financial Assets are initially recognised at fair value. Transaction costs that are directly attributable to the acquisition or issue of Financial Assets, which are not at Fair Value through Profit and Loss, are adjusted to the fair value on initial recognition.
Purchase and sale of Financial Assets are recognised using trade date accounting.
(B) Subsequent Measurement
Financial Assets measured at Amortised Cost (AC)
A Financial Asset is measured at Amortised Cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the Financial Asset give rise to cash flows on specified dates that represent solely payments of principal and interest on the principal amount outstanding.
Financial Assets measured at Fair Value Through Other Comprehensive Income (FVTOCI)
A Financial Asset is measured at FVTOCI if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling Financial Assets and the contractual terms of the Financial Asset give rise on specified dates to cash flows that represents solely payments of principal and interest on the principal amount outstanding.
Financial Assets measured at Fair Value Through Profit or Loss (FVTPL)
A Financial Asset which is not classified in any of the above categories is measured at FVTPL. Financial assets are reclassified subsequent to their recognition, if the Group changes its business model for managing those financial assets. Changes in business model are made and applied prospectively from the reclassification date which is the first day of immediately next reporting period following the changes in business niodel in accordance with principles laid down under Ind AS 109-Financial instruments.
(C) Investments
Investments are classified into Current or Non-Current Investments. Investments that are readily realizable and intended to be held for not more than a year from the date of acquisition are classified as Current Investments. All other Investments are classified as Non-Current Investments. However, that part of Non-Current Investments which are expected to be realized within twelve months from the Balance Sheet date is also presented under Current Investments under Current portion of Non-Current Investments in consonance with Current/Non-Current classification of Schedule-l of the Act.
All the equity investments which are covered under the scope of Ind AS 109, Financial Instruments are measured at fair value. Investment in mutual funds is measured at fair value through profit and loss (FVTPL). Trading Instruments are measured at fair value through profit and loss (FVTPL)
(D) Investment in Subsidiaries, Associates and Joint Ventures
The Company has accounted for its investments in Subsidiaries, associates and joint ventures at cost less impairment loss (if any).
NON-GAAP MEASURES
Gross Profit, Gross Profit Margin (%), EBITDA, EBITDA Margin (%), PAT Margin (%), Return on Equity (%), Return on Capital employed (%), Net Tangible Fixed Asset Turnover and Working Capital Days (together, Non-GAAP Measures ), presented in this Draft Red Herring Prospectus are a supplemental measure of our performance and liquidity that is not required by, or presented in accordance with, Ind AS. Further, these Non-GAAP Measures are not a measurement of our financial performance or liquidity under Ind AS and should not be considered in isolation or construed as an alternative to cash flows, profit/ (loss) for the years or any other measure of financial performance or as an indicator of our operating performance, liquidity, profitability or cash flows generated by operating, investing or financing activities derived in accordance with Ind AS. In addition, these Non-GAAP Measures are not standardized terms, hence a direct comparison of these Non-GAAP Measures between companies may not be possible. Other companies may calculate these Non-GAAP Measures differently from us, limiting its usefulness as a comparative measure. Although such Non-GAAP Measures are not a measure of performance calculated in accordance with applicable accounting standards, our Companys management believes that they are useful to an investor in evaluating us as they are widely used measures to evaluate a companys operating performance.
Reconciliation of Non-GAAP Measures
Reconciliation of various Non-GAAP measures included in this Draft Red Herring Prospectus are given below:
Reconciliation of Restated Profit for the Year to EBITDA and EBITDA Margin
The table below reconciles restated profit for the year to EBITDA.
| Particulars | For the three months ended June 30, Fiscal | |||
| 2025 | 2025 | 2024 | 2023 | |
| ( million, unless otherwise stated ) | ||||
| Profit before exceptional items (I) | 76.91 | 1,000.44 | 949.55 | 32.74 |
| Other income (II) | 20.11 | 53.10 | 37.07 | 20.29 |
| Finance costs (III) | 21.47 | 177.42 | 76.81 | 73.89 |
| Depreciation and amortization expense (IV) | 71.42 | 265.91 | 133.95 | 15.91 |
| EBITDA (V = I-II+III+IV) | 149.69 | 1,390.67 | 1,123.24 | 102.24 |
| Revenue from operations (VII) | 686.77 | 4,690.80 | 4,281.89 | 968.28 |
| EBITDA Margin (%) (VIII) = (VI/VII) | 21.80 | 29.65 | 26.23 | 10.56 |
Reconciliation for Restated Profit for the Year to Profit After Tax Margin (PAT Margin)
The table below reconciles restated profit for the year to PAT Margin:
| Particulars | For the three months ended June 30, Fiscal | |||
| 2025 | 2025 | 2024 | 2023 | |
| ( million, unless otherwise stated ) | ||||
| Restated profit for the year (I) | 54.31 | 727.60 | 685.43 | 11.81 |
| Total Income (II) | 706.87 | 4743.90 | 4318.96 | 988.57 |
| PAT Margin (%) (III = I/II) | 7.68 | 15.34 | 15.87 | 1.19 |
Reconciliation for Total Borrowings to Net Debt and Net Debt to EBITDA
The table below reconciles total borrowings to Net Debt and Net Debt to EBITDA.
| Particulars | For the three months ended June 30, Fiscal | |||
| 2025 | 2025 | 2024 | 2023 | |
| ( million, unless otherwise stated) | ||||
| Non-current borrowings (I) | - | - | 152.72 | 27.18 |
| Current borrowings (II) | 596.09 | 781.35 | 810.86 | 383.01 |
| Cash and cash equivalents (III) | 382.51 | 1,009.71 | 856.74 | 247.38 |
| Bank Balances (IV) | 161.92 | 9.52 | 299.99 | 149.62 |
| Net Debt (V = (I + II) (III + IV)) | 51.67 | (237.88) | (193.15) | 13.19 |
| EBITDA (VI) | 149.69 | 1,390.67 | 1,123.24 | 102.24 |
| Net Debt to EBITDA (in times) (VII) = (V/VI) | 0.35 | (0.17) | (0.17) | 0.13 |
Reconciliation of Total Equity to Return on Equity
The table below reconciles total equity to return on equity.
| Particulars | For the three months ended June 30, Fiscal | |||
| 2025 | 2025 | 2024 | 2023 | |
| ( million, unless otherwise stated) | ||||
| Average Shareholders\u2019 Fund (I) | 4,945.68 | 3,601.35 | 1,300.24 | 293.66 |
| Restated profit for the year (II) | 54.31 | 727.60 | 685.43 | 11.81 |
| Return on Equity (%) (III) = (II/I) | 1.10 | 20.20 | 52.72 | 4.02 |
Not annualised for the period ended June 30, 2025.
Reconciliation of Total Equity to Capital Employed, Restated Profit for the Year to EBIT and Return on Capital Employed
The table below reconciles total equity to capital employed.
| Particulars | For the three months ended June 30, | Fiscal | ||
| 2025 | 2025 | 2024 | 2023 | |
| ( million, unless otherwise stated) | ||||
| EBITDA (I) | 149.69 | 1,390.67 | 1,123.24 | 102.24 |
| Depreciation (II) | 71.42 | 265.91 | 133.95 | 15.91 |
| EBIT (III) | 78.27 | 1,124.75 | 989.28 | 86.34 |
| Capital Employed (IV) | 4,083.42 | 4,111.28 | 1,459.96 | 602.35 |
| Return on Capital Employed (%) (IX = IV/III) | 1.92 | 27.36 | 67.76 | 14.33 |
Not annualised for the period ended June 30, 2025.
Reconciliation of Revenue from Operations to Net Fixed Assets Turnover Ratio
The table below reconciles revenue from operations to net fixed assets turnover ratio.
| Particulars | For the three months ended June 30, 2025 | 2025 | Fiscal 2024 | 2023 |
| ( million, unless otherwise stated) | ||||
| Turnover (I) | 686.77 | 4,690.80 | 4,281.89 | 968.28 |
| Net Tangible Fixed Assets (II) | 246.98 | 244.85 | 47.86 | 31.06 |
| Net Tangible Fixed Assets Turnover Ratio (in | 2.78 | 19.16 | 89.47 | 31.18 |
| times) (III = I/II) | ||||
Not annualised for the period ended June 30, 2025.
Reconciliation of Net Worth to Net Asset Value per Equity Share
The table below reconciles Net Worth to net asset value per Equity Share.
| Particulars | For the three months ended June 30, Fiscal | |||
| 2025 | 2025 | 2024 | 2023 | |
| ( million, unless otherwise stated) | ||||
| Net Worth (I) ( million) | 4,989.97 | 4,901.39 | 2301.31 | 299.17 |
| Number of Equity Shares at the end of the year | 57,282,100 | 57,282,100 | 50,282,100 | 39,019,200 |
| (II)^ | ||||
| Net Asset Value per equity share (III) = (I/II) ( per share) | 87.11 | 85.57 | 45.77 | 7.67 |
^Number of Equity Shares considered after taking into account CCPS.
Net Asset Value per Equity Share has been adjusted for the effect of bonus issue, share split and share buy back.
PRINCIPAL COMPONENTS OF INCOME AND EXPENDITURE
The principal components of our income and expenditure are as follows:
Income
Our income comprise revenue from operations and other income.
Revenue from operations
Revenue from operations comprises revenue from sale of products, i.e., export sales, domestic sales and other operating revenues.
Other Income
Other income comprises: (i) interest earned; (ii) rental income; (iii) profit on sale of asset; (iv) gain on settlement of liabilities; (v) finance income Ind AS impact; and (vi) miscellaneous income (sale of scrips).
Expenses
Total expenses comprise: (i) cost of materials consumed; (ii) changes in inventories of finished goods; (iii) employee benefits expenses; (iv) finance costs; (v) depreciation and amortisation expenses; and (vi) other expenses.
Cost of materials consumed
Cost of materials consumed comprise the sum of opening stock of raw materials for the year, purchases and incidental expenses during the year (net of returns, claims/discount, if any), less closing stock of raw materials for the year.
Changes in inventories of finished goods
Changes in inventories of finished goods consists of net increases or decreases in inventories of finished goods.
Employee benefits expense
Employee benefits expense comprises (i) salaries and bonus; (ii) gratuity; (iii) leave encashment; (iv) contribution to provident and other funds; (v) insurance; (vi) staff welfare expenses; and (vii) expense on ESOP.
Finance cost
Finance cost comprises: (i) financing charges to banks, i.e., (a) interest expenses and (b) bank charges; and (ii) financing charges to others.
Depreciation and amortization expense
Depreciation and amortization expense comprises: (i) depreciation on property, plant and equipment; (ii) depreciation on right of use asset; and (iii) amortisation of intangible assets.
Other expenses
Other expenses primarily include: (i) debtors written off; (ii) sales and marketing expenses; (iii) technical support services; (iv) travel and conveyance; (v) provision for warranty; (vi) legal and professional fees; (vii) freight; (viii) royalty fees/technical know-how; (ix) repairs and maintenance of buildings and others; (x) corporate social responsibility; and (xi) miscellaneous expenses.
Exceptional items
Exceptional items comprises cost of equity raise
RESULTS OF OPERATIONS
The following table sets forth certain information with respect to our results of operations on a consolidated basis for the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023:
| Particulars | For the three months ended June 30, | For the years ended March 31, | ||||||
| 2025 | 2025 | 2024 | 2023 | |||||
| Amount ( million ) | Percenta ge of Total Income | Amount ( million ) | Percentag e of Total Income (%) | Amount ( million ) | Percentag e of Total Income (%) | Amount ( million ) | Percentag e of Total Income (%) | |
| (%) | ||||||||
| Revenue from operation s | 686.77 | 97.16 | 4,690.80 | 98.88 | 4,281.89 | 99.14 | 968.28 | 97.95 |
| Other income | 20.11 | 2.84 | 53.10 | 1.12 | 37.07 | 0.86 | 20.29 | 2.05 |
| Total | 706.87 | 100.00 | 4,743.90 | 100.00 | 4,318.96 | 100.00 | 988.57 | 100.00 |
| Income | ||||||||
| Cost of materials consumed | 190.96 | 27.01 | 2,153.09 | 45.39 | 2,132.75 | 49.38 | 707.87 | 71.61 |
| Changes in inventorie s of finished goods | 155.78 | 22.04 | (106.98) | (2.26) | 66.55 | 1.54 | (119.80) | (12.12) |
| Employee benefits expenses | 119.60 | 16.92 | 444.35 | 9.37 | 130.55 | 3.02 | 52.19 | 5.28 |
| Finance costs | 21.47 | 3.04 | 177.42 | 3.74 | 76.81 | 1.78 | 73.89 | 7.47 |
| Depreciat ion and amortisati on expenses | 71.42 | 10.10 | 265.91 | 5.61 | 133.95 | 3.10 | 15.91 | 1.61 |
| Other expenses | 70.74 | 10.01 | 809.67 | 17.07 | 828.80 | 19.19 | 225.79 | 22.84 |
| Total expenses | 629.96 | 89.12 | 3,743.46 | 78.91 | 3,369.41 | 78.01 | 955.83 | 96.69 |
| Profit/(Lo ss) before exception al and extraordin ary items and tax | 76.91 | 10.88 | 1,000.44 | 21.09 | 949.55 | 21.99 | 32.74 | 3.31 |
| Exception al items | NIL | NIL | 7.76 | 0.16 | 4.05 | 0.09 | 19.07 | 1.93 |
| Particulars | For the three months ended June 30, | For the years ended March 31, | ||||||
| 2025 | 2025 | 2024 | 2023 | |||||
| Amount ( million ) | Percenta ge of Total Income | Amount ( million ) | Percentag e of Total Income (%) | Amount ( million ) | Percentag e of Total Income (%) | Amount ( million ) | Percentag e of Total Income (%) | |
| (%) | ||||||||
| Profit before tax Tax expense | 76.91 | 10.88 | 992.68 | 20.93 | 945.50 | 21.89 | 13.67 | 1.38 |
| Current tax | 8.80 | 1.24 | 218.50 | 4.61 | 211.50 | 4.90 | 2.27 | 0.23 |
| MAT credit | NIL | NIL | - | 0.00 | 15.02 | 0.35 | (1.98) | (0.20) |
| Deferred tax | 13.80 | 1.95 | 46.58 | 0.98 | 33.55 | 0.78 | 1.57 | 0.16 |
| Profit for the year (net of tax) | 54.31 | 7.68 | 727.60 | 15.34 | 685.43 | 15.87 | 11.81 | 1.19 |
THREE MONTHS ENDED JUNE 30, 2025
Total Income
Total income for the three months ended June 30, 2025 was 706.87 million.
Revenue from Operations
Revenue from operations for the three months ended June 30, 2025 was 686.77 million.
Other Income
Other income for the three months ended June 30, 2025 was 20.11 million.
Expenses
Total expenses for the three months ended June 30, 2025 was 629.96 million
Cost of materials consumed
Cost of materials consumed for the three months ended June 30, 2025 was 190.96 million.
Changes in inventories of finished goods
Changes in inventories of finished goods for the three months ended June 30, 2025 was 155.78 million.
Employee Benefits Expense
Employee benefits expense for the three months ended June 30, 2025 was 119.60 million.
Finance Cost
Finance cost for the three months ended June 30, 2025 was 21.47 million.
Depreciation and Amortisation Expense
Depreciation and amortisation expense for the three months ended June 30, 2025 was 71.42 million.
Other Expenses
Other expenses for the three months ended June 30, 2025 was 70.74 million.
Profit before tax
Our profit before tax for the three months ended June 30, 2025 was 76.91 million.
Tax Expense
Current tax for the three months ended June 30, 2025 was 8.80 million, and deferred tax for the three months ended June 30, 2025 was 13.80 million. As a result, total tax expense for the three months ended June 30, 2025 was 22.61 million.
Restated profit for the period
For the reasons discussed above, our profit for the three months ended June 30, 2025 was 54.31 million. FISCAL 2025 COMPARED TO FISCAL 2024 Total Income
Total income increased by 9.84% from 4,318.96 million in Fiscal 2024 to 4,743.90 million in Fiscal 2025 primarily on account of an increase in revenue from operations.
Revenue from Operations
Revenue from operations increased by 9.55% from 4,281.89 million in Fiscal 2024 to 4,690.80 million in Fiscal 2025 primarily on account of an increase in revenue from export sales from 2,081.46 million in Fiscal 2024 to 3,073.38 million in Fiscal 2025.
Other Income
Other income increased by 43.24% from 37.07 million in Fiscal 2024 to 53.10 million in Fiscal 2025, primarily
on account of an increase in interest earned from 33.39 million in Fiscal 2024 to 41.30 million in Fiscal 2025, and a gain on settlement of liabilities and miscellaneous income in Fiscal 2025 of 8.30 million and 1.06 million, respectively.
Expenses
Total expenses increased by 11.10% from 3,369.41 million in Fiscal 2024 to 3,743.46 million in Fiscal 2025, primarily due to an increase in cost of materials consumed from 2,132.75 million in Fiscal 2024 to 2,153.09 million in Fiscal 2025, employee benefits expenses from 130.55 million in Fiscal 2024 to 444.35 million in Fiscal 2025, an increase in finance costs from 76.81 million in Fiscal 2024 to 177.42 million in Fiscal 2025 and an increase in depreciation and amortisation expenses from 133.95 million in Fiscal 2024 to 265.91 million in Fiscal 2025.
Cost of materials consumed
Cost of materials consumed increased by 0.95% from 2,132.75 million in Fiscal 2024 to 2,153.09 million in
Fiscal 2025, primarily due to an increase in raw materials consumed on account of increase in business operations.
Changes in inventories of finished goods
Changes in inventories of finished goods decreased by (260.75)% from 66.55 million in Fiscal 2024 to (106.98) million in Fiscal 2025, primarily due to a decrease in opening stock of finished goods from 120.75 million in Fiscal 2024 to 54.20 million in Fiscal 2025.
Employee Benefits Expense
Employee benefits expense increased by 240.36% from 130.55 million in Fiscal 2024 to 444.35 million in Fiscal 2025, primarily on account of an increase in staff welfare expenses from 5.89 million in Fiscal 2024 to 17.68 million in Fiscal 2025, an increase in contribution to provident and other funds from 8.09 million in Fiscal 2024 to 20.67 million in Fiscal 2025 and an increase in salaries and bonus from 109.30 million in Fiscal 2024 to 281.27 million in Fiscal 2025 and an increase in expense on ESOP from (7.30) million in Fiscal 2024 to 102.40 million in Fiscal 2025, due to an increase in the number of employees from 167 in Fiscal 2024 to 258 in Fiscal 2025.
Finance Cost
Finance cost increased by 130.98% from 76.81 million in Fiscal 2024 to 177.42 million in Fiscal 2025 primarily on account of an increase in interest expenses from 53. 96 million in Fiscal 2024 to 125.61 million in Fiscal 2025 and increase in financing charges to others from 16.40 million in Fiscal 2024 to 42.25 million in Fiscal 2025.
Depreciation and Amortisation Expense
Depreciation and amortisation expense increased by 98.51% from 133.95 million in Fiscal 2024 to 265.91 million in Fiscal 2025, primarily on account of an increase in amortisation of intangible assets 114.40 million in Fiscal 2024 to 230.31 million in Fiscal 2025 on account of acquiring our intellectual property rights towards the end of Fiscal 2024 and an increase in depreciation on property, plant and equipment from 10.05 million in Fiscal 2024 to 19.08 million in Fiscal 2025.
Other Expenses
Other expenses decreased by (2.31)% from 828.80 million in Fiscal 2024 to 809.67 million in Fiscal 2025, primarily on account of a decrease in; royalty fees and technical know-how from 105.13 million in Fiscal 2024 to nil in Fiscal 2025 due to the acquisition of all our intellectual property rights towards the end of Fiscal 2024 ; expense on provision for warranty from 208.20 million in Fiscal 2024 to 81.49 million in Fiscal 2025; expense of debtors written off from 218.21 million in Fiscal 2024 to 190.51 million in Fiscal 2025; technical support services from 120.26 million in Fiscal 2024 to 115.63 million in Fiscal 2025.
Profit before tax
Our profit before tax increased from 945.50 million in Fiscal 2024 to 992.68 million in Fiscal 2025 for the reasons discussed above and was offset by the increase in exceptional items from 4.05 million in Fiscal 2024 to 7.76 million in Fiscal 2025.
Tax Expense
Current tax increased from 211.50 million in Fiscal 2024 to 218.50 million in Fiscal 2025 due to a corresponding increase in the profit before tax in Fiscal 2025, our MAT credit decreased from 15.02 million in Fiscal 2024 to nil in Fiscal 2025 and deferred tax increased from 33.55 million in Fiscal 2024 to 46.58 million in Fiscal 2025. As a result, total tax expense amounted to 265.08 million in Fiscal 2025 as compared to 260.07 million in Fiscal 2024.
Restated profit for the year
For the reasons discussed above, our profit for the year was 727.60 million in Fiscal 2025 as compared to 685.43 million in Fiscal 2024.
FISCAL 2024 COMPARED TO FISCAL 2023
Total Income
Total income increased by 336.89% from 988.57 million in Fiscal 2023 to 4,318.96 million in Fiscal 2024 primarily on account of an increase in revenue from operations.
Revenue from Operations
Revenue from operations increased by 342.21% from 968.28 million in Fiscal 2023 to 4,281.89 million in Fiscal 2024 mainly on account of an increase in revenue from sale of products; export sales from 180.64 million in Fiscal 2023 to 2,081.46 million in Fiscal 2024 and domestic sales from 656.36 million in Fiscal 2023 to 1,748.62 million in Fiscal 2024.
Other Income
Other income increased by 82.68% from 20.29 million in Fiscal 2023 to 37.07 million in Fiscal 2024, primarily on account of an increase in interest earned from 16.20 million in Fiscal 2023 to 33.39 million in Fiscal 2024.
Expenses
Total expenses increased by 252.51% from 955.83 million in Fiscal 2023 to 3,369.41 million in Fiscal 2024, primarily due to an increase in cost of materials consumed from 707.87 million in Fiscal 2023 to 2,132.75 million in Fiscal 2024, an increase in changes in inventories of finished goods from (119.80) million in Fiscal 2023 to 66.55 million in Fiscal 2024 and an increase in employee benefits expense from 52.19 million in Fiscal 2023 to 130.55 million in Fiscal 2024.
Cost of materials consumed
Cost of materials consumed increased by 201.29% from 707.87 million in Fiscal 2023 to 2,132.75 million in Fiscal 2024, primarily due to an increase in raw materials consumed on account of increase in business operations.
Changes in inventories of finished goods
Changes in inventories of finished goods increased by 155.55% from (119.80) million in Fiscal 2023 to 66.55 million in Fiscal 2024 primarily on account of an increase in the opening stock of finished goods from 0.95 million in Fiscal 2023 to 120.75 million in Fiscal 2024.
Employee Benefits Expense
Employee benefits expenses increased by 150.15% from 52.19 million in Fiscal 2023 to 130.55 million in Fiscal 2024, primarily on account of an increase in salaries and bonus from 41.00 million in Fiscal 2023 to 109.30 million in Fiscal 2024 and an increase in staff welfare expenses from 1.72 million in Fiscal 2023 to 5.89 million in Fiscal 2024 due to an increase in employees from 63 in Fiscal 2023 to 167 in Fiscal 2024.
Finance Cost
Finance cost increased by 3.96% from 73.89 million in Fiscal 2023 to 76.81 million in Fiscal 2024 primarily on account of an increase in financing charges to others from 5.19 million in Fiscal 2023 to 16.40 million in Fiscal 2024.
Depreciation and Amortisation Expense
Depreciation and amortization expense increased by 742.17% from 15.91 million in Fiscal 2023 to 133.95 million in Fiscal 2024, primarily on account of an increase in amortisation of intangible assets from 2.64 million in Fiscal 2023 to 114.40 million in Fiscal 2024 on account of acquiring our intellectual property rights towards the end of Fiscal 2024 and an increase in depreciation on property, plant and equipment from 7.28 million in Fiscal 2023 to 10.05 million in Fiscal 2024.
Other Expenses
Other expenses increased by 267.07% from 225.79 million in Fiscal 2023 to 828.80 million in Fiscal 2024, primarily on account of an increase in: technical support services from 50.20 million in Fiscal 2023 to 120.26 million in Fiscal 2024; expense on provision for warranty from 56.60 million in Fiscal 2023 to 208.20 million in Fiscal 2024; royalty fees/technical know-how from 76.60 million in Fiscal 2023 to 105.13 million in Fiscal 2024 both due to an increase in revenue from operations in Fiscal 2024; expense of debtors written off from 4.53 million in Fiscal 2023 to 218.21 million in Fiscal 2024. Further, we incurred an expense on printing and stationery and recruitment and training of 2.12 million and 1.56 million, respectively in Fiscal 2024, which were both nil in Fiscal 2023.
Profit before tax
Our profit before tax increased from 13.67 million in Fiscal 2023 to 945. 50 million in Fiscal 2024 for the reasons discussed above and due to the decrease in exceptional items from 19.07 million in Fiscal 2023 to 4.05 million in Fiscal 2024.
Tax Expense
Current tax increased from 2.27 million in Fiscal 2023 to 211.50 million in Fiscal 2024 due to a corresponding increase in the profit before tax in Fiscal 2024, MAT credit increased from (1.98) million in Fiscal 2023 to 15.02 million in Fiscal 2024 and deferred tax increased from 1.57 million in Fiscal 2023 to 33.55 million in Fiscal 2024. As a result, total tax expense amounted to 260.07 million in Fiscal 2024 as compared to 1.86 million in Fiscal 2023.
Profit for the year
For the reasons discussed above, our restated profit for the year was 685.43 million in Fiscal 2024 as compared to 11.81 million in Fiscal 2023.
LIQUIDITY AND CAPITAL RESOURCES
Our primary source of liquidity is cash generated from operations, equity raised, working capital and cash credit facilities from banks. As of June 30, 2025 we had cash and cash equivalents of 382.51 million and bank balances other than cash and cash equivalents of 161.92 million.
Our financing requirements are primarily for working capital and investments in our business such as capital expenditure. We evaluate our funding requirements periodically in light of our net cash flow from operating activities and the requirements of our business and operations.
CASH FLOWS
The following table sets forth certain information relating to our cash flows in the years/ periods indicated:
| Particulars | For the three months ended June 30, Fiscal | |||
| 2025 | 2025 | 2024 | 2023 | |
| Net cash from operating activities (A) | (239.74) | (1,361.18) | 783.34 | 230.55 |
| Net cash from /(used in) investing activities (B) | (41.92) | (246.89) | (1,901.66) | (104.47) |
| Net cash from /(used in) financing activities (C) | (193.15) | 1,470.57 | 1,878.06 | (82.40) |
| Net increase/(decrease) in cash & cash equivalents (A+B+C) | (474.81) | (137.50) | 759.73 | 43.69 |
Operating Activities
Three months ended June 30, 2025
For the three months ended June 30, 2025, net cash used in operating activities was 239.74 million. Our net profit before tax was 76.91 million and adjustments primarily consisted of depreciation and amortisation expense of 71.42 million and transfer to share options outstanding account for 36.40 million.
Operating profit before working capital changes was 171.08 million in the three months ended June 30, 2025. The primary adjustments for changes in working capital included decrease in trade receivables of 427.54 million, decrease in other current liabilities of 444.60 million, decrease in trade payables of 149.06 million and increase in other financial assets (non-current) of 167.55 million. Cash used in operating activities in the three months ended June 30, 2025 was 166.51 million.
Fiscal 2025
In Fiscal 2025, net cash used in operating activities was 1,361.18 million. Our net profit before tax was 992.68 million and adjustments primarily consisted of depreciation and amortisation expense of 265.91 million, finance cost of 125.61 million and transfer to share options outstanding account for 102.40 million.
Operating profit before working capital changes was 1,445.39 million in Fiscal 2025. The primary adjustments for changes in working capital included an increase in other financial assets (non-current) of 650.89 million, increase in trade receivables of 1,166.69 million, a decrease in other current assets of 195.05 million and a decrease in other current liabilities of 979.97 million. Cash used in operating activities in Fiscal 2025 was 1,029.02 million and income taxes paid was 332.17 million.
Fiscal 2024
In Fiscal 2024, net cash used in operating activities was 783.34 million. Net profit before tax was 945.50 million and adjustments primarily consisted of depreciation and amortisation expense of 133.95 million, finance costs of 53.96 million and interest income of 33.39.
Operating profit before working capital changes was 1,093.78 million in Fiscal 2024. The primary adjustments for changes in working capital included increase in inventories of 721.00 million, increase in trade receivables of 524.83 million, increase in other current assets of 215.10 million, increase in other current liabilities of 1,100.45 million and a decrease in trade payables. Cash used in operating activities in Fiscal 2024 was 837.29 million which was partially offset by income taxes paid of 53.95 million.
Fiscal 2023
In Fiscal 2023, net cash generated by operating activities was 230.55 million. Net profit before tax was 13.67 million and adjustments primarily consisted of depreciation and amortisation expense of 15.91 million, finance costs of 64.40 million and interest income of 16.20 million.
Operating profit before working capital changes was 77.55 million in Fiscal 2023. The primary adjustments for changes in working capital included increase in inventories of 253.14 million, increase in trade receivables of 236.32 million, increase in trade payables of 264.28 million and an increase in other current liabilities of 513.47 million. Cash generated from operating activities in Fiscal 2023 was 240.08 million which was partially offset by income taxes paid of 9.53 million.
Investing Activities
Three months ended June 30, 2025
Net cash used in investing activities was 41.92 million in the three months ended June 30, 2025, primarily on account of payment for purchase of intangible assets of 44.92 million.
Fiscal 2025
Net cash used in investing activities was 246.89 million in Fiscal 2025, primarily on account of payments for purchase of property, plant and equipment of 216.12 million and payments for purchase of intangible assets and capital work in progress of 50.63 million.
Fiscal 2024
Net cash used in investing activities was 1,901.66 million in Fiscal 2024, primarily on account of payments for purchase of intangible assets and capital work in progress of 1,845.86 million.
Fiscal 2023
Net cash used in investing activities was 104.47 million in Fiscal 2023, primarily on account of payments for purchase of intangible assets of 109.98 million, which was partially offset by interest received of 16.20 million.
Financing Activities
Three months ended June 30, 2025
Net cash generated from financing activities was 193.15 million in the three months ended June 30, 2025, primarily on account of repayment of long-term borrowings of 157.89 million.
Fiscal 2025
Net cash generated from financing activities was 1,470.57 million in Fiscal 2025, primarily on account of issue of Equity Shares of 1,750.00 million which was partially offset by the repayment of long term borrowings of 152.72 million and finance cost paid of 125.61 million.
Fiscal 2024
Net cash generated from financing activities was 1,878.06 million in Fiscal 2024, primarily on account of issue of cumulative Preference Shares of 1,322.99 million and proceeds from short term borrowings of 427.84 million.
Fiscal 2023
Net cash used in financing activities was 82.40 million in Fiscal 2023, primarily on account of finance cost paid of 64.40 million and repayment of long term borrowings of 19.58 million.
INDEBTEDNESS
As of November 30, 2025, our aggregate indebtedness was 2,445.00 million. The interest rates applicable to our funds and non fund based facilities typically range from 7.75% to 8.50%. The tenor of the facilities availed by our Company typically ranges from three months to five years. For further information on our outstanding indebtedness, see Financial Indebtedness on page 420.
MATURITY PROFILE OF FINANCIAL LIABILITIES
The following table detail our financial liabilities into relevant maturity based on their contractual maturities for all non-derivative financial liabilities. The amounts disclosed in the table below are the contractual undiscounted cash flows of financial liabilities as at and for the three months ended June 30, 2025.
| Particulars | Less than 1 year | 1-2 year ( million) | 2 3 Years | More than 3 years | Total |
| Borrowings | 596.09 | - | - | - | 596.09 |
| Less: IND AS Effect | - | - | - | - | - |
| Total | 596.09 | - | - | - | 596.09 |
| Trade payable | 63.90 | 0.18 | - | 64.08 | |
| Other financial liabilities | 0.90 | - | - | - | 0.90 |
| Total | 660.89 | 0.18 | - | - | 661.07 |
CONTINGENT LIABILITIES
As of June 30, 2025, our contingent liabilities that have been disclosed in the Restated Consolidated Financial Statements are as follows:
| S. No. Particulars | Amount |
| ( million) | |
| 1. Bank guarantees | 257.52 |
| Total | 257.52 |
Further, as of June 30, 2025, our commitments that have been disclosed in the Restated Consolidated Financial Statements are as follows:
| S. No. Particulars | Amount ( million ) |
| 1. Capital commitments | 0.57 |
| 2. Other commitments (expenditure related contractual commitments apart from capital commitments) | 84.67 |
For further information of our contingent liabilities as of June 30, 2025, see Restated Consolidated Financial Statements Note 39 - Contingent liabilities and Capital Commitments , on page 359.
CAPITAL EXPENDITURES
For the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively, the aggregate of additions to property, plant and equipment was 12.62 million, 216.12 million, 26.85 million and 20.70 million, respectively. The following table sets forth additions to property, plant and equipment by category of expenditure, for the three months ended June 30, 2025 and Fiscals 2025, 2024 and 2023, respectively:
(in million)
| Particulars | Three months ended June 30, 2025 | Fiscal 2025 | Fiscal 2024 | Fiscal 2023 |
| Data processing equipment | 2.48 | 17.51 | 12.48 | 0.47 |
| Furniture & fixtures | 2.75 | 4.47 | 0.96 | 0.20 |
| Office equipment | 0.67 | 22.36 | 2.17 | 1.73 |
| Plant & machinery | 0.38 | 6.42 | 6.29 | 15.38 |
| Leasehold improvements | 6.33 | 165.36 | 4.95 | 2.92 |
| Total | 12.62 | 216.12 | 26.85 | 20.70 |
OFF-BALANCE SHEET COMMITMENTS AND ARRANGEMENTS
We do not have any off-balance sheet arrangements, derivative instruments or other relationships with other entities that would have been established for the purpose of facilitating off-balance sheet arrangements.
RELATED PARTY TRANSACTIONS
We enter into various transactions with related parties in the ordinary course of business. Related parties with whom transactions have taken place during the year include sales, reimbursement of expenses, purchases of project material/equipment, software and technical support, sublease rentals from CEAQ India; purchases of project material/equipment, purchase of intangible assets, other services and loans from CEAQ Singapore; purchases of project material/equipment from UAB Tonbo Imaging; and sales, reimbursement of expenses, purchases of project material/equipment and other services from HBL Engineering Limited. For further information, see Restated Consolidated Financial Statements Note 45 - Related Party Disclosures on page
375.
AUDITOR_fS OBSERVATIONS
Our Statutory Auditors have not included any qualifications, reservations or emphasis of matters in their audit reports in the three months ended June 30, 2025 and the last three Fiscals.
CHANGES IN ACCOUNTING POLICIES IN THE LAST THREE FINANCIAL YEARS
There have been no changes in our accounting policies in the three months ended June 30, 2025 and the last three Fiscals.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our operational activities expose us to a variety of financial risks which includes market risk (including foreign currency risk, interest rate risk, other price risk), credit risk and liquidity risk. Our focus is to ensure liquidity which is sufficient to meet our operational requirements. Our board of directors have established certain key managerial personnel who are responsible for developing and monitoring the risk management policies.
Market Risk
Market risk is the risk arising from changes in market prices such as interest rates will affect our income or the value of our holdings of financial instruments. Market risk is attributable to all market risk sensitive financial instruments including long term debt. We are exposed to market risk primarily related to interest rate risk, currency risk and the other prices risk and the market value of the investments. Thus, the exposure to market risk is a function of investing and borrowing activities and revenue generating and operating activities.
Foreign Currency Risk
We are exposed to foreign exchange risk arising from foreign currency transactions, USD being its prime foreign currency. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not our functional currency (INR). The risk is measured through a forecast of highly probable foreign currency cash flows.
Interest Rate Risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to the risk of changes in market interest rates relates primarily to our debt obligations with floating interest rates and investments. However, we do not have any borrowings. All of our borrowings are on a fixed rate of interest. We have exposure to interest rate risk, arising principally on changes in Marginal Cost of Funds based Lending Rate ( MCLR ). We use a mix of interest rate sensitive financial instruments to manage the liquidity and fund requirements for its day to day operations like short term credit lines besides internal accruals.
Other Price Risk
Other price risk is the risk that the fair value of a financial instrument will fluctuate due to changes in market traded price. Our Company is exposed to price risk arising mainly from investments in equity/equity-oriented instruments recognized at FVTPL/FVTOCI.
Credit Risk
Credit risk is the risk of financial loss arising from counterparty failure to repay or service debt according to the contractual terms or obligations. Credit risk encompasses of both, the direct risk of default and the risk of deterioration of creditworthiness as well as concentration of risks. We measure the expected credit loss associated with its assets based on historical trend, industry practices and the business environment in which the entity operates or any other appropriate basis. The impairment methodology applied depends on whether there has been a significant increase in credit risk. Financial instruments that are subject to concentration of credit risk principally consist of trade receivables, investments, derivative financial instruments and other financial assets. None of the financial instruments of our Company results in material concentration of credit risk.
Credit risk is the risk that a counterparty fails to discharge its obligation to our Company. Our Companys exposure to credit risk is influenced mainly by cash and cash equivalents, trade receivables and other financial assets measured at amortized cost. Our Company continuously monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. Our Company assesses and manages credit risk based on internal credit rating system. Internal credit rating is performed for each class of financial instruments with different characteristics. Our Company assigns the following credit ratings to each class of financial assets based on the assumptions, inputs and factors specific to the class of financial assets: (i) Low credit risk, (ii) Moderate credit risk, (iii) High credit risk.
Liquidity Risk
Liquidity risk is the risk that our Company will encounter difficulty in meeting the obligations associated with its financial liabilities that are settled by delivering cash or another financial asset. Our Companys approach to managing liquidity is to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when they are due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to our Companys reputation.
The management monitors monthly rolling forecasts of our Companys liquidity position and cash and cash equivalents on the basis of expected cash flows. This is generally carried in accordance with standard guidelines. Our Company has liquidity reserves in the form of highly liquid assets in the form of cash and cash equivalent, deposit accounts, etc.
For further information, see Restated Consolidated Financial Statements Note 43 - Financial Risk Management on page 367.
SIGNIFICANT ECONOMIC CHANGES
To the knowledge of our management, other than as described in Risk Factors and - Significant Factors Affecting our Results of Operations and Financial Condition on pages 33 and 385, respectively, there are no other significant economic changes that materially affect or are likely to affect income from continuing operations.
UNUSUAL OR INFREQUENT EVENTS OF TRANSACTIONS
Except as described in this Draft Red Herring Prospectus, to our knowledge, there have been no unusual or infrequent events or transactions that have in the past or may in the future affect our business operations or future financial performance.
KNOWN TRENDS OR UNCERTAINTIES
Our business has been affected and we expect will continue to be affected by the trends identified above in _g
Significant Factors Affecting our Results of Operations and Financial Condition and the uncertainties described in Risk Factors beginning on pages 392 and 33. To our knowledge, except as described or anticipated in this Draft Red Herring Prospectus, there are no known factors which we expect will have a material adverse impact on our revenues or income from continuing operations.
FUTURE RELATIONSHIP BETWEEN COST AND INCOME
Other than as described in Risk Factors , Our Business and Managements Discussion and Analysis of
Financial Condition and Results of Operations on pages 33, 233 and 385, respectively, there are no known factors that might affect the future relationship between costs and revenues.
NEW PRODUCTS OR BUSINESS SEGMENTS
Except as set out in this Draft Red Herring Prospectus, we have not announced and do not expect to announce in the near future any new business segments other than in the normal course of business.
COMPETITIVE CONDITIONS
We operate in a competitive environment. See Our Business , Industry Overview and Risk Factors on pages 233, 147 and 33, respectively, for further information on competitive conditions that we face.
EXTENT TO WHICH MATERIAL INCREASES IN NET SALES OR REVENUE ARE DUE TO INCREASED SALES VOLUME, INTRODUCTION OF NEW PRODUCTS OR SERVICES OR INCREASED SALES PRICES
Changes in revenue in the three months ended June 30, 2025 and the last three Fiscals are as described in _g Fiscal 2025 compared to Fiscal 2024 and _g Fiscal 2024 compared to Fiscal 2023 above on pages 409 and 410, respectively.
SEGMENT REPORTING
Our Company is engaged in a single line of business of vision technology based products and solutions and operates from a single geographical location (Bangalore, Karnataka, India). The Chief Revenue Officer (CRO) monitors the business as a whole for the purposes of making decisions on resource allocation and performance assessment. Accordingly, the Company has only one reportable segment, and the segment reporting requirements under Ind AS 108 Operating Segments are not applicable beyond the entity-wide disclosures presented in the Restated Consolidated Financial Statements.
SIGNIFICANT DEPENDENCE ON SINGLE OR FEW CUSTOMERS/SUPPLIERS
We typically enter into contracts with our customers through tenders obtained via a competitive bidding process. Accordingly, our relationship with our customers are short term and typically for the manufacture of a specific product, but our revenue from operations has been materially concentrated in the three months ended June 30, 2025 and last three Fiscals. Some of our tenders garner us customers who contribute significantly towards revenue from operations for particular periods.
SEASONALITY/ CYCLICALITY OF BUSINESS
While our business is not seasonal, the nature of business is cyclical in nature on account of it being geopolitically driven. Funding for defence projects is subject to annual or multi-year government budgets, which can be delayed or reprioritised due to shifting political or economic circumstances. As per the F&S Report, in recent years, geopolitical instability, such as border conflicts, rising regional tensions, and emerging non-state threats, has led to accelerated procurement through emergency purchase mechanisms and fast-track acquisitions. These mechanisms are designed to address immediate operational needs, leading to sudden spikes in demand for defence electronics. While this has created short-term demand spikes, such procurement cycles are episodic and may not be sustained if geopolitical tensions subside or governments revert to conventional, multi-year acquisition programs. The episodic nature of emergency procurement leads to fluctuations in order volumes and revenue, making it difficult for companies to forecast and plan long-term investments or resource allocation. Consequently, revenue visibility can be inconsistent, and conversion of opportunities from the broader Total Addressable Market
( TAM ) and Serviceable Addressable Market ( SAM ) often remains a prolonged, resource-intensive process in the absence of conflict-driven urgency.
For further details, see Our business is cyclical in nature on account of it being geopolitically driven. Further, tender-based procurement cycle results in poor revenue visibility, which may have an adverse impact on our business, financial stability, results of operations, investor confidence, and the ability to secure financing for growth or innovation.
SIGNIFICANT DEVELOPMENTS AFTER JUNE 30, 2025 THAT MAY AFFECT OUR FUTURE RESULTS OF OPERATIONS
No circumstances have arisen after June 30, 2025 which materially and adversely affect or are likely to affect our operations, trading or profitability, or the value of our assets or our ability to pay our material liabilities within the next twelve months.
Except as disclosed below, there have been no material development since June 30, 2025:
Stock Split
Pursuant to resolutions passed by the Board and the shareholders on September 16, 2025, the Company undertook a stock split, subdividing its equity shares from a face value of 10 each into 5 (five) Equity Shares of 2 (each. As a result:
Clause V of the Memorandum of Association was amended to reflect the increase in authorized share capital of our Company from 740,000,000 divided into 11,497,500 equity shares of 10 each, 125,000 preference shares of face value of 10 each, 160,000 preference shares of face value of 913 each, 200,000 preference shares of face value of 100 each and 45,000 preference shares of face value of 10,171 each to 740,000,000 divided to 57,487,500 equity shares of 2 each, 125,000 preference shares of face value of 10 each, 160,000 preference shares of face value of 913 each, 200,000 preference shares of face value of 100 each and 45,000 preference shares of face value of 10,171 each.
Pursuant to resolutions passed by our Board and our Shareholders in their respective meetings held on September 16, 2025, each, the face value of the equity shares of our Company was sub-divided from 10 each to 2 each. Accordingly, issued, subscribed and paid-up equity share capital of our Company comprising 11,456,420 equity shares of 10 each were sub-divided into 57,282,100 Equity Shares of face value 2 each.
IIFL Customer Care Number
(Gold/NCD/NBFC/Insurance/NPS)
1860-267-3000 / 7039-050-000
IIFL Capital Services Support WhatsApp Number
+91 9892691696
Download The App Now
Follow us on
2026, IIFL Capital Services Ltd. All Rights Reserved
IIFL Capital Services Limited - Stock Broker SEBI Regn. No: INZ000164132 (Member ID - NSE: 10975 BSE: 179 MCX: 55995 NCDEX: 01249), DP SEBI Reg. No. IN-DP-185-2016, IA SEBI Regn. No: INA000000623, Merchant Banker SEBI Regn. No. INM000010940, RA SEBI Regn. No: INH000000248, BSE Enlistment Number (RA): 5016, AMFI-Registered Mutual Fund Distributor & SIF Distributor
ARN NO : 47791 (Date of initial registration – 17/02/2007; Current validity of ARN – 08/02/2027), PFRDA Reg. No. PoP 20092018, IRDAI Corporate Agent (Composite) : CA1099
This Certificate Demonstrates That IIFL As An Organization Has Defined And Put In Place Best-Practice Information Security Processes.
