True Colors Ltd Management Discussions

You should read the following discussion and analysis of financial condition and results of operations together with our financial statements included in this Draft Red Herring Prospectus. The following discussion relates to our Company and is based on our restated financial statements. Our financial statements have been prepared in accordance with Indian GAAP; the accounting standards and other applicable provisions of the Companies Act.

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to our operations include, among others, economic conditions affecting demand/supply and price conditions in domestic and overseas market in which we operate, changes in Government Regulations, Tax Laws and other Statutes and incidental factors.

BUSINESS OVERVIEW

Our Company is engaged in the business of import and distribution of digital textile printers and manufacturing and supplying of products related to digital textile printing industry. Our business model includes manufacturing as well as trading that covers the following two key pillars in the digital textile printing industry such as: -

a) Machinery & Ink Supply (Import & Distribution):

We import and distribute high-quality wide format digital textile inkjet printers from globally recognized brands such as KONICA MINOLTA, HOPETECH, ITTEN, PENGDA and SKYJET. Further we have signed dealership agreements with these brands. These printers are supplied to textile manufacturers, export houses and fabric dealers across India. By providing installation services, spare parts, and after-sales support, we serve as a reliable partner for businesses adopting digital textile printing. Additionally, we import and supply specialized digital textile printing inks that ensure vibrant and durable prints. Further Our ink portfolio includes:

Sublimation Inks Specially formulated for polyester fabrics, our sublimation inks are designed for transfer printing applications. These inks offer exceptional color brilliance, high penetration, and sharp detailing, ensuring vibrant and durable prints with excellent wash and rub fastness.

Reactive Inks Used for direct printing on natural fibers such as cotton, viscose, and silk, our reactive inks deliver deep color saturation, excellent fixation, and superior color fastness. These inks are optimized for high-speed printing and consistent output across diverse fabric types.

Disperse Inks Engineered for direct-to-fabric printing on polyester materials, our disperse inks enable rich color development and high-definition print results. These inks offer outstanding thermal stability and are suitable for both fashion and home textile applications. By providing installation services, spare parts, and after-sales support, we serve as a reliable partner for businesses adopting digital textile printing.

b) Sublimation Paper Manufacturing & Supply:

We have established an in-house sublimation paper manufacturing unit, a critical component in the digital textile printing process. This ensures consistent supply to our customers, quality control over printing materials and reduced dependency on third-party suppliers.

c) Digital Textile Printing:

We provide digital textile printing for customers who prefer to outsource their printing needs and in addition to it we have increased our scope to printed fabric supply. These printing include:

Job-Work Printing- Printing on fabrics supplied by clients.

Printed Fabric Supply- Manufacturing and supplying of custom-printed fabrics.

We have consistently grown in terms of our revenues over the past years. In the recent periods our revenues from operation were 8,066.04 Lakhs in F.Y. 2022-23, Rs. 16,008.24 Lakhs in F.Y. 2023-24 and 23,365.62 Lakhs in F.Y. 2024-25. Our Net Profit after tax for the above-mentioned periods were 391.79 Lakhs, 824.57 Lakhs and 2,469.38 Lakhs respectively.

Factors contributing to the growth of our Revenue:

Operational Expansion & Integration

Strategic Client Relationships

Product Innovation Aligned with Market Trends

Rising Industry Adoption of Digital Textile Printing

FINANCIAL KPIs OF THE COMPANY:

Our company considers that KPIs included herein below have a bearing for arriving at the basis for offer price. The KPIs disclosed below have been used historically by our Company to understand and analyse the business performance, which in result, help us in analysing the growth of our company.

The KPIs disclosed below have been approved by a resolution of our Audit Committee dated July 04, 2025 and the members of the Audit Committee have verified the details of all KPIs pertaining to our Company. Further, the KPIs herein have been certified by M/s Lakhankiya and Dosi LLP, Chartered Accountants, by their certificate dated July 04, 2025. Further, the members of the Audit Committee have confirmed that there are no KPIs pertaining to our Company that have been disclosed to any investors at any point of time during the three years period prior to the date of filing of this Draft Red Herring Prospectus.

For the details of our key performance indicators, see sections titled "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations Key Performance Indicators" on pages 107 and 173 respectively of this DRHP. We have described and defined them, where applicable, in "Definitions and Abbreviations" section on page 5 of this Draft Red herring Prospectus. Our Company confirms that it shall continue to disclose all the KPIs included in this section on a periodic basis, at least once in a year (or any lesser period as determined by the Board of our Company), for a duration of one year after the date of listing of the Equity Shares on the Stock Exchange or till the complete utilisation of the proceeds of the Fresh Issue as per the disclosure made in the Objects of the Issue, whichever is later or for such other duration as may be required under the SEBI ICDR Regulations. Further, the ongoing KPIs will continue to be certified by a member of an expert body as required under the SEBI ICDR Regulations.

Key metrics like revenue growth, EBIDTA Margin, PAT Margin and few balance sheet ratio are monitored on a periodic basis for evaluating the overall performance of our Company.

(Amount in Lakhs, % and ratios)

Key Financial Performance	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Revenue from Operations (1)	23,365.62	16,008.24	8,066.04
Growth in revenue from operations (%)	45.96%	98.46%	791.90%
Total Income(2)	23,404.89	16,090.85	8,093.53
EBITDA(3)	4,091.20	1,449.97	566.89
EBITDA Margin (%) (4)	17.48%	9.01%	7.00%
Restated profit for the period/year(5)	2,469.38	824.57	391.79
Restated profit for the period/year Margin/ PAT	10.57%	5.15%	4.86%
Margin (%) (6)
Return on Net Worth(7)	44.53%	56.42%	61.52%
Return on Average Equity ("RoAE") (%) (8)	70.49%	78.60%	111.74%
Return on Capital Employed("RoCE")(%) (9)	35.94%	18.56%	21.43%
Debt- Equity Ratio(10)	0.86	3.87	3.15

Notes:

(1) Revenue from operations represents the revenue from sale of service & product & other operating revenue of our Company as recognized in the Restated financial information.

(2) Total income includes revenue from operations and other income.

(3) EBITDA means Earnings before interest, taxes, depreciation and amortization expense, which has been arrived at by obtaining the profit before tax/ (loss) for the year / period and adding back interest cost, depreciation, and amortization expense.

(4) EBITDA margin is calculated as EBITDA as a percentage of total income.

(5) Restated profit for the period / year margin is Is calculated as total income less total expenses.

(6) PAT Margin (%) is calculated as Profit for the year/period as a percentage of Revenue from Operations.

(7) Return on net worth is calculated as Net profit after tax, as restated, attributable to the owners of the Company for the year/ period divided by Net worth at the end of respective period/year. Net worth means aggregate value of the paid-up equity share capital and reserves & surplus.

(8) RoAE is calculated as Net profit after tax divided by Average Equity.

(9) Return on capital employed calculated as Earnings before interest and taxes divided by capital employed as at the end of respective period/year. (Capital employed calculated as the aggregate value of total equity, total debt and deferred tax liabilities)

(10) Debt- equity ratio is calculated by dividing total debt by total equity. Total debt represents long-term and short-term borrowings. Total equity is the sum of share capital and reserves & surplus.

KPI	Explanation
Revenue from operations:	Revenue from operations representshe total turnover of the business as well as provides information regarding the year over year growth of our Company.
Total Income	Total Income is used by our management to obtain a comprehensive view of all income including revenue from operations and other income.
EBITDA:	EBITDA is calculated as Restated profit / loss for the period plus tax expense plus depreciation and amortization plus finance costs and any exceptional items. EBITDA provides information regarding the operational efficiency of the business of our Company
EBITDA margin:	EBITDA Margin the percentage of EBITDA divided by revenue from operations and is an indicator of the operational profitability of our business before interest, depreciation, amortisation, and taxes.
Restated profit for the period / year:	Restated profit for the period / year represents the profit / loss that our Company makes for the financial year or during a given period. It provides information regarding the profitability of the business of our Company.
Restated profit for the period / year margin:	Restated profit for the period / year Margin is the ratio of Restated profit for the period / year to the total revenue of the Company. It provides information regarding the profitability of the business of our Company as well as to compare against the historical performance of our business.
Return on Net Worth (in %)	Return on Net Worth provides how efficiently our Company generates profits from shareholders funds.
Return on Average Equity ("RoAE"):	RoAE refers to Restated profit for the period / year divided by Average Equity for the period. Average Equity is calculated as average of the total equity at the beginning and ending of the period. RoAE is an indicator of our Companys efficiency as it measures our Companys profitability.
	RoAE is indicative of the profit generation by our Company against the equity contribution.
Return on Capital Employed ("RoCE"):	RoCE is calculated as Earnings before interest and taxes (EBIT) divided by Capital Employed by the Company for the period. RoCE is an indicator of our Companys efficiency as it measures our Companys profitability. RoCE is indicative of the profit generation by our Company against the capital employed.
Debt-Equity Ratio (in times)	Debt- equity ratio is a gearing ratio which compares shareholders equity to company debt to assess our companys amount of leverage and financial stability.

FACTORS AFFECTING OUR RESULT OF OPERATIONS

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

Except as otherwise stated in this Draft Red Herring Prospectus and the Risk Factors given in the Draft Red Herring Prospectus, the following important factors could cause actual results to differ materially from the expectations include, among others:

Regulatory Framework

We have obtained all regulatory permissions which are necessary to run our business, Further, some of the approvals are granted for fixed periods of time and need renewals, which are obtained in the course of business, however, there may be change in statutory regulations at any time which cannot be predicted by us. There can be no assurance that the change in regulations will not impact our operations in the future.

Ability of Management

Our success depends on the continued services and performance of the members of our management team and other key employees. Competition for senior management in the industry is intense, and we may not be able to retain our existing senior management or attract and retain new senior management in the future. The loss of any member of our senior management or other key personnel may adversely affect our business, results of operations and financial condition.

Market & Economic conditions

India is one of the largest economies and is growing at a rapid pace. But in this globalised economy, all the businesses face an uncertain level of volatility from unexpected global events which ranges from global pandemics to wars, to weather changes to supply chain disruption, which may change the economic dynamics and the purchasing capability of the end customers. At the time of market slowdown, the demand falls which has adverse impact on our business.

Competition

We compete with a range of players in the highly competitive Textile industry, including large multinational corporations as well as specialized boutique firms. The market is characterized by price wars, rapid technological advancements, and the constant need for innovation to stay ahead. These factors present significant challenges for our company, as they can erode profit margins and make it difficult to differentiate our offerings.

Significant Developments after March 31, 2025 that may affect our Future Results of Operations

The Directors confirm that there have been no other events or circumstances since the date of the last financial statements as disclosed in the Draft Red Herring Prospectus which materially or adversely affect or is likely to affect the business or profitability of our Company or the value of our assets, or our ability to pay liabilities within next twelve months.

SIGNIFICANT ACCOUNTING POLICY BASIS OF ACCOUNTING AND PREPARATION OF FINANCIAL STATEMENTS

The restated summary statement of assets and liabilities of the Company as at March 31, 2025, March 31, 2024 and March 31, 2023 and the related restated summary statement of profits and loss and cash flows for the year ended March 31, 2025, March 31, 2024 and March 31, 2023 (herein collectively referred to as ("Restated Summary Statements") have been compiled by the management from the audited Financial Statements of the Company for the year ended on March 31, 2025, March 31, 2024 and March 31, 2023 approved by the Board of Directors of the Company. Restated Summary Statements have been prepared to comply in all material respects with the provisions of Part I of Chapter III of the Companies Act, 2013 (the "Act") read with Companies (Prospectus and Allotment of Securities) Rules, 2014, Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)

Regulations, 2018 ("ICDR Regulations") issued by SEBI and Guidance note on Reports in Companies Prospectuses (Revised 2019) ("Guidance Note"). Restated Summary Statements have been prepared specifically for inclusion in the offer document to be filed by the Company with the BSE in connection with its proposed SME IPO. The Companys management has recast the Financial Statements in the form required by Schedule III of the Companies Act, 2013 for the purpose of restated Summary Statements.

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards specified under Section 133 of the Companies Act, 2013 and the relevant provisions of the Companies Act, 2013 ("the 2013 Act"), as applicable. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

Accounting policies not specifically referred to otherwise are consistent and in consonance with generally accepted accounting principles in India.

All assets and liabilities have been classified as current or non-current as per the Companys normal operating cycle and other criteria set out in Schedule III to the Companies Act, 2013. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalents, the Company has determined its operating cycle as twelve months for the purpose of current non-current classification of assets and liabilities.

USE OF ESTIMATES

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

PROPERTY, PLANT & EQUIPMENT AND INTANGIBLE ASSETS

(i) Property, Plant & Equipment

All Property, Plant & Equipment are stated at cost less accumulated depreciation and impairment losses, if any. Cost for this purpose comprises its purchase price and any attributable cost bringing the asset to its working contribution for its intended use. Property, Plant & Equipment taken on finance lease are capitalized.

Capital work-in-progress is stated at the amount expended up to the date of Balance Sheet. On commencement of commercial production, capital work-in-progress related to project is being allocated to the respective Property, Plant & Equipment.

(ii) Intangible Assets

Intangible Assets are stated at acquisition cost, net of accumulated amortization and accumulated impairment losses, if any.

DEPRECIATION / AMORTISATION

Depreciation on Property, Plant & Equipment is provided to the extent of depreciable amount on the Straight Line method. Depreciation is provided based on useful life of the assets as prescribed in Schedule II to the Companies Act, 2013. Depreciation on addition to the Property, Plant & Equipment is provided on a pro-rata basis from the date of put to use.

Intangible assets are amortized on straight line method basis over 6 years in pursuance of provisions of AS-26.

IMPAIRMENT OF ASSETS

An asset is treated as impaired when the carrying cost of asset exceeds its recoverable value. Recoverable amount is the higher of an assets net selling price and its value in use. An impairment loss is charged to the Statement of Profit and Loss in the year in which an asset is identified as impaired. The impairment loss recognized in prior accounting periods is reversed if there has been a change in the estimate of the recoverable value.

FOREIGN CURRENCY TRANSLATIONS

i) Foreign Currency Transactions are recorded at exchange rates prevailing on the date of such transactions.

ii) Monetary items denominated in foreign currencies at year end are restated at year end rates. In case of items which are covered by forward exchange contracts, the difference between the year end rate and rate on the date of the contract is recognized as exchange difference and the premium paid on forward contracts is recognized over the life of the contract.

iii) Foreign Currency assets and liabilities at the year end are realigned at the exchange rates prevailing at the year end and the difference on realignment is recognized in the statement of profit and loss/fixed assets as the case may be.

iv) Any income or expense on account of exchange difference either on settlement or on translation is recognized in the Statement of Profit and Loss.

BORROWING COSTS

Borrowing costs that are 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 intended use. All other borrowing costs are recognised in Statement of Profit and Loss in the period in which they are incurred.

PROVISIONS, CONTINGENT LIABILITIES AND CONTINGENT ASSETS

Provision involving substantial degree of estimation in measurement is recognized when there is a present obligation as a result of past events and it is probable that there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are neither recognized nor disclosed in the financial statements.

REVENUE RECOGNITION

Revenue is recognized to the extent that is is probable that the economic benefits will flow to the company and the revenue can be reliably measured.

A. Sale of Goods:

Revenue from sale of goods is recognized when all the significant risk and rewards of ownership has been transferred to the buyer and is stated at net of claims, discount, sales related tax, trade discounts & rebates.

B. Sale of Services:

Revenue from services is recognized on accrual basis when the related services have been performed at contracted rates as per terms of agreement.

C. Other Income:

Interest Income on fixed deposit is recognized on time proportion basis. Other Income is accounted for when right to receive such income is established.

TAXES ON INCOME

Income taxes are accounted for in accordance with Accounting Standard (AS-22) "Accounting for taxes on income", notified under Companies (Accounting Standard) Rules, 2021. Income tax comprises of both current and deferred tax. Current tax is measured on the basis of estimated taxable income and tax credits computed in accordance with the provisions of the Income-Tax Act, 1961.

The tax effect of the timing differences that result between taxable income and accounting income and are capable of reversal in one or more subsequent periods are recorded as a deferred tax asset or deferred tax liability. They are measured using substantially enacted tax rates and tax regulations as of the Balance Sheet date.

Deferred tax assets arising mainly on account of brought forward losses and unabsorbed depreciation under tax laws, are recognized, only if there is virtual certainty of its realization, supported by convincing evidence. Deferred tax assets on account of other timing differences are recognized only to the extent there is a reasonable certainty of its realization.

CASH AND BANK BALANCES

Cash and cash equivalents comprises Cash-in-hand, Current Accounts, Fixed Deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value. Other Bank Balances are short-term balance (with original maturity is more than three months but less than twelve months).

EARNINGS PER SHARE

Basic earning per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity share outstanding during the year. Diluted earning per share is computed by dividing the profit/ (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

EMPLOYEE BENEFITS

Defined Contribution Plan:

Contributions payable to the recognised provident fund, which is a defined contribution scheme, are charged to the statement of profit and loss.

Defined Benefit Plan:

The Company has an obligation towards gratuity a defined benefit retirement plan covering eligible employees The plan provides for lump sum payment to vested employees at retirement, at death while in employment or on termination of an amount equal to 15 by 26 days salary payable for each completed years of service without any monetary limit. Vesting occurs upon completion of five years of service. Provision for gratuity has been made in the books as per actuarial valuation done as at the end of the year.

SEGMENT REPORTING

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors. Revenue and expenses have been identified to segments on the basis of their relationship to the operating activities of the segment.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue /expenses / assets / liabilities".

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RESULTS OF OUR OPERATIONS

(Amount in Lakhs)

Particulars	For the year ended 31st March, 2025	% of Total**	For the year ended 31st March, 2024	% of Total**	For the year ended 31st March, 2023	% of Total**
Revenue from Operations	23,365.62	99.83%	16,008.24	99.49%	8,066.04	99.66%
Other Income	39.27	0.17%	82.61	0.51%	27.49	0.34%
Total Revenue (A)	23,404.89	100.00%	16,090.85	100.00%	8,093.53	100.00%
EXPENDITURE
Cost of Materials Consumed	6,196.39	26.47%	4,257.37	26.46%	-	-
Purchase of stock-in-trade	7,494.54	32.02%	7,633.28	47.44%	6,829.94	84.39%
Changes in finished goods and stock-in-trade	(93.86)	(0.40%)	(906.55)	(5.63%)	(952.59)	(11.77%)
Direct Expenses	2,729.84	11.66%	1,809.38	11.24%	317.65	3.92%
Employee Benefits Expenses	1,984.78	8.48%	960.14	5.97%	636.82	7.87%
Finance Costs	483.54	2.07%	211.52	1.31%	37.09	0.46%
Depreciation & Amortisation Expenses	342.63	1.46%	118.35	0.74%	0.82	0.01%
Other Expenses	960.19	4.10%	859.74	5.34%	677.40	8.37%
Total Expenses (B)	20,098.05	85.87%	14,943.23	92.87%	7,547.14	93.25%
Profit before tax	3,306.84	14.13%	1,147.62	7.13%	546.40	6.75%
Tax Expense/ (benefit)
(a) Current Tax Expense	762.16	3.26%	261.62	1.63%	157.08	1.94%
(b) Deferred tax expenses/(credit)	75.30	0.32%	61.43	0.38%	(2.47)	(0.03%)
Net tax expense / (benefit)	837.46	3.58%	323.05	2.01%	154.61	1.91%
Profit for the year	2,469.38	10.55%	824.57	5.12%	391.79	4.84%

**Total refers to Total Revenue

Components of our Profit and Loss Account

Income

Our total income comprises of revenue from operations and other income.

Revenue from Operations

Our revenue from operations as a percentage of our total income was 99.83%, 99.49% and 99.66% for the Financial Years ended March 31, 2025, March 31, 2024 and March 31, 2023 respectively.

(Rs. In Lakhs)

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Sale of Goods
-Export	93.29	-	3.54
-Domestic	19,836.30	15,264.56	8,051.75
Sale of Services
-Domestic	3,436.03	743.68	10.75
TOTAL	23,365.62	16,008.24	8,066.04

Other Income

Our Other Income primarily consists of Foreign Exchange Gain, Freight income, Machine Clearing and Forwading income, Rent Income and Interest on bank deposits.

(Rs. In Lakhs)

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Foreign Exchange Gain	16.60	59.08	27.05
Freight income	6.82	3.13	-
Machine Clearing and Forwading income	2.68	12.08	-
Rent Income	1.44	-	-
Interest on bank deposits	11.73	8.32	0.44
TOTAL	39.27	82.61	27.49

Expenditure

Our total expenditure primarily consists of Cost of Material Consumed, Purchases of Stock-in-Trade, Direct Expenses, Employee benefit expenses, Finance costs, Depreciation & Amortization Expenses and Other Expenses.

Direct Expenses

Our direct expenses primarily consists of Import and Export Expenses, Job work Printing, Oil and Chemicals Expenses, Courier & Freight charges, Electric Expenses, Transportation Expense.

(Rs. In Lakhs)

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Import and Export Expenses (includes Custom
Duty & terminal handling charges etc.)	450.20	421.89	179.79
Cess Charges	33.55	9.01	-
Job work Printing	1,234.27	975.02	-
Oil and Chemicals Expenses	229.54	39.19	-
Repairing & Parts	78.44	20.82	8.11
Courier & Freight charges	200.05	75.71	64.86
Electric Expenses	364.33	163.17	25.31
Labour Charges	4.47	4.83	-
Gas and Petrol Expenses	24.67	-	-
Loading unloading charges	8.85	8.86	4.69
Transportation Expense	101.47	90.88	34.89
TOTAL	2,729.84	1,809.38	317.65

Employee Benefit Expenses

Our employee benefits expense comprises of Salaries to Staff, Directors Remuneration, Contribution to PF, ESIC & other funds, Gratuity Expense and Staff Welfare Expenses.

(Rs. In Lakhs)

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Salaries to Staff	1,833.46	842.74	566.77
Directors Remuneration	25.00	40.00	49.00
Contribution to PF,ESIC & other funds	78.29	30.01	11.63
Gratuity Expense	16.74	47.37	9.42
Staff Welfare Expenses	31.29	0.02	-
TOTAL	1,984.78	960.14	636.82

Finance costs

Our Finance cost expenses comprises of Bank Charges (incl. processing fees), Interest on borrowings, Interest on delayed payment of statutory dues and Interest on MSME Creditors.

(Rs. In Lakhs)

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Bank Charges (incl. processing fees)	41.81	27.52	17.42
Interest on borrowings	439.80	177.20	11.47
Interest on delayed payment of statutory dues	0.91	6.53	8.19
Interest on MSME Creditors	1.02	0.27	0.01
TOTAL	483.54	211.52	37.09

Other Expenses

Other expenses primarily include Brokerage paid, Petrol and travelling, Travelling and Conveyance and Exhibition & Marketing expenses.

(Rs. In Lakhs)

Particulars	For the year ended March 31, 2025	For the year ended March 31, 2024	For the year ended March 31, 2023
Audit fees	1.60	1.50	0.80
Brokerage paid	258.06	474.09	445.11
Bank charges	27.88	1.70	-
Charitable Donation	-	0.11	-
CSR Expense	12.27	6.56	-
Computer repairing expenses	9.92	2.89	0.62
Penalty on late payment of Custom duty	0.66	1.47	0.39
Discount Allowed	3.81	2.56	0.98
Freight Expenses	-	1.76	2.98
Insurance Expenses	10.59	7.35	1.83
Office Expenses	34.76	32.59	10.78
Postage and Courier Expense	1.62	1.52	1.17
Packing Expense	39.38	5.63	0.09
Service Expenses	10.06	9.83	2.76
Security Expenses	23.30	15.14	5.23
Professional & Legal Fees	81.54	53.00	58.58
Petrol and travelling	114.04	58.49	35.35
Rates & Taxes	3.34	2.27	0.04
Rent	4.11	11.22	16.98
Software Maintenance Expenses	3.65	5.43	6.62
Telephone & Internet Exp.	3.26	2.24	0.77
Stationery and Postage Expenses	15.41	12.29	5.66
Travelling and Conveyance	221.97	95.29	53.70
Bad Debt	0.71	0.74	-
Water charges	2.70	-	-
Gujarat Pollution Control Board Charges	2.55	-	-
Membership fees	0.97	-	-
Written-off fixed assets	-	9.07	-
Exhibition & Marketing expenses	72.03	45.00	26.96
Total	960.19	859.74	677.40

Provision for Tax

The provision for current taxation is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

Fiscal 2025 compared with Fiscal 2024

Revenue from Operations

The revenue from operations of our company for Fiscal 2025 was 23,365.62 Lakhs against 16,008.24 Lakhs revenue from operations for Fiscal 2024. An increase of 45.96% in revenue from operations was due to our significant capital investments in FY 2023-24, including factory construction and production capacity expansion reflected the typical lag between capital outlays and revenue realization in FY-2023-24.

This lag is common, as capital investments often take time to yield returns. Fortunately, our investments have started generating yields from FY 2024-25 onwards.

The increased production capacity enabled us to meet growing demand and capitalize on market opportunities, thereby driving revenue growth.

Other Income

The other income of our company for Fiscal 2025 was 39.27 Lakhs against 82.61 Lakhs other income for Fiscal 2024. A decrease of 52.46% in other income was due to the appreciation of the rupee against the US dollar resulted in reduced gains from foreign exchange transactions, ultimately impacting our other income.

Total Income

The total income of our company for Fiscal 2025 was 23,404.89 Lakhs against 16,090.85 Lakhs total income for Fiscal 2024. An increase of 45.45% in total income was due to company witnessed a substantial increase in turnover during FY 2024-25, resulting in a significant percentage growth in total income. This notable surge in revenue reflects the companys strong performance and growth trajectory during the year.

Expenditure

Cost of Material Consumed

The cost of material consumed by our company for Fiscal 2025 was 6,196.39 Lakhs against 4,257.37 Lakhs for Fiscal 2024.

This An increase of 45.55% was due to following factors:

1. Production of Sublimation paper and Digital Textile Printed Fabrics and Job work increased significantly.

2. To support the increased production, raw material procurement also rose.

3. Costs associated with purchases, such as material costs, increased correspondingly.

4. The cumulative effect of these factors led to a notable increase in COGS in FY 2024-25 compared to the previous year.

Purchases of Stock-in-Trade

The purchases of stock-in-trade by our company for Fiscal 2025 were 7,494.54 Lakhs against 7,633.28 Lakhs purchases of stock-in-trade for Fiscal 2024. A decrease of 1.82% in purchases of stock-in-trade was due to the purchase of stock-in-trade, comprising digital textile printing machines, ink, and spare parts, remained relatively consistent with FY 2023-24. This stability is attributed to the companys focus on optimizing existing resources to support the manufacturing activities of Sublimation Paper and Digital Textile Printed Fabrics during FY 2024-25, rather than significantly expanding inventory purchases to increase trading activity.

Direct Expenses

The direct expenses incurred by our company for Fiscal 2025 were 2,729.84 Lakhs against 1,809.38 Lakhs direct expenses for Fiscal 2024. An increase of 50.87% in direct expenses was due to increase in Production Costs

The significant increase in production led to a substantial rise in raw material purchases, which included both local and imported materials, along with associated procurement costs. Additionally, the increased production volume resulted in:

1) Higher energy consumption: Energy costs increased in line with the higher production levels.

2) Increased labour costs: Labour costs also rose due to the need for additional workforce to support the increased production activity.

These factors collectively contributed to the overall increase in production costs.

Changes in Inventories of Finished Goods, and Stock-in-Trade

The changes in inventories of Finished Goods, and Stock-in-Trade for Fiscal 2025 were (93.86) Lakhs against (906.55) Lakhs changes in inventories for Fiscal 2024.

Employee Benefits Expense

The employee benefits expense of our company for Fiscal 2025 was 1,984.78 Lakhs against 960.14 Lakhs employee benefits expense for Fiscal 2024. An increase of 106.72% in employee benefits expense was due to align with the increased production and trading activities in FY 2024-25, the company augmented its workforce by hiring more employees and labourers. Consequently, this expansion led to a corresponding increase in employee benefit expenses, including salaries, wages, and other benefits, which rose in proportion to the growth in personnel numbers.

Finance Costs

The finance costs incurred by our company for Fiscal 2025 were 483.54 Lakhs against 211.52 Lakhs finance costs for Fiscal 2024. An increase of 128.60% in finance costs was due to support the increased production and raw material procurement, along with associated costs, we enhanced our cash credit facility from the bank in FY 2024-25 compared to the previous year.

Additionally, we availed term loans from the bank in FY 2023-24 for capital expenditure (capex) and solar implementation. Although we had a 6-month moratorium period in FY 2023-24, the full impact of interest payments was realized in FY 2024-25, resulting in an increase in financial costs for the year.

Other Expenses

The other expenses incurred by our company for Fiscal 2025 were 960.19 Lakhs against 859.74 Lakhs other expenses for Fiscal 2024. An increase of 11.68% in other expenses was due to The increase in production led to a corresponding rise in other expenses related to day-to-day business operations. As a result, there was a slight increase in indirect, administrative, selling, and distribution expenses in FY 2024-25 compared to FY 2023-24. These expenses, which are essential for sustaining business operations, grew in line with the increased production and business activity levels.

Profit Before Tax

The profit before tax of our company for Fiscal 2025 was 3,306.84 Lakhs against 1,147.62 Lakhs profit before tax for Fiscal 2024. An increase of 188.15% in profit before tax was due to Several key factors contributed to the increase in profit before tax in FY 2024-25 compared to FY 2023-24:

1. Capital investments yielding returns: Our capital investments began generating yields in FY 2024-25, resulting in a significant increase in turnover.

2. Electricity savings: The solar implementation led to electricity savings of 1.1 crore, directly reducing overheads and improving EBITDA with an offset value of 8.50/unit.

3. Improved cost control: Although variable costs increased in absolute terms, their share of sales dropped, indicating better cost control or an improved pricing strategy.

4. Rebound in contribution margin: After a decline in FY 2024, the contribution margin percentage saw a robust rebound in FY 2025, driving business profitability.

5. Scalability with improving profitability: Fixed costs increased at a slower pace than revenue and contribution margin, enabling scalability while improving profitability.

These factors collectively contributed to the increase in profit before tax in FY 2024-25 compared to the previous year.

Profit after Tax

Profit after tax for Fiscal 2025 was 2,469.38 Lakhs against a profit after tax of 824.57 Lakhs in Fiscal 2024. An increase of 199.47% was due to in FY 2024-25, our company achieved a revenue of Rs. 233.69 crore with a Profit After Tax (PAT) of Rs. 24.30 crore, representing a PAT margin of 10.85%. This significant improvement in profitability can be attributed to several factors same as profit before tax.

Fiscal 2024 compared with Fiscal 2023

Revenue from Operations

The revenue from operations of our company for Fiscal 2024 was 16,008.24 Lakhs against 8,066.04 Lakhs revenue from operations for Fiscal 2023. An increase of 98.46% in revenue from operations was due to successful installation and commissioning of new capacity resulted in a substantial increase in turnover in 2024.

Other Income

The other income of our company for Fiscal 2024 was 82.61 Lakhs against 27.49 Lakhs other income for Fiscal 2023. An increase of 200.51% in other income as other income primarily consists of freight income, foreign exchange gain, and fixed deposit (FD) interest income. Notably, foreign exchange gain surged by 118% in FY 2023-24 compared to FY 2022-23, driven by increased imports. Additionally, FD interest income witnessed a substantial 1791% increase over the same period.

Total Income

The total income of our company for Fiscal 2024 was 16,090.85 Lakhs against 8,093.53 Lakhs total income for Fiscal 2023. An increase of 98.81% in total income was due to Total revenue and other direct income have increased due to above mentioned reasons which leads to increase in total income in Fiscal 2024.

Expenditure

Cost of Material Consumed

The cost of material consumed by our company for Fiscal 2024 was 4,257.37 Lakhs against Nil for Fiscal 2023. This was due to our company focused exclusively on trading Digital Textile Printing Machines and Inks, with no manufacturing activities in FY-2022-23. As a result, there was no Cost of Goods Sold (COGS) for that year.

However, in FY 2023-24, we expanded our operations to include manufacturing of sublimation paper and digital printed fabrics. Consequently, COGS is reflected in our financials for FY 2023-24, representing a significant shift in our business model and cost structure.

Purchases of Stock-in-Trade

The purchases of stock-in-trade by our company for Fiscal 2024 were 7,633.28 Lakhs against 6,829.94 Lakhs purchases of stock-in-trade for Fiscal 2023. An increase of 11.76% in purchases of stock-in-trade was due to our progressed from FY 2022-23 to FY 2023-24, we witnessed a significant increase in purchases. This growth reflects our expanding business operations and increasing in purchase of stock in trade.

Direct Expenses

The direct expenses incurred by our company for Fiscal 2024 were 1,809.38 Lakhs against 317.65 Lakhs direct expenses for

Fiscal 2023. An increase of 469.61% in direct expenses was due to the increase in purchases led to a corresponding rise in import costs for machines, inks, and spare parts.

Additionally, the establishment of manufacturing units in FY 2023-24 resulted in a significant increase in labour costs compared to FY 2022-23, when our operations were limited to trading. The expansion into manufacturing has introduced new cost components, contributing to the overall growth in expenses.

Changes in Inventories of Finished Goods, and Stock-in-Trade

The changes in inventories of Finished Goods, and Stock-in-Trade for Fiscal 2024 were (906.55) Lakhs against (952.59) Lakhs changes in inventories for Fiscal 2023.

Employee Benefits Expense

The employee benefits expense of our company for Fiscal 2024 was 960.14 Lakhs against 636.82 Lakhs employee benefits expense for Fiscal 2023. An increase of 50.77% in employee benefits expense was due to initiation of manufacturing units, involving substantial capital expenditure and workforce expansion in FY 2023-24. This led to a notable increase in employee costs compared to FY 2022-23, when our operations were limited to trading. The addition of manufacturing activities has significantly impacted our cost structure.

Finance Costs

The finance costs incurred by our company for Fiscal 2024 were 211.52 Lakhs against 37.09 Lakhs finance costs for Fiscal

2023. An increase of 470.29% in finance costs was due to, In FY 2022-23, our financing arrangement consisted solely of a Cash Credit facility from the bank.

However, to support our growth plans, we secured additional financing in FY 2023-24, including Machinery Term Loans and an enhancement of our existing Cash Credit facility.

Other Expenses

The other expenses incurred by our company for Fiscal 2024 were 859.74 Lakhs against 677.40 Lakhs other expenses for Fiscal 2023. An increase of 26.92% in other expenses was due to the growth in trading and manufacturing activities in FY 2023-24 led to a corresponding increase in administrative, selling, distribution, and other costs compared to FY 2022-23. This rise in expenses is a direct result of our expanded business operations.

Profit Before Tax

The profit before tax of our company for Fiscal 2024 was 1,147.62 Lakhs against 546.40 Lakhs profit before tax for Fiscal 2023. An increase of 110.03% in profit before tax was due to the significant increase in trading and manufacturing activities in FY 2023-24 resulted in a substantial rise in revenue and overall margin compared to FY 2022-23. This growth in business operations has positively impacted our financial performance.

Profit/ (Loss) after Tax

Profit after tax for Fiscal 2024 was 824.57 Lakhs against a profit after tax of 391.79 Lakhs in Fiscal 2023. An increase of 110.46% was due to increase in trading and manufacturing activity leads to increase in revenue and overall margin in the FY-2023-24 as compared to FY-2022-23.

Cash Flows

(Amount in Lakhs)

Particulars	For the year ended March 31,
	2025	2024	2023
Net Cash Flow from / (used in) Operating Activities	561.40	930.34	(1,169.91)
Net Cash Flow from / (used in) Investing Activities	(812.14)	(3,358.21)	(1,008.21)
Net Cash Flow from / (used in) Financing Activities	286.74	2,875.52	2,173.52

Cash Flows from Operating Activities

1. In FY 2025, Net cash generated from operating activities were 561.40 Lakhs. This comprised the profit before tax of 3,306.84 Lakhs, which was primarily adjusted for depreciation and amortization expenses of 342.63 Lakhs, interest expenses of 439.80 Lakhs, gratuity provision of 16.74 Lakhs, interest income of 11.73 Lakhs and unrealized foreign exchange gain of 16.60 Lakhs. The resultant operating profit before working capital changes was 4,077.68 Lakhs, which was primarily adjusted for an increase in inventories of 941.85 Lakhs, increase in trade receivables during the year of 3,362.91 Lakhs, decrease in short term loans and advances of 68.46 Lakhs, decrease in other non-current assets of 32.81 Lakhs, and increase in other bank balances of 184.98 Lakhs, increase in trade payables during the year of 1,256.90 Lakhs and an increase in other current liabilities & provisions during the year of 288.67 Lakhs.

Cash generated from operations were 1,234.78 Lakhs, which was reduced by net income tax paid of 673.38 Lakhs, resulting in a net cash flow generated from operating activities of 561.40 Lakhs.

2. In FY 2024, Net cash generated from operating activities was 930.34 Lakhs. This comprised the profit before tax of 1,147.62 Lakhs, which was primarily adjusted for depreciation and amortization expenses of 118.35 Lakhs, interest expenses of 177.20 Lakhs, gratuity provision of 47.36 Lakhs, interest income of 8.32 Lakhs, and unrealized foreign exchange gain of 59.08 Lakhs. The resultant operating profit before working capital changes was 1,423.13 Lakhs, which was primarily adjusted for an increase in inventories of 1,602.69 Lakhs, increase in trade receivables during the year of 678.55 Lakhs, decrease in short term loans and advances of 657.51 Lakhs, increase in other non-current assets of 70.47 Lakhs, and increase in trade payables during the year of 1,590.10 Lakhs and an decrease in other current liabilities & provisions during the year of 82.12 Lakhs.

Cash generated from operations was 1,236.91 Lakhs, which was reduced by net income tax paid of 306.57 Lakhs, resulting in a net cash flow of 930.34 Lakhs from operating activities.

3. In FY 2023, Net cash used in operating activities was 1,169.91 Lakhs. This comprised the profit before tax of 546.40 Lakhs, which was primarily adjusted for depreciation and amortization expenses of 0.82 Lakhs, interest expenses of 11.47 Lakhs, gratuity provision of 9.42 Lakhs, interest income of 0.44 Lakhs, and unrealized foreign exchange gain of 27.05 Lakhs. The resultant operating profit before working capital changes was 540.62 Lakhs, which was primarily adjusted for an increase in inventories of 952.59 Lakhs, increase in trade receivables during the year of 689.07 Lakhs, increase in short term loans and advances of 754.34 Lakhs, increase in other non-current assets of 86.88 Lakhs, and increase in trade payables during the year of 173.44 Lakhs and an increase in other current liabilities & provisions during the year of 691.21 Lakhs.

Cash used in operations were 1,077.61 Lakhs, which was reduced by net income tax paid of 92.30 Lakhs, resulting in a net cash used in operating activities of 1,169.91 Lakhs.

Cash Flows from Investment Activities

1. In FY 2025, net cash used in investing activities was 812.14 Lakhs, which primarily comprised of cash used for Purchase of property, plant & equipment and intangible assets of 1,177.89 Lakhs, long term loans and advances of 354.02 Lakhs & Interest Income Received of 11.73 Lakhs.

2. In FY 2024, net cash used in investing activities was 3,358.21 Lakhs, which primarily comprised of cash used for Purchase of property, plant & equipment and intangible assets of 3,897.35 Lakhs, long term loans and advances of 530.82 Lakhs & Interest Income Received of 8.32 Lakhs.

3. In FY 2023, net cash used in investing activities was 1,008.21 Lakhs, which primarily comprised of cash used for Purchase of property, plant & equipment and intangible assets of 123.81 Lakhs, long term loans and advances of 884.84 Lakhs & Interest Income Received of 0.44 Lakhs.

Cash Flows from Financing Activities

1. In FY 2025, net cash flow from financing activities was 286.74 Lakhs, which predominantly comprised of proceeds from Borrowings of 2,522.48 Lakhs, proceeds from issue of Equity Shares of 1,614.60 Lakhs, Finance Cost Paid of 423.32 Lakhs and repayment of borrowings of 3,427.02 Lakhs.

2. In FY 2024, net cash flow from financing activities was 2,875.52 Lakhs, which predominantly comprised of Proceeds from Borrowings of 4,478.67 Lakhs, repayment of borrowings of 1,425.95 Lakhs and Finance Cost Paid of 177.20 Lakhs.

3. In FY 2023, net cash flow from financing activities was 2,173.52 Lakhs, which predominantly comprised of Proceeds from issue of Equity Shares of 180.60 Lakhs, Proceeds from Borrowings of 2,210.62 Lakhs and repayment of borrowings of 206.23 Lakhs and payment of finance cost of 11.47 Lakhs.

OTHER MATTERS

Unusual or infrequent events or transactions

Except as described in this Draft Red Herring Prospectus, there have been no other events or transactions to the best of our knowledge which may be described as "unusual" or "infrequent".

Significant economic changes that materially affected or are likely to affect income from continuing Operations

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page no. 29. of the Draft Red Herring Prospectus. To our knowledge, except as we have described in the Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

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

Apart from the risks as disclosed under Chapter titled "Risk Factors" beginning on page no. 29. in this Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

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

Our Companys future costs and revenues will be determined by demand/supply situation and government policies.

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

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

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

Our company is operating in Digital Textile Industry. Relevant Industry data and, as available, has been included in the chapter titled "Industry Overview" beginning on page no. 98. of this Draft Red Herring Prospectus.

Status of any publicly announced new products or business segment.

Except as disclosed elsewhere in the Draft Red Herring Prospectus, we have not announced any new products or business segments.

The extent to which business is seasonal.

Our Companys business is seasonal in nature as disclosed under Chapter titled "Risk Factors" beginning on page no.29.

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

As details provided in the DRHP there is no dependency in the single or few suppliers or customers.

Competitive conditions:

We face competition from existing and potential competitors which is common for any business. We have, over a period, developed certain competitors who have been discussed in chapter titles "Business Overview" beginning on page no. 107 of this Draft Red Herring Prospectus.