Vision Infra Equipment Solutions Ltd Management Discussions

You should read the following discussion in conjunction with our restated financial statements attached in the chapter titled "Financial Information of the Company" beginning on page 137. You should also read the section titled "Risk Factors" on page 32 and the section titled "Forward Looking Statements" on page 20 of this Red Herring Prospectus, which discusses a number of factors and contingencies that could affect our financial condition and results of operations. The following discussion relates to us, and, unless otherwise stated or the context requires otherwise, is based on our Restated financial Statements. Our financial statements have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI (ICDR) Regulations and restated as described in the report of our auditor dated August 31, 2024 which is included in this Red Herring Prospectus under "Financial Statements". The Restated Financial Information has been prepared on a basis that differs in certain material respects from generally accepted accounting principles in other jurisdictions, including US GAAP and IFRS. Our financial year ends on March 31 of each year, and all references to a particular financial year are to the twelve-month period ended March 31 of that year.

We are a solution provider in the equipment space delivering our services in airports, smart cities, irrigation, building & factories, mining , railways , etc. Our portfolio of services includes: renting of road construction equipment and trading and refurbishment of these equipment. Our services offer several advantages, such as improved efficiency, cost control and a streamlined supply chain. Our business of renting of road construction equipment is executed in two rental modes based on: (i) "time-based pricing" and (ii) "output based pricing".

The time based pricing model allows customers to pay for the equipment based on how much they use it or the time duration they utilize it for, which is primarily a fixed fee. This model is common where our equipment is leased to contractors or developers in the infrastructure industry and in road construction activity like: paving. Rental based on the output of a service provider is often referred to as "output-based pricing". In this model, the customer pays for the service based on the results or outcomes delivered by the service provider, rather than a fixed fee or hourly rate. This approach is commonly used in delivering our services as service provider for various road construction activities like: milling and crushing. We deploy our equipment, manpower and other resources for running out these activities.

We have large no. of fleet of major OEMs like Wirtgen, Case, Luigong, Dynapac, Komatsu, Atlas Copco, Ashok Leyland, Bharat Benz, Eicher Motors, Volvo, Terex Power Screen, Caterpillar, Metro, BOMAG etc which is rented out to infra companies like: Larsen & Toubro, Ashoka Buildcon Ltd, Afcons Infrastructure Ltd, NCC Ltd, GMR Infraprojects Ltd, Shapoorji Pallonji, Dilip Buildcon Ltd, Tata Projects Ltd, ITD Cementation India Limited, HG Infra Engineering Ltd , IRB Infra developers Ltd, GR Infra Projects Ltd, etc. Offering a fleet of road construction equipment for rent provides flexibility to clients who may not want to invest in purchasing the machinery outright. Further it allows our clients to access the latest technology without the long-term commitment of ownership. As of March 31, 2024 we own a fleet of 395 road construction equipment. During the FY 2022, we rented out our construction equipment to approx. 95 customers which expanded to approx. 133 customers during FY 2024. We operate from our head office situated at Shop No 401-405, Bhawani International Business Bay, Bhavani Peth, Pune City, Pune-411042, Maharashtra, India.

The leasing of Construction equipments require a combination of expertise, efficient equipment, and a skilled workforce. Our scope of work as a service provide includes deployment of road construction equipment along with ancillary equipment of required quality and capacity with suitable manpower for operation and maintenance of the same. Our scope further includes mobilization and demobilization of such equipment from client location. Its a crucial sector for infrastructure development, ensuring the creation and maintenance of quality roads. Having gained knowledge and experience about road construction equipment and services we successfully delivered our services for various projects of our clients, some of which are as under:

Road projects like: JNPT Road Project, Samruddhi Mahamarg, MUMBAI City Eastern Expressway, Varanasi Aurangabad Section of NH-2, Ahmedabad Vadodara Expressway, Delhi Jaipur Highway, Delhi Ahmedabad Highway, Udaipur Chittorgarh Road Project, Guwahati-Shillong Road Project etc. Lucknow - Agra Expressway, Sambalpur - Rourkela Road Project, Delhi - Amritsar Road Project, Bijapur - Humnabad Road Project, Ganga Expressway, Mumbai Bangalore Highway.

Airports like: Hyderabad International Airport, Indira Gandhi International Airport, Sardar V.Patel International Airport.

Defence like: Bhuj Defence Airport, Varsha Project (Indian Navy), Nda, Pune

Railways like: WDFCC (Delhi - Mumbai), High Speed Rail Project (Ahmedabad - Mumbai),

Smart City Projects like: Ujjain, Pune, Amravati Capital City, Ap, Dolera Smart City

Irrigation Projects like: Kaleshwaram Dam

Buildings & Factory Work like: Kia Motors, Anantpur, Reliance Life Science.

Muncipal Solid Waste Management like: Kalyan-Dombivali Muncipal Corporation, Raipur Muncipal Corporation, Jalgaon Muncipal Corporation.

Meerut Aligarh Ghaziabad Road Project, Mej-Indergarh Expressway Project (Miep), Mudhol Nipani Road Project, Jaora Nayagaon Road Project, Four Lanning of Kaithal- Rajasthan Border Section NH-152/52, Six Laning Of Kishangarh Udaipur Ahmedabad Section, Noida International Airport Project, Jewar, Up - Milling Activity

Mumbai Coastal Road Package 1 (Bridges)- Rental Service

Ghaziabad Aligarh Expressway- Crushing Activity

In the context of road construction equipment and services, the refurbishment business plays a significant role in extending the life cycle of machinery and ensuring optimal performance. We are involved in the business of trading in second-hand road construction equipment which involves buying, refurbishing if necessary, and reselling used machinery for road construction activities. We purchase used equipment from Infrastructure companies, contractors, NBFCs , banks and Retail Market and refurbish the equipment such that it is brought back to optimal working condition, meeting safety and quality standards before being resold. In the past we had been carrying out our refurbishment activities both in house and through job work. However currently we areoutsourcing the refurbishment activities. Further our company intends to establish its new refurbishment unit at Gat No 185 and 186, Ambi, Taluka - Maval District- Pune, Maharashtra 410507 for which we have already executed the leave and license agreement for a period of 5 years. During the FY 2022 we refurbished and/or sold more than 500 equipment and during FY 2024 we have refurbished and sold out around 400 road construction equipment.

Key Performance Indicators of our Company

Key Financial Performance	FY 2023-24	FY 2022-23	FY 2021-22
Revenue from operations (1)	33,274.58	35,980.81	29,457.43
EBITDA (2)	8,152.67	5,565.03	3,411.67
EBITDA Margin (3)	24.50%	15.47%	11.58%
PAT	2,668.89	918.85	927.88
PAT Margin (4)	8.02%	2.55%	3.15%
Net Worth (5)	2,346.31	3000.37	2514.12
Return on Net Worth (6)	113.75%	30.62%	36.91%

Notes:

(1) Revenue from Operations means the Revenue from Operations as appearing in the Restated Financial Statements

(2) EBITDA is calculated as Profit before tax + Depreciation + Interest Expenses - Other Income (3) ‘EBITDA Margin is calculated as EBITDA divided by Revenue from Operations

(4) ‘PAT Margin is calculated as PAT for the period/year divided by revenue from operations.

(5) Net worth for FY 22 and FY 23 is computed as the sum of the Partners capital and Partners Current account balance. Partners Current Account balance in Partnership firm has been transferred to Unsecured Loan Account at the time of conversion of partnership firm into company. Net worth for FY 24 pursuant to conversion of partnership firm into company is calculated as Paid up Share Capital and Reserves and Surplus.

(6) Return on Net Worth is ratio of Profit after Tax and Net Worth.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of "Statement of Significant Accounting Policies", please refer to Annexure IV of Restated Financial Statements beginning on page 143 of this Red Herring Prospectus.

Factors Affecting our Results of Operations

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

2. Inability to promptly identify and respond to changing technologies;

3. We may not be able to sustain our historical growth rates, and our historical performance may not be indicative of our future growth or financial results;

4. Failure to successfully upgrade our fleet of equipment, from time to time;

5. Any change in government policies resulting in increases in taxes payable by us;

6. Our ability to retain our managements personnel and other employees;

7. We are dependent on certain customers for a portion of our revenues. Loss of relationship with any of these customers or a reduction in their demand for our services may have a material adverse effect on our profitability and results of operations;

8. Foreign exchange fluctuations may adversely affect our earnings and profitability;

9. Delay in expansion into new territories;

10. Changes in laws and regulations that apply to the industries in which we operate;

11. Our ability to grow our business;

12. The occurrence of natural disasters or calamities;

13. General economic, political and other risks that are out of our control;

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

15. Companys ability to successfully implement its growth strategy and expansion plans;

16. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;

17. Occurrence of Environmental Problems & Uninsured Losses;

18. Conflicts of interest with affiliated companies, the promoter group and other related parties;

19. Any adverse outcome in the legal proceedings in which we are involved; and

20. Concentration of ownership among our Promoters.

Discussion on Result of Operations

The following discussion on results of operations should be read in conjunction with the Restated Financial Statements for the financial years ended on March 31, 2024 March 31, 2023 and March 31, 2022.

Particulars	31-Mar-24	% of Total Income	31-Mar-23	% of Total Income	31-Mar-22	% of Total Income
Revenue:
Revenue From Operations	33,274.58	95.16%	35,980.81	97.54%	29,457.43	96.55%
Other Income	1,691.00	4.84%	908.73	2.46%	1,052.73	3.45%
Total Revenue	34,965.58	100.00%	36,889.54	100.00%	30,510.16	100.00%
Expenses:
Cost of Material Consumed	17,669.21	50.53%	23,489.13	63.67%	22,107.55	72.46%
Cost of Service provided	5,312.61	15.19%	4,076	11.05%	3,149	10.32%
Changes in inventories of finished goods	-1,603.14	-4.58%	622.50	1.69%	-812.55	-2.66%
Employee benefit expenses	1,695.93	4.85%	1,423.03	3.86%	836.56	2.74%
Finance Costs	1,747.17	5.00%	1,502.53	4.07%	1,093.80	3.59%
Depreciation and amortization expenses	4,236.10	12.12%	3,365.37	9.12%	2,194.92	7.19%
Others Expenses	1,962.22	5.61%	773.58	2.10%	727.62	2.38%
Total Expenses	31,020.10	88.72%	35,251.73	95.56%	29,296.77	96.02%
Profit before tax	3,945.48	11.28%	1,637.81	4.44%	1,213.39	3.98%
Tax expenses:
Current tax	1,250.86	3.58%	606.74	1.64%	334.12	1.10%
Deferred Tax Expense/(income)	25.72	0.07%	112.22	0.30%	-48.60	-0.16%
Total Tax Expenses	1,276.58	3.65%	718.96	1.95%	285.52	0.94%
Profit/(Loss) for the period After Tax- PAT	2,668.90	7.63%	918.85	2.49%	927.88	3.04%

Revenue from operations:

Revenue from operations mainly consists of Revenue from renting, trading and refurbishment of road construction equipment.

Other Incomes

Other income primarily comprises of Interest Income on FD, Duty Drawback, Discount Received, Scrap Sale, Foreign exchange Gain, Profit on sale of fixed assets, Export Incentive/MEIS Incentive, Other Miscellaneous Income.

Total Expenses:

Total expenses consist of operating cost like Cost of Material consumed, Cost of Service provided, Change in inventories of finished goods, Employee benefits expense, Finance costs, Depreciation and amortization expenses and other expenses.

Cost of Material consumed

Cost of Material consumed expenses primarily comprises of material consumption.

Cost of Service provided

Cost of Service provided primarily comprises of Direct cost which includes Power & Fuel, Hiring & Leasing Charges, Labour Charges, Repair & Maintenance Charges, Staff Welfare, Transportation Expenses & Other Cost for Services.

Change in inventories of finished goods

Change in inventories of finished goods comprises of increase/ (decrease) in inventory of equipment.

Employee benefits expense:

Employee benefits expense primarily comprises of Remuneration to partners, salary, Expenses related PF & ESIC, Staff welfare expenses, Gratuity Expense.

Finance Costs:

Our Finance cost includes Interest expenses and Bank charges.

Depreciation and Amortization Expenses:

Depreciation and Amortization Expenses includes depreciation on Plant and Machinery, Furniture and Fixture, Vehicles, Computers, Office Equipment.

Other Expenses:

Other Expenses consists of Expenses like: Audit Fees, Commission Expenses, Diesel and Fuel Expenses, Electricity Charges, Freight Charges, GST Written Off, Water Expenses, Insurance Expenses, Interest & Penalties on Income Tax, Loading and Unloading Charges, Lodging & Boarding Exp, Office Expenses, Other Expenses, Postage and Courier Expenses, Printing & Stationary, Professional Fees, Rent Expenses, RTO Expenses, Sales Promotion Expenses, Stamp Duty Fees, Telephone and Internet Expenses and Travelling Expenses.

FINANCIAL YEAR 2024 COMPARED TO FINANCIAL YEAR 2023

Total Income:

The Total Income from FY 23 to FY 24 decreased slightly by 5.22% from Rs 36,889.54 lakhs in FY 23 to Rs 34,965.58 lakhs in FY 24. The main reason for increase in Total income is due to decrease in Revenue from Trading & Refurbishment Products by 32.24% from Rs. 24,228.04 lakhs in FY 23 to Rs. 16,417.25 lakhs in FY 24. Further the Revenue from Rental Services increased by 43.43% from Rs 11,752.77 lakhs in FY 23 to Rs. 16,857.33 lakhs in FY 24.

Revenue from Operations

During the financial year 2023-24 the net revenue from operation of our Company decrease to Rs. 33,274.58 Lakhs as against Rs. 35,980.81 Lakhs in the Financial Year 2022-23 representing a decrease of 7.52%. The main reason of decrease was due to decrease in the revenue from sale of Trading and Refurbishment equipment from 24,228.04 Lakhs in the Financial Year 2022-23 as compared to Rs. 16,417.25 Lakhs in the financial year 2023-24 representing a decrease of 32.24% and increase in the revenue from Rental services from Rs 11,752.77 Lakhs in the Financial Year 2022-23 as compared to Rs. 16,857.33 Lakhs in the financial year 2023-24 representing an increase of 43.43%.

Other Income:

During the financial year 2023-24 the other income of our company increased to Rs. 1,691.00 Lakhs as against Rs. 908.73 Lakhs in the Financial Year 2022-23. The increase of 86.08% was due to increase in income from

(i) Profit on sale of fixed assets of Rs. 1,541.59 in financial year 2023-24 as compared to Rs. 888.60 in the financial year 2022-23 which amount to increase of 73.49%;

(ii) Foreign exchange gain of Rs. 115.81 lakhs in the financial year 2023-24 as compared to Rs. 8.75 lakhs in the financial year 2022-23 which amount to increase of 1223.41%;

(iii) Discount received of Rs. 11.67 lakhs in the financial year 2023-24 as compared to Rs. 1.65 lakhs in the financial year 2022-23 which amount to increase of 608.22%;

(iv) Interest income on FD of Rs. 14.72 in the financial year 2023-24 as compared to Rs. 6.02 lakhs in financial year 2022-23 which amount to increase of 144.31%;

(v) Reversal of Gratuity Provision of Rs. 3.42 in the financial year 2023-24 as compared to Nil in financial year 2022-23 which amount to increase of 100.00%;

(iv) Scrap sale of Rs. 3.79 lakhs in the financial year 2023-24 as compared to Rs. 3.71 lakhs in the financial year 2022-23 which amount to increase of 2.20%.

Total Expenses

The total expense for the financial year 2023-24 decrease to Rs. 31,020.10 Lakhs from Rs. 35,251.73 lakhs in the Financial Year 2022-23 representing a decrease of 12.00%. Such increase was due to decrease in the volume of business operations of the Company due to which the company shrunk in its expenditure.

Cost of Raw Material consumed

The Cost of material consumed for the financial year 2023-24 decreased to Rs. 17,669.21 lakhs from Rs. 23,489.13 lakhs in the Financial Year 2022-23 representing a decrease of 24.78%. Such decrease was due to decrease in purchase of raw material and equipment from Rs. 23,362.32 lakhs in financial year 2022-23 to Rs. 17,999.67 lakhs in the financial year 2023-24 representing a decrease of 22.95%.

Cost of Service provided

The Cost of service provided for the financial year 2023-24 increased to Rs. 5,312.61 lakhs from Rs. 4,075.59 lakhs in the Financial Year 2023-24 representing an increase of 30.35%. Such increase was due to increase in charges of power and fuel from Rs. 1,882.31 lakhs in the financial year 2022-23 to Rs. 2,217.99 lakhs in the financial year 2023-24 representing an increase of 17.83%; increase in Hiring & Leasing charges from Rs. 643.25 lakhs in the financial year 2022-23 to Rs. 1,610.83 lakhs in the financial year 2023-24 representing an increase of 150.42%; increase in Repair & Maintenance Charges from Rs. 186.52 lakhs in the financial year 2022-23 to Rs. 224.47 lakhs in the financial year 2023-24 representing an increase of 20.34%; increase in On Site Labour & Staff Expenses from Rs. 160.54 lakhs in the financial year 2022-23 to Rs. 194.92 lakhs in the financial year 2023-24 representing an increase of 21.42%; increase in Other Cost for Services from Rs. 2.85 lakhs in the financial year 2022-23 to Rs. 4.07 lakhs in the financial year 2023-24 representing an increase of 42.99%;

Change in inventories

Our Change in inventories comprises of increase/(decrease) in inventory of equipment used in business operations. The closing inventories of finished goods 2023-24 was Rs. (1,603.14) lakhs as compared to Rs. 622.50 lakhs in the Financial Year 2022-23 due to increase in closing inventories.

Employee benefits expense:

Our Company has incurred Rs. 1,695.93 Lakhs as Employee benefits expense during the financial year 2023-24 as compared to Rs. 1,423.03 Lakhs in the financial year 2022-23. The increase of 19.18% was due to increase in

(i) Salary of Rs. 1,448.82 lakhs in the financial year 2023-24 as compared to Rs. 1,263.79 lakhs in financial year 2022-23 which amount to increase of 14.64%;

(ii) Contribution to PF & ESIC of Rs. 67.42 lakhs in the financial year 2023-24 as compared to Rs. 52.62 lakhs in financial year 2022-23 which amount to increase of 28.13%;

(iii) Staff and Welfare Expenses of Rs. 44.69 lakhs in the financial year 2023-24 as compared to Rs. 39.31 lakhs in financial year 2022-23 which amount to increase of 13.69% and

(iv) Remuneration to director/partner of Rs. 135.00 lakhs in the financial year 2023-24 as compared to Rs. 54.00 lakhs in the financial year 2022-23 which amount to an increase of 150.00%.

Finance Costs:

Our Company has incurred Rs. 1,747.17 Lakhs as finance cost during the financial year 2023-24 as compared to Rs. 1,502.53 Lakhs in the financial year 2022-23. The increase of 16.28% was due to increase in

(i) interest expenses on borrowings from bank to Rs 1,662.09 lakhs in the financial year 2023-24 from Rs 1,470.59 lakhs in the financial year 2022-23 resulting in total increase of 13.02%;

(ii) Processing fees & Bank Charges to Rs 85.08 lakhs in the financial year 2023-24 from Rs 31.94 lakhs in the financial year 2022-23 resulting in total increase of 166.38%

Depreciation and Amortization Expenses:

Depreciation for the financial year 2023-24 stood at Rs. 4,236.10 Lakhs as against Rs. 3,365.37 Lakhs during the financial year 2022-23. The increase in depreciation was around 25.87% which was majorly due to addition in Plant and Machinery.

Other Expenses:

Our Company has incurred Rs. 1,962.22 Lakhs during the Financial Year 2023-24 on other expenses as against Rs. 773.59 Lakhs during the financial year 2022-23. There was an increase 153.65% mainly due

(i) Increase in freight charges by 12925.79% from Rs. 7.54 lakhs in financial year 2022-23 to Rs. 981.65 lakhs in financial year 2023-24;

(ii) Increase in commission expenses by 47.18% from Rs. 94.51 lakhs in financial year 2022-23 to Rs. 139.10 lakhs in financial year 2023-24;

(iii) increase in electricity charges by 25.96% from Rs. 10.52 lakhs in the financial year 2022-23 to Rs. 13.25 lakhs in the financial year 2023-24;

(iv) Increase in GST written off by 1176.13% from Rs. 7.92 lakhs in financial year 2022-23 to Rs. 101.06 lakhs in financial year 2023-24;

(v) Increase in water expenses by 97.87% from Rs. 3.98 lakhs in the financial year 2022-23 to Rs. 7.87 lakhs in the financial year 2023-24;

(vi) Increase in Loading and Unloading Charges by 43.33% from Rs. 5.42 lakhs in the financial year 2022-23 to Rs. 7.77 lakhs in the financial year 2023-24;

(vii) Increase in Lodging & Boarding Exp by 36.89% from Rs. 9.16 lakhs in the financial year 2022-23 to Rs. 12.54 lakhs in the financial year 2023-24;

(viii) Increase in professional fee by 165.28% from Rs. 63.89 lakhs in the financial year 2022-23 to Rs. 169.50 lakh in the financial year 2023-24,

(ix) Increase in Printing & Stationary expense by 42.11% from Rs. 2.11 lakhs in the financial year 2022-23 to Rs. 3.00 lakhs in the financial year 2023-24;

(x) Increase in RTO expenses by 48.29% from 70.05 in financial year 2022-23 to Rs. 103.87 lakhs in the financial year 2023-24;

(xi) Sales Promotion expenses by 92.69% from Rs. 13.62 lakhs in the financial year 2022-23 to Rs. 26.25 lakhs in the financial year 2023-24;

(xii) Audit Fees by 195.45% from Rs. 2.20 lakhs in the financial year 2022-23 to Rs. 6.50 lakhs in the financial year 2023-24;

(xiii) Stamp Duty Fees by 469.14% from Rs. 5.27 lakhs in the financial year 2022-23 to Rs. 29.99 lakhs in the financial year 2023-24

Restated Profit before tax:

Net profit before tax for the financial year 2023-24 increased to Rs. 3,945.48 Lakhs as compared to profit of Rs. 1,637.81 Lakhs in the financial year 2022-23. The increase of 140.90% was majorly due to factors as mentioned above.

Restated profit after tax:

Net profit after tax for the financial year 2023-24 increased to Rs. 2,668.89 Lakhs as compared to profit of Rs. 918.85 Lakhs in the financial year 2022-23. The increase of 190.46% was majorly due to factors increase in PAT margin. The PAT margin for the financial year 2022-23 was 8.02% and the same has increased to 2.55% in the financial year 2023-24.

FINANCIAL YEAR 2023 COMPARED TO FINANCIAL YEAR 2022

Total Income:

The Total Income from FY 22 to FY 23 increased slightly by 20.91% from Rs 30,510.16 lakhs in FY 22 to Rs 36,889.54 lakhs in FY 23. The main reason for increase in Total income is due to increase in Revenue from Trading & Refurbishment Products by 12.11% from Rs. 21,611.18 lakhs in FY 22 to Rs. 24,228.04 lakhs in FY 23. Further the Revenue from Rental Services increased by 49.79% from Rs 7,846.24 lakhs in FY 22 to Rs. 11,752.77 lakhs in FY 23. During FY 2023, the company made substantial Capital Expenditure of Rs 10,323.31 lakhs in the form of addition of new fleet of equipment. While this investment also resulted in higher depreciation expenses. The new machinery and equipment, while essential for our growth, have contributed significantly to the depreciation charge for the year. Depreciation expenses for FY 22 was 7.19% of the Total Income and the same increased to 9.12% of the Total Income for FY 23 which had a direct impact on the profitability.

Revenue from Operations

During the financial year 2022-23 the net revenue from operation of our Company Increase to Rs. 35980.81 Lakhs as against Rs. 29,457.43 Lakhs in the Financial Year 2021-22 representing an Increase of 22.15%. The main reason of increase was due to increase in the revenue from sale of Trading and Refurbishment equipment from 21,611.18 Lakhs in the Financial Year 2021-22 as compared to Rs. 24,228.04 Lakhs in the financial year 2022-23 representing an Increase of 12.10% and increase in the revenue from Rental services from Rs 7,846.24 Lakhs in the Financial Year 2021-22 as compared to Rs. 11,752.77 Lakhs in the financial year 2022-23 representing an Increase of 49.79%.

Other Income:

During the financial year 2022-23 the other income of our Company decreased to Rs.908.73 Lakhs as against Rs. 1052.73 Lakhs in the Financial Year 2021-22. The decrease of (13.68%) was due to decrease in income from

(i) Duty drawback of Rs. Nil in the financial year 2022-23 as compared to Rs. 14.88 lakhs in financial year 2021-22 which amount to decrease of 100%;

(ii) Export Incentive/ MEIS Incentive of Nil in the financial year 2022-23 as compared to Rs. 66.83 lakhs respectively in financial year 2021-22 which amount to decrease of 100%;

(iii) Discount received of Rs. 1.65 lakhs in the financial year 2022-23 as compared to Rs. 14.37 lakhs in the financial year 2021-22 which amount to decrease of (88.53%);

(iv) Scrap sale of Rs. 3.71 lakhs in the financial year 2022-23 as compared to Rs. 14.30 lakhs in the financial year 2021-22 which amount to decrease of (74.05%).

Total Expenses

The total expense for the financial year 2022-23 Increase to Rs. 35,251.73 Lakhs from Rs. 29,296.77 lakhs in the Financial Year 2021-22 representing an increase of 20.33%. Such increase was due to Increase in the volume of business operations of the Company due to which the company expanded its expenditure.

Cost of Raw Material consumed

The Cost of material consumed for the financial year 2022-23 increased to Rs. 23489.13 lakhs from Rs. 22,107.55 lakhs in the Financial Year 2021-22 representing an increase of 6.25%. Such increase was due to increase in purchase of raw material and equipment from Rs. 22,388.78 lakhs in financial year 2021-22 to Rs. 23,362.32 lakhs in the financial year 2022-23 representing an decrease of 4.35%.

Cost of Service provided

The Cost of service provided for the financial year 2022-23 increased to Rs. 4075.59 lakhs from Rs. 3,148.87 lakhs in the Financial Year 2020-21 representing an increase of 29.43%. Such increase was due to increase in charges of power and fuel from Rs. 1322.25 lakhs in the financial year 2022-23 to Rs. 1882.31 lakhs in the financial year 2021-22 representing an increase of 42.36%, increase in labour charges from Rs. 195.30 lakhs to Rs. 415.20 lakhs representing an increase of 112.60%.

Change in inventories

Our Change in inventories comprises of increase/(decrease) in inventory of equipment used in business operations. The closing inventories of finished goods 2022-23 was Rs. 838.11 lakhs as compared to Rs. 1460.61 lakhs in the Financial Year 2021-22 representing a decrease in closing inventories.

Employee benefits expense:

Our Company has incurred Rs. 1423.03 Lakhs as Employee benefits expense during the financial year 2022-23 as compared to Rs. 836.56 Lakhs in the financial year 2021-22. The increase of 70.11% was due to increase in

(i) Salary of Rs. 1263.79 lakhs in the financial year 2022-23 as compared to Rs. 705.47 lakhs in financial year 2021-22 which amount to increase of 79.14%,

(ii) Contribution to PF & ESIC of Rs. 52.62 lakhs in the financial year 2022-23 as compared to Rs. 8.01 lakhs in financial year 2021-22

(iii) Staff and Welfare Expenses of Rs. 39.31 lakhs in the financial year 2022-23 as compared to Rs. 24.03 lakhs in financial year 2021-22 which amount to increase of 63.57% and

(iv) Gratuity of Rs. 13.31 lakhs in the financial year 2022-23 as compared to Rs. 9.05 lakhs in the financial year 2021-22 which amount to an increase of 47.11%.

Finance Costs:

Our Company has incurred Rs. 1,502.53 Lakhs as finance cost during the financial year 2022-23 as compared to Rs. 1093.80 Lakhs in the financial year 2021-22. The increase of 37.37% was due to increase in

(i) interest expenses on borrowings from bank from Rs 1470.59 lakhs in the financial year 2021-22 to Rs 1056.09 lakhs in the financial year 2022-23 resulting in total increase of 39.25%

Depreciation and Amortization Expenses:

Depreciation for the financial year 2022-23 stood at Rs. 3365.37 Lakhs as against Rs. 2194.92 Lakhs during the financial year 2021-22. The increase in depreciation was around 53.32% which was majorly due to addition in Plant and Machinery.

Other Expenses:

Our Company has incurred Rs. 773.58 Lakhs during the Financial Year 2022-23 on other expenses as against Rs. 727.62 Lakhs during the financial year 2021-22. There was an increase 6.32% mainly due

(i) Increase in commission expenses by 72.89% from Rs. 54.66 lakhs in financial year 2021-22 to Rs. 94.51 lakhs in financial year 2022-23,

(ii) increase in electricity charges by 55.85% from Rs. 6.75 lakhs in the financial year 2021-22 to Rs. 10.52 lakhs in the financial year 2022-23,

(iii) increase in insurance expenses by 38.21% from Rs. 65.54 lakhs in financial year 2021-22 to Rs. 90.58 lakhs in financial year 2022-23, (iv) Increase in Interest & Penalties of Income-tax by 91.49% from Rs. 16.44 lakhs in financial year 2021-22 to Rs. 31.48 lakhs in financial year 2022-23, (v) Increase in office expenses by 157.61% from Rs. 14.43 lakhs in the financial year 2021-22 to Rs. 37.17 lakhs in the financial year 2022-23,

(vi) Increase in other expenses by 36.81% from Rs. 15.35 lakhs in the financial year 2021-22 to Rs. 20.99 lakhs in the financial year 2022-23,

(vii) Increase in Postage and courier charges by 159.06% from Rs. 7.44 lakhs in the financial year 2021-22 to Rs. 19.27 lakhs in the financial year 2022-23,

(viii) Increase in professional fee by 167.49% from Rs. 23.89 lakhs in the financial year 2021-22 to Rs. 63.89 lakh in the financial year 2022-23,

(ix) Increase in rent expenses by 54.30% from Rs. 68.61 lakhs in the financial year 2021-22 to Rs. 105.86 lakhs in the financial year 2022-23,

(x) (xi) Increase in sales promotion expenses by 100% from Nil in financial year 2021-22 to Rs. 13.62 lakhs in the financial year 2022-23,

(xii) Telephone and internet expenses by 162.89% from Rs. 2.64 lakhs in the financial year 2021-22 to Rs. 6.95 lakhs in the financial year 2022-23.

Restated Profit before tax:

Net profit before tax for the financial year 2022-23 increased to Rs. 1,637.81 Lakhs as compared to profit of Rs. 1,213.39 Lakhs in the financial year 2021-22. The increase of 34.98% was majorly due to factors as mentioned above.

Restated profit after tax:

The PAT margin for FY 22 was 3.04% in FY 22 and the same decreased slightly to 2.49% in FY 23. However, there was no substantial decrease in the Profit After Tax in absolute terms which was Rs 927.88 lakhs in FY 22 as compared to Rs 918.85 lakhs in FY 23.

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

An analysis of reasons for the changes in significant items of income and expenditure is given hereunder:

1. Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. Except as disclosed in this Red Herring Prospectus, there are no unusual or infrequent events or transactions in our Company.

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

There are no significant economic changes that may materially affect or likely to affect income from continuing operations.

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

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 32 of the 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.

4. Future changes in relationship between costs and revenues

Other than as described in the sections "Risk Factors", "Our Business" and "Managements Discussion and Analysis of Financial Condition and Results of Operations" on pages 32, 97 and 220 respectively, to our knowledge, no future relationship between expenditure and income is expected to have a material adverse impact on our operations and finances.

5. Segment Reporting

For details on segment reporting please refer "Annexure IV" forming part of "Financial Information of the Company" on page 145 of the Red Herring Prospectus

6. Status of any publicly announced New Products or Business Segment

Except as disclosed in the Chapter "Our Business", our Company has not announced any new product or service.

7. Seasonality of business

Renting of road construction equipment is subject to seasonality as the road construction activities are affected at the time of monsoon. For further information, see "Risk factors- Our business is subject to seasonality, which may contribute to fluctuations in our results of operations and financial condition" on pages 32.

8. Dependence on single or few customers

During Fiscal 2024, 2023 and 2022 revenue generated from our top ten customers were 20,699.7 lakhs, 29,169.51 lakhs and 24,751.28 lakhs which represented 62.21%, 81.07% and 84.02% respectively of our revenues from operations.

9. Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Our Business" beginning on pages 88 and 97 respectively of this Red Herring Prospectus.

10. Details of material developments after the date of last balance sheet i.e., March 31, 2024

After the date of last Balance sheet i.e., March 31, 2024, the following material events have occurred:

1. Our Company has approved the Draft Red Herring Prospectus vide resolution in the Board Meeting dated May 31, 2024.

2. Our company has approved the audited consolidated financial statements for the Financial Year ending March 31, 2024 in the Board meeting dated July 24, 2024.

3. Our Company has conducted Annual General Meeting on July 30, 2024.

4. Our Company has approved the Restated Financial Statements for the financial year ended March 31, 2024, March 31, 2023 and March 31, 2022 in the Board meeting dated August 31, 2024.

5. Our Company has approved the Red Herring Prospectus vide resolution in the Board Meeting dated September 01, 2024.