Arabian Petroleum 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 138 You should also read the section titled "Risk Factors" on page 21 and the section titled "Forward Looking Statements" on page 15 of this 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 September 01, 2023 which is included in this 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.

OVERVIEW

We are in the business of manufacturing wide range of Lubricants including Specialty Oils, Coolants etc used for Industrial and Automotive applications. Our business is categorized into two distinctive product division: (i) Automotive Lubricants - Arzol and (ii) Industrial Lubricants - SPL. We are dedicated to consistently providing products that deliver stellar quality and comply with statutory requirements in the Automotive and Industrial Lubricants domain.

Our Company took over the manufacturing and trading business of Industrial & Automotive Lubricants from the proprietorship firm "Arabian Petroleum" run by its proprietor Hemant D Mehta HUF vide Business Takeover agreement dated December 25, 2015, in the manner that all the Know- how, goodwill, clients of the proprietorship firm were transferred to the company and the company set up its own manufacturing facility at a plant in Ambernath situated at Plot 14-B, Morivali M.I.D.C., Opp. Positive Packaging, Ambernath (W), Ambernath, Thane - 421505, Maharashtra, India. Thereafter our company started its manufacturing activities with 10 blending machines. In the year 2019 we further expanded our manufacturing activities to Factory Unit-2 situated at Plot no. 14B/1, Morivali MIDC, opp. Positive Packaging Ambernath (W), Distt- Thane-421505, Maharashtra, India and added 2 more blending machines with total installed capacity of 40590 KLPA Our combined in-house storage capacity of storage tanks at both our manufacturing facilities for base oil, additives, waxes as on date of the Prospectus is approximately 2000 KL and that for semi-finished or finished products is approximately 1000 KL. We are accredited with ISO 9001:2015 Quality Management System, ISO 45001:2018 Occupational health and Safety Management System and ISO 14001:2015 Environmental Management System for Manufacturing and supply of Industrial and Automotive Lubricants.

In the year 2021 our company was licensed by American Petroleum Institute (API) to use API mark on some of its products like: Arzol Milage Synactiv, Arzol Super Duty and Arzol Synpros.

Our domestic and international customers are spread across multiple industries, including pharmaceutical, FMCG, chemicals, steel, rubber and tyre, power, civil engineering, electrical appliances, textile, telecommunication, chemical, cables and conductors and automobile industry etc. Apart from private players, we also derive our revenues under the contracts from the Government sectors (both central and state) and associated entities. We are honored to be one of the suppliers of lubricants to the Indian Armed Forces and have successfully delivered lubricant products to Border Security Force (BSF), Indian Air Force (IAF) and Indian Navy across various parts of the country.

We have product approval certification from Volvo Group Trucks Technology, Renault Group and MACK Trucks for our product "Milage Synactivs 15W-40" engine oil. We have recently received OEM approval from Bharat Earth Movers Limited (Formerly - BEML Limited) for their entire range of products like Engine oil, hydraulic oil etc.

We also manufacture and package lubricants on private label basis for some of the customers for B2B as well as B2C verticals. Some of our clientele include: Varroc Engineering Limited, Mahindra First Choice Services

Limited, Greaves Cotton Limited, Gabriel India Limited, Ki Mobility Solutions Private Limited - TVS Group Company, HELLA India Lighting Ltd, Petrelplus Inc, Nand Persaud & Co Ltd, J K Files (India) Limited - a Raymond Group Company, Godrej & Boyce Manfacturing Co. ltd etc. We also have government clientele including BEML Limited, Bharat Coking Coal Limited, Bharat Electronics Limited, Bharat Heavy Electricals Limited, Hindustan Aeronautics Limited, Indian Air Force, Mazagon Dock Shipbuilders Limited, Indian Navy (Controller of Procurement Material Organisation), Municipal Corporation of Greater Mumbai, Indian Railway, Western Coalfields Limited, SouthEastern Coalfields Limited, Northern Coalfields Limited etc. Furthermore we are exporting our products to countries like: Guyana, Oman, Qatar, Vietnam, Sri Lanka, Sierre Leone, Zambia, Bangladesh, Chile, Jordan, Seychelles, Maldives, Fiji, Congo, Gautemala, Suriname, Peru, Mauritius, Dubai etc.

We sell our automotive lubricants under the brand name of "Arzol" and Industrial Lubricant under the brand name of "SPL Lubricants" through:

• Retail packs: Ranging from 175ML to 20L packs that are sold in plastic packets, HDPE containers and pails for our retail customers;

• Wholesale packs: Ranging from 26L to 210L that are sold in HDPE containers and tin containers for our wholesalers and our institutional customers; and

• Institutional sales: For bulk supply of our products in the tankers to institutional customers, subject to their requirements.

We also manufacture and package lubricants on job work basis for some of the customers for B2B applications. We have diversified our product portfolio, mainly due to our strong research and development ("R&D"), technological and laboratory capabilities. Our R&D capabilities include product design, product engineering, product simulation, prototyping and testing. Our R&D activities are mainly undertaken at our manufacturing facilities at Ambernath. Our research activities are focused on creating new products and solutions which are customized to meet customer expectations and end-user preferences and also improving our production processes and improving the quality of our existing products. We are under process of accrediting our lab with NABL certification for our lab.

Our Company is led by our Managing Director, Mr. Hemant Dalsukhrai Mehta and Whole Time Directors Mr. Manan Hemant Mehta and Mr. Dharman Manoj Mehta having an overall experience of around 41 years, 9 years and 7 years respectively. We have received the below mentioned prestigious awards in the past that bear testimony to the faith our customers have in us and our ability to successfully serve and meet their requirements.

> We have been ranked amongst the High Growth Company in the Asia-Pacific in a report by the Financial Times consecutively for FY 2021 and FY 2022

> Our Company was recognized amongst the Top 10 Lubricant manufacturers in the year 2021 by Industry Outlook in acknowledgement of its unwavering focus and dedication to achieve excellence in quality and delivery in this field.

> The Economic Times and Statista recognized our Company as one of the Indias Growth Champions 2021

For the financial years ended on March 31, 2023, March 31, 2022 and March 31, 2021 our Revenue from Operations were Rs. 24,283.67 Lakhs, Rs.19,101.28 lakhs and Rs. 10,998.70 lakhs respectively and PAT were Rs. 486.48 lakhs, Rs. 414.34 lakhs and Rs. 287.54 lakhs respectively.

Key Performance Indicators of our Company

(Rs. In Lakhs except percentages and ratios)

Key Financial Performance	FY 2022-23	FY 2021-22	FY 2020-21
Revenue from operations?	24283.67	19101.28	10998.70
ebitda(2)	928.62	819.21	618.61
EBITDA Margin?	3.82%	4.29%	5.62%
PAT	486.48	414.34	287.54
PAT Margin?	2.00%	2.17%	2.61%
Net Worth (5)	2202.80	1716.32	1301.98
RoE(%)(6)	22.08%	24.14%	22.09%
RoCE (%)(7)	32.47%	36.38%	28.60%

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 means the aggregate value of the paid-up share capital and reserves and surplus of the company.

 

(6) Return on Equity is ratio of Profit after Tax and Average Shareholder Equity

 

(7) Return on Capital Employed is calculated as EBIT divided by capital employed, which is defined as shareholders equity plus total borrowings {current & non-current}.

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 145 of this Prospectus.

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 21 of this Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

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

• Changes in consumer demand and preferences;

• Availability of raw materials and fluctuation in the prices of raw materials for our speciality oils and lubricants products

• Failure to successfully upgrade our product portfolio, from time to time;

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

• Our ability to retain our key managements persons and other employees;

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

• Our failure to keep pace with rapid changes in technology;

• Our ability to make interest and principal payments on our existing debt obligations and satisfy the other covenants contained in our existing debt agreements;

• Delay or default in payment from our depots and customers

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

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

• Exchange rate fluctuations in various currencies in which we do business;

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

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

• Inability to successfully obtain registrations in a timely manner or at all;

• Occurrence of Environmental Problems & Uninsured Losses;

• Any adverse outcome in the legal proceedings in which we are involved;

• Concentration of ownership among our Promoters;

• The performance of the financial markets in India and globally;

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, 2023, 2022 and 2021.

(Rs. In lakhs)

Particulars	2022-23	% of Total Income	2021-22	% of Total Income	2020-21	% of Total Income
Revenue from operations	24283.67	0.99545	19101.28	0.99698	10998.7	0.99766
Other Income	111.0046	0.00455	57.82133	0.00302	25.83467	0.00234
Total Income	24,394.68	100.00%	19,159.10	100.00%	11,024.54	100.00%
Expenses
Cost of materials consumed	2079 1.99	0.85232	16320.45	0.85 184	8846.248	0.80241
Changes in Inventory	-273.233	-0.0112	-666.018	-0.0348	-134.305	-0.0122
Employee benefit expenses	1007.371	0.04129	924.7035	0.04826	627.4201	0.05691
Financial cost	253.6938	0.0104	175.3049	0.00915	122.6721	0.01113
Depreciation and Amortisation Expenses	137.792	0.00565	142.5732	0.00744	138.5923	0.01257
Other expenses	1823.211	0.07474	1679.792	0.08768	1033.92	0.09378
Total Expenditure	23,740.83	97.32%	18,576.80	96.96%	10,634.55	96.46%
Profit/ Loss Before Exceptional & Extraordinary Items & Tax	653.85	2.68%	582.30	3.04%	389.99	3.54%
Exceptional Item	-	-	-	-	-	-
7 Profit/ (Loss) Before Tax	653.85	2.68%	582.30	3.04%	389.99	3.54%
8 Tax expense
(1) Tax Expense for Current Year	179.5879	0.00736	160.0814	0.00836	103.868	0.00942
(2) Short/ (Excess) Provision of Earlier Year	-0.01431
(2) Deferred Tax	-12.205	-0.0005	7.87941	0.00041	-1.42358	-0.0001
Net Current Tax Expense	167.3685	0.00686	167.9608	0.00877	102.4444	0.00929
9 Profit/ Loss for the Year (V-VI)	486.48	1.99%	414.34	2.16%	287.54	2.61%

Revenue from operations:

Revenue from operations mainly consists of revenue from sale of wide range of Lubricant products including speciality Oils, Coolants, Greases, Brake Fluids etc.

Other Income:

Our other income primarily comprises of Interest Income, Rental income, Net gain on foreign currency transactions, Export drawback received etc.

Expenses:

Companys expenses consist of Cost of Materials Consumed, Change in inventories, Employee benefits expenses, Finance cost, Depreciation and amortization expenses and Other expenses.

Cost of Materials Consumed:

Cost of Materials Consumed comprises of cost of Raw Material consumed being base oil and additives

Changes in inventories of finished goods work-in-progress and Stock-in-Trade:

Changes in inventories of finished goods and work-in-progress comprises of increase/decrease in Finished Goods and Work in Progress.

Employee benefits expense:

Our employee benefits expense primarily comprises of Salary and wages, Provision for gratuity, Contribution to Provident and Other Fund, Directors Remuneration, Staff welfare expenses etc.

Finance Costs:

Our finance cost includes Interest expense on borrowings and Bank Charges.

Depreciation and Amortization Expenses:

Depreciation includes depreciation on Buildings, Computers and Printers, Furniture & Fixtures, Vehicles, Laboratory Equipment, Office Equipment, Plant & Equipments and Computer Software etc.

Other Expenses:

Our other expenses consist of electricity charges, factory, power and fuel, transport charges, administration, CFA charges, commission expenses, consulting charges, conveyance expenses, discount, insurance, job work charges, packing expenses, professional fees, repairs and maintenance, selling and Distribution, security, spares and consumables, travelling expenses, other expenses, etc.

FINANCIAL YEAR 2023 COMPARED TO FINANCIAL YEAR 2022 Total Income:

Total income for the financial year 2022-23 stood at Rs. 24,394.68 Lakhs whereas in Financial Year 2021-22 the same stood at Rs. 19,159.10 Lakhs representing an increase of 27.33% The main reason of increase was increase in the volume of business operations of the company. The total income consists of revenue from operations and other income.

Revenue from Operations

During the financial year 2022-23 the net revenue from operation of our Company increased to Rs. 24,283.67 Lakhs as against Rs. 19,101.28 Lakhs in the Financial Year 2021-22 representing an increase of 27.13%. The main reason of increase was due to increase in the sales of products traded/Manufactured by the Company.

Other Income:

During the financial year 2022-23 the other income of our Company increased to Rs. 111.00 Lakhs as against Rs. 57.82 lakhs in the Financial Year 2021-22 representing an increase of 91.98% which was due to increase in income from (i) Export Drawback Received of Rs. 7.68 lakhs in the financial year 2022-23 as compared to Rs. 6.82 lakhs in financial year 2021-22 which amount to increase of 12.52%, (ii) Exchange Gain/Loss of Rs.50.66 lakhs in financial year 2022-23, as compared to Rs. 42.35 lakhs in financial year 2021-22 which amount to increase of 19.62%, (iii) Interest Income of Rs. 5.59 lakhs in financial year 2022-23, as compared to Rs. 3.46 lakhs in financial year 2021-22 which amount to increase of 61.64%, (iv) Insurance Claim Received of Rs. 6.96 lakhs in financial year 2022-23, which started in current year itself, (v) Sundry Creditors W/Back of Rs. 36.17 lakhs in financial year 2022-23, which started in current year itself .

Total Expenses:

The total expense for the financial year 2022-23 increased to Rs. 23,740.83 Lakhs from Rs. 18,576.80 lakhs in the Financial Year 2021-22 representing an increase of 27.80%. Such increase was due to increase in business operations of the Company.

Cost of Materials Consumed

The Cost of material consumed for the financial year 2022-23 increased to Rs. 20,791.99 lakhs from Rs. 16,320.45 lakhs in the Financial Year 2021-22 representing an increase of 27.40%. Such increase was due to increase in purchase of raw materials from Rs 16,818.24 lakhs in financial year 2021-2022 to Rs 20,364.10 lakhs in financial year 2022-2023 representing an increase of 21.08%.

Change in inventories of finished goods and work in progress

Our Change in inventories of finished goods and work in progress comprises of increase/(decrease) in finished goods and increase/(decrease) in work in progress (WIP). Such decrease was due to the closing inventories of finished goods for the financial year 2022-23 which was Rs 1,045.14 lakhs as compared to Rs 783.12 lakhs in the Financial Year 2021-22 representing an increase in closing inventories of 33.46% and closing work in progress for the financial year 2022-23 was Rs 299.47 lakhs as compared to Rs 288.26 lakhs in the Financial Year 2021-22 representing an increase of 3.89%.

Employee benefits expense:

Our Company has incurred Rs. 1,007.347 Lakhs as Employee benefits expense during the financial year 2022-23 as compared to Rs. 924.70 Lakhs in the financial year 2021-22. The increase of 8.94% was due to increase in (i) Salary and Wages from Rs. 626.64 lakhs in the Financial Year 2021-22 to Rs. 794.06 lakhs in the financial year 2022-23 representing an increase of 26.72 %, (ii) Provision for Gratuity from Rs. 22.48 lakhs in the Financial Year 2021-22 to Rs. 34.42 lakhs in the financial year 2022-23 representing an increase of 53.15 %, (iii) Contibution to Provident fund and other funds from Rs. 44.54 lakhs in the Financial Year 2021-22 to Rs. 63.95 lakhs in the financial year 2022-23 representing an increase of 43.58 %, (iv) Staff Welfare Expenses from Rs. 25.51 lakhs in the Financial Year 2021-22 to Rs. 31.05 lakhs in the financial year 2022-23 representing an increase of 21.68 %.

Finance costs:

Our Company has incurred Rs. 253.69 Lakhs as finance cost during the financial year 2022-23 as compared to Rs. 175.30 Lakhs in the financial year 2021-22. The increase of 44.72% was due to increase in interest expenses of the Company.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2022-23 stood at Rs. 137.79 Lakhs as against Rs. 142.57 Lakhs during the financial year 2021-22. The decrease in depreciation was around 3.35% which was due to sale of Office Equipment.

Other Expenses:

Our Company has incurred Rs. 1,823.21 Lakhs during the Financial Year 2022-23 on other expenses as against Rs. 1,679.79 Lakhs during the financial year 2021-22. There was an increase of 8.54% mainly due (i) increase in Electricity Charges by 19.81% from Rs. 32.76 lakhs in financial year 2021-22 to Rs. 39.25 Lakhs in financial year 2022-23, (ii) increase in Factory Expenses by 13.28% from Rs. 29.70 lakhs in financial year 2021-22 to Rs. 33.65 lakhs in financial year 2022-23, (iii) increase Transport Charges by 3.88% from Rs. 804.46 lakhs in financial year 2021-22 to Rs. 835.65 lakhs in financial year 2022-23, (iv) increase in Administration Expenses by 41.65% from Rs. 30.37 lakhs in financial year 2021-22 to Rs 43.03 lakhs in financial year 2022-23 (v) increase in CFA Charges by 3.29 % from Rs. 65.31 lakhs in financial year 2021-22 to Rs. 67.46 lakhs in financial year 2022-23 (vi) increase in Commission Expense by 5.93 % from Rs. 154.53 lakhs in financial year 2021-22 to Rs. 163.7 lakhs in financial year 2022-23 (vii) increase in Conveyance Expenses by 17.31 % from Rs 35.00 lakhs in financial year 2021-22 to Rs. 41.06 lakhs in financial year 2022-23, (viii) increase in Insurance by 3.46 % from Rs 73.10 lakhs in financial year 2021-22 to Rs. 75.63 lakhs in financial year 2022-23, (ix) increase in Job Work Charges by 24.05 % from Rs 15.57 lakhs in financial year 2021-22 to Rs. 19.31 lakhs in financial year 2022-23, (x) increase in Lab Testing Material by 5.62 % from Rs 5.63 lakhs in financial year 2021-22 to Rs. 5.94 lakhs in financial year 2022-23, (xi) increase in Professional fees by 37.35 % from Rs 142.11 lakhs in financial year 2021-22 to Rs. 195.19 lakhs in financial year 2022-23, (xii) increase in Repairs & Maintenance by 502.49 % from Rs 3.79 lakhs in financial year 2021-22 to Rs. 22.82 lakhs in financial year 2022-23, (xiii) increase in Rent expenses by 55.88 % from Rs 6.8 lakhs in financial year 2021-22 to Rs. 10.6 lakhs in financial year 2022-23, (xiv) increase in Selling & Distribution expenses by 356.13 % from Rs 14.38 lakhs in financial year 2021-22 to Rs. 65.61 lakhs in financial year 2022-23, (xv) increase in Security Charges by 68.57% from Rs 17.86 lakhs in financial year 2021-22 to Rs. 30.10 lakhs in financial year 2022-23, (xvi) increase in software expenses by 9.53 % from Rs 5.85 lakhs in financial year 2021-22 to Rs. 6.41 lakhs in financial year 2022-23, (xvii) increase in Travelling expenses by 100.24 % from Rs 31.69 lakhs in financial year 2021-22 to Rs. 63.46 lakhs in financial year 2022-23 etc.

Restated Profit before tax:

Net profit before tax for the financial year 2022-23 increased to Rs. 653.85 Lakhs as compared to Rs. 582.30 Lakhs in the financial year 2021-22. The increase of 12.29 % was majorly due to factors as mentioned above.

Restated profit after tax:

As a result of the foregoing factors, our profit after tax for the year increase by 17.41% from net profit of Rs. 414.34 Lakhs in financial year 2021-22 to net profit Rs. 486.48 lakhs in financial year 2022-23.

FINANCIAL YEAR 2022 COMPARED TO FINANCIAL YEAR 2021 Total Income:

Total income for the financial year 2021-22 stood at Rs. 19,159.10 Lakhs whereas in Financial Year 2020-21 the same stood at Rs. 11,024.54 Lakhs representing an increase of 73.79 %.

Revenue from Operations

During the financial year 2021-22 the net revenue from operation of our Company increased to Rs. 19,101.28 Lakhs as against Rs. 10,998.70 Lakhs in the Financial Year 2020-21 representing a decrease of 73.67 %. Such increase was due to increase in business operations of the Company.

Other Income:

During the financial year 2021-22 the other income of our Company increased to Rs. 57.82 Lakhs as against Rs. 25.83 lakhs in the Financial Year 2020-21 representing an increase of 123.81%.

Total Expenses:

The total expense for the financial year 2021-22 increased to Rs. 18,576.80 Lakhs from Rs. 10,634.55 lakhs in the Financial Year 2020-21 representing an increase of 74.68 %. Such increase was due to increase in business operations of the Company.

Cost of material consumed

The Cost of material consumed for the financial year 2021-22 increased to Rs 16,320.45 lakhs from Rs. 8,846.25 lakhs in the Financial Year 2020-21 representing an increase of 84.49%. Such increase was due to increase in purchase of (i) raw materials from Rs 9,471.54 lakhs in financial year 2020-2021 to Rs 16,818.24 lakhs in financial year 2021-2022 representing an increase of 77.57%

Change in inventories of finished goods and work in progress

Our Change in inventories of finished goods and work in progress comprises of increase/(decrease) in finished goods and increase/(decrease) in work in progress (WIP). The closing inventories of finished goods for the financial year 2021-22 was Rs 783.12 lakhs as compared to Rs 256.92 lakhs in the Financial Year 2020-21 representing an increase in closing inventories of 204.81% and work in progress for the financial year 2021-22 was Rs 288.26 lakhs as compared to Rs 148.44 lakhs in the Financial Year 2020-21 representing an increase of 94.19%.

Employee benefits expense:

Our Company has incurred Rs. 924.7 Lakhs as Employee benefits expense during the financial year 2021-22 as compared to Rs. 627.42 Lakhs in the financial year 2020-21. The increase of 47.38 % was due to increase in (i) Salary and Wages from Rs. 419.42 lakhs in the Financial Year 2020-21 to Rs. 626.64 lakhs in the financial year 2021-22 representing an increase of 49.41 %, (ii) Provision for Gratuity from Rs. 6.45 lakhs in the Financial Year 2020-21 to Rs. 22.48 lakhs in the financial year 2021-22 representing an increase of 248.41 %, (iii) Contibution to Provident fund and other funds from Rs. 30.55 lakhs in the Financial Year 2020-21 to Rs. 44.54 lakhs in the financial year 2021-22 representing an increase of 45.78 %, (iv) Staff Welfare Expenses from Rs. 24.49 lakhs in the Financial Year 2020-21 to Rs. 25.51 lakhs in the financial year 2021-22 representing an increase of.4.2%, (v) Directors Remuneration from Rs. 146.51 lakhs in the Financial Year 2020-21 to Rs. 205.53 lakhs in the financial year 2021-22 representing an increase of.40.29%.

Finance Cost

Our Company has incurred Rs. 175.30 Lakhs as finance cost during the financial year 2021-22 as compared to Rs. 122.67 Lakhs in the financial year 2020-21. The increase of 42.91% was due to increase in Borrowing Costs of the Company.

Depreciation and Amortization Expenses:

Depreciation for the financial year 2021-22 stood at Rs. 142.57 Lakhs as against Rs. 138.59 Lakhs during the financial year 2020-21. The increase in depreciation was around 2.87% which was due to addition in Plant & Equipment, Furniture & Fixtures, Office Equipment, Computers & Printers, Building.

Other Expenses:

Our Company has incurred Rs. 1,679.79 Lakhs during the Financial Year 2021-22 on other expenses as against Rs. 1,033.92 Lakhs during the financial year 2020-21. There was a increase of 62.47% mainly due (i) increase in Electricity Charges by 33.88% from Rs. 24.47 lakhs in financial year 2020-21 to Rs. 32.76 Lakhs in financial year 2021-22, (ii) increase in Factory Expenses by 260.87% from Rs. 8.23 lakhs in financial year 2020-21 to Rs. 29.7 lakhs in financial year 2021-22, (iii) increase Transport Charges by 73.47% from Rs. 463.75 lakhs in financial year 2020-21 to Rs. 804.46 lakhs in financial year 2021-22, (iv) increase in Administration Expenses by 52.84% from Rs. 19.87 lakhs in financial year 2020-21 to Rs 30.37 lakhs in financial year 2021-22 (v) increase in CFA Charges by 64.90 % from Rs. 39.60 lakhs in financial year 2020-21 to Rs. 65.31 lakhs in financial year 2021-22 (vi) increase in Commission Expense by 31.08 % from Rs. 117.89 lakhs in financial year

2020- 21 to Rs. 154.53 lakhs in financial year 2021-22 (vii) increase in Conveyance Expenses by 47.57 % from Rs 23.72 lakhs in financial year 2020-21 to Rs. 35.00 lakhs in financial year 2021-22, (viii) increase in Insurance by 181.08 % from Rs 26.01 lakhs in financial year 2020-21 to Rs. 73.10 lakhs in financial year 2021-22, (ix) increase in discount by 190.74 % from Rs 5.96 lakhs in financial year 2020-21 to Rs. 17.34 lakhs in financial year 2021-22, (x) increase in Power & Fuel by 25.12 % from Rs 19.31 lakhs in financial year 2020-21 to Rs. 24.16 lakhs in financial year 2021-22, (xi) increase in Professional fees by 28.73 % from Rs 110.39 lakhs in financial year 2020-21 to Rs. 142.11 lakhs in financial year 2021-22, (xii) increase in Rates & Taxes by 98.17 % from Rs 5.83 lakhs in financial year 2020-21 to Rs. 11.56 lakhs in financial year

2021- 22, (xiii) Rent expenses which started in financial year 2021-22 amounting to R 6.8 lakhs, (xiv) increase in Selling & Distribution expenses by 2.41 % from Rs 14.04 lakhs in financial year 2020-21 to Rs.14.38 lakhs in financial year 2021-22, (xv) increase in Security Charges by 201.26% from Rs 5.93 lakhs in financial year 2020-21 to Rs. 17.86 lakhs in financial year 2021-22, (xvi) increase in software expenses by 116.00 % from Rs 2.71 lakhs in financial year 2020-21 to Rs. 5.85 lakhs in financial year 2021-22, (xvii) increase in Travelling expenses by 357.52 % from Rs 6.93 lakhs in financial year 2020-21 to Rs. 31.69 lakhs in financial year 2021-22 etc.

Restated profit before tax:

Net profit before tax for the financial year 2021-22 increased to Rs. 440.19 Lakhs as compared to Rs.279.60 Lakhs in the financial year 2020-21. The increase of 57.44% was due to factors as mentioned above.

Restated profit for the year:

The Company reported Restated profit after tax for the financial year 2021-22 of Rs.307.99 Lakhs in comparison to Rs. 204.94 lakhs in the financial year 2020-21. The increase of 50.29% which was majorly due to factors as mentioned above.

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 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 21 of the 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 21, 90 and 182 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. Total turnover of each major industry segment in which our Company operates

The Company is in the business of manufacturing a wide range of Lubricants including speciality Oils, Coolants, etc. Relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 83 of this 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

Our business is not affected by seasonal variations and adverse weather conditions.

8. Dependence on single or few customers or suppliers

For the FY 22-23, FY 21-22 and FY 20-21 our top 10 customers contributed to 40.65%, 34.76% and 26.53% of our revenue from operations. For further information, see "Risk Factors" on page 21 of this Draft Red Herring Prospectus

9. Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Our Business" beginning on pages 83 and 90 respectively of this Prospectus.

10. Details of material developments after the date of last balance sheet i.e., March 31, 2023

After the date of last Balance sheet i.e., March 31, 2023, the following material events have occurred after the last audited period-

1. Our Company has approved the Restated Financial Statements for the financial year ended March 31, 2023, 2022 & 2021 in the Board meeting dated September 01, 2023.

2. Our Company has approved the Prospectus vide resolution in the Board Meeting dated September 18, 2023.