Flair Writing Industries Ltd Management Discussions

1 Our Net Capital Turnover Ratio increased by 54.22%> to 4.38 times in Financial Year 2023 from 2.84 times in Financial Year 2022 and

We utilize a set of financial and non-financial key performance indicators that our management reviews in evaluating the performance of our business. Our management believes that the presentation of these key performance indicators in this Draft Red Herring Prospectus are important to understanding our performance from period to period and also have an impact on our results of operations. These key performance indicators may or may not be compatible with similarly-titled metrics presented by others operating in our industry. These indicators are not intended to be a substitute for, or superior to, any measures of performance prepared in accordance with Ind AS, and may not fully reflect our financial performance, liquidity, profitability or cash flows. Set forth below are some of our key operational performance indicators as of and for the periods indicated, along with reasons for the changes, increases or decrease in these key operational performance indicators during the periods indicated.

For further information, see “Basis for Offer Price" and “Our Business" on pages 120 and 161, respectively.

Our results of operations and financial condition are affected and will continue to be affected in future by a number of important factors, including:

Our range of products sold and brand portfolio in any particular period impacts our revenue and profitability. Our products are sold under our flagship brand “Flair” (which was introduced in 1976), our principal brands, “Hauser” and “Pierre Cardin” and we have recently introduced “ZOOX” in India. As of March 31, 2023, our extensive product range comprised 699 different products, including pen products (ball pens, fountain pens, gel pens, roller pens and metal pens), which is our largest category in terms of number of products offered, stationery products (mechanical pencils, highlighters, correction pens, markers, gel crayons and kids stationery kits) and calculators. We have launched a range of “Flair Creative” products in 2021 which include water colours, crayons, sketch pens, erasers, wooden pencils and geometry boxes, fine liners, sharpeners and scales. We have developed a reputation as one of the key manufacturers of pens writing instruments in India, according to CRISIL. The number of products offered by us as of March 31, 2023, are set out below:

In Financial Year 2023, we sold 1,303.60 million units of pens, of which 975.30 million units or 74.82% was sold domestically. Our pen and stationery products are offered across a wide range of prices, including in both the mass-market segment with prices between Rs.5 and Rs.15 and the mid-premium segment with prices between Rs.16 and Rs.100 and the premium segment priced above Rs.100. This approach helps us cater to all target consumers, including students, professionals and offices. Our margins and profitability are generally higher in the midpremium segment and premium segment as compared with the mass-market segment, particularly products which are priced between Rs.20 to Rs.50. However, we view presence in the mass-market as critical to market penetration, brand recognition and acceptance in our distribution network.

Details of revenue from operations from sale of products (domestic) for the periods indicated, are set out below:

Details of our revenue from operations from sale of our pen products by brand for the periods indicated, are set out below:

We believe that the reputation of our flagship “Flair” brand, which commenced as a brand for metal pens, and its

acceptance by consumers and our distribution network, has been instrumental in permitting our expansion of the brand to plastic pens, including ball pens and gel pens, as well as premium segment products. We believe that our brands command credibility in the market and provides a competitive advantage in existing markets and to enter new markets, growing our product range, entering into distribution arrangements and connecting with consumers. Our multi-tiered nationwide domestic sales and distribution network enables our products to reach a wide range of consumers and help to ensure effective market penetration across geographies. Brand development and product differentiation are crucial to the success of our business. Our Promoters, Mr. Khubilal Jugraj Rathod and Mr. Vimalchand Jugraj Rathod, have been associated with our flagship “Flair” brand since its inception and have been instrumental in its growth.

Our exports comprise sales of products manufactured by us including writing and creative instruments and other stationery products, as well as products which we contract manufacture as an OEM for international customers. As of March 31, 2023, we had sold 1,303.60 million units of pens, of which 975.30 million units or 74.82 % was sold domestically, and 328.30 million units or 25.18% was exported globally. Further, as of March 31, 2023, our products were sold in 97 countries.

Set forth below is a table of the top five export countries and the revenue from the top five export countries in terms of percentage of our (i) sale of products (exports); and (ii) sale of products for the Financial Years indicated.

Details of revenue from operations from sale of products (exports) for the periods indicated, are set out below:

For the export of our branded products, primarily “Flair”, “Hauser”, “Pierre Cardin”, “ZOOX” and “Flair Creative”, we typically appoint a distributor for a particular brand in each country or region. As of March 31, 2023, we had relationships with 54 international distributors for the distribution and sale of our products abroad. As of March 31, 2023, our products were sold by us and our distributors in 97 countries, whereby we mitigate any concentration risk. We also have a team of sales and marketing employees to aid our exports. We regularly participate in various international trade fairs in order to enhance our presence in the global markets. We are also recognized as a top exporter for our leading position in the export business.

Any adverse developments or change in the demand for our products abroad, including any termination of our OEM arrangements or reduction in OEM orders, could adversely affect our financial results and prospects. For instance, our sale of products (exports) increased by 37.26% from Rs.1,345.64 million in the Financial Year 2022 to Rs.1,847.05 million in the Financial Year 2023 due to increase in realisation along with increase in new focus countries.

We operate in the highly competitive Indian writing and creative instruments industry, which is expected to grow at a CAGR of 7.5-8.5% between Financial Years 2023 and 2028 to reach Rs.140-145 billion by Financial Year 2028, according to CRISIL. Competitive factors in the writing instruments industry include product range, product mix, production capacity, advertising/marketing efforts, design and market penetration. Our ability to respond to changing market conditions, consumer preferences and the products and sales efforts of our competitors is important in order to maintain a competitive position in the Indian writing instruments industry. For example, we believe that introducing innovative products such as the “Flair” Writo-meter Ball Pen (which writes up to 10,000

meters), Sunny Ball Pen (4-in-1), Ezee Click (a low-viscosity retractable pen) and Hauser XO Ball Pen (which has a unique design and is available in pastel colours) have helped build brand recognition. In order to enhance our competitive position in the writing and creative instruments sector, we constantly strive to enhance cost efficiencies to provide control over the critical components in the manufacturing process while controlling costs and improving margins.

In the mass-market sub-segment, which comprises writing instruments sold at prices up to Rs.15, companies generally find it difficult to increase prices of products targeted at students as any increase in prices (deviation from denomination of multiples of five) may shift demand to some other brand, according to CRISIL. We endeavor to improve our margins from the sales of mass-market pen and stationery products through manufacturing efficiencies and minimizing wastage. Our Gross Material Margin (%) decreased to 46.03% in the Financial Year 2023 from 46.62% in the Financial Year 2022. We achieve better margins in the sale of writing instruments in the mid-premium segment and premium segment, particularly products which are priced between Rs.20 and Rs.100, such as “Pierre Cardin” and “ZOOX” products, as we believe consumers at that level are more focused on design and quality than marginal increases in price. Higher margins and pricing power in the midpremium segment and premium segment also incentivize innovation, quality manufacturing and sales and marketing efforts coupled with improving shelf visibility and positioning of our brands with consumers. We also plan to increase production volumes pursuant to higher capacity utilization without a corresponding increase in fixed costs in order to improve our margins. Our ability to maintain and grow our position in the mass-market segment and increase our sales in the mid-premium segment and premium segment will impact our business and financial results.

Some of our competitors may have substantially greater financial resources (including to spend on innovation and sales and marketing), technology, research and manufacturing capability and greater market penetration, and their brands may be more well-known than ours. Our principal competitors in the pen industry include BIC Cello, Camlin, DOMS, Hindustan Pencils, Linc, Luxor, Reynolds, according to CRISIL. According to CRISIL, our Company is the largest player in the pens segment reporting a revenue of Rs.7,541.8 million in the Financial Year 2023 from the pens writing instrument segment in India. From time to time, we have also had to increase our sales and marketing efforts, including our incentive programs to our distribution network, and widen or improve our product range in order to respond to our competitors, which have increased our expenses in such periods. Accordingly, competition in the Indian writing instruments industry will continue to have a significant impact on our financial results.

Our revenue from operations is impacted by the scale and growth of our distribution network, consisting of superstockists, distributors, direct dealers, wholesalers and retailers. As of March 31, 2023, our Company had the largest distributor/dealer network and wholesale/retailer network, in the writing instruments segment in India, according to CRISIL, comprising approximately 7,700 distributors/dealers and approximately 315,000 wholesalers/retailers. As of March 31, 2023, our Company had 131 super-stockists in India (including our in-house super-stockist for the Mumbai region operated by the Flair Sporty division of our Company), supported by our 900 sales and marketing employees, and a retail presence in 2,387 cities, towns and villages in India. Besides traditional distribution channels, our products are also sold through modern retail outlets, including hypermarkets, supermarkets and e-commerce. As of March 31, 2023, we also had 54 international distributors catering to a specific region or country. Our products were sold by us and our distributors in 97 countries as of March 31, 2023.

We incentivize sales by having brand-wise arrangements for writing and creative instruments with super-stockists in their respective geographic regions and dedicated sales and marketing employees for each of our brands who help with the sourcing and execution of orders across the distribution network. Further, we plan to incentivize super-stockists and distributors through periodic and festival sales schemes and revenue targets and product- specific schemes (through discounts and gift hampers). In India, our super-stockists resell to distributors at prices determined by our Company.

We earn revenue primarily by selling our products on a fixed margin basis in India directly to super-stockists in our distribution network in India, and to distributors abroad appointed for a particular country or region and for a specific brand. We also conduct distribution through our Companys Flair Sporty division, which is the superstockist for the Mumbai region. In terms of our agreements with super-stockists, we do not have control over their onward distribution, appointment of distributors and collection of payments and the super-stockists do not have any purchase commitments towards us. We invoice our products to super-stockists (typically on credit for a period of 30 days to 60 days).

Our strategy to deepen our sales and distribution network includes expanding our existing sales and distribution network in India, by entering into arrangements with more super-stockists and distributors and continuing to nurture existing relationships in order to create new distribution channels to reach under-served areas and smaller towns across all zones of India with a focus on Eastern and Western zones in India. In addition, we also intend to increase our interaction with our super-stockists, distributors, direct dealers, wholesalers and retailers, including through our sales and marketing employees and the use of information technology platforms. We plan to increase our sales through modern retail, by increasing our range of products offered, entering into distribution arrangements and strengthening the sales and marketing team. We also intend to recruit more sales and marketing employees to enhance our sales, marketing and brand-building activities. Our ability to maintain and grow our distribution network, including our relationships with super-stockists, will impact our financial results.

The capacity and efficiency of our manufacturing, including by improving our production volumes and managing our operating costs, is a key driver of our revenue from operations. We currently manufacture our products from 11 manufacturing plants in India, including three plants in Valsad, Gujarat ( “Valsad Building-II”, “Valsad Building-III” and “Valsad Building-IV”), one plant in Naigaon, Maharashtra (“Naigaon Unit-I”), five plants in Daman, Union Territory of Dadra and Nagar Haveli and Daman and Diu (“Daman Unit-II”, “Daman Unit-III”, “Daman Unit-IV”, “Daman Unit-V” and “Daman Agrawal Unit”) and two plants in Dehradun, Uttarakhand (“Dehradun Unit-I” and “Dehradun Unit-II”). While our Company runs manufacturing operations from Valsad Building-II, our Subsidiary, FWEPL, operates Valsad Building-III and our Subsidiary, FCIPL, operates Valsad Building-IV. For details, see “Our Business?Manufacturing Facilities and Other Properties” on page 182. With a view to expanding our production capacity, we intend to use a portion of the proceeds from this Offer for funding capital expenditure of our Company to set up a new manufacturing facility and purchase of machinery, moulds, equipment, technology, among other things. For details, see “Objects of the Offer” on page 96.

We plan our manufacturing based on demand in the preceding month and the historical seasonality information for our domestic business and on actual orders from customers for our exports. Further, we believe that 70% to 80% is the optimum capacity utilisation for our manufacturing facilities due to the wide range of products and the numerous components being used. We start planning for additional capacity once our capacity utilization reaches 72%. We intend to improve our capacity utilization and manage our operating costs through increased automation/semi-automation of certain manufacturing processes. For example, in recent years, we have introduced automatic and semi-automatic assembly machines for packaging at some of our manufacturing plants, which was earlier done manually. We seek to integrate technology into our processes at key stages of design, manufacturing and distribution to increase efficiency and ensure optimization and quality in a cost-effective manner. We also increase automation to address increased demand for specific products when required, as well as based on our estimation of the viability of the investment in automation vis-a-vis the expected market pricing of the product manufactured. We also believe automation has helped improve the quality of our products. We seek to upgrade our existing machinery and purchase new machinery with modern technology to achieve better productivity and minimize our wastage.

The following table sets forth the installed capacity of our manufacturing plants (excluding Daman Unit-V which is yet to commence operations as of the date of this Draft Red Herring Prospectus) as of March 31, 2023, March 31, 2022 and March 31, 2021 and the actual production and capacity utilization for the Financial Years 2023, 2022 and 2021, as certified by the Chartered Engineer, pursuant to a certificate dated July 12, 2023:

Our ability to maintain an optimal funding mix between debt and equity and to source cost-effective funding could affect our results of operations. Historically, we have funded the majority of our capital requirements from internal accruals and financing from banks. As of June 30, 2023, (i) our aggregate outstanding indebtedness was Rs.1,261.03 million; (ii) secured term loans and working capital facilities constituted Rs.545.66 million against sanctioned limits of Rs.952.47 million and Rs.436.99 million against sanctioned limits of Rs.1,433.00 million, respectively; and (iii) unsecured loans from our Directors and other related parties constituted Rs.278.38 million against sanctioned amount of Rs.1,365 million. For further information, see “?Indebtedness” and “Financial Indebtedness” on pages 353 and 315, respectively. Our financial results and future growth will depend on our ability to optimize our working capital cycle and to continue to source working capital adequate for our business requirements. We also intend to use Rs.770.00 million from the Net Proceeds to meet working capital requirements of our Company and our Subsidiaries, FCIPL and FWEPL in the Financial Year 2024. For details, see “Objects of the Offer” on page 96. We also seek to maintain an optimal relationship between debt and equity in our funding mix. As of March 31, 2023, our Debt to Equity Ratio was 0.26.

We derive a majority of our revenue from sales of writing instruments in India, and a significant portion from exports. Details of revenue from operations from sale of products for the periods indicated, are set out below:

For details of our key financial performance indicators, see “?Discussion of our Key Performance Indicators” on page 324.

According to CRISIL, government measures to improve literacy and the increasing spend on education by the government is likely to increase the demand for writing and creative instruments. The introduction of National Educational Policy, 2020 by government of India focusing on education penetration in the country and the skill development programs by government for MSMEs would further bolster the writing and creative instruments industry, according to CRISIL. In addition, the growing share of young population in India and growth in the Indian MSME sector workforce coupled with increasing literacy level, the shift in consumer trends towards premiumization and people returning to offices post COVID-19 pandemic, is expected to increase the writing instruments and stationery market size, according to CRISIL.

According to CRISIL, between Financial Years 2023 and 2028, the organized players in the writing and creative instruments industry in India are poised to experience significant faster growth when compared to the unorganized players. According to CRISIL, the higher growth rate among organized players is attributed to the increase in market share from the unorganized sector during the COVID-19 pandemic and the expansion of product offerings by organized players across various categories and age groups. According to CRISIL, the key seven organized players in the writing and creative instrument industry in India, including our Company, have grown faster than the rest of the organized players. While COVID-19 (in Financial Year 2020) impacted the overall industry, post pandemic (between Financial Year 2021 to 2023), the key seven organized players played a pivotal role in driving industry growth which is attributable to entering into new price segments in the existing category of products. According to CRISIL, the key seven organized players are expected to continue the growth momentum and grow at a CAGR of 7.7-8.4% between Financial Years 2023 and 2028 which is expected to be driven by factors such as a rise in literacy rates and government initiatives towards education. Our performance and growth are, and will be, dependent on the macro-economic conditions in India and globally, government initiatives, industry trends and exchange rate fluctuations. Any slowdown or perceived slowdown in the Indian economy could adversely affect our business. For instance, the COVID-19 pandemic caused a downturn in India and globally. According to CRISIL, the COVID-19 pandemic resulted in the writing and creative instruments industry witnessing a 39% decline in Financial Year 2021 due to subdued demand for products. Accordingly, any change in such conditions and trends will impact our financial results. Also see, “?Unusual or Infrequent Events or Transactions?Impact of the COVID-19 pandemic” on page 356.

The preparation of the Restated Consolidated Financial Information requires that the management of the Company make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as of the date of the Restated Consolidated Financial Information and the reported amounts of revenue and expenses during the reporting period. The recognition, measurement, classification or disclosure of an item or information in the Restated Consolidated Financial Information is made relying on these estimates.

The estimates and judgments used in the preparation of the Restated Consolidated Financial Information are continuously evaluated by the group and are based on historical experience and various other assumptions and factors (including expectations of future events) that the group believes to be reasonable under the existing circumstances. Actual results could differ from those estimates. Any revision to accounting estimates is recognised prospectively in current and future periods.

Property, plant and equipment / intangible assets are depreciated / amortized over their estimated useful lives, after taking into account estimated residual value. The management of the Company reviews the estimated useful lives and residual values of the assets annually in order to determine the amount of depreciation / amortisation to be recorded during any reporting period. The useful lives and residual values are ba sed on the groups historical experience with similar assets and take into account anticipated technological changes. The depreciation / amortisation for future periods is revised if there are significant changes from previous estimates.

Judgments are required in assessing the recoverability of overdue trade receivables and determining whether a provision against those receivables is required. Factors considered include the credit rating of the counterparty, the amount and timing of anticipated future payments and any possible actions that can be taken to mitigate the risk of non-payment.

Provisions and liabilities are recognized in the period when it becomes probable that there will be a future outflow of funds resulting from past operations or events and the amount of cash outflow can be reliably estimated. The timing of recognition and quantification of the liability requires the application of judgment to existing facts and circumstances, which can be subject to change. The carrying amounts of provisions and liabilities are reviewed regularly and revised to take account of changing facts and circumstances.

The obligation arising from defined benefit plan is determined on the basis of actuarial assumptions. Key actuarial assumptions include discount rate, trends in salary escalation, actuarial rates and life expectancy. The discount rate is determined by reference to market yields at the end of the reporting period on government bonds. The period to maturity of the underlying bonds correspond to the probable maturity of the post-employment benefit obligations.

Estimates of rates of discounting are done for measurement of fair values of certain financial assets and liabilities, which are based on prevalent bank interest rates and the same are subject to change.

All the assets and liabilities have been classified as current or non-current as per the groups normal operating cycle and other criteria set out in schedule III to the Act. Based on the nature of products and the time between the acquisition of assets for processing and their realization in cash and cash equivalent, the Company has ascertained the operating cycle to be 12 months, save and except trade receivables outstanding for more than twelve months which have been classified as Current, based on management estimates.

The group assesses at each reporting date whether there is an indication that an asset may be impaired. If any indication exists, the group estimates the assets recoverable amount. An assets recoverable amount is the higher of an assets or group of assets, called cash generating units (“CGU”), fair value less costs of disposal and its value in use. It is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or CGUs. Where the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

The impairment provisions for financial assets are based on assumptions about risk of default and expected cash

loss rates. The group uses judgments in making these assumptions and selecting the inputs to the impairment calculation, based on groups past history, existing market conditions as well as forward looking estimates at the end of each reporting period.

Freehold land is carried at historical cost.

Property, plant and equipment are stated at historical cost, net of recoverable taxes, trade discount and rebates less accumulated depreciation and impairment losses, if any. Such cost includes purchase price, borrowing cost and any cost directly attributable to bringing the assets to its working condition for its intended use, net charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the assets.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. Subsequent costs are included in the assets carrying amount or recognized as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the entity and the cost can be measured reliably.

The carrying amount of any component accounted for as a separate asset is derecognized when it is discarded/scrapped. All other repairs and maintenance costs are charged to profit and loss in the reporting period in which they occur.

Deposits and advances paid towards the acquisition of property, plant and equipment outstanding as of each reporting date and the cost of property, plant and equipment not available for use before such date are disclosed under other assets.

An assets carrying amount is written down immediately to its recoverable amount if the assets carrying amount is greater than its estimated recoverable amount.

Any gain or loss on disposal of an item of property, plant and equipment is recognized in profit or loss.

Gains or losses arising from derecognition of property, plant and equipment are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognized in the Restated Consolidated Financial Information when the asset is derecognized.

The Company depreciates property, plant and equipment over their estimated useful lives using the straight-line method considering the nature, estimated usage, operating conditions, past history of replacement and anticipated technological changes. Taking into account these factors, the Company has decided to retain the useful life hitherto adopted for various categories of property, plant and equipment, which are different from those prescribed in schedule II of the Act.

The useful life of major assets is as under:

Depreciation methods, useful lives and residual values are reviewed periodically, including at each financial year end with the effect of any changes in the estimate accounted for on a prospective basis.

Intangible assets that are acquired are measured initially at cost. After initial recognition, an intangible asset is carried at its cost less accumulated amortisation and impairment loss if any. Subsequent expenditure is capitalized only when it increases the future economic benefits from the specific asset to which it relates.

Intangible assets are amortized over their respective individual estimated useful lives on a straight-line basis, from the date that they are available for use. Amortisation of intangible assets is calculated over the managements estimated useful lives as mentioned below:

Amortization methods and useful lives are reviewed periodically including at each financial year end. Software not exceeding Rs.25,000 is charged off to the statement of profit and loss.

Capital work-in-progress including expenditure during construction period incurred on projects are treated as preoperative expenses pending allocation to the assets. These expenses are apportioned to the respective fixed assets on their completion / commencement of commercial production.

The group assesses at each reporting date as to whether there is any indication that any property, plant and equipment and group of assets, called CGU may be impaired. If any such indication exists the recoverable amount of an asset or cash generating units is estimated to determine the extent of impairment, if any. When it is not possible to estimate the recoverable amount of an individual asset, the group estimates the recoverable amount of the cash generating units to which the asset belongs.

An impairment loss is recognized in the Restated Consolidated Financial Information to the extent, assets carrying amount exceeds its recoverable amount. The recoverable amount is higher of an assets fair value less cost of disposal and value in use. The value in use is based on the estimated future cash flows, discounted to their present value using pre-tax discount rate that reflects current market assessments of the time value of money and risk specific to the assets.

The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount.

A financial instrument is any contract that gives rise to a financial asset of one entity and a financial liability or equity instrument of another entity.

The Company classifies its financial assets in the following measurement categories:

• those to be measured subsequently at fair value (either though other comprehensive income, or through profit and loss), and

• those measured at amortized cost

The classification depends on the entitys business model for managing the financial assets and the contractual cash flow characteristics.

For investments in debt instruments, this will depend on business model in which the investment is held.

For investments in equity instruments, this will depend on whether the company has made an irrevocable election at the time of initial recognition to account for the equity investment at fair value through other comprehensive income.

A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.

All financial assets are recognized initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset.

Subsequent to initial recognition, non-derivative financial instruments are measured as described below:

The groups cash and cash equivalents consist of cash on hand and in banks and demand deposits with banks (three months or less from the date of acquisition). For the purposes of the cash flow statement, cash and cash equivalents include cash on hand, in banks and demand deposits with banks (three months or less from the date of acquisition), net of outstanding bank overdrafts that are repayable on demand and are considered part of the Company s cash management system. In the balance sheet, bank overdrafts are presented under borrowings within current liabilities.

• Financial assets carried at Amortized Cost:

A financial asset is subsequently measured at amortized cost if it is held within a business model whose objective is to hold the asset in order to collect contractual cash flows and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

• Financial assets at Fair Value Through Other Comprehensive Income (FVOCI):

A financial asset is subsequently measured at fair value through other comprehensive income if it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets and the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Further, in cases where the Company has made an irrevocable election based on its business model, for its investments which are classified as equity instruments, the subsequent changes in fair value are recognized in other comprehensive income.

• Financial assets at Fair Value Through Profit or Loss (FVTPL):

A financial asset which is not classified in any of the above categories are subsequently fair valued through profit or loss.

In accordance with Ind-AS 109, the group uses expected credit losses (“ECL”) model, for evaluating impairment of financial asset other than those measured at fair value through profit and loss.

• The 12- months ECL (ECL that result from those default events on the financial instruments that are possible within 12 months after the reporting date); or

• Full lifetime ECL (ECL that result from all possible default events over the life of the financial instrument)

The credit loss is the difference between all contractual cash flows that are due to an entity in accordance with the contract and all the cash flows that the entity expects to receive (i.e. all cash shortfalls), discounted at the original effective interest rate. This is assessed on an individual or collective basis after considering all reasonable and supportable evidence including that which is forward-looking.

Customer credit risk is managed by the groups established policy, procedures and control relating to customer credit risk management. An impairment analysis is performed at each reporting date on an individual basis based on historical data. The group is receiving payments from customers within due dates and therefore the group has no significant credit risk related to these parties. The group evaluates the concentration of risk with respect to trade receivables as low.

For other assets, the group uses 12-month ECL to provide for impairment loss where there is significant increase in credit risk. If there is significant increase in credit risk full lifetime ECL is used.

Other financial assets mainly consists of loans to employees, security deposit, other deposits, interest accrued on fixed deposits, other receivables and advances measured at amortized cost.

Following is the policy for specific financial assets:

The Company derecognizes a financial asset when:

• the contractual rights to the cash flows from the financial asset expire or it transfers the financial asset and the transfer qualifies for derecognition under Ind AS 109.

• retains contractual rights to receive the cash flows of the financial asset but assumes a contractual obligation to pay the cash flows to one or more recipients.

When the entity has neither transferred a financial asset nor retained substantially all risks and rewards of ownership of the financial asset, the financial asset is derecognized if the Company has not retained control of the financial asset. Where the Company retains control of the financial asset, the asset is continued to be recognized to extent of continuing involvement in the financial asset.

Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings, payables, or as derivatives designated as hedging instruments in an effective hedge, as appropriate.

All financial liabilities are recognized initially at fair value and, in the case of loans and borrowings and payables, net of directly attributable transaction costs.

The subsequent measurement of financial liabilities depends on their classification, as described below: Financial liabilities at amortized cost

Borrowings, trade and other payables are initially recognized at fair value, and subsequently carried at amortized cost using the effective interest method. For these financial instruments, the carrying amounts approximate fair value due to the short-term maturity of these instruments.

A financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability.

The difference in the respective carrying amounts is recognized in the statement of profit or loss.

The group is exposed to foreign currency fluctuations on foreign currency assets, liabilities, net investment in foreign operations and forecasted cash flows denominated in foreign currency. The group limits the effect of foreign exchange rate fluctuations by following established risk management policies including the use of derivatives. The group enters into derivative financial instruments where the counterparty is primarily a bank.

Although the group believes that these derivatives constitute hedges from an economic perspective, they may not qualify for hedge accounting under Ind AS 109, financial instruments. Any derivative that is either not designated a hedge, or is so designated but is ineffective as per Ind AS 109, is categorized as a financial asset or financial liability, at fair value through profit or loss.

Derivatives not designated as hedges are recognized initially at fair value and attributable transaction costs are recognized in net profit in the statement of profit and loss when incurred. Subsequent to initial recognition, these derivatives are measured at fair value through profit or loss and the resulting exchange gains or losses are included in other income. Assets / liabilities in this category are presented as current assets / current liabilities if they are either held for trading or are expected to be realized within 12 months after the balance sheet date.

Inventories include raw materials and stores, semi-finished goods, finished goods, stock-in-trade, packing materials, and stores and spares.

Inventories are stated at the lower of cost and net realizable value.

Cost of raw materials and stores comprises cost of purchases. Cost of purchase is determined after deducting rebates and discounts.

Raw materials and other supplies held for use in production of inventories are not written down below cost except in the case where material prices have declined and it is estimated that the cost of the finished product will exceed its net realizable value.

Cost of work-in-progress and finished goods comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure. The fixed overhead expenditure is allocated on the basis of normal operating capacity. Cost of inventories also includes all other costs incurred in bringing the inventories to their present location and condition. Costs are assigned to individual items of inventory on the basis of first-in first out basis.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

The net realizable value of work-in-progress is determined with reference to the selling prices of related finished products.

Cost of traded goods comprises all costs of purchase, duties, taxes (other than those subsequently recoverable from tax authorities) and all other costs incurred in bringing the inventories to their present location and condition.

The income tax expense or credit for the period is the tax payable on the current periods taxable income based on the applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the end of the reporting period. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulation is subject to interpretation and considers whether it is probable that a taxation authority will accept an uncertain tax treatment. The group measures its tax balances either based on the most likely amount or the expected value, depending on which method provides a better prediction of the resolution of the uncertainty.

Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the Restated Consolidated Financial Information. Deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting profit nor taxable profit (tax loss). Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the end of the reporting period and are expected to apply when the related deferred income tax asset is realized or the deferred income tax liability is settled.

Deferred tax assets are recognized for all deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilize those temporary differences and losses.

Deferred tax assets and liabilities are offset where there is a legally enforceable right to offset current tax assets and liabilities and where the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Current and deferred tax are recognized in statement of profit and loss, except to the extent that it relates to items recognized in other comprehensive income or directly in equity. In this case, the tax is also recognized in other comprehensive income or directly in equity, respectively.

The group manufactures/ trades and sells writing instruments and its allied. Revenue from contracts with customers involving sale of these goods is recognized at a point in time when control of the goods has been transferred, and there are no unfulfilled obligations that could affect the customers acceptance of the goods. Delivery occurs when the goods are shipped to specific location and control has been transferred to the customers. The group has objective evidence that all criteria for acceptance have been satisfied.

Revenue from contracts with customers is recognized on transfer of control of promised goods to a customer at an amount that reflects the consideration to which the Company is expected to be entitled to in exchange for those goods or services.

Revenue towards satisfaction of a performance obligation is measured at the amount of transaction price (net of variable consideration) allocated to that performance obligation. The transaction price of goods sold is net of

variable consideration on account of various discounts and schemes offered by the Company as part of the contract. This variable consideration is estimated based on the expected value of outflow.

Revenue (net of variable consideration) is recognized only to the extent that it is highly probable that the amount will not be subject to significant reversal when uncertainty relating to its recognition is resolved.

Revenue from the sale of products is recognized when the significant risks and rewards of ownership of the goods have passed to the buyer, usually on delivery of the goods. Revenue from the sale of products is measured at the fair value of the consideration received or receivable, net of returns, trade discounts, volume discounts and other applicable discounts.

Export entitlements such as duty drawback, credit under MEIS, RODTEP, EPCG license etc. are recognized as income when the right to receive the same as per the terms of the scheme is established in respect of the exports made and where there is no significant uncertainty regarding the ultimate realization.

Interest income is recognized on time proportionate basis taking into account amount outstanding and rate of interest. Interest income is included in other income in the Restated Consolidated Financial Information.

Employee benefits include bonus, compensated absences, provident fund, employee state insurance scheme and gratuity fund.

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognized as an expense during the period when the employees render the services.

A defined contribution plan is a post-employment benefit plan under which the group pays specified contributions to a separate entity. The group makes specified monthly contributions towards provident fund and employees State Insurance Corporation. The groups contribution is recognized as an expense in the Restated Consolidated Financial Information during the period in which the employee renders the related service.

The Company pays gratuity to the employees whoever has completed five years of service with the Company at the time of resignation/superannuation. The gratuity is paid @15 days salary for every completed year of service as per the Payment of Gratuity Act, 1972.

The liability in respect of gratuity and other post-employment benefits is calculated using the projected unit credit method and spread over the period during which the benefit is expected to be derived from employees services.

Re-measurement of defined benefit plan in respect of post-employment are charged to the other comprehensive income.

Accumulated compensated absences, which are expected to be availed or encashed within 12 months from the end of the year end are treated as short term employee benefits. The obligation towards the same is measured at

the expected cost of accumulating compensated absences as the additional amount expected to be paid as a result of the unused entitlement as of the year end.

The group recognizes a liability and an expense for bonus. The group recognizes a provision where contractually obliged or where there is a past practice that has created a constructive obligation.

The group assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

The groups lease asset classes primarily comprise of lease for land and building. The group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The group recognizes lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

The group recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and accumulated impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the unexpired period of respective leases.

If ownership of the leased asset transfers to the group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. The right-of-use assets are also subject to impairment.

At the commencement date of the lease, the group recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the group and payments of penalties for terminating the lease, if the lease term reflects the group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognized as expenses (unless they are incurred to produce inventories) in the period in which the event or condition that triggers the payment occurs.

In calculating the present value of lease payments, the group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset.

The group has elected not to apply the requirements of Ind AS 116 leases to short-term leases of all assets that have a lease term of 12 months or less and leases for which the underlying asset is of low value. The lease payments associated with these leases are recognized as an expense on a straight-line basis over the lease term.

Grants from the government are recognized at their fair value where there is a reasonable assurance that the grant will be received and the group will comply with all attached conditions.

• Government grants relating to income are deferred and recognized in the profit or loss over the period necessary to match them with the costs that they are intended to compensate and presented within other income.

• Government grants relating to the purchase of property, plant and equipment are included in noncurrent liabilities as deferred income and are credited to statement of profit and loss on a straight-line basis over the expected lives of the related assets and presented within other income. When loan(s) or similar assistance are provided by the Government or related institutions, with an interest rate below the current applicable market rate, the effect of this favorable interest is reduced from the interest. The loan or assistance is initially recognized and measured at fair value and the government grant is measured as the difference between the initial carrying value of the loan and the proceeds received.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The Board of Directors monitors the operating results of all product segments separately for the purpose of making decisions about resource allocation and performance assessment.

Segment performance is evaluated based on profit and loss and is measured consistently with profit and loss in the Restated Consolidated Financial Information.

Basic EPS is computed by dividing the net profit for the period attributable to the equity shareholders of the group by the weighted average number of equity shares outstanding during the period.

Diluted EPS is calculated by dividing the profit attributable to equity holders by the weighted average number of Equity shares outstanding during the year plus the weighted average number of Equity shares that would be issued on conversion of all the dilutive potential Equity shares into Equity Shares.

Borrowing cost includes interest and other costs incurred in connection with the borrowing of funds and charged to Statement of Profit & Loss on the basis of effective interest rate method. Borrowing cost also includes exchange differences to the extent regarded as an adjustment to the borrowing cost.

General and specific borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is required to complete and prepare the asset for its intended use or sale. Qualifying assets are assets that necessarily take a substantial period of time to get ready for their intended use or sale.

Cash and cash equivalents include cash and cheque on hand, bank balances, demand deposits with banks and other Short-Term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value where original maturity is three months or less.

For the purpose of presentation in the statement of cash flows, cash and cash equivalents includes cash on hand, deposit held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Cash flows are reported using the indirect method whereby the profit before tax is adjusted for the effect of the transactions of a non-cash nature, any deferrals or accruals of past and future operating cash receipts or payments

and items of income or expenses associated with investing or financing cash flows. The cash flows from operating, investing and financing activities of the group are segregated.

Items included in the Restated Consolidated Financial Information are measured using the currency of the primary economic environment in which the company operates (that is ‘functional currency). The financial statements are presented in INR which is the Companys functional and presentation currency.

Foreign currency transactions are translated into the functional currency using the exchange rate prevailing at the date of the transaction. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities denominated in foreign currencies at year end exchange rate are generally recognized in the statement of profit and loss.

A provision is recognized when the Company has a present obligation (legal or constructive) as a result of past event and it is probable than an outflow of resources will be required to settle the obligation, in respect of which the reliable estimate can be made. Provisions (excluding retirement benefits and compensated absences) are determined at present value based on best estimate required to settle the obligation at the balance sheet date. These are reviewed at each balance sheet date adjusted to reflect the current best estimates.

A disclosure for contingent liability is made when there is a possible obligation or a present obligation that may, but will probably not, require an outflow of resources. When there is a possible obligation or a present obligation in respect of which the likelihood of outflow of resources is remote, no provision or disclosure is made.

A contingent asset is not recognized but disclosed in the Restated Consolidated Financial Information where an inflow of economic benefit is probable.

Provisions, contingent liabilities, contingent assets and commitments are reviewed at each reporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability, or

• In the absence of a principal market, in the most advantageous market for the asset or liability

The principal or the most advantageous market must be accessible by the group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

A fair value measurement of a non-financial asset takes into account a market participants ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the Restated Consolidated Financial Information are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities;

• Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable;

• Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

For assets and liabilities that are recognized in the Restated Consolidated Financial Information on a recurring basis, the group determines whether transfers have occurred between levels in the hierarchy by re-assessing categorization (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period.

External valuers are involved for valuation of significant assets, such as properties, unquoted financial assets etc., if needed. Involvement of independent external valuers is decided upon, annually by the group. Further such valuation is done annually at the end of the financial year and the impact, if any, on account of such fair valuation is taken in the annual financial statements.

For the purpose of fair value disclosures, the group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above.

When the fair values of financial assets and financial liabilities recorded in the Restated Consolidated Financial Information cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are from observable markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. Changes in assumptions could affect the reported value of fair value of financial instruments.

The MCA notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. On March 31, 2023, the MCA amended the Companies (Indian Accounting Standards) Amendment Rules, 2023, as below:

• Ind AS 1 - Presentation of Financial Statements:

This amendment requires the entities to disclose their material accounting policies rather than their significant accounting policies. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The group has evaluated the amendment and the impact of the amendment is insignificant in the groups financial statements.

• Ind AS 8 - Accounting Policies, Changes in Accounting Estimates and Errors:

This amendment has introduced a definition of ‘accounting estimates and included amendments to Ind AS 8 to help entities distinguish changes in accounting policies from changes in accounting estimates. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The group has evaluated the amendment and there is no impact on its consolidated financial statements.

• Ind AS 12 - Income Taxes:

This amendment has narrowed the scope of the initial recognition exemption so that it does not apply to transactions that give rise to equal and offsetting temporary differences. The effective date for adoption of this amendment is annual periods beginning on or after April 1, 2023. The group has evaluated the amendment and there is no impact on its consolidated financial statements.

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

The components of our revenue from operations are: (i) operating income, which consists substantially of sale of products manufactured and traded from our domestic business and our exports, (ii) sale of services, and (iii) other operating income, which consists of sales of scrap, sale of fixed assets (trading) and export incentives.

Set forth below is a breakdown of our revenue from contracts with customers, for the periods indicated.

The key components of our other income are (i) interest income on bank interest, other interest income, and interest received on income tax refund, and (ii) other non-operating revenue which consist of the (a) government grant income; (b) gain on sale of property, plant and equipment (net); (c) gain on foreign currency transactions (net); (d) tooling amortisation income; (e) labour incentive; (f) development income; (g) profit/(loss) on sale of investments (net); (h) premium/(discount) on forward contract; (i) reimbursement towards special discount; and (j) other non-operating income.

Set forth below is a breakdown of our other income, for the Financial Years indicated.

Our expenses comprise: (i) cost of raw materials and components consumed; (ii) purchase of stock-in-trade; (iii) changes in inventory of finished goods, work-in-progress and stock-in-trade; (iv) employee benefits expenses; (v) finance costs; (vi) depreciation and amortization expenses; and (vii) other expenses.

Set out below is a breakdown of our total expenses, for the Financial Years indicated:

Cost of raw materials and components consumed primarily consists of the cost of raw materials and packing materials that we use in the manufacture of our products, primarily powder, ink and tips.

Purchase of stock-in-trade primarily consists of pens and stationery and household products.

Changes in inventory of finished goods, work-in-progress and stock-in-trade is the difference between our opening stock and closing stock of inventory during a Financial Year.

Employee benefits expenses primarily consist of salaries, wages and bonus and as well as contributions to provident and other funds and staff welfare expenses.

Finance costs primarily consist of (i) interest expense on loans from banks, (ii) interest expense on other loans,

(iii) interest expense on right of use assets, and (iv) interest expense on delayed payment of income taxes.

Depreciation and amortization expenses are primarily on our buildings, plant and machinery, moulds, offices and factory equipment, furniture and fixtures, electrical installations, computers, vehicles.

Other expenses, which primarily consists of manufacturing expenses, establishment expenses, repairs and maintenance and selling and distribution expenses.

The following table sets forth certain information with respect to our results of operations for the Financial Years 2023, 2022 and 2021, the components of which are also expressed as a percentage of total income for such Financial Years.

Our total income increased by 62.39% to Rs.9,542.91 million in the Financial Year 2023 from Rs.5,876.42 million in the Financial Year 2022. This increase in total income was primarily due to increase in our revenue from operations.

• Revenue from Operations

Our revenue from operations increased by 63.26% to Rs.9,426.60 million in the Financial Year 2023 from Rs.5,773.98 million in the Financial Year 2022. This increase was primarily due to increased sales on resumption to normal working post Covid-19 pandemic along with higher realisation.

Our sale of products (manufactured - domestic) increased by 71.85% to Rs.7,064.08 million in the Financial Year 2023 from Rs.4,110.57 million in the Financial Year 2022 due to an increase in domestic sales of products. Our sale of products (manufactured - export) increased by 36.56% to Rs.1,833.42 million in the Financial Year 2023 from Rs.1,342.54 million in the Financial Year 2022 due to increased sales on resumption to normal working post the Covid-19 pandemic along with higher realisation. Our sale of products (traded - domestic) increased by 78.90% to Rs.414.13 million in the Financial Year 2023 from Rs.231.48 million in the Financial Year 2022 due to increased sales on resumption to normal working post the Covid-19 pandemic along with higher realisation. Our sale of products (traded - export) increased by 339.68% to Rs.13.63 million in the Financial Year 2023 from Rs.3.10 million in the Financial Year 2022 due to increased sales on resumption to normal working post Covid-19 pandemic along with higher realisation.

• Other Income

Our other income increased by 13.55% to Rs.116.31 million in the Financial Year 2023 from Rs.102.43 million

in the Financial Year 2022. This increase was primarily due to increase in net gain on foreign currency transactions and labour incentive.

Our total expenses increased by 54.71% to Rs.7,954.93 million in the Financial Year 2023 from Rs.5,141.93 million in the Financial Year 2022. This increase was primarily due to an increase in overall cost of materials consumed arising from an increase in revenue from operations, finance costs, employee benefits expenses arising from an increase in the number of employees and other expenses. As a percentage of our total income, our total expenses decreased to 83.36% in the Financial Year 2023 from 87.50% in the Financial Year 2022.

• Cost of raw materials and components consumed

Our cost of materials consumed increased by 52.31% to Rs.5,081.51 million in the Financial Year 2023 from Rs.3,336.25 million in the Financial Year 2022. This increase was primarily due to an increase in raw material costs and an increase in the scale of our operations.

• Purchase of stock-in trade

Our purchase of stock-in-trade increased by 30.50% to Rs.61.65 million in the Financial Year 2023 from Rs.47.24 million in the Financial Year 2022. This increase was primarily due to increase in sales of traded goods.

• Changes in inventory of finished goods, work-in-progress and stock-in-trade

Our changes in inventory of finished goods, work-in-progress and stock-in-trade decreased by 81.61% to Rs.55.47 million in the Financial Year 2023 from Rs.301.55 million in the Financial Year 2022. This decrease was primarily due to changes in semi-finished goods, finished goods and stock-in-trade during the Financial Year and lower inventory at the beginning of the Financial Year 2023 as compared to Financial Year 2022.

• Employee benefits expense

Our employee benefits expenses increased by 33.64% to Rs.1,173.36 million in the Financial Year 2023 from Rs.878.01 million in the Financial Year 2022. This increase was primarily due to an increase in our number of employees in the Financial Year 2023 and due to an increase in the overall employee costs arising from annual increments and incremental minimum wages.

• Finance costs

Our finance costs decreased by 9.93% to Rs.90.04 million in the Financial Year 2023 from Rs.99.97 million in the Financial Year 2022. This decrease was primarily due to reduction in interest rates and reduction in overall borrowings.

• Depreciation and Amortization Expenses

Our depreciation and amortization expenses increased by 12.21% to Rs.273.41 million in the Financial Year 2023 from Rs.243.66 million in the Financial Year 2022. This increase was primarily due to higher capital expenditure arising from the procurement of new and upgraded machinery for our manufacturing plants, particularly the plant at District Valsad, Gujarat.

• Other Expenses

Our other expenses increased by 58.70% to Rs.1,330.42 million in the Financial Year 2023 from Rs.838.35 million in the Financial Year 2022. This increase was primarily due to an increase in the scale of our operations. However, as a percentage of revenue from operations, our other expenses declined to 14.11% in the Financial Year 2023 from 14.52% in the Financial Year 2022 due to lower advertisement and marketing expenditure.

As a result of the factors discussed above, our profit before tax increased by 116.20% to Rs.1,587.99 million in the

Financial Year 2023 from Rs.734.48 million in the Financial Year 2022. As a percentage of our total income, our profit before tax increased to 16.64% in the Financial Year 2023 from 12.50% in the Financial Year 2022.

We recorded a current tax of Rs.404.98 million in the Financial Year 2023 compared to Rs.190.90 million in the Financial Year 2022. We also recorded deferred tax of Rs.2.01 million in the Financial Year 2023 compared to Rs.(7.93) million in the Financial Year 2022. Accordingly, our total tax expenses increased by 122.44% to Rs.406.99 million in the Financial Year 2023 from Rs.182.97 million in the Financial Year 2022.

Our profit after tax increased by 114.14% to Rs.1,181.00 million in the Financial Year 2023 from ^551.51 million in the Financial Year 2022.

Our total comprehensive income increased by 113.17% to Rs.1,179.39 million in the Financial Year 2023 from Rs.553.27 million in the Financial Year 2022.

Our total income increased by 89.03% to Rs.5,876.42 million in the Financial Year 2022 from Rs.3,108.73 million in the Financial Year 2021. This increase in total income was primarily due to increase in our revenue from operations.

• Revenue from Operations

Our revenue from operations increased by 93.77% to Rs.5,773.98 million in the Financial Year 2022 from Rs.2,979.88 million in the Financial Year 2021. This increase was primarily due to opening of domestic and exports market after closure due to the COVID-19 pandemic.

Our sale of products (manufactured - domestic) increased by 139.97% to Rs.4,110.57 million in the Financial Year 2022 from Rs.1,712.97 million in the Financial Year 2021 due to an increase in domestic sales of products. Our sale of products (manufactured - export) increased by 24.11% to Rs.1,342.54 million in the Financial Year 2022 from Rs.1,081.71 million in the Financial Year 2021 due to increase in sales due to opening of exports market after closure due to the COVID-19 pandemic. Our sale of products (traded - domestic) increased by 108.47% to Rs.231.48 million in the Financial Year 2022 from Rs.111.04 million in the Financial Year 2022 due to introduction of new traded products. Our sale of products (traded - export) was 3.10 million in the Financial Year 2022 and nil in Financial Year 2021 since introduction of new traded products.

• Other Income

Our other income decreased by 20.50% to Rs.102.43 million in the Financial Year 2022 from Rs.128.85 million in the Financial Year 2021. This decrease was primarily due to reduction in interest income on surplus funds, lower gain on sale of plant, property and equipment and non-receipt of reimbursement towards special discount.

Our total expenses increased by 66.55% to Rs.5,141.93 million in the Financial Year 2022 from Rs.3,087.36million in the Financial Year 2021. This increase was primarily due to an increase in overall cost of materials consumed arising from an increase in revenue from operations, finance costs and employee benefits expenses arising from an increase in the number of employees and other expenses. As a percentage of our total income, our total expenses decreased to 87.50% in the Financial Year 2022 from 99.31% in the Financial Year 2021.

• Cost of raw materials and components consumed

Our cost of materials consumed increased by 128.35% to Rs.3,336.25 million in the Financial Year 2022 from

Rs.1,461.04 million in the Financial Year 2021. This increase was primarily due to an increase in raw material costs and an increase in the scale of our operations.

• Purchase of stock-in trade

Our purchase of stock-in-trade decreased slightly by 0.74% to Rs.47.24 million in the Financial Year 2022 from Rs.47.59 million in the Financial Year 2021. This decrease was primarily due to a slight decrease in purchase of traded goods.

• Changes in inventory of finished goods, work-in-progress and stock-in-trade

Our changes in inventory of finished goods, work-in-progress and stock-in-trade decreased by 293.79% to Rs.(301.55) million in the Financial Year 2022 from Rs.155.61 million in the Financial Year 2021. This decrease was primarily due to changes in semi-finished goods, finished goods and stock-in-trade during the relevant Financial Year and lower inventory at the beginning of the Financial Year 2022 as compared to Financial Year 2021.

• Employee benefits expense

Our employee benefits expenses increased by 50.38% to Rs.878.01 million in the Financial Year 2022 from Rs.583.88 million in the Financial Year 2021. This increase was primarily due to an increase in our number of employees in the Financial Year 2022 and due to an increase in the overall employee costs arising from annual increments and incremental minimum wages.

• Finance costs

Our finance costs decreased by 11.61% to Rs.99.97 million in the Financial Year 2022 from Rs.113.10 million in the Financial Year 2021. This decrease was primarily due to reduction in net borrowings and the interest cost on the loans taken.

• Depreciation and Amortization Expenses

Our depreciation and amortization expenses increased by 8.61% to Rs.243.66 million in the Financial Year 2022 from Rs.224.34 million in the Financial Year 2021. This increase was primarily due to higher capital expenditure arising from the procurement of new and upgraded machinery for our manufacturing plants.

• Other Expenses

Our other expenses increased by 67.07% to Rs.838.35 million in the Financial Year 2022 from Rs.501.79 million in the Financial Year 2021. This increase was primarily due to an increase in the scale of our operations. However, as a percentage of revenue from operations, our other expenses declined to 14.52% in the Financial Year 2022 from 16.84% in the Financial Year 2021 due to an increase in our revenue at a higher pace as compared to the increase in our expenses.

As a result of the factors discussed above, our profit before tax increased by 3,336.97% to Rs.734.48 million in the Financial Year 2022 from Rs.21.37 million in the Financial Year 2021. As a percentage of our total income, our profit before tax increased to 12.50% in the Financial Year 2022 from 0.69% in the Financial Year 2021.

We recorded a current tax of Rs.190.90 million in the Financial Year 2022 compared to Rs.2.30 million in the Financial Year 2021. We also recorded deferred tax of Rs.(7.93) million in the Financial Year 2022 compared to Rs.9.18 million in the Financial Year 2022. Accordingly, our total tax expenses increased by 1,493.82% to Rs.182.97 million in the Financial Year 2022 from ^11.48 million in the Financial Year 2021. This was primarily due to increased tax liability based on an increase in our profit before tax.

351

Our profit after tax increased by 5,476.44% to Rs.551.51 million in the Financial Year 2022 from Rs.9.89 million in the Financial Year 2021.

Our total comprehensive income increased by 4,576.84% to Rs.553.27 million in the Financial Year 2022 from ^11.83 million in the Financial Year 2021.

Historically, our primary liquidity and capital requirements have been to fund our working capital, capital expenditure for business operations and enhancing our manufacturing capabilities. We have met these requirements through cash flows from operating activities and borrowings from banks and financial institutions.

As of March 31, 2023, we had Rs.7.89 million in cash and cash equivalents, Rs.1,706.72 million in trade receivables, Rs.0.05 million in bank balances (excluding cash and cash equivalents) and Rs.8.42 million in other financial assets.

Cash in the form of cash on hand, current accounts at banks and other balances held with banks in foreign currency accounts together represent our cash and cash equivalents.

We believe that after taking into account the expected cash to be generated from operations, our borrowings and the proceeds from the Offer, we will have sufficient liquidity for our present and anticipated requirements for capital expenditure and working capital for at least the next 12 months.

The table below summarises the statement of cash flows, as derived from our restated cash flow statements, for the Financial Years indicated.

Net cash generated from operating activities in Financial Year 2023 was Rs.964.38 million. While our restated profit before tax was Rs.1,587.99 million, we had an operating profit before working capital changes of Rs.1,951.13 million, primarily due to adjustments for (i) depreciation and amortization expense of Rs.273.41 million; (ii) profit/loss on sales of property, plant and equipment of Rs.0.04 million; (iii) provision for doubtful debts of Rs.10.33 million, (iv) interest and other finance cost of Rs.81.63 million, and (v) interest on leased assets of Rs.3.36 millio n, which were partially offset by an interest income of Rs.5.63 million. Our working capital adjustments for Financial Year 2023 primarily consisted of (i) an increase in inventories of Rs.294.66 million; (ii) an increase in trade receivables of Rs.247.35 million; (iii) an increase in loans of Rs.0.99 million; (iv) an increase in other financial assets of Rs.38.84 million; (v) an increase in other assets of Rs.153.60 million; (v) a decrease in trade payables of Rs.132.74 million;

(vi) a decrease in other financial liabilities of Rs.2.54 million; (vii) an increase in provisions of Rs.21.74 million, and (viii) an increase in other liabilities of Rs.30.33 million. Our cash generated from operations was Rs.1,397.96 million, adjusted by the payment of taxes of Rs.433.58 million.

Net cash generated from operating activities in Financial Year 2022 was Rs.350.43 million. While our restated profit before tax was Rs.734.48 million, we had an operating profit before working capital changes of Rs.1,060.67 million, primarily due to adjustments for (i) depreciation and amortization expense of Rs.243.66 million; (ii) loss on sales of property, plant and equipment of Rs.0.49 million; (iii) provision for doubtful debts of Rs.1.93 million, (iv) interest and other finance cost of Rs.86.30 million, and (v) interest on leased assets of Rs.5.29 million, which were partially offset by an interest income of Rs.7.42 million and gain on sales of liquid fund of Rs.3.08 million. Our working capital adjustments for Financial Year 2022 primarily consisted of (i) an increase in inventories of Rs.529.10 million; (ii) an increase in trade receivables of ^313.23 million; (iii) an increase in loans of Rs.0.37 million; (iv) an increase in

other financial assets of Rs.3.26 million; (v) a decrease in other assets of ^31.52 million; (v) an increase in trade payables of Rs.92.04 million; (vi) an increase in other financial liabilities of Rs.37.42 million; (vii) an increase in provisions of Rs.17.94 million, and (viii) an increase in other liabilities of Rs.64.34 million. Our cash generated from operations was Rs.457.97 million, adjusted by the payment of taxes of Rs.107.54 million.

Net cash generated from operating activities in Financial Year 2021 was Rs.603.94 million. While our restated profit before tax was Rs.21.37 million, we had an operating profit before working capital changes of Rs.307.85 million, primarily due to adjustments for (i) depreciation and amortization expense of Rs.224.34 million; (ii) loss on sales of property, plant and equipment of Rs.21.89 million; (iii) interest and other finance cost of Rs.105.48 million, and

(iv) interest on leased assets of Rs.7.62 million, which were partially offset by an interest income of Rs.28.51 million and gain on sales of liquid fund of Rs.0.56 million. Our working capital adjustments for Financial Year 2021 primarily consisted of (i) a decrease in inventories of Rs.187.93 million; (ii) a decrease in trade receivables of Rs.626.39 million; (iii) a decrease in loans of Rs.0.80 million; (iv) an increase in other financial assets of Rs.1.35 million;

(v) an increase in other assets of Rs.24.36 million; (v) a decrease in trade payables of Rs.321.48 million; (vi) a decrease in other financial liabilities of ^117.56 million; (vii) an increase in provisions of Rs.12.89 million, and (viii) a decrease in other liabilities of Rs.64.78 million. Our cash generated from operations was Rs.606.34 million, adjusted by the payment of taxes of Rs.2.39 million.

Net cash used in investing activities in Financial Year 2023 was Rs.735.94 million, which primarily consisted of purchase of property, plant and equipment and intangible assets worth Rs.744.75 million, partially offset by interest received amounting to Rs.5.63 million and proceeds received from sale of property, plant and equipment amounting to ^3.18 million.

Net cash used in investing activities in Financial Year 2022 was Rs.194.97 million, which primarily consisted of purchase of property, plant and equipment and intangible assets worth Rs.392.43 million, partially offset by proceeds from sale of investment in mutual funds amounting to Rs.165.75 million, interest received amounting to Rs.7.42 million and proceeds received from sale of property, plant and equipment amounting to Rs.24.28 million.

Net cash used in investing activities in Financial Year 2021 was Rs.157.82 million, which primarily consisted of purchase of property, plant and equipment and intangible assets worth Rs.103.68 million and purchase of investment in mutual funds amounting to Rs.135.11 million, partially offset by interest received amounting to Rs.28.51 million and proceeds received from sale of property, plant and equipment amounting to Rs.52.46 million.

Net cash used in financing activities in Financial Year 2023 was Rs.223.33 million, which primarily consisted of repayment of loan of Rs.107.40 million, payment of principal portion of lease liabilities of Rs.34.30 million and interest paid amounting to Rs.81.63 million.

Net cash used in financing activities in Financial Year 2022 was Rs.158.83 million, which primarily consisted of repayment of loan of Rs.39.80 million, payment of principal portion of lease liabilities of Rs.32.73million and interest paid amounting to Rs.86.30 million.

Net cash used in financing activities in Financial Year 2021 was Rs.475.28 million, which primarily consisted of repayment of loan of Rs.337.68 million, payment of principal portion of lease liabilities of Rs.32.12 million and interest paid amounting to Rs.105.48 million.

As of March 31, 2023, we had current borrowings of Rs.737.91 million and non-current borrowings of Rs.418.01 million, primarily attributable to term loans, vehicles loans, packing credit facilities and cash credit facilities. Some of our financing agreements also include conditions and covenants that require us to obtain lender consents prior to carrying out certain activities and entering certain transactions. For further information on our agreements governing our outstanding indebtedness, see “Financial Indebtedness” on page 315.

Our historical capital expenditure was mainly related to the purchase of plant and machinery, moulds, furniture

and fixtures. The primary sources of financing for our capital expenditure have been internal accruals, and borrowings. In Financial Years 2023, 2022 and 2021, our capital expenditure for property, plant and equipment was Rs.745.21 million, Rs.373.57 million and ^113.57 million, respectively.

We propose to utilize ,185.45 million for setting up a new manufacturing facility for writing instruments in District Valsad, Gujarat (of which Rs.956.22 million will be funded from the Net Proceeds and the cost of the land aggregating to Rs.229.23 will be funded by our Companys internal accruals); and Rs.867.48 million for funding capital expenditure of our Company and our Subsidiary, FWEPL, by setting up new manufacturing lines for tip manufacturing at our units at Daman and procure certain moulds and machinery for our unit at Valsad to expand our existing production capacity, respectively. For further information relating to our planned capital expenditure to be financed from the Net Proceeds, see “Objects of the Offer?Details of the Objects?Setting up the New Valsad Unit" and “ Objects of the Offer?Details of the Objects?Funding capital expenditure of our Company and our Subsidiary, FWEPL” on pages 98 and 103, respectively.

The table below sets forth our contractual obligations with definitive payment terms as of March 31, 2023. These obligations primarily relate to our borrowings, lease liabilities and trade payables.

Set forth below is a table from our Restated Consolidated Financial Information showing our contingent liabilities as of March 31, 2021, March 31, 2022 and March 31, 2023.

We usually fulfil the obligation in subsequent years in the ordinary course of business and hence no provision for any contingent liability, which would have arisen on non-completion of export obligations have been made.

The following table shows selected financial data derived from our restated summary statement of assets and

liabilities as of the dates indicated.

Our related party transactions include sale and purchase of goods, sale and purchase of fixed assets, sale and purchase of license, lease/license of properties, borrowings and interest, payment of remuneration, labour and moulding charges, advertisement and sales promotion expenses and reimbursement of expenses incurred in the ordinary course of business. For details, see “Financial Information” on page 234.

We do not have any off-balance sheet transactions, except our contingent liabilities.

We are, during the normal course of business, exposed to various types of market risks. Market risk is the risk of loss related to adverse changes in market prices. We are exposed to credit risk, liquidity risk, interest rate risk, currency risk and commodity risk.

Credit risk is the risk that a customer or counterparty will not meet its obligation under a financial instrument, leading to financial loss. The credit risk arises principally from our operating activities (primarily trade receivables) and are influenced mainly by individual characteristics of each customer.

We are exposed to credit risk from our operating activities, primarily from our outstanding trade receivables. We typically have credit terms of 45 to 150 days for our customers in India and of 30 to 150 days for our customers abroad. For further information, see note 34(i) to our Restated Consolidated Financial Information included in this Draft Red Herring Prospectus.

We manage our credit risk through credit approvals, establishing credit limits and continuously monitoring the creditworthiness of the customers, to which we grant credit in accordance with the terms and conditions of our credit policy and in the ordinary course of business. Under this credit policy, each new customer is analysed individually for creditworthiness before the Companys standard payment and delivery terms and conditions are offered. Further for credit monitoring, the Company segments its customers into super-stockiest/ distributors and others. In relation to our loans and advances, we make specific provisions, as and when required, and establish an allowance for impairment that represents our estimate of expected losses.

Our outstanding trade receivables were Rs.1,706.72 million, Rs.1,469.70 million and Rs.1,158.40 million, as of March 31, 2023, March 31, 2022 and March 31, 2021, respectively, and our doubtful debts as a percentage of our gross receivables were 0.61%, 0.13% and nil as of March 31, 2023, March 31, 2022 and March 31, 2021, respectively. Also see “Risk Factors?Any delays and/or defaults in payments from our customers could result in increase of working capital investment and/or reduction of our profits, thereby affecting our business, operations, prospects and financial results. Further, our accounts receivable collection cycle exposes us to client credit risk. ” on page 44.

We are exposed to liquidity risk which may arise from our inability to meet our cash flow commitments on time. Our approach to managing liquidity is to ensure, as far as possible, that we have sufficient liquidity to meet our liabilities when they are due, under both normal and stressed conditions, without incurring acceptable losses or risking damage to our reputation. As of March 31, 2023, our current ratio and liquid ratio were 2.23 times and

1.11 times, respectively.

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Our exposure to the risk of changes in market interest rates relates primarily to our debt obligations with floating interest rates. As of March 31, 2023, Rs.1,155.92 million of our total borrowings were subject to variable rate borrowings.

We are exposed to currency risk through our sales to overseas markets and purchases from overseas suppliers in various foreign currencies. Changes in the values of foreign currencies with respect to the Indian Rupee may cause fluctuations in our operating results expressed in Indian Rupees. In the usual course of business, we endeavor to cover certain of our exchange rate risks through forward contracts. As of March 31, 2023, our unhedged net foreign currency exposure was Rs.394.02 million.

We are exposed to risks in relation to the prices of our principal raw material, ie., a variety of plastic polymers, which are primarily derivatives of crude oil. Our approach to managing commodity risk is by expanding our source base, having appropriate contracts and commitments in place and planning our procurement and inventory strategy. We also have a risk management strategy regarding commodity price risk and its mitigation.

In recent years, India has experienced relatively high rates of inflation. While we believe inflation has not had any material impact on our business and results of our operations, inflation generally impacts the overall economy and business environment and hence could affect us.

Our business is not subject to seasonal variations.

Given the nature of our business operations, we do not believe our business is dependent on any single or a few customers.

Except as discussed in this Draft Red Herring Prospectus, there have been no events or transactions to our knowledge which may be described as “unusual” or “infrequent”. For details of the risks applicable to us, see

“Risk Factors” on page 29.

In the first half of calendar year 2020, COVID-19 pandemic spread to a majority of countries across the world, including India. The COVID-19 pandemic has had, and may continue to have, significant repercussions across local, national and global economies and financial markets. The impact of the pandemic on our business, operations and future financial performance included and may in future include, among other things, temporary closure of our and customers offices and facilities. For further details, see “?Principal Factors Affecting our Financial Condition and Results of Operations?Industry trends and macro-economic conditions” on page 332.

Due to the lockdowns and restrictions introduced in response to the first wave of the COVID-19 pandemic, our manufacturing facilities were shut down for 14 days and were operational intermittently for two months. Our offices were closed for a month and became functional gradually only after such restrictions were relaxed by the local governments. As a result of the lockdowns and restrictions, our revenue from operations and result of operations were subject to volatility and fluctuation, primarily due to temporary disruptions faced by our suppliers, super-stockists and distributors. Our financial information for the Financial Year 2021 may not be comparable

with that for the Financial Year 2022 because of the severe impact of COVID-19 on our business in Financial Year 2021 and consequently, our revenue from operations and result of operations. During this period, our operating efficiency reduced resulting in increase in Working Capital Cycle (Days) and we experienced delays in payment from customers resulting in longer periods for trade receivable and consequently trade payables and also experienced a decrease in our EBITDA Margin. Upon resumption of activities in India and the gradual opening up of the global economy after the second wave of the COVID-19 pandemic, we saw recovery of the demand for our products to pre-COVID-19 levels as offices and educational institutions were operational again. The outbreak of another pandemic or epidemic in India could adversely affect the Indian economy, the logistics industry and, consequently, our business. For details, see “Risk Factors?Our business and operations had been adversely impacted by the COVID-19 pandemic and the future impact on our business, operations and financial performance is uncertain and could continue for an unknown period of time” on page 32.

We have evaluated the possible effects that may result from the COVID-19 pandemic on the carrying amounts of our assets and liabilities and its internal financial controls. We have considered internal and external sources of information as of the date of approval of our Restated Consolidated Financial Information in determining the possible impact, if any, of the resurgence of the COVID-19 pandemic on the carrying amounts of its trade receivables, financial and non-financial assets. We have been prudent in applying judgments and making estimates. Based on our evaluation, we do not expect any material impact on our financial condition or financial performance, however, the eventual outcome of impact of COVID-19 pandemic may be different from those estimated in the Restated Consolidated Financial Information as the COVID-19 situation evolves in India and globally. We will continue to closely monitor any material changes to future economic conditions.

Except as described in the section “Risk Factors on page 29 and this section, and elsewhere in this Draft Red Herring Prospectus, there are no known trends or uncertainties that have had or are expected to have a material adverse impact on our revenues.

Except as discussed in the section “Risk Factors” on page 29 and this section, and elsewhere in this Draft Red Herring Prospectus, there are no known factors that will have a material adverse impact on our operations or finances.

Except as described in the section “Our Business” on page 161, there are no new products or business segments which we operated.

We expect competitive conditions to intensify further due to the entry of new players and the consolidation of existing players in the Indian writing instruments industry. For further information, see the sections “Risk Factors” and “Our Business on pages 29 and 161, respectively.

Our business has been subject, and we expect it to continue to be subject, to significant economic changes that materially affect or are likely to affect our income from continuing operations identified above in “ ?Significant Factors Affecting our Results of Operations and Financial Condition” and the uncertainties described in the section “Risk Factors” on pages 328 and 29, respectively.

There are no auditor qualifications in the examination report that have not been given effect to in the Restated Consolidated Financial Information.

To our knowledge, except as disclosed below and otherwise disclosed in this Draft Red Herring Prospectus, no

circumstances have arisen since March 31, 2023, that materially and adversely affect, or are likely to affect our operations or profitability, or the value of our assets, or our ability to pay our material liabilities within the next 12 months.

• Our Company, in consultation with the BRLMs, may consider a Pre-IPO Placement for an aggregate amount not exceeding Rs.730.00 million. The Pre-IPO Placement, if undertaken, will be at a price to be decided by our Company in consultation with the BRLMs, and the Pre-IPO Placement will be completed prior to filing of the Red Herring Prospectus with the RoC. If the Pre-IPO Placement is undertaken, the amount raised from the Pre-IPO Placement will be reduced from the Fresh Issue, subject to compliance with Rule 19(2)(b) of the SCRR.

• Our Company has acquired leasehold rights for a parcel of land located at Village Kachigam, Nani Daman, District Daman (Daman Unit-V) pursuant to the leave and license agreement dated May 19, 2023 (the “Lease Agreement”) for a consideration of Rs.0.32 million per month. In this regard, a one time security deposit of Rs.1.10 million has been submitted by our Company. The Lease Agreement is valid for a period of two years from June 1, 2023 to May 30, 2025 and can be renewed further. Our Company will manufacture creative products in Daman Unit-V.

• Our Company has entered into a memorandum of understanding dated June 14, 2023 for acquisition of land to set up a new manufacturing facility for writing instruments in the Valsad district (“New Valsad Unit”). The New Valsad Unit is being set up by our Company with the objective of leasing the New Valsad Unit to our Subsidiary, FWEPL on commercially acceptable terms for manufacture of a wide range of pens and houseware products. For details, see “Objects of the Offer?Details of the Objects?Setting up the New Valsad Unit” on page 98.

• Our Company and our Subsidiaries, FWEPL and FCIPL, have been disbursed certain loan amounts from Citibank N.A., the details for which are set out below.