Ishan International Ltd Management Discussions

OPERATIONS

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in this Prospectus. You should also read the section entitled "Risk Factors" beginning on page 25 and "Forward Looking Statements" beginning on page 19 which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations.

The following discussion of our financial condition and results of operations should be read in conjunction with our Restated Financial Statements as of and for the fiscal year ended March 31, 2022, 2021 and, 2020, 2019,prepared in accordance with the Companies Act, 2013 to the extent applicable and Indian GAAP and restated in accordance with the SEBI ICDR Regulations, including the schedules, annexure and notes thereto and the reports thereon, included in the section titled "Financial Information of the Company" on page no. 143 of this Prospectus. Please note that in terms of Schedule VI of the SEBI (ICDR) Regulations, 2018, the company is required to give the financial information for the preceding 3 financial years from the date of the Prospectus. Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal year/financial year are to the twelve-month period ended on March 31 of that year. The forward-looking statements contained in this discussion and analysis is subject to a variety of factors that could cause actual results to differ materially from those contemplated by such statements. Indian GAAP differs in certain material respects from U.S. GAAP and IFRS. We have not attempted to quantify the impact of IFRS or U.S. GAAP on the financial data included in this Prospectus, nor do we provide a reconciliation of our financial statements to those under U.S. GAAP or IFRS. Accordingly, the degree to which the Indian GAAP financial statements included in this Prospectus will provide meaningful information is entirely dependent on the reader‘s level of familiarity with the Companies Act, Indian GAAP and the SEBI ICDR Regulations.

Overview of the Company

The Company was originally incorporated as Ishan International Private Limited on May 29, 1995 under the Companies Act, 1956 vide certificate of incorporation issued by the Registrar of Companies, New Delhi.

Subsequently the name of the company was changed from "as Ishan International Private Limited" to "Ishan International Limited" under the Companies Act, 2013 pursuant to a special resolution passed by our shareholders at the EGM held on January 11, 2022 and had obtained fresh certificate of incorporation January 17, 2022 issued by the Registrar of Companies, New Delhi. The CIN of the Company is U74899DL1995PLC069144.

Ishan is an ISO 9001: 2015 certified Company, GoI certified Star Export House and a diversified heavy engineering company with an history of 26+ years of experience in selling heavy engineering equipment in international markets. It is engaged in contracting and building projects that focus on supplying machines, erection/installation, commissioning and operational training for sugar plants, jaggery plants, pharmaceutical plants, hydro power plants and pollution control systems. It also provides high end engineering services and solutions for all types of activities in Hydro Power, Sugar and Jaggery, Pharmaceuticals, Pollution Control Systems. It provides customized heavy equipments including the entire range of machinery for sugar, jaggery, pharmaceuticals, hydro power and pollution control.

Established in 1995, its initial business was of pharmaceutical machinery and raw materials for pharmaceuticals ingredients and our company later diversified into heavy engineering. Its business is largely focused in international markets. In 1999, it established its 1st overseas office in Vietnam. Between 1999 and 2021, it had set up its overseas offices in Philippines, Indonesia, Hanoi (Vietnam), Ho Chi Minh City (Vietnam) and Kenya (in process). Its core strength Quality Management System in place under ISO 9001 : 2015.

Since 2004, it has leveraged its track record internationally by providing a wide range of heavy engineering machineries on various overseas projects, particularly in the Philippines, Vietnam and Indonesia to esteemed clients like Busco Sugar Milling Co. Inc, Univarsal RRobina Corporation Group, First Farmer Holding Corporation FFHC, Sonedco, Sunwest, Navetco-National Veterinary Joint Stock Company, Minh Dan Pharmaceutical Joint Stock Company, Thien Tan, Song Da Group, NCC, Kosy Group, Tra Linh, PBT PT. Purnama Bohler Technologi, GMMPT. Gendhis Multi Manis, PSMI, GMTPT. Garuda Mas Transindo, Biscom Inc , Lopez Sugar Corporation, Dynamic Technologist & Trading, Papiz Sugar, Central Inc, PT. PG Gorontalo, Bogo-Medellin milling Company Inc, Kibos Sugar And Allied Industries Limited etc. Over the years, it has had an array of successful relationship with Vietnam government and this continues Through its efficient functioning, it has been able to grab a niche in the market and would continue to maintain the same goodwill.

COVID 19 Pandemic:

Pursuant to outbreak of coronavirus disease (COVID-19) worldwide and its declaration as global pandemic, the Government of India declared lockdown on March 24, 2020, followed by several restrictions imposed by the Governments across the globe on the travel, goods movement and transportation considering public health and safety measures, which had some impact on the Companys supply chain during March, 2020. The Company is closely monitoring the impact of the pandemic on all aspects of its business, including how it will impact its customers, employees, vendors and business partners. The management has exercised due care, in concluding on significant accounting judgments and estimates, inter-alia, recoverability of receivables, inventory, based on the information available to date, both internal and external, while preparing the Companys financial results as of and for the year ended 31st March, 2020.

Significant Developments Subsequent to the Last Financial Year

After the date of last audited accounts i.e. March 31, 2022, the Directors of our Company confirm that, there have not been any significant material developments which materially and adversely affect or is likely to affect within the next twelve months for the trading or profitability of the Company, the value of its assets or its ability to pay its liability. However, following material events have occurred after the last audited period

1) The Board of Directors via its Board resolution passed on April 07, 2022 authorized the funds to be raised by making an initial public offering.

2) The Shareholders via its Resolution passed at the EGM held on April 22, 2022 authorized the funds to be raised by making an initial public offering.

3) The Shareholders via its Resolution passed at the EGM held on April 22, 2022 to increasing the Borrowing Power of the Company upto Rs. 100.00 Crores.

4) The financial statement-Audit Report for March 2022 was approved by Board resolution dated August 02, 2022.

5) Mr. Vipin Ganpatrao Goje was appointed as Additional Director by passing of Board Resolution dated April 07, 2022.

6) Mrs. Neelam was appointed was appointed as the CFO of the Company via Board resolution dated April 07, 2022.

Significant Developments subsequent to March 31, 2022

Except as set out above, to our knowledge, no circumstances have arisen since the date of the last financial statements as disclosed in this Prospectus which materially or 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.

Key factors affecting our results of operation:

The business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factor" beginning on page no. 25 of this Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

- General economic and demographic conditions; ? Fluctuations in foreign and Indian currency;

- Periods of disease outbreaks and the impact of COVID-19 pandemic; ? Depreciation, repairs and maintenance of our equipment;

- Significant developments in India‘s economic and fiscal policies;

- Our ability to obtain the necessary licenses in timely manner; ? Our ability to attract and retain its consumers; ? Our ability to expand its existing retail network; ? Our ability to attract and retain distributors, wholesalers; ? Demand, Supply and pricing for heavy machinery; ? Age and condition of heavy machinery;

- Changes in laws or regulations that affect the usage of heavy machinery; ? Changes in Segment Contribution to Revenue;

- Governmental policies, in particular with regard to environmental regulation and alternative energy;

- Social, political and geo-political instability in producing or importing countries, including war, terrorism or labour unrest; and

Our Significant Accounting Policies:

Our significant accounting policies are described in the Section IX entitled "Financial Statements" on page no. 143 of this Prospectus.

Our Results of Operation

The following table sets forth select financial data from restated financial statement, the components of which are also expressed as a percentage of total income for such periods.

						(Rs. In Lakh)
	As on March 31,
Particulars	% of Total Income	2022	% of Total Income	2021	% of Total Income	2020
I. Revenue From Operation	97.15%	2,112.41
I. Sales	2.85%	61.90	97.79%	2221.06	96.42%	2191.18
II. Other Income	100.00%	2,174.31	2.21%	50.14	3.58%	81.38
III. Total Revenue (I+II)			100.00%	2271.20	100.00%	2272.56
IV. Expenses	70.65%	1,536.14
Cost of Material Consumed	5.49%	119.46	76.64%	1740.62	72.73%	1652.93
Employee Benefits Expenses	4.02%	87.38	10.54%	239.31	11.87%	269.76
Finance Cost	0.25%	5.46	3.85%	87.52	2.26%	51.32
Depreciation and Amortization Expenses	9.91%	215.49	0.27%	6.21	0.34%	7.71
Admin& Selling Expenses	90.32%	1,963.93	7.81%	177.45	11.12%	252.61
Total Expenses	9.68%	210.38	99.12%	2251.11	98.32%	2234.33
V. Profit before tax (III-IV)	-1.13%	(24.52)	0.88%	20.09	1.68%	38.23
VI. Extraordinary items				-		-
VII. Profit Before Tax
After Extra items(V- VI)	9.78%	185.86	0.88%	20.09	1.68%	38.23
VIII Tax expenses
1. Current taxes	-2.58%	(56.00)	-0.23%	(5.20)	-0.44%	(9.89)
2. MAT Credit Entitlements
3. Deferred tax	-0.12%	(2.70)	0.01%	0.16	0.00%	(0.08)
Profit after tax and before extraordinary items	5.85%	127.16	0.66%	15.05	1.25%	28.42
Extraordinary items		-		-		-
Net Profit after extraordinary items available for appropriation	5.85%	127.16	0.66%	15.05	1.25%	28.42
Proposed Dividend	-	-	-	-	-	-
Dividend distribution tax	-	-	-	-	-	-
Net profit carried to Balance sheet	5.85%	127.16	0.66%	15.05	1.25%	28.42

COMPARISON OF FY 2022 WITH FY 2021

Revenue from Operations

During the Financial Year 2021-22, the total revenue accumulated is 2174.31 lakhs., it is slightly lower than the previous year for a number of reasons.This is mainly because of the lockdown implemented in India during phase 2 lockdown, where there were minimal exports nation-wide. Another factor to consider was the lack of shipping lines available during 2021, as several orders were getting postponed. This led to delay in shipments which inturn resulted in lower turnover. Regardless, with a strong order book Ishan is on track to achieve a healthy growth in the coming financial year. due to the sudden boost in global economic conditions after the second wave.

Revenue Other Income

During Financial Year 2021-22, the revenue generated from other income has remained stable approximately 3%of the total revenue This is mainly attributable to the amount no longer payable have been written back during the period ending March 2022. .

Total Expenses

The total expenses consist of various sub-headings that include Cost of Goods Sold, Employee Benefits Expense, Finance Cost, Depreciation & Amortization Expense, and Administrative and Selling Expense.

Cost of Goods Sold

During Financial Year 2021-22, the Cost of Goods Sold consists majorly of Sugar, Pharma, and API machinery.

Employee expenses

Expenses incurred on staff and executives and their welfare during the financial year 2021-22 was 119.46 lakhs, which is a huge reduction from the 239 lakhs from the previous year. They have been reduced due to the cost reduction strategy undertaken by the company particularly to address lockdown phase 2 covid.

Finance and Interest cost

The Finance and Interest Cost incurred during the financial year 2021-22 has stayed the same when comparing the same with previous year

Depreciation and amortization expense

During the financial year 2021-22, depreciation and amortization expense of the company has stayed the same when comparing the same with previous year

Administrative & Selling Expenses

Administrative & Selling Expenses for the financial year 2021-22 has increased from 177 lakhs to 215 lakhs from the previous year. This has happened due to aggressive marketing strategy adopted by the company. Also the freight rates have gone up drastically, due to several covid related supply chain issues.

Profit/ (Loss) After Tax

The PAT for Financial Year 2021-22 has increased from 15 lakhs to 127.16 lakhs from the previous year. This is due to better margins on product sales, and improved business opportunities in hydropower projects through which additional commission income has been generated.

COMPARISON OF FY 2021 WITH FY 2020

Revenue from Operations

During the Financial Year 2020-21, the total revenue for the 12 months accumulated is 2221 lakhs. When comparing to the previous year with the value of 2191 lakhs, this is a slight increase of sales.

Revenue Other Income

Revenue attributable to other income has reduced to a value of 50 lakhs from 81 lakhs in the previous year.

Total Expenses

The total expenses consist of various sub-headings that include Cost of Goods Sold, Employee Benefits Expense, Finance Cost, Depreciation & Amortization Expense, and Administrative and Selling Expense.

Cost of Goods Sold

During the Financial Year 2020-21, the Cost of Goods Sold has increased about 6% from 1652 lakhs to 1740 lakhs. This marginal increase can also be reflected in the Sales Revenue figure increase in the same period of time.

Employee expenses

When comparing both years, we can see a drop in Employee expenses from 269 lakhs to 239 lakhs, which accounts for almost a 10% reduction. Due to global economic conditions faltering because of covid, costs had to be cut down to maintain profitability.

Finance and Interest cost

Finance Costs had increased from 51 lakhs to 87 lakhs. This increase can be attributed to additional loans raised by the company.

Depreciation and amortization expense

This value has dropped from 7 lakhs to 6 lakhs over the course of the year.

Administrative & Selling Expenses

This value changed from 252 lakhs to 177 over the course of the financial year. This is mainly attributable to drastic reduction in domestic and international travel, reduction in sales promotions, and a fall in other operating expenses.

Profit/ (Loss) After Tax

This value has changed from 28 lakhs to 15 lakhs over the course of the year. Since this was during covid, the decision was made to give trade discounts for early recovery from debtors, leading to this reduction in Profit After Tax.

COMPARISON OF FY 2020 WITH FY 2019

Revenue from Operations

During the Financial Year 2019-20, the total revenue for the 12 months accumulated is 2191 lakhs. When comparing to the previous year with the value of 2674 lakhs, this is a drop of 22%. This is mainly because shipments that were due in March got postponed, leading to some of the revenue being shifted into the next FY.

Revenue Other Income

During this year, Revenue from other income has gone up from 34 lakhs to 81 lakhs.

Total Expenses

The total expenses consist of various sub-headings that include Cost of Goods Sold, Employee Benefits Expense, Finance Cost, Depreciation & Amortization Expense, and Administrative and Selling Expense.

Material Consumed

The Cost of Goods Sold has decreased from 1951 lakhs to 1652 lakhs, which is approximately a 15% reduction reflective in the Sales Revenue figure of the same period.

Employee Expenses

When comparing both years, we can see a drop in Employee expenses from 293 lakhs to 269 lakhs, which accounts for almost a 9% reduction. This was done by reducing the salaries of the Key Managerial Personnel.

Finance and Interest cost

Finance Costs had decreased from 72 lakhs to 51 lakhs. This decrease can be attributed to a reduction in borrowings by the company.

Depreciation and amortization expense

This value has dropped from 9 lakhs to 7 lakhs over the course of the year. This reduction can be sourced due to the sale of a vehicle.

Administrative & Selling Expenses

This value changed from 331 lakhs to 252 lakhs over the course of the financial year. This year sea freights were reduced, and also operating expenses.

Profit/ (Loss) After Tax

During this period margins have remained fairly stable, in absolute terms. This can be reflected when looking at other figures in P&L statement.

Cash Flow Details

The table below summaries our cash flows from our Audited Consolidated Financial Information for the financial year ended March 31, 2022, 2021 and 2020

			(Rs. in Lakhs)
Particulars	FY 2022-21	FY 2020-21	FY 2019-2020
Net cash generated from / (used in) operating activities	112.45	(23.29)	(32.48)
Net cash generated from / (used in) Investing Activities	50.94	19.10	(0.76)
Net cash generated from / (used in) from financing activities	(133.18)	(64.98)	35.56
Net Increase / (decrease) in Cash & Cash Equivalents	30.20	(69.17)	2.32
Cash and cash equivalents at the beginning of the year	120.32	189.49	187.17
Cash and cash equivalents at the end of the year	150.52	120.32	189.49

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

1. Unusual or infrequent events or transactions.

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years, except the outbreak of COVID 19.

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

Other than as described in the section titled "Risk Factors" beginning on page no. 25 of this Prospectus respectively, to our knowledge there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

3. Income and Sales on account of major product/main activities.

Income and sales of our Company on account of major services/ main activities derives from shipping and dredging activities.

4. Whether the company has followed any unorthodox procedure for recording sales and revenues.

Our Company has not followed any unorthodox procedure for recording sales and revenues.

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

Other than as described in the section titled "Risk Factors" beginning on page no. 25 of this Prospectus, in our opinion there are no known trends or uncertainties that have or had or are expected to have a material adverse impact on revenues or income of our Company from continuing operations.

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

Our Companys future costs and revenues can be impacted by an increase in labour costs as the company looks to hire talent with new skills and capabilities for the digital economy who may be in short supply.

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

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

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

Our Company is in the business of trading heavy machinery. Relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page 77 of this Prospectus.

9. Status of any publicly announced new products or business segment.

Our Company has not announced any new service and segment publicly.

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

The % of Contribution of our Supplier vis-a-vis the total traded goods cost as on March 2022 is as follows:

Particulars	Suppliers	Customers
Top 5 %	91.01%	56.91%
Top 10 %	97.64 %	73.80%

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled "Industry Overview" and "Business Overview" beginning on pages 77 and 98, respectively of the Prospectus.