Jay Kailash Namkeen Ltd Management Discussions

OF FINANCIAL CONDITIONS & RESULTS OF OPERATIONS

You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Red Herring Prospectus. You should also read the section entitled "Risk Factors" beginning on page 30 and "Forward Looking Statements" beginning on page 21, 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 for the period ended March 31, 2023 & March 31, 2021 and for the period ended March 31, 2022 and June 30, 2021 including the schedules and notes thereto and the reports thereto, which appear in the section titled "Financial Information of our company" on Page 161 of the Draft Red Herring Prospectus. The financial statements presented and discussed herein have been prepared to comply in all material respects with the notified accounting standards by Companies (Accounting Standards) Rules, 2006 (as amended), the relevant provisions of the Companies Act and SEBI (Issue of Capital and Disclosure Requirements) Regulations. Our fiscal year ends on March 31 of each year. Accordingly, all references to a particular fiscal period are to the twelve-month period ended on March 31 of that year except for financial period 2022. 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.

Overview

Our company is engaged in the business of manufacturing of packaged snacks. We have a wide range of all type of Namkeen and snacks like Chana Jor Namkeen, Masala Chana Jor, Pudina Chana, Masala Mung Jor, Plain Mung Jor, Bingo Triangle, Soya Sticks, Haldi Chana etc. Our diversified product portfolio is therefore, relatively less susceptible to shifts in consumer preferences, market trends and risks of operating in a particular product segment. Our brand philosophy emphasises delivery of maximum value to consumers, as reflected by the regular introduction of new flavours, relatively high per pack weight to volume ratio for our products.

Our Company was originally incorporated on June 30, 2021 as "Jay Kailash Namkeen (OPC) Private Limited" under the provisions of the Companies Act, 2013 with the Registrar of Companies, Central Registration Centre. Subsequently our Company has acquired the running business of "Kailash Namkeen" a proprietorship firm through Business Transfer Agreement dated July 26, 2021. Further the name of our company was changed from "Jay Kailash Namkeen (OPC) Private Limited" to "Jay Kailash Namkeen Private Limited" and fresh certificate of incorporation dated May 25, 2022 was issued by, Registrar of Companies, Ahmedabad pursuant to conversion of one-person company to private company. Subsequently our Company was converted into Public Limited Company and name of company was changed from "Jay Kailash Namkeen Private Limited" to "Jay Kailash Namkeen Limited" vide fresh certificate of incorporation dated June 24, 2022 issued by the Registrar of Companies, Ahmedabad. The Corporate Identification Number of our Company is U15549GJ2021PLC123708.

Our Registered Office of the company is situated at Deeva House, Fourth Floor, Diwanpara 11/12 corner, Rajkot City, Rajkot, Gujarat-360001, India.

Our company was initially engaged only in B2B transactions where we sold our products to well-known brands in industry in bulk quantities and they further sold it to the consumer in the market under their own brand name. Recently our company has started B2C transactions where we are selling our product under our own brand name "JAY KAILASH NAMKEEN" to the consumers.

Our Company mainly manufactures Chana Jor in huge quantities along with other products side by side. We do wholesale trade of Chana Jor along with retail trade in our own brand name.

Our promise is to not only satisfy our customers but also to delight them with great quality products at most reasonable price. We are committed in creating maximum number of employment opportunities to ultimately serve our great Nation. Our vision is to attain, a reputable and trustworthy position through Quality, Reliability, Faith and Efficiency not only in the Indian and Global market but also in the Hearts of our consumers.

We follow stringent quality procedures which satisfy quality guidelines. Our quality testing team keeps a close checking on each and every level of the production process and makes sure that only faultless range is delivered to the customer. All our machines are made from the superior quality basic material to ensure excellent performance. Specific strategies are deployed through our quality and their progress is measured on a time period. The manufactured products are prepared completely under hygienic atmosphere by the professional makers. We have been certified by Food Safety and Standards Authority of India (FSSAI) for the quality management systems of our Company in relation to our products.

SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL:

In the opinion of the Board of Directors of our Company, since the date of the last audited period i.e., March 31, 2023, as disclosed in this draft red herring prospectus, there have not arisen any circumstance that materially or adversely affect or are likely to affect the trading or profitability of our Company or the value of its assets or its ability to pay its material liabilities within the next twelve months.

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "Risk Factors" beginning on page 30 of this Draft Red Herring Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. A reduction in the demand of the products in which we deal in and/or competing products gaining wider market acceptance;

2. Our ability to successfully implement our strategy, our growth and expansion, technological changes.

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

4. Changes in laws and regulations relating to the industries in which we operate;

5. Occurrence of natural disasters or calamities affecting the areas in which we have operations;

6. Disruptions in the supply chain can lead to higher costs, reduced production, and lost sales;

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer to Annexure IV of Restated Financial Statements under chapter titled "Restated Financial Statements" beginning on page 161 of this Draft Red Herring Prospectus.

RESULTS OF KEY OPERATION

The following table sets forth select financial data from our restated financial statement of profit and loss for the period ended March 31, 2023, March 31, 2022 and March 31, 2021 the components of which are also expressed as a percentage of total revenue for such period and financial period.

					( in Lakhs)
	March 31, 2023	% of Total Income	March 31, 2022*	% of Total Income	March 31, 2021	% of Total Income
Revenue from Operations	979.99	99.22	1043.12	100.00	1314.56	99.98
Other Income	7.75	0.78	0.00	0.00	0.25	0.02
Total Income (A)	987.74	100.00	1043.12	100.00	1314.81	100.00
EXPENDITURE
Cost of Material Consumed	687.64	69.62	972.22	93.20	1252.05	95.23
Changes in inventories of finished goods work-in- progress and Stock-in-Trade	50.25	5.09	(63.87)	(6.12)	-	-
Employee benefits expense	25.93	2.63	13.57	1.30	11.08	0.84
Finance costs	7.61	0.77	0.67	0.06	2.58	0.20
Depreciation and amortization expense	13.44	1.36	9.52	0.91	8.04	0.61
Other expenses	86.42	8.75	31.27	3.00	32.26	2.45
Total Expenses (B)	871.29	88.21	963.39	92.35	1306.00	99.33
Profit before Exceptional Items(A-B)	116.45	11.79	79.74	7.65	08.81	0.67
Exceptional Items	0.00	0.00	0.00	0.00	0.00	0.00
Profit Before Tax	116.45	11.79	74.59	7.65	08.81	0.67
Tax expense:
(i) Current tax	31.31	3.17	22.20	2.13	0.00	0.00
(ii) Deferred tax	(3.65)	(0.37)	2.96	0.28	0.00	0.00
Total Tax Expense	27.66	2.80	25.16	2.41	0.00	0.00
Profit for the year	88.79	8.99	54.57	5.24	08.81	0.67

*Combined figures from April 01, 2021 to June 30, 2021 and July 01, 2021 to March 31, 2022

Key Components of Companys Profit and Loss Statement

Revenue from Sale of Product: Revenue from operations mainly consists of Sales of Products.

Expenses: Companys expenses consist of Cost of Raw material consumed, change in inventories of finished goods, WIP & stock in trade, employee benefit expenses, finance cost, depreciation and amortization expenses and other expenses.

Employee Benefits Expense: Employee benefit expense includes Workers and Office staff salaries.

Finance Costs: Finance cost comprises interest on Indebtedness, Bank charges and Processing Charges Loan.

Depreciation and Amortization Expense: We recognize Depreciation and Amortization expense on a WDV Basis as per the rates set forth in the Companies Act, 2013.

Other Expenses: Other expenses includes Transport charges, Rates & Taxes, Advertisement Expenses, Electricity Expenses, Legal & Professional Expenses, etc.

Comparision of FY 2023 with FY 2022:

Income from Operations

The Companys total revenue for the financial year 2022-23 is 987.74 lakhs. This represents a 5.31% decrease compared to the previous financial years total income of 1043.12 lakhs. The decrease is due to a Shifting our focus in sales from B2B to B2C. Specifically, sales from B2C has been 230.30 as compared to NIL in last FY.

Other Income

In the financial year 2022-23, the Other Income recorded an increase of 7.75 lakhs, as compared to NIL in financial year 2021-22. This was primarily due to an increase in interest income.

Total Expenses

The total expenses for the financial year 2022-23, were 871.29 lakhs, while the total expenses for the financial year 2021-22, were 963.39 lakhs. This indicates a decrease in total expenses of 92.1 lakhs, or approximately 9.56% .The decrease is on account of decrease in cost of Material Consumed of 284.58 lakhs, which got set off from increase in Employee benefit expense, changes in inventory, Other expenses, etc.

Cost of Raw Material Consumed

The Cost of Raw Material Consumed decreased from 972.22 lakhs in financial year 2021-22 to 687.64 lakhs in financial year 2022-23. This represents an decrease of approximately 284.58 lakhs or 29.27% which is due to decrease in B2B transactions which is of low margin.

Employee Benefits Expenses

The Employee benefit expenses increase by 91.08% to 25.93 lakhs in the Financial Year 2022-23 against that of 13.57 lakhs in Financial Year 2021-22. The increase in employee expenses was on account decrease in salary and wages by 1.14 lakhs and increase director remuneration by 13.50 lakhs.

Finance Cost

The Finance cost increased to 7.61 lakhs in the Financial Year 2022-23 against that of 0.67 lakhs in Financial Year 2021-22. The increase of the finance charges is on account increase in interest expenses by 6.84 lakhs in the FY 2021-22.

Depreciation and Amortisation Expenses

The Depreciation and Amortisation expenses increase by 3.92 lakhs to 13.44 lakhs in the financial year 2022-23 against that of 9.52 lakhs in financial year 2021-22. The increase in depreciation was due to a purchase of motor vehicle and Plant & Machinery during the year.

Other Expenses

The Other expenses increase by 176.37% to 86.42 lakhs in the financial year 2022-23 as against that of 31.27 lakhs in financial year 2021-22. The other expenses increase mainly on account of increase in direct expenses which primarily consist of Transport expenses and Discount Expenses which increased by 17.59 lakhs due to increase B2C Sales. The indirect expenses increase by 37.56 lakhs to 52.65 lakhs in the financial year 2022-23 against that of 15.09 lakhs in financial year 2021-22. The other indirect expenses increase mainly on account of increase in advertisement expenses by 8.98,

Bad debts by 12.23 lakhs, increase in electricity expenses by 2.06 lakhs, increase in rates & taxes expense by 9.67 lakhs, etc.

EBDITA

The EBITDA for financial year 2022-23 was 137.50 lakhs as compared to 89.93 lakhs for financial year 2021-22. The EBITDA was 13.92% of total revenue in financial year 2022-23 as compared to 8.62% in financial year 2021-22.The EBITDA increased in financial year 2022-23 compared to financial year 2021-22 on account of decrease in cost of materials consumed.

Profit after Tax (PAT)

PAT is 88.79 lakhs for the financial year 2022-23 compared to 54.57 lakhs in financial year 2021-22. The PAT was 8.99% of total revenue in financial year 2022-23 compared to 5.23% of total revenue in F.Y. 2021-22. The profit is increased on account of decrease in cost of material consumed as a percentage of total revenue.

Comparision of FY 2022 with FY 2021:

Income from Operations

The Companys total revenue for the financial year 2021-22 is 1043.12 lakhs. This represents a 20.65% decrease compared to the previous financial years total income of 1314.56 lakhs. The decrease is due to a Shifting our focus in sales from low margin trading activity.

Other Income

In the financial year 2021-22, the Other Income recorded a decrease of 0.25 lakhs to NIL, as compared to 0.25 lakhs in financial year 2021-22. This was primarily due to an decrease in interest income.

Total Expenses

The total expenses for the financial year 2021-22, were 963.39 lakhs, while the total expenses for the financial year 2020-21, were 1306.00 lakhs. This indicates a decrease in total expenses of 342.61 lakhs, or approximately 26.23% .The decrease is on account of decrease in cost of Material Consumed of 279.83 lakhs, and Inventory by 63.87 lakhs.

Cost of Raw Material Consumed

The Cost of Raw Material Consumed decreased from 1252.05 lakhs in financial year 2020-21 to 972.22 lakhs in financial year 2021-22. This represents an decrease of approximately 279.83 lakhs or 22.35% which is due to decrease in trading transactions which is of low margin.

Employee Benefits Expenses

The Employee benefit expenses increase by 22.47% to 13.57 lakhs in the Financial Year 2021-22 against that of 11.08 lakhs in Financial Year 2020-21. The increase in employee expenses was on account increase in salary and wages by 2.49 lakhs.

Finance Cost

The Finance cost decreased to 0.67 lakhs in the Financial Year 2021-22 against that of 2.58 lakhs in Financial Year 2020-21. The decrease of the finance charges is on account decrease in interest expenses by 1.91 lakhs in the FY 2021-22.

Depreciation and Amortisation Expenses

The Depreciation and Amortisation expenses increase by 1.48 lakhs to 9.52 lakhs in the financial year 2021-22 against that of 8.04 lakhs in financial year 2020.21. The increase in depreciation was due to a purchase of Plant & Machinery during the year.

Other Expenses

The Other expenses decrease by 3.07% to 31.27 lakhs in the financial year 2021-22 as against that of 32.26 lakhs in financial year 2020-21. The other expenses decrease mainly on account of decrease in indirect expenses which primarily consist of Electricity expenses, Factory Expenses, Repairs & Maintenance and Rates & Taxes which decreased by 15.04 lakhs . The same got set off by increase in direct expenses by 14.05 lakhs to 16.18 lakhs in the financial year 2021-22 against that of 2.13 lakhs in financial year 2020-21.

EBDITA

The EBITDA for financial year 2021-22 was 89.93 lakhs as compared to 19.43 lakhs for financial year 2020-21. The EBITDA was 8.62% of total revenue in financial year 2021-22 as compared to 1.48% in financial year 2020-21.The EBITDA increased in financial year 2021-22 compared to financial year 2020-21 on account of decrease in cost of materials consumed.

Profit after Tax (PAT)

PAT is 54.57 lakhs for the financial year 2021-22 compared to 08.81 lakhs in financial year 2020-21. The PAT was 5.23% of total revenue in financial year 2021-22 compared to 0.67% of total revenue in F.Y. 2020-21. The profit is increased on account of decrease in cost of material consumed as a percentage of total revenue.

Cash Flows

( in lakhs)

Particulars	For the period ended March 31, 2023	For the year ended March 31, 2022	For the year ended March 31, 2021
Net Cash from Operating Activities	(26.42)	61.97	52.30
Net Cash from Investing Activities	(21.22)	(41.21)	(25.98)
Net Cash used in Financing Activities	239.48	4.00	(32.94)
Particulars	For the period ended March 31, 2023	For the year ended March 31, 2022	For the year ended March 31, 2021
Net Cash from Operating Activities	(26.42)	61.97	52.30
Net Cash from Investing Activities	(21.22)	(41.21)	(25.98)
Net Cash used in Financing Activities	239.48	4.00	(32.94)

Cash Flows from Operating Activities

Net cash from operating activities for period ended on March 31, 2023 was at (26.42) lakhs as compared to the Profit After Tax at 88.79 lakhs, while Net cash from operating activities for period ended on March 31, 2022 was at 61.97 lakhs as compared to Profit After Tax at 54.57 lakhs. This was primarily due to adjustments against, inventories, trade receivables, trade payables and borrowings.

Net cash from operating activities for period ended on March 31, 2022 was at 61.97 lakhs as compared to the Profit After Tax at 54.57 lakhs, while Net cash from operating activities for period ended on March 31, 2021 was at 52.30 lakhs as compared to Profit After Tax at 08.81 lakhs. This was primarily due to adjustments against, inventories, trade receivables and trade payables.

Cash Flows from Investment Activities

In Period ended on March 31, 2023, the net cash invested in Investing Activities was (21.22) lakhs.

This was mainly on account of purchase of fixed assets. In the period ended March 31, 2022, the net cash from investing activities was (41.21) lakhs and for Year ended March 31, 2021, the net cash from investing activities was (25.98) lakhs.

Cash Flows from Financing Activities

In Period ended on March 31, 2023, the net cash from financing activities was 239.48 lakhs. This was on account of proceeds from issuance of Equity Shares capital, Loan proceeds and Finance Cost. In the period ended March 31, 2022, the net cash from financing activities was 4.00 lakhs on account of loan and for year ended March 31, 2021, the net cash from financing activities was (32.94) on account of Loan repaid.

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

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

1. Unusual or infrequent events or transactions

There has not been any unusual trend on account of our business activity. There are no Unusual or infrequent events or transactions in our Company. The transactions are as per usual business operations.

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

Except for any change in economic policy affecting food industry in India, there are no other significant economic changes that may materially affect or likely to affect income from continuing operations.

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

Apart from the risks as disclosed under Section "Risk Factors" beginning on page 30 in the Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues

Our Companys future costs and revenues will be determined by demand supply situation, Government

Policies and growth of industry in which we operate.

5. Decreases in net sales or revenue

Decreases in revenues are by and largely linked to decreases in low margin trading business of our Company.

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

Our Company has not announced any new Product other than disclosed in the Draft Red Herring Prospectus.

7. Seasonality of business

Our Companys business is not seasonal in nature as it is Food industry.

8. Dependence on few customers/ clients

Revenues from any particular client may vary between financial reporting periods depending on the nature and term of on-going contracts with such client. However, historically certain key clients have accounted for a significant proportion of our revenues in the period ended March 31, 2023, our top ten customers contributed 73.06% of the revenue while our largest customer contributed 45.90% of our revenue of that period.

9. Competitive conditions

Competitive conditions are as described under the Chapters "Industry Overview" and "Our Business" beginning on pages 105 and 117, respectively of the Draft Red Herring Prospectus.

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

There have been no material developments occurred after the date of last Balance sheet i.e. March 31, 2023.