Mish Designs Ltd Management Discussions

You should read the following discussion and analysis of financial condition and results of operations together with our financial statements included in this Draft Prospectus. The following discussion relates to our Company and is based on our restated financial statements. Our financial statements have been prepared in accordance with Indian GAAP, the accounting standards and other applicable provisions of the Companies Act.

Note: Statement in the Management Discussion and Analysis Report describing our objectives, outlook, estimates, expectations or prediction may be "Forward looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to our operations include, among others, economic conditions affecting demand/supply and price conditions in domestic and overseas market in which we operate, changes in Government Regulations, Tax Laws and other Statutes and incidental factors.

BUSINESS OVERVIEW

Our company Mish Design Limted is incorporated on November 24, 2017 is engaged in manufacturing of garments and sell its products through digital platforms.

Our manufacturing facility and registered office is at Gala No 2, 3 &4, C.T.S-1/372 Gulati Industries, Hattibaug Love Lane, Mazgaon, Mumbai- 400010, Maharashtra and warehouse is located at 1st floor, Survey No 32, Shivam Estate, Tungar Phata Road, Sativali, Vasai East -401208, Mumbai. Our manufacturing facility and registered office is well equipped with computer systems, internet connectivity, other communication equipment, security and other facilities, which are required for our business operations to function smoothly. Company has department were they conduct quality check at different phases before product delivers to customer.

Our total income as restated weref 1,111.95 lakhs, f 730.70 lakhs and f419.32 lakhs for the fiscals 2023, 2022 and 2021 respectively. Further, Our Profit after Tax had been recorded af 60.76 lakhs, f 5.36 lakhs and f 0.30 for the fiscals 2023, 2022 and 2021.

Significant Developments after March 31, 2023 that may affect our Future Results of Operations

The Directors confirm that there have been no events or circumstances since the date of the last financial statements as disclosed in the Draft Prospectus which materially or adversely affect or is likely to affect the profitability of our Company, or the value of our assets, or our ability to pay liabilities within next twelve months.

RECENT DEVELOPMENT

Impact of COVID-19

The pandemic outbreak has caused an economic downturn on a global scale, including closures of many businesses and reduced consumer spending, as well as significant market disruption and volatility. The demand for our products is dependent on and directly affected by factors affecting industries where our products are supplied. Despite the impact of the COVID-19 Pandemic, our revenue from operations for the Fiscal 2023, Fiscal 2022 and Fiscal 2021 was Rs. 1,110.24 lakhs, Rs. 730.70 and Rs 419.32 lakhs respectively. We continue to closely monitor the impact that COVID- 19 may have on our business and results of operations. It is difficult for us to predict the impact that COVID-19 will have on us, our customers or suppliers in the future.

FACTORS AFFECTING OUR RESULT OF OPERATIONS

Growth in the textile industry:

Our business is significantly dependent on general economic conditions and textile sector activity in India and in international market. The Indian government in recent years has introduced a number of policies and incentives aimed at encouraging the domestic textile sector, while the removal of textile quotas internationally has created potentially significant market opportunities for textile manufacturers from countries with relatively lower production costs. Our ability to anticipate and respond to the expected rapid growth, and consequent competition, in the Indian and international textile industry will be critical to our results of operations in the coming years.

Demand and supply:

Our products sales realizations are influenced by the demand for and supply of these products in the Indian and international markets. Demand and supply is influenced by factors such as fashion trends, consumer preferences, perception of prospective demand, competition, tax, manufacturing incentives, the Indian and international macroeconomic and retail environment and the cost of raw materials, principally cotton.

Timely Availability of Raw Material and Price Fluctuations thereof:

Raw material costs comprise largest part of our total operating expenditure. Our major raw materials include cotton Availability of cotton is dependent on climatic factors and occurrence of drought may seriously hamper our ability to timely source our cotton requirements at competitive prices. Delays or deficiency in monsoon may affect timely availability of cotton at competitive prices for requisite quality. The major raw materials required for the project is fabrics, which will be purchased indigenously and other accessories like buttons, threads zipper etc. required would be procured locally.

RESULTS OF OUR OPERATIONS

(in lakhs)

	For the year ended March 31,
Particulars	2023	% of Total Income	2022	% of Total Income	2021	% of Total Income
INCOME:
Revenue from Operations	1,110.24	99.85%	729.55	99.84%	418.99	99.92%
Other Income	1.71	0.15%	1.14	0.16%	0.33	0.08%
Total Income (A)	1,111.95	100.00%	730.70	100.00%	419.32	100.00%
EXPENSES:
Cost of Materials Consumed	618.92	55.66%	456.54	62.48%	219.44	52.33%
Change in Inventories	(130.71)	-11.76%	(88.09)	-12.06%	(13.51)	-3.22%
Employee benefit expenses	61.04	5.49%	89.25	12.21%	60.62	14.46%
Finance costs	36.06	3.24%	16.92	2.31%	3.97	0.95%
Depreciation and amortization	11.40	1.02%	9.70	1.33%	7.43	1.77%
Other expenses	436.28	39.24%	237.64	32.52%	139.00	33.15%
Total Expenses (B)	1,032.99	92.90%	721.96	98.80%	416.96	99.44%
Net Profit / (Loss) before tax	78.96	7.10%	8.73	1.20%	2.36	0.56%
Less: Tax expense
(i) Current tax	18.97	1.71%	3.37	0.46%	1.84	0.44%
(iii) Deferred tax	(0.77)	(0.07)%	(0.45)	(0.06)%	0.04	0.01%
(b)Short/ Excess Tax provision for earlier periods	-		0.45	0.06%	0.18	0.04%
Total Tax Expense	18.20	1.64%	3.37	0.46%	2.05	0.49%
Net Profit / ( Loss ) after tax	60.76	5.46%	5.36	0.73%	0.30	0.07%

Main Components of our Profit and Loss Account Income

Our total income comprises of revenue from Sale of Products and other income.

Revenue from Operations

Our revenue from operations as a percentage of total income was 99.85 %, 99.84%and 99.92%, for the fiscals 2023, 2022 and 2021 respectively.

Other Income

Our other income comprises of interest income, foreign fluctuation income and duty drawback from custom. Other income, as a percentage of total income was 1.71%, 1.14% and 0.33% for the fiscals ended2023, 2022 and 2021 respectively.

Expenditure

Our total expenditure primarily consists of raw material consumed, employee benefit expenses, finance cost, depreciation expenses, other expenses.

Cost of Raw Material Consumed

It consists of cost of raw materials consumed and other direct expenses.

Employee Benefit Expenses

Employee benefit expenses comprises of salaries, employee welfare expenses, contribution to PF & Gratuity and gratuity.

Depreciation and Amortization Cost

Depreciation and Amortization Expenses consist of depreciation on the Tangible & Intangible assets of our company

i.e. Furniture& Fixtures, Plant & Machinery, Computer and Office Equipments, software.

Finance costs

Finance cost includes Interest on Borrowings and processing expenses.

Other Expenses

Other expenses includes Commission, Logistics, Rent, Marketing, Legal & professional expenses, Insurance expense, Telephone and Internet charges, Postage and courier charges, Auditors fees, and General expenses.

Provision for Tax

The provision for current tax is computed in accordance with relevant tax regulation. Deferred tax is recognized on timing differences between the accounting and the taxable income for the year and quantified using the tax rates and laws enacted or subsequently enacted as on balance sheet date. Deferred tax assets are recognized and carried forward to the extent that there is a virtual certainly that sufficient future taxable income will be available against which such deferred tax assets can be realized in future.

Fiscal 2023 compared with fiscal 2022

Income

In fiscal 2023, our total income increased by ? 381.25 lakhs or 52.18%, from ? 730.70 lakhs in fiscal 2022 to 1111.95 lakhs in fiscal 2023. The increase in the year 2023 was due to delivery of clothes in both International market and

Domestic market. Other income increased by ? 0.57 lakhs or 49.86%, from ?1.14 lakhs in fiscal 2022 to ? 1.71 lakhs in fiscal 2023 as foreign fluctuation gain and Duty Drawback was recorded against Export Sales during Fiscal 2023.

Change in Inventories

Inventories were ?(130.71) lakhs in fiscal 2023 as compared to ?(88.09) lakhs in fiscal 2022 due to conversion of inventory to sales.

Cost of Material Consumed

Cost of material consumed increased by ? 162.38 lakhs or 35.57%, from ? 456.54lakhs in Fiscal 2022 to ? 618.92 lakhs in Fiscal 2023 due to increase in production against order thereby even increase in purchases of Raw materials and other direct expenses associated with it.

Employee Benefit Expenses

Employee Benefit Expenses decreased ? 28.20 lakhs or 31.60 %, from ? 89.25 lakhs in fiscal 2022 to ? 61.04 lakhs in fiscal 2023 due to decrease in director remuneration and gratuity expenses.

Finance Costs

Finance Costs increased by ? 19.15 lakhs or 113.19%, from ? 16.92 lakhs in fiscal 2022 to ? 36.06 lakhs in fiscal 2023. This increase was mainly due to more loans availed from NBFCs and cash credit utilised from bank during the Fiscal year 2022-23, resulting in increase in finance cost.

Depreciation Expenses

Depreciation expenses were ?9.7 lakhs in fiscal 2022 as compared to ?11.40 lakhs in fiscal 2023.

Other Expenses

Other expenses increased by ?198.64 lakhs or 83.59 % from ?237.64 lakhs in fiscal 2022 to 436.28 lakhs in Fiscal 2023. During Fiscal 2023 we have incurred major expenses of Marketing, logistics, commission as compared to last Fiscal.

Profit/ (Loss) before Tax

The increase in revenue from operations with better margins has led to increase in our Profit before tax by?70.23 lakhs or 803.98 % from ?8.73 lakhs in fiscal 2022 to ?78.96 lakhs in fiscal 2023.

Tax Expenses

The Companys current tax expenses are ?18.20 lakhs in the Fiscal 2023.

Profit/ (Loss) after Tax

After accounting for taxes at applicable rates, our Profit after Tax increased by ?55.39 lakhs or 1032.81 %, from ?5.36 lakhs in fiscal 2022 to?60.76 lakhs in fiscal 2023.

We believe that the number of products sold from various e commerce platforms are largely driven by mix of products and brands that are sold on the platforms. Our number of products sold has grown to 1.09 lakhs in the Financial Year 2022-23 from 0.42 lakhs in the Financial Year 2020-21 inclusive of products such as Dresses, Tops, Bottoms, Aprons and gloves. Based on the restated financial statements, our companys Revenue from Operation increased to ? 1,110.24 lakhs in the Financial Year 2022-23 from ?418.99 lakhs in the Financial Year 2020 -21at the CAGR of 62.78%. An increase in the quantity of products sold and revenue generated through various e-commerce platforms generally results in an increase in profitability of the company.

The COVID-19 outbreak led to government imposed country-wide lockdowns, restrictions on travel and business operations. We experienced lower Orders and Turnovers in the Financial Year 2020 and half year of

the Financial Year 2021 primarily due to the lockdown restrictions imposed owing to COVID-19 pandemic. Following the half year of the Financial Year 2021, as lockdown restrictions were gradually relaxed, our business witnessed a sharp recovery through e-commerce platforms. Our company was incorporated towards the ending of financial year 2017-18 with an idea to sell products through prominent digital platforms. To build relations with them and increase our brands presence in the digital market, we have incurred significant amount of commission costs, logistic charges and marketing expenses. Over the years, we have seen gradual growth in revenue and significant expenses for our brands visibility and reach in each corner, thereby leaving smaller profit margins. Over the years of efforts and teamwork, we are now able to grow our revenue at better profit margins. We also export our products to U.A.E. Number of products sold from 2020-21 to 2022-23 are shown below:

Fiscal 2022 compared with fiscal 2021

Income

In fiscal 2022, our total income increased by ? 311.38lakhs or 74.26%, from ? 419.32 lakhs in fiscal 2021 to ? 730.70 lakhs in fiscal 2022. The increase in the year 2022 was due to increase in the delivery of products as compared to last year.

Other income increased by ? 0.81 lakhs or245.91%, from ? 0.33lakhs in fiscal 2021 to ? 1.14 lakhs in fiscal 2022 for increase in interest income, foreign fluctuation income, duty draw back.

Change in Inventories

Inventories were ? (88.09) lakhs in fiscal 2022 as compared to ?(13.51) lakhs in fiscal 2021.

Cost of Material Consumed

Cost of material consumed increased by ?237.10 lakhs or 108.05%, from?219.44 lakhs in Fiscal 2021 to ? 456.54lakhs in Fiscal 2022 as we purchased bulk quantity of raw materials, direct expenses to meet the requirement of production house.

Employee Benefit Expenses

Employee Benefit Expenses increased28.62 lakhs or 47.21%, from ? 60.62 lakhs in fiscal 2021 to ? 89.25lakhsin fiscal 2022. This increase was mainly due to increase in salaries, bonus and staff welfare expenses,

Finance Costs

Finance Costs increased by ? 12.94lakhs or 325.91%, from ? 3.97 lakhs in fiscal 2021 to ? 16.92 lakhs in fiscal 2022. This increase was mainly due to increase in borrowing from bank which enhanced our interest cost during the year.

Depreciation Expenses

Depreciation expenses were? 7.43 lakhs in fiscal 2021 as compared to ? 9.70 Lakhs in fiscal 2022.

Other Expenses

Other expenses increased by ? 98.64 lakhs or 70.96% from ? 139.00 lakhs in fiscal 2021 to ?237.64 lakhs in Fiscal 2022. The increasemajorly consisted of commission, marketing, logistic expenses paid during the year.

Profit/ (Loss) before Tax

The increase in scale of operations has led to increase in our Profit before tax by ? 6.38 lakhs or 270.63% from ? 2.36lakhs in fiscal 2021 to ? 8.73 lakhs in fiscal 2022.

Tax Expenses

The Companys tax expenses in the Fiscal 2021 were? 2.05 lakhs and ? 3.37 lakhs in Fiscal 2022.

Profit/ (Loss) after Tax

After accounting for taxes at applicable rates, our Profit after Tax increased by ? 5.06 lakhs or 1666.11%, from ?0.30 lakhs in fiscal 2021 to? 5.36 lakhs in fiscal 2022.

Cash Flows

(? in lakhs)

	For the year ended March 31
Particulars	2023	2022	2021
Net Cash from Operating Activities	(118.07)	(87.54)	(58.35)
Net Cash from Investing Activities	(10.19)	(12.22)	(16.97)
Net Cash used in Financing Activities	132.59	106.39	71.99
Net Increase / (Decrease) in Cash and Cash equivalents	4.33	6.63	(3.33)

Cash Flows from Operating Activities

Net cash from operating activities in fiscal 2023 was ? (118.07) lakhs as compared to the PBT of ? 78.96lakhs for the same year. This difference is primarily on account of Inventory, Trade Receivable and Finance Cost.

Net cash from operating activities for the fiscal 2022 was ? (87.54) lakhs as compared to the PBT of ? 8.73lakhs for the same period. This difference is primarily on account of changes in Inventories, Trade payables.

Net cash from operating activities in fiscal 2021 was ? (58.35) lakhs as compared to the PBT of ? 2.36 lakhs for the same year. This difference is primarily on account of changes in Trade and other receivables, Trade Payables and Finance Cost.

Cash Flows from Investment Activities

In fiscal 2023,2022,2021the net cash utilised in investing activities was ? 10.19 lakhs,12.22 lakhs,16.97 lakhsrespectively on account of purchasing Plant and Machinery, Furniture and fixture, Software, Computers, office equipments.

Cash Flows from Financing Activities

Net cash used in financing activities in fiscal 2023 was 132.59 lakhs. This was on account of repayment finance cost incurred during the year, proceeds from banks, issue of equity shares.

Net cash generated from financing activities in fiscal 2022was 106.39 lakhs. This was on account of proceeds from short term loans.

Net cash used in financing activities in fiscal 2021 was 71.99 lakhs. This was on account of repayment of finance cost incurred during the year, proceeds from banks, issue of equity shares.

OTHER MATTERS

1. Unusual or infrequent events or transactions

Except as described in this Draft Prospectus, during the period/ years under review there have been no transactions or events, which in our best judgment, would be considered unusual or infrequent.

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

Other than as described in the Section titled "Financial Information" and chapter titled "Managements Discussion and Analysis of Financial Conditions and Results of Operations" on page 21 and 148 respectively of this Draft Prospectus respectively, to our knowledge there are no significant economic changes that materially affected or are 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 revenue or income from continuing operations

Other than as described in the chapter titled "Risk Factors" and "Managements Discussion and Analysis of Financial Conditions and Result of Operations " on page 21 and 148 respectively of this Draft Prospectus respectively, best 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.

4. Future relationship between Costs and Income

Other than as described in the chapter titled "Risk Factors " on page 21 of this Prospectus, best to our knowledge there are no factors, which will affect the future relationship between costs and income or which are expected to have a material adverse impact on our operations and finances.

5. The extent to which material increases in revenue or income from operations are due to increased volume, introduction of new services or increased prices

Increase in revenues is by and large linked to increase in delivery of order and volume of business activity thereby, completing and receiving more orders for our products.

6. Status of any publicly announced new services or business segments

Please refer to the chapter titled "Our Business" on page 81 of this Draft Prospectus.

7. The extent to which the business is seasonal.

Our business is not seasonal in nature.

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

For fiscal 2023, the revenue from our top 5 and top 10 customers (including our website) constituted approximately 95.47 % and 100.00% respectively of the revenue from operations. For fiscal 2023, the purchases from our top 5 and top 10 suppliers constituted approximately 46.90 % and 68.94% respectively of the revenue from operations.For further details, please refer chapter "Our Business" on page 81 of this Draft Prospectus.

9. Competition Conditions

We face competition from various domestic and international players in the market. We intend to continue competing rigorously to capture more market share and manage our growth in an optimal way. We expect that our commitment to quality, past record of timely execution and transparency will provide us with an edge over our competitors. Further we believe that our competition also depends on several factors which include changing business framework, competitive price, delivery at given timeline and established relationship with suppliers, brand recognition etc.