Saroja Pharma Industries India Ltd Management Discussions

You should read the following discussion of our financial position and results of operations together with our Restated Standalone Financial Information, which have been included in this Prospectus. You should also read the section entitled "RISK FACTORS" beginning on page 18 and "FORWARD LOOKING STATEMENTS" beginning on page 11, which discusses a number offactors, risks and contingencies that could affect our financial condition and results of operations.

The following discussion and analysis of our financial position and results of operations is based on our Restated Standalone Financial Information for financial years ended March 31^st, 2023, 2022 and 2021 including the related notes and reports, included in this Prospectus prepared in accordance with requirements of the Companies Act and restated in accordance with the SEBI Regulations, which differ in certain material respects from IFRS, U.S. GAAP and GAAP in other countries. Our Financial Statements, as restated have been derived from our audited financial statements for the respective period and years. Accordingly, the degree to which our Restated Standalone Financial Information will provide meaningful information to a prospective investor in countries other than India is entirely dependent on the readers level of familiarity with Indian GAAP, Companies Act, SEBI Regulations and other relevant accounting practices in India.

This discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward looking statements as a result of certain factors such as those described under "RISK FACTORS" and "FORWARD LOOKING STATEMENTS" on pages 18 and 11, respectively, and elsewhere in this Prospectus. Our Financial Year ends on March 31 of each year. Accordingly, all references to a particular Financial Year are to the 12 months ended March 31 of that year.

BUSINESS OVERVIEW

Our Company was originally incorporated as Private Limited Company, under the Companies Act, 2013 ("Companies Act") in the name and style of "Saroja Pharma Industries India Private Limited" on January 14^th, 2019 through vide Certificate of Incorporation issued by the Registrar of Companies, Mumbai, Maharashtra. Later on, company was converted into public limited company, the name of the Company has changed to "Saroja Pharma Industries India Limited" and for the same fresh Certificate of Incorporation dated 18^th April, 2023 was issued by the Registrar of Companies, Mumbai, Maharashtra.

The Company was incorporated with the objective of the best service deliverance in chemical trading with the best premium pharmaceutical companies in India and abroad for cost effective human and veterinary medicine. The Company trade in Pharma API, Pharma Intermediates, Chemicals, Solvents used for pharmaceutical products human and veterinary medicine. The Company was formed with a mission being providing clientele specification-based approved product at a competitive pricing with hassle free dispatch abroad and within India contributing to cost effectiveness in end product for human and veterinary medicine.

The product demand by our clientele is manufactured as per their specifications by our suppliers initially in sample size thereafter on clients testing and approving the order is finalized. The approved specified product is manufactured for the order quantity to be dispatched by the appropriate mode of transport within India or abroad.

The clientele base has magnified over the last two years since inception contributing us to forge into manufacturing of API Pharma products to further enhance our vision of cost-effective contribution to human and veterinary medicine.

We are into Active Pharmaceuticals Ingredients, Specialty Chemicals, Intermediates for Pharma trading. We are also into specialty chemicals imports & exports as well as supply of the same to the actual users. As per the clients need and requirements, we provide customize specialty chemicals in India and abroad regularly. Our Specialty chemicals & its Intermediates have wide application in sectors like pharma, agro & chemicals for human and veterinary.

Our management always emphasis on core strength and policies that focus on technology and great deliverance. With a passion to set high standards of services, the management has always taken all measures to scale up as and when required only to deliver the best. We work diligently and have a wide range of products to cater to every need and to reach the client sensitivity and centricity.

We believe in Best Committed Express Economical Deliverance in all spheres of transactions internal and external at all levels being executed by our company. Our company further believes and values in building long term relationship every time consistently with one and all interacting through us. The strong culture of our company involves being transparent and executing well-defined plan of action through daily operations to achieve goals of the organization supported by strategy and structure.

We believe that the high levels of customer retention and growth in the number of customers reflects the value proposition we provide and positions us for further growth. The financial performance of the company for last three years as per restated financial Statement.

We have a strong track record of revenue growth and profitability. The following table sets forth certain Key Performance Indicators for the years indicated:

(t In Lakhs)

	For the year ended
Key Financial Performance	31st March, 2023	31st March, 2022	31st March, 2021
Revenue from Operations(1)	5,019.32	5,563.25	3,666.15
Growth in Revenue from Operations?	-	51.75%	114.65%
EBITDA(3)	287.70	242.63	138.73
EBITDA Margin?	5.73%	4.36%	3.78%
PAT	106.06	114.01	73.13
PAT Margin?	2.11%	2.05%	1.99%

Notes:

(1) Revenue from operation means revenue from sales.

(2) Growth in Revenue from Operations (%) is calculated as Revenue from Operations of the relevant period minus Revenue from Operations of the preceding period, divided by Revenue from Operations of the preceding period.

(3) EBITDA is calculated as Profit before tax + Depreciation + Finance Cost.

(4) EBITDA Margin is calculated as EBITDA divided by Revenue from Operations.

(5) PAT Margin is calculated as PAT for the period/year divided by revenue from operations.

STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

For details in respect of Statement of Significant Accounting Policies, please refer Restated Financial Statements under chapter titled "RESTATED FINANCIAL STATEMENTS" beginning on page 139 of this Prospectus.

Factors Affecting our Results of Operations

Our business is subjected to various risks and uncertainties, including those discussed in the section titled "RISK FACTORS" beginning on page 18 of this Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

1. COVID -19 pandemic:

2. Our dependence on limited number of customers/suppliers/brands for a significant portion of our revenues;

3. Any failure to comply with the financial and restrictive covenants under our financing arrangements;

4. Controlled by our Promoters and certain related entities after the completion of the Issue.

5. No long-term supply agreements with our vendors/suppliers. Our Business may be adversely affected if there is any disruption in the trading material supply or due to non-availability of trading material.

6. Non-availability of material in the required quantity and of required quality from alternate source, the supply schedule to our clients may be adversely be affected impacting the sales and profitability of the Company.

7. Increased competition in industries/sector in which we operate;

8. General economic and business conditions in India and in the markets in which we operate and in the local, regional and national economies;

9. Changes in laws and regulations relating to the Sectors in which we operate;

10. Political instability or changes in the Government in India or in the government of the states where we operate could cause us significant adverse effects;

11. Failure to obtain any applicable approvals, licenses, registrations and permits in a timely manner;

12. Occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition; and

13. Our inability to successfully diversify our product offerings may adversely affect our growth and negatively impact our profitability.

BRIEF FINANCIALS OF OUR COMPANY

(? In Lakhs)

	For the year ended March 31,
	2023		2022		2021
Particulars	Amount	% of Total Income	Amount	% of Total Income	Amount	% of Total Income
Revenue from operations	5,019.32	99.69	5,563.25	99.42	3,666.15	99.77
Other Income	15.77	0.31	32.42	0.58	8.51	0.23
TOTAL INCOME	5,035.09	100.00	5,595.67	100.00	3,674.67	100.00
EXPENDITURE
Cost of Material Consumed	4,869.52	96.71	5,013.11	89.59	3,373.05	91.79
(Increase)/Decrease in Inventories	-339.93	-6.75	18.96	0.34	-38.92	-1.06
Employee Benefits Expenses	136.76	2.72	114.29	2.04	85.83	2.34
Finance Cost	131.89	2.62	80.13	1.43	32.95	0.90
Depreciation and amortization Expenses	6.66	0.13	4.56	0.08	2.24	0.06
Other Expenses	81.03	1.61	206.69	3.69	115.98	3.16
TOTAL EXPENSES	4,885.94	97.04	5,437.74	97.18	3,571.12	97.18
Profit Before Tax	149.15	2.96	157.93	2.82	103.55	2.82
Tax Expenses
Current Tax	42.17	0.84	43.76	0.78	29.96	0.82
Deferred Tax (Liabilities) / Assets	0.92	0.02	-0.16	0.00	-0.45	-0.01
Profit After Tax	106.06	2.11	114.01	2.04	73.13	1.99

Financial Performance Highlights for the period ended 31^st March, 2023:

The following descriptions set forth information with respect to the key components of our profit and loss statement.

1. INCOME:

Revenue from Operation: Our Companys total revenue during the period (April 01, 2022 to March 31, 2023) was ?5035.09 Lakhs. The revenue from operation was ?5019.32 Lakhs which is almost 99.69% of total Revenue which consist of trade of pharmaceutical products.

Other Income: Other Income during the period (April 01, 2022 to March 31, 2023) was ?15.77 Lakhs which is 0.31% of the Total Revenue.

2. EXPENSES:

Total Expenses: Our Companys total expenses during the said period (April 01, 2022 to March 31, 2023) were ? 4885.94 Lakhs. The Total Expenditure is almost 97.04% of Total Revenue. The main constituent of Total Expenditure is Cost of Material Consumed which was ?4869.52 Lakhs, almost 96.71% of Total Revenue.

Employee Benefits Expense: The Employee Benefit Expenses for the said period (April 01, 2022 to March 31, 2023) was ?136.76 Lakhs, almost 2.72% of Total Revenue.

Finance Cost: The Finance Cost for the said period (April 01, 2022 to March 31, 2023) was ^131.89 Lakhs, almost 2.62% of Total Revenue.

Depreciation and Amortization Expense: We recognize Depreciation and Amortization expenses on a Straight - Line Method as prescribed under schedule II of the Companies Act, 2013.

Other Expenses: Other expenses includes cleaning expenses, service contract payments, professional fees, rent expenses, travelling expenses and other miscellaneous expenses. Total other expenses for the said period (April 01, 2022 to March 31, 2023) was ? 81.03Lakhs, which is almost 1.61% of Total Revenue.

3. PROFIT:

Profit/ (Loss) Before Tax: The Restated Profit Before Tax for the said period (April 01, 2022 to March 31, 2023) was ?149.15 Lakhs, which is almost 2.96 % of Total Revenue.

Profit/ (Loss) after Tax: The Restated Profit After Tax for the said period (April 01, 2022 to March 31, 2023)) was ? 106.06 Lakhs, which is almost 2.11% of Total Revenue.

Comparison of Financial Performance of Fiscal Year 2023 with Fiscal 2022

The following descriptions set forth information with respect to the key components of our profit and loss statement.

1. INCOME:

Total Revenue: During FY 2022-23 the revenue from operation and other income of the company decreased to ? 5035.09 Lakhs as against ? 5595.97 Lakhs in FY 2021-22. This decrease was mainly due impact on exports due to the Russia Ukraine War.

2. EXPENSES:

Total Expenses: The total expenditure for FY 2022-23 decreased to ?4885.94 Lakhs as against ?5437.74 Lakhs in FY 2021-22. This decrease was mainly due to decrease in volume of operation during the FY as mentioned in revenue from operation above.

Employee Benefits Expense: The Employee Benefit Expenses for FY 2022-23 increased to ?136.76 Lakhs as against ?114.29 Lakhs in FY 2021-22. This increase was mainly due to companys positive future outlook leading to hiring of new employees.

Other Expenses: The Other Expenses for the FY 2022-23 decreased to ?81.03 Lakhs as against ? 206.69 Lakhs in the FY 2021-22. This decrease was mainly due to decrease in volume of operation during the FY as mentioned in revenue from operation above.

3. PROFIT:

Profit/ (Loss) Before Tax: The Restated Profit Before Tax for FY 2022-23 decreased to ? 149.15 Lakhs as against ? 157.93 Lakhs in the FY 2021-22. This decrease was mainly due to decrease in volume of operation during the FY as mentioned in revenue from operation above.

Profit/ (Loss) After Tax: The restated Profit After Tax for FY 2022-23 decreased to ? 106.06 Lakhs as against ? 114.01 Lakhs in the FY 2021-22. This decrease was mainly due to decrease in volume of operation during the FY as mentioned in revenue from operation above.

Comparison of Financial Performance of Fiscal 2022 with Fiscal 2021

The following descriptions set forth information with respect to the key components of our profit and loss statement.

1. INCOME:

Total Revenue: During FY 2021-22 the revenue from operation and other income of the company increased to ?5595.67 Lacs as against ?3674.67 Lacs in FY 2020-21. The reason behind the increase in the Total Revenue of the company was mainly due to the impact of COVID-19 Pandemic as production of Vaccines and other medicines increase in the year FY 2021-22 leading to increased use of Pharma Intermediate products in the pharma industry. As that company is primarily involved in the trading of pharmaceutical intermediaries, which can be used in the production of various human medicines, including vaccines.

2. EXPENSES:

Total Expenses: The total expenditure for FY 2021-22 increased to ? 5437.74 Lakhs as against ?3571.12 Lakhs in FY 2020-21. This increase was mainly increase in volume of operation during the FY as mentioned in revenue from operation above.

Employee Benefits Expense: The Employee Benefit Expenses for FY 2021 -22 increased to ? 114.29 Lakhs as against ? 85.83 Lakhs in FY 2020-21. This increase was mainly due to companys positive future outlook leading to hiring of new employees.

Other Expenses: The Other Expenses for the FY 2021-22 increased to ? 206.69 Lakhs as against ? 115.98 Lakhs in the FY 2020-21. This increase was mainly increase in volume of operation during the FY as mentioned in revenue from operation above.

3. PROFIT:

Profit/ (Loss) Before Tax: The Restated Profit Before Tax for FY 2021-22 increased to ?157.93 Lakhs as against ? 103.55 Lakhs in the FY 2020-21. This increase was mainly increase in volume of operation during the FY as mentioned in revenue from operation above.

Profit/ (Loss) after Tax: The Restated Profit After Tax for FY 2021-22 increased to ?114.01 Lakhs as against ? 73.13 Lakhs in the FY 2020-21. This increase was mainly increase in volume of operation during the FY as mentioned in revenue from operation above.

CASH FLOWS:

	For the Year ended March 31st
Particulars	2023	2022	2021
Net Cash from Operating Activities	219.29	(367.39)	(104.63)
Net Cash from Investing Activities	(482.45)	(33.53)	(5.04)
Net Cash from Financing Activities	273.10	426.97	102.55

Cash Flows from Operating Activities

Net cash from operating activities for period ended 31^st March, 2023 was ? 219.29 Lakhs as compared to the Profit Before Tax at ? 149.15 Lakhs. This was primarily due to adjustments against finance cost, changes in trade receivables, inventories and other working capital changes.

Net cash from operating activities for year ended 31^st March, 2022 was at ? (367.39) Lakhs as compared to the Profit before Tax at ? 157.93 Lakhs. This was primarily due to adjustments against finance cost, changes in trade receivables and other working capital changes.

Net cash from operating activities for year ended 31^st March, 2021 was at ? (104.63) Lakhs as compared to the Profit Before Tax at ? 103.55 Lakhs. This was primarily due to adjustments against finance cost, changes in trade receivables and other working capital changes.

Cash Flows from Investment Activities

For the year ended 31^st March, 2023, net cash outflows from Investing Activities were ? (482.45) Lakhs. This was mainly on account of Purchase of Fixed Assets and advance for factory plot.

For the year ended 31^st March, 2022, net cash outflows from Investing Activities were ? (33.53) Lakhs. This was mainly on account of Purchases of Fixed Assets.

For the year ended 31^st March, 2021, net cash outflows from Investing Activities were ? (5.04) Lakhs. This was mainly on account of Purchase of Fixed Assets.

Cash Flows from Financing Activities

For the year ended 31^st March, 2023, net cash from financing activities was ? 273.10 Lakhs. This was on account of movement in long and short term borrowings.

For the year ended 31^st March, 2022, net cash from financing activities was ? 426.97 Lakhs. This was on account of proceeds from short term Borrowings and issue of shares.

For the year ended 31^st March, 2021, net cash from financing activities was ? 102.55 Lakhs. This was on account of proceeds from short term Borrowings.

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 service 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 18 in the Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

4. Future changes in relationship between costs and revenues.

Our Companys future costs and revenues will be determined by growth of industry in which we operate.

5. Increases in net sales or revenue and Introduction of new products or services or increased sales prices.

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

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

Our Company has not announced any new Services.

7. Seasonality of business.

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

8. Dependence on few Customer.

The percentage of contribution of our Companys Top Customers/Clients is as follows:

(Amount in Lakhs)

	Revenue for the year ended 31st March
Particulars	2023	% of Revenue from Operations	2022	% of Revenue from Operations	2021	% of Revenue from Operations
Vineet Laboratories Limited	956.16	19.23%	948.51	17.05	-	-
Heranba Industries Ltd - Unit-1	860.88	17.32%	600.92	10.80	491.88	13.42
Precise Biopharma Private Limited	732.52	14.74%	460.96	8.29	-	-
Vineet Life Science Private Limited	662.67	13.33%	699.94	12.58	286.32	7.81
Hemani Industries Limited	321.72	6.47%	190.42	3.42	503.53	13.73
Divis Laboratories Limited	231.98	4.67%	383.24	6.89	199.61	5.44
Gitanjali Chemicals Private Limited	155.33	3.12%	-	-	-	-
Sanpra Synthesis Private Limited	121.68	2.45%	104.33	1.88	-	-
Modepro India Private Limited	77.94	1.57%	185.87	3.34	87.63	2.39
Jayant Specialities Private Limited	70.50	1.42%	131.58	2.37	-
Siflon Drugs	-	-	128.33	2.31	172.24	4.70
Ortin Laboratories Limited (Unit- II)	-	-	-	-	726.33	19.81
Precise Chemipharma Private Limited	-	-	-	-	108.25	2.95
Ashu Organics (I) Private Limited	-	-	-	-	100.02	2.73
Yashasvi Pharma Chem	-	-	-	-	56.48	1.54

9. Competitive conditions.

Competitive conditions are as described under the Chapters "INDUSTRY OVERVIEW" and "BUSINESS OVERVIEW" beginning on pages 82 and 88, respectively of the Prospectus.

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

Except as mentioned in this Prospectus, no circumstances have arisen since the date of last financial statement until the date of filing the Prospectus, which materially and adversely affect or are likely to affect the operations or profitability of our Company, or value of its assets, or its ability to pay its liability within next twelve months.