Shree Marutinandan Tubes 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 Draft 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 of factors, 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 the financial years ended March 31^st, 2023, 2022 and 2021 including the related notes and reports, included in this Draft 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 Draft 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, Shree Marutinandan Tubes Limited, established in 2013 swiftly evolved into a trusted name in the steel industry. We specialize in trading a wide array of steel pipes, including Galvanized, ERW MS, Black, and Solar Structural Pipes, catering to diverse sectors such as Agriculture, Oil, Public Health, Housing, and Engineering. By adhering to stringent quality standards and customer-focused values, we garnered a strong reputation for reliability and excellence.

Our founders, Mr. Vikram Shivratan Sharma and Mr. Bharat Shivratan Sharma, possess over a decade of profound steel industry expertise, driving our growth with innovative strategies. Our well-established distribution network ensures widespread availability of our products, primarily reaching wholesalers and distributors in the domestic market. We cultivate robust supplier relationships, enabling us to acquire high-quality inventory in substantial volumes, translating into competitive pricing for our customers.

For more details kindly refer our chapter titled "BUSINESS OVERVIEW" begins from page No. 82 of this Draft Prospectus.

Key Performance Indicators of our Company:

(Rs. In Lakhs)

Key Financial Performance		For 31st March,
	2023	2022	2021
Revenue from Operations(1)	4,716.96	4,714.07	3,563.60
Growth in Revenue from Operations(2)	0.06%	24.41%	17.40%
EBITDA(3)	353.67	81.20	97.16
EBITDA Margin(4)	7.49%	1.72%	2.70%
PAT(5)	201.76	6.01	13.30
PAT Margin(6)	4.27%	0.13%	0.37%

Note:

(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 + Interest Expenses;

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

(5) PAT is calculated as Profit before tax Taxes;

(6) 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 119 of this Draft 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 Draft Prospectus. Our results of operations and financial conditions are affected by numerous factors including the following:

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

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

3. Our ability to retain and hire key employees or maintain good relations with our workforce;

4. Impact of any reduction in sales of our services/products;

5. Rapid Technological advancement and inability to keep pace with the change;

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

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

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

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

11. Occurrence of natural or man-made disasters could adversely affect our results of operations and financial condition; and 12. 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	4,716.96	99.88	4,714.07	99.91	3,563.60	99.06
Other Income	5.63	0.12	4.42	0.09	33.68	0.94
Total Income	4,722.58	100.00	4,718.49	100.00	3,597.28	100.00
EXPENDITURE
Cost of Material Consumed	4,492.53	95.13	4,855.88	102.91	3,452.57	95.98
Inventory	-193.42	-4.10	-296.71	-6.29	-2.44	-0.07
Employee Benefits Expenses	28.40	0.60	28.31	0.60	28.96	0.80
Finance Cost	70.20	1.49	64.61	1.37	72.20	2.01
Depreciation and amortization
Expenses	10.57	0.22	3.52	0.07	2.32	0.06
Other Expenses	41.39	0.88	49.79	1.06	21.03	0.58
TOTAL EXPENSES	4,449.68	94.22	4,705.41	99.72	3,574.64	99.37
Profit Before Tax	272.90	5.78	13.07	0.28	22.64	0.63
Tax Expenses
Current Tax	71.58	1.52	6.18	0.13	11.21	0.31
Deferred Tax (Liabilities) / Assets	(0.44)	(0.01)	0.88	0.02	(1.88)	(0.05)
Profit After Tax	201.76	4.27	6.01	0.13	13.30	0.37

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 4,722.58 Lakhs. The revenue from operation was 4,716.96 Lakhs which is almost 99.88% of Total Revenue which consist of trading of ERW/MS Pipes, black pipes and Structural pipes.

Other Income: Other Income during the period (April 01, 2022 to March 31, 2023) was 5.63 Lakhs which is 0.12% of the Total Revenue.

2. EXPENSES:

Total Expenses: Our Companys total expenses during the said period (April 01, 2022 to March 31, 2023) were 4,449.68 Lakhs. The Total Expenditure is almost 94.22% of Total Revenue. The main constituent of Total Expenditure is Cost of Material Consumed which was 4,492.53 Lakhs, almost 95.13% of Total Revenue.

Employee Benefits Expense: The Employee Benefit Expenses for the said period (April 01, 2022 to March31, 2023) was 28.40 Lakhs, almost 0.60% of Total Revenue.

Finance Cost: The Finance Cost for the said period (April 01, 2022 to March 31, 2023) was 70.20 Lakhs, almost 1.49% of Total Revenue.

Depreciation and Amortization Expense: We recognize Depreciation and Amortization expense on a Written down value method on pro rata basis and at the rates prescribed under schedule II of the Companies Act, 2013.

Other Expenses: Other expenses includes Direct expenses, Office expenses, selling & Administrative expenses, 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 41.39 Lakhs, almost 0.88% 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 272.90 Lakhs, almost 5.78% of Total Revenue.

Profit/ (Loss) after Tax: The Restated Profit After Tax for the said period (April 01, 2022 to March 31, 2023) was 201.76 Lakhs, almost 4.27% of Total Revenue.

Comparison of Financial Performance of Fiscal 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 companys revenue from operations and other income remained consistent at 4,722.58 Lakhs, similar to the amount of 4,718.49 Lakhs recorded in FY 2021-22. Due to the lack of additional working capital, the company was not able to expand their client base and increase revenue, hence it remained consistent in FY 2022-23.

2. EXPENSES:

Total Expenses: The total expenditure for FY 2022-23 has been decreased to 4,449.68 Lakhs as against 4,705.41 Lakhs in FY 2021-22. This decrease was mainly due to decrease in cost of material consumed during the year as majority of the sale was direct on commission basis during the FY 22-23.

Employee Benefits Expense: The Employee Benefit Expenses for FY 2022-23 have remained consistent at 28.40 Lakhs, the same as the amount of 28.31 Lakhs in FY 2021-22. This was mainly due to no new hiring and no significant changes in employees remuneration.

Other Expenses: The Other Expenses for the FY 2022-2023 have decreased to 41.39 Lakhs as against 49.79 Lakhs in the FY 2021-22. This decrease was majorly due to decline in freight inward charges, sales promotion expenses and insurance expenses since company was engaged in direct sale on commission basis as stated above.

3. PROFIT:

Profit/ (Loss) Before Tax: The Restated Profit Before Tax for FY 2022-23 has been significantly increased to 272.90 Lakhs as against 13.07 Lakhs in the FY 2021-22. Despite the sales volume remaining constant during the fiscal year there was a significant increase in Profit before tax due to decrease in total expenses as discussed above, leading to improved profit margins.

Profit/ (Loss) After Tax: The Restated Profit After Tax for FY 2022-23 has been significantly increased to 201.76 Lakhs as against 6.01 Lakhs in the FY 2022-21. Despite the sales volume remaining constant during the fiscal year there was a significant increase in Profit after tax due to decrease in total expenses as discussed above, leading to improved profit margins.

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 4718.49 Lacs as against 3563.60 Lacs in FY 2020-21. This increase was mainly due to our association with new clients along with increased revenue from existing clients.

2. EXPENSES:

Total Expenses: The total expenditure for FY 2021-22 increased to 4705.41 Lakhs as against 3574.64 Lakhs in FY 2020-21. This increase was mainly due to increase in cost of material consumed and operational expenses due to increase in revenue from operation as mentioned above.

Employee Benefits Expense: The Employee Benefit Expenses for FY 2021-22 have remained consistent to 28.31 Lakhs, the same as the amount of 28.96 Lakhs in FY 2020-21. This was mainly due to no new hiring and no significant changes in employees remuneration.

Other Expenses: The Other Expenses for the FY 2021-2022 increased to 49.79 Lakhs as against 21.03 Lakhs in the FY 2020-21. This increase was mainly due to increase in operational and administrative expenses like rent, sales & promotion, office expenses and insurance expenses.

3. PROFIT:

Profit/ (Loss) Before Tax: The Restated Profit Before Tax for FY 2021-22 decreased to 13.07 Lakhs as against 22.64 Lakhs in the FY 2020-21. This decrease was mainly due to increase in operational expenses during the FY as mentioned in total expense above leading to decline in profit margins.

Profit/ (Loss) after Tax: The Restated Profit After Tax for FY 2021-22 decreased to 6.01 Lakhs as against 13.30 Lakhs in the FY 2020-21. This decrease was mainly due to increase in operational expenses during the FY as mentioned in total expense above leading to decline in profit margins.

CASH FLOWS:

( In Lakhs)

Particulars	For the Year ended March 31st
	2023	2022	2021
Net Cash from Operating Activities	(43.95)	268.77	(272.54)
Net Cash from Investing Activities	(1.27)	(34.58)	(1.45)
Net Cash from Financing Activities	3.99	(195.50)	255.93

Cash Flows from Operating Activities

Net cash from operating activities for year ended 31^st March, 2023 was at (43.95) Lakhs as compared to the Profit Before Tax at 272.90 Lakhs. This was primarily due to increase in trade receivables and inventories and additional Income tax impact.

Net cash from operating activities for year ended 31^st March, 2022 was at 268.77 Lakhs as compared to the Profit Before Tax at 13.07 Lakhs. This was primarily due to decrease in trade receivables and short term loans & advances and increase in trade payables.

Net cash from operating activities for year ended 31^st March, 2021 was at (272.54) Lakhs as compared to the Profit Before Tax at 22.64 Lakhs. This was primarily due to increase in trade receivables and short term loans & advances.

Cash Flows from Investment Activities

For the year ended 31^st March, 2023, net cash outflows from Investing Activities were (1.27) Lakhs. This was mainly on account of Purchase of Fixed Assets.

For the year ended 31^st March, 2022, net cash outflows from Investing Activities were (34.58) 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 (1.45) 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 3.99 Lakhs. This was primarily on account of movement in Long term and Short term Borrowings.

For the year ended 31^st March, 2022, net cash from financing activities was (195.50) Lakhs. This was primarily on account of payment on Short term Borrowings and interest.

For the year ended 31^st March, 2021, net cash from financing activities was 255.93 Lakhs. This was primarily on account of purchase in long term and 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 Draft 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 Products or Business Segment.

Our Company has not announced any new products.

7. Seasonality of business.

The nature of business is seasonal. For further detail, please refer to section titled "RISK FACTORS" beginning on page 18 of this Draft Prospectus.

8. Dependence on few Customer.

The % of Contribution of our Companys customer and supplier viz a viz the total revenue from operations and total purchase of goods respectively for the year ended March 31^st, 2023 is as follows:

Top Customers:

S.	Particulars	31st March, 2023		31st March, 2022		31st March, 2021
No.		%	Amount	%	Amount	%	Amount
1.	Bhanushali Lokhandwala	7.33	345.76	-	-	-	-
2.	Ritu Steel	7.07	333.42	-	-	-	-
3.	Visaman Global Sales Limited	6.61	311.74	4.21	198.24	2.86	101.81
4.	Raj Steel Enterprise	5.62	265.15	-	-	-	-
5.	Shivshakti Marketing	5.29	249.73	4.44	209.45	-	-
6.	Shreenathji Steel	-	-	4.43	208.75	3.86	137.70
7.	Rushabhdev Pipes Private Limited	-	-	4.91	231.54	-	-
8.	Maheshwari Sales Corporation	-	-	7.24	341.53	7.37	262.75
9.	Maniratna Steel	-	-	-	-	6.35	226.34
10.	Mahavir Pipes	-	-	-	-	5.74	204.72
11.	Others	68.08	3211.16	74.77	3524.56	73.81	2630.28
	Total	100.00	4716.96	100.00	4714.07	100.00	3563.61

Top Suppliers:

S.	Particulars	31st March, 2023		31st March, 2022		31st March, 2021
No.		%	Amount	%	Amount	%	Amount
1.	Ahmedabad Strips Private Limited	65.80	2955.90	45.12	2190.97	37.91	1308.91
2.	Jindal Industries Private Limited	13.45	604.03	38.32	1860.58	46.52	1606.07
3.	Mark Alloys Private Limited	2.96	132.78	-	-	-	-
4.	Shree Gayatri Engineering And Galvanizing	2.67	120.02	-	-	-	-
5.	Hutch India Private Limited	2.16	96.95	7.33	356.12	7.26	250.55
6.	Khandelwal D?cor World	2.10	94.15	-	-	-	-
7.	Dev Pipes	-	-	0.79	38.38	-	-
8.	Others	10.88	488.70	8.44	409.84	8.31	287.05
	Total	100.00	4492.53	100.00	4855.88	100.00	3452.57

9. Competitive conditions.

Competitive conditions are as described under the Chapters "INDUSTRY OVERVIEW" and "BUSINESS OVERVIEW" beginning on pages 71 and 82, respectively of the Draft Prospectus.

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

Except as mentioned in this Draft Prospectus, no circumstances have arisen since the date of last financial statement until the date of filing the Draft 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.

STATEMENT FOR FINANCIAL INDEBTNESS

Our company utilizes various credit facilities from banks and others for conducting its business. Set forth below is a brief summary of our Companys secured and unsecured borrowings as on March 31^st 2023 together with a brief description of certain significant terms of such financing arrangements

Our Board is empowered to borrow money in accordance with Section 179 of the Companies Act and our Articles of Association. Following is the statement of Companys outstanding secured and unsecured Loans.

I. LONG TERM BORROWINGS OF THE COMPANY

(Rs. In Lakhs)

Particular	As at March 31st,
	2023	2022	2021
I Secured Loan
From Scheduled Bank	44.47	67.55	58.81
Less: Current Maturity of Long-Term Borrowing	(23.35)	(23.09)	(11.44)
Remaining Balances	21.12	44.47	47.37
From Non-Banking Financial Company	-	1.16	2.76
Less: Current Maturity of Long-Term Borrowing	-	(1.16)	(1.61)
Remaining Balances	-	-	1.16
II Unsecured Loan
From Directors and Their Relatives	188.90	230.32	245.49
Total	210.02	274.78	294.02

Secure Loan from Schedule Bank I GECL Loan:

Sanctioned Amount: Rs. 58,81,000;

Secured Against: Primary Security against all the current assets and Collateral security against Land owned by Kusumlata Sharma, Vikram Sharma, and Bharat Sharma;

Interest Rate: 9.25%;

Repayment Schedule: Equal principal repayment of Rs. 1,63,631 starting from 30/09/2021 to 31/08/2024. II.

Vehicle Loan: Sanctioned Amount: Rs. 20,17,998.

Secured Against: Vehicle; Interest Rate: 7.20%;

Repayment Schedule: Equal instalment of Rs. 40,054 starting from 05/04/2022 to 05/03/2027.

Secure Loan from NBFC: I. Vehicle Loan: Sanctioned Amount: Rs. 6,00,000;

Secured Against: Vehicle; Interest Rate: 10.46%;

Repayment Schedule: Equal instalment of Rs. 14,990 starting from 01/12/2018 to 01/11/2022.

Unsecured Loan:

Loan from Directors and their relatives repayable or renewable after one year.

II. SHORT TERM BORROWINGS OF THE COMPANY

(Rs. In Lakhs)

Particular	As at March 31st,
	2023	2022	2021
Secured Loan: From Scheduled Bank
Bank Overdraft	483.53	343.68	466.53
Current Maturity of Long-Term Borrowing	23.35	23.09	11.44
From Non-Banking Financial Company	-	1.16	1.61
Total	506.88	367.92	479.57

Secure Loan from Schedule Bank I Bank Overdraft:

Sanctioned Amount: Rs. 5,01,00,000;

Secured Against: Primary Security against all the current assets and Collateral security against Land owned by Kusumlata Sharma, Vikram Sharma and Bharat Sharma.;

Interest Rate: CD Rate + 3.08%.