Bombay Metrics Supply Chain Ltd

We will remain focused on growing our Make in India sales and supplier enablement for North American and European markets...

Dear Shareholders,

It gives us immense pleasure to share with you our first post listing annual report. I'd like to start by thanking all of our investors and stakeholders for their continued support and faith in us - you are the reason for our successful IPO. In the years ahead, we aspire to build on our legacy and reach major milestones together.

This letter is a little longer than expected as we would like to inform all the stakeholders about our journey to-date, share insights on how we see our business, what metrics we follow, and finally, share our owner's manual, which will remain a different document in all our communication mediums. The letter will be published annually, while the owner's manual may see changes from time to time, as we continue to develop owners with long-term perspectives to join our journey.

Our Journey & Where We Stand Today

10-10-10 - October 10th, 2010 - This is when we started with the goal of developing India as an export hub for engineering products. Almost 10+ years later, we have learned many ways to succeed and fail. We will share some of our learnings further in this letter and in the future.

We started on this journey with a modest goal of developing an export-import hub from India. We tried our hands with various business opportunities such as imports of baby products, domestic medical products trading and a few other projects. Those didn't pan out well, but a few things did. One was the supply of engineering goods to the United States (USA) and then to Mexico & European markets. We have also been successful in developing many small suppliers, which have the good technical know-how but do not have the marketing and logistical capabilities to support customers abroad.

We realized that merely manufacturing goods in India at competitive prices is not enough. Original Equipment Manufacturers (OEM's) and Tier 1 suppliers expect engineering & design support in their geographies and further expect goods to be available on just in-time basis in the vicinity of their global assembly plants. To facilitate this, we partnered with sales resources in the USA and Europe and become the preferred vendor of the purchasing organizations. We also work with global third-party logistic partners that help us be close to customers.

Much of our current sales is through one of the supply chain leaders in North America - MES Inc. We have some common ownership between MES and Bombay Metrics. There are only a few supply chain integrators and manufacturers that have a global footprint like us. We take utmost care that the goods are shipped in the most efficient manner and stored in a most responsible way supporting our end customers.

We are working on mitigating our customer concentration as currently, 90% of our revenue is through a single largest customer. In the coming years, we target to improve our customer mix by exploring newer avenues of direct customers and reducing customer concentration. While lighting currently dominates our Industry mix, which was more than 50% in 2021, we expect Automotive, EV, and Agriculture sales to grow much faster and become a larger part of the mix in the coming years.

Strengthening Structural Trends

We have developed our internal capabilities i.e., strong quality, sourcing, supply chain, logistics and administration in India over the years. Additionally, we have also been benefited from external factors, and the biggest one over the years has been how many things are more favourable today than it was when we started.

There are many structural initiatives carried out over the years which have provided a tailwind to our business:

1. Government spending has increased significantly on infrastructure i.e., roads, ports, railways, airports and electricity over the last decade. In the coming few years India will spend ~$1.5 trillion on Infrastructure. Few interest statistics to help understand the progress India has made:

a. Total containers shipped from India has grown from 9.7 million TEU's in 2011 to over 16.3MM in 2020 (despite COVID). In FY22 (until February) 2022, all key ports in India handled 650.52 million tonnes (MT) of cargo traffic. According to the Indian Ports Association, the container traffic handled at the major ports in India was 11.22 (MT) TEUs from April to March 2022, up from 9.61 (MT) TEUs April-March 2021, an increase of 16.74% year on year from 2021 to 2022. India has further planned to invest about US$ 82 billion in port projects by 2035.

b. Road construction activity and investment has tripled from 10.39 km/day in 2012 to touch a record 37 km/day in 2020-21

c. Installed Electricity generation capacity has increased from ~200 GW in 2012 to ~400 GW in 2022

d. There have been notable changes in the number of flight miles travelled air cargo capabilities and the number of airports being developed. 150+ as of 2020 with plans to have 450 commercial airports by 2035.

e. GoI is working on further expansion of dedicated roadways, railways, and waterways freight corridor

2. Geo-Politics: Growing friction between the USA, China and Russia has provided India with an opportunity to be neutral and continue to focus on alliances, which can help grow its economic interests. Tariff war between US and China followed by COVID disruptions and now the Russia- Ukraine war is continuing to develop deep fault lines in their investment and trading relationship. India stands at a very promising fork, where any road they take is likely to provide strong support for growing our manufacturing and exports.

To put it simply, it's easier to move goods within India and outside India now than it was a decade ago. This tailwind helps the "Make In India" initiative, scores of our small suppliers and the Bombay Metrics organization. We have been beneficiaries of these trends and we will continue to take advantage of these winds behind our backs.

Bombay Metrics decision for IPO

As discussed above, with many tailwinds and our growing capabilities, we are at the cusp of rapid expansion. Foreign investment in Bombay Metrics is possible and likely as well, but it is not as easy to take money back currently. The government is working on several initiatives to enable this but to support our ambitious growth plans in India, we need sources of funds. We have been approached by a few strategic companies, but we think those would have impeded our focus on the longer term as well as our autonomy in building the business. We explored various options and found the National Stock Exchange's (NSE) Emerge platform to be an attractive and strategic fit for us. We aspire to get listed on the NSE main board in a couple of years but starting now on

Emerge platform allows us to put our reporting, compliance, oversight, and governance in place before we get too big.

Economic landscape

As the global economy was gradually putting the COVID-19 pandemic behind, with many parts of the world lifting restrictions, and several economies returning to their pre- COVID levels, another shock struck. Since late February, the ongoing war between Russia and Ukraine has become a humanitarian crisis. The war has far-reaching ramifications as economic damage will contribute to a significant slowdown in global growth in 2022. As we continue to emerge from all these global headwinds, another major concern has been the rise in inflation across many parts of the world. The geopolitical conflict between Russia and Ukraine has further intensified these inflationary pressures.

Developments during the year

We have grown our capabilities by strengthening our team keeping in mind the long-term vision of your company, and also opened a new office in Pune. Your company now owns the complete responsibility of inbound trucking making us responsible for all the movement of the consignments from the supplier's end to the respective ports. This allows us to plan and arrange for the pickup so that the maximum available space in the truck is utilized, thereby reducing costs. Furthermore, your company now owns the responsibility of booking containers from India which was earlier being taken care by costumer as we have changed our terms on ocean shipments from collect to pre-paid. This has resulted in cost reduction on ocean freight. In addition, this lets us plan containers three weeks in advance based on confirmation of readiness from the suppliers, so the time frame between pickup and delivery is tracked and documented properly. By switching from non-standard boxes to standard ones, the dimensions of which are determined based on the usable space inside a 40' HC container, the maximum amount of space in the container is utilized. Your company was able to do 95% plus in terms of weight or CBM in the majority of the cases in the previous hear, thus saving costs.

Your company has received new Request For Quote (RFQs) coming in from various potential customers from the nonlighting, automotive, and engineering sectors. Your company added 2 new customers, and also won several awards during the year.

Challenges during the year

During the COVID-19 pandemic, like any other industry, our industry also faced some challenges. International shipping faced a lot of challenges since the beginning of COVID-19, the shortage of containers being one of the most crucial ones. Most of the containers were either held at ports or at inland storage facilities. As the crisis deepened, a few other obstacles that grappled the industry were vessels roll over and blank sailing. Port congestion, which was a ripple effect of a lot of other problems, at the majority of the ports across the world also crippled the supply chain industry to a large extent. The cost of air and ocean freight also increased dramatically and thus affected the margins.

On the supplier front, the manpower issue was one of the biggest challenges. Since the rise in demand was more than what we anticipated, it dramatically impacted the capacity at the supplier end. In some cases, blanket purchase orders were received up to the extent of a two-year requirement.

Robust financial performance & Key metrics

During the year, our revenue from operations grew by ~90% to Rs 6,150 lakhs from Rs 3,230 lakhs. Your company delivered EBITDA (including other income) of Rs 198 lakhs FY 2021-22 as against Rs 201 lakhs in FY 2020-21. PAT stood at Rs 125 lakhs FY 2021-22 as against Rs 130 lakhs in FY 2020-21. Earnings Per Share (EPS) for the year stood at Rs 9.57 FY 2021-22 down from Rs 12.12 in FY 2020-21. Long-term borrowings were Rs 12 lakhs during the year. The Net worth of the Company for FY 2021-22 stood at Rs 924 lakhs as compared to Rs 416 lakhs in the previous year.

Broadly speaking, as the management team, we are looking for growth in sales, earnings and growth in supplier engagement for "Make in India". We achieved 67% growth in "Make in India" sales, 90% growth in Bombay Metrics sales. Our engagement with small and mid-size suppliers continues to grow rapidly with almost 45 suppliers undergoing MESH Rating Sourcing Audits and 44 total suppliers who have undergone full quality systems audits. The strength of Bombay Metrics resources should help hundreds and thousands of suppliers in years to come. Sales are divided between Lighting (42%), Transportation & Automobile (37%) and Electrical/Industrial and Construction & Agriculture markets sharing the rest.

*estimated

Outlook for Coming Years

We remain focused on growing our Make in India sales and supplier enablement for North American and European markets with a special focus on Ferrous commodities and more engineered applications for Electrical Vehicles.

In line with our long-term perspective, we will continue to push for four broad business goals:

1. Diversification in OEMs where our products are used

2. Diversification in Industries where our products are used

3. Variety of commodities that we develop for our end customers

4. Number of suppliers we develop export markets for

While Make in India and exports will dominate our efforts, we also see India continue to import commodities. We are evaluating several opportunities to represent and import selected high-quality engineered products into India. With our global network and access to manufacturers in India, we can serve as a strong sales and distribution partner for many global manufacturers of primary materials in India.

Closing Remarks

Considering everything we've accomplished, FY 2021-22 was another terrific year for your company. As we look ahead, we are more optimistic than ever about the enormous opportunity ahead of us. we will continue to build on our decades of experience and commitment to our incredible team working towards our long-term vision.

I want to thank you for your continued support and faith in the Company.

Sincerely,