7NR Retail Ltd Management Discussions.

1. COMPANY OVERVIEW:

Your Company is engaged in whole selling and Retailing of the readymade garments. The Company is offering the finest quality product matching with the latest style and fashion. We have been taking care regarding the choice, quality and customer satisfaction. Your Company strives to focus on maintaining and reinforcing the image of its existing exclusive brand outlets under the brand name of “Gini & Jony”.

2. OVERVIEW OF THE ECONOMY:

The world has changed dramatically in the last few months. The COVID-19 pandemic and subsequent lockdown that the world has seen, has put pressure on all economies. According to the International Monetary Fund (IMF), while there is huge uncertainty about 2020 growth prospects, and even more so about the 2021 outlook, the impact of COVID-19 on the world will—across the board—be severe and unprecedented. This is the lowest growth rate in almost 60 years, including during the global financial crisis (4.7%) and the Asian financial crisis (1.3%). The global economy is expected to contract in 2020 by 3% - causing the worst recession since the Great Depression. This is a synchronised contraction, a sudden global shutdown.

During the first three quarters of FY 2020, the cyclical slowdown in the Indian economy showed signs of a turnaround, on account of counter-cyclical measures announced by the Government of India, along with the accommodative stance adopted by the Reserve Bank of India (RBI). However, the emergence of the COVID-19 pandemic in March has cast a shadow on these incipient signs, with the economy estimated to have grown at an 11-year low of 4.2%.

In addition to a phased nationwide shutdown, the Government of India has rolled out a series of policy initiatives and broad-based stimulus to offset the economic impact to the lockdown.

The fiscal support under the ‘Aatma Nirbhar Bharat Abhiyan announced on May 12, 2020 intends to inject Rs.20.9 trillion into the economy, 10% of the nominal GDP of India. These actions have served to reduce systemic stress and contributed to limiting the amplification of the shock. However, the full impact of the outbreak cannot be ascertained yet.

3. INDUSTRY OVERVIEW:

The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to the entry of several new players. Total consumption expenditure is expected to reach $3,600 billion by 2020 from that of $1,824 billion in 2017. The Indian retail industry is the fifth largest in the world, and accounts for over 10% of the countrys GDP and 8% of its employment.

However, post the announcement of the nationwide lockdown and closure of ‘nonessential operations, the retail sector has been severely affected.

Even as businesses open up in the green zones, social distancing will restrict footfalls and sales at stores and malls in the ensuing months. The retail industry is estimated to require 9-12 months to recover amid the pandemic. The demand for non-essential retail is projected to open with 40% of the value notedin pre-COVID-19 times. The cost of business across non-essential sectors is likely to increase by 30-35% postlockdown. Moreover, the non-essential industry is hit hard, especially due to the overlap of the lockdown with the peak season from March to May.

COVID-19 perspective: Consumer trends:

• Discretionary spends witnessing either cutbacks or postponement of demand.

• Health and wellness, at-home entertainment and ‘essential categories witnessing the most traction.

• Spends in categories like beverages and food delivery witnessing mixed performance.

• Panic buying inducing a ‘stocking up and ‘savings-first mind set.

• E-commerce witnessing a clear surge, even in traditional categories (Source: Boston Consulting Group research; CT Group research)

4. OPPORTUNITIES AND STRENGTH

• Well known Brand

• Visionary leadership

• Versatile work force,

• Unparalleled reach to the largest consumer groups

• Value for money,

• Image Diversified geographical presence,

• Strong customer connect,

• Focus on superior customer experience,

• Enhanced quality of production,

• Improved efficiency of working capital management,

• Improvement in cost structure would add to operating margins of the Company.

• Categories

• Well penetrated distribution network

5. RISK AND THREATS:

• Changing consumer preference,

• Discount Rates and Offers

• High fixed cost structure,

• Intensifying competition with more branded apparels,

• Rise in cost to serve the consume

• Changes in fashion trends and slowdown in consumption pattern of the consumers, may adversely affect the turnover of the Company.

• Fast-paced adoption of technology

• Economic conditions

• New entrants (Competition)

• Industry disruptions

• Online expansion

6. SEGMENT REVIEW:

The Company operates in single segment.

7. OUTLOOK:

The jolt from the coronavirus outbreak will weigh significantly on the Indian Economic growth until the pandemic is brought under control. The prolonged financial stress on account of the Covid-19 pandemic among rural households, weak job creation and, more recently, a credit crunch among non-banking financial institutions have increased the probability of a more entrenched weakening of the Indian Economy. The lockdown has brought manufacturing and services to a grinding halt, prompting many to predict that the Indian economy may contract by more than 2 per cent in 2020-21. However stimulus packages extended by the Government from time to time to support the economy should reduce the depth and duration of Indias growth slowdown.

The year ahead looks very grim for the Indian Textile Industry as both domestic consumption as well as export demand would be badly affected at least in the 1st half of 2020-21. Production activity would also be affected on account of shortage of raw material and labour as well as on account of the credit crunch. Recovery in the 2nd half of 2020-21 would be dependent on how the pandemic is controlled and on measures taken by the Government to revive the economy as well as the support it extends to the Textile Industry.

8. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

Your Company has in place an adequate internal financial control system, commensurate with the size and complexity of its operations. Necessary checks and controls are in place to ensure that all assets are safeguarded, to detect and prevent errors and frauds and that the transactions are properly verified, adequately authorized, correctly recorded and properly reported. The Internal Auditors of the Company conduct Audit of various departments to ensure that internal controls are in place and submit Quarterly Reports to the Audit Committee. The Audit Committee regularly reviews these Reports and the Company when needed takes corrective actions. The Internal Auditors also audit the effectiveness of the Companys internal financial control system. No major inefficiencies were reported.

9. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Particulars For the year ended 31st March, 2020 For the year ended 31st March, 2019
Income from Operations 1184.20 1322.12
EBITDA (Before exceptional items) 33.96 41.49
Profit/(Loss) after tax 11.03 21.43
Basic & Diluted Earnings per Share (EPS) 0.11 0.20

The Company recorded total revenue of Rs. 1197.61 Lakh during the year under review as against Rs. 1328.26 Lakh. The profit after tax for the year ended 31st March, 2020 is Rs.11.03 Lakh as against Rs. 21.43 Lakh.

10. KEY FINANCIAL RATIOS:

Ratios 2019-2020 2018-2019
Debtors Turnover1 7.06 11.97
Inventory Turnover Ratio 0.45 2.26
Interest Coverage Ratio2 2.36 0.87
Current Ratio3 3.07:1 3.43:1
Debt Equity Ratio 0.42:1 0.03:1
Operating Profit Margin %4 2 2.11
Net Profit Margin% 4 0.93 1.62
Return on Networth %4 1.05 1.97

Notes:

1. Debtors turnover has decreased due to decrease in frequency of receivables.760341535

2. Increase in interest coverage ratio is due to higher earnings with no corresponding increase in finance cost.

3. Current ratio is impacted due to increase in current maturity of long-term borrowing.

4. Operating Profit Margin, Net Profit Margin and Return on Net Worth is due to lower profitability during the year

11. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

The Company firmly believes that motivated and empowered employees are the cornerstone of competitive advantage. The Companys employee value proposition is based on a strong focus on employee development, providing a satisfying work environment, performance appraisal and counseling and appropriate empowerment. The Company continues to maintain and enjoy a cordial relationship with its employees, providing positive environment to improve efficiency with regular investments in upgrading the knowledge and skills of the employees.

Industrial relations with staff and workmen during the year under review continued to be cordial.

12. DISCLOSURE OF ACCOUNTING TREATMENT:

The Company has followed all the treatments in the Financial Statements as per the prescribed Accounting Standards.

13. CAUTIONARY STATEMENT:

The statements in the "Management Discussion and Analysis Report” section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors.

For and On Behalf of Board of Directors of
7NR RETAIL LIMITED
Place: Ahmedabad SD/-
Date: 04.09.2020 Pinal Kanchanlal Shah
Managing Director/Chairman
DIN: 05197449

DISCLOSURE UNDER RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL), RULES, 2014

1. The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year 2019-2020.

(Rs. in Lakh)

Sr. No. Name of the Director Remuneration Median Remuneration Ratio
1. Mr. Pinal Kanchanlal Shah 6.00 1.50 4:1
2. Mrs. Riddhi Pinal Shah 0.94 1.50 063:1

2. The percentage increase in remuneration of each Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the Financial year 2019-2020.

Sr. No. Name of the Director Designation % Increase
1. Mr. Pinal Kanchanlal Shah Chairman and Managing Director Nil
2. Mrs. Riddhi Pinal Shah* Director Nil
3. Mr. Mittal Chandresh Shah Chief Financial Officer Nil
4. Ms. Shaili Samir Mehta** Company Secretary Nil
5. Ms. Kiran Prajapati*** Company Secretary Nil

* Mrs. Riddhi Pinal Shah resigned from the post of Director w.e.f 19th June, 2019 ** Ms. Shaili Samir Mehta resigned as Company Secretary w.e.f 5th June, 2019 *** Ms. Kiran Prajpati was appointed as Company Secretary w.e.f 9th July, 2019

3. The Median Remuneration of Employees (MRE) of the Company is Rs. 1,50,000/ - for the Financial Year 2019-2020. The MRE for the year increased by Rs. 48000/- in compare to last financial year. The MRE increased by 47.06 % in the FY 2018-2019.

4. The number of permanent employees on the rolls of Company in the Financial year 2019-2020.

The Company has 19 permanent employees on its rolls;

5. Average percentile increase made in the salaries of employees other than the managerial remuneration in the last financial year was 16.45 %. Managerial Remuneration was not increased during the year under consideration.

6. Affirmation that the remuneration is as per the remuneration policy of the Company.

It is affirmed that the remuneration paid is as per the remuneration policy of the Company.