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". Now the Company has started business of Suiting and Shirting.

2. OVERVIEW OF THE ECONOMY:

The pandemic was an unforeseen health catastrophe,which has had enormous impact on the global economy, contracting by 3.3% (World Economic Outlook, April 2021: Managing Divergent Recoveries) in 2020. Countries across the globe went into a lockdown to control the spread of the virus, deeply affecting both lives and livelihoods. This led to governments and central banks across the world announcing favourable fiscal policies and offering monetary stimulus to curtail the economic meltdown and support the recovery.

Vaccination drives across countries are a source of optimism and an enabler of continuity in an environment of uncertainty, considering new strains emerging in some countries. Recovery is expected to be unequal across countries and sectors, depending on variation in pandemic-induced disruptions, effectiveness of policy intervention, access to medical support, cross-country exposure and other structural factors affecting economic growth. The global economy is expected to grow at 6% (source: World Economic Outlook, April2021) in 2021 and is seeing upwards revision in projections by global forums backed by strong economic signals. The vaccine-powered recovery in the second half of 2021, unrelenting adaptation of economic activity due to subdued mobility and additional fiscal support in a few large economies, bode well for the global economy.

India

Although the economy is being steadily supported by multiple fiscal measures announced by the government to ease supply constraints and inject liquidity, the path to recovery has been inconsistent. The pandemic mounted additional pressures on the already stressed Indian economy, which saw a steep economic slowdown, and is reported by National Statistical Office (NSO) to have contracted by 7.7% in FY 2021. The service and industry sector were affected by the pan-Indian restriction on movement, impacting income and consumption patterns. There were signs of revival in the latter half of the year, boosted by pent up demand and the upcoming festive season.

2016-2017 2017-2018 2018-2019 2019-2020 2020-2021
8.2 7.0 6.1 4.2 -7.7

Multiple economic indicators contributed positively towards broad-based resurgence of economic activity. The path to recovery will carry likelihood of further mobility restrictions, less stringent restrictions, targeted lockdown approach, and shorter duration of lockdowns, going forward. Resilient consumer and business behaviour to the New Normal will mitigate the economic impact of the second wave.

3. INDUSTRY OVERVIEW: World market:

The global retail and wholesale market was distresseddue to operational challenges caused by social distancing,remote working, and closure of commercial activities. Withcompanies rearranging their operations as they recover fromthe COVID-19 impact, the sector is expected to see a fastrebound, growing at a rate of 9.9% (Source: Business Wire- Retail and wholesale Global Market Report 2021)from $65,323.79 billion in 2020 to $71,809.83 billion in 2021, thereon moderating to a compound annual growth rate (CAGR) of 7% to reach $93,696.36 billion by 2025.

Growth of omni-channel with focus on digital:

The pandemic accelerated the adoption of multiple contactless services, including video and WhatsApp shopping, home delivery and drive-through service. Digital channel adoption for food delivery, grocery to all kind of shopping and services gained a higher share than before. Online sales increased by over 10% (Source: Mckinsey& Company-perspective on Retail and Consumer Goods) across most categories they are available in. The trend is expected to stay with countries having lower online penetration, seeing an uptick in adoption, while those who already have a strong e-commerce set-up, seeing a growth in ticket size.

Preference for value essentials and convenience:

Consumers are speculative about economic revival and growth, the degree of the same varying with impact of COVID-19 in their own country. Consumers are becoming more restrained in their purchases, with trading down for value buying, choosing convenience over anything else and sometimes opting for a combination of both.

Health and ‘caring economy:

Customers are now more cognisant about the perception of the place they are shopping from. They are looking for retailers with advanced safety measures, such as enhanced cleaning and social distancing, healthy and hygienic packaging and those demonstrating concern for employees. Stakeholder engagement has become more important than ever, with the steps taken and opinion created during the pandemic expected to linger in the customers, subconscious.

Catering the Homebody economy:

As the name suggests the ‘homebody economy is fuelled by the at-home consumer. Noticeably, one of the major benefactors of this was the e-commerce platform. Big data analysis and knowing your customer are of paramount importance for targeted advertisements.

Indian markets:

Changes in customer behaviours have been seen domestically too, with COVID-19 derailing Indias retail growth by a couple of years. Restriction in operations and supply chain, lower discretionary spend due to lack of secure income flow and health risk comprehension leading to lower footfalls into stores, were some of the factors affecting the India growth story.

The pandemic tested the adaptability of the Indian retail sector, and it has been seen that retail players navigated the crisis by leveraging technology and acceleration of e-commerce growth.

Indian retail industry outlook:

India had been witnessing strong consumption growth for several years now, which was forecast to triple(Source: NASSCOM- Retail 4.0 India Story) by 2030. This has largely been driven by strong fundamentals, including the burgeoning middle and affluent class, urbanisation, nuclearisation and one of the worlds youngest population with a hunger for spending. Backed by the worlds second-largest consumer base, Indias retail industry is emerging among the fastest evolving and digitising sector. With economic activity picking up, as recorded across multiple factors and consumer sentiment, India is expected to be back on its growth trajectory with a delay of 1-2 years.

COVID-19 impact on forces shaping the Indian retail landscape

• Attitude and demographic changes in consumer behaviour

• Disruptions and irregular supplies leading to innovation in supply

• Data and technology driven disruptions reshaping customer shopping preference

• Blurring omni-channel boundaries leading to addition of new competitive forces

• Change in regulations leading to increased local sourcing, labour and store operations

4. OPPORTUNITIES AND STRENGTH

--OPPORTUNITIES:

• Online Expansion

• Premiumisation and access to global brands

• Further Growth of Private Brands

• Expanding Beauty and Personal Care Categories

• Digital Innovation

• Focus on analytics

--STREHGTH:

• First Citizens loyalty Programme

• Increased omni Channel presence

• Personal Shoppers Service

• Brand Marketing

• Strong brands across Apparel, Beauty, Accessories and Home

• Robust supply base

• Strong systems, processes and teams

• Corporate Governance

5. CHALLENGE AND THREATS:

--Challenge

• Pandemic impacting footfall at stores

• Accelerated technology adoption

• Inadequate availability of skilled work

• Increased cost of operations

--THREATS

• Economic conditions

• Increased competition

• Industry Disruption

• Marketplace scale in fashion and beauty

6. SEGMENT REVIEW:

The Company operates in single segment.

7. OUTLOOK:

There are significant challenges in the short to medium term as the country races to mitigate the second wave of infections and increase the speed of vaccinating the large populace.

The long-term growth factors of the economy such as favourable demography, stable geo-political environment, and increased urbanisation remain intact and are projected to drive the India growth story in the long term.

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. ISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Particulars For the year ended 31st March, 2021 For the year ended 31st March, 2020
Income from Operations 275.65 1184.20
EBITDA (Before exceptional items) -38.60 33.96
Profit/(Loss) after tax -53.36 11.03
Basic & Diluted Earnings per -0.51 0.11
Share (EPS)

The Company recorded total revenue of Rs. 297.72/- Lakh during the year under review as against Rs. 1197.61/-Lakh. The profit after tax for the year ended 31st March, 2021 is Rs.-53.36/- Lakh as against Rs. 11.03/-Lakh.

10. KEY FINANCIAL RATIOS:

Ratios 2020-2021 2019-2020
Debtors Turnover1 1.47 7.06
Inventory Turnover Ratio 0.58 0.45
Interest Coverage Ratio2 -1.92 2.36
Current Ratio3 3.01:1 3.07:1
Debt Equity Ratio 0.00:1 0.42:1
Operating Profit Margin %4 2.31% 2%
Net Profit Margin% 4 -19.36% 0.93%
Return on Networth %4 -5.61% 1.05%

Notes:

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

2. Decrease in interest coverage ratio is due to decrease in earnings with no corresponding decrease in finance cost due to pandemic situation mainly.

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 low due to due to pandemic situation.

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.