Lakshmi Automatic Loom Works Ltd Management Discussions.

I. Industry Structure and Development:

On the advent of shuttleless technology, the demand for high speed automatic C type Shuttle Weaving Machines manufactured by the Company was affected. As the market for the Companys C type shuttle loom was eroded, only spares and accessories for the Companys shuttle looms were manufactured during the year.

In order to augment the revenue the available building space is rented out to logistic services providers. In every industry segment, warehouses play a vital role in the entire value chain from raw material to final product especially in the manufacturing sector.

The supply of Parts for Machine Tools including Tool holders to the Export Oriented Unit depends on the export market and is price competitive. Demand for Loom Accessories and Spares is also stagnant due to gradual phasing out of the looms supplied by the Company in earlier years.

II. Opportunities and Threats:

A. Warehousing Rental Services:

The size of the Indian Warehousing Industry is estimated to be around Rs.560 billion. The sector is growing at more than 10% per annum. Of the total warehousing industry, cold storages have a share of about 16% and the warehouses catering to the Industrial and Retail players are holding the maximum share at about 55%. The Company is concentrating on Warehousing Rental Services for augmenting its revenue.

The entry of more Warehouses developers with additional facilities may have an adverse impact on the rental rate. However the location advantage of the Companys buildings may offset the impact.

B. Other Engineering Services :

The orders from the Export Oriented Unit for supply of Parts for Machine Tools including Tool Holders are based on the export orders bagged by them. As the export market for parts for Machine Tools and Tool Holders is fluctuating the inflow of orders to the Company is also not consistent. Your Company has taken steps to source orders from domestic manufacturers and the rates offered are highly competitive.

III. Outlook:

The income from Warehouse Rental Services at Hosur will tend to increase. Additional Building Area is constructed to meet the demand by the Warehousing & Logistic Services Providers.

IV. Internal Control System and the adequacy:

The Company has adequate internal control system commensurate with its size and nature of its business. The Management has overall responsibility for the Companys internal control systems to safeguard the assets and to ensure reliability of financial records. The Audit Committee reviews the Financial Statements and ensures adequacy of internal control systems.

V. Discussion of Financial Performance with respect to Operational Performance:

The Company has achieved its revenue at Rs.895.01 Lakhs from operations and the net profit for the year under review is Rs.127.80 Lakhs after providing Rs.46.96 Lakhs for Depreciation and Rs.52.20 Lakhs towards taxation.

VI. Material development in Human Resources / Industrial relations front, including number of people employed:

The number of employees engaged during the year was in line with operational requirement of the Company. The relation with labour was cordial during the year. The permanent employees on Roll as on 31-03-2019 were fifty five (55).