Lakshmi Mills Company Ltd Management Discussions

I. INDUSTRY STRUCTURE AND DEVELOPMENTS

Indian Textile industry is one of the largest in the World - holding 4% of global market share contributing 2% to countrys GDP and employing 45 million people directly making it the second largest employer in the country.

The textile sector had to face both in the domestic and export markets an unprecedented pandemic, unstable demand and fluctuations in commodity prices. On the external front, the average textile and clothing exports from the country showed a decline of 3.24%.

Indian Cotton yarn spinning industry is expected to witness a breather in this fiscal financial year 2025 with stable Cotton prices due to better availability of Cotton during Cotton season 2024. The Cotton prices likely to remain below International prices and operating margins are expected to improve. Exports are likely to grow marginally over last year performance.

II. OPPORTUNITIES AND THREATS

a) Opportunities

Both the Central and State Governments has announced measures to boost the Textile production to generate employment.

b) Threats:

Unexpected Geo Political development viz., (conflicts in Ukraine and Middle East) had very seriously affected normal trading activities. The prolonged economic impact of global conflicts coupled with challenges such as 11% import duty on cotton and issues related to Manmade Fibre Quality Control Order has led to a significant drop in capacity utilization. International Cotton Advisory Committee (ICAC) has said that geopolitical unrest in the Red Sea has driven shipping freight significantly higher in recent months. Due to re-routing of ships resulting in order delays and cancellations as products take longer time to reach the markets especially for seasonal textiles and apparels.

III. SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company is structured into two separate business segments - ‘Textiles and ‘Rental Services.

i) Textile consists of manufacturing and sale of yarn and trading in cloth and garments.

ii) Rental services consist of letting out Properties. Your Company has expanded its Rental services during the year, starting earlier with the TATAs Zudio, Croma and Westside retail shops, your Company has attracted well known Hypermarket, international brands like Starbucks, Adidas and also Restaurants serving different style of foods.

IV. OUTLOOK

India is focusing on maintaining its competitiveness in Cotton sector. New indigenous brand Cotton "Kasturi Cotton Bharat" has created awareness regarding quality, purity and durability among stake holders. Ginners can get better value for this Cotton.

The FTA agreements with UAE as well as with Australia are concluded and the Textile industry is eagerly awaiting the signing of Indo-U.K. FTA and a possible FTA with Canada, Peru and few other countries. These FTAs are expected to give an impetus to exports as the disadvantages currently faced by Indian exporters ranging from 9.6% to 12% in price realisation could be removed. Stable Cotton prices due to better availability of Cotton in Cotton season 2024 and improved Cotton yarn prices will support improvement in margin.

V. RISKS AND CONCERNS

The Company has a risk management process and framework in place. The process is coordinated by the Board which meets regularly to review risks as well as the progress against the planned actions. The Board seeks to identify, evaluate business risks and challenges across the Company through such framework. These risks include market risk and liquidity risk. Schemes of Modernisation to improve the productivity levels as well as for increasing capacity are in place.

VI. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate Internal Control System commensurate with its size and operations to safeguard the assets and ensure reliability of financial results.

VII. DISCUSSIONS ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The revenue during the year 2023-24 was Rs. 26,101.04 Lakhs and your Company incurred a loss of Rs. 1,379.29 Lakhs after deferred tax credit of Rs. 641.58 Lakhs. The EBITDA stands at Rs. 934.81 Lakhs.

VIM.MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NO. OF WORKERS EMPLOYED

The relations with employees continue to be cordial. The Company had 327 permanent employees as on 31.3.2024

IX. KEY FINANCIAL RATIOS