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Le Lavoir Ltd Management Discussions

300
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Aug 6, 2025|03:18:00 PM

Le Lavoir Ltd Share Price Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A. Overview of the Global Economy:

The global economy in the past financial year has continued to face mixed conditions, marked by moderate growth, geopolitical tensions, inflationary pressures, and supply chain disruptions. According to leading financial institutions such as the IMF and World Bank, global GDP growth has slowed to approximately 2.83.0%, down from post-pandemic recovery highs, with advanced economies showing sluggish expansion and emerging markets exhibiting relatively stronger resilience.

Despite macroeconomic headwinds, sectors focused on essential services—including healthcare, hospitality, and urban infrastructure—remained relatively stable, benefiting companies like ours in the institutional laundry and textile care segment. These industries continue to demand reliable and hygienic textile cleaning services, creating opportunities for sustained business even during economic slowdowns.

While inflation, currency fluctuations, and energy costs remain critical concerns across the globe, businesses that can balance cost efficiency with quality and compliance—particularly in the laundry services sector—are well-positioned for steady growth.

Overall, while the global economic environment remains cautious, the institutional laundry, dry cleaning, and laundromat service sectors are expected to grow steadily, supported by the essential nature of their offerings and increasing demand for quality textile care services.

B. Overview of the Indian Economy:

The Indian economy remained resilient during the financial year, recording a robust growth rate of approximately 7.2% (as per government estimates), positioning India as one of the fastest-growing major economies globally. Driven by strong domestic demand, sustained infrastructure investments, and government-led reforms, the macroeconomic fundamentals have stayed stable despite global headwinds such as inflation, geopolitical tensions, and energy price volatility.

Indias urbanization, rising middle-class consumption, and the rapid growth of organized retail and services have significantly impacted consumer behaviour, leading to increased outsourcing of non-core household and institutional services—including laundry, dry cleaning, and textile care.

While inflationary pressures and input cost volatility remain short-term challenges, the medium-to-long-term outlook for the Indian economy—and consequently, the laundry and allied services industry—remains strong. Organized players who adopt technology, scale operations, and maintain service quality are well- positioned to benefit from rising demand and formalization of the sector.

C. Outlook:

The company expects strong growth in institutional services, especially with increasing health and hygiene consciousness. The dry-cleaning and laundromat segments are expected to rebound post-pandemic as consumer confidence improves. Strategic investments in automation, franchise expansion, and sustainable practices will be critical growth drivers over the next 2-3 years.

D. Industry Structure and Developments:

The laundry and dry-cleaning industry in India have evolved significantly, driven by rising urbanization, changing consumer lifestyles, and increased demand for hygienic textile care. Within this space, the institutional laundry segment has shown strong growth, supported by sectors such as hospitality, healthcare, and manufacturing, where professional laundry services are essential.

The laundromat and retail dry-cleaning markets are also expanding, buoyed by increased awareness of hygiene and convenience. The industry is experiencing a shift toward technology integration, with smart machines, mobile app-based service delivery, and eco-friendly practices gaining traction.

E. Opportunities and Threats:

Opportunities:

• Growing demand from hospitals, hotels, hostels, and corporate sectors.

• Rising preference for organized laundry and dry-cleaning services.

• Expansion opportunities in Tier-II and Tier-III cities.

• Government initiatives promoting cleanliness and hygiene.

• Use of technology (IoT-enabled machines, app-based booking, contactless delivery).

Threats:

• High initial capital investment for machinery and operations.

• Unorganized sector offering services at lower costs.

• Regulatory compliance related to wastewater disposal and environmental standards.

• Increasing input costs (water, power, chemicals).

F. Segment-wise or Product-wise performance:

The Company is primarily engaged in single segment i.e. Special Consumer Service - Institutional Laundry Vertical.

G. Future Outlook:

The company expects strong growth in institutional services, especially with increasing health and hygiene consciousness. The dry-cleaning and laundromat segments are expected to rebound post-pandemic as consumer confidence improves. Strategic investments in automation, franchise expansion, and sustainable practices will be critical growth drivers over the next 2-3 years.

H. Risks and Concerns:

• Operational Risk: Machine breakdown or water/power shortages could impact service delivery.

• Client Concentration Risk: Heavy reliance on a few institutional clients may pose a risk.

• Environmental Risk: Water-intensive operations and chemical usage necessitate strict adherence to environmental regulations.

• Labor Issues: High attrition and lack of skilled manpower may affect service quality.

I. Material Developments in Human Resources / Industrial Relations:

Industrial Relations continued to be harmonious and cordial throughout the year. The Company always valued its Human Resources and believes in unlimited potential of each employee. Your directors believe and affirm the importance of developing human resources, which is the most valuable asset of your Company and the key element in bringing all round improvements and achieving growth. The human resource philosophy and strategy of your Company has been designed to attract and retain the best talent. In practice, it creates and nurtures a work environment that keeps employees engaged & motivated. Employee relations during the year under review were peaceful. The contribution and co-operation received from employees across all levels was excellent and the same has been appreciated & supported by the management through its continuous & systematic training programmes.

J. Internal control systems and their adequacy

The Company has an independent Internal Audit function with a well-established risk management framework. The scope and authority of the Internal Audit function are derived from the Internal Audit Charter approved by the Audit Committee. The Company has engaged a reputable external firm to support the Internal Audit function for carrying out the Internal Audit reviews.

The Audit Committee meets every quarter to review and discuss the various Internal Audit reports and follow up on action plans of past significant audit issues and compliance with the audit plan. The Chairperson of the Audit Committee has periodic one-on-one meetings with the Chief Internal Auditor to discuss any key concerns.

Additionally, the following measures are taken to ensure proper control:

• Budgets are prepared for all the operational levels.

• Any material variance from budget has to be approved by the Commercial director.

• Any major policy change is approved by the managing director.

• Any deficiency in not achieving target is reviewed at management meetings.

K. Discussion on financial performance with respect to operational performance

The financial performance of the Company for the Financial Year 2024-25 is described in the Directors Report of the Company.

L. Material developments in Human Resources / Industrial Relations front including number of people employed

The cordial employer - employee relationship also continued during the year under the review. The Company has continued to give special attention to human resources.

M. Caution Statement

Statements made in the Management Discussion and Analysis describing the various parts may be "forward looking statement" within the meaning of applicable securities laws and regulations. The actual results may differ from those expectations depending upon the economic conditions, changes in Govt. Regulations and amendments in tax laws and other internal and external factors.

Registered Office:

By the Order of the Board

Digvijay Plot, Street No. 51 Opposite

Le Lavoir Limited

Makhicha Nivas, Jamnagar, Gujarat, India - 361 005.

Sd/-

Sd/-

Ashok Dilipkumar Jain

Sachin Kapse

Place: Jamnagar

Director

Managing Director

Date: 29th July, 2025

DIN: 03013476

o o DIN: 08443704

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