Lloyds Enterprises Ltd Management Discussions

Global Markets OverView 2023

In 2023, global markets experienced a mix of resilience and challenges amidst fluctuating economic conditions. The world economy grew by 3.2%, maintaining a steady pace compared to previous years, despite the pressures from significant central bank interest rate hikes aimed at curbing inflation. Inflation rates saw a gradual decline, dropping from 6.8% to 5.9%, with further decreases anticipated in the coming years .

Developed markets faced mixed fortunes: The U.S. economy showed resilience, avoiding an immediate recession but anticipated mild contraction by year-end due to the Federal Reserves restrictive policies. The Eurozone experienced stagnation, largely due to high energy prices and wage pressures, though inflation began to ease in the latter half of the year.

Emerging markets displayed varied performance: Asia, particularly China, saw robust growth driven by the post- pandemic recovery, with GDP growth averaging 5.2%. However, Chinas uneven recovery raised concerns about the sustainability of its growth momentum. South Asia, led by India, continued to be the fastest-growing region among emerging markets, with growth projected at 5.7%.

Sub-Saharan Africa and other developing regions faced challenges such as high living costs and political instability, limiting their economic progress despite a projected growth rebound to 3.8% in 2024.

Stock markets globally ended 2023 on a high note, with significant gains in major indexes. The S&P 500, for instance, marked notable highs despite mid-year volatility, driven by sectors with strong pricing power and less sensitivity to interest rates.

Overall, while the global markets showed resilience, ongoing geopolitical tensions, monetary policy adjustments, and economic disparities among regions continue to shape the economic landscape going into 2024.

Indian Markets Overview 2023

From April 2023 to March 2024, the Indian markets saw varied performances across different asset classes, reflecting the complex interplay of domestic economic policies, global economic trends, and sector-specific dynamics.

Equity Markets

The Indian equity markets continued their bullish trend, with the BSE Sensex and NSE Nifty 50 indices achieving significant gains. The Nifty 50 surged by around 15% during this period, driven by robust corporate earnings, strong domestic consumption, and positive investor sentiment.

Key sectors such as Information Technology, Banking, and Pharmaceuticals led the gains. For instance, IT stocks benefited from the global digital transformation wave, while banks saw improved asset quality and higher credit growth.

Debt Markets

The debt markets faced a challenging environment due to regulatory changes and interest rate fluctuations. The removal of indexation benefits on debt mutual funds in April 2023 impacted investor returns, which were in the range of 7-8%. However, the Indian governments measures to control inflation led to a slight softening of yields on 10- year government securities, which stabilized around 7.10%. Despite these challenges, the debt market remained a crucial component for conservative investors seeking stable returns .

Gold

Gold remained a strong performer, providing a return of approximately 13% in rupee terms. The depreciation of the Indian rupee against the US dollar, combined with global geopolitical tensions, enhanced golds appeal as a safe-haven asset. The steady demand for gold during festive seasons and wedding periods also supported its performance.

Real Estate

The residential real estate market showed resilience, supported by favorable government policies such as subsidies under the Pradhan Mantri Awas Yojana and reduced stamp duties in certain states. Urbanization and the increasing demand for housing further bolstered this segment. Conversely, the commercial real estate market faced headwinds due to the shift towards remote work and higher interest rates, which impacted office space demand.

Commodities

Apart from gold, other commodities such as crude oil and natural gas saw volatile movements influenced by global supply-demand dynamics and geopolitical events. Indias commodity market, particularly in agricultural commodities, remained stable, supported by favorable monsoon conditions and government support for the farm sector.

Forex Market

The Indian rupee experienced volatility, depreciating against the US dollar due to global economic uncertainties and trade imbalances. However, strong foreign direct investment (FDI) inflows and a robust forex reserve position provided some stability to the currency.

The Company is engaged in business activities of trading in Iron & Steel products and Investments. Your Companys Investment portfolio is a mix of listed and unlisted Group (Lloyds) shares and diversified non-group equities, unlisted equities, and fixed-income securities.

? Key Hiahliahts for FY 2023-24

• The Company crossed Rs. 1000 crores revenue milestone in FY 2023-24.

• Total Income - On a Consolidated basis, the Company has surpassed the significant milestone of Rs. 1000 crores in revenue (Consolidated) in FY 2023-24.

• The Company has been expanding its trading portfolio amongst various products in the steel seCtor. As a result, the trading inCome for FY 202324 has increased multifold to Rs. 316 crores, an increase of 368% YoY.

• PAT for the company grew from Rs. 10.60 crores in FY 2022-23 to Rs. 72.20 crores in FY 2023-24; a growth of ~6x YoY.

• Total Comprehensive Income on a standalone basis - Inclusive of MTM gains/loss on Investments, a growth of ~4x YoY.

? Key Investments durina FY 2023-24

- Investment in Lloyds Realty Developers Limited

The Company acquired a 60% stake in Lloyds Realty Developers Limited, marking its foray into the real estate sector. The decision to invest Rs. 110 crores in Lloyds Realty Developers Limited ("LRDL") was made on 6^th December 2023, further solidifying the Companys strategic position in the real estate sector.

- Key Details about the Acquisition:

The investment, made at near the book value of LRDL, was executed through a fresh infusion of funds without diluting existing shareholders. This all-cash deal is anticipated to provide an immediate uplift to LRDLs operations in the near to medium term.

- About Lloyds Realty Developers Ltd (LRDL):

LRDL is a stalwart in the Indian real estate landscape, boasting a strong presence in MMR, Pune, and Tamil Nadu since its inception in 1994. The company has successfully delivered over 2.5 million sq ft of residential and commercial projects, leaving an indelible mark on the real estate skyline.

Apart from its 2.5 million sq ft completed projects, LRDL, through its land bank and controlled SPVs, has over 15 lakh sq ft of area under development. These projects hold immense potential, with the capability to generate higher Revenue over the next 5-7 years. Importantly, LRDLs debt- free status positions it favourably in the market, demonstrating resilience against market cyclicality.

- The Companys subsidiary Lloyds Engineering Works Limited continues to perform well. The company has an order book of Rs. 904 crores as of FY 2023-24 and has reported 117% growth in profits YoY in FY 2023-24.

The Management discussions and analysis is given hereunder: -

a) Industry structure and development: The

Company is engaged in trading activity, primarily of iron and steel products, which has vast potential and is growing at an accelerated pace. There is a significant demand for quality iron ore and steel products, which the company tries to fill in via its product offerings.

b) Opportunities and threats: Being involved in trading activities of iron and steel products, the company remains susceptible to economic volatility and sector dynamics. However, the Company is well equipped to handle such volatility.

c) Segment-wise performance: The Company is operating on only one broad segment and hence separate segmental reporting is not applicable. The Company has no activity outside India.

d) Outlook: The outlook for FY 2024-25 has to be viewed in the context of the overall economic scenario, including the domestic, global, and socio-political scenarios.

e) Risk and concerns: The Company is exposed to general market risk and is initiating adequate steps.

f) Internal control system and their adequacy:

The Company maintains adequate internal control systems, which provide adequate safeguards and proper monitoring of the transactions.

g) Discussion on financial performance with

respect to operating performance: The

operating performance of the Company has been discussed in Directors Report under the head "Financial Performance and the state of the Companys Affairs" in the current year.

h) Human resources and industrial relations:

During the year under review, the Employee/ Industrial relations remained cordial.

i) Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

The Company has identified the following ratios as key financia! ratios:

Particulars	2023-24	2022-23
Debtor Turnover Ratio (times)	59.19	12.60
Current Ratio	1.81	2.98
Operating Profit Margin (%)	1.41	10.05
Net Profit Margin (%)	22.81	15.67
Revenue Growth	3.68	62.97

Ratios where there has been a significant change as compared to immediately preceding financia! year.

The debtor turnover has increased due to the companys expanded operations, which have led to higher sales. The current ratio has decreased due to an increase in the companys operations compared to last year, which has led to an increase in inventories, investments, and the use of the bank overdraft facility. The Operating profit margin has decreased due to increase in other income as compared to last year. The net profit ratio has increased due to a rise in the companys profit, primarily attributed to the sale of rights entitlement.

j) Return on Net worth

The details of return on net worth are given below:

Particulars	2023-24	2022-23
Return on net worth (%)	2.40	0.64

The return on net worth has increased as a result of the companys expanded operations and the sale of rights entitlements, both contributing to a higher net profit compared to last year.

k) Cautionary Statement: The Management Discussion and Analysis describes the Companys projections, expectations or predictions and are forward looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incidental factors.