Lorenzini Apparels Ltd Management Discussions

The management of Company has reviewed the Companys performance and key business developments for the financial year ended March 31, 2025, and shared its perspective on the road ahead. The outlook reflects the current economic environment and business landscape, though future developments both domestic and global across economic, social, and political fronts may influence actual outcomes.

Global Economy Overview

The global economy showed steady progress, despite facing a challenging and uncertain environment. According to the IMF World Economic Outlook, April 2025, the world economy grew by 3.3 percent in 2024, and is projected to grow by 2.8 percent and 3.0 percent in 2025 and 2026 respectively. While these figures reflect a stable trend, they also signal that the pace of growth is more moderate compared to the past. Sector-wise, the global services sector continued to expand, while manufacturing showed signs of weakness, particularly in Europe. Trade policy uncertainty remains high, with more protectionist measures being adopted by major economies. This could impact investment flows and global trade if such trends continue. Looking ahead, risks from geopolitical tensions and climate-related events persists. As the global economy adjusts to new realities, businesses are focusing more on resilience, diversification, and long-term value creation.

Indian Economy Overview

Indias economy remained on a steady growth path in FY 2024-25, demonstrating resilience amid global headwinds and geopolitical uncertainties. As per the first advance estimates released by the Ministry of Statistics & Programme Implementation (MoSPI), real GDP is projected to grow by 6.4 percent for the year, reaffirming Indias status as one of the fastest-growing major economies globally. The industrial sector recorded a growth of 6.2 percent, led by infrastructure and construction activities. Indias Manufacturing PMI remained in expansion, and outlook surveys by the RBI indicate improving order books and business sentiment in upcoming quarters. Exports grew by 5.6 percent in H1 FY25, whileimports remained largely flat. Importantly, Indias growth has been supported by macroeconomic stability, with controlled inflation, amanageable fiscal position, and a stable balance of payments. These factors have contributed to building resilience in the domestic economy and bolstering investor confidence. We continue to monitor these developments closely. While several economic uncertainties remain, opportunities are emerging and we well positioned to capture these.

Textile Market Summary

The global textile industry had grown consistently since CY2018, barring CY2020, which saw a decline due to Covid-19. The growth has continued and the global textile market size attained a value of around USD 988 Billion in 2024. Going ahead, the industry is expected to grow by around 3-4 percent driven by increasing demand from the apparel industry, newer trends in fast fashion segment coupled with the growth of e-commerce platforms. However, the industry may face challenges due to ongoing tariff situation. India is the second largest producer of cotton globally, which provides a significant competitive advantage. For the Indian economy, the textile sector is one of the critical sectors being the second largest provider of employment, after agriculture. It provides employment to approx. 45 million people directly and to another 60 million indirectly through allied activities. The textile industry in India is diversified with handwoven and handspun textile at one end and sophisticated textile mills on the other end of the spectrum. Presence of players across the value chain starting from production of raw material to production of yarn, fabric and garments in the country makes the Indian textile industry well placed at a global level. Between fiscals 2019 to fiscal 2024, the total Indian textile and apparel industry had grown at a CAGR of 4.5 percent. Within the total industry, the domestic Indian textile and apparel industry had grown at a higher pace of 5.8 percent, while exports have grown at a CAGR of 2.1 percent. The future growth in Indian textile and apparel market will be led by various economic factors such as increase in discretionary income and rising urban population. Further, the demand is poised by increase in online retailing, shift from cotton to man-made fibre, fast fashion, and robust growth of technical textiles segment. Additionally, global industry expanding outside of China would aid the Indian export markets in the growth trajectory. Bangladesh is the second largest exporter of readymade garments.

However, the socio-political disturbances erupting in Bangladesh during 2024 have shifted some RMG orders to India and this trend may continue on the future thus benefit the Indian textile industry. The cotton yarn market is expected to grow at 4.5-5.5% CAGR between fiscals 2024 and 2028 driven by recovery in global trade. The ongoing tariffs imposed by the USA will have consequences on the Indian textile industry as it creates uncertainty and volatility for the business and may adversely impact the Indias GDP growth, decline in export volumes and export revenue and supply chain disruptions. However, India has a competitive advantage due to higher tariffs imposed on other competing countries in the textile sector.

BUSINESS OPERATIONS OF THE COMPANY

Your Company is known for quality and customer-oriented focus. Quality control is paramount, and the Company strives to deliver the best products to its customers, thereby enhancing the brand name among customers. The Company places great emphasis on establishing strategic business partnerships with selective customers in the domestic markets, which had enabled the business to maintain a competitive edge among industry peers. The Company serves its customers through the channels of retail business and E-commerce. It also outsources the garments manufacturing on job work basis from third party contractors from time to time and provides the technical specification such as designs, pattern, quality fabrics etc. to them who based on company specifications, procure the requisite raw material at their own costs and begin the manufacturing process. The Products are sold under the brand name “MONETIL” through the exclusive stores /outlets in India.

PERFORMANCE OF THE COMPANY

During the financial year under review, the Company recorded a turnover of 6,342.04 lakhs against 5475.92 lakhs in the previous year and the Company has incurred profit of 583.64 lakhs as compared to profit of 529.66 lakhs in previous financial year. The management of the Company is putting their best efforts to improve the performance of the Company. During the year the Company has performed modestly but despite of challenging economic conditions and other related factors, we are able to maintain profits and steady revenue in the Company. The Directors are relentlessly striving for betterment of the business and growth of the Company. They are optimistic about the future and expect the business to perform well in the forthcoming year.

RISK AND CONCERNS

The prevailing economic trends are likely to have a direct impact on your Companys growth prospects. Inflation is expected to remain high for the foreseeable future, driven by commodity price increases due to ongoing conflicts and broader price pressures. Additionally, the anticipated interest rate hikes by Central Banks in the coming year are expected to dampen growth and strain economies, especially in emerging markets. In this environment, the ability to effectively manage cost pressures will be crucial to your Companys overall performance. Reduced purchasing power and demand, driven by the economic climate, could lead to significant shifts in consumer behavior, negatively affecting the market for textiles and apparel. A shift towards more value-for-money options could further reduce growth and profitability for your Company.

Opportunities a) Sustainable Product: There is a growing consumer demand for responsibly produced clothing. By adopting Sustainable practices, we can attract and retain eco-conscious customers and enhance our brand loyalty and Reputation. Through product and process innovation, we can help lower the environmental footprint of our Products across own operations and value chain. b) Product Quality and Safety: -Product quality and safety can help us gain a competitive edge in the market. High-quality, safe products foster consumer trust and loyalty, enhancing brand reputation and encouraging Repeat purchases. c) Resource Management- Energy and Water: -efficient resource usage and focus on raw materials and processes with lower environmental impact can result in cost savings, increased customer loyalty, the opening of new market segments and a stronger brand Image. d) Resilient exports: -Textile and apparel exports rose 5.37% year-on-year in July 2025, reaching US $3.1 billion, with cumulative exports from April July surpassing US $. According to the Textile Ministry, the industry has demonstrated resilience despite global uncertainties, reaffirming its role as a key driver of employment, exports, and economic growth, PTI reported. e) As per quick estimates released by the Directorate General of Commercial Intelligence & Statistics (DGCIS), cumulative textile exports for April-July 2025 rose 3.87 per cent to $12.18 billion against $11.73 billion last year.

OUTLOOK AND STRATEGY

Market Outlook (India - Apparel Industry)

Indias apparel industry is set for steady growth, driven by favorable demographics, rising incomes, urbanization, and evolving fashion preferences. Digital adoption and demand for branded, personalized clothing are transforming consumer behavior, especially in Tier II IV cities, fueled by aspirational youth and expanding e-commerce. Despite short-term macroeconomic pressures like inflation and shifting spending patterns, long-term prospects remain strong. The rise of Gen Z and Gen Alpha, growing fashion awareness, and increasing demand for sustainable, value-driven fashion are reshaping the industrys future.

Strategic Focus Areas

To capitalize on these trends and maintain a competitive edge, the Company has adopted the following key strategies: a) Omnichannel Expansion: Integrating digital and physical retail for a seamless customer experience, with continued investment in e-commerce and digital marketing. b) Portfolio Diversification: Expanding product offerings across value, premium, and occasion wear, while entering new categories and consumer segments. c) Geographic Penetration: Strengthening presence in Tier II IV cities through franchise and owned formats, backed by localized marketing. d) Customer-Centric Innovation: Using data to drive personalized products, curated collections, and improved post-purchase service. e) Sustainability: Adopting eco-friendly materials, optimizing supply chains, and minimizing environmental impact in line with global standards. f) Operational Efficiency: Leveraging technology and AI to boost supply chain agility, inventory management, and responsiveness to market trends.

KEY INITIATIVES WITH RESPECT TO STAKEHOLDER RELATIONSHIP

A Stakeholders relationship committee is formed for reviews of statutory compliances and services relating to security. No complains was raised or received from any shareholders during the year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

The Company had sufficient numbers of employees at its administrative office. The Company recognizes the importance of human value and ensures that proper encouragement both moral and financial is extended to employees to motivate them. The Company enjoyed excellent relationship with workers and staff during the last year.

Our human resource department plays a key function in our Company. It is operated by professionally qualified and experienced personnel and receives attention from senior management. The following table sets forth information on the number of our staff in various departments of our business as of March 31, 2025.