lorenzini apparels ltd Management discussions

The last two years the countrys economy has seen turbulence anduncertainty in terms of COVID - 19. Economic activity which wasrecovering with the ebbing of the third wave, rapid stride towardsuniversal vaccination, and supportive fiscal and monetary policiesnow faces significant headwinds from the exacerbating geopoliticaldevelopments and the accompanying sharp rise in global commodityprices and weakening global growth outlook. The global recovery fromthe COVID-19 pandemic is turning out to be muted relative to earlierexpectations. Downside risks to even this subdued recovery havejumped significantly from the escalation of geopolitical tensions,which have led to a broad-based increase in global commodity pricesand arc expected to have a large negative impact on global trade andgrowth. Growth and inflation outcomes are at high risk across the worldas well as in India. In the face of this extraordinary risk, the positiveeffects expected from the release of pent-up demand, especially forcontact-intensive services, die governments thrust on infrastructureand capital expenditure, congenial financial conditions and improvingcapacity utilisation appear ephemeral.

1. Industry structure and developments

After a prolonged period of economic sluggishness followed by a stabilization phase, the overall economy and specially the real estate sector has started to show signs of an upward trend in the current year. The residential property market has started to show a positive movement. Lower interest rates coupled with various discount schemes offered by developers in recent quarters have boosted the demand and confidence in the sector. Also, due to Covid the importance of a well planned home is a key additional driver of Residential sector. Increased transparency via RERA is also providing additional comfort to buyers. The positive trend for residential real estate will continue this year.

2. Opportunities and threats

The property market in India is set to benefit from increased economic activity in the coming months. Over the past few years, record all-time low interest rates have opened up opportunities for many first-time buyers as well as investors. With the economy returning to normalcy and employees getting back to offices, there would be a gradual increase in demand for commercial office spaces along widi residential also. Both our parcels are well located to take advantage of the positive trends in residential and commercial real estate.

Due to premium concessions offered, we have seen a significant amount of new project launches. This may create a situation of surplus supply in the residential market which could put pressures on the pricing. Further, the continued threat of Covid could also dampen the spirit in the market.

The government has removed a 5% basic customs duty on cotton imports which will help to stabilise cotton prices. Shortage in supply with increased prices of cotton would be threat for continuity of supply

While the industry continues to be influenced by wild swings in commodity prices, it is also facing major challenges in the form of hike in fuel price, increasing wages and raw material costs. Key threats for the brand continue to be the constant inflow of cheaper alternatives from the unorganized sector as well as inflow of low priced material from neighbouring countries.

Being a retail Company of garments, our Company is exposed to specific risks that are particular to its business and the environment within which it operates including interest rate volatility, economic cycle, and market risk.

3. Segment-wise or product-wise performance

During the year under review, since Company is being working in a single segment therefore the specific performance does not stand eligible.

4. Outlook

The Company is currently operating with a lean cost business model. Retail Division has taken necessary steps to reduce the credit risk and increased the distribution. The Indian economy is heading towards a steady recovery, which we could see during the festive season of FY22.

The presence of a stable government at the center will be a major catalyst in taking major decisions which would push forward the pace of reforms and thereby directly improving the macro-economic environment. It is now being forecasted that in the near future, the Indian economy will become the fastest growing emerging market.

Looking at the Indian economy, the Company has plans to diversify its business in future.

5. Risks and areas of concern

The continued threat of Covid remains a major risk for the industry this year. Apart from that, rising inflation continues to be a major concern for the sector as this is putting a stress on the margins.

The price of cotton has risen too much now, which is a major concern for the textile industry. However with the abolition of import duty, prices should cool down.

Prices of raw materials as well as energy costs, the two major input costs for the PSF division are significantly dependent on crude oil price. Changes in oil prices could lead to impact on margins and profitability. With the main input costs based in US$, fluctuations in the Indian Rupec/USS exchange rate could impact the business and margin. Supply and price of cotton crop in India and globally could have an impact on the demand of PSF. Increased competition due to surplus capacity in the country has resulted in pressure on margins due to price undercutting in the market.

In any business, risks and prospects are inseparable. As a responsible management, the Companys endeavor is to maximize returns. The Company continues to take all steps necessary to minimize its expenses through detailed studies and interaction with experts.

6. Internal control systems and their adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.

M/s Burhan & Associates, were the Internal Auditors of the Company for FY 2021-22. The reports and findings of the internal auditors and the internal control system are periodically reviewed by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on die internal audit report, process owners undertake corrective action in the respective areas and thereby strengdien the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the internal audit report, process owners undertake corrective action in the respective areas and thereby strengthen die condols. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board.

7. Discussion on financial performance with respect to operational performance

The total revenue from operations of the Company for the year ended March 31, 2022 stood at Rs.254,922,542 as against Rs. 254,922,542 for die year ended March 31, 2021. The Company has earned a profit [alter tax] of Rs. 5,375,831 for the Year ended March 31, 2022as compared to Rs. Rs. 796,627 for the year ended March 31, 2021.

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles in India. Further, the financial performance during the year under reference has been impressive in terms of sales. Even though there has been a decent increase in the turnover, the volume of profits has also increased as compared to last year.

8. Material developments in human resources /industrial relations front, including number of people employed.

AtLorenzini, employees are its prime assets and a vital key to its success. The company is committed to creating a professional culture to nurture and enable people to grow in their careers alongside Companys success. The company constantly strives to strengthen its manpower in alignment with the business needs and continue to engage them through various initiatives in the realm of learning & development opportunities, reward & recognition, employee engagement activities and career growth.

9. Cautionary Statement

The statements in the "Management Discussion and Analysis Report" section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors.

For & on behalf of

Lorenzini Apparels Limited

	Sd/-	Sd/-
	Sandeep Jain	Deepika fain
Date: 24/08/2022	Managing Director	Whole Time Director
Place: New Delhi	DIN:02365790	DIN:02365797