lotte india corporation ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Financial Results

		Rs. In lakhs
Particulars	For the year ended 31st March, 2022	For the year ended 31st March, 2021
Gross Sales	49653.63	41865.43
Less : Discounts & Schemes	4207.70	3070.10
Net Sales	45445.93	38795.33
Add: Other Income	431.56	953.58
Total Income	45877.49	39748.91
Total Expenditure	41476.88	33525.45
Profit before Interest, Depreciation and finance charges	4400.61	6223.46
Less: Interest, Depreciation and finance charges	4309.93	4994.07
Profit /(loss) before tax	90.68	1229.39
Less: Provision for tax
- Current	50.00	225.00
- Deferred	-1109.48
Profit /(loss) after tax	1150.16	1004.39
Add: Balance Brought forward from previous year	-5921.69	-6970.84
Profit /(loss) for the year	1150.16	1004.39
Other Comprehensive Income	31.69	44.76
Balance loss transferred to Balance Sheet	-4739.84	-5921.69

The Board of Directors has decided not to recommend any dividend for the year period ended 31st March, 2022.

Performance Highlights

For the year ended 31st March, 2022, the Company has achieved gross sales of Rs.49654 lakhs as against Rs.41865 Lakhs for the year ended 31st March, 2022. During the year under review, the Company has incurred a Profit after tax of Rs. 1150.16 lakhs as against a Profit of Rs. 1,004.39 lakhs for the year ended 31st March, 2021.

During the year under review, prices of raw materials such as vanaspati, bakery shorterning, Chocomass and cost of packing materials have gone up significantly when compared to last year as an impact of inflation and also due to pre-war and post-war conditions of Ukraine war. However, due to the various cost reduction measures adopted by the Company including product mix change, the company was able to reduce the impact and manage the working capital.

Industry Trends

The year 2021-22 was yet another challenging year for all of us. The severe second wave of the Covid-19 pandemic had a significant humanitarian and economic impact. We witnessed socio-political unrest in several parts of the world in the last quarter, resulting in the disruption of global supply chains and unprecedented volatility in commodity costs.

E-Commerce continued to grow with more people shopping online; consumers continued to prefer products that enhanced their health and wellbeing.

Quarter 2 & Quarter 3 started off with a new vigour, Pie category in which we operate became buoyant from Quarter 2, but confectionery took more time to get back as schools were still closed in most parts of the country till Quarter 3.

Festive season was buoyant for Modern Trade with strong volume growths. Ecommerce continued its growth momentum.

More than 800000 new stores for FMCG were opened in the year in comparison to 2019, showing clearly that the trade was back in business. Organised and unorganised retail moved towards recovery compared to 2020.

Overall, there is an evident shift by consumers to smaller pack sizes to manage external inflationary factors for both foods and non-foods.

In this uncertain operating environment, our focus remained on ensuring uninterrupted supply of our products & meeting the demands of our consumers.

Outlook

In 2022-23, where operating environment is expected to remain challenging with further input cost inflation. With inflationary pressures on consumers we are seeing trend of them downgrading to smaller SKUs. We expect this trend to continue thereby having pressures on our margins. We will continue to support our consumers by providing value packs in their stressed house-hold budget times.

Company continued its focus on its power brands Choco Pie and Coffy Bite. Both have registered growth over the previous year.

Lotte expanded into the cake category with the launch of Frutopie in Jan 2022. It has been launched across top cities and the feedback from our consumers has been very encouraging. We plan to continue our focus on this category to expand our consumer base in coming years.

With the Pie market growth in double digits portfolio expansion is being worked on for the Choco Pie brand to ride on this growth. Overall, we remain confident of outpacing Cream biscuit market growth.

With schools open, we expect growths back in Confectionary segment. We plan to launch new products to cater to the market needs and continue our growth journey.

Internal Control System

Your Company has in place adequate systems of internal control commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of internal policies. The Company has a well-defined delegation of power with authority limits for approving revenue as well as capital expenditure. Processes for formulating and reviewing annual and long term business plans have been laid down to ensure adequacy of the control system, adherence to the management instructions and legal compliances.

Cautionary Statement

Statement in the Directors report and Management Discussion &Analysis describing the objectives, expectations may be forward looking. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

	On behalf of the Board
	For Lotte India Corporation Limited
Chennai	Kyungwoon Cho	Milan Wahi	Mr. Jeongkwan Heo	D.G. Rajan
August 30, 2022	Chairman cum ED	Managing Director	Whole Time Director & CFO	Independent Director