Lovable Lingerie Ltd Management Discussions.

To,

The Members,

Your Companys Directors are pleased to present the 31st Annual Report of the Company, along with the Audited Financial Statements for the financial year ended 31st March 2018.

FINANCIAL SUMMARY
(Rs. in Lakhs)
Particulars 2017-18 2016-17
Revenue from operations 17,590.69 19,740.61
Operating Expenditure 16,675.53 17,820.14
Profit Before Interest, Tax & Depreciation 915.15 1,920.47
Other Income (net) 433.83 691.09
Finance Costs 100.23 92.20
Profit before Tax and Depreciation 1,248.75 2,519.36
Depreciation and amortization expense 342.51 339.56
Profit before Extra-Ordinary Item 906.24 2,179.80
Extra-Ordinary Item 1,402.59 398.30
Profit before Tax (PBT) (496.35) 1,781.50
Provision for Taxation (258.30) 496.48
Profit for the year (PAT) (238.05) 1,285.02
Surplus brought forward from previous year 9,671.69 7,976.51
Amount available for appropriation 9,029.44 9,873.89
Appropriations:
Transferred to General Reserve - -
Interim Dividend (excluding tax) - -
Tax on Interim Dividend - -
Proposed Dividend on Equity Share Capital - 168.00
Corporate Dividend Tax on Proposed Dividend - 34.20
Adj for Depreciation of prior years pursuant to change in useful life - -
Balance Carried to Balance Sheet 9,029.44 9,671.69
EPS Basic & Diluted- Before Extraordinary Items (in Rs.) 7.87 10.02
EPS Basic & Diluted- After Extraordinary Items (in Rs.) (1.61) 7.65

OPERATIONS

For the financial year 2017-18, the Company recorded a net turnover of Rs. 17,590.69 lakhs as against Rs. 19,740.61 lakhs for the financial year 2016-17, registering a decrease of 10.90%. The Net Profit Before Tax stood at Rs. (496.35) lakhs as against Rs. 1,721.29 lakhs over last year and Profit After Tax stood at Rs. (2384.05) lakhs for the year as against Rs. 1,227.77 lakhs in the last year.

SEGMENT-WISE RESULTS

The Company is engaged in the business of manufacturing garments. Therefore, there is no separate reportable segment.

SUBSIDIARY / JOINT VENTURE / ASSOCIATE COMPANY

Your Company does not have any subsidiary, joint venture or associate Company.

MATERIAL CHANGES AND COMMITMENT

No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this report.

EXTRACT OF ANNUAL RETURN

The extract of Annual Return as provided under sub-section (3) of section 92 of the Companies Act, 2013 (‘the Act) in prescribed form MGT-9 is enclosed as "Annexure A" to this report.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152 of the Companies Act, 2013, Mrs. Taruna Reddy (DIN: 02787135) will retire by rotation at the ensuing Annual General Meeting (‘AGM) and is eligible for re-appointment. The Board of Directors recommends the re-appointment of Mrs. Taruna Reddy as a Non-executive Director of the Company.

Mr. Gopal Sehjpal (DIN: 00175975), Mr. Anantharaman Mahadevan (DIN: 00165226) and Mr. Sivabalan Pandian (DIN: 01573458) were re-appointed as an Independent Directors of the Company by way of passing special resolution at the 30th Annual General Meeting of the Company.

Mr. Dhanpat Kothari (DIN: 03032242) resigned from the directorship of the Company with effect from August 24, 2017. The Board wishes to place on record its appreciation of services rendered by him during his tenure as the Director of the Company.

Ms. Darsha Sanghvi resigned as the Company Secretary of the Company w.e.f. October 01, 2017. Ms. Divya Shrimali has been appointed as the Company Secretary of the Company w.e.f. February 15, 2018.

POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

For the purpose of selection of any Director, the Nomination and Remuneration Committee identifies the person of integrity who possess relevant expertise, experience and leadership qualities required for the position and also takes into consideration recommendation, if any, receives from any members of the Board. The Committee also ensures that the incumbent fulfills such other criteria with regard to age and other qualifications as laid down under the Companies Act, 2013 or other applicable laws. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration.

The Companys policy on directors appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the directors report.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013.

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has constituted the following committees in compliance with the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015:

1. Audit Committee,

2. Nomination and Remuneration Committee,

3. Stakeholders Relationship Committee, and

4. Corporate Social Responsibility Committee.

The Board has accepted all the recommendations of the above committee. The brief description, composition and other required details of the above committees are provided in Corporate Governance Section to this Annual Report.

FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS

In compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations"), the Company has put in place a Familiarization Programme for the Independent & Non-Executive Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of such programme is available on the website of the company www.lovableindia.in and may be accessed through the web link http://lovableindia.in/index.php?route=information/information&information_id=69.

NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met 6 (six) times during the year on 29th May 2017, 31st July 2017, 13th September 2017, 6th October 2017, 14th December 2017 and 14th February 2018. For details of the meetings of the board, please refer to the corporate governance report, which forms part of this report. The intervening gaps between the Meetings were within the period prescribed under the Companies Act, 2013 and SEBI (LODR) Regulations.

SECRETARIAL STANDARDS

The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

The Board of Directors have carried out an annual evaluation of its own performance, its various committees and individual directors pursuant to the provisions of the Companies Act 2013, the Corporate Governance requirements as prescribed under regulation 17(10), 25(4) and other applicable provisions of the SEBI (LODR) Regulations and the Guidance note issued by SEBI.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of various criteria such as Board Composition, process, dynamics, quality of deliberations, strategic discussions, effective reviews, committee participation, governance reviews etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of criteria such as Committee composition, process, dynamics, deliberation, strategic discussions, effective reviews etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the individual directors on the basis of the criteria such as Transparency, Analytical Capabilities, Performance, Leadership, Ethics and ability to take balanced decisions regarding stakeholders.

In a separate meeting of independent directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of the executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of independent directors, at which the performance of the Board, its committee and individual Directors was also discussed.

PARTICULARS OF LOANS, GUARANTEE AND INVESTMENTS

The Company has not made any loans, guarantees or investments during the year under review, pursuant to the provisions of Section 186 of the Companies Act, 2013.

RISK MANAGEMENT

Your Company has an elaborate Risk Management procedure. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The Audit Committee reviews the status of key risks and steps taken by the Company to mitigate such risks at regular intervals.

BUY BACK OF EQUITY SHARES

Pursuant to approval of Board of Directors at their meeting held on October 6, 2017, your Company completed Buy-Back of 20,00,000 equity shares in February 2018 for an aggregate amount of Rs. 50,00,00,000/-, being 11.90% of total paid up equity share capital of the Company at Rs. 250 per equity share. The Buy- Back was made from all existing shareholders of the Company as on December 8, 2017, the record date for the Buy-Back, on a proportionate basis under the Tender Offer route in accordance with the provisions contained in the Securities and Exchange Board of India (Buy Back of Securities) Regulations, 1998 and the Companies Act, 2013 and rules made thereunder.

RELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and SEBI (LODR) Regulations, your Company has formulated a Policy on Related Party Transactions which is available on Companys website; web link at http://lovableindia.in/index. php?route=information/information&information_id=69. The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties.

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a yearly basis for transactions which are of repetitive nature and or entered in the Ordinary Course of Business and are at Arms Length.

All Related Party Transactions entered during the year were in Ordinary Course of the Business and on Arms Length basis. No Material Related Party Transactions were entered during the year by the Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.

WHISTLE BLOWER MECHANISM / VIGIL MECHANISM

To create enduring value for all stakeholders and ensure the highest level of honesty, integrity and ethical behaviour in all its operations, the company has formulated a Vigil Mechanism in addition to the existing code of conduct that governs the actions of its employees. This Whistle blower policy aspires to encourage all employees to report suspected or actual occurrence(s) of illegal, unethical or inappropriate events (behaviours or practices) that affect Companys interest / image.

A copy of the Policy is available on the website of the Company and may be accessed through the web link http://lovableindia. in/index.php?route=information/information&information_id=69.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In order to prevent sexual harassment of women at work place a new act, The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified on 9th December 2013.

The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, to provide protection to women (including outsiders) at the workplace and for prevention and redressal of complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaint Committee to consider and to redress complaints of sexual harassment. The Committee has not received any complaint of sexual harassment during the year under review.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the requirements of Section 135 of Companies Act, 2013, your Company has constituted a Corporate Social Responsibility Committee. The composition, terms of reference and other relevant details of the Corporate Social Responsibility Committee is provided in the Corporate Governance Report.

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities and expenditure incurred thereon during the year are set out in "Annexure B" of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The policy is available on the website of the Company; web link http://lovableindia.in/index.php?route=information/information&information_id=69.

PARTICULARS OF EMPLOYEES

The information required under Section 197 of the Companies Act, 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been appended as "Annexure C" to this Report.

The information required under Section 197 of the Companies Act, 2013 read with Rule 5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not applicable, since during the year under review none of the employees of the Company was in receipt of remuneration in excess of the limits specified, whether employed for the whole year or part thereof.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms that:

in the preparation of the annual accounts for the financial year ended 31st March, 2018, the applicable accounting standards have been followed and that no material departures have been made from the same;

they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

they have prepared the annual accounts on a going concern basis;

they have laid down internal financial controls for the Company and such internal financial controls are adequate and operating effectively; and

they have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

DEPOSITS FROM PUBLIC

The Company has not accepted any deposits covered under Chapter V of the Companies Act, 2013. Accordingly, no disclosure or reporting is required in respect of details relating to deposits covered under this Chapter.

LISTING

Your Companys shares are listed in the BSE Limited, Mumbai (BSE) and National Stock Exchange of India Limited, Mumbai (NSE) and the annual listing fees have been duly paid.

CASH FLOW ANALYSIS

In conformity with the provisions of Regulation 34(2) of SEBI (LODR) Regulations, the Cash Flow Statement for the year ended 31.03.2018 is enclosed as a part of this Annual Report.

AUDIT COMMITTEE

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

AUDITORS

Statutory Auditors

M/s. DMKH & Co., a firm of Chartered Accountants were appointed as a Statutory Auditors of the Company for one term of 5 (five) consecutive years to hold office from the conclusion of the 30th Annual General Meeting held on 30th August, 2017 until the conclusion of the 35th Annual General Meeting (AGM) to be held in year 2022, subject to ratification of their appointment at every AGM, if so required under the Act. The Company has received their eligibility certificate subject to Section 139 and 141 of the Act and Rules made thereunder.

The Ministry of Corporate Affairs have, vide its Commencement Notification dated 7th May 2018, inter alia, notified the commencement of section 40 of the Companies (Amendment) Act, 2017, which omitted the proviso to sub-section (1) of section 139 of the Companies Act, 2013, mandating the requirement of annual ratification for Auditors appointment by the Members at every Annual General Meeting.

The notes on Financial Statements referred to in the Auditors Report are self-explanatory and do not call for any further comments. The Auditors Report does not contain any qualifications, reservation or adverse remark and is prepared as per "Ind AS".

Internal Auditors:

Pursuant to the provisions of Section 138 of the Act and the Companies (Accounts) Rules, 2014, the Board of Directors of the Company has appointed Bathiya & Associates LLP, to conduct internal audit reviews for the Company.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed M/s. D. M. Zaveri & Co., Practicing Company Secretaries, Mumbai to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure D". The auditors report and secretarial auditors report for the financial year 2017-18 does not contain any qualifications, reservations or adverse remarks. Report of the secretarial auditor is given as an annexure which forms part of this report.

REPORTING OF FRAUD BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditors has reported to the Audit committee, under section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officer or employees, the details of which would need to be mentioned in the Boards report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

No significant or material Orders were passed by the Regulators or Courts or Tribunals during the previous year which may impact the Going Concern Status of the Companys Operation in the future.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

In terms of the provisions of Section 125 of the Companies Act, 2013 read with the Companies (Declaration and Payment of Dividend) Rules, 2014, unclaimed / un-encashed dividend for the FY 2010-11 is due for transfer to IEPF on October 2018. Members who have not encashed their dividend warrants pertaining to the aforesaid years may approach the Company/ its Registrar, for obtaining payments thereof atleast 20 days before they are due for transfer to the said fund.

Pursuant to the provisions of the Investor Education Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012, the Company has already filed the necessary form and uploaded the details of unpaid and unclaimed amounts lying with the Company, as on the date of last Annual General Meeting (i.e. August 30, 2017), with the Ministry of Corporate Affairs.

CORPORATE GOVERNANCE

Your Company continues to lay a strong emphasis on transparency, accountability and integrity.

The Companies Act, 2013 and the Listing Regulations have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the new law.

Your Company has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report enclosed as "Annexure E" to this report.

The Policy on Related Party Transactions, Remuneration Policy, CSR Policy and Whistle Blower Policy are available on the website of the Company. The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report.

A separate report on Corporate Governance is provided together with a Certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the Listing Regulations. A Certificate of the CEO and CFO of the Company in terms of sub-Regulation 17(8) of the Listing Regulations, inter alia, confirming the correctness of the financial statements and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee, is also annexed.

MANAGEMENT DISCUSSION AND ANALYSIS

To avoid duplication between the Directors Report and the Management Discussion and Analysis, we present below a composite summary of performance and functions of the Company.

OVERALL REVIEW

For the Financial Year 2017-18 (FY18), it is worth taking a look at Indias economic performance over what has been quite an interesting period. While the first quarter of the year saw the impact of demonetisation settling down, in the next quarter, introduction of the landmark Goods and Services Tax (GST) brought in some uncertainties as businesses adjusted to the new regime. This did not take long, and from the third quarter onwards, signs of growth returning were evident.

One of your Companys factories suffered a devastating fire in November 2017 which reduced our production capacity by 40%. Your Company took quick measures to step up debottlenecking and production increases at its other units and salvage the supplies to the Sales channel to the best extent possible. Our financial results from Quarter 3 onwards have to be understood with this perspective.

In the coming financial year, what can we expect? As global economic activity continues to strengthen, global growth is forecast to grow by 3.9% during 2018 as per the International Monetary Funds (IMF) January 2018 World Economic Outlook. The IMF expects India to grow further to 7.8% during 2019 in contrast to the previous years growth.

The Indian innerwear market continues to be underpenetrated and thereby holds immense business opportunities. Given the positive macro and demographic fundamentals, the innerwear market has a favorable demand growth outlook over the medium-to-long term.. However, lesser product portfolio and high costs of brand building are expected to be the challenges for this sector. Brand sensitivity and consolidation are the major trends in the Indian innerwear industry.

Your Company has identified the twin routes of Deeper and Category-leading Brand-building and Scale-up of Production as the routes to high sales volumes and to be the engines of growth.

Accordingly your Company in the year 2018 has invested heavily in new marketing initiatives, advertising and a heightened media presence, besides launches of next generation products in Innerwear and Sportswear.

Due to increased business serving multiple sales channels, to prepare for higher volume sales expected going forward in 2018-19 and due to the fire at our old production plant as discussed earlier, the Company invested in additional production capacity with advanced systems, keeping long-term cost-efficiency in focus to increase the goods supply throughput, scale economies and to enhance our brands and products portfolio in the market. During the year under review, your Company commissioned its new plant at Erode, details of which are provided in the Corporate Governance Report.

The Indian retail market is expected to grow at CAGR of 13 per cent to reach US $1,080 billion in2020 with current market size of US $585 billion. The share of apparel in the Indian market is 8 per cent. Organised apparel retail contributes to 21 per cent of the total apparel retail. Indian fashion retail market has witnessed several significant changes in recent years, which indicate the countrys evolving fashion retail market. The current online retail share accounts to about 1.2 per cent of total retail market.

The innerwear category, currently estimated to be worth Rs. 25,034 crores, accounts for 8 percent of the total apparel market in 2016 and is expected to grow at CAGR of 12 percent over next five years and reach Rs. 80,117 crores by 2026. In recent years, the womens innerwear segment has grown consistently and estimated to be worth Rs. 16,259 crores in 2016 and accounts for 5 percent of the apparel market. Your Company is deploying suitable strategies to capitalize on its growth in its chosen segments. Your Company is deploying suitable strategies to capitalize on its growth in its chosen segments.

ENVIROMENT, HEALTH AND SAFETY

Your Company places utmost importance on ensuring safety of its employees, visitors to our premises and the communities we operate in.

Your Directors are committed to strict compliance of not just statutory requirements but even more stern internal policies and best practices related to environment, health and safety in all our units. In the year under review, your Company has further strengthened its commitment to workplace compliance by increasing the strength of the workplace Compliance Department to enhance monitoring and control in all these areas.

Environment: Your Company is an environment friendly organization as it is a non-polluting and non-effluent generating manufacturing set-up.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION & FOREIGN EXCHANGE EARNINGS & OUTGO

A. Conservation of Energy

Your Company has a vision of being a ‘Zero Injury organization. The Compass, your Companys strategic framework, integrates Safety as a non-negotiable value. Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, pursuant to Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, are furnished below:

a. Conservation of Energy:

The Company continually takes steps to absorb and adopt the latest technologies and innovations in the Garment Industry. These initiatives should enable the facilities to become more efficient and productive as the company expands, thus helping conserve energy. All machinery and equipment are continuously serviced, updated and overhauled in order to maintain them in good condition. This resulted in consumption of lesser energy consumption.

Additional Investments and Proposals for Reduction of Consumption of Energy: Nil

Total Energy Consumption and Energy Consumption per Unit of Production (Form-A and Form B Enclosed).

Conservation of Energy continues to receive increased emphasis at all the units of the Company.

Form – A

Form for Disclosure of particulars with respect of conservation of energy

Particulars 2017-18 2016-17
Power & Fuel Consumption
1. Electricity
a) Purchased Units (Lacs ) 6.62 7.17
Total Cost (Rs. In Lacs ) 52.29 54.85
Rate/Unit (Rs.) 7.90 7.65
b) Own Generation
1)Through Diesel Generator
Units ( Lacs ) 0.49 0.48
KWH per unit of fuel 4.67 4.67
Fuel Cost/Unit (Rs.) 12.48 12.45

b. Technology Absorption:

Absorbing technologies with state of art machineries like automated cutting machine, automated fabric inspection machines, etc., the quality of the products and efficiency of the systems have been substantially improved. By applying those technologies, the cost of production was under control.

The products manufactured and sold by the Company are not power intensive; hence the impact on overall cost is marginal. However, steps have been taken to ensure energy conservation in the processing unit where an energy efficient boiler is installed and condensate is being re-utilised.

Efforts made in Technology absorption as per Form B: Nil

B. Consumption per unit of Production

Product Electricity
2017-18 2016-17
Consumption per Unit 0.06 0.06

C. Foreign Exchange Earning and Outgoing

The Company had foreign exchange earnings from Exports during the year was NIL (Previous year NIL). The total amount of outgo on account of foreign exchange utilized by the Company amounted to Rs. 33.81 lakhs (Previous year Rs.49.35 lakhs) mainly on account of import of raw materials, finished goods, Capital Goods, foreign travel.

Foreign exchange earned and outgo during the year ended March 31, 2018:

Rs. In Lakhs
Particulars 2017-18 2016-17
Foreign Exchange Earned - -
Exports (FOB) - -
Technical Assistance - -
Total - -
Foreign Exchange Outgo - -
CIF Value of Imports 33.52 47.40
Travelling Expenses - 1.95
Others 0.29 -
Total 33.81 49.35

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Companys internal control systems are commensurate with the nature of its business and the size and complexity of operations. These systems are routinely tested and certified by Statutory as well as Internal Auditor and cover all offices, factories and key business areas. Periodical reports and significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee is headed by an Independent Director and this ensures independence of function and transparency of the process of supervision and oversight. The Audit Committee reviews adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations, including those relating to strengthening of the Companys risk management policies and systems. The Company conducts its business with integrity and high standard of ethical behaviour and in compliance with the laws and regulations that govern its business.

OPPORTUNITIES AND THREATS

Opportunities:

For the apparel industry in general and our market in particular:

More organized retail. Better consumer retail experience

Increasing fashion consciousness and consumers becoming more aspirational, discerning and brand savvy.

The factors that determine consumption, education, occupation, urbanization, rise in nuclear families moving in a positive direction

Increasing urban women population and women corporate workforce Increasing brand consciousness and spending on kids Higher disposable income Increasing online retail

Threats:

Many major international apparel brands have commenced operations in India realizing that Indian markets are likely to emerge as one of the largest market in the world in the next few decades. Competitive intensity is expected to sustain high.

RISKS AND CONCERNS

The Company has robust risk management procedures to identify and evaluate risks on an ongoing basis. The identified risks are integrated into the business plan and a detailed action plan to mitigate the identified business risk and concerns is put in place.

The key risks and concern identified by the company and its mitigation plans are:

Availability and Rising Cost of Labour:

The industry is growing at a fast pace, in a highly labour intensive sector and demand for experienced and trained manpower is outstripping supply. The ability to retain existing talent and attract new talent assumes crucial importance. The Company has created long term plans with the objective of motivating employees to create a sense of "belonging" and a ‘feel good environment. The Company has set up robust training centers at various units where newcomers to the labour force receive structured training.

Increase in input and brand-building costs:

The availability of raw materials at reasonable rates is one of the main concerns of the company. However the company is confident that increases in raw material cost, if and when they occur, can be passed on to consumers because of the strong pricing power of its brands. The company is also aggressively taking steps to monitor and improve productivity, which will mitigate the impact of material cost increases to some extent. The Company is also conscious that in the Media environment of exploding media vehicles and fragmented audiences, the challenges for achieving Brand Reach and delivering effective communication are rising disproportionately. The Company is taking steps to plan and execute media campaigns with higher efficiency and continue to achieve brand salience.

HUMAN RESOURCES

Your Company fully values the Human capital; it deploys and credits its success to them. It has been the consistent endeavor of the Company to create a congenial and challenging working atmosphere wherein every employee can develop his own strength and deliver to his full potential.

During the year under review, industrial relations in the factory were cordial and pro-active and all employees and the Union supported productivity and process improvement measures undertaken at all the functions of the Company. Their unstinted co-operation has enabled the unit to achieve continuous growth, both quantitatively and qualitatively. Your Company continued to maintain excellent industrial relations with all its employees and independent job work firms. Adequate safety and welfare measures are in place and your Company will continue to improve the same on ongoing basis.

As of 31st March 2018, the Company had 914 employees on its roll.

FUTURE OUTLOOK

The global economic climate continues to be volatile, uncertain and prone to geo-political risks. Weak consumer sentiment and low commodity prices are expected to affect global growth adversely.

Your Company has achieved a significant growth and has been constantly following emerging market trends and has accordingly from time to time revamped its marketing strategies and product portfolios. The Company is trying to come up with some new products and ranges of inner wears according to changing consumer needs and demand. Your Company has taken a step to evolve in the super-premium segment of innerwear. India is expected to perform better, aided by improving macroeconomic fundamentals. While currently inflation is benign, upside pressures on inflation from the vagaries of monsoon or sudden changes in the rupee, could have a significant bearing on inflation.

FMCG markets are expected to grow. While consumer confidence has increased, this has not yet translated into significant improvement in FMCG market conditions. There are a few green shoots in market growths; however, uncertain global economic environment, inflation and competitive intensity continue to pose challenges. Your Company, with its brands, talent and investment in capabilities, is well placed to benefit disproportionately from this opportunity.

CAUTIONARY STATEMENT

Statements in the management discussion and analysis describing the Companys objectives, projections, estimates and expectations may be considered as "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. The factors that might influence the operations of the Company are economic conditions, government regulations and natural calamities over which the Company has no control.

The Company assumes no responsibility in respect of the forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.

APPRECIATIONS AND ACKNOWLEDGEMENTS

Your Directors place on record their sincere appreciation for the significant contribution made by our employees through their dedication, hard work and commitment.

The Board places on record its appreciation for the support and co-operation your Company has been receiving from its customers, suppliers, distributors stockists, retailers, business partners and others associated with the Company as its trading partners. Your Company looks upon them as partners in its progress. It will be the Companys endeavour to build and nurture strong links with the trade based on mutuality of benefits, respect for and co-operation with each other, consistent with consumer interests. The Directors also take this opportunity to thank all Shareholders, Investors, Clients, Vendors, Bankers, Government and Regulatory Authorities and Stock Exchanges, for their continued support.

On behalf of the Board of Directors
Lovable Lingerie Limited
Place : Mumbai L Vinay Reddy L. Jaipal Reddy
Date : August 07, 2018 Chairman& Managing Director Whole Time Director
(DIN: 00202619) (DIN: 01539678)