Airo Lam Management Discussions


Pursuant to Regulation 34 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report are as follows:

Indian Economic Overview:

The Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic.

The Indian economy during the fiscal year 2022-2023 witnessed a mix of challenges and opportunities, shaped by both domestic and global factors. Here is a concise overview of key economic aspects during this period:

1. Growth and GDP: Despite initial setbacks due to the ongoing COVID-19 pandemic, the Indian economy showed signs of recovery during FY 2022-2023. GDP growth rebounded from the previous years contraction, driven by improvements in manufacturing, services, and agriculture sectors. The growth trajectory was supported by increased consumer spending, infrastructure development, and a gradual revival of trade activities.
2. Inflation: Inflation remained a concern during this fiscal year. Supply chain disruptions, rising energy prices, and supply-demand imbalances led to elevated inflation levels. The Reserve Bank of India (RBI) adopted a cautious approach to monetary policy to manage inflationary pressures while supporting economic growth.
3. Fiscal Deficit and Government Measures: The government continued to implement various fiscal measures to bolster the economy. While fiscal deficits remained a challenge, targeted spending on infrastructure, healthcare, and social welfare programs aimed to stimulate demand and generate employment opportunities.
4. Foreign Direct Investment (FDI): India continued to attract FDI across various sectors, including technology, manufacturing, and renewable energy. The governments efforts to ease regulatory hurdles and improve the ease of doing business contributed to increased investor confidence.
5. Digital Transformation: The pandemic accelerated the adoption of digital technologies across sectors. E-commerce, digital payments, and remote work became integral parts of the economic landscape. The governments initiatives, such as the Digital India campaign, further facilitated this digital transformation.
6. Trade and External Sector: Exports and imports exhibited recovery as global trade picked up momentum. Indias trade balance improved, aided by strong demand for pharmaceuticals, software services, and agricultural products. However, challenges such as supply chain disruptions and fluctuating commodity prices persisted.
7. Agriculture and Rural Economy: The agriculture sector played a crucial role in supporting the economy. Favorable monsoon seasons and government initiatives contributed to robust agricultural production. Rural demand remained relatively resilient, providing stability to the economy.
8. Banking and Financial Sector Reforms: The banking sector underwent reforms aimed at strengthening financial institutions, improving asset quality, and enhancing credit availability. The rollout of the bad bank concept and ongoing efforts to address non-performing assets were notable steps in this direction.
9. Challenges and Risks: Despite the overall recovery, challenges persisted, including job creation, income inequality, and uneven growth across sectors. Geopolitical tensions, global economic uncertainties, and the potential for future waves of the pandemic also posed risks to Indias economic outlook.
10. Environmental Sustainability: The governments emphasis on sustainable development gained prominence during this fiscal year. Initiatives focused on renewable energy expansion, waste management, and biodiversity conservation showcased a commitment to environmental responsibility.

In conclusion, the Indian economy navigated through a transformative year marked by recovery, reforms, and resilience. While challenges remained, strategic measures and policy initiatives contributed to growth across various sectors. The coming years are anticipated to witness further advancements as India strives to position itself as a robust and innovative global economic player.

Performance of major economies:

? United States: Reported GDP growth of 2.1% compared to 5.9% in 2021? China: GDP growth is expected to contract from 8% in 2021 to 3% in 2022. ? United Kingdom: GDP is expected to grow 4.1% in 2022 compared to 7.6% in 2021.

? Japan: Reported growth of 1.7% in 2022 compared to 1.6% in 2021. ? Germany: Reported GDP growth of 1.8% compared to 2.6% in 2021.

(Source: PWC report, EY report, IMF data, OECD data)

Indian Market Overview:

Laminates

The Indian decorative laminates market is valued at 12,000 crore and is growing attractively. This growth is due to factors such as increasing urbanization, adoption of higher living standards and shifting preference for modern home furnishings. The possibility of the government of India bringing the laminates sector under the PLI scheme in the near future is further expected to contribute to its growth. (Source: The Hindu Business Line)

Decorative veneers

Consumers are increasingly opting for decorative veneers due to their durability, elegant finish and Environmentally-friendly nature. Sustainable nature. Going forward, the demand for veneers is expected to be propelled by the increasing demand for luxury homes, higher disposable income and the growth of upscale shopping malls, premium retail stores, hotels and other establishments arising from the increasing pace of urbanization. (Source: imarcgroup.com, futuremarketinsights.com)

Flooring and doors

The market demand for engineered wood flooring and doors is projected to grow due to their increasing popularity as an affordable alternative to hardwood flooring. Engineered woods high durability and low maintenance requirements are also significant factors contributing to its rising demand. Furthermore, the expanding population and the growing need for housing are expected to drive the demand for wooden flooring and doors even higher. (source: grandviewresearch.com)

In conclusion, the Indian market for lamination and plywood products demonstrated resilience and growth during the fiscal year [2022-2023]. Our companys ability to adapt to changing market dynamics, embrace innovation, and uphold quality standards enabled us to thrive in this competitive landscape.

Demand drivers

The India plywood market size reached INR 208.5 Billion in FY 2022-23. Looking forward, IMARC Group expects the market to reach INR 306.5 Billion by FY 2028-29, exhibiting a growth rate (CAGR) of 6.74% during 2023-24 to 2028-29. Plywood represents an engineered wood that is produced by assembling thin layers of wood veneers connected together using strong adhesives. Several varieties, including mahogany, oak, pine, maple, cedar, spruce, etc., are utilized in combination to manufacture this wood for various applications.

Rising population:

In April 2023, India has overtaken China as the worlds most populous country with a population of 1.4286 billion. This is expected to lead to a greater demand in the construction industry for the building of homes and public infrastructure.

Urbanization:

As of 2020, around one-third of Indias population was likely living in cities. By 2031, 75% of Indias national income is expected to come from cities.

Growing middle class income:

India is expected to form 23% of the global middle class, leading to an increase in households earning between USD 10,000 and USD 50,000 per year, expanding the wallet share for spending on home or office interiors.

Demographic dividend

In 2022, the average age of an Indian was 28.7 years. More than half of Indias population is under 25 years of age, fostering demand for ready-made furniture compared to traditional carpentry

Rise in demand for houses:

The Indian real estate market is expected to reach a value of US$ 30 trillion by 2030. This will, in turn, drive the demand for Indian furniture.

(Source: Population U, Business Standard, Indian Retailer, Statista, India.com, Business Today.in)

Discussion on performance, Financial Year 2022-23

Balance Sheet

? Total assets for FY 2022-23 stood at Rs. 16240.69 Lakhs compared to Rs. 15968.74 Lakhs in FY

2022-23.

? Net worth stood at Rs. 6425.11 Lakhs as on 31st March, 2023 compared to Rs. 5642.52 Lakhs as on 31st March, 2022.

Profit and loss statement

Revenues from operations increased from Rs. 1688.96 Lakhs in FY 2021-22 to Rs. 19946.03 Lakhs in FY 2022-23

Profit after tax was witnessed at Rs. 739.54 Lakhs in FY 2022-23 as compared to FY 2021-22 at Rs. 672.50 Lakhs

Depreciation and amortisation stood at Rs. 331.92 Lakhs in FY 2022-23 compared to Rs. 304.67 Lakhs in FY 2021-22.

Risks and Concerns

The Company has framed a sound Risk Management Policy to identify and evaluate business risks and opportunities and the same has become integral part of Companys day to day operations. The key business risks identified by the Company are as follows viz. Industry Risk, Management and Operations Risk, Market Risk, Government Policy risk, Liquidity risk, and Systems risk. The Company has in place adequate mitigation plans for the aforesaid risks.

Human Resources and Industrial Relations

The Company has created an enabling working environment where employees are selectively recruited, trained and provided with superior career growth. During the year under review, the Company organised various training programmes with a focus on enhancing functional and behaviourial competencies. The Company enjoys a harmonious relationship with factory workers; it comprises a blend of millennial and experienced employees.

Internal control systems and their adequacy

The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorised, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The internal management of the company checks and verifies the internal control and monitors them in accordance with policy adopted by the company. The Company continues to ensure proper and adequate systems and procedures commensurate with its size and nature of its business.

Cautionary Statement

The statements in the ‘management discussion and analysis section describing the Companys objectives, projections, estimates and prediction may be considered as forward looking statements. All statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market positioning, expenditures and financial results are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent developments, information or events.