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Lovable Lingerie Ltd.

BSE: 533343 Sector: Industrials
NSE: LOVABLE ISIN Code: INE597L01014
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OPEN 59.65
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VOLUME 1847
52-Week high 87.35
52-Week low 34.00
P/E
Mkt Cap.(Rs cr) 87
Buy Price 58.35
Buy Qty 200.00
Sell Price 60.90
Sell Qty 500.00
OPEN 59.65
CLOSE 58.90
VOLUME 1847
52-Week high 87.35
52-Week low 34.00
P/E
Mkt Cap.(Rs cr) 87
Buy Price 58.35
Buy Qty 200.00
Sell Price 60.90
Sell Qty 500.00

Lovable Lingerie Ltd. (LOVABLE) - Director Report

Company director report

To

The Members

Your Company's Directors are pleased to present the 33rd Annual Report ofthe Company along with the Audited Financial Statements for the financial year ended 31stMarch 2020.

FINANCIAL SUMMARY

(Rs. in Lakhs)
Particulars 2019-20 2018-19
Revenue from operations 14237.81 17550.54
Operating Expenditure 13619.92 16842.23
Profit Before Interest Tax & Depreciation 617.89 708.31
Other Income (net) 121.23 206.05
Finance Costs 9.38 7.23
Profit before Tax and Depreciation 729.74 907.14
Depreciation and amortization expense 176.22 168.63
Profit before Extra-Ordinary Item 553.52 738.51
Extra-Ordinary Item 151.08 415.92
Profit before Tax (PBT) 402.45 322.59
Provision for Taxation 88.38 241.05
Profit for the year (PAT) 314.07 81.55
Surplus brought forward from previous year 9044.03 9029.40
Amount available for appropriation 9328.78 9044.03
Appropriations: - -
Transferred to General Reserve - -
Dividend (excluding tax) 74.00 -
Tax on Dividend 15.06 -
Proposed Dividend on Equity Share Capital - -
Corporate Dividend Tax on Proposed Dividend - -
Adj for Depreciation of prior years pursuant to change in useful life - -
Balance Carried to Balance Sheet 9239.72 9044.03
EPS Basic & Diluted- Before Extraordinary Items (in Rs.) 3.14 3.36
EPS Basic & Diluted- After Extraordinary Items (in Rs.) 2.12 0.55

OPERATIONS

For the financial year 2019-20 the Company recorded a net turnover of Rs.14237.81lakhs as against Rs.17550.54 lakhs for the financial year 2018-19 registering a decreaseof 18.87%. The Net Profit Before Tax stood at Rs.402.45 lakhs as against Rs. 322.59 lakhsover last year and Profit After Tax stood at Rs.314.07 lakhs for the year as againstRs.81.55 lakhs in the last year.

SEGMENT-WISE RESULTS

The Company is engaged in the business of manufacturing garments. Therefore there isno separate reportable segment.

TRANSFER TO RESERVES

The Board of Directors has decided to retain the entire amount of profits in the profitand loss account.

DIVIDEND

The Board of Directors has recommended a final dividend of 5% on Equity Shares i.e.0.50 INR per Equity Share of 10 each for the financial year ended on 31stMarch 2020. The final dividend if approved at the forthcoming Annual General Meeting(AGM) will be paid out of the profits of the Company and the same will be paid to thosemembers whose names shall appear on the Company's Register of Members as on the Recorddate and/or the Book Closure date as may be determined by the Board of Directors. Thetotal dividend for the financial year including the proposed Final Dividend amounts toRs.0.50 per equity share and will absorb Rs 74.00 Lakhs. In view of the changes made underthe Income-tax Act 1961 by the Finance Act 2020 dividends paid or distributed by theCompany shall be taxable in the hands of the Shareholders. Your Company shallaccordingly make the payment of the Final Dividend after deduction of tax at source.

SUBSIDIARY/JOINT VENTURE/ASSOCIATE COMPANY

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

MATERIAL CHANGES AND COMMITMENT

No material changes (except global pandemic situations) and commitments affecting thefinancial position of the Company occurred between the end of the financial year to whichthis financial statement 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 theCompanies Act 2013 (‘the Act') read along with Rule 12 of the Companies (Managementand administration) Rules 2014 in prescribed form MGT-9 is enclosed as "AnnexureA" to this report and the same has been disclosed on the company's website and isaccessible onhttp://lovableindia.in/index.php?route=information/information&information_id=17

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) retires by rotation at the ensuing Annual General Meeting(‘AGM')and is eligible for re-appointment. The Board of Directors recommends there-appointment of Mrs. Taruna Reddy as a Non-executive Director of the Company.

During the year under review no change took place in the composition of Board ofDirectors of the Company.

In terms of Section 203 of the Act the Board has designated the following persons asKey Managerial Personnel of your Company:

• Mr. L Vinay Reddy Chairman & Managing Director

• Mr. Raghunathan Govindarajan Chief Financial Officer

• Ms. Divya Shrimali Company Secretary & Compliance Officer

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION

For the purpose of selection of any Director the Nomination and Remuneration Committeeidentifies the person of integrity who possess relevant expertise experience andleadership qualities required for the position and also takes into considerationrecommendation if any receives from any members of the Board. The Committee also ensuresthat the incumbent fulfills such other criteria with regard to age and otherqualifications as laid down under the Companies Act 2013 or other applicable laws.

The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration.

The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the corporate governancereport which forms part of the directors' report.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declaration from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed undersub-section (6) of Section 149 of the Companies Act 2013and as per SEBI (ListingObligation and Disclosure Requirement) Regulation 2015 ("Listing Regulation2015").

COMMITTEES OF THE BOARD OF DIRECTORS

The Company has constituted the following committees in compliance with the CompaniesAct 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 briefdescription composition and other required details of the above committees are providedin Corporate Governance Section to this Annual Report.

FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS

In compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (SEBI (LODR) Regulations") the Company has put in place a FamiliarizationProgramme for the Independent& Non-Executive Directors to familiarize them with theCompany their roles rights responsibilities in the Company nature of the industry inwhich the Company operates business model etc. The details of such programme is availableon the website of the company www.lovableindia.in and may be accessed through the web linkhttp://lovableindia.in/index.php?route=information/information&information_id=69.

NUMBER OF MEETINGS OF THE BOARD

The Board of Directors met 4 (Four) times during the year on 29th May 2019;10th August 2019; 12th November 2019; and 13thFebruary 2020. For details of the meetings of the board please refer to the corporategovernance report which forms part of this report. The intervening gaps between theMeetings 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 theInstitute 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 performanceits various committees and individual directors pursuant to the provisions of theCompanies Act 2013 the Corporate Governance requirements as prescribed under regulation17(10) 25(4) and other applicable provisions of the SEBI (LODR) Regulations and theGuidance note issued by SEBI.

The performance of the Board was evaluated by the Board after seeking inputs from allthe directors on the basis of various criteria such as Board Composition processdynamics quality of deliberations strategic discussions effective reviews committeeparticipation governance reviews etc.

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

The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual directors on the basis of the criteria such as Transparency AnalyticalCapabilities Performance Leadership Ethics and ability to take balanced decisionsregarding stakeholders.

In a separate meeting of independent directors performance of non-independentdirectors performance of the board as a whole and performance of the Chairman wasevaluated taking into account the views of the executive directors and non-executivedirectors. The same was discussed in the board meeting that followed the meeting ofindependent directors at which the performance of the Board its committee and individualDirectors was also discussed.

PARTICULARS OF LOANS GUARANTEE AND INVESTMENTS

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

RISK MANAGEMENT

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

RELATED PARTY TRANSACTIONS

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

All Related Party Transactions are placed before the Audit Committee for review andapproval. Prior omnibus approval is obtained for Related Party Transactions on a yearlybasis for transactions which are of repetitive nature and or entered in the OrdinaryCourse of Business and are at Arm's Length.

All Related Party Transactions entered during the year were in Ordinary Course of theBusiness and on Arm's Length basis. No Material Related Party Transactions were enteredduring the year by the Company. Accordingly the disclosure of Related Party Transactionsas required under Section 134(3) (h) of the Companies Act 2013 in Form AOC 2 is notapplicable.

WHISTLE BLOWER MECHANISM/VIGIL MECHANISM

To create enduring value for all stakeholders and ensure the highest level of honestyintegrity and ethical behaviour in all its operations the company has formulated a VigilMechanismin addition to the existing code of conduct that governs the actions of itsemployees. This Whistleblower policy aspires to encourage all employees to reportsuspected or actual occurrence(s) of illegal unethical or inappropriate events(behaviours or practices) that affect Company's interest / image. A copy of the Policy isavailable on the website of the Company and may be accessed through the web linkhttp://lovableindia. in/index.php?route=information/information&information_id=69.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013

The Company has adopted a Policy on Prevention Prohibition and Redressal of SexualHarassmentat the Workplace to provide protection to women (including outsiders) at theworkplace and for prevention and redressal of complaints of sexual harassment and formatters connected or incidental thereto with the objective of providing a safe workingenvironment where employees feel secure. The Company has also constituted an InternalComplaints Committee to consider and to redress complaints of sexual harassment. TheCommittee has not received any complaint of sexual harassment during the year underreview.

The Committee has not received any complaint of sexual harassment during the year underreview.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the requirements of Section 135 of Companies Act 2013 your Companyhas constituted a Corporate Social Responsibility Committee. The composition terms ofreference and other relevant details of the Corporate Social Responsibility Committee isprovided in the Corporate Governance Report.

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Companyand the initiatives undertaken by the Company on CSR activities and expenditure incurredthereon during the year are set out in "Annexure B" of this report in theformat prescribed in the Companies (Corporate Social Responsibility Policy) Rules 2014.The policy is available on the website of the Company; weblinkhttp://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 rule5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014has been appended as "Annexure C" to this Report.

The information required under Section 197 of the Companies Act 2013 read with Rule5(2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014is not applicable since during the year under review none of the employees of the Companywas in receipt of remuneration in excess of the limits specified whether employed for thewhole 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 31stMarch 2020 the applicable accounting standards have been followed and that no materialdepartures have been made from the same;

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

• they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

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

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

PUBLIC DEPOSITS

The Company has not accepted any deposits covered under Chapter V of the Companies Act2013.

LISTING

Your Company's shares are listed in the BSE Limited Mumbai (BSE) and National StockExchange 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 theCash Flow Statement for the year ended 31.03.2020 is enclosed as a part of this AnnualReport.

AUDIT COMMITTEE

The details pertaining to composition of audit committee are included in the CorporateGovernance Reportwhich forms part of this report.

AUDITORS

Statutory Auditors

M/s. DMKH & Co. a firm of Chartered Accountants were appointed as a StatutoryAuditors of the Company for One term of 5 (five) consecutive years to hold office from theconclusion of the 30th Annual General Meeting held on 30th August2017 until the conclusion of the 35th Annual General Meeting (AGM) to be heldin year 2022.

The notes on Financial Statements referred to in the Auditors Report areself-explanatory and do not call for any further comments. The Auditors' Report does notcontain any qualifications reservation or adverse remark and is prepared as per "IndAS".

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hadappointed M/s. D. M. Zaveri & Co. Practicing Company Secretaries Mumbai to undertakethe Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "AnnexureD". Reply to the observations made in Secretarial Report:

a) The observation given by the Secretarial Auditor in respect of delay intransferring/crediting the shares to Investor Education and Protection Fund the delay wasunintentional and was occurred inadvertently and the Company is in process to comply thesame at the earliest.

b) The observation given in respect of delay occur for publication of notice of BoardMeeting held on 10th August 2019 in newspaper advertisement by 2(two) dayspursuant to sub-regulation (1) of Regulation 47 Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 the delay wasunintentional and was occurred inadvertently.

REPORTING OF FRAUD BY AUDITORS

During the year under review neither the statutory auditors nor the secretarialauditors has reported to the Audit committee under section 143(12) of the Companies Act2013 any instances of fraud committed against the Company by its officer or employeesthe details of which would need to be mentioned in the Board's 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 Tribunalsduring the previous year which may impact the Going Concern Status of the Company'sOperation 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 theCompanies (Declaration and Payment of Dividend) Rules 2014 unclaimed / un-encasheddividend for the FY 2012-13 is due for transfer to IEPF on 5th September 2020.Members who have not encashed their dividend warrants pertaining to the aforesaid yearsmay approach the Company/ its Registrar for obtaining payments thereof atleast 20 daysbefore they are due for transfer to the said fund.

Pursuant to the provisions of the Investor Education Protection Fund (Uploading ofinformation regarding unpaid and unclaimed amounts lying with companies) Rules 2012 theCompany has already filed the necessary form and uploaded the details of unpaid andunclaimed amounts lying with the Company as on the date of last Annual General Meeting(i.e. September 26 2019) with the Ministry of Corporate Affairs.

CORPORATE GOVERNANCE

Your Company continues to lay a strong emphasis on transparency accountability andintegrity.

The Companies Act 2013 and the Listing Regulations have strengthened the governanceregime in the country. Your Company is in compliance with the governance requirementsprovided under the new law.

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

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

A separate report on Corporate Governance is provided together with a Certificate fromthe Statutory Auditors of the Company regarding compliance of conditions of CorporateGovernance as stipulated under the Listing Regulations. A Certificate of the CEO and CFOof the Company in terms of sub-Regulation 17(8) of the Listing Regulations inter aliaconfirming the correctness of the financial statements and cash flow statements adequacyof the internal control measures and reporting of matters to the Audit Committee is alsoannexed.

MANAGEMENT DISCUSSION AND ANALYSIS

To avoid duplication between the Directors' Report and the Management Discussion andAnalysis we present below a composite summary of performance and functions of theCompany.

OVERALL INDUSTRY

The Indian textiles industry currently estimated at around US$ 150 billion isexpected to reach US$ 250 billion by 2019. India's textiles industry contributed seven percent of the industry output (in value terms) of India in 2017-18. It contributes 2.3% tothe GDP of India 7% of the country's manufacturing production and 13% of country's exportearnings. It employs more than 45 million people and expected to touch 55 million by 2020rendering it a very vital component of India's organized and unorganized sectoremployment.

India is well integrated in the value-chain of the Textile Industry from fibre tofashion.

The production of raw cotton in India is estimated to have reached 36.1 million balesin FY19.

GOVERNMENT INITIATIVES

The Indian government has come up with a number of export promotion policies for thetextiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector underthe automatic route.

Initiatives taken by Government of India are:

- The Directorate General of Foreign Trade (DGFT) has revised rates for incentivesunder the Merchandise Exports from India Scheme (MEIS) for two subsectors of TextilesIndustry - Readymade garments and Made ups - from 2 per cent to 5 per cent.

- As of August 2018 the Government of India has increased the basic custom duty to 20per cent from 10 per cent on 501 textile products to boost "Make in India" andindigenous production.

- The Government of India announced a Special Package to boost exports by US$ 31billion create one crore job opportunities and attract investments worth Rs 80000 crore(US$ 11.93 billion) during 2018-2020. As of August 2018 it generated additionalinvestments worth Rs 25345 crore (US$ 3.78 billion) and exports worth Rs 57.28 billion(US$ 854.42 million).

- The Government of India has taken several measures including Amended TechnologyUp-gradation Fund Scheme (A-TUFS). This Scheme is estimated to create employment for 35lakh people and enable investments worth Rs 95000 crore (US$ 14.17 billion) by 2022.

- Integrated Wool Development Programme (IWDP) approved by Government of India toprovide support to the wool sector starting from wool rearer to end consumer which aims toenhance the quality and increase the production during 2017-18 and 2019-20.

- The Cabinet Committee on Economic Affairs (CCEA) Government of India has approved anew skill development scheme named ‘Scheme for Capacity Building in Textile Sector(SCBTS)' with an outlay of Rs 1300 crore (US$ 202.9 million) from 2017-18 to 2019-20.

- Government of India approves special package for employment generation viz

• Employee Provident Fund Scheme Reforms

• Increasing overtime caps

• Introduction of fixed term employment

• Additional incentives under ATUFS

• Enhanced duty drawback coverage

• Enhancing scope of Section 80JJAA of Income Tax Act

The management discussion and analysis presents the industry Overview StrengthOpportunities and Performance Initiatives by the Company and overall strategy of LovableLingerie Limited becoming a market driven producer/exporter of various innovative modelsand ranges of Textiles products.

OVERALL REVIEW

Indian Textile industry can be divided into several segments some of which can belisted as below:

- Cotton Textiles

- Silk Textiles

- Woolen Textiles

- Readymade Textiles

- Jute and Coir

STRENGTH

- India has rich resources of raw materials for the textile industry. It is one of thelargest producers of cotton in the world and also rich in resources of fibres likepolyester silk viscose etc.

- India is riched in highly trained manpower. The country has a huge advantage due tolower labour rates. Because of low labour rates the manufacturing cost in textilemanufacturing automatically comes down to very reasonable levels.

- India is highly competitive in spinning sector and has presence in almost allprocesses of the value chain.

OPPORTUNITY

- Low per-capita domestic consumption of textile indicating significant potentialgrowth.

- The Domestic market is extremely sensitive to fashion fads and this has resulted inthe development of a responsive garment industry catering to paying and aspirationalcustomers.

- India's global share is just 3% while China controls about 15% signifyingconsiderable headroom to scale up.

- Companies need to concentrate on new global product standards for leveraging theopportunities.

PERFORMANCE OF THE TEXTILE INDUSTRY

- The industry which was growing at 3-4% during the last six decades has nowaccelerated to the annual growth rate of 9-10% but various factors have effecting annualgrowth rate of textile industry Global recession and Domestic demand slowdown coupledwith a Supply glut is one of them.

- The impact of the global and domestic economic slowdown is directly affect theperformance of the industry.

INITIATIVES

Capacity building:

In order to steer your company into an aggressive growth path the company is lookinginto enter the mass segment which had not been fully explored by the company till date.To meet the expected demand from the mass segment the company is building new capacity atour Erode Plant with an annual production capacity of 25 lakhs nos. which is 30% of thecompany's total capacity.

Upskilling of Employees:

Of all the factors of production work force comes first. Upskilling and Reskilling thethe work force in tune with the latest technological developments not only motivates theemployees but also increase the productivity and upgrades product standards. Your companyassisted with the Government of India Initiative on Upskilling and Resiklling"Samarth" schemes set up and tied up with training centres to equip our workforce with modern techniques.

New Product Categories and Styles:

Your company has identified the twin routes of deeper & category-leadingbrand-building & scale-up of production routes to high sales volumes & to be theengines of growth.

SS'19 collection of Lovable comprised of Premium & Classic products likeEncircle-The Original Encircle-Elite ADL-The 1 whole new range of styles in ourConfi-series & a whole new line of products under the name "Prime" whichcaters the plus- size category of the market. Under Daisy Dee the company has launched anew sub-brand by the name of Daisy Dee OUTFIT for tapping into the Athleisure category.The company is looking to tap mass segment under the category of "LovableEssensuals"

Accordingly your company in the year 2019-20 has invested heavily in new marketinginitiatives advertising & a heightened media presence besides launches of newtrendy products in innerwear & sportswear. Your company has also increased its onlinepresence through various mediums of social media and presence on leading EcommerceMarketplaces. Dealer Apps for direct communication with the market has also been launchedin 2019.

ENVIROMENT HEALTH AND SAFETY

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

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

Environment: Your Company is an environment friendly organization as it is anon-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 yourCompany's strategic framework integrates Safety as a non-negotiable value. Information onconservation of energy technology absorption foreign exchange earnings and outgopursuant 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 andinnovations in the Garment Industry. These initiatives should enable the facilities tobecome more efficient and productive as the company expands thus helping conserve energy.All machinery and equipment are continuously serviced updated and overhauled in order tomaintain them in good condition. This resulted in consumption of lesser energyconsumption.

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

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

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

Form A

Form for Disclosure of particulars with respect of conservation of energy

Particulars 2019-20 2018-19
Power & Fuel Consumption
1. Electricity
a) Purchased Units (Lacs ) 5.55 6.07
Total Cost (Rs. In Lacs) 57.44 60.81
Rate/Unit (Rs.) 10.35 10.01

 

Particulars 2019-20 2018-19
b) Own Generation
1) Through Diesel Generator
Units (Lacs) 0.42 0.58
KWH per unit of fuel 4.67 4.67
Fuel Cost/Unit (Rs.) 18.87 15.38

b. Technology Absorption:

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

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

Efforts made in Technology absorption as per Form B: Nil

B. Consumption per unit of Production

Product Electricity
2019-20 2018-19
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 bythe Company amounted to Rs.33.82 lakhs (Previous year Rs. 66.10 lakhs) mainly on accountof import of raw materials finished goods Capital Goods foreign travel.

Foreign exchange earned and outgo during the year ended March 31 2020:

(Rs. in lakhs)
Particulars 2019-20 2018-19
Foreign Exchange Earned - -
Exports (FOB) - -
Technical Assistance - -
Total - -
Foreign Exchange Outgo - -
CIF Value of Imports 28.38 38.13
Travelling Expenses - -
Others 5.44 27.97
Total 33.82 66.10

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company's internal control systems are commensurate with the nature of its businessand the size and complexity of operations. These systems are routinely tested andcertified by Statutory as well as Internal Auditor and cover all offices factories andkey business areas. Periodical reports and significant audit observations and follow upactions thereon are reported to the Audit Committee. The Audit Committee is headed by anIndependent Director and this ensures independence of function and transparency of theprocess of supervision and oversight. The Audit Committee reviews adequacy andeffectiveness of the Company's internal control environment and monitors theimplementation of audit recommendations including those relating to strengthening of theCompany's risk management policies and systems. The Company conducts its business withintegrity and high standard of ethical behaviour and in compliance with the laws andregulations that govern its business.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS COMPARED TO PREVIOUS YEAR

Sr No. Particulars Year 2019-20 Year 2018-19 Change in %
1 Debtors Turnover 3.47 3.85 (10%)
2 Inventory Turnover 2.62 3.50 (25%)
3 Interest Coverage Ratio 60.00 103.18 (42%)
4 Current Ratio 6.02 4.10 47%
5 Debt Equity Ratio 0.05 - 5%
6 Operating Profit Margin (%) 4% 4% (7%)
7 Net Profit Margin (%) 3% 3% 15%
8 Return on Net worth 3% 3% (7%)

Explanation: Due to increased competitive intensity and contraction of overalldemand there was a drop in our turnover in FY20 as compared to FY19. The drop in turnoverhas impact on profitability and financial ratios for FY20 as compared to FY19.

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 aspirationaldiscerning and brand savvy.

• The factors that determine consumption education occupation urbanizationrise 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.

• Company need to concentrate on new global product.

• Low per-capita domestic consumption of textile indicating significant potentialgrowth.

Threats:

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

India's global share is just 3% while China controls about 15%. In post 2015 China isexpected to capture 43% of global textile trade.

RISKS AND CONCERNS

The Company has robust risk management procedures to identify and evaluate risks on anongoing basis. The identified risks are integrated into the business plan and a detailedaction 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 demandfor experienced and trained manpower is outstripping supply. The ability to retainexisting talent and attract new talent assumes crucial importance. The Company has createdlong term plans with the objective of motivating employees to create a sense of"belonging" and a ‘feel good' environment. The Company has set up robusttraining centers at various units where newcomers to the labour force receive structuredtraining.

Increase in input and brand-building costs:

The availability of raw materials at reasonable rates is one of the main concerns ofthe company. However the company is confident that increases in raw material cost if andwhen they occur can be passed on to consumers because of the strong pricing power of itsbrands. The company is also aggressively taking steps to monitor and improve productivitywhich will mitigate the impact of material cost increases to some extent. The Company isalso conscious that in the Media environment of exploding media vehicles and fragmentedaudiences the challenges for achieving Brand Reach and delivering effective communicationare rising disproportionately. The Company is taking steps to plan and execute mediacampaigns with higher efficiency and continue to achieve brand salience.

HUMAN RESOURCES

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

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

As of 31st March 2020 the Company had 1099 employees on its roll.

FUTURE OUTLOOK

The future for the Indian textile industry looks promising buoyed by both strongdomestic consumption as well as export demand. With consumerism and disposable income onthe rise the retail sector has experienced a rapid growth in the past decade with theentry of several international players like Marks & Spencer Guess and Next into theIndian market.

High economic growth has resulted in higher disposable income. This has led to rise indemand for products creating a huge domestic market.

The global economic climate continues to be volatile uncertainand prone togeo-political risks. Weak consumer sentiment and low commodity prices are expected toaffect global growth adversely.

Your Company has achieved a significant growth and has been constantly followingemerging market trends and has accordingly from time to time revamped its marketingstrategies and product portfolios. The Company is trying to come up with some new productsand 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.

CAUTIONARY STATEMENT

Statements in the management discussion and analysis describing the Company'sobjectives projections estimates and expectations may be considered as "forwardlooking statements" within the meaning of applicable securities laws and regulations.Actual results could differ materially from those expressed or implied. The factors thatmight influence the operations of the Company are economic conditions governmentregulations and natural calamities over which the Company has no control.

The Company assumes no responsibility in respect of the forward-looking statementsherein which may undergo changes in future on the basis of subsequent developmentsinformation or events.

APPRECIATIONS AND ACKNOWLEDGEMENTS

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

The Board places on record its appreciation for the support and co-operation yourCompany has been receiving from its customers suppliers distributors stockistsretailers business partners and others associated with the Company as its tradingpartners. Your Company looks upon them as partners in its progress. It will be theCompany's endeavour to build and nurture strong links with the trade based on mutuality ofbenefits respect for and co-operation with each other consistent with consumerinterests.

The Directors also take this opportunity to thank all Shareholders Investors ClientsVendors Bankers Government and Regulatory Authorities and Stock Exchanges for theircontinued support.

On behalf of the Board of Directors
For Lovable Lingerie Limited
Sd/-
L Vinay Reddy
Managing Director
Place: Mumbai DIN: 00202619
Mumbai 29th July 2020