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HOME   >  CORPORATE INFO >  MANAGEMENT DISCUSSION
Management Discussion      
Ingersoll-Rand (India) Ltd.
BSE Code 500210
ISIN Demat INE177A01018
Book Value 202.52
NSE Code INGERRAND
Dividend Yield % 1.68
Market Cap 131793.24
P/E 54.65
EPS 76.39
Face Value 10  
Year End: March 2016
 

MANAGEMENT DISCUSSION AND ANALYSIS

I. Industry Structure and Development: The Economic Survey of India reports the India GDP growth for fiscal 2015-16 at 7.5% making it the fastest growing economy in the World. The rise in growth can be credited to several factors including structural reforms and higher investment, higher discretionary demand on Pay Commission wage hike, low inflation, high corporate profitability, ongoing implementation of public capex and an accommodative monetary policy stance. The effect of gradual implementation of structural reforms is also expected to contribute to higher growth despite lack of progress on big ticket reforms including Land Acquisition Amendment Bill and the Goods and Services Tax. The Make in India campaign has successfully built a positive sentiment for the investors and positioned India well for attracting Foreign Direct Investment (FDI) and boosting industrial progress within the country. Your Company's products are primarily sold to industries in the automotive, metals, pharmaceutical and textile sectors and these sectors have shown positive growth improving the revenue growth this year.

Segment-wise operational performance: Air Solutions is the only continuing segment in your Company's operations. The gross revenue of Air Solutions business in the year under review was INR 6,765 million as against INR 6,515 million in the brvious financial year. Your Company continues to focus on local innovation and developing products 'for India and by India'.

Your Company had set up a manufacturing facility at Mahindra World City in Chennai for manufacture of refrigeration products and to be sold exclusively to Ingersoll Rand Climate Solutions Private Limited (IRCSPL). At a meeting of the Board of Directors held on 21st September 2015, your Directors decided to discontinue the operations at the Company's plant in Chennai on account of lack of future orders from IRCSPL and entered into a termination agreement for terminating the supply agreement with IRCSPL. In terms of the termination agreement, IRCSPL will reimburse all the loss, expenses and taxes that may be suffered by your Company by way of damages upto the time all assets of Chennai Plant are disposed of and proceeds received by the Company. The gross revenue from Chennai Plant was INR 357 million during the year under review as against INR 502 million in the brvious financial year.

The profit before tax and after exceptional items is Rs. 835 million in the year under review as against Rs. 1,009 million in the brvious financial year.

Outlook: The outlook for the financial year 2016-17 is optimistic with the GDP growth rate projected to be around 7.5%. The raise in foreign investment limits in sectors of defense, real estate and insurance and foreign equity in railways should boost the Indian Economy. As per a report by CMIE (Centre for Monitoring Indian Economy), the slow but steady improvement in size of the Indian economy is likely to continue in 2016-17. Your Company will continue to focus on revenue growth through value added services. Cost reduction will continue to be a focus area to ensure profitability.

Threat and concerns: The primary threat continues to be leading competitors that are using price brssures as a tool to win the market share. However, your Company is securing customer orders and mindshare with superior product quality and strong brand image. Our focus on innovation ensures that we stay ahead of competition. High inflation and fluctuation in foreign currency rates will have impact on imports. Localization of components, value analysis and value engineering initiatives has helped offset inflation and differentiate your Company's products from the competition.

Safety, Health and Environment: Your Company continues to operate with the vision of building an 'Incident Free' and 'Zero Environment Incidents' organization. The management is committed to conducting the Company's business in a sustainable manner with stringent procedures around safety systems and processes. Several measures have been implemented to revitalize safety systems and processes especially across the extended Supply Chain operations (starting with suppliers). Task risk assessments were conducted in the manufacturing plant at Naroda and actions were taken as a key focus area during the year under review. Employees across the Company were extensively trained and educated on safety awareness, process safety management and road safety measures. Regular health checkups and hygiene studies are conducted every year for the employees. Your Company also achieved substantial savings by carrying out energy audits and implementing key projects to save energy.

VI. Technology Innovation: Your Company continues to invest in product innovation and operational excellence to drive growth and profitability.

We believe that innovation will be key to meet our customer needs and accelerate our performance. This year, your Company launched Ultra EL, a high-performance lubricant incorporating the latest performance-additive technologies. The product will provide various performance benefits when compared to ultra coolant and other fluids available in the marketplace today. Ingersoll Rand Ultra EL is a high-performance combrssor coolant based on a blend of PAG and POE base stocks and incorporates the latest performance additive technology. The new generation of coolant technology for rotary screw air combrssors has been developed extensively over a period of three years during which every possible aspect was subjected to rigorous laboratory analysis, controlled combrssor endurance tests and field trials. The main goal of the development work was to produce a product that would last up to 16,000 hours in a rotary screw air combrssor, twice the expected life of similar products available in the market place today.

Your company also announced the launch of Contact Cooled Rotary Screw Air Combrssors with a new level of reliability, efficiency, productivity and serviceability. Contact Cooled Rotary Screw Air Combrssors will cater to industries like textile, sugar, rubber, general machinery, automobile, engineering, fabrication, cement, ceramics, ferrous & non ferrous, air separation, paper and rice amongst others. This new offering will be manufactured in your Company's manufacturing plant at Naroda, Gujarat. The New 30-37 kW Air Combrssors comes with best of time proven designs and technologies with new advanced features while increasing productivity, reducing cost of operation by consuming less power and consumables.

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