MANAGEMENT DISCUSSION & ANALYSIS OPERATIONAL PERFORMANCE REVIEW NET SALES/INCOME FROM OPERATIONS The net sales/income from operation has registered an increase by about 24% over brvious year mainly because of higher volume of Cement sales coupled with improved unit realization in comparison with the brvious year. PROFIT FROM OPERATIONS Profit from operation has turned positive at Rs. 2492 lacs as against loss of Rs. 472 lacs in the brvious year. The composite impact on this front by Rs. 2964 lacs during the year under report has resulted in positive working result. Following are the broad reasons for variations in the working results: Positive Impacts: • Higher volume of Cement sales by 11.82% over brvious year coupled with improved unit realization. • Saving in Electricity rate by 4.17 % and in consumption by 2.87% in comparison with brvious year. • Increase in other operating income of Scrap Sale, exchange gain etc. Negative Impact: • Increase in Raw material cost by about 20% over brvious year, • Increase in Fuel cost by 8%. • The Company has incurred higher amount of Rs. 1875 lacs in comparison with the brvious year on repairs and maintenance cost of the Plant. This has resulted in achieving consistency in Plant operation. EXCEPTIONAL ITEMS - 2013 The Company had introduced Voluntary Retirement Scheme -2013 ("VRS Scheme"). 135 employees had opted for the benefits of this separation scheme resulting in an over- all pay out of Rs. 1415 lacs, appearing under this head. FINANCE Your Company has availed short term working capital loan for Rs. 8600 lacs from CITI Bank NA. This has increased higher interest out go in comparison with the brvious year. During the year under report, a sum of Rs. 5393 lacs has been utilized in paying off ECB and Buyers Credit borrowings. CAPITAL EXPENDITURE As reported in the brvious year, the Pet Coke Mill is commissioned and put in operation during the year under Report. The Company has also spent a significant amount of Rs. 3479 lacs for up gradation of Plant and, to install various balancing equipment to achieve sustainable plant performance. SEGMENT REVIEW AND ANALYSIS It is a single product Company OUTLOOK, RISK AND CONCERN Looking at the brvailing scenario, anticipated good monsoon and ongoing developmental activities in Infrastructural segment, the demand for Cement in the year 2015 is likely register a moderate growth in the State of Gujarat - the home market for your Company. However, capacity consolidation and new entrants with increased capacities in the State/ adjoining States will have an adverse effect on overall market share as also on price sentiments. MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATION FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED Industrial relations during the year under report remained cordial. Variable pay scheme is in place to reward employees for their performance, linked with the performance of the Company. The total number of employees in the rolls of the Company as on 31st December, 2014 was 317. (Previous year as on 31st December, 2013 was 309). RISK MANAGEMENT The Company is aware of the risks associated with the business. It regularly analyses and takes corrective actions for managing / mitigating the same. Your Company's Risk management framework ensures compliance with the provisions of Clause 49 of the Listing Agreement. Your Company has institutionalized the process for identifying, minimizing and mitigating risks which is periodically reviewed. Some of the risks identified and been acted upon by your Company are: Securing critical resources; ensuring sustainable plant operations; ensuring cost competitiveness including logistics; completion of CAPEX; maintaining and enhancing customer service standards and resolving environmental and safety related issues. INTERNAL CONTROL SYSTEM The Company has an appropriate internal control system commensurate with the size of its business. Appropriate internal audit further strengthens internal control system. CAUTIONARY STATEMENTS Forward-looking statements are based on certain assumptions and expectations of future events. Actual results may differ from those exbrssed or implied. Important factors that could influence the Company's operations include demand and supply conditions, availability of inputs and their prices both domestic and global, changes in government regulations, tax laws, natural calamities, monsoon, economic developments within the country and other factors. For and on behalf of the Board Sven Erik Oppelstrup Director Madsen Chain Singh Jasol Whole-Time Director Place : Digvijaygram Date : 25th February, 2015 |