MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENT The macro-economic situation is still sluggish and policy measures taken by the new Government are yet to positively influence the economy and the business of electrical distribution and other components industry. The slowdown in electrical distribution and other components industry began few years back, continued to this financial year also and continued impacting capacity utilization and price realization because of keen competition amongst organized sector manufacturers owing to overcapacity in industry. Demand of Switches, counter and other electrical items by corporate both private and public sectors, are much lower and with that limited demand is being chased by huge capacity. This has caused industry's capacity utilization at sub-optimum level and price realization and liquidity problem is still faced by most of players in the Industry. With the new Government at Centre, public sentiment has substantially improved. Measures taken by the new Government are positive for overall industrial sectors including electrical distribution and other components industry .The situation is expected to improve gradually and the initiatives and measures on policy matters will have its genuine effect in contribution to economic growth over next 18-24 months period and hence, medium to long term outlook seems positive, subject to future risks and uncertainties relating to general economic and industry conditions, currency exchange rates, interest rates, implementation of policies and other factors affecting the industry. FINANCIAL PERFORMANCE & ANALYSIS The total revenue of the Company during the year 2014-15 was Rs.2275.29 Lacs as compared to Rs. 2558.24 Lacs for brvious fiscal year. The net loss after tax during the current year was Rs. 113.98 Lacs as compared to net profit of Rs. 43.18 Lacs during the brvious year. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. HUMAN RESOURCES: The Company continues its focus on development of human resource, which is one of its most critical assets. Learning, training and development has been strengthened to bring value addition in employees and to enhance team building and core competencies. The Company focuses on providing the employees friendly environment and culture and career growth opportunities. RISK AND CONCERN Considering the existing continued slow-down and future positive medium to long term outlook due to steps taken on policy matters by the new government, situation is expected to revive gradually in near future. The major risk factors affecting the Company are overcapacity in industry, increase in receivable positions due to delay in payment by certain customers, uncertainty in execution of low fixed price orders. OUTLOOK The Company expects further improvement in volume at available market prices. Currency fluctuation is also affecting margins since cost of raw material, being of import origin, is affected. Increasing competition, delay in implementation of announced projects and measures, high prices of major raw materials and other components will continue to impact realizations, both at gross and net level. Expected reduction in interest rate by banks and financial institution not moving at desired pace also delaying revival of stuck projects and takeoff of new projects recently announced. Your Company is always focused on cost control and productivity improvement areas to effectively fight competition. With new Government at the Centre taking positive steps in policy matters, revival of indolent phase is expected gradually in next 18-24 months period and outlook for long term seems positive for our Company. CAUTIONARY STATEMENT Statements in this report on Management Discussion and Analysis may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could however, differ materially, from those exbrssed or implied. Important factors that could make a difference to the Company's operations include global and domestic demand supply conditions, finished goods prices, raw material costs and availability and changes in government regulations and tax structure, economic development within India and the countries with which the Company has business contacts and other factors such as litigation and industrial relations. By Order of the Board of Kaycee Industries Limited Sd/- Raju Grover Chairperson Place: Mumbai Date: 13th August, 2015 |