Management Discussion and Analysis We submit herewith the Management Discussion and Analysis Report on the Company's business for the year ended 31st March, 2014. We have attempted to include discussion on all specified matters to the extent relevant, or within limits that in our opinion are imposed by the Company's competitive position. INDUSTRY STRUCTURE Financial Year 2013-2014 was yet another challenging year for the the world economy and Indian Economy in particular. For the second year in a row the macro economic environment affected the recovery to a dismal level. The business climate during the year was affected by high inflation, unfavorable interest rate regime, rising fuel & other input costs and therefore uncertainty continued unabated about economic recovery. During the year under review the Indian economy recorded another consecutive year of lower growth rate. However, to revive and stimulate the business growth, the New Government at the Center has started taking some corrective and progressive steps. COMPANY OVERVIEW The impact of volatility in prices, on going production and selling challenges, Geo-political situation, a perceived slowdown, and uncertainties in the policy landscape contributed to the lack of confidence in the market during the financial year 2013-14. It has been another trying year to keep the pace with sustaining growth under erratic & volatile raw material pricing policy of primary producers, competitive impediment in gaining locational advantage over selling prices and under sluggish business activities, particularly, in those user industries where company has its brsence. The world economic situation does impact the domestic environment and sentiment where input costs are rising to affect the squeezed margins. OPPORTUNITIES Your Company's constant efforts of gradual consolidation in varied user industries is facing challenges of global adversity and delayed projects of user sector industries. A message has been passed across the company to be more determined, show resilience in the downturn and be brpared to capture the future growth by participating in the user industries expected revival in demand for your companies products. To this end, the Company is realigning its marketing efforts to match with expected demand spurt by user industry, particularly in respect to your Company's products. The company has been constantly mapping the role for further growth that it intends to play. We have been vigilant and resilient to use these last two years to constantly retrospect, to concentrate and to strengthen our competitive advantage. All out efforts were made/are being made to enhance capabilities and efficiencies. The per capita consumption of aluminum in India is progressively /gradually increasing in power, electrical, transportation, packaging, consumer durables, construction, building systems, defense, PSU's, railways, switch-gears, automobiles, infrastructure industry. Fresh applications by the potential new users are being explored. Your Company continues to enjoy increasing confidence from its valued customers sbrad across various industries for providing quality products and efficient delivery logistics in place. To meet the increasing demand of the user industry and new users, capacity utilization have been increased commensurately. THREATS, RISKS AND CONCERNS The Company's products are primarily sold in the domestic market. The increase in raw material prices, competition from established and emerging players, foreign exchange fluctuations and increase in fuel and other input costs are major areas of risks and concerns. Your Company is aware about business risks and risk management exercise is being attended to and accordingly from time to time the management has taken effective steps to mitigate/minimize its impact and ensure continuity and business development in line with the mission and vision of the Company. The Company has adequate insurance coverage of all its assets. The compliance of safety norms and requirements as brscribed by different government agencies are duly fulfilled. OUTLOOK With the visible revival of the Indian economy since the 2nd half of 2013, several large players of the different user industry have formulated their growth plans which is directly expected to give a big thrust to aluminum extrusion industry, more particularly to your Company. With installed capacities being streamlined for better and full utilization, Your Company is hopeful of better performance in the current year and in future. The immediate plan for 2014-2015 is to utilize expanded capacity to the maximum, to effectively manage resources, to optimize cost and to secure a significant share of the increasing domestic market. INTERNAL CONTROL AND THEIR ADEQUACY Company's internal control systems are commensurate with the nature of its business and the size and complexity of its operations. In addition to its own audit department, to have better effective control over the accounting systems and check over day to day operations of the Company, internal auditors are also appointed. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews the adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations including those relating to strengthening of the Company's risk management policies and system. DIVERSIFICATION & NEW VALUE ADDED PRODUCTS The company is on the lookout to develop extruded sections for sophisticated end user/s. The down-stream activity is being vigilantly followed. TOTAL QUALITY MANAGEMENT The Company is re certified for Management System ISO 9001 : 2008 certification, ISO/TS 16949 : 2009, AS ALSO SA 8000:2008 FOR SOCIAL RESPONSIBILITY. It has also received certificates from T.U.V. NORD INDIA LTD., for I.S.O.14001-2004 STANDARD (ENVIRONMENTAL MANAGEMENT SYSTEM AND I.S.O. 18001-2007 STANDARD (OHASAS-OCCUPATIONAL HAZARDS SAFETY ASSESSMENT SERIES SYSTEM) and EnMS 50001:2011 for Quality Systems. During the year your Company has received an award and certificate from Director of Industrial Safety & Health (DISH), Labour Division, Govt. of Maharashtra, and Mutual & Response Group (MARG), Nasik for the Best Practices for the yearly safety brcautions During the year your Company has received Accreditation, from NABL (National Accreditation Board for testing and Calibration Laboratories) under SEIG of Department of Science & Technology of Govt. of India for the laboratory of the Company. RISK MANAGEMENT / HEALTH, SAFETY, SOCIAL ACCOUNTABILITY ETC As a part of business policy, the Company gives due importance to the risk identification and control in various functional areas. The Company has adopted suitable measures to work more efficiently and responsively with long term vision and business acumen to manage the internal and external factors. The Company is taking due care and steps in respect of pollution control, safety, health etc. Its certification is under process. The company is SA 8000 Certified. HUMAN RESOURCES AND INDUSTRIAL RELATIONS The relations between the employees and the Company remained cordial throughout the year During the year, Your Company continued to focus on enhancing capabilities of the employees, particularly in view of expanding capacities. Technical and Safety training programmes were held periodically during the year to enhance workers knowledge and application skills. SEGMENT - WISE / PRODUCT - WISE PERFORMANCE Your Company's business activity falls within a single primary business segment viz. Aluminum extrusions. As such there are no separate reportable segments as per Accounting Standard - 17 (AS -17) issued by the Institute of Chartered Accountants of India. CORPORATE SOCIAL RESPONSIBILITY Your Company believes that growth has not only to be profitable and competitive, but also sustainable in a socially relevant way. Your company has volunteered to provide relief to local communities residing nearby the factory when in distress. During the year your Company has continued to undertake the following CSR initiatives at Nashik (a) Managing "Sudal Welfare Center" for which a Doctor has been appointed and on daily basis 40 to 50 poor and needy people from the Society are checked free of charge/ cost with medicines. (b) One drinking water connection of MIDC has been provided by your company for needy and poor people, who are residing in the vicinity of our Plant. (c) Your Company is also associated with The National Association for the Blind (NAB) Nashik and we provide relief to blind people by giving them ourjob work,etc. (d) Every year your Company arranges Blood Donation Camp in Sudal Industries Limited Premises for Social causes in association with M/s Arpan Blood Bank, Nashik. (e) Every year your Company has arranging a programme and awarding & celebrating to the children's of employees those who are passed S.S.C. std. (f ) Every year your company welcomes to Sai Yatri ( People ) on the Sudal Gate with Snacks, Tea & Coffee . (g) Every year your company is arranging Ganesh utsav and celebrating it with employees & other people. (h) Every year your company is undertaking tree plantation in company brmises. SAP SAP system is fully implemented in the current year. The system has helped in strengthening the MIS and the internal control procedures. By Order of the Board of Directors For Sudal Industries Limited Sudarshan Chokhani Managing Director Place : Mumbai Date : 30th May, 2014 Registered Office :A - 5, MIDC, Ambad Industral Area, Mumbai Nashik Highway, Nashik - 422 010 |