MANAGEMENT DISCUSSION AND ANALYSIS REPORT OVERVIEW As per the requirement of the Listing Agreement as part of the Directors Report or in addition thereto a Management Discussion & Analysis Report forming part of the 42nd Annual Report to the Members is given below discussing the key issues. All statements that address expectations about the future, but not limited to the Company's strategy for growth, product development, market position, expenditures and financial results, are forward looking statements. Since these are based on some assumption and expectations of future events, Company cannot guarantee that these are accurate or will be realized. INDUSTRY STRUCTURE AND DEVELOPMENTS The Conveyor beltings form an integral part of material handling system. It serves as a chain right from the stage of conveying semifinished goods till final rolling out of finished goods. International Conveyors Limited is engaged in the manufacture and marketing of solid woven fabric reinforced PVC imbrgnated and PVC covered fire retardant, anti static conveyor belting in India since 1978 with a rich and valuable experience of 37 years. Apart from providing easy and uninterrupted logistics support for material handling system it reduce the cost and other head expense thereby enabling the user to stay in the market at most competitive rates. With more than three decades of experience in research and development and manufacture and marketing of conveyor belting for underground mining operations. The main thrust areas of our specialization are the conveyor Belts for heavy Industries, Coal Mining, Potash Mining, Grain and Material handling Industries and green energy from wind turbine generators located across four states. OPPORTUNITIES AND THREATS Subdued steel prices and a slowdown in demand growth from China continued to weigh on the global steel sector in the past years which is impacting demand for Coal and consequently PVC Belting. For long wall mining, our plan for the future is to get mines enlarged by merging mines or opening a new large mine where long wall mining is possible. Outlook for thermal (steam) generating coal is to be expected with price projections revised downward due to supply growing faster than demand. There is however, one important factor which strengthens the case for underground mining. The use of explosives in opencast mining affects the vegetation, soil and wildlife around the mine. Environmentally, underground mining is much better than opencast because it doesn't immediately affect the natural habitat. The proportion of underground mining would go up a bit in the sense of our understanding of new technology and opening of larger mines where new technology could be deployed. We at International Conveyors Limited believes demand or competitive pricing as temporary and macro industry in which we operate has high demand and growth potential. Lower pricing is temporary phase as no quality manufacturer can sustain at non-remunerative prices for long. SEGMENT-WISE AND PRODUCT-WISE PERFORMANCE The segment-wise and product-wise performances of the Company are given in the notes to accounts for the year ended March 31, 2015. OUTLOOK India has set itself an ambitious target of increasing coal production from 565.77 million tonnes in 2013-14 to 1.5 billion tonnes by 2019-20 to reduce dependence on imports which is positive prospects for India's underground mining Conveyor Belt Business. ICL has the ability to make conveyors up to 2500 kn/m in strength and belt widths up to 1800mm. This is the widest solid woven product range available from any one company and with a manufacturing capacity in excess of 1 million meters per annum. The share of underground coal mining in India has slumped from 16.3% to 8.8% in the last decade. The primary reason is the rise in production from opencast mines, which is increasing at a greater rate than underground mines. Due to environmental concerns Government of India's major thrust is on underground mining and because of same the market for Conveyor Belt is expected to increase at the rate of 5-10% per annum including the replacement market. Accordingly, the market potential for Conveyor Belts estimated to increase. The growth in production in the coal from underground mining industry in India, which is a major end-user of Conveyor Belts, is expected to drive higher demand for Conveyor Belts during the period 2015-2020. RISKS AND CONCERNS Risk Management is an important aspect in today's business environment. The aim of Risk Management is to identify, monitor and take mitigation measures in respect of the events that may pose risks for these businesses. The Company's Risk Management is embedded in the business process. Your Company has identified the following risks: • Risks of non-availability and price fluctuation on raw material as well as energy. • Attrition and non-availability of the required talent resources can affect the performance of the Company. • The increase in competition can create brssure on margins, market share etc. • Any increase in operating cost, interest rate may adversely affect the finance cost and profitability. • The changes in various economic parameters including growth, inflation and interest rate. • Global concerns about environment may put restrictions on coal production thereby reducing demand for PVC conveyor belting. • Continued low crude prices may affect the demand for coal which may act negatively for PVC belting market. • Low Coal prices may not motivate coal producer to produce more coal thereby restricting growth in demand for PVC belting. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Given the nature of business and size of operations, your Company's Internal Control system has been designed to provide for: • Accurate recording of transactions with internal checks and prompt reporting. • Adherence to applicable Accounting Standards and policies. • Compliance with applicable statutes, policies and management policies and procedures, • Effective use of resources and safeguarding of assets. The Internal Control System provides for well documented policies/guidelines, authorizations and approval procedures. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening them as appropriate. The observations arising out of the audit are periodically reviewed and compliance ensured. The summary of the Internal Audit observations and status of implementations are submitted to the Audit Committee and is reviewed by it on a regular basis and concerns, if any, are reported to the board. ENVIRONMENT, HEALTH AND SAFETY Your Company maintains the highest standards of Occupational Health, Safety, Security and Environment (HSSE) and complies with all applicable laws of the land. The HSSE performance has been integral to your Company's business performance and your Company continues to focus on the goal: 'No Accidents, No Harm to People and No Damage to the Environment.' Your Company also implements ISO 9001:2008 (Quality Management System Standard). Your Company has taken many initiatives towards environment conservation viz. use of LED lighting and free air-conditioning units, minimization of water consumption, effluents generation amongst others. The Company is committed to provide a safe workplace to its employees and contractors, and safety to the community where it operates. FINANCIAL PERFORMANCE During the year 2014-2015 the Company recorded net sales of Rs. 9,739.47 lacs as compared to net sales of Rs.13,498.81 lacs in 20132014. The Company derived 33.12% of its sales from within India and balance 66.88% of its sales derived from Exports. Profit before tax were at Rs. 619.85 lacs and Profit after tax were at Rs. 427.60 lacs for the year ended March 31, 2015 as compared to Rs. 1263.96 lacs and Rs. 837.20 lacs for the financial year ended March 31, 2014 respectively. The total cost of materials has decreased from Rs. 6919.51 lacs in 2013-2014 to Rs. 5513.91 lacs in 2014-2015. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED Intellectual capital is the biggest asset of our Company. It has large, efficient and dedicated staff strength, comprising professionals from diverse backgrounds like experts in company law & secretarial field, engineering, finance, management, businesses supervisors, operators and sub staff. In addition to the above, a highly competent, skilled and semi-skilled work force is also engaged at workplace. The Company continued the welfare activities for the employees, which include Medical Care, Group Insurance etc. To enrich the skills of employees and enrich their experience, the Company arranges Practical Training Courses by Internal and External Faculty. Employer - employee relations continued to remain cordial during the year. Training and development of employees continued to be an area of prime importance. The devotion and commitment of our employees has enabled the Company to fulfill its targets and deadlines in time. The total number of people employed in the Company as on March 31, 2015 was 111. CAUTIONARY STATEMENT Statements in the Management Discussion & Analysis describing the Company's focal objectives, expectations or anticipations may be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from the expectations. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of products, inputs availability and prices, changes in Government regulations/tax laws, economic developments within the country and factors such as litigation and industrial relations. For and on behalf of the Board of Directors R. K. Dabriwala Managing Director M. P. Jhunjhunwala Director Place : Kolkata Date : May 30, 2015 |