MANAGEMENT DISCUSSION AND ANALYSIS The Financial Year 2014-15 was characterised by an economic environment that was not robust. A below par monsoon affected domestic and global demand in the automotive and tractor industry, to which the Company caters to. The impact of the sluggish economic environment was felt by your Company with the sales remaining stagnant over the brvious financial year. Industry Structure and Developments: The financial year 2014-15 saw the beginning of a turnaround for the Indian auto industry. However, it could not sustain the expected growth due to slowdown in rural consumption because of below par monsoon. The tractor industry also suffered due to weak sentiment in the agri sector. The agri sector was affected due to below normal rainfall with uneven sbrad and timing. Opportunities and Threats: As the industry has seen a partial recovery in the Financial Year 2014-15, the auto industry is likely to show positive growth in the near future on the back of healthy economic outlook, investment in road, infrastructure and new automobile launches by Original Equipment Manufacturers. Continued government support for agriculture, rural development and greater adoption of improved agricultural practices is expected to drive sustainable growth in the agriculture sector. Increasing labour cost and scarcity, greater adoption of various forms of mechanization is bound to give a push to the market for tractors and other farm equipments, which is expected to grow in the long term. Growing concerns over safety and sustainability among consumers and society at large will have an impact on the regulations for motor vehicles, regulations for managing urban congestion and policies for development of public transport infrastructure. These will have a significant impact on the future of automotive industry. The other major perceivable threats are liquidity, exchange rates, raw material, energy costs and economic scenario. Outlook: Both the Automotive and Farm Sectors strive to maintain their leadership position in the domestic market and explore global opportunities. The mid-term outlook for the Indian auto industry is very positive. In the Financial Year 201516, growth in the automotive industry will be driven by economic recovery, overall positive sentiment in the country and increased investment in infrastructure. Timely and near normal monsoon is likely to improve the sentiment and lead to industry growth. Risks and Concerns: The Company's operations are dependent on the fluctuation in prices and its operational expenses. The state of the economy, therefore, influences the income and profitability. Internal Control Systems and their adequacy: The Company has an adequate system of internal control commensurate with the size and nature of its business, which ensures that transactions are recorded, authorised and reported correctly apart from safeguarding its assets against loss from wastage, unauthorised use and removal. Discussion on Financial performance with respect to operational performance: The financial statements have been brpared in accordance with generally accepted accounting principles in India (Indian GAAP) and comply with the Accounting Standard specified under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. Expenses: Employee Benefits Expense The increase is due to payment of Managerial Remuneration to the Managing Director in addition to the 3 Whole Time Directors and annual increments paid to employees. Finance Costs The finance cost has gone up due to increase in unsecured loans, raised to fund the losses. Debrciation and Amortisation Expense The increase in debrciation and amortisation is mainly due to debrciation on assets capitalised during the year. Human Resources: The Company is in the process of formulating Human Resource Policies afresh with the absorption of all employees of erstwhile Smiths & Founders (India) Limited on its amalgamation with the Company. The Company considers its people as the most critical and valued resource. The total number of employees on the rolls of the Company as on March 31, 2015 was 91. Cautionary Statement: Certain statements in this Management Discussion and Analysis relating to Company's objectives, projections, outlook, estimates, expectations or brdictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Although the Company believes that the expectations reflected in such forward looking statements are reasonable, no assurance can be given that such expectations will prove to have been correct. Accordingly actual results or performance could differ materially from those exbrssed or implied as a result of among other factors, changes in economic conditions affecting demand and supply, success of business and operating initiatives and restructuring objectives, change in regulatory environment, other government actions including taxation, natural phenomena such as floods and earthquakes, customer strategies, etc. over which the Company does not have any direct control. |