MANAGEMENT DISCUSSION AND ANALYSIS REPORT OVERVIEW National Plywood Industries Limited is a pioneer in the Indian Plywood Industry and one of the first few manufacturers to venture into producing a wide range of plywood products. Its plywood products are sold across the nation and have a strong brdominance in the market because of best quality and constant upgradation through research and development. OUTLOOK The Economic slowdown had a significant bearing on the functioning and profitability trading businesses in the medium term. But it has been estimated that in the long run there are vast opportunities for trading entities. Hence, the Company is expecting to improve its performance and profitability in years to come. HUMAN RESOURCE MANAGEMENT AND INDUSTRIAL RELATIONS The well disciplined workforce which has served the Company lies at the very foundation of the Company's major achievements and shall well continue for the years to come. The Company .recognises the importance of Human Resource as a key asset instrumental in its growth. The Company continues to give priority to its human assets. The Company is continuously working to create and nurture an atmosphere which is highly motivated and result oriented. Decisions on recruitment, career development, training, promotion, rewards, and other employment related issues are made solely on the ground of individual ability, achievement, expertise and conduct and these principles are operated on a nondiscriminatory basis. We have made further progress on Health and Safety both in terms of safe working practices and the reporting performance by implementation of standards for vehicles and machine safety, ergonomics initiatives, wearing protective equipments, regular safety audits etc. Also managing environment impact is a matter of priority and therefore continuous care for the environment, responsible disposal of wastes and development of local co-operatives are engaged into. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. The Company is following all the applicable Accounting Standards for properly maintain the books of account and reporting financial statements. The Audit Committee of the Company also periodically reviews internal controls and takes remedial measures whenever necessary. The Company has robust internal control systems in place which are commensurate with the size and nature of business. The internal controls are aligned with systems statutory requirements and designed to safeguard the assets of the Company. Apart from self monitoring of the internal controls, there is Chartered Accountant firm appointed to conduct internal audit of the Company's operations as per audit plan approved by the Audit Committee. The Audit Committee takes due cognizance of the observations made by the auditors and give their suggestions for improvement. The suggestions of the Audit Committee further ensures the quality and adequacy of the control. OPPORTUNITIES Business Opportunities for trading companies are enormous as the new areas and segments are being explored. Your Company on its part is also well poised to seize new opportunities as they come. The opportunities observed are based on the trends noticed in the past couple of years, which continues to be relevant. Some of the key ones are as follows: • Domestic market to get boosted due to Government focus on "Digital India" and "make in India". • The Company is looking forward to the expansion of the market in the upcoming areas of the country. • Company has sufficient spare capacity to cater the increase demand of its products (if any). The major threat being faced by trading companies are change in taste and brference of customers, fall in demand, high inflation etc. The Country is also facing stiff competition from competitors due to their ability to procure materials at a lower cost which enable them to provide materials at much cheaper rate. • Forex Risk: Since a major portion of raw material is imported, fluctuation in forex rate is also a risk to business. • Credit Risk: Company's products are sold on credit and as such credit risk is an inherent risk to the business. • Cost of Capital Risk: the Company has substantial borrowings, both term loan and working capital loan from banks, an increase in interest rates will affect profitability. BUSINESS RISK MANAGEMENT Although the Company has long been following the principle of risk minimization as is the norm in every industry it has now become a compulsion. Therefore, in accordance with Clause 49 of the Listing Agreement the Board members were informed about risk assessment and minimization procedures after which the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the Company. The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. In today's challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Regulations, competition, Business risk, Technology obsolescence, Raw Material, Investments, retention of talent and expansion of facilities. Business risk, inter-alia, further includes financial risk, political risk, fidelity risk, legal risk, forex risk, credit risk, insurable risk, cost of capital risk, risk from substitute products. FINANCIAL PERFORMANCE The Financial Performance of the Company for the year under review is discussed in detail in the Directors Report, for and on behalf of board of directors. CAUTIONARY STATEMENT The Statement in this report on Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or brdictions may be forward looking, within the meaning of applicable security law 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 materials" cost and availability, changes in Government regulations and tax structure, economic developments and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information, or events. By Order of the Board. (P.PERIWAL) Vice-Chairman & Managing Director DIN:00698796 Place : Kolkata Date: 30th July. 2015. |