MANAGEMENT DISCUSSION AND ANALYSIS REPORT INDUSTRY OVERVIEW Electronic Industry is broadly categorized under consumer, medical, communication, automotive, strategic electronics and industrial segments. Semiconductors in different forms are being used in most of these applications. Your Company operates in high power semiconductor segment, where it continues to be a leader in niche semiconductor processing and manufacturing in India. Your Company is the only company in private sector to process chips ranging from 28mm to 125mm diameter in high power segment. Continuous improvement in design technologies have led to smaller, complex and more reliable products at a lower cost, driven by increased demand for sophisticated electronic systems. It has led to extensive usage of semiconductors in diverse end use applications in e ectronic industry. BUSINESS REVIEW (a) Company Outlook: Your Company experienced a moderate demand during the financial year 2014-15. The Principal end markets which your Company caters comprising of Railways, Capital Goods, Industrial and Alternate Energy have shown signs of improvement. Various development initiatives taken by the Government and increase in infrastructure spending is likely to boost positive sentiments and as a result your Company expects to do much better in the current financial year. Company's efforts in streamlining certain processes to meet the international standards, getting quality and product approvals by certifying agencies has made your Company more competitive and acceptable in the international market. Efforts of the Company to increase its share in export market has started paying rich dividends as the exports are already showing signs of improvement. Our constant endeavor to take challenging assignments bodes well with the outlook of the Company. (b) Operational Performance Review: The Company's operational performance during the year was guided by stable order inflows from semiconductor devices segments supported by execution of large equipment orders during the year. As a result, the Company reported a turnover of Rs. 27.06 crores for the financial year 2014-15 as compared to Rs. 21.81 crores last year thereby reporting a growth of 24% in the top line. The Company also achieved significant improvement in the bottom line by posting net profit of <f 31.41 lacs as against net loss of <f 29.31 lacs last year. The Company's efforts to focus on exports, getting product approvals and registrations has started paying dividends with a stable order book position in the current financial year. Consolidation in production system and processes has also helped in cutting operating costs resulting in improvement in margins. (c) Opportunities and Threats: Since the Company essentially caters to OEM's, Railways, Steel sector, Pollution control industry opportunities are likely to open up due to impetus on infrastructure development which the brsent government is putting to revive the economy and business sentimerts in the country. Due to tender based business, competition from other players may affect the crystallisation of orders for the Company. Fluctuation in currency rates due to large imports also affects Company's performance, though to some extent shall be offset by increase in exports. Focus on new product range, viz. modules and capsules has improved Company's margins and risk averse appetite of losing existing business. The Company's entry into manufacturing of high current rectifiers, battery chargers, variac controllers, etc. has started showing flow of orders. SEGMENT WISE PERFORMANCE Segment reporting as per Accounting Standard AS-17 is not applicable, as the Company operates only in one segment i.e. Power Electronics. OUTLOOK India is emerging as one of the largest electronics market in the world. The government through its policy initiatives, seeks to transform the Indian electronic manufacturing sector to a US $ 400 billion market by 2020. With the renewed focus by Govt, in the area of manufacturing through "Make in India" drive and promoting business friendly environment, we foresee the Indian manufacturing sector to see high growth rate in the coming years. However, the gestation period for the manufacturing sector to show results is longer compared to other sectors and therefore, it may take a few years to see real benefits INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY The Company has an adequate system of internal controls to ensure that the transactions are properly authorised, recorded and reported, apart from safeguarding its assets. The internal control system is supplemented by well-documented policies, guidelines, procedures and reviews carried out by the Company's internal audit function. The Company has continued the services of M/s. Bhandarkar & Kale, Chartered Accountants to oversee and carry out internal audit of the Company's activities and submit their reports periodically to the Management and the Audit Committee of the Board. The Audit Committee, Statutory Auditors and the business heads are periodically apprised of the Internal audit findings and corrective actions are taken. FINANCIAL PERFORMANCE (i) Profits and Earnings : During the year, the Company's revenue from operations increased by 24% to Rs. 270,561,312/- as compared to Rs. 218,135,796/- in 2013-14. Earnings before Debrciation, Interest and Tax (EBIDTA) increased by 25% to Rs. 27,901,517/- as compared to Rs. 22,400,468/- last year. The Company has earned Net Profit of Rs. 31,41,546/- during the year as against loss of Rs. 29,30,713/- last year. (ii) Capital Expenditure : During the year under review, tne Company has not spent any substantial amount on capital expenditure. (iii) Finance Costs : In spite of ploughing back of funds, from internal accruals, the high working capital off take has resulted in marginal increase in finance cost by 0.27% to Rs. 14,076,932/- as against Rs. 14,039,011/- last year. HUMAN RESOURCES During the year, there has been no material development in Human Resources/Industrial relations. Your Company has a favourable work environment that motivates performance, customer focus and innovation while adhering to the highest degree of quality and integrity. Your Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Various HR initiatives are taken to align the HR policies to the growing requirements of the business. CAUTIONARY NOTE The statement in the Management Discussion and Analysis describing the Company's objectives, projections and estimates may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those exbrssed. Important factors affecting the Company's operation include global and domestic supply and demand conditions, input availability and production costs, currency fluctuations, changes in Government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations. For and on behalf of the Board of Directors Hasmukh J. Shah Chairman Place : Mumbai Date : 27,h May, 2015 |