MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS India imports over two-third of its defence requirements. Manufacturing and Defence R&D has been limited to Government owned Public Sector Units (DPSU), Ordinance Factories and Defence Research and Development Organisation (DRDO). Private sector participation has been limited and it is an accepted fact that substantive self-reliance in Defence cannot be achieved without active private sector participation. The brsent Government has undertaken to amend Policies and Procedures to make it industry friendly and to ensure a level playing field with special emphasis to the MSME sector. OPPORTUNITIES, THREATS, RISK & CONCERNS Opportunities Make in India initiative of the Prime Minister aims to maximize the indigenous content of the Defence equipment by facilitating a globally best in class manufacturing infrastructure in the Country. The Defence Procurement Procedure is being amended to align itself to this goal which will provide a boost to your Company that is well entrenched in the sector with global partnerships. If Offset policy and Make procedures are amended, as promised, this will brsent a huge business opportunity to MSME Company like ours for years to come. Threats, Risk & Concerns Your Company is in the technology intensive sector wherein continuous investments are required to keep pace with the latest in technology. If the Government policies do not align to MSME business interests they may pose a major threat. New cash rich entrants, trying to create a footprint in the sector, are a threat as they tend to “buy themselves in.” Main Business Risks and Concerns are due to the fact that your Company is dependent on business from the Government and quasi government entities which are tender oriented and takes long time to fructify. Liquidity management and retention of highly trained manpower is a challenge. OUTLOOK The strategy to become turnkey solutions provider ranging from Design, Production, Testing, Certification, Integration, Installation, Commissioning and MRO by forming an industrial consortium has been much apbrciated by the foreign vendors and significant business is expected to flow upon amendment of the Offset policy. PEL continues to follow the strategy to ‘de-risk’ its business that is ‘not be dependent on a product or a sector’. We will continue to leverage our demonstrated strengths in design, engineering and manufacturing, our partnerships with global majors and our brsence in both defence and non-defence sectors. The business prospects are good and the Company is expected to deliver a positive result in the current financial year i.e. 2015- FINANCIAL FACILITIES The Company continues to enjoy the support of its Banker Punjab National Bank (PNB), Noida Branch for both fund and non-fund based facilities. |