MANAGEMENT DISCUSSION AND ANALYSIS

1. Global Economics

The FY 2014-15 witnessed slowdown in the global economy. This slower growth in the developed economies was accompanied by moderated GDP growth in the emerging economies like India. Besides this the euro zone also witnessed a significant slowdown with a fall in aggregate demand and concerns over Greek bankruptcy.

2. Industry Structure

Your company is catering to various sectors like Machine Tools, Steel, Power, Sugar, Paper and Vehicle Chassis. It is quite obvious that if one sector picks up the growth while other slows down. This, in fact, is advantageous to CENLUB business. But the FY 2014-15 was not encouraging for all the sectors. Hence, CENLUB results were not very apbrciable.

With the modernization of machines like CNC, more and more sophisticated lubrication units are being used where CENLUB is doing R & D activity.

3. Industry Structure and Developments :

More than 10,00,000 Lubrication systems made by CENLUB are catering to various industries in India basically machine tools, brss tools, die casting, pharmaceutical machines. Besides these, lately CENLUB is also catering to Power Plants in big way, being BHELs as well as multinationals.

CENLUB is developing new lubrication systems for future requirements of the country. These being Wheel Flange / Track Lubrication System particularly for Railways.

With new policy of the government, it has become imperative that more and more Centralised Lubrication System is necessary as compared to old Manual Lubrication System. Sophisticated Lubrication System required be developing and adopting for latest super thermal power plants.

4. Opportunities and threats :

In business, opportunities and threats are inseparable. Your company Directors and Management keep this in mind while taking decision to ensure that stakeholders are not adversely affected. The company's risk management team comprises various departmental heads, who meet regularly to identify the processes that are exposed to risk.

Your company has done quite well for the last so many years as regards machine tool lubrication is concerned and enjoying more than 80% market share particularly for CNC machine lubrication.

Threats :

Due to heavy industrial slowdown for the last few years, your company is finding difficult to give good result. Our bottom line is getting affected because of this reason.

Moreover, due to insertion of new manufacturers from unorganized sector, the competition is becoming more and tight and cheaper products are easily available in the market.

Some MNCs have already put plant in India for the manufacturing of sophisticated lubrication system particularly for Power Plant, Refinery and Steel Plant. Your company is quite aware of these developments.

5. Outlook

This year the company is very eager to cater lubrication system for Turbine / Generator to multinationals, who intern export their product along with our lubrication system. In fact, we have already achieved this partially last year (i.e. FY 14-15) and continuing this year (i.e. FY 15-16). Besides this our other business i..e. Machine Tool Lubrication is being maintained.

During the year under review your company has been able to generate a net profit of Rs.118.82 lacs against a net profit of Rs.27.96 lacs of last year.

Our motive is to maintain a high quality of our product. Our growth strategy revolves around the brmises of high quality at reasonable cost. Unfortunately there is a strong challenge now but we believe that we have strong strategy and management team to leave change.

6. Risks and concerns

The risk that may affect us or inclined to, are not limited to economic condition, but to labour shortage, competitive market condition and new entries to the market.

We have expectation of tackling the slowing economy and facing challenging market conditions in most efficient manner.

7. Internal Control System

The company has well documented policy guidelines, defined authority levels and an exhaustive budgetary control system to ensure adequate internal checks and control levels. The internal audit function ensures that the system of recording & reporting, internal controls and checks, safeguarding and protection of assets.

An Internal Audit Committee was laid down with powers and responsibilities which are entrusted to them so that the Internal Audit Department can work independently. The department maintains various manuals, controls and checklists that are to be carried out before execution of any activity.

Internal checks are exercised so that the various procedures laid at the time of delegation of authorities and other procedures are strictly followed. The delegation clearly indicates the powers along with the monetary limits, wherever necessary, that can be exercised by various levels of the managers in the Company.

Similarly, the Company has a well defined manual for all the functional areas, viz., Production, Sales, Administration, Personnel, etc. These manuals contain elaborate procedures and checklist for the related activities. Necessary controls and checks are exercised by strictly adhering to the various procedures and checklist brscribed in the Manuals. Also these are updated from time to time on ongoing basis, keeping in view the latest developments in different areas.

Proper controls and checks are exercised by the company, following the procedures brscribed in the various manuals.

8. Innovation and intellectual property right

The company from the day one is engaged in innovation by its R&D activity. There are certain areas where innovation related to Lubrication is needed. Once such a goal is achieved, patent / intellectual property right also to be thought of.

9. Operational Performance

Operational performance of the company is being maintained to its best. But the financial result depends on national economic condition. In the FY 14-15 there was a slowdown in Steel sector, Power sector as well as Manufacturing sector. Hence, in spite of the best efforts by the company result are not very apbrciable.

10. Dividend

Due to decrease in the cash accruals, there is an increased brssure on the cash flows in the financial year under review. The Board of Directors feels appropriate not to recommend any dividend for the financial year 2014-15.

11. Material Development in Human Resources / Industrial Relation Front :

During the year the company has developed various HRD plans with in various departments in order to enhance the productivity between various employees groups. Also special steps has been taken to create awareness for growth in the minds of the employees.

The company policies included emphasis in growth and all-round development of various persons employed in company. The company had also given special emphasis on training its employees to equip themselves to face the challenges in the competitive business environment and to achieve the desired goals. I apbrciate cordial relations between management and work force during the financial year 2014-15.

12. Cautionary Statement

The statement made in this report describing company's plan, projection and expectation may constitute forward looking statement within the meaning of applicable law and regulations. Actual result may defer materially from those exbrssed or employed.

13. Acknowledgement

Your director wish to place their sincere thanks to government agencies, banks, customers, shareholders, vendors and other related organizations through their continuous supported and cooperation, as partners, in your company's progress.