MANAGEMENT DISCUSSION AND ANALYSIS REPORT OVERVIEW/ INDUSTRY STRUCTURE Demand for bearings, related products and services are directly linked to industrial activity and in general the economy. The automotive segment in India consists of Passenger Cars, Utility Vehicles, Commercial Vehicles, Two Wheelers and Three Wheelers. The Industry plays a major role in the Indian economy and is one of the key indicator of GDP. During the last few years, there has been a general slow down in the industrial activity, leading to a slow down in the automotive segment as well. The most affected segment due to recessionary trend is the commercial vehides segment, which has shown negative growth for three years in a row. Though, there has been marginal improvement in medium and heavy commercial vehicle segment, it is rather insignificant to justify robust growth in the near future. The light commercial vehicle segment continues to show negative growth. The tractor industry has experienced negative growth in the current year. The new Government understands that opening of the infrastructure and the mining sectors will kick start the economy and has started to take actions in these areas and together with the "Make in India" movement, it is hoped that industrial activity will pick up post monsoon. PROSPECTS The Indian economy is expected to grow over medium to long term horizon on the back of a strong demographic dividend, high savings rate, a large and emerging middle class and growing internal consumption. The demand for bearings depends on the automotive and other engineering products. With rapid industrialization, Indian bearing industry doubled over the last five years and has registered annual gains well above both the regional and global averages. The prospects of the bearing industry are directly linked to the performance of two key sectors, viz automotive and infrastructure facilities - roads, ports and airports. The demand for bearings and other products w i l also increase. The prospects of the Indian bearing industry are bright OPPORTUNITIES AND THREATS Opportunities The Commercial Vehicles, Two Wheelers and Three Wheelers Vehicles and the Tractor Industry segments are operating well below full utilization levels. With the Government clearing many infrastructure and mining projects, it is likely that the economy will pick up in the latter part of the year. The "Make in India" movement, removal of GST, simplifying tax regime and making business easier in India is sending positive signals to the investors and if it results in GDP growth as expected by the Government, industry will be the direct benefactor. 1. Though the after - market is currently sluggish, opportunities lie to sell bearings and other automotive components in the rural areas where branded products are still not available. Large efforts are needed and being put in by the Company to develop Distributor and Dealer network to penetrate rural India to achieve sustained growth. 2. The Company is keen to enter new markets to sbrad its base of customers as the domestic user industry is not showing any sign of pick up in demand. In order to do this, the Company has embarked on various projects to increase exports. However, the nature of our industry is such that the gestation period for an enquiry to mature to order/supply stage is rather long as it requires time consuming approval procedures a must for all OEM customers. Threats: 1. Large scale imports of low priced components and bearings from abroad, especially China are not only hurting the industry but also hampering the "Make in India" ideology. Manufacturers are reluctant to put new investments in their plants as the market share is being lost to imported products. 2. The negative brdictions issued by meteorology department for monsoon to be below normal level will not encourage industrial activity and capacity utilisation of the auto industry and its ancillaries will continue to be lower than optimum. 3. As the Demand falls, the cash flow of companies are getting affected and may result in delay of payments to vendors and repayment of loan installments to the banks. SEGMENT-WISE-PERFORMANCE The Company has only one segment of activity namely 'Bearings' as defined by AS-17 specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. OUTLOOK Key economic indicators not being encouraging and with the forecast of below normal monsoon, it is difficult to brdict the near term growth; however, on the long - term, the outlook is still positive. The other concerns are competition from imports of low priced bearings, slow opening up of Infrastructure activities, high interest rates and unforeseen disasters. INTERNAL CONTROL SYSTEMS The Company is professionally well structured and the policy guidelines are well documented with br defined authority and responsibility. The Company has put in place combrhensive systems and procedural guidelines concerning all areas of business like budgeting, execution, material management, quality, safety. Procurement, asset management, finance, accounts and audit, human resources etc. which are adequate and necessary considering the size and level of operations of the Company. The management has been reviewing and upgrading the existing systems and processes to gear up and meet the changing needs of the business. The Company carries out internal audit through an external audit firm of Chartered Accountants who have extensive experience in such assignment FINANCIAL PERFORMANCE Net Worth: The total net worth of the Company as on 3151 March, 2014 was Rs. 144L48 Lacs which is Rs. 1720.25 Lacs as on 31st March, 2015 indicating increase of 19.34 % in the net worth. Earning per Share: Basic and Diluted EPS after extraordinary items of the Company as on 3151 March, 2014 was Rs. 8.94 both of which stands to Rs. 9.02 as on 31st March, 2015. EBITDA and PBT: During the year 2014-15 the Company has earnings before interest, debrciation and tax amounting to Rs. 732.73 Lacs. After providing for interest of Rs. 180.93 Lacs and debrciation of Rs. 119.60 Lacs, Profit before tax comes to Rs. 432.20 Lacs which was Rs. 412.07 Lacs during the year 2013-14. HUMAN RESOURCES Employees are our vital and most valuable assets. Company's HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity: to contribute to developing and achieving individual exceBence and departmental objectives and continuously improve performance to realize the fiil potential of our personnel. The relations between the employees and the Management have remained cordial. CAUTIONARY STATEMENT Statements in this report on Management's Discussion and Analysis describing the Company's objectives, projections, estimates, exceptions or brdictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and exceptions of future events. Actual results could however differ materially from those exbrssed or implied. The Company assumes no responsibility in respect of forward looking statements |