MANAGEMENT DISCUSSION AND ANALYSIS The management of P G Foils Limited brsents the analysis of performance of the company for the year 2014-15 and its outlook for the future. The outlook is based on assessment of the current business environment It may very due to future economic and other developments. Industry Scenario After sworn of new government in country, industrial environment showed improvement and foil industry too. During last one year demand of foil increased mainly due to increase in production of pharmaceutical medicine and less import of foils from china. GDP growth rate for the year to come is estimated to 6.5% to 7% which will also contribute in our future growth significantly and we expect a good year for foil industry. We expect nearly 10% growth in our industry for current year. However due to downfall in metal rates, foil industry may face problem of rate cut and competition from China. Future outlook Due to various steps taken by new government for growth of industry under "Make in India" program, we look forward improvement in foil demand on account of growth of pharmaceutical industry by 10 to 15%. We also expect increase in production and quality improvement due to up gradation of technology at various processes in our units in last one year. Operational performance Company achieved a Gross turnover of Rs. 273.81 Crores as against Rs. 205.09 Crores in the brvious year and production for the year 6516.48 MT as against last year 5012.558 MT. Financial Performance Gross turnover for the year is Rs.273.81 Crores against Rs. 205.09 Crores in last year. Profit before extraordinary items for the year is Rs. 12.48 Crores compared to loss of Rs. 1.21 Crores in last year, higher mainly due to less scrap generation, power saving and higher production economy. Company contributed a total Rs. 23.56 Crores to the National Exchequer as Excise Duty. Resources & Liquidity Company continues to maintain its conservative financial profile. Company Banked with IDBl Bank limited for their working capital needs. Company has sufficient working capital limits of Rs. 100 Crores from IDBI Bank Ltd at concessional and extremely competitive interest rate. Presently Company is not availing any cash credit facility due to ample liquidity. Cash Flow for less than 2 years is adequate to extinguish its entire debts timely. Company made most of local purchases on cash basis at discounted rates but overseas purchases are on credit basis on cheaper interest rates under buyer's credit facility. Opportunities and outlook Due to downfall in metal and grannual rates globally, company expect improvement in -margin on account of low raw material cost Company have opportunity to increase production and sales turnover due to acceptance of product by most of the major Pharma Companies in India and Bangladesh. Threats Due to downfall in metal and grannual rates customers may ask for rate reduction and more import activities form China and other countries at lower rate. Risks and Concerns Your company faces risk with similar to those laced -by companies operating in the non ferrous metal sector. The volatility of the primary metal LME linked price on account of fluctuation in $ and LME continues to be a key issue and success or failure is linked on how effectively companies are able to manage their purchase to tide over these critical periods. The company is exposing to risk from fluctuations in foreign exchange as nearly 95% of foil stock purchase is linked with dollar rate. Profitability may also be affected on account of competition from existing and prospective manufactures of the same products and cheap import from China. Export The company's contribution to foreign exchange earnings amounted to Rs. 1806.59 Lacs during the year under review and the total foreign exchange utilized by the company amounted to Rs.13255.93 Lacs the details of which are provided in annexure to the director's report Company is brsently exporting to various countries and further trying to increase export to developed countries. Company is concentrating on Bangladesh foil market and expects to achieve almost 2/3rd foil market shares in years to come. Human Resources It is your company's belief that people are at the heart of corporate & constitute the primary source of sustainable competitive advantage. The trust of your company's human resource development efforts therefore is to create a responsive and market driven organization. Your company continues its focus on strengthening competitiveness in all its business. Your directors took forward to the future with confidence. The company has followed a conscious policy of providing training to Management Staff through in-house and external programme, for upgrading personal and technical skills in relevant areas of functional disciplines. Internal Control System The Company has an adequate system of internal controls implemented by the management towards achieving efficiency in operations, optimum utilization of company's resources and effective monitoring thereof and compliance with applicable laws and regulations. The Audit Committee of the Board of Directors also periodically reviews audit plans, external auditor observations and recommendations, significant risk area assessments and adequacy of internal controls. Cautionary Statement Statements in the Management Discussion and Analysis describing the Company's objectives, expectations or brdictions may be forward looking within the meaning of applicable securities, law and regulations. Actual results may differ materially from those exbrssed in the statement Important factors that could influence the Company's operations include global and domestic supply and demand conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and outside the country and other factors such as litigation and industrial relations. For Sharma Ashok & Associates, Chartered Accountants (CA Harish Agarwal) Partner M. No. 403262 Place : Pali Date :30th June 2015 |