MANAGEMENT DISCUSSION AND ANALYSIS 1. INDUSTRY STRUCTURE AND DEVELOPMENTS: COAL INDUSTRY Coal reserves of 301.56 billion tones have been estimated by the Geographical Survey of India (01.04.2015). The overall production of Coal for 2014-15 was projected at 630.25 MT. During the period April to December, 2014 the actual production was 426.7 million tonnes compared to 391.08 million tonnes (MT) during the corresponding period of 201314, showing a growth of 9.1%. India is the world's third largest producer of thermal coal, well behind China and the United States. Despite large reserves, production growth has been well below growth in consumption in the past decade (figure 18). In response to the widening gap between India's coal consumption and production, imports of thermal coal have grown from 12 million tonnes in 2004 to 142 million tonnes in 2013. Coal is a key commodity in ensuring India's energy security because it is the most abundant non-renewable energy source in India. It has the world's fifth largest proved recoverable reserves of coal (60.6 billion tonnes) after the United States (237.3 billion tonnes), Russia (157.0 billion tonnes), China (114.5 billion tonnes) and Australia (76.4 billion tonnes) (WEC 2013). In order to satisfy the coal demand, the Indian coal industry needs more investment and private players to raise their production level. As per our latest estimations, carried out in recent research report, the overall coal imports are anticipated to cross the 200 Million tonnes-mark this Fiscal Year. De-allocation of coal blocks and stake sales in PSUs were among the major steps taken by the government to boost production and investment in the coal industry. Better infrastructure by road enable fast movement of coal among various locations in the Country, infrastructure section in India is getting better by way of various projects undertaken by the Government. REAL ESTATE INDUSTRY The Indian real estate sector is one of the most globally recognized sectors. In the country, it is the second largest employer after agriculture and is slated to grow at 30 per cent over the next decade. According to a study by ICRA, the construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the economy. Real estate has emerged as the second most active sector, raising US$ 1.2 billion from private equity (PE) investors in the last year. The Indian real estate sector has witnessed high growth in recent times with the rise in demand for office as well as residential spaces mostly for the economically weaker sections and low-income groups, through public-private-partnership (PPP), interest subsidy and increased flow of resources to housing sector', Union Minister of Urban Development, Housing and Urban Poverty Alleviation and Parliamentary Affairs, Government of India. The growing flow of FDI into Indian real estate is encouraging increased transparency. Developers, in order to attract funding, have revamped their accounting and management systems to meet due diligence standards. 2. OPPORTUNITIES & THREATS: The Company's business comprises of two segment viz. Infrastructure and Coal Trading. Demand of Coal mainly from Power Sector is growing rapidly and increasing government support will boost the coal production in the country. However bottlenecks likes domestic coal transportation and lack of proper road connectivity further increase the challenges. Also availability of railway wagons and mismatch of demand and supply of wagons and coal off-takes affect production capacity and delay in mining activities at captive coal blocks and concern relating to the increasing ash content of run - of- mine coal further impact production. Real estate and Infrastructure sectors are getting major funding from foreign investor as per relaxation in Foreign Direct Investment (FDI) rules / regulation implemented by India. However current scenario of real estates exbrss that there is excess supply against the demand from end users and domestic output has also been clipped due to hurdles over environmental clearances and land acquisition and other government policies. 3. OUTLOOK COAL INDUSTRY India is the world's third largest coal consumer behind China and the United States; and the share of coal in India's electricity mix has been rising. India's coal consumption was estimated at 790 million tonnes (or 516 million tonnes of coal equivalent (Mtce), around 10 per cent less than the United States (IEA 2014f). Thermal coal accounts for around 85 per cent, or 665 million tonnes, of India's coal consumption. Metallurgical coal (80 million tonnes) and lignite (45 million tonnes) make up the balance. The power sector accounts for more than 70 per cent of India's coal use and supported a five-fold increase in coal use in electricity generation over the past few decades. As such, the power sector is clearly central to the coal outlook in India. India's steel production has increased by around 25 per cent over the past five years to around 83 million tonnes in 2014. The cement industry, the second largest globally after China, is also a major coal user, accounting for around 5 per cent of total coal use. Other industrial sectors, including brick manufacture, consume small quantities of coal. The Indian coal market is set to witness great boost in near future because of the rising government initiatives. The coal demand has been rising constantly in India due to growth &high demand from major coal consuming sectors, including power, cement and steel. We estimate that coal production will grow in anticipation to the demand for thermal coal and coking coal by power and steel sectors, respectively, will gain momentum in near future. REAL ESTATE INDUSTRY The Indian real estate market size is expected to touch US$ 180 billion by 2020. The housing sector alone contributes 5-6 per cent to the country's gross domestic product (GDP). Also, in the period FY08-20, the market size of this sector is expected to increase at a compound annual growth rate (CAGR) of 11.2 per cent. Retail, hospitality and commercial real estate are also growing significantly, providing the much-needed infrastructure for India's growing needs. If the economy grows at the rate of 10% the housing sector has the capacity to grow at 14% and generate 3.2 million new jobs over a decade. Private equity players are considering big investments, banks are giving loans to builders, and financial institutions are floating real estate funds. Indian property market is immensely promising and most sought after for a wide variety of reasons. 4. INTERNAL CONTROL SYSTEMS: The Company has a proper and adequate Internal Control System to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition, and those transactions are authorized, recorded and reported correctly. The Company, in consultation with its Statutory Auditors, periodically reviews and ensures the adequacy of Internal Control Procedures for the orderly conduct of business and also includes a review to ensure overall adherence to Management Policies and applicable Laws &Regulations. The Company's internal audit team carries out extensive audits throughout the year, across all functional areas. 5. HUMAN RESOURCES DEVELOPMENTS: Our Philosophy is "Human Resource" is the most important factor for achieving efficiency, productivity and quality. Human Relationship Management assumes great importance in the Company and human resources are the great asset. During the year under review, the Company continued its emphasis on Human Resource Development as one of the critical area of its operation. Realizing that the human capital being the Company's greatest asset, the up gradation of skills, personality and attitude of its employees is always looked after. Measures are also being implemented for enhancing the motivation and commitment of the work force and building up a unique positive work culture. Employer -Employee relation throughout the year were cordial. The Company organizes periodical trainings to encourage and develop vital human resource. All the efforts are aimed to ensure develop and nurture the entrebrneurial attitude and skill among the employees. The Company places on record its apbrciation for the valuable contributions made by employees at all levels. 6. FINANCIAL PERFORMANCE: The Financial Statements for the year ended March 31, 2015 have been brpared in compliance with the requirement of Companies Act 2013 and Generally Accepted Accounting Principles (GAAP) in India. During Financial Year 2014-15, the Company recorded total income of Rs. 62993.09 Lacs, of which income from operations is Rs. 62778.61 Lacs and other income ofR 214.48 Lacs. For the year FY 2014-15, Earning before interest, Debrciation, tax and Amortization was Rs. 857.34 Lacs. For the FY 2014-15, Debrciation was Rs.0.29 Lacs and interest and Financial charges were Rs. 755.37 Lacs and Profit before tax (PBT) wasRs. 857.34 Lacs. Profit after tax (PAT) was Rs.575.30 Lacs and Earning Per Share (EPS) of Rs. 4.21. Out of the PAT of Rs. 575.30 Lacs, Rs.76.34 Lacs has been apportioned as follows: - (i) for proposed dividend on Preference of Rs.19.20 Lacs(including Dividend Distribution Tax of Rs.3.20 Lacs) and (ii) Rs.57.14 Lacs has been transferred to Capital Redemption Reserve. 7. SEGMENT WISE PERFORMANCE: Company's business comprises two segment viz. Coal Trading Division and Infrastructure division. During the Financial Year 2014-15, there is no turnover from Infrastructure division and entire income from operation of R 62778.61 Lacs is from Coal Trading division. As on March 31, 2015, Coal Trading Division is having Segment Assets of Rs. 22076.98 Lacs and Segment liabilities of Rs. 19004.87 Lacs and Infrastructure division is having Segment Assets of Rs.1043.61 Lacs and Segment Liabilities of Rs. Nil. 8. CAUTIONARY STATEMENT: Certain statements in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or brdictions may be forward-looking statements within the meaning of applicable securities laws and regulations which have been brpared in compliance with the requirements of the Companies Act, 2013, the Accounting Standards issued by the Institute of Chartered Accountants of India, the Listing Agreements and all other applicable rules and regulations. The actual performance may vary depending on the market fluctuations, changes in Government policies, rules and regulations change in economic conditions nationally as well as internationally. |