MANAGEMENT DISCUSSION ANDANALYSIS A .lndustry structure and developments Your Company is operating in the Small Scale Industrial Sector having manufacturing plants for the manufacture of Arc Welding Electrodes and Copper Coated Mild Steel (CCMS) Wire used for the purpose of welding by the Engineering and Fabrication industries Your Company also trades in the entire range of welding products and accessories required by diverse industries in the heavy engineering and capital goods sector. Your Company trades by importing CCMS Wire, retile, MIG-MAG Machine, Flux Core Wire and Flux on a regular basis. The demand for Company's products depends upon the robustness of demand in the engineering and capital goods industries in the Country. B .Performance During the year ended 31 * March 2015 the overall turnover of the Company was Rs 2329.18 lakhs as against Rs 2064.38 lakhs achieved during the last year resulting in an increase in the turnover to the extent of 12.83% when compared with the brvious year. The production of welding electrodes was 1583.649 MTs as against 1610.305 MTs achieved during the brvious year. The production of CCMS Wire during the year ended 31st March 2015 was 1469.169 MTs as against 905.765 MTs during the brvious year. During the year ended 31" March 2015 the profit before tax was Rs 148.17lakhs(brviousyearRs83.15lakhs)and after making a provision for tax amounting to Rs 54.24 lakhs (brvious year Rs 27.06 lakhs) (including provision for deferred tax), the profit after tax was Rs 93.92 (brvious year Rs 56.09 lakhs). The Profit after tax has increased considerably by 67.45% during the year ended 31" March 2015 when compared to the brvious year. The performance of the Company has shown marked improvement during the year ended 31s1 March 2015 with the turnover increasing by 12.83% and Profit after tax increasing considerably by 67.45%. Your Company has installed imported plant and machinery for the manufacture of CCMS Wire with an installed capacity of 1800 MTPA. This expansion in capacity together with the existing capacity of 1500 MTPA will enable the Company to produce up to 3300 MTPA of CCMS Wire per annum. The capacity expansion will considerably reduce the dependence on imported supply of CCMS wire to cater to the market share established by the Company. The capacity expansion was funded out of internal accruals and the equity and convertible warrant capital issuance made during the year. The Company continues to comply with the certification requirements of Det Norkse Veritas Management System conforming to Quality Management System Standard ISO 9001:2008forits manufacturing facility at Redhills, Chennai. C .Segmentwise performance Your company operates in the single segment i.e., manufacture and marketing of welding electrodes and as such the discussion of segment-wise performance is not applicable. D .Concerns Economic growth is yet to pick up acceleration. The prospects of the company is closely intertwined with the performance of the capital goods sector. It is hoped that with the pick up in the economic growth based on policy in itiastives kick started by the Central Government will augur well for the company. E. Prospects and Outlook Your Company is confident of establishing its own niche market as far as the marketing of quality welding electrodes. With the expansion in capacity completed, your Company is well equipped to cater to the ever increasing market demand in the CCMS Wire segment which is replacing the traditional Arc Welding Electrodes market. F. lntemal control systems Your company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorised useordisposition. G Human resources and industrial relations Your Company has well qualified and experienced technical, financial and administrative staff to caterto its business requirements. The relations with the employees of the company remained cordial throughout the year. CAPITAL ISSUANCE AND COPORATE ACTIONS During the year, the following capital issuance and corporate actions have taken place: i. Your Board of Directors have allotted 240,000 Equity shares of Rs 10 each for cash at a price of Rs 35.82 per share to promoters and promoters group who have exercised their option to convert equal number of Warrants as per the terms of issue of the Warrants allotted to them as per approval accorded by the members at their Extraordinary General Meeting held on 22nd February 2013.. The proceeds raised have been utilized to meet the working capital requirements. ii. Your Board of Directors have allotted 951,100 Equity shares of Rs 10 each for cash at a price of Rs 54.00, which includes a brmium of Rs 44/- per share, on a brferential basis to applicants belonging to Non-Promoters group as per approval accorded by the members at their Extraordinary General Meeting held on 30* August 2014. The proceeds raised have been utilized to meet the working capital requirements. iii. Your Board of Directors have allotted 10,00,000 Convertible Equity Warrants with each Warrant convertible into one equity share of the Company of nominal value of Rs. 10/- each at a price of Rs. 54/- which includes a brmium of Rs. 44/- per share on brferential basis to the applicants belonging to the Promoters and Non-Promoters Group as per approval accorded by the members at their Extraordinary General Meeting held on 30* August 2014. The Company has received the allotment money equivalent to 25% of the total consideration per warrant and proceeds raised have been utilized for working capital purposes. The Warrants are convertible at the option of the allottees into equal number of Equity shares of Rs 10 each at a brmium of Rs 44/- within a period of 18 months from the date of allotment and the Company has not received any warrants for conversion till the date of this report. iv. The Board of Directors have sub-divided each Equity Share of the Company having a face value of Rs. 10 each fully paid-up into 5 (five) Equity Shares of face value of Rs. 2 each fully paid-up as per the approval accorded by the members through postal ballot and electronic voting process on 11* April 2015. Thus, as on the record date on 12* May 2015fixed by the Board of Directors for the purpose of sub-division, the 61,61,100 Equity Shares of Rs 10/- each fully paid up were sub-divided into 308,05,500 Equity shares of Rs 21- each fully paid up which has been duly credited to the demat account/ physical share certificates sent to all the eligible members in lieu of and in cancellation of the Equity shares of Rs 10/- each held by them as on the record date on 12th May 2015. The outstanding 10,00,000 Convertible Warrants of Rs 10 each will be eligible to be converted into 50,00,000 Equity shares of Rs 2 each at an appropriate price and brmium as per the terms of issue of the Convertible Warrants as and when the same is lodged for conversion by the respective allottees. CREDIT RATING Your Directors take pleasure in informing that your Company has been rated by NSIC-CRISIL Performance and Credit Rating for Small Scale Industries and they have awarded your Company with rating of 'SE 2B which indicates 'High Performance Capability and Moderate Financial Strength'. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES Your Company does not have any subsidiary, joint venture or associate companies |