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HOME   >  CORPORATE INFO >  MANAGEMENT DISCUSSION
Management Discussion      
Solar Industries India Ltd.
BSE Code 532725
ISIN Demat INE343H01029
Book Value 292.91
NSE Code SOLARINDS
Dividend Yield % 0.09
Market Cap 865492.13
P/E 125.55
EPS 76.18
Face Value 2  
Year End: March 2015
 

MANAGEMENT DISCUSSION AND ANALYSIS

ECONOMIC OVERVIEW

INDIAN ECONOMY

India is in the midst of change since the advent of the new Government in May 2014. The change at the helm has brought in a sense of optimism with the initiation of progressive policies such as 'Make in India' and increased focus on physical infrastructure, education, employment generation and empowerment through skills development. Fast-track clearance of proposals that were caught up in the logjam of the past has also infused positivity in the environment.

The new Government's proposals and the optimism with which they have been received have pulled the country out of the economic quagmire that had resulted from a combination of adverse global developments and their impact on the domestic economy in the brceding years.

The buoyancy in the Indian economy is reflected in the projections of the International Monetary Fund (IMF). IMF, in its World Economic Outlook - 2015, has projected India to become the fastest growing emerging economy in FY 2015-16.

Driven by the Government's policy initiatives, pick-up in investments and lower oil prices, the Fund estimates that India will grow at 7.5% in FY 2015. India is thus projected to overtake China, whose economy is expected to witness a deceleration in growth to 6.8% in FY 2015.

The projections of India's Finance Ministry and the Reserve Bank of India (RBI) for the current year are even more upbeat. While the Finance Ministry expects GDP to grow at 8-8.5% in FY 2015-16, the RBI expects it to clock 7.8%.

Aiming to promote growth, and as part of its emphasis on development of physical infrastructure, the Government has been focussed on resolving bottlenecks in power generation and distribution. Top of its agenda are issues relating to the increase of coal production for Coal India from 500 Million Tonnes in FY 2014-15 to 1 Billion Tonnes in FY 2019-20 and the establishment of processes and procedures for transparent auction of coal and mineral mines. Further, the Indian coal industry targets production from 612 Million Tonnes to 1.35 Billion Tonnes for the corresponding period. On the infrastructure front, the Finance Minister, in Budget 2015-16, announced increased outlays for both roads and railways by Rs. 14,031 Cr and Rs. 10,050 Cr, respectively. The total investment in infrastructure was increased by Rs. 70,000 Cr over the brvious year.

The uptick in economic growth, coupled with the progressive initiatives by the Government, bode well for domestic growth in the coming years. This will have a cascading effect on the explosives industry, which will benefit immensely from the target set in the coal sector, as well as the mammoth investment planned for housing, townships and physical infrastructure.

GLOBAL ECONOMY AND EXPLOSIVES INDUSTRY

Global Economy

The global economy grew at a steady pace of 3.3% in FY 2013 and FY 2014. It is expected to grow by a marginally higher rate of 3.5% in FY 2015, due to a comparative pickup in growth in advanced economies. This global growth comes despite a slowdown in emerging markets and developing economies, which accounted for three-fourths of overall growth in FY 2014.

Global activity was impacted by a combination of forces in FY 2014. These included an ageing population and declining potential growth, coupled with global shocks like lower oil prices. Many country or region-specific factors, such as crisis legacies and exchange rate swings triggered by actual and expected changes in monetary policies, also affected global growth.

Cumulatively, these factors are still shaping the world's economic outlook. However, fresh variables have been introduced into the global growth equation. For one, the Greece bailout package has disturbed the growth momentum in the European Union and the Balkan region. This has led to uncertainty in the global financial and commodity markets. Further, negotiations with Iran over its nuclear programme have adversely impacted the price of oil. Amidst these myriad developments, India continues to forge ahead with its pro-growth agenda and reforms in the mining sector. Consequently, even the World Bank has ranked India's expected rate of growth at 7.5% for FY 2015 - higher than that of China and all other major emerging markets.

Countries of interest

In the overseas markets, Solar currently has manufacturing facilities at Zambia, Nigeria and Turkey.

Nigeria

Faced with economic challenges, Nigeria's robust growth, which brvailed at around 7% during the past decade, could now mellow. Exchange-rate volatility and falling global oil prices have begun to impact public-sector spending. The non-oil sector has been the main driver of growth. While services account for 57% of growth, manufacturing and agriculture contributed around 9% and 21%, respectively. This data reveals that the economy is becoming more diversified and services-oriented, in particular through retail and wholesale trade, real estate, information and communication. Further, low oil prices are likely to lead to a sharp drop in fiscal revenues. Nevertheless, the overall impact of oil prices on non-oil sector GDP could remain relatively muted and this sector could remain the main driver of growth over the medium term. The sector is, thus, expected to remain the main driver of growth over the medium term and, in the light of the recent macroeconomic challenges, the government has adopted an adjustment strategy that hinges on tightening government spending and shoring up non-oil revenues to compensate for dwindling oil revenues.

Zambia

After declining from 6.7% in FY 2013 to 5.7% in FY 2014, on the back of lower copper production as well as slower growth in manufacturing and public services, Zambia's economy has been gaining in strength and is expected to grow by over 6% in FY 2015-16. A catalyst to this growth will be the perception of Zambia as a peaceful and stable country, with robust governance and democratic processes, due to the recent brsidential by-elections.

Compensating for the lower growth in the mining sector, agriculture has put up a strong performance, growing at over 6% as a result of a bumper maize harvest. Inflation is expected to decrease below 7.0% by FY 2017.

Looking ahead, Zambia's economic performance is expected to remain strong in the medium term on account of large investments in infrastructure and some success in fiscal consolidation in the recent past. The growing public administration and defence within the country will also spur growth as it creates jobs and boosts spending.

Turkey

During FY 2015, Turkey is expected to grow at around 3%, far below the Mid-term Plan target (4%). The inflation rate is expected to move within a range of 6.5-7% towards the end of the year, despite dipping during the year. The current account deficit as a percentage of GDP will drop to 4.5%, i.e., around 35 billion USD, on the back of falling oil prices and relatively weak growth rates. In terms of impact, the sharp fall in oil prices seems to be a positive for Turkey in the short-term. However, improving the growth dynamics in the mid-term requires structural reforms designed to increase savings, improve competitiveness and enhance the investment climate.

Explosives Industry

Industrial explosives comprise cartridge explosives, bulk explosives, ANFO based explosives, including boosters and PETN as well as accessories for explosives such as safety fuses, detonating fuses and detonators. The global market is largely driven by bulk explosives. The mining industry is the largest consumer of industrial explosives, with coal mining demand dominating over others, due to increasing demand for coal. Other segments that utilise explosives include limestone and metal mines besides infrastructure segments like roads, dams, canals and tunnels.

Global Explosives Industry

After taking a major blow during the recent recession, the global explosives market has rebounded strongly and is forecast to reach 15.8 million metric tonnes by FY 2018. The main drivers of this growth are expected to be growing demand from emerging economies and technological advancements focussed on the development of safe blasting technologies. Looking ahead, the need for more natural gas and a rising industrial production index will keep the growth rate moving along.

The fortunes of the explosives industry are closely linked with the metal/mineral extraction industry. More than 75% of the explosives production is consumed in mining operations alone across the globe. Accordingly, industrial explosives have witnessed significant growth due to an increase in demand from its end user industries, such as mining and construction. While the market has entered a stabilisation phase in some countries, it is gathering momentum in other economies with the availability of extensive mineral deposits for excavation and a rebound in construction and quarrying activity.

Developing economies such as China, India and South Africa are expected to drive the growth of the explosives market with a rise in mining and construction, as well as manufacturing industries. In addition, civil works, such as roads, tunneling constructions and other development projects in emerging markets, are expected to drive market growth. An increasing focus on product innovation and technological advancements as well as on market expansion in developing and emerging regions is expected to provide new opportunities for the industrial explosives market. However, recent meltdown in commodities can hamper the explosives industry to some extent in short term.

Indian Explosives Industry

Emerging economies such as India serve as a huge opportunity for the industrial explosives industry. The industry in India has grown not only to be self sufficient in explosives, but also exports to a large number of countries. Rising construction activities and the significant growth of the mining industry are expected to boost the demand for various materials such as coal for electricity, limestone for cement and iron ore for steel. This, in turn, is expected to drive the demand for industrial explosives, which are used in mining iron ore and limestone for construction activities.

The industry for these explosives in India remains concentrated, with only a few companies enjoying a pan-India brsence and the capacity to produce the whole range of industrial explosives. Solar Industries India Limited is a prominent player on account of the Company's thriving record of project execution as well as a strong brand name in the field of industrial explosives.

KEY DEMAND DRIVERS

Mining

Global Mining Industry

Calendar year 2014 was rough for the global mining industry, with prices of iron ore and gold receding to record lows. Survival became tough in this environment, forcing many companies to reduce costs and postpone projects. Yet, in a way, it was a year of consolidation as volatile markets prompted some companies to expand their projects in an effort to enhance margins, while others upgraded outdated machinery and technology to improve productivity.

Overall, FY 2014 was a mixed year for the global mining industry. Some developed economies, including Australia, Canada and Norway, saw relatively rapid recovery in private investment due to mining and energy booms. In contrast, South Africa witnessed decline in growth - to 1.5% in FY 2014 from 2.2% in FY 2013, on account of mining strikes and electricity supply disruptions. Growth in the rest of the Sub-Saharan region, however, was strong on the back of increased investments in mining and infrastructure. Weak exports and investment in Peru caused a sharp slowdown in FY 2014, but concerted policy action and new mining operations should support a rebound in FY 2015. The same trend is being witnessed globally, across developed and emerging markets. The sector also faces other key risks in the form of capital dilemmas, resource nationalism, price and currency volatility, infrastructure access, sharing of benefits, balancing talent needs and access to water and energy.

Indian Mining Industry

Despite India's huge reserves of various natural minerals, the share of the mining and quarrying sector as a percentage of Gross Domestic Product (GDP) has declined from 2.8% in FY 2010-11 to 2.1% in FY 2013-14 (Provisional Estimates). This decline came against the backdrop of various judicial pronouncements and the Justice Shah Commission Report, which led to the suspension of several mining leases or closure of mines. The revival of the mining sector is now linked to providing a level playing field between domestic and foreign investors. The proposal is aimed not only at remedying the problems in the sector but also at creating an enabling environment based on sound principles of transparency and efficiency. Once the mining sector is back on track, the explosives industry is set to witness a new phase of growth.

COal

The Government has set an excavation target of 1.35 Billion Tonnes of coal by FY 2020. According to the plans firmed up by Coal India along with the Union Coal Ministry, total output envisaged for Coal India's subsidiaries is about 900 Million Tonnes and other proposed New Projects for is about 100 Million Tonnes. Its plans for each of the subsidiaries are in place, though, and it also envisages opening up 70-100 mines to achieve the FY 2020 target. The Government has also assigned high priority to the early completion of critical railway projects for coal transportation. These developments will cumulatively facilitate the emergence of a more efficient and productive coal sector. This will, in turn, trigger greater demand for the explosives industry.

According to a vision statement brpared by Coal India, its success in meeting the target will also depend on switching to full mechanisation and adoption of latest technology, large-scale contract mining, upgrading skills of employees and deployment of sufficient manpower, speedy land acquisition, faster environment clearances and speedy state level clearances.

India has a burgeoning demand for coal as the country's power capacity is expected to increase significantly from around 230 GW in FY 2013 to around 319 GW by FY 2017. Higher production of coal necessitates higher requirement of explosives, auguring well for the Company.

Iron Ore

The iron ore mining industry is currently facing some hurdles in securing approvals to restart mines, especially in the three states of Odisha, Karnataka and Goa. Nevertheless, once these mines begin production, iron ore output is set to grow at a robust pace of 10% during FY 2015. Against an output of 140 Million Tonnes in FY 2014, domestic production is set to reach 155 Million Tonnes in FY 2015. Some positive developments that are imminent include the renewal of leases for mines in Goa, the formation of a new government in Jharkhand, issuance of clearances and permits in Odisha and revival of mines in Karnataka.

Limestone

Limestone is a key material used in manufacturing of cement. With the current Government's focus on infrastructure promotion, cement demand, which was muted for two years, grew by 10.29% to 16.43% between June 2014 and August 2014. On a cumulative performance basis, during the first ten months (April-January) of FY 2014-15, the cement sector grew by 7.09%. Looking ahead, cement demand is expected to grow at a compound annual rate of 8% between FY 2014-15 and FY 2016-17. Augmentation of cement capacities is a likely fallout of this development. Also, the pick-up in cement demand implies a boost for limestone production, which in turn will give a fillip to the demand for industrial explosives.

Construction

Construction sector has two key segments, namely (a) Buildings including residential, commercial, institutional and industrial and (b) Infrastructure such as rail, road, dams, irrigation, airports and seaports, power systems, telecommunication systems, urban infrastructure including water supply, sewerage and drainage, as well as rural infrastructure.

The Indian Government has put strong emphasis on both these segments of the construction sector - infrastructure and housing & townships.

• Infrastructure - It has allocated an increased investment Rs. 70,000 Cr over the brvious year towards infrastructure, including roads and railways. It has also proposed the establishment of a National Investment and Infrastructure Fund (NIIF) with an annual flow of Rs. 20,000 Cr, to be leveraged by infrastructure companies for financing infrastructure projects.

• Housing and townships - In the interim budget, the Government had proposed an expenditure of Rs. 7,060 Cr

Infrastructure - It has allocated an increased investment Rs. 70,000 Cr over the brvious year towards infrastructure, including roads and railways. It has also proposed the establishment of a National Investment and Infrastructure Fund (NIIF) with an annual flow of Rs. 20,000 Cr, to be leveraged by infrastructure companies for financing infrastructure projects.

Housing and townships - In the interim budget, the Government had proposed an expenditure of Rs. 7,060 Cr

Defence

Till some time ago, India was the world's largest arms importer, largely due to lack of domestically produced arms. To reduce significant outflows of valuable foreign currency as well as to promote domestic growth of the industry, the Government brsented the Defence Procurement Policy in FY 2013, under which all Government procurements would need to have a minimum 30% (of such purchases) with indigenous content. This has opened up new business opportunities for the explosives sector in India.

Budget 2015-16 has also provided an outlay of Rs. 246,727 Cr for defence. The Government's 'Make in India' initiative, seeking to promote self-reliance, indigenisation, technology upgradation and achieving economies of scale and developing capabilities for exports in the defence sector, will also open up a large window of opportunity for the explosives sector.

OPERATIONAL REVIEW

Solar Industries India Limited (Solar) is the largest manufacturer of industrial explosives and explosive initiating systems in the country. The Nagpur-based Company has a licensed capacity of 4.02 Lacs tonnes for plants across the country. The Company's offerings include bulk and packaged (cartridge) explosives, apart from a wide array of initiating systems comprising detonators, detonating fuses and cast boosters.

Currently, Solar has 25 manufacturing facilities, spanning 10 states in India and 3 overseas units - in Zambia, Nigeria and Turkey.

The Company has acquired 100% stake in Emul Tek Private Limited and Blastec (India) Private Limited.

Solar commands a major share in the domestic market and caters to abroad-based clientele in the mining and infrastructure sectors. Its clientele can be categorised across Coal India, other mining institutions, trade, exports and overseas product sales. The Company is the largest supplier of industrial explosives to Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL). It also supplies to corporate giants such as Steel Authority of India Ltd. (SAIL), Oil and Natural Gas Corporation (ONGC), the Tata's, the Adani's, Jindal's, Vedanta, Reliance Power, NHPC, the Aditya Birla Group, etc. Solar is the largest exporter of explosives from India, supplying to 20 countries. The Company has also taken a strategic leap in the recently forayed defence sector through the execution of some early orders in the space. Looking ahead, the defence foray offers immense scope for growth.

FINANCIAL REVIEW

ANNUAL COST ANALYSIS

The overall cost as percentage of net sales for the FY 2014-15 is 85.27% as against 86.14% in the brvious year. The overall cost includes the raw material consumed, employee cost, debrciation, interest & finance cost and other expenses.

The material consumed as a percentage of overall expenses increased to 57.13% from 52.49% mainly on account of changes in product mix.

Employee costs, as a percentage of overall costs, remained steady.

The useful life of fixed assets has been revised in accordance with the Schedule II to the Companies Act, 2013 from April 01, 2014 and therefore debrciation increased to 2.34% from 1.94%.

The interest and finance costs fell to 1.33% in FY 2014-15 from 1.59% in the brvious year due to the repayment of Working Capital Loan of Rs. 107 Cr.

Gross Sales

The revenue of the Company in the FY 2014-15 stood at Rs. 1,456.47 Cr against Rs. 1,216.50 Cr in the FY 2013-14 registering a growth of 19.73%. The export and overseas sales constituted 27% of the total sales, whereas 73% was attributable to domestic sales.

EBIDTA

EBIDTA for FY 2014-15 was recorded at Rs. 261.92 Cr, as against Rs. 214.1 Cr in the brvious year, translating into a growth of 22.34%. The EBIDTA margin was recorded at 19.47%, an increase of 45 basis points over the brvious year.

Profit After Tax

The net profit after tax during FY 2014-15 grew to Rs. 147.41 Cr from Rs. 118.44 Cr in the brvious year. This marked an increase of 24.46%. The PAT increased due to a combination of an increase in sales as well as a reduction in costs. Our exports and overseas subsidiaries contributed more substantially to growth. We effected a reduction in our interest and finance costs through the repayment of borrowing and hedging of our foreign currency exposure.

Debt

The Company's overall (short-term and long-term) borrowings declined to Rs. 320.30 Cr from Rs. 423.93 Cr. As a result, the Debt equity ratio fell to 0.41 from 0.64 in the brvious year.

Dividend

The Company distributed an interim dividend of Rs. 8 per share and has now proposed a further dividend of Rs. 9 per share. Subject to the approval of the proposed additional dividend at the AGM, the Company will pay out a total of Rs. 17 per share for FY 2014-15, as against Rs. 12 per share in FY 2013-14.

Earnings per Share

Earnings per Share increased from Rs. 65.44 in the brvious financial year to Rs. 81.45 as on March 31, 2015.

RESEARCH AND TESTING

CAPABILITIES

Amid the acute need for explosive testing facilities and research laboratories in India, Solar Industries has set up R&D labs that are accredited by the Department of Science and Technology, Government of India. Continuous upgradation of product testing technologies is done at these labs on pilot plant scale. This helps ensure better economy, safety and reliability. The Solar labs also design tailor-made products for clients in mining and defence sector to meet their unique needs.

RISK & CONCERNS

Solar Industries is one of the largest manufacturers of explosives in India, with close to two decades of experience in manufacturing. It is a professionally managed Company with its various business verticals headed by highly experienced and competent teams of professionals. The Company, over the years, has continuously enhanced its processes and built a robust and integrated risk management system. Some of the key risks faced by the Company and their mitigation plans are as under:

Hazardous risk

The Company's business is prone to accidents and requires a high level of safety.

Mitigation plan: Solar is cognisant of such risks and whole-heartedly supports the well-being of all its employees. Solar is an active member of SAFEX, an international apex body promoting best safety practices. The zero incident rate, frequency rate and severity rate reported during the year endorses the Company's commitment to safety. The Company regularly conducts safety training for all its employees directly or indirectly, across various processes and also follows regular safety check mechanism.

Economic and Political factors

Most of the end-use sectors for the Company are dependent on economic policies and infrastructure sector growth. This means that an economic slowdown can have an adverse impact on the business. On the flip side, proactive Government regulations and spending provide a great boost to infrastructure and mining growth. However, both these sectors are subject to many clearances and could face policy reversals.

Mitigation plan: Over the last two decades, the Company has seen many business cycles. This has lent the Company extensive experience in maintaining a reasonably leveraged balance sheet. Also, with best-in-class product offerings, Solar is the brferred supplier to all major players in the mining and infrastructure sectors. Further, diversification across clients and geographies insulate the Company from the adverse impact of any policies in a particular industry or sector. The Company has similarly built a diversified global clientele and regional base to mitigate this risk.

Regulatory factor

The highly sensitive commercial explosives industry is stringently regulated. Any kind of adverse decision by concerned authorities could impact the Company's core operations.

Mitigation plan: The Company abides by all the rules and laws set by the regulatory body and as such, is in possession of all the necessary licenses. Further, it restricts the sale of products only to licensed buyers, thereby complying wholly with the regulator's requirements.

Raw material price volatility

The price of the Company's key raw materials, Ammonium Nitrate (AN) and Diesel, tends to fluctuate, which can have an adverse trigger effect on its profitability.

Competition risk

The tender system of supply to Coal India poses a constant risk of loss of business to competitors.

Mitigation plan: There are only a few players in the industry that are totally integrated, i.e. have a brsence in most products. Solar Industries not only produces all five major products in this segment but has a veritable pan-India brsence too. Further, a large part of the Company's business is tender-based, enabling it to participate and seize opportunities based on merit. However, margins can be impacted by aggressive bidding amongst customers.

Concentration risk

Concentration on few industries and clients could have an adverse impact on the Company's revenue if there is any slowdown in these segments.

Mitigation plan: Solar offers a vast bouquet of products that are used across mining and infrastructure segments. Further, the Company earns substantial revenues from its overseas operations and also from exports. Consequently, Solar remains well diversified geographically, as well as with its client base, thereby mitigating the risk to a large extent.

safety, health, environment

Safety

FY 2014-15 was an accident and mishap free year for Solar Industries. The Company has minimised chances of any untoward incident through increased training hours for every person. It has also covered all its plants with fire hydrant lines with 7 bar brssure. Further, new BMD vehicles are operated with safety systems .

Being part of a business that requires a high level of safety, the Company has been investing heavily in safety across its operations. It regularly incorporates safety modules and practices to strengthen standards as per the globally established norms. The Company is a member of SAFEX, an international apex body reporting and promoting best practices in safety standards of the explosive industry. Besides, the Company's processes are ISO 9001:2000 and ISO 14001:2004 certified. In addition, products exported to Europe have received CE certification.

Solar keeps the safety of employees dealing with explosives as paramount. Accordingly, the Company conducts training on safety at all levels. Such training is in-built into the systems as a continuous, on-going practice to improve the safety performance and morale of the employees. Strong focus is placed on these training sessions to ensure positive behavioural changes and to br-empt any incidents due to unsafe acts.

The Company also regularly conducts safety training workshops for operators and supervisors through internal and external experts.

Health

At Solar, employees and workers are considered the most important of assets and the Company takes a lot of care for their health, and also that of their families. The Company has initiated several measures to enable its employees mitigate health-related contingencies and enhance their work concentration levels.

Health check-ups at concessional rates at a recognised hospital were among the various initiatives taken by the Company as part of its healthcare programme during the year.

Environment

Solar Industries not only respects the ecosystem it operates in but also works consistently towards conserving it. The Company has adopted eco-friendly technologies across its various operational processes. These policies are aimed at minimising pollution, controlling waste and conserving natural resources. The Company is accredited with OHSAS 18001:2007 certification.

Initiatives for brserving environment

The Company undertook a number of initiatives for environment brservation during the year.

• Distribution of 450 improved chulhas & 50 Solar Cookers in the surrounding villages to reduce their dependency on fuel wood, thereby brserving the nearby forest areas. This programme was carried out in association with the Bio-diversity Board. The consumption of fuel reduced by almost 50%.

• Plantation of trees across the manufacturing areas.

• Creation of bunds for rainwater harvesting.

• Plantation on hillsides to reduce natural erosion.

CORPORATE SOCIAL RESPONSIBILITY

Following the lead of its Chairman, Shri Satyanarayan Nuwal, Solar Industries truly lives by the adage 'Service to Man is Service to God'. The Company strongly believes that contributing time, knowledge and money to social development is the finest form of worship. This philosophy, which has percolated from the top management, has resulted in deep commitment to the upliftment of the less fortunate communities that reside in their vicinity of the Company's plants and other locations.

In line with this philosophy, the Company has planned a series of initiatives as part of its CSR programme. Through the Rotary foundation, the Company seeks to render qualitative healthcare facilities to people in the region for brvention of various diseases. The initiative taken in this regard includes installation of medical equipments in the recognised hospitals

The Company has allocated a total of Rs. 177.5 lakh for medical equipment and facilities at various well-recognised hospitals under Disease Prevention and Care Projects. In addition, the Company is open to funding other activities as may be decided from time to time.

A blood donation camp was also conducted through Government Medical College.

Further, in pursuit of Rural Infrastructure Development and Cleanliness, the Company has embarked on a rainwater harvesting project at Village Shiva,Tal. Nagpur (Gramin) in Nagpur. The harvesting will enable enhancement of water levels in nearby areas and provide clean and safe drinking water to people in the vicinity.

Beyond its dedication to improving hospital and health care, the Company is also committed to other social causes, including promoting safety and awareness, training and employment, rural infrastructure development and cleanliness, education and sports, supporting the green revolution and environmental issues, etc. It envisages pursuing these missions in a phased manner.

HUMAN RESOURCES MANAGEMENT

Solar Industries has always lived by its human resource philosophy, which centres around talent acquisition, training and development, leadership development, maintaining healthy employee relations, emphasis on compliances and on productivity improvement. To achieve these goals, the Company regularly undertakes training and development programmes, engages employees in various activities and encourages talent through mentoring and entrusting them with responsible positions.

Over the years, the Company has instituted robust and dynamic HR policies that guide its employees and nurtures an environment in which they are perceived as strategic business partners. The policy not only gives clarity on individual roles but also aligns the employee goals with the Company's objectives. Consequently, Solar's employees continue to play a supportive role and attrition is kept to the minimum.

During the year under review, the Company organised Management Development Programmes in partnership with the renowned Management Institutes.

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on brvention, prohibition and redressal of the same in line with the provisions of the Sexual Harassment at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder.

The Company has constituted a committee for taking action against the sexual harassment pursuant to the provisions of Companies Act, 2013 for brvention, prohibition and redressal of complaints / grievances on the sexual harassment at work places.

INTERNAL CONTROL SYSTEMS

Solar Industries has established appropriate internal control systems and procedures, which are compatible with the size of its operations and business. These systems give authenticity to the information, reports, records, documents, transactions, and serve as a strong foundation for decision-making for the management. With a view to ensuring that the adopted systems are adhered to and the controls are not flouted, a firm of chartered accountants conducts an Internal Audit of operations, establishments and stockyards on a regular basis. The Audit Committee reviews the reports of the Internal Auditors and monitors the overall effectiveness and the operational efficiency of the internal control systems. The Audit Committee provides valuable suggestions from time to time towards improving the business processes, systems and internal controls.

At brsent, the Company is working on ERP (SAP ECC6.0 EHP5 module), which helps in business activities such as material management, finance, payroll and sales & distribution. During the year under review, the Company also implemented plant maintenance and quality management modules to enhance the performance of the plant, as well as for testing the quality of raw materials and finished goods.

OUTLOOK

Against a backdrop of robust performance, we look forward to a future full of promise. All the sectors which form our consumer caucus - mining, infrastructure and construction - are witnessing policy changes that are expected to result in structural strengthening and phenomenal growth. This gives us plenty of reason to be optimistic. The defence sector too, which is moving strategically from imports to domestic sourcing of its requirements, has opened up colossal opportunities for your Company.

When we turn to examine opportunities overseas too, we are pleasantly greeted with positive developments that will bode well for the Company. Zambia, which saw a dip in economic growth last year, is back on the recovery path. This translates into an improvement in the scope of our operations in that country.

It has always been our philosophy to anticipate opportunities and make the most of them when they brsent themselves. As we complete two eventful and rewarding decades in this industry, we foresee numerous prospects for further growth and development. Rest assured that with the support of all our stakeholders and well wishers, we will successfully pursue them.

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