MANAGEMENT DISCUSSION AND ANALYSIS REPORT INDUSTRY STRUCTURE AND DEVELOPMENT: During the financial year forging industry is likely to see a marginal increase in production compared to the brvious year based on the expected growth in the automotive sector. The non-automotive sector is expected to continue in the existing pattern. OPPORTUNITIES: During the Year 2015-16, Your Company had utilized the opportunities to grow and has grown by 10%.The Company is pursuing the cost reductions initiated in 2014-15 and this is helping the Company to become adept in terms of cost structure. Indian Auto Industry has started showing initial signs of recovery during the financial year 2015-16 and your Company catering to Auto industry has shown growth of 10%. With the Government policies expected to remain stable and fiscal policies expected to become flexible during the year in terms of lower lending rates, your Company expects good growth opportunities in the coming years. THREATS AND RISK & CONCERNS: The overall power situation, increasing power cost, labour cost and consumables cost will pose a threat to the Indian forging Industry. Higher level of Automation will become order of the day and your company will strive to focus on these areas to remain competitive in the Market. Hot forging division relying on power is located in Karnataka and will be potentially exposed to risk of power fluctuation in line with existing scenario in the state as the state is depend on Hydro Power. The projected normal monsoon is expected to ease the situation in 2016-17. SEGMENT: Your Company operates in only one segment–Forging INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company’s internal control system has been designed & implemented, taking into account the nature of business and size of operations, to provide for: l Reliability and integrity of financial and operational information l Effectiveness and efficiency of operations and assets l Compliance with applicable statutes, policies, listing requirements, management policies and procedures The Company, through its own Internal Audit Department, carries out periodic audits at all locations and all functions and brings out any deviation to internal control procedures. The observations arising out of auditor periodically reviewed and compliance ensured. The summary of the internal audit observations is submitted to the Audit Committee. The Audit Committee at their meetings regularly review the financial, operating, internal audit &compliance reports to improve performance. The heads of various monitoring / operating cells are brsent for the Audit Committee meetings to answer queries from the Audit Committee HEALTH, SAFETY, SECURITY ENVIRONMENT The Company accords high priority to health, safety and environment. The Company has two manufacturing plants in operation. The Company emphasizes on maintaining a healthy and safe environment in and around its factory. Safety awareness is inculcated through regular Safety awareness program. HUMAN RESOURCES / INDUSTRIAL RELATIONS Employer – employee relation remained cordial during the year. Training and development of employees continue to be an area of prime importance. The total number of people employed in the Company as on 31st March 2016 was 395. RISK MANAGEMENT To enhance the risk management process, the company has identified and prioritized the risks. Risk mitigation activity plans are established and executed as and when need arises. Periodical reviews are carried out to assess the risk levels and its mitigation plans. CAUTIONARY STATEMENT The Management Discussion and Analysis Report contains forward looking statements based upon the data available with the Company, assumptions with regard to global economic conditions, the government policies etc. The Company cannot guarantee the accuracy of assumptions and perceived performance of the Company in future. Therefore, it is cautioned that the actual results may materially differ from those exbrssed or implied in the report. By Order of the Board K. KARTHIK Executive Director DIN: 06846794 P. SHANMUGASUNDARAM Director DIN: 00119411 Coimbatore 30.04.2016 |