MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE AND DEVELOPMENT
Alufluoride Ltd (AL) is the only Company in Andhra Pradesh producing high purityAluminium Fluoride (AIF3) with technology developed by Alusuisse, Switzerland. Thistechnology facilitates conversion of Fluorine effluents from Phosphatic Fertilizer Complexinto Hydrofluosilicic Acid and then to Aluminium Fluoride. The project ensues pollutionabatement, import substitution, conservation of natural resources like Fluorspar &Sulphur, cost effective product, conversion of waste into wealth and earning valuableforeign exchange to the Nation. AIF3 is used as flux in reducing the melting point ofAlumina during the electrolytic process of producing Aluminium. All Aluminium Smelters inIndia & abroad. are using the Company's product with repeat orders for increasedquantities due to its quality & service.
FUTURE OUTLOOK, OPPORTUNITIES, THREATS, RISKS & CONCERNS
Alufluoride Ltd (AL) set up the project in 1995 to produce AIF3 and related products,based on an agreement between AL and M/s Coromandel International Ltd, Visakhapatnam(CFL). As per the agreement, CFL is to supply 4,000 TPA of Hydrofluosilicic Acid (Acid)exclusively to AL. However, since inception CFL was unable to supply the contractedquantity and the supplies from them are deteriorating year after year. Consequently, AL'sfinancial results were adversely affected.
It is reported that, all the Aluminium smelters in India & abroad are increasingtheir Aluminium production capacities and also new Aluminium smelters are coming up withhigh capacities, resulting in an increased demand for AIF3.
The only risk & concern for the Company is availability of Acid. When the acid isprocured from other sources, the landed cost increases significantly due to transportcost. As the Company is now Debt-free, with efficient working capital management, improvedAIF3 sales realization etc., your Directors are hopeful of improved financial results withoptimized production.
The Company is getting offers from Acid producers that they would like to supply theAcid on a long term basis. The Company is also approaching various acid suppliers forsupplies from them on an assured as well on a long term basis. If these efforts aresuccessful, the Company prefer to shift the total plant to the place where there is anassured acid supply available, by which it can reduce the acid transport cost and can postgood financial results on a long term basis.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an internal control system which provide for:
Efficient use and safeguarding of resources
Accurate recording and custody of assets
Compliance with prevalent statutes, policies, procedures, listing requirements,management guidelines and circulars
Transactions being accurately recorded, cross verified and promptly reported
Adherence to applicable accounting standards and policies
IT systems, which include controls for facilitating the above
The internal control system provides for well documented policies, guidelines,authorizations and approval procedures. The internal audit reports are laid before theAudit Committee and discussions were held periodically by the Audit Committee at itsmeetings. The observations arising out of audit are subject to periodic review, complianceand monitoring. The significant findings/observations made in internal audit reports,along with the status of action thereon, are reviewed by the Audit Committee of the Boardof Directors on a regular basis for further appropriate action, if and as deemednecessary.
HUMAN RESOURCE DEVELOPMENT
The continued Certification of Quality, and Environmental Management System adopted bythe Company to ISO 9001, 14001 and OHSAS 18001 manifests to the commitment of all theemployees to excellence, Committed human resources is principal core strength of yourCompany and is attribute to the extremely cordial atmosphere prevailing in the Company.The total number of employees stood at -69 as on 31. March, 2010.