MANAGEMENT DISCUSSION AND ANALYSIS REPORTECONOMY OVERVIEW:
The financial crisis that shook the pillars of world economy is on the path ofrecovery. Global growth, after experiencing a sharp downturn in 2008-2009, has catapultedback to recovery phase with the global trade gradually picking up. In the wake of suchrecovery, prospects of developing countries are for robust recovery in the times ahead.
India, over a period of the year has posted significant recovery in terms of growthfigures. GDP growth rate is around 8.2% for the fourth quarter of the financial year2010-2011. Manufacturing sector registered a growth of 8.9% in 2009-2010 to 8.6% in2010-2011. The Chemical industry in which your Company operates, shall continue to grow ata steady pace since the basic needs remain the same.
High inflation especially high food inflation of 8.53% has put consumers spending underpressure.
INDUSTRY STRUCTURE AND DEVELOPMENTS:
The Chemical Industry has been continuously growing and showing an upward trend sincethe company began its operations in 1996. Today your Company serves various segments ofproducing sodium silicates such as food grade silicates, drilling grade silicates,detergent grade silicate, etc., and all are available in Glass, Liquid and Powder form.Your Company has state of the art latest technologies and facilities to keep pace with theemerging trends in the market.
Your Company has designed Bio-Gas plants which uses all types of biomass &generates bio-gas which is used in redesigned end fired triple pass regenerative furnacesto get temperature above 1300 degree Centigrade. The designs have been commerciallyaccepted and market response for the same has been overwhelming.
The hike in the price of Raw material during the year has resulted into decrease inmargin of your Company.
OPPORTUNITIES:
Your Company is a supplier for Sodium Silicates to toothpaste, Salt, Cosmetics, Tyre& Rubber Industry & Pesticides industry, especially food processing industry. Theindustry is expected to grow at a rate of 10% -12% annually. Keeping this in mind,potential for the growth of chemical industry is enormous.
Your Company is amongst the early movers to switch their raw material from soda ash tocaustics, as the same is a better reactant as compared to the former, thus resulting insaving of fuel costs. We also saw great opportunity in moving from the conventional fossilfuels to biogas, resulting in additional cost savings.
THREATS, RISKS & CONCERNS:
Fluctuations in prices of raw material such as soda ash, sand etc. keep the marginsunder pressure. The exchange rate fluctuations have further increased the inputs costs.Also, being in the market, competition serves as one of the threats to the businessoperation of the Company.
Your Company endeavors to address these threats by monitoring, checking and discussingand gaining industry specialization and expertise.
OUTLOOK:
Your Company, keeping pace with overall sodium silicates market has grownsignificantly. The Management expects to continue this trend in the years to come, subjectto favorable market conditions, and stable economic policies.
INTERNAL CONTROLS:
Your Company's Internal Control System is supplemented by extensive audit by anindependent firm of Chartered Accountants as Internal Auditors, who discusses InternalControl System with Audit Committee. The Audit Committee thoroughly reviews the InternalAudit function and makes recommendations on scope of Internal Audit. Internal Auditreports are reviewed and observations are discussed. Corrective measures are takenwherever necessary. The Audit Committee also meets up with Statutory Auditors to discussand have an overview on the operations of the Company.
CAUTIONARY STATEMENT:
Statements in the Management Discussion & Analysis Report describing the Company'sexpectations, opinion, and predictions may please be considered as "forward lookingstatements" only. Actual results could differ from those expressed or implied.Company's operations should be viewed in light of changes in market conditions, prices ofraw materials, economic developments in the country and such other factors.