MANAGEMENT DISCUSSION AND ANALYSIS
The Management of Ellenbarrie Industrial Gases Ltd. presents its analysis coveringperformance and forward looking statements based on certain assumptions and expectationsof future event:
Production and Sales Performance:
Particulars of goods manufactured and sold during the last two years are given in thefollowing table:
| || || |
Financial Year 2012-2013
Financial Year 2011-2012
|Products ||Units ||Production ||Sales ||Production ||Sales ||Production ||Sales |
|Oxygen ||cu.m ||2,44,34,162.10 ||2,08,98,992.65 ||3,62,49,553.25 ||3,61,02,550.00 ||(32.59) ||(42.11) |
|Nitrogen ||cu.m ||2,84,91,011.29 ||2,60,87,512.59 ||2,97,88,613.70 ||5,96,44,032.50 ||(4.36) ||(12.00) |
|Argon ||cu.m ||7,87,972.63 ||6,35,486.48 ||5,85,958.61 ||5,80,935.99 ||34.48 ||9.39 |
|Acetylene ||cu.m ||94,179.00 ||84,044.90 ||86,382.80 ||85,707.90 ||9.03 ||(1.94) |
|Medical Oxygen ||cu.m. ||23,11,666.34 ||23,40,305.84 ||2,85,509.01 ||2,72,817.28 ||709.66 ||757.33 |
|Carbon-di-Oxide ||kg. ||12,53,413.50 ||12,24,325.25 ||12,18,206.00 ||11,74,084.00 ||2.89 ||4.28 |
|Gas Mixture ||cu.m ||73,216.80 ||94,936.00 ||60,075.50 ||58,215.50 ||21.87 ||63.08 |
Demand of industrial gases have direct relationship with GDP growth of the country.General downtrend in economy specially, in the manufacturing sector continue to affectdemand of gases of your company. In addition, cost of energy which is one of our maininputs has been steadily rising. It has not been possible to recover the higher input costfrom the market because of creation of excess capacity by the competitors in a shrinkingmarket. The results of the company have been affected due to combination of these factors.
Lower production of steel and sluggish general engineering activities in Eastern Indiahave had massive effect on volume of Oxygen sale. We have been able to maintain volume ofNitrogen very close to last year's level through our dominant presence in thePharmaceutical market. We have put on special thrust on other gases like Oxygen formedical uses and speciality gases.
AIR WATER INC (hereinafter called the acquirer) incorporated under the laws of Japanhaving its principal office at 12 - 8 Minami Semba 2-Chome, Chuo-Ku, Osaka 542 0081 Japanhas entered into a share purchase agreement dated June 14, 2013 with promoters andpromoter group of the company. The acquirer wishes to acquire 51 % of the equity sharecapital of the company. Salient features of the scheme of acquisition are already in thepublic domain through public announcement process under various Regulations of SEBI[Substantial Acquisition of shares and Takeovers Regulations 2011 ] by the acquirerthrough Merchant banker Axis Capital Ltd.
The encouraging aspect of the acquisition is that products and services offered by yourcompany and by the acquirer are complementary to each other and if combined, wouldcomplete a range of product offering in industrial gas business. On completion of thetakeover there will be addition to the Board with new directors and your company will beable to penetrate, new market, new product and new services, which will go a long way tobolster the growth and strength of the company.
MANAGEMENT OUTLOOK AND STRATEGY
In the midst of depressed macro economic scenario we expect improvement in economy inthe short term that would lift activities in the core sector and create a demand pull ofour products. Our products play very important roles in the growth of core sector and, onecan expect gradual upturn in production of steel, automobiles, power generation, oilrefining in course of time. We anticipate that the year 2013-14 would be an extremelychallenging year. We hope to commission a new plant at Hyderabad in the first quarter ofnext year i.e. 2014 -15.
Under the present challenging time, more internal actions are required rather thanwaiting for upturn of economy. Some of the actions in cost containment, productivityimprovement and application development of our products towards providing total solutionto customers have assumed greater importance. Your company has also decided to move intodiversified product lines in niche market, and this would help our financial fundamentalsin the future.