cenlub industries ltd Management discussions

1. Global Economics:

Globally, business in general is seeing an upward and positive trend. Although wars in some areas of world and continued threat of Covid pandemic has had some impact on business, but overall scenario in the world as well as In India has Improved in almost all sectors. There is boost in domestic as well as international demand due to revival of projects and business opportunities have increased. Your company Is also trying to make best use of these renewed opportunities.

2. Industry Structure:

Cenlub is serving a vast range of Industrial sectors, ranging from Machines, Power, Steel, Cement, Sugar and Paper to Railways and vehicles. Recently, the company has made an Impressive entry into prestigious Oil and Gas sector, by roping in a number of important international MNCs. With CE certification also available, company Is now poised for entry into European markets. Cenlub has been among the top suppliers for railways and with the introduction of many new products for vehicles, the company is expecting good business in construction and heavy earth moving machinery and vehicles sector also. Cenlub, a pioneer in manufacturing centralized lubrication systems in India, is sure to further strengthen its position in this sector in current year.

3. Industry Structure and Developments:

Over the past couple of years, Cenlub has emerged as major manufacturer of Lube oil systems for Power sector while maintaining its position as a preferred vendor in the field of Industrial lubrication. Our activities in this sector are growing at a very fast rate both at domestic and international level, contributing now significantly to companys turn over. Due to its vast potential, company plans to focus on this business. Another potential field of Oil & Gas has also been tapped with very positive results and our customer base in these sectors is growing at a very fast rate.

Your company also caters to Machine Tool Sector and we are among the top suppliers with very significant market share. We are OEM to most of the machine tool builders, particularly of CNCs, getting repeat orders from diem. This sector is being served from our plants at Faridabad (serving North, East and West India ) and Bangalore ( South India ). Some new products developed by this division hold very good potential in Vehicles, construction and heavy earth moving machinery field and these are being aggressively marketed to reputed domestic as well as international manufacturers of these machines.

4. Opportunities and Threats:

Company visualizes immense opportunities in Power, Oil and Gas sector. However, being project based business, this sector is sensitive to many factors including Government policies, long term project economic projections, change in customer planning and priorities, International and global factors. Railways sector also holds a very substantial long term business potential but faces security threats at sites, being in very difficult terrains. Opportunities also exist in Industrial and Vehicle Chasis lubrication and Company is making best use of available opportunities while considering the threat factors also.

Like any business venture, threats do exist but these are being mitigated with careful planning. The overall opportunities vs threats scenario is very positive and company is in a very sound position to meet these challenges.

5. Risks & Concerns:

COVID-19 Pandemic has been a major threat to Business and economy not only in India but all over the world for last couple of years. Although the situation has been controlled to a large extent, there is an impact on cost of raw materials in Post Covid period. There is a rise in general price index affecting systems pricing and profitability. Also, due to rise in general price index, manpower has become expensive and scarce, which directly affects project executions. Both these factors are a matter of concern. While company is not ignoring this risk, It is trying to resolve these by optimum work study and planning.

6. Internal Control System and their adequacy:

The company has ISO 9000 In place and a detailed manual has been prepared for Internal controls, commensurate with Its nature of business and size of operations to safeguard and protect from loss & unauthorized use or disposition of Companys resources. There are proper procedures for authorization, recording and reporting to the management, both on technical as well as on administrative & finance side. Systems and procedures exist to ensure that all transactions are recorded as necessary to permit preparation of financial statements in conformity with applicable accounting standard and principles or any other criteria applicable to such statements and to maintain accountability for assets. The Companys internal audit process covers all significant operational areas, whether technical, administrative or finance and reviews the records regularly.

7. Innovations and Intellectual property right:

Company has been a pioneer in Centralised lubrication field in India and is engaged in innovation by its own R&D activities. Company has identified certain new areas where innovation related to lubrication is needed and work in these is in progress. Once required goals are achieved, patent / intellectual property right shall also to be considered.

8. Operational Performance:

Company is maintaining excellent operational performance and company share price is at all time high. Order position of company is very good and company is enjoying good vendor support, ensuring uninterrupted supply of raw materials. However, cost of raw material has increased post Covid, which is a matter of concern. Company is trying to mitigate this by increased volume of business and competitive pricing of its products.

9. Human Resource:

The company is taking various initiatives to enhance human resources for better productivity by providing internal training and development of skills to non-experienced staff. This will help in enhancing their emotional and intellectual engagement with the company.

10. Dividend:

Due to additional borrowings made previously, there is a commitment towards repayments to the Banks. As such, Board of Directors feels appropriate not to recommend any dividend for the Financial Year 2022-23.

11. Acknowledgement:

Your Directors acknowledge and thank the Companys customers, shareholders, vendors, state government authorities, business associates and bank for the support extended to the Company. Your Directors also record their appreciation for the commitment and dedication of the employees of your company.