MANAGEMENT DISCUSSION AND ANALYSIS
Industry Scenario /opportunity & Out Look / Risk & Concern:
Your Company is basically engaged in Transportation, Wind Energy and Trading of
Automotive Parts, Renting of Immovable Properties, distribution of fuel energy. The
details in respect of sector wise outlook, strengths, threats and risks attached to each
segment, performance of the Company in each segment is mentioned as under:
Transport Sector:
The road transportation industry has been the most significant constituent of the
Indian logistics industry. However, the segment continues to struggle to cater to the
countrys size and widely spread consumption hubs.
Opportunities in Transport Sector:
Increase in economic development of the Country will ultimately require increase in
transportation of goods and Services. Further Road Transportation is one of the cheapest
mode of transport and goods can be transported from one place to another, even in remote
areas. Furthermore due to increase in prices of land, big industries are located in remote
areas and which provides more opportunity for the transportation sector. Further,
improvement in the quality of road infrastructure has played a critical role. Further with
the introduction of Goods and Services Tax movement of vehicles has become easier. Further
the development of roads and highways have made the movement of vehicles easier.
Strength of the Company in Transport Sector :
Your Company has more than 70 Commercial Vehicles, either directly or indirectly and
has entered into contract with various companies for the transportation of goods. The
Company has experience of more than 3 decades in the Transportation Sector. Thus the
Company has good network in the field of the transportation Sector.
Weakness of the Company in Transportation Sector:
Competition is one of the factors affecting the performance of the Company. Further the
Sector requires capital investment which is getting costlier day by day for the purchase
of new commercial vehicles. Lack of ability of the Company to invest in new commercial
vehicles is one of the major weaknesses of the Company.
Risk in Transportation Sector:
Increase in overhead costs is also another risk associated with the transportation
Sector. Further customers do not pay in proportion to the increase in the input prices, if
any.
High cost of manpower also affects the transportation sector. Further slowdown in the
economic activity of the industries also affects the growth of the Sector.
Performance of the Company in Transportation Sector:
During the year under review, your Company continued to get / renewed transportation
Contracts from valued customers to cater needs of its valued clients. The Revenue from
Transport Operations increased from Rs. 1,251.6 9 Lakhs to Rs. 1,413.87 Lakhs registering
a decrease of 12.95%.
Trading in Automotive Parts and Petroleum Products:
Industry Scenario /opportunity & Out Look / Risk & Concern:
The growth outlook for the automotive aftermarket industry in India continues to be
positive, driven by sustained increase in vehicle population and a shift towards
higher-end vehicles.
Except for large automotive distributors, players across the aftermarket faced margin
pressure in the last few years. This trend is likely to continue as most players in the
Indian aftermarket are still sub-scale and will be at risk of margin decline due to
pricing pressures as well as rising costs.
Opportunities of the Company in Automotive Parts and Petroleum products:
Your Company has distributorship of BOSCH Ltd and also of Mahindra & Mahindra Ltd,
which are very reputed international brands. Sale of such branded parts provides customer
satisfaction and more demand from the Customers.
Your Company has commenced petrol and petroleum products distribution by taking
franchisee for selling MS / HSD / Lubes of Nayara Energy Limited (formerly known as Essar
Oil Limited) Haldia, West Bengal.
Strengths of the Company in Automotive Parts and Petroleum products:
Your Company is acting as the Main Distributor for Auto Components manufactured by
"BOSCH Ltd." for the Automotive Aftermarket and supplies such spares to
Authorised Service Centers of Bosch as well as to retail outlets and neutral garages and
workshops.
BOSCH is the global leader in Automotive Components and "BOSCH" brand
products come as OE fitments in all ranges of vehicles worldwide. With newer models of
vehicles being introduced in the market every year, the business has very good potential
in future.
Your Company is acting as the Super Distributor for Auto Components & Farm
Equipment manufactured by "Mahindra & Mahindra Ltd.," for the Automotive
Aftermarket. With newer models of vehicles being introduced in the market every year, the
business has very good potential in future.
We have executed an agreement on for Super Stockist Agency with Dorf Ketal Chemicals
India Private Limited for our appointment as Super Stockist too market their product in
the assigned territory for Gujarat State for one year
In the petroleum Sector your company believes that with the rising population and
increase in the number of vehicles the petroleum consumption is going to increase.
Risk of the Company in Automotive Parts and Petroleum products:
The margins from the automotive parts depend upon the policy and pricing of components
by BOSCH Ltd., Tractor and Farm Equipment Limited and by Mahindra & Mahindra Ltd over
which the Company has no control. Manufacturing of parts by local suppliers at cheap rate
is also another risk associated with the automotive parts.
The distribution of petrol and petroleum products is very risky and highly inflammable
products. Though adequate care is taken by carrying out insurance.
Performance of the Company in Automotive Parts and Petroleum products:
The Revenue from trading Operations of automotive parts and Petroleum products of
increased from Rs. 5,561.94 Lakhs to Rs. 5,807.76 Lakhs registering an increase of 4.42%.
Wind Energy Generation:
Industry Scenario & Out Look:
India is moving towards energy sufficiency and at the same time emphasis is improving
on renewable energy contribution. Emphasis of the Government is adding up renewable
energy. Accelerated depreciation will help in furthering the cause of commissioning more
wind mills.
Opportunities in Wind Energy Sector:
Thermal and Coal Power projects involve storage, transportation and pollution problems
and hence Wind Energy is one of the cleanest sources of energy. Wind industry is
attracting large investments.
Policies of the government are enabling the company to supply quality power to the
consumers. Company has realized revenue faster from the group captive consumers than
selling power to the utility.
Strength of the Company in Wind Energy Sector:
Your Company has installed Wind mills in the strategic areas whereby wind blows at a
faster pace which helps the Company to generate more energy. It is one-time investment
leading to returns for number of years.
Weakness of the Company in Wind Energy Sector:
Competition from other energy source like Thermal, Solar and Bio Mass is impacting Wind
Energy badly. Company has to follow industry norms and compete. Once the industrialization
picks up, we may expect the prices to go up again.
Risks in Wind Energy Sector:
Generation of wind energy depends upon the weather. A good monsoon will enable
generation of more power. Government policies also play an important role in determining
the prices and also availability of Grid to export power to our consumers.
Our power is being utilized by the group captive consumers. Company may face problem if
our consumers are facing impact on international / national prices of the commodities.
Performance of the Company in Wind Energy Sector:
The Revenue from Operations of the division increase from Rs. 187.68 Lakhs to Rs.
182.65 Lakhs registering a decrease of 2.68%
Renting of immovable properties:
Industry Scenario & Outlook:
During the year under the review, the real sector has witnessed slowdown. The Slowdown
in real sector is mainly due to huge supply and lower growth of economy. Rentals from real
estate have also come down significantly. However, it is expected that the demand of the
real estate will increase in the years to come forward. Central Government and State
Government also play an important role in the growth of the Sector.
Opportunities of the Company in Real Sector:
High Population growth and rapid expansion of the urban area, resulting in higher
demand for real estate.
Further the company expects that in the years to come the economy will improve and will
result in more demand which will also lead to increase in rental income and rental
business.
Weakness of the Company in Real Sector:
Huge Interest Burden and liquidity crisis is one of the major weaknesses of the Company
to invest in the real estate.
Risk of the Company in Real Sector:
High Investment in the Real Sector is one of the major risks that the Company foresee
in the real estate. Further rentals from real estate will depend upon the growth of the
economy.
In the recent past Bankers have attached / taken possession some of the properties from
which the Company use to derive its rental income.
Performance of the Company in Real Sector:
The Revenue from Operations of the division increased from Rs. 73.79 Lakhs to Rs.
104.17 Lakhs registering a increase of 41.17%.
Internal Control Systems and their adequacy:
The Company maintains adequate internal control systems, which provides, among other
things, reasonable assurance of recording the transactions of its operations in all
material respects and of providing protection against significant misuse or loss of
companys assets.
Internal Controls are adequately supported by internal audit and periodical review of
by the management. The audit committee meets periodically to review with the management
and statutory auditors, financial statements. The Audit Committee also meets with the
internal auditors to review adequacy /scope of internal audit function, significant
findings and follow up thereon and finding of abnormal nature.
Your Company has installed CCTV in some of its Divisions, which acts as safeguarding
the assets from theft/burglary or any unforeseen events.
Human Relations:
Relations with the employees of the Company at various levels remained harmonial during
the year under the review. The Company is making its best efforts to retain and attract
talented employees. During the year under the review, the Company has complied with all
legislative provisions of labour laws. As at 31st March, 2023 the Company has
85 employees.
Cautionary Statements:
Statements in this Directors Report & Management Discussion and Analysis
describing the Companys Objectives, projections, estimates, expectations, or prediction
may be "forward looking statements " within the meaning of applicable securities
laws and regulations. Actual result might differ materially from those expressed or
implied.
The Company assumes no responsibility in respect of the forward looking statements
herein, which may undergo changes in future on the basis of subsequent developments,
information or events.
The Corporate Governance & Management Discussion & Analysis (MDA) Report:
The Corporate Governance & Management Discussion & Analysis (MDA) Report forms
part of the Annual Report. The Certificate from the Statutory Auditors of the Company
certifying compliance of the conditions of the Corporate Governance as stipulated in SEBI
(Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed to the
report on Corporate Governance.
|
By order of the Board of Directors of |
|
Frontline Corporation Limited |
|
Sd/- |
| Place: Ahmedabad |
Ram Prasad Agarwal |
| Date: 31st August, 2023 |
Chairman |
+91-9892691696
