menon and menon ltd Management discussions

MENON AND MENON LIMITED ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS PERFORMANCE: The year under review, your Company recorded net sales of Rs.92.57 Crores, an increase of around 34% over Rs.69.07 Crores in the previous year. Your Company achieved a profit before tax of Rs.4.74 Crores as compared to Rs.5.02 Crores for the previous year showing a decrease of around 6%. This is mainly on account of increase in input material costs. This has resulted in increase in material cost to 54.73% as against previous years 50.24% and there is a marginal fall in the current years EBIDTA compared to the previous year. Also the Auto Component industry as a whole for the year under review is reeling under profit pressures. In the year under review, Company had set an objective of Energy Conservation to reduce energy cost. With the efforts put in, the Company was able to reduce its power cost to 12.32% as against previous years 15.35%. Also to control the cost of Employment, company implemented Maynard Operations Sequence Technique (MOST). With this, apart from substantial increase in salaries, Company was able to reduce the employment cost at 16.170% as against previous years 17.03%. The salient features of MOST system are: * increase in operator efficiency through scientific study of manual activities in depth. * Ruling out all traditional methods of time & motion study to avoid variation, conflicts etc. * identifying the areas for continuous improvement to accelerate working efficiency. BIFR: The BIER hearing had taken place on October 16, 2007. BIER has granted certain reliefs sought by the Company from Provident Fund and ESI Authorities etc. Now since the Companys net worth as on March 31, 2008 has become positive, company proposes to go for de-registration from BIFR. FUTURE PLANS: The current foundry capacities are being utilized to the optimum. There is a significant demand from the existing as well the new customers and considering the market scenario we are contemplating to increase the foundry capacities by an additional 2000 Tons per month. A new green field foundry is under study and planning. We propose to short list the main equipments in the next financial year. Machining and Hydraulic Aggregate capacities will also be proportionately increased with the modern manufacturing facilities to meet the customer demand.