ut ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Structure and Developments/

Opportunities and Threats/Risks and Concerns

Your Company is engaged in the manufacture of hydraulic cylinders and hydraulic tipping systems which are basically muscles of all hydraulic equipments used for Earthmoving, Tippers, Materials Handling, Steel Plants, Cement Plants, Mining, Road Construction, Railways, Defence and many more others. Most of these industries are reeling under recession for last 2/3 years. But all these industries are gaining momentum with the growth of the Indian economy. This has opened great opportunities for your Company and at the same time export opportunities are also widening due to globalization effort initiated by most of the major manufacturers of the country. In order to meet the current market scenario, major efforts are being made in waste reduction through adoption of proven manufacturing technology.

Your Company is backed a Dealer Network across India. This is the strength of your Company. After sales & service with spares back up are always available at all the major parts of the country.

Your Company is also looking at potential upside in exports in the future.

Segment-wise or Product-wise Performance

The segment-wise performance of the Company during the period under review has been disclosed in the Note 33 to the Audited Financial Statements.

Internal Control Systems and their Adequacy

Your Company has an adequate and proper system of internal controls. It ensures that the transactions are authorized, recorded and reported correctly and timely. The internal control systems are reviewed by the management. The internal audit is carried out by a firm of Chattered Accountants to ensure that responsibilities are executed effectively and that adequate systems are in place.

The Audit Committee reviews all audit reports submitted by the internal auditors; follows up on the implementation of various recommendations; meets the Company’s statutory auditors to ascertain their views on the adequacy of internal control systems; and keeps the Company’s Board of Directors informed of major observations from time to time.

Discussion on Financial Performance with respect to Operational Performance

During the period under consideration your Company had recorded a net turnover of Rs. 10.49 Crores and loss after tax of Rs. 12.65 Crores. The loss piled up during the period under review is due to interest on borrowings from Banks and Financial Institution has been provided in the Books of Account as a matter of prudence. Out of loss of Rs. 12.65 Crores, Interest of current period of Banks and

Financial Institution is amounting to Rs. 4.51 Crores. Moreover, the Company has disputed outstanding liability figures. The Company had entered into a One Time Settlement (OTS) with Allahabad Bank and Axis Bank at a much lesser amount and was on the verge of the same with Bank of India and M/s. SICOM Ltd. The Company had made a part payment to Allahabad Bank. The negotiations with the Strategic Investor could not be concluded resulting in the Company not being able to pay the OTS amount to the Banks within the stipulated time period. However, The Company has submitted again a revised proposal for One Time Settlement to the Banks and Financial Institution which is under consideration at various levels to their respective departments. The Company believes that the same shall be accepted by them at the earliest.

Loss includes Trade Receivables and Advances written off and Provision for Doubtful Trade Receivables and Advance amounting to Rs. 52.80 lacs and Rs. 27.37 Lacs respectively.

The Directors have already taken appropriate measures to revive the Company as stated above in details under the heading "Auditors’ Report".

Developments in Human Resources/Industrial Relations Front

Your Company believes that Human Resource is the most important resource and continues to work for its development. The Company continues to invest in upgrading the knowledge and skills of employees. The Company is providing growth opportunities to internal talent by assigning them with higher responsibilities along with suitable exposure. The Industrial relations at the plant were cordial. The manufacturing operation of the Hosur Unit could not be continued due to high manufacturing cost and non remunerative selling prices. The ‘Suspension of Work’ was implemented on 24th July, 2012 in the Hosur Unit with a view to reduce the cost and expenditure without interruption of production i.e. by relocating a part of the Operation to Budge Budge, Kolkata plant with the option to the workmen to join the same for the time being.

The Company endeavours to create an environment where employees can use their capabilities effectively to support the business. Hence, the Company encourages employees to balance their work and personal life.

The total number of people employed as on 31st March, 2013 was 321.

Quality Statement

Your Company strategy is to focus on marketing excellence, delivery reliability and people while pursuing a policy of continuous improvement and strict control of cost and assets. Your Company is always maintaining beneficial relationship with supplier and customers. Here the Quality is assured at every stage, right from the procurement of raw materials to the processing, manufacturing and packing of the final product. Target based Quality Improvement Project is carried out in your Company for all round improvement.

In order to eliminate assignable causes of variations your Company provides necessary resources and training to identify problem and develop/organize corrective actions. The aim is always to challenge current assumptions and perspectives and to stretch the boundaries towards more innovative and relevant solutions. The intention is to provide products and services that always exceed customer expectation.

Your Company is practicing an efficient and effective Quality Management System (QMS) reviewed periodically. Your Company achieved ISO 9001:2008 version of updated QMS standard in the year 2009.

Future Outlook

Prospect of hydraulic industry looks to be bright considering the turn around of earthmoving and construction equipment industries with signs of revival of economy and major thrust on infrastructure development by Government of India. With the expected increased demand for hydraulic components in above industries, your Company is geared up to take the advantage of the new market situation. This is likely to benefit the Company which has over four decades of experience coupled with well established dealer workshops and service centers manned by trained technicians.

Cautionary Statement

Statements in this "Management Discussion and Analysis Report" which seek to describe the Company’s objectives, projections, estimates, expectations or predictions may be considered to be "forward looking statements" within the meaning of applicable securities laws or regulations. However, actual results could or may differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations also include global and Indian demand-supply conditions, finished goods prices, availability of raw materials, changes in Government regulations, tax regimes, political scenario, natural calamity etc. over which the Company does not have any control. Forward march of your Company is always exposed to risk of hindrances arising out of aforesaid unforeseen predicaments, thereby upsetting the apple cart. Readers are cautioned not to place undue reliance on such statements and apply their own diligence and independent judgement.