ang industries ltd share price Management discussions

The Management discussion and analysis report set out developments in the business environment and the Companys performance since the last report. The analysis supplements the Directors report, which forms part of this Annual Report.

Industry Structure and Developments Economic Trends and Implications

Global Economy Recovery continues to be in recovery mode. However, American truck market has not grown during the year 2016-2017. Further, due to differences and disputes with the customers, on delivery, air freight and other charges, the company has lost all the major contracts during the year under review. Thus, the prospect of the Company have not been very encouraging. The company is trying to revive its business relations or have new orders.

Global outlook continue to be impacted by the slowdown and rebalancing of the Chinese economy, low commodity prices and the gradual tightening of monetary policy in the United States.

Impact BS III Vs BS IV on ANG

In view of implementation of Stage BS IV as per the order of Hon.ble Supreme Court of India, no BS III vehicles will be sold in India from 1 April. 2017 as the Honble Supreme Court banning the sales and registration of BS III vehicles. The difference between BSIII emission norms and BSIV emission norms is almost double. Looking at it from a lay-mans point of view, the air pollution caused from BSIV compliant vehicles will be almost half of what BSIII compliant vehicles emit. This point is very important as the Supreme Court has underlined public health as its primary reason for not extending the deadline. So India is all set to move to a BS IV future and it seems that the auto manufacturers will have to pay the price, as there are over 8.2 lakh BS III vehicles still lying unsold in the country. It will be a big jolt to the automobile industry to have their entire inventory rendered useless from April 1, 2017. Manufacturers that have a presence in BSIII compliant export markets will still have the option to sell those vehicles abroad but all of it will cost them extra money.

This has an impact on the business of ANG, as the vehicle production at our customers end i.e. Ashok Leyland Limited has suffered a lot. This has been implemented on March 27, 2017, in view of vehicles produced in BS III compliance could not be rolled out. This has impacted us a huge as the tippers bodies which were to be mounted on the vehicle during the month of March could not be mounted or sold and the turnover of ANG reduced in the last quarter of 2016-17.

Notwithstanding this, the resulting in huge vehicle inventories of BS III compliance vehicle manufactured by Ashok Leyland Limited to produce less vehicle in April 2017 and May 2017 and the vehicles of stock are to be retrofitted with BS IV compliant. This exercise will continue till July 2017 and which have impact of supply of tipper bodies by ANG. The sale / manufacturing of Tippers by ANG may have impact of 60-70% less of tipper due to the reasons mentioned above. It is expected that the exercise of retrofitted with BS IV Compliant with all the old BS -III compliance vehicle will be completed in August 2017.

BHEL: The company has also been repudiate due to non completion of order of BHEL and BHEL cancel the contract.

Emerging marketing and developing economies accounted for a major share of projected world growth in 2017 but prospects across countries remain uneven.

Indian Economy is experiencing a turnaround with economic growth projected at 7.6 per cent in 2016-17 in an environment of slow global economic recovery. Performance of the Company during the year was effected by subdued business environment. Company has mitigation strategies in place to address risk emanating from prevailing economic uncertainties and volatility in business environment.

In February, 2016 the Government has imposed the Minimum Import Price (MIP) condition on import of 173 steel items. Further, during April 2016, the Government of India has initiated Countervailing Duty/Anti-subsidy investigation on imports of certain "Hot Rolled and cold Rolled Stainless Flat Products" from China.

With the Governments focus on manufacturing and industry coupled with spending on infrastructure (roads, rail and ports, etc) the demand for steel is going to increase in the coming years.

Opportunities and Threats Key Opportunities Commercial Vehicle Industry:

The overall Commercial Vehicles segment registered a growth of 4.16 percent in April-March 2017 as compared to the same period last year. Medium & Heavy Commercial Vehicles (M&HCVs) grew by 0.04 percent and Light Commercial Vehicles grew by 7.41 percent during April-March 2017 over the same period last year.Despite a subdued trend in the industrial activity, the pick-up in M&HCV sales was driven by replacement-led demand by large fleet operators, pre-buying ahead of the implementation of BS-IV emission norms and gradual improvement in the viability of fleet operators due to declining diesel prices. The year also witnessed the implementation of Anti- Locking Braking systems in M&HCVs and Uniform Bus Body code in buses. These initiatives generated some pre-buying during the year Your Company is tryingto revive its business.

Automotive Components:

The automotive industry is an engine of growth for the Indian economy. The auto component industry contributes 3.8% to National GDP, providing direct employment to 1.5 million people. The Government of India, too, was proactive and intervened positively on several counts for the Industry. However, there is a still a lag between policy announcement and actual transformation of conditions on the ground.

Over the years the component industry has adapted well to the changes in the policy & regulatory environment and the needs of its customers. To realize their ambition of graduating from being a build to print is art to part, the auto component manufacturers must focus on R&D to help generate IP in India and in the process, create greater returns than the cost of capital to make India an attractive destination for investments.

Over the last decade, the automotive components industry has scaled three times to US$ 40 billion in 2015, while exports have grown even faster to US$11 billion. Strong growth in the domestic market along with increasing globalization (including exports) of several Indian suppliers has accelerated this industrys position.

Risk Management

Risk is an integral factor in virtually all businesses. At ANG risks are adequately measured, estimated and controlled. Irrespectively of the type of risk or the activity that creates it, the Companys fundamental approach to risk management remains the same by identifying and measure risks, leverage an in depth-knowledge of the business and competitors and respond flexibility in our risk understanding and management.

Your Company operates both in the domestic market and overseas. Having its global presence with import and export trade, we are subject to currency rate fluctuation which may results into gain or losses.

Risks arising from delayed implementation of Government policies, exchange rate risks from a weaker rupees and global trends on oil prices can also have a significant impact on the short term profitability. Competition from unorganised players can also act as impediment to the business.

While risk is an inherent aspect of any business, the Company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measures for its mitigation.

Internal Control Systems and its Adequacy

The Company implements a comprehensive internal control system, corresponding to its nature of business and size of its operation. Your Company has an established adequate internal control for ensuring optimal utilization of various resources. Investment decisions involving capital expenditures are taken up only after due appraisal and review and adequate policies have been laid down for approval and control of expenditure. Board of Directors has appointed Internal Auditor for the year 2016-17.

Cautionary Statement

The Management Discussion and Analysis Report contains forward looking statements based upon the data available with the Company, assumptions with regard to global economic conditions, the government policies, etc. The Company cannot guarantee the accuracy of assumptions and perceived performance of the Company in future. Therefore, it is cautioned that the actual results may materially vary from those expressed or implied in the report.