Anik Industries Ltd Management Discussions.
A. INDUSTRY STRUCTURE AND DEVELOPMENTS
The Financial year 2018-19 was an eventful year after adoption of Goods and Service Tax (GST). The Government (Govt.) had taken several initiatives during 2018-19 in the areas of infrastructure, real estate, easing the process of doing business, campaigns for encouraging start-ups. The global economy is under slow down and the Economic Survey 2019-20 has also forecasted a slow growth rate during the current financial year 2019-20, but with mass population and powerful purchasing power, India will surely come out of current phase.
Your Company is primarily engaged in the business ofWind power Generation Realty, Trading ofAgri- Commodities, Edible oil & Vanaspati.
In terms of wind power installed capacity, India is amongst top five countries in the world. India has rapidly grown in the Wind Power Energy Sector, despite being a relative newcomer. The unexploited resource has the potential to sustain the growth of wind energy in future.
B. OPPORTUNITIES & THREATS
(I) Wind Power:
With the encouraging policy for renewable energy, this sector has shown great growth pace which helped India to become the new "Wind Superpower". The Company has Two Wind Power projects at Nagda Hills, Dewas (M.P.) and Jaisalmer (Rajasthan) are successfully generating energy. After sale of Dairy business, your Company is in process of entering in long term arrangement of sale of electricity generated from Dewas (MP) wind mill with MP State Electricity Board.
(II) Real Estate:
On the front of Real Estate business, The integrated township project Active Acres at Kolkata is continuously getting good response from all segments of public with 4 completed towers are almost fully booked/sold even in the phase of recession in the real estate sector. 5th tower is also 75% booked and construction work of 6th tower is also in progress. In addition to that one Commercial Tower is also under construction with approx. 240000 sq. ft. saleable area, various famous brands have approached for getting space in the said commercial building on lease/sale basis.
New project of the company comprising of service apartments and luxury residences in the name of One Rajarhat at Kolkata with 320 apartments is also performing well with booking of around 200 units. Both the projects will surely result in good profitability to company in coming years.
With favourable monsoon spread over all over India, good quality & quantity of agri commodities is expected. The symptoms of global commodity business are favorable for coming future and suitable steps of Government and Reserve Bank of India will also keep lower movement in exchange rates. The Company proposes to continue to recognize the full potential in agro commodities, edible oils & Vanaspati in the coming period.
F ew years back your Company has diversified in mining business. Few of the mines allotted to your Company are in process of getting necessary permissions/ approvals to start commercial production in short span of time.
However, with the applicability of the stringent provisions of Mines & Minerals (Development and Regulation) Amendment Act, 2015 plenty of obstacles have come across which is going to affect mining industry to substantial extent.
The future performance of your Company would depend to a large extent on its ability to successful diversification, market of commodities. We are hopeful that through the combination of market developments and expansion activity, there will be healthy growth over the next few years.
C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE
The company has disclosed business segment as the primary segment. Based on the criteria mentioned in Ind AS 108 "Operating Segment" the company has identified its reportable segments. The various segments identified by the company comprised as under: -
|W ind Power Unit -||Wind Turbine Power Unit|
|Real Estate -||Construction and Development of Housing Proj ect|
|Others -||Trading of Coal, Agri Commodities, Edible Oils Etc|
The Company has identified geographical segments as the secondary segment. Secondary segments comprise of domestic and export markets. However, company has no export sales.
The segment wise performance in detail is given in Note 39 to the audited accounts of the Company as available in this annual report.
The Wind Power Projects of the Company are generating electricity satisfactorily. We see ecological power generation as the sunrise industry of tomorrow and have positioned ourselves to save the nature and to reap the reward for our stakeholders.
In current year monsoon improved in all over India. The symptoms of global commodity business are favorable for coming future and suitable steps of Government and Reserve Bank of India will also keep lower movement in exchange rates. The Company proposes to continue to recognize the full potential in agro commodities, edible oil & vanaspatiin the coming period.
With our strong focus on core business activities and our competitive position, better performance is expected in the years to come.
E. RISKAND CONCERNS
The major risks and concerns attributed to the performance of the Company are:
a. The Company is exposed to risks from market fluctuation of foreign exchange. Hence the erratic movement in foreign exchange rates and international prices of dairy products may influence the performance of the Company. Change in duty structure may affect adversely.
b. Increase in input costs, change in tax structure, change in interest rates, changes in govt. policies/ laws of land, development and stability of Indian economy against the negative external and internal forces may also impact the overall performance of the Company.
c. Profitability may be affected on account of competition from existing and prospective manufacturers of the Companys products.
F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has a good and effective internal control system for its various units in respect of efficiency of operations, financial reporting, proper recording and safeguarding of assets, compliance with applicable laws and regulations etc.
Pursuant to Section 134 of the Companies Act, 2013, the Board, through the Operating Management has laid down Internal Financial Controls and procedures to be followed by the Company. The adequacy of the same has been reported by the statutory auditors of your Company in their report.
G. FINANCIALS PERFORMANCE
The performance of the Company for the financial year 2018-19 is summarized below
(Rs. in lacs)
|Balance Sheet||As at March 31, 2019||As at March 31, 2018||As at March 31, 2019||As at March 31, 2018|
|a. Property, Plant and Equipment||1976.31||2,050.60||6,503.42||6,577.70|
|b. Capital Work-in-progress||509.06||509.06||1,014.79||896.30|
|c. Financial Assets||14,092.98||12,483.91||3,762.64||6,288.55|
|d. Other Non-current assets||705.54||607.15||6,261.87||609.22|
|e. Current assets||38,471.14||42,259.64||42,194.45||48,986.78|
|f. Total Equity||30,038.17||31,547.07||42,175.25||45,187.05|
|g. Non- current liabilities||6,221.74||4,745.17||6,221.74||4,745.17|
|h. Current liabilities||20,295.36||21,623.10||20,979.41||22,270.30|
Summarized Profit & Loss Account
|Revenue from operations||60,453.82||60967.09||60,453.82||60,967.09|
|Profit/ (Loss) before Depreciation, Finance Cost, Exceptional items & Tax Expenses||(902.62)||3,064.20||(822.93)||3103.32|
|Profit/ (Loss) before Finance Cost, Exceptional Items and Tax Expenses||(992.08)||2,970.93||(912.39)||3,010.05|
|Less: Finance Cost||1274.47||1227.20||1,274.61||1,227.40|
|Profit/ (Loss) before Exceptional Items and Tax Expenses||(2,266.55)||1,743.73||(2,187.00)||1,782.65|
|Add/ (Less): Exceptional items|||||||||
|Profit (Loss) before tax expenses||(2,266.55)||1,743.73||(2,187.00)||1,782.65|
|Less: Current tax||0.33||385.00||0.56||385.50|
|Less: Deferred tax||(746.70)||(24.91)||(746.70)||(24.91)|
|Less: Earlier Taxes paid||-||||-||3.09|
|Profit (Loss) for the year from continuing operations (A)||(1520.18)||1,383.64||(1,440.86)||1,418.97|
|Profit (Loss) from discontinuing operations before tax|||||||||
|Less: Current tax|||||||||
|Less: Deferred tax|||||||||
|Profit (Loss) from discontinuing operations after tax (B)|||||||||
|Profit (Loss) for the year (A+B)||(1520.18)||1,383.64||(1,440.86)||1,418.97|
|Add: Share of Profit (Loss) of associate||||||(78.36)||(37.08)|
|Profit (Loss) for the year after Minority interest and Share of Profit/(Loss) of Associates||(1520.18)||1,383.64||(1,519.22)||1,381.89|
|Add: Other Comprehensive Income||11.29||1.73||11.29||1.73|
|Total Comprehensive Income||(1508.89)||1,385.37||1507.93||1,383.62|
|Balance brought forward from previous year||28,771.72||27,386.34||39,346.35||41,001.74|
|Amount Available for Appropriation||27,262.83||28,771.72||37,552.65||39,346.35|
|Transfer to General Reserve|||||||||
|Proposed Dividend on Equity Shares|||||||||
|Tax on Dividend|||||||||
|Surplus carried to Balance Sheet||27262.83||28,771.72||37,552.65||39,346.35|
|Paid Up Equity Share Capital||2775.35||2775.35||2775.35||2775.35|
|Earnings Per share (Rs. 10/- each) Basic & Diluted (in Rs.)||(5.48)||4.99||(5.43)||4.99|
H. INFORMATION TECHNOLOGY
SAP has been implemented in all plants, depots, regional offices and head office of the Company enabling better supply chain, debtors control at operational level and access to consolidated data of the Company since the system is integrated. Among other benefits, SAP will provide real-time data, support in strategy formulations, lead to adoption of uniform and transparent business practices, render cost optimization and value enhancement.
I. MATERIALDEVELOPMENT IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT
Your Company considers the quality of its human resources to be most important asset and constantly endeavors to attract and recruit best possible talent. The number of people employed during the year as 70.
The industrial relations of the Company continue to remain harmonious and cordial with focus on improving productivity and quality.
J. KEY FINANCIAL RATIOS ANALYSIS
|S. No.||Particulars||FY 2019||FY 2018||Remarks|
|1||Debtors Turnover||2.70||2.41||Debtors turnover ratio increased due to decrease in average trade receivables.|
|2||Inventory Turnover||7.32||8.46||Inventory turnover ratio also decreased due to increase in inventory.|
|3||Interest Coverage Ratio||-1.44||6.56||Ratio declined during the year due to lower profitability.|
|4||Current Ratio||1.90||1.95||Current ratio slightly decrease during the year due to decrease in liquidity.|
|5||Debt Equity Ratio||0.22||0.14||Debt equity ratio Improved during the year due to increase of long term debts.|
|6||Operation Profit Margin (%)||-0.11%||5.39%||Declined due to lower profitability in overall business segments.|
|7||Net Profit Margin (%)||-3.75%||2.86%||Declined due to lower profitability in overall business segments.|
|8||Return on Net Worth||-7.55%||5.53%||Declined due to lower profitability in overall business segments.|
K. CAUTIONARY STATEMENT
Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.