Ashapura Minechem Ltd Management Discussions.


After strong growth in 2017 and early 2018, global economic activity slowed in the second half of last year, reflecting a confluence of factors like weakening financial market sentiment, trade policy uncertainties, slowdown in manufacturing, credit policy tightening and concerns over Chinas outlook and deceleration in industrial production outside the United States (US) which weighed down momentum. As such, in the Calendar Year (CY) 2018, world economic growth marginally decelerated to 3.6%, as compared to 3.8% in CY 2017. It is expected to further decelerate to 3.3% in CY 2019, before picking up slightly to 3.6% in CY 2020. Negative effects of tariff increases enacted in US and China will be the primary reason for slow output. Growth rate for the emerging market and developing economies is also likely to witness a slowdown in CY 2019, further impacting output.

While the global economy is battling headwinds, Indias economy continues to be one of the fastest growing major economies in the world. India became the worlds sixth-largest economy in FY 2019. Despite external vulnerabilities in the form of high oil prices, trade tensions between major global trading partners and the US monetary tightening, the Indian economy remained resilient. Globally, analysts and agencies have a consensus that Indian economy will continue to outperform amidst global gloom, albeit at a slower pace. As per the International Monetary Fund (IMF), the Indian economy is likely to accelerate moderately and grow by 7.3% in FY 2019-2020. Despite Indias optimistic outlook and recent stock market Bull Run, the nation still faces deep-rooted, persistent challenges. Major economic challenge in India is the population growth, which has grown 20% per decade as also the deteriorating infrastructure in business, education, and healthcare.


The Indian Mining industry is the backbone for most of the industries like power, steel, cement, etc. which, in turn, are significant for the overall development of the economy. It produces variety of minerals comprising of non-metallic minerals, metallic minerals, fuel related minerals, atomic and minor minerals (including building and other minerals).

Nevertheless, the mining sectors contribution to the countrys Gross Domestic Product (GDP) has been less than 3% in FY 2018-19. It needs to be more than double for the country to reach a double-digit growth rate of 10%, as per the industry body viz. Federation of Indian Chambers of Commerce & Industry (FICCI). Metals and mining industry is confronted with various difficulties like inadequate infrastructural facilities in terms of weak legislations, regulatory challenges and policy gridlocks, corruption, social unrest, low financial guarantee, low commodity prices etc. Many of the planned projects have hindered and lagged due to issues related to land acquisitions, mining leases, forest clearances; relief and rehabilitation (R&R) policies. Further, the National Mineral Policy 2019 needs to be reviewed for long-term sustainable gains to all stakeholders.


There is significant scope for new mining capacities in iron ore, bauxite etc. Power and cement industries also aiding growth in the metals and mining sector. Further, the demand for iron and steel is set to continue, given the strong growth expectations for the residential and commercial building industry. With the Indian economy expected to grow more than 7% in the years to come, sectors such as infrastructure and automobiles should receive a renewed thrust, which would in turn generate demand for steel in the country. Furthermore, 100% Foreign Direct Investment (FDI) allowed in the mining sector and exploration of metal and non-metal ores under the automatic route is expected to benefit. Companies such as yours, with global expertise to operate and transport from multiple resource bases would be in a position to take advantage of such opportunities.


In the event that the Company is unable to conclude settlements with respect to the contested shipping and other financial claims, any adverse legislative decisions/actions in the said matters could significantly affect the Company. A continuation of the debilitating levels of government levies such as royalties and export duties on minerals & ores including bauxite could whittle down the competitiveness of Indian exporters versus other global suppliers. Also, any unfavourable mining or environmental legislation in India in general could adversely impact the operations of the Company.


The Financial Statements for the year ended 31st March, 2019, have been prepared in accordance with the Companies (Indian Accounting Standards) Rule, 2015 (Ind AS) prescribed under section 133 of the Companies Act, 2013 and other recognised accounting practices and policies to the extent applicable.

The net income from operations stood at Rs. 33,717.86 Lakhs with a negative bottom line of Rs. 7,431.45 Lakhs after providing for total expenses of Rs. 39,528.06 Lakhs and exceptional item of Rs. 2,584.36 Lakhs. At the Consolidated level, net Income from operations stood at Rs. 62,136.58 Lakhs with the negative bottom line of Rs. 33,101.99 Lakhs after providing for total expenses of Rs. 68,149.15 Lakhs and exceptional item of Rs. 29,074.60 Lakhs.


Your Companys renewed focus on Bentonite in which it enjoys an admirable global standing and its foray into newer bulk industrial minerals such as silica quartz offers both, a certain degree of resilience and growth in the scale of business. Your Company has also undertaken initiatives to automate & standardise certain manufacturing, packaging & logistical processes designed to increase efficiency and rationalise costs.


The Company continues its efforts to resuscitate the settlement agreement of July 2017 regarding the resolution of claims from two shipping companies that was unilaterally terminated by the counterparty in September, 2018. As a part of the settlement agreement, the Company had pledged shares of two of its wholly-owned subsidiaries and one joint venture, upon termination the pledge was invoked by the counterparty; therefore, the revival of the said settlement agreement is important for the Company to regain ownership of the shares.

Furthermore, the Company continues to suitably attend to the decree execution petition filed by another shipping company in Honble Bombay High Court for recovery of its claims based on the foreign arbitration award. Any order against the Company in the matter may adversely impact the business of the Company.


Your Company is committed to ensure that its operations are carried out within a well-defined internal control framework. It possesses a suitable mechanism for internal controls commensurate with its size and nature of business. These controls have been developed and designed in a manner to properly maintain accounting records for ensuring reliability of financial reporting, monitoring of operations, protecting assets from unauthorized use or losses and compliance with regulations.

The Company has an Audit Committee of Directors which defines the scope of work, accountability, independence and reporting responsibilities of the Internal Audit function. It also recommends improvements for monitoring and enhancing efficiency of operations and ensuring reliability of financial and operational information. The Audit Committee monitors and reviews significant internal audit observations, compliance with accounting standards, risk management and control systems and profitability.

The Company has engaged an Independent Audit firm of Chartered Accountants with a view to ensure that the system of internal control and procedures are properly adhered. Internal audits are performed to test the adequacy and effectiveness of the internal controls laid down by management and to suggest improvements. The Internal Auditors based on their findings/observations submits Internal Audit Report to Audit Committee which also include recommendations to the Management for the corrective actions, if any. The Audit Committee on regular basis interacts with statutory and internal auditors to ensure that internal control systems are operating effectively.

The performance of the Company is regularly reviewed by the Audit Committee and the Board of Directors to ensure that it is in consonance with the overall corporate policy and in line with pre-set objectives.


Research & Development (R&D) is an integral part of the Companys operation. Your Companys Knowledge & Innovation Center that spreads over a lush four acre Innovation Complex at Bhuj, Gujarat, carries out extensive research on product and process development. The Companys R&D activities focuses on providing cost-effective and sustainable solutions to support consistent growth of business.

During the year under review, the Company carried out R & D activities in the field of Specialty mineral products, Industrial Functional Minerals, White Performance Minerals & Products and such other.

The brief details of the R & D activities during the year are given under Annexure - C forming part of the Directors Report.


Your Company recognizes the importance of human resources in realizing its growth ambitions and believes in nurturing talent within the organization to take up leadership positions. The Company believes in investing in people development and process improvements, aligned with Companys vision and values. Company continues to conduct employee trainings across several functions pertaining to technical, behavioural / general, health, safety and environment and ISO standards. Managerial Skill Development training programs are conducted to enhance the soft skills of potential managers. A regular employee performance evaluation system is in place to evaluate the individual performances, goal settings as well as determining their development needs and future potential individual Goal setting with two way discussions and developmental feedback between employees and their managers.

The Company has well designed and documented policies in place that prevent discrimination and harassment. There is a Whistleblower Policy as well as POSH Policy in place to discourage any wrong practices at the workplace.

The Company as on 31st March, 2019 has 566 employees which consists of experienced staff and executives at different levels.

Key Financial Ratios:

The Key Financial Ratios for FY 2018-19 and FY 2017-18, along with explanation for significant changes (change of 25% or more) are as follows:

Sr. No. Particulars 2018-19 2017-18 % change
1 Debtors turnover Ratio (Days)* Avg Debtors /Sale 77.00 160.00 51.76
2 Inventory turnover Ratio (Days) Cost of goods sold /Avg Inventory 258.00 257.00 (0.36)
3 Interest coverage ratio (EBIT : Profit before Exceptional Item and tax + Interest on borrowing) (4.13) (4.04) (218)
4 Current ratio Current assets /Current Liability 0.33 0.41 19.72
5 Operating Profit Margin ** (EBIT- other Income) /Net revenue from Operation (0.14) (0.26) 45.03
6 Net Profit Margin ** (Net Profit /Revenue from Operation) (0.14) (0.22) 35.86


1. Exceptional items are excluded from Net profit.

2. Debt Equity ratio is Nil, because the companys worth is negative in FY 18-19 & 17-18.

*We realized 59% from our customers including group company debtors during FY 18-19 which resulted in to reduction of outstanding receivable days. **The increase in operating profit and Net Profit Margin because of effective cost reduction in Manufacturing Cost resulting into increase in Margin.


Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be "forwardlooking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, downtrend in the industry, economic conditions affecting demand/supply and price conditions in the domestic market in which the Company operates, changes in political and economic environment in India, changes in the Government regulations, tax laws and other statutes, litigations and incidental factors.

For and on Behalf of the Board of Directors



Place: Mumbai

Date : 13th November, 2019