Damodar Industries Ltd Management Discussions.

Overview, Industry Structure & Developments, Outlook:

We achieved our goal satisfactorily in the first 6 months of the FY 2019- 20.We have seen our growth lower as compared to the previous year. There are many factors which have affected the business; slow economic activity, liquidity which impacted overall demand in the industry, unfavorable market conditions. Apart from macro market conditions competition from unorganized sector plays a vital role in this industry, and in the final phase of the year the unpredicted pandemic outbreak and imposed lockdown. These disruptions Rs impacted the performance of the company for the year but we still managed to secure industry level growth and started earning on surplus funds available with the company.

Opportunities: Due to the current scenario it seems that the demand will increase as imports of goods is reduced due to the negative sentiments. Being a reputed manufacturer of world class quality products, and thanks to social drive “Vocal for Local” we are optimistic of the future. Volume of business is expected to increase as consumers are more attracted towards local good quality products which are more reliable and come with warranty rather than using imported products. The company has in-house R & D team and surplus funds available for investment which will help us in exploring various opportunities in exports and other products.

Threats: Covid- 19 plays a very crucial role this year due to which we saw a down size of business in the last quarter and also will have to face the same for some more time. The priority of people has changed which will take a longer time for the market to come back to the normal condition. Demand plays a very important role and Covid -19 would leave a deep cut in economy and corporate financials this year due to this the income of people have been affected largely and there is a lot of hesitation in buying things other than essentials and the demand had reduced to a great extent. But we ensure that we do not make compromise in our long term business objectives and brand strength. The company has also taken steps to curtail the overall expenses to overcome the situation.

Research & Development: Research and development department plays an integral role in the development of new products. The role of R & D Team is to keep improving on existing product, Quality Control Check, Innovation and Staying Ahead of Trends, Developing New Products. The company keeps an eye on developing trends in India and overseas and on what the competition is doing, also analyses and understand the current conditions within a specific goal. The company continues to initiate appropriate, significant and result oriented products in the market, which are innovative, Futuristic with Modernized Technology. Each product designed is deliberately executed inhouse and undergoes a series of rigorous checks.

Risk Management: The Company is exposed to various potential risks like Economical Risk, Compliance Risk, Operational Risk, Environmental Risk and Financial Risk. The key risk areas are regularly and systematically reviewed by senior management while the Risk Management committee also reviews and provides input to mitigate the risk.

Internal Control: At the Company level, internal control objectives relate to the reliability of financial reporting. The Companys resources are directed, monitored, and measured on regular intervals which help in detecting and preventing fraud and protecting the organization Rs s resources, both physical and intangible. The Company has always implemented appropriate controls to make sure that it Rs s operational; Compliance and reporting objectives are achieved. The company has detailed policies and standard operating procedure for all existing and future growing needs. These policies and procedures play a key role in the deployment of internal controls. They are regularly reviewed to ensure the relevancy, comprehensiveness and compliance is embedded into the management review process. To strengthen the process, Controls of the key processes are reviewed by the internal audit team with timely suggestions.

Disclosure On Accounting Treatment: In the preparation of financial statements for FY2019-20, there is no treatment of any transaction different from that prescribed in the Accounting Standards notified by the Government of India under Section133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014; guidelines issued by the Securities and Exchange Board of India and other accounting principles generally accepted in India.

Key Financial Ratios:

Particulars F.Y. 2019-20 2018-19 Change(%)
OPERATING PROFIT MARGIN (%) 2.95 3.40 -13.38%
NET PROFIT MARGIN (%) -0.90 1.08 -183.33%
DEBT/EQUITY RATIO 3.29 2.95 11.51%
CURRENT RATIO 1.17 1.26 -7.23%
INTEREST COVERAGE RATIO 0.67 1.88 -64.47%
INVENTORY TURNOVER RATIO 8.84 12.18 -27.42%
DEBTORS TURNOVER RATIO 8.4 8.66 -3.03%
Return on Net Worth (%) -6.73 7.67 -187.72%

Detailed explanation of ratios:

1. Net Profit Margin: Net Profit Margin has been mainly decreased due to Net Loss during the year 2019-20.

2. Interest Coverage Ratio: Interest Coverage Ratio has been decreased due to increased finance cost in the year 2019-20.

3. Return on Net Worth: The Company incurred a loss during the year 2019-20, hence no net income.

Human Resources and Industrial Relations:

Employees are biggest source for any Companys success and expansion. Our Human Resource Team based on their strengths, potential and determination towards work evaluates the employees. It is very important to keep the employees encouraged to take decisions and initiatives towards the betterment of their work. The company encourages and provides them a safe and motivating work environment. Furthermore various training and educational seminars and events are organised with proper importance given on health and safety issues. The Company has always followed process of Appraisal from time on time, to recognise talents and ensure that employees remain devoted to the organisation on a long-term.

Cautionary Statement: The content provided for Management Discussion and Analysis Report may vary with the anticipation made in the discussion statements. It describes the Companys objectives, projections and estimates progressive within the meaning of applicable security laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Taxation laws, Economic Development, Cost of Raw Materials, Interest and Power Cost are among the few extraneous variables that influence the Companys operations.