Elgi Rubber Company Ltd Merged Share Price Management Discussions
ELGI RUBBER COMPANY LIMITED
ANNUAL REPORT 2009-2010
MANAGEMENT DISCUSSION AND ANALYSIS
Review of Operations and Future Outlook
During the year under review, though sales has improved, the profits from
operations has been lower. This is on account of higher raw material costs
and higher depreciation on new equipment for expansion and for the
manufacture of new products.
The first quarter of the year saw unprecedented increase in raw material
costs. However during the second half of the year the company was able to
pass on raw material cost increase to customers which has considerably
improved the bottom line.
The sale of retreading accessories to corporate accounts continues to grow
but at a very slow pace. The sale of these products through distributors
has registered very high growth rates. The companys thrust area is
overseas markets.
High increase in polymer cost is driving the rubber industry to look for
alternate/ recycled products. As a result, the growth in the reclaimed
rubber sales is very encouraging. The company is actively looking at
capacity expansion through new facilities or acquisition.
The Company continues to maintain its debt free status.
Risk and Concerns
The company does not face any risk other than those that are prevalent in
the industry. The company has taken all possible steps to overcome such
risks. The main concerns are the volatility in raw materieal prices and
fluctuations in foreign exchange. The company is taking measures that will
enable it to pass on the part of raw material prices in tune with the
competition. Foreign exchange fluctuation risk is minimized through proper
planning and natural hedging.
As a part of the overall risk management strategy, all assets are
appropriately insured. Internal Control Systems
Internal Audit is being done every quarter by an independent firm of
Chartered Accountants and observations are reported to the management.
Immediate steps are taken to rectify any discrepancies. All significant
audit observations were discussed in the audit committee meetings.
Human Resources and Industrial Relations
The Company continues to enjoy a cordial relationship with its employees at
all levels. The total strength of employees as on March 31, 2010 is 219.
Cautionary Statement
Statements in this report, especially those relating to MD & A giving
details of companys objectives, projections, estimates and expectations
may be construed as forward looking statements within the realm of
applicable laws and regulations. Actual results are liable to differ
materially from those either expressed or implied.