exedy india ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

INDUSTRY DEVELOPMENTS

The passenger vehicle segment grew by 8%y-o-y. The Commercial vehicle segment had a 17% increase in sales. Increase of the passenger vehicle segment was slower than market expectation due to high petrol & diesel price and high interest on car loan. Especially Maruti Suzuki India Limited who is our biggest customer has reduced their production due to labour unrest, as a result our sales were impacted. Other automotive sectors such as the commercial vehicle segment and 2wheeler segment showed a smart growth. Two wheelers grew by 23%. Overall, the automotive sector showed a steady recovery from the recessionary phase.

OPPORTUNITIES

1. Two-wheeler manufacturers look upon your company positively as a potential supplier for their new models. Two-wheeler manufacturer has increased their production and requirement on your company is increasing rapidly. Also, they show their interest on your company as a potential supplier for other products too.

2. Four-wheeler manufacturer also is increasing their requirements on your company. Your company has been receiving inquiries from them for various new model business.

3. New businesses with existing customers will improve sales turnover and profitability. New model launches by existing customers will add to the sales and profitability of the company.

STRENGTHS

1. A dedicated and motivated work force with invaluable experience.

2. Up-to-date technology from M/s Exedy Corporation, Japan for two, three and four wheeler clutches.

3. Strong customer base across various vehicle classes. Support from all customers for existing and new business continues to be positive.

4. Vertical manufacturing process where all key components are manufactured in-house. This enables us to maintain our reputation of being high quality producer of clutches

WEAKNESSES

1. High cost of borrowing

2. Your company is not immune to increases in input costs.

3. Marginal player in heavy commercial vehicles (HCV) and passenger cars with diesel engines.

THREATS:

1. Cost of steel increasing at frequent intervals.

2. Imports form a big share of total input costs. Any further depreciation in the rupee will affect margins.

RISKS & CONCERNS:

High levels of borrowing in long and short term continue to strain your companys performance.

OUTLOOK:

Demand conditions for the short to medium term are expected to remain strong. However, petrol price has increased 20% as comparing to the last year. Market demand for cars may comedown in near future due to high running cost and market may prefer to more diesel cars than petrol cars. To cater the above manufacturers expectation, your company needs to look into timely investment. New product developments for commercial vehicles and diesel engine vehicles will be the key focus of your company. The pressure on raw material prices could continue. Your company will concentrate more on localization of components to avoid increasing material cost by depreciation in the Rupee. Simultaneously, cost leadership measures to reduce operating costs through leveraging synergies and improved efficiency measures like supply chain management, connectivity with all our suppliers and distributors and productivity improvement throughout manufacturing lines in your company are an ongoing initiatives.

INTERNAL CONTROL SYSTEM

The Company maintains adequate internal control systems, which provide, among other things, reasonable assurance of recording the transactions of its operations in all material respects and of providing protection against significant misuse or loss of company assets. Your Company has engaged the services of independent agencies to carry out internal audit at both its locations. The Audit Committee of the Board reviews the reports and counter measures proposed by the operating management through interaction with the management personnel as well as the Internal and Statutory Auditors. This not only ensures the reliability of control systems and compliance with laws and regulations, but also covers resources utilization and system efficiency.

QUALITY

Your Company continues to take quality improvement measures for the entire range of its products and services with an objective to meet the customers requirement and satisfaction. The Company has obtained TS-16949 certification at both the units and Greater Noida facility has also received ISO 14001 and OHSAS-18001 certification.

The Company has well-equipped Quality Assurance and Quality Control laboratories at both the locations. The laboratories are equipped with State-of-the-Art instruments of international standards to meet in-house testing requirements for quality control on raw materials, intermediates and finished products and investigating customer complaints. These laboratories follow the most advanced trends in investigation and analysis and provide reliable services to meet the customer needs.

CAUTIONARY STATEMENT

The information and opinion expressed in this Report may contain certain forward looking statements, which the management believes are true to the best of its knowledge at the time of its preparation. Actual results might differ from those anticipated because of changing ground realities, government policies, economic & political developments, market conditions etc. The management shall not be liable for any loss, which may arise as a result of any action taken on the basis of the information contained herein. Prior written permission of the Company should be obtained for furnishing this information to any person.

	For and on behalf of the Board of Directors
	MAHESH. B. KOTHARI
	Executive Chairman
Registered Office:
Plot No. L-4, MIDC Industrial Area,
Chikalthana, Aurangabad -431006,
Maharashtra.
Mumbai, 21st February, 2013

DECLARATION BY THE MANAGING DIRECTOR UNDER CLAUSE 49 OF THE LISTING AGREEMENT

To,

The Members of Exedy India Limited

I, Mr. Akira Hirai, Managing Director of Exedy India Limited declare that all the Members of the Board of Directors and Senior Management Personnel have affirmed compliance with the Code of Conduct for the year ended 31st March, 2012.

	Mr. Akira Hirai
	Managing Director
Registered Office:
Plot No. L-4, MIDC Industrial Area,
Chikalthana, Aurangabad -431006,
Maharashtra.
Mumbai, 21st February, 2013

COMPLIANCE CERTIFICATE

To,

The Members of Exedy India Limited

We have examined the Compliance of conditions of Corporate Governance by Exedy India Limited, for the year ended on 31st March, 2012, as stipulated in clause 49 of the Listing Agreement of the said Company with stock exchange in India.

The compliance of condition of corporate Governance is responsibility of the management. Our examination was limited to procedure and implementation thereof, adopted by the Company for ensuring the compliance of the condition of the Corporate Governance. It is neither an audit nor expression of opinion on the financial statement of the Company.

In our opinion and to the best of our information and according to explanation given to us, we certify that the Company has complied with the condition of the corporate Governance as stipulated in the above mentioned Listing Agreement.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

	For and on behalf of
	D. L. SHAH & COMPANY
	Chartered Accountants
	DINESH L. SHAH
	Proprietor
Mumbai, 21st February, 2013	Membership No. 3784