Frontier Springs Ltd Management Discussions.

GLOBAL ECONOMIC OVERVIEW

Most of the Companies whether developed or developing took stringent measures to contain the spread of COVID-19 virus including closing their borders and closure of industrial operations within the country. As a result of which Gross Domestic Product (GDP) fell to a marked extent and affected the business cycle and lifes of individuals. China possibly remained the only exception .The response by policy makers prevented a collapse that would have been at least three times worse and medium term losses for the global economy are expected to be smaller than the global financial crisis. The infusion of liquidity at the right time ensured that no one at least starves for a basic livelihood. The lockdowns helped in preventing a health catastrophe during the first phase. However, India’s economy rebounded quickly from one of the world’s longest and most stringent lockdowns and saw a V-shaped recovery. Digital adaption saw acceleration during the crisis particularly digital payments.

INDUSTRY STRUCTURE & DEVELOPMENTS

The Company is engaged in manufacture of Coil Springs, Leaf Springs, LHB Springs and forging items. During the year under review, the Company has entered into a MOU with Contitech India Private Limited for Air Springs. Contitech India Pvt Ltd will supply technical know-how, specifications and rubber bellow for Air springs. Your Company will in turn will manufacture the metal part and supply to Indian Railways.

Features of Air Springs are

1) They have low natural frequency

2) Constant Leveling function which maintains the vehicle body at a consistent height regardless it is full of passengers or not.

The company will be installing a Six Ton Hammer in the current financial year as a result of which we will be able to forge new products which was not possible due to capacity constraints. The Company is optimistic about the long term opportunities while at the same time meeting the short term challenges hence best internal preparedness is being made to aggressively grab the opportunities and to take maximum advantage of such opportunities.

OPPORTUNITIES & THREATS

The year under review was full of challenges as the outbreak of COVID-19 pandemic had its impact in all the sectors and left its footprints globally on all the economies of world. The Indian Railways had come to a grinding halt which led to decrease in turnover of the company. With the unlock and simultaneously operations of railways in a phased manner will help us revive better and get higher number of orders. In the emerging competitive scenario, there is a compelling need to improve the global competitiveness of the various businesses to handle the competitive forces and to secure the customer base hence apart from others; Company is emphasizing on stringent quality control measures to accelerate continuous growth In supply orders of the Company’s product.

PRODUCT WISE PERFORMANCE

The Company’s position as the market leader is due to its persistent efforts and emphasis in the areas like product quality, introduction of products through innovation, investing in machines that make the product finish better and faster through in house development, competitive pricing and extremely competitive cost structure, continuous product improvement and dynamic approach to situation. In future, Company is firm, with its object of serving the end user of Company’s product in an efficient and timely manner.

RISKS AND CONCERNS

In the coming decade, the main focus would be on enhancing efficiency and productivity, and on innovation driven by changing customer demands. Price sensitivity of the Indian consumer, cost optimization needs of manufacturers and increasing focus on environmental concerns will drive critical changes in market.

Currently, the Company perceives the following main business risks:

a) Revival of targets in a phased manner

b) Exposed to volatility in raw material prices;

c) Pressure on selling price due to increase in competition.

Company is trying to work out long term contracts with suppliers with a view to ensure uninterrupted supply of input feed mix. The assets, buildings, plant & machinery and stock of the Company are adequately insured.

OUTLOOK

In the back of significant market, opportunities described earlier, the outlook for the coming year is challenging and we are all set by tapping available demand and product innovation and invention which will lead to better profitability. Your Directors are of view that if conscious strategy to reduce production cost and development of new products is being followed, coupled with the supportive markets, financial performance of the Company shall stage a turn around.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company is committed to maintain internal control systems and procedures designed to provide reasonable assurance for orderly and efficient conduct of business and security of its assets. Actual performance is constantly monitored by the management. The Company has a well defined Organization Structure and authority level. The internal control system is supplemented by an extensive review by the management and documented policies, guidelines and procedures.

HUMAN RESOURCE

The Company believes that its employees are a vital resource in the current business environment. To ensure that this resource plays important role in the performance of the Company, the company is pursuing the following:

It is engaged in providing continuous training and all round exposure to its people.

It is inviting suggestions from all the employees on regular basis and is also engaged in obtaining feedback in a meaningful way from time to time.

It is ensuring proper empowerment of employees to foster a sense of ownership among them.

In brief, it is providing an opportunity to all employees to utilize their full potential and grow in the Organization.