Galaxy Agrico Management Discussions

a. Industry Overview Forged Rings (Bearings)

The globally evolving and emerging landscape today is clearly changing business realities. Disruptive technologies and business models are rapidly changing the market map. Technological advances in the form of automation and digitization are redefining business models. Customers, on the other hand, are seeking lower cost of ownership and longer life cycles for products and solutions. Indias macroeconomic scenario remained stagnant with demand waiting to recover.

The Indian bearings market did not witness any major structural changes and is estimated at about INR 90 billion. The market is driven by two key user segments - the automotive and industrial sectors. The business is further divided into OEMs and end user markets. OEM and companies across the industrial and automotive sectors were affected by the prevailing economic headwinds, and hence this was a challenging year for the Indian bearings industry.

Agriculture Equipments

The tractor market has seen sharp decline during the year under review which can be primarily be attributed to a slowdown in the Agri sector on account of deficient monsoon. With external demand remaining sluggish the rural income was hard hit by consecutive weak crop ping season. Strong Government support for improvement in agricultural productivity, rural development and greater adoption of improved agricultural practices is expected to drive sustainable growth in the agriculture sector.

b. Opportunities & Threats Forged Rings Business-

Indias economy is poised to enter an era of sustained growth. The expectations of the global community from Indias economy to deliver on its potential have never been as high they are now. Continued reforms in policy regime, a focus on building a world class infrastructure (Railways, ports, roads etc) hold the promise of a bright era for Indias manufacturing sector. The "Make in India" initiative is a path breaker that can revolutionize the countrys economy. Better road infrastructure, smart cities, improved connectivity of industrial clusters with modern ports, development of sustainable energy infrastructure, a continued development of field to market sustainable food chain, tougher safety and emission norms for automotive industry will enhance our competitiveness as a nation while creating a completely new market opportunity.

Agriculture Equipments Business-

With increasing Labour cost and scarcity, greater adoption of various forms of mechanization is the way forward. In this scenario, the market for farm equipments is expected to grow in the long term. In more developed markets, growth in agricultural equipment demand will be driven by efforts to reduce inputs and maximize production capabilities and replacement demands. However going forward, the competitive intensity in the agriculture equipment business is expected to increase.

c. Segment / Product wise performance

Your company has a single manufacturing segmentviz.Forged Ringswhile it only trades in Agricultural tools and equipments.The detailed segment-wise performance has been given separately in the note on "Segment Reporting" forming part of financial statements.

d. Risk & Concerns

The Companys business is exposed to many internal and external risks and it has consequently put in place robust systems and processes along with appropriate review mechanism to monitor, manage and mitigate these risks.

The major risk factors affecting the company are overcapacity in industry, cash constraints at customers end leading to inventory pile up, increasing receivable position and volatility in currency and raw material prices.

e. Internal control systems & their adequacy

The Company has in place an effective and independent internal control system covering all areas of operations. A regular review is done in respect of the financial and operating controls at various locations of the company. The audit committee at its periodic meetings reviews observations and recommendations contained in internal audit reports, where both statutory as well as internal auditors participate. Independent opinions are expressed on issues of concern and the consequential corrective actions are reviewed by the audit committee.

f. Discussion on financial performance vis-a-vis operational performance

The financial performance of the Company has been given separately in the Directors Report.

g. Material development in human resources and industrial relation front

The Company is a firm believer that its employees are its strength and respects individual rights and dignity of all its employees. The Company focuses on providing employee friendly environment along with career growth opportunities.

Industrial relations remained cordial throughout the year.