iccon oil specialities ltd Management discussions

ICCON OIL AND SPECIALITIES LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS Even though company could not resume its operations during the year, company is maintaining it plant in excellent condition to hit the market at any time in future. The company is in manufacturing sector of re-fined tube oil (base oil) and in the manufacture of waxes and jellies. The key issues of the Management Discussion and Analysis are given below. (a) Industry Structure and Developments Over the past years the role of oil is evolved from a supporting function into strategic necessity into business and development. As it assumes the central role of finance sector, balance of payments and so the importance of the sector is not required any explanations. The sky rocketing of oil prices in International and domestic markets necessitated the refining of waste/used oils and had created a vast opportunity for the business entrepreneurs. Your company having an excellent facility of manufacturing and processing of refined oil sees an opportunity in this growing sector. (b) Strength Excellent and ready to operate manufacturing facility of the company, along with dedicated staff and efficient management gives the company always an edge in its business activities. Highly qualified professionals under an efficient Board of directors and a team of executives is the major strength of the Company. Company is known for its reputation and had created its on place in the market and its products have wide acceptability in the market. (c) Comment on Current years performance The company did not carried business during the year. BIFR is considering its scheme of rehabilitation and company expecting an earliest order in this respect. Receipts : Company do not have any income. Operating Expenses : No operating expenses Operating Profits : There are no operating profit for the current year. Indirect Expenses : The Indirect Expenses are under control. Depreciation : Rs.7.04 Lacs is provided as depreciation Profit before tax : company incurred net loss of 7.32 Lacs. Taxation : Tax is not Provided. d) Opportunities and Threats We operate in a market characterized by swift changes and convergence. We face formidable competition in every aspect of our business. We do face competition from other manufacturers, including start-ups as well as developed companies that are enhancing or developing new methods and technologies. Your company however, has a well-integrated platform that will ensure we stay ahead of the curve. We are augmenting features and products to our existing products and own the complete value chain of products and services we address. (e) Segment wise performance The business of the Company falls under a single segment i.e. refining, processing of oil and ancillary products and for the purpose of Accounting Standard AS-17. The Company is making all efforts to re-start and accelerate growth of its manufacturing of well standardized products. It expects to improve its position in the market by focusing on adopting new methods and technology and thereby expand into more profitable products/market segments and working aggressively in the areas of productivity, efficiency and cost reductions. (g) Risk and concerns The market penetration by new entrants in the Companys business area and the strong hold of existing Big players in the market places hurdles in the growth path of the Company. However the company is aggressively using well talented employees and personal to establish new business areas and to develop existing market. (h) Internal control system (f) Outlook Internal audit and other controls have been found to be adequate. These are reviewed periodically by the Audit Committee and found the performance satisfactory.