India Foils Ltd merged Management Discussions

INDIA FOILS LIMITED ANNUAL REPORT 2008-2009 MANAGEMENT DISCUSSION AND ANALYSIS The core business of the Company is manufacturing and marketing of aluminium foils. The management discussion and analysis is given hereunder: INDUSTRY STRUCTURE & DEVELOPMENT: Aluminium Industries in India is one of the leading industries in the Indian economy. The growth of the aluminum Metal industry in India would be sustained by the diversification and exploration of new horizons for the industry. India has huge deposits of natural resources in form of minerals like copper, chromite, iron ore, manganese, bauxite, gold, etc. The India aluminum industry falls under the category of non iron based which include the production of copper, tin, brass, lead, zinc, aluminum, and manganese. The main operations of the Indian aluminum industry is mining of ores, refining of the ore, casting, alloying, sheet, and rolling into foils. For the sustenance of the growth the aluminum industry in India has to develop research and development units to assist the production and improve on the quality measures to keep a stringent quality control. The Indian aluminum Metal Industries sector in the previous decade experienced substantial success among the other industries. The Indian aluminum industry is developing fast and the advancement in its technologies is boosting the growth even faster. The utilization of both international and domestic resources was significant in the rapid development of the Indian aluminum industry. This rapid development has made the Indian aluminum industry prominent among the investors. The Indian aluminum industry has a bright future as it can become one of the largest players in the global aluminum market as in India the consumption is fairly low, the industry may use the surplus production to cater the international need for aluminum which is used all over the world for its several applications. OPPORTUNITIES AND STRENGTHS: Your company has realigned itself on the requirements of the market especially in the value added sector . The company is now focusing on the direct pharmaceuticals market instead of taking the distributor route .This has not only enhanced average realisation of the products but also contributed to cash flow. Positioning itself as a cost plus manufacturer IFL has been able to steer clear of the vagaries of the erratic nature of the LME. In the international arena the ties with Bangladesh pharma majors has been reestablished and value added exports to the middle east and west Africa have also revived the inherent strength of your company in the pharmaceutical segment has been utilised by using 100% dc foilstock which has given it a substantial advantage over competition . RISKS & CONCERNS: Like other non ferrous companies your company has also faced the problems associated with the downturn in the marketplace. With the rising crude costs all petroleum based products associated with the manufacturing process have been north bound. This has had an effect on the cost incurred in the processes. While your company has continuously been in touch with the customers regarding realisation of the increased cost base but with the given market scenario this is taking its own time. Also a long term pricing mechanism is not feasible in the given scenario. However your company has taken measures in energy efficiency and put energy audits as well teams to work on recovery improvement which will be the main drivers to reduce cost. OUTLOOK: Your Company has shown resilience time and again by fighting against all odds and marching ahead at every step. The accelerated growth of the Pharmaceutical sector would create additional demands and your Company is geared up to convert new opportunities into successful businesses going forward. External factors would continue to play an important role but through effective risk management processes, it would be possible to steer ahead in turbulent times, based on your Companys high level of engagement and commitment both internally as well as externally. Your Company has joined hands with Ess Dee Aluminium Limited for its revival and accordingly submitted a modified draft rehabilitation scheme to BIFR. INTERNAL CONTROL & SYSTEMS AND THEIR ADEQUACY: Your Company has appropriate internal control systems and procedures in place with regard to effective utilization of resources, efficiency in operation, financial reporting and compliance with various rules and regulations. The internal control system is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets and further supplemented by extensive audits conducted by the Auditors. Regular audits are conducted to review the adequacy and effectiveness of the internal controls and suggest improvement, if any, for strengthening the existing system. ENVIRONMENT & SAFETY: Safety and Environment Management continues to be one of the key result areas for your company. The Company is committed to providing a safe and healthy workplace for all of its employees including contract workmen. Appropriate training is provided to all of its employees and associates to minimize the risk. The company has adopted a Framework of Standards aligned to ISO 9001 standards. IFL is committed to the environmental improvement of its products. The Company will continue to devote significant resources to control air and water pollutants, to dispose of wastes and to provide risk free environment around the work place and in the neighbourhood. Concern for environment and safety are integral to IFLs business and part of business ethos. INDUSTRIAL RELATIONS & HUMAN RESOURCE MANAGEMENT: The Company constantly endeavors to attract and recruit the best talent and to retain, nurture and groom to meet its current and future challenges. It places utmost importance to the quality of its human resources. As on March 31, 2009 the Company had 442 employees. It places great emphasis on the training and development of employees at all levels and seeks to achieve closer alignment between their objectives and the strategic objective of business through intensive communication of the corporate strategic objectives to all employees. The Industrial Relations continue to be peaceful and cordial. The Directors wish to acknowledge the efforts of all the employees. CAUTIONARY STATEMENT: Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be forward- looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws, labour policies and other statutes and other incidental factors.