Koa Tools India Ltd Management Discussions

Industrial Structure and Development

The Government’s flagship initiative ‘Make in India’ aims to promote manufacturing, which currently constitutes approximately 18% of the GDP versus a targeted 25%. Indias unique combination of democracy, demography and demand would also help make it a suitable manufacturing destination.

Indias growth story got .> boost with the rebasing of GDP data. Based on the new series, the real GDP growth stands at 7.4% in FY 2014-15 and 6.9% in FY 2013-14 i.e. approximately 180 bps higher than earlier estimates. While the data shows that growth recovery has been swift and substantial, several on-ground indicators like growth in industrial output, credit and net t ax revenues, suggest that activity is still sub-par. Changing economic and business conditions, evolving consumer preferences, rapid technological innovation and adoption and globalization are driving corporations to transform the manner in which they operate. Companies are now more focused on their core business objectives such as, revenue, growth, profit ability and asset efficiency and new product development in auto parts industry.

Outlook Risk and Concern

The Company’s business, operations and financial condition are subject to various risks and uncertainties. The company has continuously focused on minimizing adverse impact on its growth, profitability, efficiency and sustainability. During the year the company has carried our assessment of risk and its potential impact on the business. The Company has reviewed and monitored key development in regulating environment and its impact on the supply chain management.

The Company is also in process identifying some opportunities to acquire new lines of business that could contribute to its success.

Opportunities and threats

Machine tool industry is unarguably one of the crucial segments for industrial activity in the country and the key ingredient in the development of the manufacturing sector. Hence, the growth of the machine toots industry has an immense bearing on the entire manufacturing industry, which is critical for the country’s strategic requirements, such as defense, railways, infrastructure, and atomic energy. This sector is also one of the major contributors in the growth of a number of small and medium manufacturing enterprises, which are the second major employment generators of the economy, after agriculture.

Adequacy of Internal Control System

The Company’s internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations. The internal control system is supported by qualified personnel for reviewing the adequacy and efficacy of the Company’s internal controls, including its systems and processes and compliance with regulations and procedures. The Companys internal control system is commensurate with the size, nature and operations of the Company.

Financial Performance

Operational Results 2013-14 versus 2014-15