Madhav Copper Ltd Management Discussions.

A) INDUSTRY STRUCTURE AND DEVELOPMENTS

Industry Structure:

Your company, as you are aware, has been manufacturing copper winding wires, mainly enamelled copper wires. Based on market demand, company’s products have been diversified into enamelled copper round winding wire, Poly wrap submersible winding wires, enamelled aluminum round winding wire, bare copper wire and other copper strips and wires.

With the government pushing for smart cities, there will be a greater demand for solutions to make homes, commercial complexes, industries and cities smarter. Initiatives by the government like "Make in India" and "Digital India", amongst others, will further boost interest in India as it gives a fillip to the manufacturing sector.

Winding wires & strips form a very important segment of Indian Electrical Equipment Industry which includes both - power generation, Transmission and Distribution (T&D) equipment. If the coil of any electrical equipment like Generator, Motor, Transformer, Relay or Switchgear, Domestic appliances etc. burns or fails, the equipment is dead and hence, winding wire/ strip is often known as the "Heart" of the equipment. It is used in all sectors namely Railways, Defence, Agriculture, Infrastructure etc. of Indian economy.

Developments:

Modernization and expansion into more value added products and Technological development has been the tradition of your Company. The production of enamelled copper round winding wire, Poly wrap submersible winding wires, enamelled aluminum round winding wire, bare copper wire and other copper strips and wires witnessed higher growth.

In addition, as mentioned in last annual report that your company was going under expansion. Your company feels immense pleasure that the expansion project was completed in due time (in November, 2018) and the Company has set up copper Furnace and production through the same is already started. This has resulted into added capacity to our existing manufacturing capacity as well as introduction of new products i.e. Copper Bus Bars, Profile, Copper Stripes, Oxygen Free Copper Rod, Paper Insulated Copper Conductor, Fibber Glass Copper Conductor.

B) OPPORTUNITIES

Indian Electrical equipment Industry is set for revival and higher growth based on good support from union budget and growth in power sector. This is an opportunity for demand in winding wires & strips, which is one of the principal inputs to electrical machines & electronic equipment. It is expected that customer base will expand and new customer base will be generated.

C) THREATS

Increasing competition from domestic and foreign players could lead to margin contraction due to pricing pressure. Some of the larger global players are already present in India. Highly fluctuating price of copper, which is the principle input to the winding wire Industry, continues to be of serious concern. The rising cost of production, especially due to wage increase and rise in prices of other materials & services, short & stringent delivery schedule by customers in the background of highly volatile copper prices, Fiscal policy of government encouraging imports of inputs which are detrimental to Indian Electrical Industry, competition from other leading winding wire manufacturers etc. continue to threaten the profitability of your Company. Competition, whether domestic or international, is always a challenge and transforming challenges into opportunities has been a practice at Madhav Copper.

D) SEGMENT WISE PERFORMANCE

The Company has only one segment. Performance of the same is given below in point H.

E) OUTLOOK

As per the projection by Union Power Ministry, by the year 2020, every home in the country will be electrified. This coupled with the success of UDAY (Ujwal DISCOM Assurance Yojana) scheme of the Energy & Power ministry to strengthen the working of State electricity boards to supply electricity to its consumers will increase per capita consumption of electricity in India. All these factors will boost the demand for Electrical equipment for Industry and domestic consumption in the vast rural sector which in turn will result in huge demand for winding wires.

F) RISKS AND CONCERNS

In the winding wire business, the global demand and supply of copper and its prices plays a vital role and could significantly affect your Company’s turnover. Your company is fairly exposed to the domestic and global political and economic risks. The prices advanced on rapidly increasing demand for copper from China, India and the other emerging economies of Asia. Your company also continuously keeps working on getting approvals from new and renowned customers to increase its market share commensurate with its capacity.

Intense competition in the market could affect our cost advantages and result in decreased turnover. Failure to complete fixed price, fixed time frame deliveries could result in lower revenues of the company. The business of your company could suffer if we fail to anticipate and develop new products and enhance existing range to keep pace with the rapid changes in the winding wire industry. Currency fluctuations could affect the results of operations.

Your company’s manufacturing facilities are based in India. Any changes in the legal, fiscal and other regulatory regimes of our country could affect our performance. In the event that the Government of India brings about any changes in import tariffs in India and reduction or curtailment of income tax benefits available to some of our operations in India can pose risks to your company. It also has a wide customer base and changes in the legal, fiscal or regulatory regimes can also affect the competitiveness of our product and affect your company’s performance.

G) INTERNAL CONTROL SYSTEM

The Company has implemented internal control system at floor to shop level and we believe that Internal controls and systems implemented are adequate. These are also reviewed periodically by the Audit Committee and efforts are made to improve further, wherever possible. To ensure effective Financial Controls the Company has laid down following measures:

• All legal and regulatory compliance are ensured on quarterly basis. Any amendment is regularly updated by internal and external agencies.

• Approval of all transactions is ensured through pre approved Delegation of Authority Schedule which is reviewed periodically.

H) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company earned operational income of 2,128,774,856 compared to 1,688,193,679 in the previous year. This shows significant increase in turnover during the year under review.

Profit after tax for the year under review is 36,416,708 as compared to previous year figure of 23,676,825. Continued efforts of your company have come up with significant results.

I) HUMAN RESOURCE DEVELOPMENT

Training:

Training to employees at all levels is provided regularly to develop the knowledge and skills. The management is fully committed to the development of its human resources. Your company aims at providing in-class training to each employee. Every new recruit receives complete safety training and on the job training from his colleagues/supervisor. Functional and developmental training is provided from time-to-time to all employees to enhance their skills and productivity. There is an all round support from the management to the development of human resources.

Knowledge Management:

Madhav Group has a practice of sharing experiences of one company with other group companies in various fields of production / finance / marketing. Knowledge Management is being developed by involving and sharing of information on key performance parameters at all levels which results in an overall improvement. This has been formalized by having a daily Business Meeting which is held at all locations of the group companies.

Industrial Relations:

Your company continues to maintain healthy and cordial industrial relations. The values and the culture of the group foster family feelings amongst all its employees.