Magna Eletrocasting Ltd Management Discussions.

Overview:

Magnas corporate vision is to ensure a sustainable business model, provide customers with products and services consistently conforming to customer requirements at the right time, cost and quality and maintain a leadership position in the segments in which it is operating. This objective is sought to be achieved through total employee involvement, plant improvements, continuous process developments and conforming to ethical business practices.

The financial statements presented here have been prepared in compliance with the requirements of the Companies Act, 2013, various statutory enactments and Indian Accounting Standards.

Industry structure and developments:

The Indian Foundry Industry is a vital industrial segment of the manufacturing sector, especially the engineering sub-sector. Globally, it is ranked 2nd and produces 11.35 million MT of cast components of various specifications. The new manufacturing policy envisages the increase in the share of manufacturing in the GDP to 25% from current 15% & to create 100 Million additional jobs in next 10 years

The Capital Goods Policy of Govt. envisages the Auto sector to grow from USD 35 Bn to USD 115 Bn Industry by 2025 .Whereas the auto sector as per Automotive Mission plan 2016-26 envisages auto sector to grow at 3.5 to 4 times of the current value of USD 74 billion to USD 260 billion to 300 billion, even if these plans are realized by 75-80% ,it will augur well for the Indian Foundry Industry .The casting demand for iron & Aluminium castings could grow by 35-40 % by 2019-20 from current levels

The Companys performance during the year 2017-18:

The Operating Revenue of the Company has increased by about 13% from Rs 8335.47 Lakhs to Rs 9424.01 Lakhs. The local market was vibrant and the market pick up steadily increased.

In spite of an increase in turnover, the margin were under severe pressure throughout the year because of sharp increase in the prices of all raw materials. This has resulted in a sharp decline in the Profit before Tax at Rs787.54 Lakhs as against Rs902.61 Lakhs in the previous year, and resulting in a Net Profit of Rs 686.18 Lakhs as against Rs731.71 Lakhs in the previous year.

Opportunities and Threats:

Auto, Auto Components & Capital Goods Industries have drawn up ambitious plans to grow three fold in the next 10 years. This will drive the demand for metal casting industry and this will enable steady growth in automotive industries. Magna is well placed to capitalize on opportunity that arises out of this growth.

The major threats in the foundry industry is steady increase in raw material prices and includes a major challenge in compliance with stringent environment standards reducing business returns. Lack of skilled and unskilled labour poses a great threat to the Industry.The Export market was however subdued and the demand in the overseas market was lacklustre.

Environment, Safety and Energy Conservation Policy:

Magna is aware of its responsibility to protect the Natures scarce resources and the environment and invested in improved equipments and improving water conservation efforts. Magna considers its employee welfare and having proper safety management system in place.

Risks and concerns:

Magna has adopted a comprehensive and integrated risk mitigation and management process. The risk mitigation measures are placed before the Audit Committee and the Board for its periodical review and improvements.

Internal control systems and their adequacy:

Magna is having well established Internal Control Systems and from the annual business plan, detailed budgets for revenue and capital for each month/ quarter is determined. The actual performances are reviewed and compared with budget, the deviations from there is addressed properly. Magna is also having established internal audit team, statutory audit teams and Audit Committee of Board of Directors to control internal systems adequately.

Personnel:

Magna is committed to a well talented employee and satisfied human capital. The Company is aware that the employees of the Company are its greatest asset and also provides in terms of training, skill developments, health & safety, hygiene, education etc., to improve human efficiency over the years.

Cautionary Statement:

The view expressed herein may be forward looking within the legal frame-work, but the actual results may differ from what has been expressed due to various factors. The information given herein is based on information available with the Company and its judgement. This judgement depends upon the Companys perception. Any investment by shareholders/ investors should therefore be based on their individual analysis.

COMPLIANCE CERTIFICATE ON CORPORATE GOVERNANCE

To the Members of Magna Electro Castings Limited

1. We have examined the compliance conditions of Corporate Governance by Magna Electro Castings Limited for the financial year ended 31st March, 2018 as stipulated in Regulations 17 to 27 and Clause (b) to (i) of Regulation 46(2), Schedule II and Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015

2. The Compliance of conditions of Corporate Governance is the responsibility of the Management. Our Examination has been limited to a review of the procedures and implementation thereof adopted by the Company for ensuring compliance with the conditions of Corporate Governance as stipulated above. It is neither an audit nor an expression of opinion on the financial statements of the Company.

3. In our opinion and to the best of our information and according to the explanations given to us, and based on the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Regulations 17 to 27 and Clause (b) to (i) of Regulation 46(2), Schedule V and Schedule II of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015.

4. We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

For Srikishen & Co.
Chartered Accountants
( Reg.No.004009S)
K Murali Mohan
Coimbatore Proprietor
30 th May, 2018 Membership No.14328