Magna Eletrocasting Ltd Management Discussions.
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 the most vital industrial segment of the manufacturing sector and hence called Rs Mother of all Industries. Globally, the Indian Foundry Industry has been ranked Second. On an average the castings produced annually is about 10 million tonnes, which is capable of being increased 20 million tonnes given the fact that there is a lot of emphasis being given to railways, defence and infrastructure sectors.
It has been estimated that more than 40% of the Castings are for the automobile sector and it is expected to record growth for another couple of years. The industry is bullish of doubling growth rates, spurred by imminent demand from emerging sectors such as automotive, railways, defence, agriculture, infrastructure etc.,
The Companys performance during the year 2018-19:
The Operating Revenue of the Company has increased by about 30% from Rs 9424.01 Lakhs to Rs 12292.39 Lakhs. The market, both domestic and export recorded substantial growth both in terms of tonnage and value. This is possible due to good market condition prevailing across all sectors, both locally and on the export front.
Consequent upon the increase in turnover from Rs 9424.01 Lakhs to Rs 12292.39 Lakhs, the Profit Before Tax has recorded a substantial increases from Rs 787.54 in the previous year to Rs 1501.68 Lakhs in the current year. This was achieved inspite of spiralling raw material cost sand other overheads. But strict control on costs and a favourable forex market enable the Company to register an increase 91% in Profit Before Tax.
Wind Energy Division:
The Wind Energy Division generated an income of Rs 520.79 Lakhs as against Rs 507.89 Lakhs in the Previous year.
The Company has developed 148 new products which includes proto parts and other regular parts. Consequent upon this, the Company expects substantial increase in sales during the current year as stated in Boards Report.
The Company has also entered into new customer segments which will help to increase sales in the coming years
Opportunities and Threats:
The ongoing trade and tariff war between the US and China may come as a boon to the Indian Foundry Industry sector and India is expected to have an edge on the export front with close to 40-45 percent of total exports to the US. This will boost the opportunities in exports for next couple of years.
The increase in sales volume shall be expected in coming years based on the new products developed during previous 2 years.
In order to grow and remain competitive, we need to upgrade the technology from time to time.
The major threats in the foundry industry is increase in raw material prices and secondly availability of quality materials.
The introduction of BS VI compliant vehicles by Government will also have an impact on castings industry in the short run. The phased introduction of electric vehicles will also have an impact on the Foundry Industry in the long run.
Environment, Safety and Energy Conservation Policy:
Magna is continuously focusing on preserving natural resources through non-polluting, energy efficiency and providing workers friendly environment, as one of our missions is keeping our foundry Clean and Green. Several safety awareness programmes are being conducted for workers at various levels to avoid even minor injuries to the Employees through Safety Committee.
Efficient Energy Conservation targeted by introducing new technologies and automations for foundry process and using existing resources in most efficient manner. As stated in the Boards Report, the Company, instead of wasting natural resources like sand., has installed machines to manufacture bricks and pavered stone out of the waste sand. This apart from meeting captive needs, will also help to generate additional sources of revenue.
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 and adequate Internal Control Systems commensurate to the size of the business. The actual performances are reviewed and compared with budget, the deviations from there is addressed regularly. Magna is also having established internal audit team, statutory audit teams and Audit Committee of Board of Directors to control internal systems adequately.
Magna value its employees and continuously provides training and skill development to improve their quality. The Company also focuses on employeesRs safety at work place and strives to provide good and healthy environment. Necessary policies were framed during the year for their long term benefits.
Key Financial Ratios:
There is no significant change in key financial ratios when compared with previous year and below are ratios;
|Debtors Turnover Ratio||94 days||112 days|
|Inventory Turnover Ratio||14 times||13 times|
|Interest Coverage Ratio||103 times||27 times|
|Debt Equity Ratio||NIL||NIL|
|Operating Profit Margin||16.51%||13.63%|
|Net Profit Margin||9.05%||7.25%|
|Return on Networth||16.10%||11.32%|
Further the Company confirms that there is no different accounting treatment has been followed than prescribed in accounting standard while preparing financial statements
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, 2019 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.|
|Place : Coimbatore||K Murali Mohan|
|Date : 30.05.2019||Proprietor|