1. INDUSTRY STRUCTURE AND DEVELOPMENTS
The MDF product Is being increasingly accepted in the Indian market and the increase in
demand is reflected in the increase in the capacity of the existing manufacturers and
project based product which is yet to reach the levels of popularity of plywood. There are
host of other non-industry players entering the field of manufacturing of MDF.
The retail business has developed over the years with spawning of small mechanized
fabrication units and the handicraft segment that depend on the channel network for their
raw material.
Further with the lack of viable timber sources plywood too has become expensive and
becoming non-viable for common applications. Also with the introduction of GST imports
have become viable and more material is available in the market being cheaper and is
readily replacing the plywood. The import of one side prevaricated MDF escaped
anti-dumping duty and finding ready acceptance in the Indian market.
2. OUTLOOK
During the last few years, a stable Government at the Centre was established which is
expected to drive development in the coming years. The Government has planned and is
taking several significant steps to energise the economy. The credibility of the Indian
economy has been re-established and world is predicting Indias stable growth. The
Government has planned reforms in indirect tax through introduction of GST which was a
much awaited reforms and is expected to provide numerous benefits to both business and
consumers by way of reducing supply chain inefficiency and interstate trade will become
easy and the market will be integrated at the national level.
With all such long-term sustainable economic measure being undertaken by the
Government, the economic growth is likely to accelerate. The Indian real estate sector is
second only to agriculture in terms of employment generation and contributes considerably
to GDP.lt is poised to grow manifold over the next decade in view of the prevailing
massive shortage of dwelling units. The Indian market is now headed for price correction
which will increase consumer affordability and leading to overall sectoral growth. A fall
in the interest rates will also lead to revival of the real estate sector.
Since MDF are growing as essential part of interior furnishing, the demand for product
is directly related to the growth of infrastructure and real estate sector. With continued
government focus on infrastructure and real estate sector, demand for the companys
product is expected to remain high. With the popular "Duratuff" brand, the
company is expected to perform better in years to come.
3. OPERATIONAL AND FINANCIAL PERFORMANCE
• Operational Performance
During the current quarter ended March, 2021 the production has started at plant from
26th March 2021 but due to surge in case of Covid-19 during end of April 2021 the MDF
plant has to be stopped from 9th May 2021. However, production has restarted from 14th
July 2021 in compliance of guidelines issued by Govt.of India and following social
distancing, hygiene and other safety measures.
The Company has installed its 2.5 MW Captive Thermal Power Plant which is in the
process of generating power as we are taking reasonable steps to operate it as it was
non-functional due to such long closure.
• Financial Performance
During the year, Gross production was 1919 MT as compared to 2860 MT in the previous
year.
Gross sales for the year is Rs. 781.65 Lacs as compared to Rs.472.07 Lacs in the
previous year.
Loss for the year stands at Rs. 1880.15 Lacs as against Rs. 1473.10 Lacs in the
previous year.
The Company is continuing its efforts on all fronts like reduction of operational
costs, strategic marketing, positioning of brand and optimal production of finished goods.
We are hopeful it will help to achieve better results in years to come.
4. MARKETING AND SALES
Duratuff being the oldest brand in the country, has seen a very positive response
from the market in terms of demand. There has also been a shift in preference for
Prelaminated MDF which augurs well for the brand Duratuff. Also as part of our R8iD
activities, we have been successful in developing 100% Anti -fungal treated MDF and should
be launching the same shortly as this is expected to create good market in the costal belt
of India where the humidity is significantly high. We are also in the process of
developing a Fire Retardant MDF and hope to launch the same soon. Today Duratuff is a name
to reckon in the Southern markets of India with a top line brand positioning.
The marketing strategies are backed by a dedicated and motivated marketing team which
has been the backbone of the marketing. The team leaders are highly experienced and have
rich experience in the trade of MDF which ensures ease in market penetration.
The Brands presence in the Indian market over past three decades has created a market
stronghold despite other new domestic competitors and the continuous threat of imports.
5. OPPORTUNITIES AND THREATS
MDF today is a product that has been accepted by the Indian market since its inception
in mid -80s. Today there are dealer counters totally dedicated to MDF which was unheard of
5 years ago. The customers are ready to try out MDF in newer applications where in
multilevel mezzanine storage solution Duratuff has established monopoly with its
ultra-high thickness MDF which is unique in the industry. With increased impetus on
economic growth, the pressures on infrastructural demand of alternative panels like MDF in
housing and the furniture sectors besides the rapid growth in IT sector, the demand is set
for an exponential growth in demand.
Blit on the flip side the ageing machinery is not able to meet the pressures of the
market needs. Despite sustained popularity of the brand Duratuff, due to the lack of
consistent supply and quality, the brand has taken a beating where in staunch supports of
the brand, customers has started to look for alternatives as they are not able to base
their business plans on the erratic supply of the Company.
The primary threat is the fact that new MDF capacities are coming up as all
manufacturers are going for capacity enhancement. The strategy of importing pretaminated
MDF to dodge the anti- dumping net a new reality which is forcing down the domestic prices
for prelaminated items. Added to this is the spawning Short Cycle Presses which are using
the OSR Boards to provide the finished decor boards.
6. RISKS AND MITIGATING STEPS
Despite the fact that there have been concerted efforts by the Indian MDF manufacturers
in the imposition of Anti-Dumping Duty, still imported MDF are leaking through the net and
hitting the Indian shores. Apart from this there is severe price pressure from the major
Indian fabricators from organized sector wherein the market price line is being negatively
redefined.
MDF is now a true commodity and defined by prices only and not by brands. The other key
factor is the marketable volume at the disposal of the competing brands thereby
drastically reducing orders to supply gestation period and being able to give a better
product mix enabling dealers to optimize the stock. This is one luxury that we do not have
in our operations causing untold delays in dispatching orders as per desired product mix
of the customer.
The Company has identified various risks faced by the Company from different areas.
Appropriate structures are present so that risks are inherently monitored and controlled.
A combination of policies and procedures attempts to counter risk as and when they evolve.
Further all issues pertaining to risk management are looked into by the Audit Committee.
7. INTERNAL CONTROL SYSTEMS ANDTHEIR ADEQUACY
Your Company has in place adequate internal financial control systems, commensurate
with the size, scale and complexity of its operations. The Company has appropriate
policies and procedures for ensuring the orderly and efficient conduct of its business,
including adherence of the Companys policies, safeguarding of its assets, prevention and
detection of frauds and errors, accuracy and completeness of accounting records and timely
preparation of reliable financial information. The internal auditor monitors and evaluates
the efficacy and adequacy of internal control systems in the Company. Based on the report
of the internal auditor, respective departments undertake corrective action in their
respective areas and thereby strengthen the controls.
Significant audit observations and corrective actions thereon are presented to the
Audit Committee of the Board.
8. HUMAN RESOURCES
The Company recognizes that its people are its core strength and its biggest
performance catalysts. The Company has always nurtured a favourable work environment that
encourages continuous learning and innovation. The Company has created a work culture
which strives to attract the best talent and provide a conducive environment for their
professional and personal growth.
There are 152 permanent employees on the rolls of Company as on 31st March, 2021.
9. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS.
The following critical ratios have changed beyond the 25% indicative threshold
specified in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015:
|
F.Y. 20-21 |
F.Y. 19-20 |
% Change |
| Interest Coverage Ratio |
(1.17) |
(0.85) |
(36.85) |
| Debt Equity Ratio |
6.75 |
5.99 |
12.83 |
| Current Ratio |
0.13 |
0.22 |
(39.61) |
The changes in the above ratios are due to loss incurred during the year.
10. RETURN ON NET WORTH
| Particulars |
F.Y.20-21 |
F.Y. 19-20 |
| Return on Net worth |
% |
% |
The return on net worth as on 31st March, 2021 is not calculated due to negative net
worth.
11. CAUTIONARY STATEMENT
The statement in this report on Management Discussion and Analysis describing the
Companys objectives, projections, estimates, expectations or predictions may be forward
looking, within the meaning of applicable security law or regulations. These statements
are based on certain assumptions and expectations of future events. Actual results could
however differ materially from those expressed or implied. Important factors that could
make a difference to the Companys operations include global and domestic demand-supply
conditions, finished goods prices, raw materials cost and availability, changes in
Government regulations and tax structure, economic developments and other factors such as
litigation and industrial relations. The Company assumes no responsibility in respect of
forward looking statements herein which may undergo changes in future on the basis of
subsequent developments, information, or events.
Yours faithfully,
|
Vishwanath Chandak Anand Daga Vidula Jalan Leena Ghosh Prabhat Kumar |
Directors |
| Place: Kolkata |
Siddhartha Roy |
Director, CFO & Manager |
| Date : 28th June, 2021 |
|
|
+91-9892691696
