mark exhaust systems ltd Management discussions

MARK EXHAUST SYSTEMS LIMITED ANNUAL REPORT 2006-2007 MANAGEMENT DISCUSSION AND ANALYSIS PERFORMANCE OF THE COMPANY: FINANCIAL RESULTS Particulars Rs. in Lacs Rs. in Lacs 2006-2007 2005-2006 Gross Turnover 30154.23 19460.55 Sales and Other Income 25900.91 16911.86 Profit before Dep., Finance 1805.39 1875.34 Charges and Lease Rent Finance Charge - On Loans & Others 532.47 347.92 - On Finance Lease 13.94 43.64 Lease Rent 0.67 300.11 Profit before Depreciation 1258.30 1183.68 (Cash Profit) Depreciation - On Owned Assets 533.13 447.59 - On Leased Assets 300.61 300.61 Misc. Exp. Written off 51.73 84.18 Profit before Tax 372.83 351.31 Provision for Income Tax 40.06 29.68 Provision for Wealth Tax 0.98 0.97 Provision for Fringe Benefit Tax 14.50 11.60 Deferred Tax for Current year 145.48 144.98 Net Profit After Tax 171.81 164.07 Tax Paid for Previous Year 0.00 0.27 Net Profit After Tax of earlier Year and Prior period 171.81 163.80 OPERATIONS Your company achieved a turnover of Rs. 301.54 Crores including other income of Rs. 2.05 Crores during the current financial year. As compared to the previous year, there is an increase of 54.95% in the Turnover. The increase in the turnover is mainly on account of additional volumes of Alto Door Sash, Increase in the volumes of Exhaust Manifold for Wagon R and increase in the volumes of M/s Honda Cars and Introduction of New model of Motorcycle by M/s Honda Scooters and Motorcycles. PROJECT COMPLETION AND PERFORMANCE During the year under review, your company has successfully started the mass production of Exhaust System for Marutis Swift Diesel Model w.e.f. December, 2006 and Model L model w.e.f. April, 2007 in technical collaboration with M/s Futaba Industrial Co. Ltd., Japan. Your company also started manufacture of additional volumes of Exhaust Manifold for Wagon R Model of Maruti Udyog Limited in technical collaboration with M/s Futaba Industrial Co. Ltd., Japan. Commercial supplies for this model started w.e.f. October, 2006. Your company also started the manufacture of Exhaust Systems for M/s Honda SIEL Cars India Limited for its new UH (CIVIC) model in Technical collaboration with M/s Sankei Giken Kogyo Co. Ltd., Japan. Commercial supplies for this models started w.e.f. June, 2006. FUTURE PROSPECTS Your company has been selected by Maruti Udyog Limited for manufacture of Exhaust Systems for its new model YN-4 (Notch Back) in technical collaboration with M/s Futaba Industrial Co. Ltd., Japan. Start of Production of these models is expected during financial Year 2007-08. Your company is under discussion with various Twowheeler and four wheeler manufacturers operating in India and abroad for supply of Exhaust Systems and Door Sashes for their various new models. ENVIRONMENT PROTECTION & SAFETY Your company and its collaborators are jointly working to create a better environment for the future. MESL range of mufflers and Catalytic Converters perform a social role by helping to conserve natural energy resources, reduce exhaust pollution and provide greater safety for product users. Your company has made significant contribution and innovation in the field of environmental protection and securing the quality of air in spite of the explosive growth in the Automobile Sector in the country. In line with our value statement and quality policy continual improvement with emphasis on safety, wastage and environment and to be a responsible corporate citizen, environment, health and safety excellence has been extensively promoted as a corporate culture within the Company. Your company has developed a structured approach to assess environment, health and safety hazards/ issues associated with the research, development and manufacture of our products. It is our endeavour therefore, to ensure that the workplace is safe and environment is protected at all times. Doing the right things right ensures that the environment, including the natural resources are well protected and the industry adopts a model of sustainable development. The Company is also committed to improving the safety at the work place. During the year, a number of initiatives were taken towards strengthening the existing safety infrastructure at the manufacturing sites. Environment, Health and Safety training programs were also organized on a regular basis for employees. Hygiene at work was continually monitored to ensure that the workplace supports and ensures good health of the employees. HUMAN RESOURCES Human resources are the most valued of all assets of the Company. The Company provides challenges, encourages initiative, and recognizes and rewards excellence through performance incentives, bonus etc. The Companys HR policies and processes are aligned to effectively drive its expanding business and forays into emerging opportunities. This has been achieved by continuously investing in learning and development programs, creating a compelling work environment, empowering employees at all levels and maintaining well-structured reward and recognition mechanisms. Employee engagement remains a key focus of HR initiatives undertaken by the Company. The Company enables its employees to meet their career objectives through rotation across projects, functions and locations. The Company helps employees build new skills and competencies and promotes knowledge sharing and team building. During the year the Employee Relations in the company remained harmonious and cordial. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Greater emphasis on effective implementation of control systems has been given by effective functioning of internal audit and inspection machinery. For this purpose, expert help in the form of outside internal auditors has been taken from M/s VKGN and Associates. The internal auditors are reporting on Quarterly basis to the Board Audit sub committee for ensuring effective and speedy compliance of their observations, suggestions and modification in the systems of the company.