Misquita Engineering Ltd Management Discussions

INDUSTRY OVERVIEW:

The engineering sector is the largest of the industrial sectors in India. It accounts for 27% of the total factories in the industrial sectors and represents 63% of the overall foreign collaborations. Indias engineering sector has witnessed a remarkable growth over the last few years driven by increased investment in infrastructure and industrial production. The engineering sector, being closely associated with the manufacturing and infrastructure sectors, is of strategic importance to Indias economy. India, on its quest to become a global superpower, has made significant strides towards developing its engineering sector. The Government has appointed the Engineering Export Promotion Council (EEPC) as the apex body in charge of promotion of engineering goods, products, and services from India. India exports transport equipment, capital goods, other machinery/equipment, and light engineering products such as castings, forgings, and fasteners to various countries of the world. India became a permanent member of the Washington Accord (WA) in June 2014. The country is now a part of an exclusive group of 17 countries who are permanent signatories of the WA, an elite international agreement on engineering studies and mobility of engineers.

BUSINESS OVERVIEW:

Your Company was incorporated in the year 1998 under the name Misquita Engineering Private Limited under the provisions of Companies Act, 1956 later it converted into a public limited company. Your company is engaged in the manufacturing of the front-loading washers. The registered office and corporate office is situated at 182/1, GharBhat, VaiginimVaddo, Nachinola, Bardez Goa-403 508, India. Misquita Engineering Limited is the major component supplier and job worker to a manufacturer of washing machines in the Indian market for Front Loading washers. Your Company has consistently believed in supplying Zero Defect products and all manufacturing and operating systems in the company are geared up towards the goal and vision of Zero Defect=Zero Effect, Zero effect with respect to zero wastage of resources and utilization of all resources efficiently and effectively. This consistency has enabled our company to consistently supply components with Zero defect every time, on time without defaulting for a single instance in Delivery and Quality. Misquita Engineering Limited is now planning to expand its production and building capacities for the same. Presently, Your Company has expanded the factory shop floor area to 10,000 sq. ft from 3500 sqft with state of the art material handling systems including Goods and scissor lifts to facilitate our potential growth and diversify our product portfolio. Moreover we are optimising our processes by introducing newer technology such as Turn Mill centres and CMM measuring instruments capable of producing components for the defence, railways and aerospace industries.

Your Company has been qualified as a Strategic Supplier for supply of Machined parts to "Commscope USA."Your Company believes that its consistency in five main areas of Quality, Delivery, Cost, Response and Customer satisfaction is its USP and strives to excel in these areas. Our Company is continuously looking at proposals to introduce Robot based loading and unloading systems on its machines as well as installing new advanced technology in metal cutting on its shop floor.

OUR COMPETITIVE STRENGTHS:

Experienced Management:

Our Promoters, Mr. Thomas C. Avinash Misquita and Ms. Gail L. Misquita bring their entrepreneurial vision and leadership having experience of more than 25 years which has been instrumental in growing and sustaining our business operations. They have been actively involved in the business with continued personal attention. We believe that our management teams have good knowledge of the processes and markets that assist in identifying opportunities. Our Company is managed by a team of experienced personnel exclusively focused on different aspects of business and also growth oriented and has ability to manage growth in a rapidly changing business environment and delivery of high-quality materials at sustainable cost. There is a good communication system between all levels of management i.e from Top Level to Bottom Level. We believe that our management teams experience and their understanding of the business will enable us to continue to take advantage of both current and future market opportunities.

Growing Domestic Economy:

India is growing to a developed country from developing country now. The GDP rate of India is also higher as compared to the other countries. It forecasts more demand for our products and there will be a huge expansion of disposable incomes and our main products will have huge demand.

Quality Assurance and Standards:

Our Company, an ISO 9001:2015 certified company, believes in the quality in our manufacturing systems and process and products. We are committed to deliver the good quality components in the proper manner at all steps of the manufacturing chain from procurement materials to dispatch. The quality checks ensure that no defective products reach the customers and ensure reduced process rejection. Our dedicated internal quality control team ensures compliance with good manufacturing systems and practices.

Need of Clients and Locational Advantages:

We have a high level of knowledge about the needs of the customers, resulting from continuous two-way communication between our representatives and customers. We carefully cover the needs of each and every customer. We make them aware of all available options and provide them with competent advice enabling them to take an informed business decision. Our aim is to earn customers trust and confidence through personal attention, passion for what we do and commitment to long lasting relationships. Our manufacturing facility is presently situated at 182/1, VaiginimVaddo, Nachinalo, Bardez, Goa-403 508. It is well connected by road to all our customers.

Cordial Relationship with our Customers:

We have a cordial relationship with our suppliers for supply of materials, which we believe provides us with the competitive advantage of effective and timely sourcing of raw materials. We also believe effective sourcing of materials ensures timely delivery of our products to our customers, thereby enhancing the value provided to our customers.

Fully Integrated Manufacturing Facility:

We carry on all our manufacturing activities in-house and there is no substantial dependence on job-work or external manufacturing. Our manufacturing facility is mainly headed by Mr.DesiderioMisquita (8 years of experience in the same industry) and is a fully integrated and self-sufficient facility. All infrastructure facilities like water, fuel, power and human resources have posed no hurdles till date. All the equipment required for manufacturing the products are in place. We have one manufacturing facility located at 182/1, VaiginnimVaddo, Nachinalo, Bardez, Goa-403 508.

PROCESS FLOW CHART:

PRODUCT PORTFOLIO:

Ultra-Cast Iron Bearing Sleeve used in Front Loading washing machines of four different sizes, said to be the heart of every washing machine, is machined by us within 10 microns bore accuracy, 30 microns concentricity between both bearing bores and surface finish of 1.6uRa.

Old Model Bearing Sleeves, made of Cast Iron, now being supplied as spares in 2 variants of 40 lts and 34 lts used for Front Loading Washing Machines. Bore Tolerance is 30 microns.

Adjuster Bush made of Aluminium Alloy, 2 nos used in each 2 Ft Microwave Antenna.

Adjuster Boss made of Aluminium alloy used for 2 Ft Microwave Antennas, 1 no used per Antenna.

Spacer of Aluminium Alloy 1 no used for each 2 Ft Micro wave Antenna.

Washer assemblies used for Base Station Antennas, each antenna uses between 6 to 8 washer asslys. They are of 4 different models.

Drive Screws, of different sizes made of stainless steel supplied for remote controlled movement of base stationAntennas

Booms used in Telecom Industry made of Aluminium Alloy of various lengths and diameters based on the frequency required, speciality if Diameter control in 20 microns, Circularity control in 15 microns and Perpendicularity control in 20 microns.

ODE, DE Terminal Box, Bearing Cover and Adaptor made of Cast Iron, supplied for Flame retardant Motors used in Petrol pumps.

OUR BUSINESS STRATEGIES: Improving Operational Efficiencies:

Our Company makes continuous efforts to improve efficiencies to achieve cost reductions so that we can be competitive in the market. We believe that we can achieve the same by gaining economies of scale in our operations and continuous research and development. Our operating team including senior management adopts good practices in line with industry standards across our trading facilities. We will continue to invest in increasing our operational efficiency throughout the organization. We are addressing the increase in operational output through continuous process improvement, quality check and technology development. Our employees are regularly motivated to increase efficiency with error free exercise.

Work with Existing Suppliers:

Instead of finding new suppliers, we support our existing suppliers. It helps us to save time in the procurement phase of the raw material.

Expand Geographical Reach:

Our Company seeks to expand and enhance our presence in our existing business segments by identifying markets where we can provide cost-effective and quality materials to prospective consumers. We seek to capitalize on our existing experience, establish contracts with suppliers and entering into the new products considering the local working conditions.

Strengthening our Company:

Our Company invests in developing and enhancing recognition of Our Company, through continuous efforts, communication and promotional initiatives such as participation in industry events, public relations and investor relations efforts. This will help us to maintain and improve our reach. We believe that our branding exercise will enhance the recall value and trust in the minds of our customers and will help in increasing demand for our products.

To build up a professional organization:

We believe in transparency, commitments and co-ordinations in our work, with our suppliers and customers. We have a blend of experiences and sufficient staff for taking care of our day-to-day operations. We also consult with external agencies on a case-to-case basis on technical and financial aspects of our business. We wish to make it sounder and stronger in time to come.

Training of our Employees:

Our Company believes that the successful implementation of our business and growth strategies depends on our employees commitment to our vision. We also believe that to sustain our future growth, we need to continue to train and empower our employees. As we expand our business into other geographical regions, our ability to successfully train our existing and new employees will play a crucial role.

HUMAN RESOURCE:

We believe that our employees are key contributors to the success of our business. We focus on attracting and retaining the best possible talent. We in our company always take care of our employees with a feeling that they are part of a family. This attribute helps employees garner a sense of brotherhood with the management which ultimately produces exemplary results for the entire organization. Our manpower is a prudent mix of the experienced and youth which gives us the dual advantage of stability and growth. Our work processes and skilled, semi-skilled and unskilled resources together with our management team have enabled us to implement our growth plans. Our Company believes that the human resources are a very important part of its strengths and hence ensures that all facilities like EPFO, ESIC, Annual/Performance Bonus, Leave Entitlement, Gratuity and other facilities, uniforms, safety equipment is provided to all staff as applicable. Housing facility is available for outstation employees. Our Company maintains a strict policy of not employing any individual below the age of 18 years.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has robust internal controls systems (including Internal Financial Controls) that facilitates efficiency, reliability and completeness of accounting records and timely preparation of reliable financial and management information. The internal control system ensures compliance with all applicable laws and regulations facilitates optimum utilization of resources and protects the Companys assets and investors interests. The Companys well-defined organizational structure, documented policy guidelines, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources. The Audit Committee of the Board regularly reviews significant audit findings of the Internal Audit system covering operational, financial and other areas.

RISK MANAGEMENT:

Risk Management is an ongoing process. Effective risk management is therefore critical to any organizational success. Globalization with increasing integration of markets, newer and more complex products and transactions and an increasingly stringent regulatory framework has exposed organizations to an integrated approach to risk management. Timely and effective risk management is of prime importance to our continued success. The sustainability of the business is derived from the following:

? Identification of the diverse risks faced by the Company.

? The evolution of appropriate systems and processes to measure and monitor them.

? Risk Management through appropriate mitigation strategies within the policy framework.

? Reporting these risk mitigation results to the appropriate managerial levels.

CAUTIONARY STATEMENT:

Statements in the Management Discussion & Analysis, describing the Companys objectives, projections and estimates are forward looking statements and progressive within the meaning of applicable laws & regulations. Actual results may vary from those expressed or implied. Important developments that could affect the Companys operations are significant changes in the political and economic environment in India, tax laws, exchange rate fluctuation and related factors.