Multi Arc India Ltd Share Price Management Discussions
MULTI-ARC INDIA LIMITED
ANNUAL REPORT 2008-2009
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE AND DEVELOPMENTS
Our company is in the business of surface enhancement. This is a high-tech
Research and Development oriented business.
Our business is multi-product, multi-location hence tight operational
management of the logistic cost, Rationalization of Human Resources, Gold
cost and effective use of assets is essential to meet the customers demand
and faster turned around of their material.
The Industry is moving towards supply of coated product rather than either
supplying uncoated products or providing coating services. In this respect,
our acquiring of Bharuch Plant through our subsidiary has proved very
effective.
To overcome the slow down in economy, we have increased and shifted our
customer base from unorganized to organized segment improving gold
recovery, to manage the increase in Gold cost and introduction of new black
DLC (Diamond Like Carbon) Coating.
OPPORTUNITIES AND THREATS
(a) In Aesthetic coatings enormous opportunities exist both in gold coated
products and non-gold products. Company continuously works hand in hand
with the Industrial manufacturers and successfully develops new
applications.
In Wear Coatings new technologies are coming in internationally and our
company has successfully tied-up arrangements to bring these new path
breaking technologies to our country.
In the changing industry scenario and to meet quick turnaround requirement
of customers, Company has implemented its plans to establish additional
Coating Centres.
(b) Aesthetic coating business can be affected by high price of gold.
However, impact of this has been mitigated by gold cost linked pricing with
major customers. Company is also making progress in successful application
of non-gold coating business.
SEGMENT-WISE PERFORMANCE
The Company has only single segment namely surface enhancement, therefore,
disclosure of segment-wise performance is not required.
OUTLOOK
The Global economy and Indian economy are facing recessionary trends and a
slow down. There are signs of improvement in some sectors. The increase in
Gold price is a threat and would affect our margins. The poor quality
unorganized sector is trying to enter the Coating business. These would
post some problem in the short term, but the lack of quality and technology
will not seriously on the part of unorganized sector will have no impact on
our performance, as we mainly cater to organized Players who have a strong
quality control and expect strong commitments to deliveries. Besides the
growth of rural market will also provide growth opportunity,
The increase of Gold price has paradoxical impact to the business whereby
the margins will be squeezed but market-size will grow. Many applications
which were conventionally Electro plating would use our technology. The
business will be driven by strong technological development and managing
Gold cost. The Decorative coatings of other colours which do not involve
Gold also become very important.
RISKS AND CONCERNS
Our company is exposed to external and internal risks.
External risks arise out of nature of demand, entry of new manufacturers,
expansion of capacity by existing players, international companies entering
India, technological obsolescence, rising price of raw materials, etc.
These risks are continuously being monitored and are sought to be mitigated
by tie-up for new technologies, acquiring new capacities, establishing new
Coating Centers near to customer locations and achieving backward and
forward integration. Internal risks are being mitigated by continuous
productivity improvements, developing new applications through our R&D
efforts in collaboration with customers and Government Agencies. Employees
are motivated and prepared for higher responsibilities to successfully
manage new businesses through training and empowerment and to mitigate
risks arising from attrition.
INTERNAL CONTROL SYSTEMS
The company is committed to maintaining an effective system of internal
control for facilitating an accurate, reliable and speedy compilation of
financial information for safeguarding the assets and interest of the
Company and ensuring compliance with laws and regulations. The Audit
Committee consists of independent Directors from our Board of Directors.
HUMAN RESOURCES
Our Company has always believed that Human Resource is the most important
capital of the company, and as a continuous process has been striving to
value-add to this asset by various measures.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis describing the
Companys position and expectation may be forward looking statements
within the meaning of applicable securities laws and regulations. Actual
performance could differ from those express or implied. Important factors
that could make a difference to the Companys operations include,
interalia, economic condition affecting demand/supply and price conditions
in the market in which the company operates, especially the price of raw
material (Gold), changes in government regulations, other statutes and
incidental factors that are beyond the control of the Management.