National Oxygen Ltd Management Discussions

Industry structure and Developments

Our company with its quality policy based on international quality of Standard of ISO 9001:2008 maintained its quality and that has helped to sustain in the competitive market inspite of severe recession affecting our customers. By its wide range of contacts and efficient management, the company could retain its customers and manages efficiently in both Gases and Windmill sectors

Opportunities and Threats

Our company project has resulted in high quality output which has resulted to tie up long term contracts with the customers. The plants at Pondichery and Perundurai are also performing at its rated capacity.

Increase in interest rate on Bank Credit Facilities and variable cost of inputs will affect the margin

Segment wise performance

The performance of the products manufactured by the company namely Industrial Gases are satisfactory and the only problem faced by the company is power interruption and power failure which are beyond control. The overall working and performance of the windmill is satisfactory.

Risks and Concerns:

Our main concern is, continuous competition from MNCs by reducing the price in the market due to which the company has to reduce the price to retain its share in the market. Regarding the windmill, power generation is depends on the seasonal wind and accordingly power is generated as and when the wind is good.

Internal control system and their adequacy

The company maintains its adequate internal controls to have efficient operations. Also the company maintains all statutory rules, regulations, laws as applicable from time to time and protection of resources and assets.

Financial performance with respect to operational performance

Summary of statement of profit and loss account is given below

Revenue	31.03.2017	31.03.2016
Gross Revenue from Operation	3934.93	3629.49
Less: excise duty	326.04	311.78
Net Revenue from operation	3608.89	3317.71
Other income	32.73	35.48
Total revenue	3641.62	3353.19
Expenses
Cost of material consumed	94.65	136.23
Changes in inventory	20.66	(5.93)
Employees benefit expenses	290.91	284.00
Power and fuel	2224.74	2144.44
Finance cost	646.26	609.91
Depreciation and amortization	378.81	394.35
Other expenses	489.46	478.14
Total expenses	4145.48	4041.14
Profit / ( Loss) before tax	(503.86)	(687.95)

Revenue:

Your company net revenue improved by 8.78% due to increase of sales while comparing the previous year and other income hasdecreased by 7.73%

Expenses:

Cost of material consumed decreased by 30.53% due to production of some raw material within the factory.

Changes in inventories decreased by 448.65% due to efficient inventory management

Employees benefit expenses increased by 2.43% due to annual increment provided to employees.

Power and fuel expenses increased by 3.74% due to consumption proportionate to production and cost increase.

Finance cost increased by 5.96% due to borrowing and increase of rate of interest.

Depreciation and Amortization cost decreased by 3.94% due to non- installation of any new machinery

Other expenses increased by2.37% due to cost escalation of various consumptions.

Total expenses increased by 2.58% .which is reasonable while comparing the increase of production.

Material developments in human resources / Industrial relations front:

Being an ISO company, training on all sectors are given to its employees periodically and motivated to work inline with the development of the Industry. The willingness and commitment of the employees help the company to stand tall among its customer in quality and service. The company has the total employee strength of 116.

DIRECTORS RESPONSIBILITY STATEMENT:

As required under Section 134 (5) of the Companies Act, 2013, the Board of Directors hereby confirm:-

(i) That in the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) That the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company at the end of the Financial Year and of the profit of the Company for that period;

(iii) That the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) That the Directors had prepared the Annual Accounts on a going-concern basis;

(v) That proper internal financial controls were followed by the Company and that such internal financial controls are adequate and were operating effectively.

(vi) That the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation of the co-operation and assistance received from the business constituents during the year under review.

	By Order of the Board,
PLACE : Chennai	Sd/-
DATE : 28.07.2017	G.N.Saraf
	Chairman