NILE Ltd Management Discussions.

The management discussion and analysis report sets out developments in the business environment and the Companys performance since the last report. The analysis supplements the Directors report, which forms part of this annual report.

Industry Structure and Development:

Lead and Wind Energy are the two divisions of the Company.

Pure Lead and Lead alloys are supplied to manufacturers of Lead acid batteries.

Wind energy generated is sold to Andhra Pradesh Southern Power Distribution Company Limited.

Results of our operations for the year ended 31st March 2019

(Rs. In lakhs)

Particulars 2019 % 2018 %
Net Sales 57,083.46 100.00 63,312.01 100.00
Cost of Goods sold 53,208.06 93.21 57,550.13 90.90
Gross Profit 3,875.40 6.79 5,761.88 9.10
Selling and Marketing expenses 403.34 0.71 420.50 0.66
General and administration expenses 1,210.20 2.12 1,515.37 2.39
Operating profit before Depreciation 2,261.86 3.96 3,826.01 6.04
Depreciation and Amortization 385.11 0.67 387.94 0.61
Operating Profit 1,876.75 3.29 3,438.07 5.43
Other income 57.12 0.10 110.60 0.17
Profit before Tax 1,933.87 3.39 3,548.67 5.61
Tax expenses 682.83 1.20 1,243.95 1.96
Profit after Tax 1,251.04 2.19 2,304.72 3.64
Other Comprehensive Income 40.59 0.07 19.24 0.03
Total Comprehensive Income 1,210.45 2.12 2,285.48 3.61

Note: Previous years figures are regrouped and presented wherever necessary.

Lead prices on the London Metal Exchange were significantly lower throughout the financial year, and this resulted in a significant drop in your companys revenues. The raw material prices did not drop proportionately because of the continued high demand in the Indian market, and this had an adverse impact on the profitability.

There have been no significant developments on the employment and manpower front. Relevant manpower data is provided elsewhere in the document.

Banking arrangements:

Your companys banking arrangements with Kotak Mahindra Bank Limited and HDFC Bank Limited are working satisfactorily, and has resulted in a reduction in finance costs.

Outlook:

Margins continued to be severely affected by the reduced gap between the raw material prices and the finished product prices. There currently appears to be a slight improvement in the Lead prices on the London Metal Exchange.

There is no letup in the robust demand for Lead and Alloys. Capacity utilization of both plants continues to go up and your company has sufficient capacity to meet further demand without incurring any capital expenditure

While the wind farm continues to give marginal profits, the situation might not continue for long because the wind mills are operating beyond the originally expected useful life. Payments from the Andhra Pradesh Power Coordination Committee are getting inordinately delayed, eating into the already meagre realization.

Opportunities and Threats:

Your company has narrowed its search for suitable diversification opportunities, and should be ready to finalize on appropriate projects soon.

Internal Control Systems and their Adequacy:

Your Company has an established system of internal controls for ensuring optimal utilization of various resources. Investment decisions involving capital expenditure are taken up only after due appraisal and review, and adequate policies have been laid down for approval and control of expenditure.

Internal audit is carried out by a firm of Chartered Accountants to ensure adequacy of the internal control systems. The internal audit report is reviewed by the Audit Committee to ensure that all policies and procedures are adhered to, and all statutory obligations are complied with.

For and on behalf of the Board
Sd/-
V. Ramesh
Place : Hyderabad Chairman and Managing Director
Date : 14-08-2019 DIN: 00296642