Remi Process Plant & Machinery Ltd Management Discussions.

a) Industry structure and developments

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 the development of its engineering sector. The Government of India 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. We possess sound manufacturing facility which is assisted by our production team. The manufacturing unit is outfitted with the requisite machines, tools and equipments. The production process are designed and carried out as per the industry standards.

b) Opportunities and Threats

The threat of competition and imports continues, which the Company has been, and will be able to withstand, by focusing on cost control, exploring new applications of our products in other industries and approvals thereof. The cost control measures include increased automation, value engineering, and expanding the vendor base.

c) Outlook

We continue to see a significant opportunity in the market and will use periods of interim weakness as investment opportunities for long term. However, performance could differ materially due to economic conditions affecting demand, supply and price conditions in the domestic and overseas markets, changes in the government regulations, tax laws and other incidental factors .

d) Risks and Concerns

Risk is integral to any business. The Company has evolved a proper governance to identify and access potential risks and also formulate appropriate mitigation plans as under

• Rising input cost Identifying alternative sources for procurement of key raw material in cost competitive manner dividing the exposure into various kinds of raw materials which are also interchangeable.

• Labour availability In order to retain the labour company has taken initiative of providing training on skill development and also introduced performance linked incentive schemes.

• Competition To minimize the threat of competition the Company is regularly identifying the niche/high value segment and working aggressively with the customer centric approach. Various new approvals have been obtained and more are underway.

• Trade barriers Wherever the Company finds surging of cheaper imports in the country, the matter will be timely taken through business associations with appropriate authorities in the Government for suitable protection / remedial measures.

e) Internal Control Systems and their adequacy:

The Company has adequate internal control systems in technical and financial fields.

f) Financial Performance:

The Financial Performance of the Company has improved during the year.

g) Human Resources/ Industrial Relations:

The Company has maintained good industrial relations and has maintained harmonious relations with the employees.

h) Cautionary Statement:

Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable securities laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting global and domestic demand and supply, finished goods prices in the domestic and overseas markets in which the Company operates, raw-materials cost and availability, changes in Government regulations, tax regimes, economic developments within or outside India and other factors such as litigation and industrial relations. The Company assumes no responsibility to publicly amend, modify or revive any forward looking statements on the basis of any subsequent developments, information or events.

j) Details of significant changes in Key Financial Ratios:

Sr. No. Particulars 2018-19 2017-18 Remarks
1) Debtors Turnover Ratio 4.89 6.30 The debtors turnover ratio has gone down in FY 2019 as substantial sale was made in last month and consequently debtors turnover ratio was low.
2) Inventory Turnover Ratio 3.44 4.89 The inventory turnover ratio was lower during FY 2019 as the level of inventory was higher at the end of year due to procurement of raw material for high inflow of orders to be executed in first half of next financial year.
3) Current Ratio 1.19 1.48 The current ratio deteriorated in FY 2019 as the Company made some long term investments during the year.
4) Debt-Equity Ratio 0.03 0.06 The debt equity ratio has improved in FY 19 as the Companys profitability improved and the same were retained in the business and debts were repaid.
5) Net Profit Margin 8.90 7.10 The net profit margin has improved in FY 2019 as the Companys costs of raw material and overheads were under control.

There was no significant changes in Interest Coverage Ratio, Operating Profit Margin, Ratio and Return on Net Worth Ratio.