RPG Cables Ltd merged Management Discussions

RPG CABLES LIMITED ANNUAL REPORT 2008-2009 MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS: The Company operates in two segments viz., Power Cables and Telecom Cables. The respective industry scenario is as under: Power Cables: Slowdown in orders is observed due to global meltdown and financial constraints. Government of India is planning Infrastructure projects with 80000 MW power generation in next five years. Many new capacities would be generated in near term in view of continuous demand of cables. The Company obtained certain short term credit facilities for working capital requirements, thereby resulting in improved turnover and margins during the year under report. The Company commenced manufacturing of LT Cables at its Mysore factory with an installed capacity of 5000 km per annum. The Company successfully executed a single export order of about Rs. 110 crores for supply of Power Cables to Afghanistan. Telecom Cables: There is a steady improvement in the off-take of both Jelly Filled and Optical Fibre Telecom Cables, due to the expansion in the networks of the State owned Telecom companies, as well as the private telecom operators. The above trends are likely to continue in the near future, resulting in substantive growth, particularly for Power Cables. SEGMENT WISE & PRODUCT WISE PERFORMANCE: Financial Highlights: Income Statement: (Rs. in Lacs) Particulars 31.03.2009 31.03.2008 Profit before Depreciation, Interest and Tax 2426.16 2323.77 Financial Expenses 2757.67 2685.70 Depreciation 359.39 346.61 Profit before tax (690.90) (708.54) Tax (Net) 14.27 13.91 Profit after Tax (705.17) (722.45) Segment wise performance: (Rs. in Lacs) Sales 31.03.2009 31.03.2008 Telecom Cables 2227.11 5919.85 Power Cables 36250.16 29004.98 Others 28.45 63.75 Total 38505.72 34988.58 RISKS, CONCERNS AND THREATS: The company is experiencing continuous delay in realisation of dues from customers. Increase in cycle time from receipt of order to realization of cash affecting cash flow of the company. Economic situation globally as well as raw material and forex volatility are impacting business and the same is likely to impact next financial year. The Company has been sanctioned a suitable rehabilitation scheme from the BIFR. However, one of the parties has challenged the said scheme before the Appellate Authority and the same is pending. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an effective system of internal audit to ensure that there exists a proper control over all the transactions across all the units of the Company, safeguarding the assets/resources, protecting them from loss or unauthorized use. Transactions are authorized, recorded and reported in compliance with various laws and Accounting Standards. The internal audit programme comprises well-documented policies, guidelines, authorities and approval procedures. The Internal Audit Department periodically conducts audits of the key areas of business and systems and reports to the Audit Committee. Significant audit observations, follow-up actions and audit plans are reported to the Audit Committee of the Directors. TOTAL QUALITY MANAGEMENT & HUMAN RESOURCES AND INDUSTRIAL RELATIONS: Quality Management is given utmost importance. All the plants of the Company have ISO Certification. An Employee Engagement Survey was conducted in order to obtain the views of the employees and their suggestions for the Company to become the Preferred Employer. Regular Induction Programs are being carried out by the Company to enable every new employee to understand the organization culture. Industrial Relations continue to be cordial. Employees are involved in Small Group Activities (SGAs) which helps in bringing cohesion, togetherness and sense of belonging to the organization which in turn results in greater productivity. The total numbers of employees as at March 31, 2009 were 411. FORWARD LOOKING STATEMENT: This report contains forward looking statements that involve risks and uncertainties. Actual result may vary from those expressed or implied depending upon economic conditions affecting demand, supply and price conditions, government policies and other incidental factors.