Ruttonsha International Rectifier Ltd Management Discussions.

INDUSTRY OVERVIEW

Ruttonsha International Rectifier Ltd. operating since last five decades has identified its core strength in niche Power Electronics Industry with focus on two segments i.e. manufacturing Low and high power semi conductor devices like diodes, thyristors modules and bridge rectifiers by processing chips from 28mm to 125 mm diameter in the state of the art facility and manufacturing of Power Equipments like Rectifiers, Battery Chargers, High Power Stacks, Rectifier Panels used in diverse industrial sectors.

With renewed focus on Make in India initiative by the Govt. of India and efforts to create an environment of Ease of Doing Business which is expected to bring in large investments in key sectors, viz. Defence, Railways and Infrastructure. The introduction of GST and its smooth transition and other reforms has raised the confidence of global players in Indian markets. All these initiatives shall ultimately result in high industrial growth rates, which is slow in the current scenario, and which shall improve significantly in the coming years thereby benefitting the small businesses in the organised sector to show better results in near future.

BUSINESS REVIEW

(a) Company Outlook : Your Company experienced a pickup in the demand cycle in domestic market during the second half of the financial year 2017-18. The key contributors to the Companys growth during the year were Semiconductor Devices and High Power Equipments which reported sequential growth. However, the overall topline could grow by 3.35 % on account of decline in contribution from export sales. The principal and markets which your Company caters comprising of Railways, Capital Goods, Industrial and Alternate Energy have shown signs of improvement.

Going into the next financial year, the Companys operational performance will be guided by stable order inflows from semiconductor devices supported by execution of Railway orders as well as large equipment orders from other private players. The Company has established itself as a major player in Power Electronics. As a strategy the company has focused to grow its business through innovations, design, technology, quality and timely deliveries. The Company forsees a lot of opportunities in developing High Power devices and modules for strategic electronic industry; and catering to the requirements of Indian Railways and other OEMs.

(b) Opportunities and Threats : Our Company essentially caters to OEMs, Railways, Steel Sector, Pollution Controls and Capital Goods industry where huge opportunities are likely to open up due to the core focus of the present government in developing infrastructure facilities across the country, in order to boost the economy and business sentiments in the country

Tender based bidding system and competition from other private players may affect crystallisation of new orders to be awarded to the Company. Wide fluctuations in currency rates, emerging global trade wars among developed countries may impact our import costs which in turn affect the companys performance. However, such impact to a certain extent shall be offset by growth in export business.

Our focus lies in developing new product range viz. Modules and Capsule Devices to achieve higher margins and acquire greater market share. The Companys development of IGBT based rectifiers, battery chargers, AC/DC damping panels, thyristor controlled transformer rectifiers has started showing flow of orders.

SEGMENTWISE PERFORMANCE

The Company continues to operate in one segment i.e. Power Electronics thus segment-wise reporting as per the requirements of Ind AS 108 is not applicable to the Company.

INTERNAL CONTROL SYSTEMAND THEIRADEQUACY

The Company has an adequate system of internal controls to ensure that the transactions are properly authorised, recorded and reported, apart from safeguarding its assets. The internal control system is supplemented by well-documented policies, guidelines and procedures and reviews carried out by the Companys internal audit function. The Company continues to obtain the services of M/s. Bhandarkar & Kale, Chartered Accountants to oversee and carry out internal audit of the companys activities and submit their reports periodically to the Management and the Audit Committee of the Board.

The Audit Committee, Statutory Auditors and the business heads are periodically apprised of the Internal audit findings and corrective actions taken.

FINANCIAL PERFORMANCE

(i) Profits and Earnings : During the year, the Companys Revenue from Operations increased marginally by 3.35% to Rs. 326,335,351/- as compared to Rs. 315,767,303/- in 2016-17. Earnings before Interest, Tax and Depreciation and Amortisation (EBITDA) for the year also increased by 3.75 % to Rs.36,613,411/- as compared to Rs. 35,289,850/- last year. Net Profit for the year also increased by 17.95 % to Rs.7,938,717/- as against Rs. 6,730,744/- last year.

(ii) Capital Expenditure : During the year under review, the Company has not spent any substantial amount on Capital Expenditure.

(iii) Finance Costs: Ploughing back of funds from internal accruals, better financial controls and reduction in borrowing costs has resulted in decline in finance costs by 8 % to Rs.13,639,888/- as against Rs. 14,832,676/- last year.

HUMAN RESOURCES

During the year, there has been no material development in Human Resources / Industrial relations. Your Company has a favourable work environment that motivates performance, customer focus and innovation while adhering to the highest degree of quality and integrity.

Your Company takes pride in the commitment, competence and dedication shown by its employees in all areas of business. Various HR initiatives are taken to align the HR policies to the growing requirements of the business.

CAUTIONARY NOTE

The statement in the Management Discussion and Analysis describing the Companys objectives, projections and estimates may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed. Important factors affecting the Companys operation include global and domestic supply and demand conditions, input availability and production costs, currency fluctuations, changes in Government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

For and on behalf of the Board of Directors
Place : Mumbai Hasmukh J. Shah
Date : 24th May, 2018 Chairman