Ruttonsha International Rectifier Ltd Management Discussions.

INDUSTRY OVERVIEW

Ruttonsha International Rectifier Ltd. which is operating since last five decades has identified its core strength in the niche Power Electronics Industry with its focus on two segments -

(a) 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

(b) Manufacturing of Power Equipments like Rectifiers, Battery Chargers, High Power Stacks, etc. used in diverse industrial sectors.

Renewed focus on Make in India initiative by the Govt, of India and efforts to create an environment of Ease of Doing Business 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 benefiting the small businesses in the organised sector and help them to show better results in future.

BUSINESS REVIEW

(a) Company Outlook : During the year 2018-19, your Company experienced better demand in all three segments i.e. Semiconductor Devices, High Power Equipments and Exports, all of which grew at steady pace thereby reporting overall growth of the Company. The end markets that your Company caters to viz. Railways, Capital Goods, Automobiles, Power, Steel, Welding Industry, Defence, Industrial and Alternate Energy have show promising signs. With proven track record and successful supply of large equipment orders during the year to private players such as BGR Energy Systems, Hindalco, etc.; the Company looks to tap this opportunity to grow itself beyond Railways and other government parties for its High Power Equipment business.

The Company continues to focus on High Power Semiconductor devices business and foresees ample opportunities for growth in International Markets. During May, 2019 the Company had participated in worlds leading exhibition and conference for Power Electronics - PCIM Europe. Our vision of creating worldwide recognition for our products in International markets would garner better growth in export business in coming years.

We are glad to have completed 50 glorious years of success from 1969 to 2019 and continue to focus on our next journey which will be even brighter. In this past decade, we have transformed out Company well beyond our original discrete semiconductor products. We achieved this transformation through internal product development as well as by entering into new product range. In addition to our continued focus on operational excellence, we continue to drive our product portfolio towards better margins and strive to increase our value proposition to customers by adding new products and capabilities from internal research and development activities. Our constant endeavor to enter new fields bodes well with the Companys outlook.

(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 increased focus of the government in developing infrastructure facilities, in orderto boost the economy and business sentiments in the country. The Company views this as a major opportunity, but the same comes with the threat of any economic/industrial slowdown which may adversely affect the business and sales of the company.

Tender based bidding system and competition from other private players may affect crystallization 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 profitability. However, such impact to a certain extent shall be offset by growth in export business.

Ourfocus 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 in the current year.

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 SYSTEM AND THEIR ADEQUACY

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 by 33.53% to Rs. 435,761,768/- as compared toRs. 326,335,351/- in 2017-18. Earnings before Interest, Tax and Depreciation and Amortisation (EBITDA) for the year increased by 53.92 % to Rs. 56,356,630/- as compared to Rs. 36,613,411 /- last year. Net Profit for the year increased by 3.27 times to Rs.25,998,261/-as againstRs.7,938,718/-lastyear.

(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 26.97 % to Rs. 9,961,711 /- as againstRs. 13,639,888/- 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 differfrom 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 : May, 2019 Chairman