Sibar Auto Parts Ltd Management Discussions.
[Pursuant to Regulation 34 (2) (e) of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015] (A) Business Overview: Review of Operations:
Your Directors wish to present the details of Business operations done during the year under review: During the year under review your company reported growth in revenue from operations of 15.41% over the previous year. The Revenue from operations stood at Rs. 2741.44 lakhs compared with Rs.2375.47 lakhs in the previous year. However the operations resulted in Net Loss of Rs. 361.44 lakhs against previous year net loss of Rs.161.86 lakhs. The main contributing factors are increase in Operating costs and Depreciation. Effective steps are being taken to reduce operating cost by adding new machines and modifications to existing manufacturing facility so as to improve profitability. Your directors are hopeful of better results with increase turnover in the coming years.
INDUSTCRY STRUCTURE AND DEVELOPMENTS
AUTO COMPONENTS INDUSTRY IN INDIA IN THE YEAR 2018-19
The Indian auto-components industry has experienced healthy growth over the last few years. The auto-components industry accounts for 2.3 per cent of India s Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly each. A stable government framework, increased purchasing power, large domestic market, and an ever-increasing development in infrastructure have made India a favorable destination for investment.
The Indian auto-components industry can be broadly classified into the organised and unorganised sectors. The organised sector caters to the Original Equipment Manufacturers (OEMs) and consists of high-value precision instruments while the unorganised sector comprises low-valued products and caters mostly to the aftermarket category. According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto-components industry is expected to register a turnover of US$ 100 billion by 2020 backed by strong exports ranging between US$ 80- US$ 100 billion by 2026.
Outlook for the next year
The rapidly globalizing world is also opening up newer avenues for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe and reliable modes of transportation. Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers, who would need to adapt to the change via systematic research and development. Company is monitoring the present style of auto parts used and analyzing future development requirements in auto parts based on the new innovation taking place in automobile industry. Company is also focusing to give best quality so as it can increase the exports of the same. With the best of technical expertise, financial acumen, marketing experience and managerial skills at hand, we look forward to explore the export market in the gears and in the wide range of automotive parts. The Indian auto-components industry is set to become the third largest in the world by 2025. Indian auto-component makers are well positioned to benefit from the globalisation of the sector as exports potential could be increased by up to US$ 30 billion by 2021E and with the growth of Indian auto Component Industry, there will be growth of our Company too.
Risks and Concerns: RISKS:
Financial Risk Management:
The Company s activities expose to a variety of financial risks viz., market risk, credit risk and liquidity risk. The Company s focus is to foresee the unpredictability of financial markets and seek to minimize potential adverse effects on its financial performance. The primary market risk to the
Company is credit risk and liquidity risk. The Company s exposure to credit risk is influenced mainly by Government Orders.
Management of Market Risk:
Market risks comprises of Price risk and Interest rate risk. The Company does not designate any fixed rate financial assets as fair value through Profit and Loss nor at fair value through OCI. Therefore, the Company is not exposed to any interest rate risk. Similarly, the Company does not have any Financial Instrument which is exposed to change in price.
Foreign Currency Risks:
The Company is exposed to foreign exchange risk arising from various Currency exposures primarily with respect to the US Dollars (USD), for the imports being made by the Company. The Company exposure to foreign currency risk as at the end of the reporting period March 31 2019 is INR Nil (March 31 2018 INR NIL & March 31 2017 INR NIL )
Credit risk is the risk of financial loss to the Company if a customer fails to meet its contractual obligations. The maximum exposure to the credit risk at the reporting date is primarily from trade receivables. The company operations are with parent companies and hence no issues credit worthiness. The company considers that, all the financial assets that are not impaired and past due as on each reporting dates under review are considered credit worthy.
There is a comprehensive Risk Management Framework established in your company which takes care of emerging risks and their mitigation. As part of the diversification process, you will be glad to know that your company has forayed into HF communications and is on the look out to expand to other areas akin to the company s core competencies for sustainable growth ahead. (B) Opportunities And Threats: Opportunities:
The Company is carrying on the business of manufacturing of auto components such as Cylinder Heads, Crankcases for Three Wheelers, Aluminum parts for CAC tanks, Aluminium Parts in Electrical Segments such as Connectors, Core boxes etc. We have given Nickel Silicon Coated Electro Plated Cylinder blocks for trails for two wheeler manufacturer and discussion are going on with various two wheeler manufacturers. In today s parlance Auto component industry has growth potential as the population is increasing, demand of vehicle in all segment is increasing so the future of the Company seems bright.
Your Company regularly monitors the various risks associated with its business. The Company is identifying, minimizing and mitigating the risks and the same are reviewed periodically. There are various Risk factors such as Changes in Government Policies and Regulations, Fluctuation in Foreign Exchange Rates, Prices of Raw materials, Competition, Volatile in Automobile Industry, Manpower. The Company is trying to overcome/minimize it by taking certain steps, which are in hand of company. Besides this, Companies Internal Risk, Credit Risk, Liquidity Risk, Maturities of Financial Liabilities, Interest rate risk and the details of the same has been given in Notes Forming Part of Financial Statements
(C) Internal Control Systems:
The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.
(D) Cautionary Statement:
Statements in the management discussion analysis describing the Company s objectives, projections, estimates, expectations are forward looking within the meaning of applicable security-laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. Actual results may differ materially from these expressed in the statement. Important factors that could make difference to Company s operations include economic conditions, changes in the Government priorities/policies/ regulations, tax laws and other statutes and other incidental factors affecting the business environment. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements on the basis of any subsequent developments, information or events.
|By order of the Board of Directors|
|For Sibar Auto Parts Ltd|
|Pemmasani Veeranarayana||Pemmasani Madhu Pratap|
|Managing Director||Whole-Time Director|
|DIN: 00644259||DIN: 00644254|