Sky Industries Ltd Management Discussions.

INDUSTRY STRUCTURE & DEVELOPMENT:

SKY INDUSTRIES LIMITED is a dominant player in the Narrow Woven Fabric industry in India having its presence felt in various product categories viz. Hook & Loop Tape Fasteners. Traditionally, this industry is an accessory supplier to major industries like Textiles, Leather, Footwear, Infant wear, Sports, Defence, Orthopedics, Medical Accessories, Hygiene, Aviation, Automobiles, Home furnishings etc.

OPPORTUNITY AND THREATS:

The Company has the opportunity of capturing steadily growing Asian markets by undertaking process capacity expansion and seek strategic alliances to gain access to marketing channels and expand the companys market domain.

The Company has the disadvantage of limited global presence and lesser international penetration compared to some other big brands, which the company is planning to increase in the coming years.

The Companys strength is built around the robust domestic and international marketing network. The Company has a network of over 800 corporate customers and over 50 channel partners as a part of its domestic network, which are comprised from various industry segments, allowing the Company to de-risk its business.

The Company does face threats from imports and other new emerging players with access to Asian markets that are creating intense competition for the companys products. Also there is a possibility of newer fastening applications being developed, which is a threat to the core product of the Company.

Risks and Concerns:

The Company faces various risks which are incidental to the Companys operations in the various product lines viz. Hook and Loop Tape Fasteners and Velvet tapes like new competitor setting up business or expanding of the existing players owing to the market available.

The concerns amongst others are Company facing rising input costs on account of Raw Materials pricing being steadily rising as well as inability of the Company to pass on the increase in costs to its customers being the main concern.

Also, the volatility in Exchange Rate has its own costs, all of which may not be possible to be passed on to the customers.

The Company is looking however to address the above risks and concerns by setting up a robust risk management system.

Risk Management Policy:

In accordance with the requirements of the Act, the Company has adopted and implemented a Risk Management Policy for identifying risks to the Company, procedures to inform Board members about the risk assessment and minimization procedures, monitoring the risk management plan, etc.

Segment Reporting:

The Company has one segment of activity namely “Fastening solutions under the broader category of Narrow Woven Fabrics”. Hence, Accounting Standard on Segment Reporting (AS - 17) issued by the Institute of Chartered Accountant of India does not apply.

Operations:

The turnover during the year was Rs. 53 Crores as compared to previous years 48 Crores, a 10% growth over the last year.

As in earlier years, the Company focused on increasing the share of the Value Added products.

Exports:

During the year under review the Exports were at 106 lacs, a drop from the previous year. The drop was mainly on account of conscious decision to avoid the riskier markets, as well as Companys decision to exit the allied businesses, which were largely instrumental in getting higher export orders in the previous year.

Financial Liquidity:

Cash and cash equivalent as at 31st March 2018 was 86.32 lakhs (Previous year 44.81 lakhs).

The Companys working capital management is based on a well-organized process of continuous monitoring and controls on Receivables, Inventories and other parameters.

Internal Control Systems and their adequacy:

The Company has commensurate internal audit systems in relation to the size of the Company. The Company has also appointed Internal Auditors M/s. UKG & Associates Chartered Accountants, who have been conducting internal audit of the systems that are being strengthened.

Indian Accounting Standards (IND AS):

The Company has adopted Ind AS w.e.f. 1st April, 2017 with a transition date of 1st April, 2016. Accordingly, results for the year ended 31st March, 2017 have been prepared in accordance with Ind AS prescribed under Section 133 of the Companies Act, 2013 and other accounting principles generally accepted in India. Previous periods figures have been restated as per Ind AS to make them comparable.

Human resources and Industrial Relations:

We strongly believe that engaged, enthusiastic, and loyal employees are pivotal drivers of growth and health in any organization, which is why we place a lot of emphasis on taking care of our employees, their dreams and aspirations.

Your Company has a team of able and experienced industry professionals in various ranks, who make us what we are today. As of 31stMarch, 2018, the total number of employees on the rolls of the Company was 59.

Cautionary Statement:

The Boards Report and Management Discussion & Analysis may contain certain statements describing the Companys objectives, expectations or forecasts that appear to be forward-looking within the meaning of applicable securities laws and regulations while actual outcomes may differ materially from what is expressed herein. The Company is not obliged to update any such forward-looking statements. Some important factors that could influence the Companys operations comprise economic developments, pricing and demand and supply conditions in global and domestic markets, changes in government regulations, tax laws, litigation and industrial relations.