Sturdy Industries Ltd Management Discussions.

The report on Management Discussion and Analysis is akin to the Companys performance in the current economic and industry scenario. The report also details the threats perceived and the opportunities available to the Company.

I. INDUSTRY STRUCTURE AND DEVELOPMENT:

Sturdy Industries Limited was incorporated in 1989. The company is involved in business of Aluminum Conductor, Pipes & fitting, Irrigation System, ACC & ACP Sheets and Trading in Polymers & Aluminum etc. Our business interest comprises Irrigation Systems- Drip & Sprinkler Irrigation, Power generation products- Aluminum Conductors, cables, wire rods, I.T. Infrastructure products- HDPE PLB Ducts. The Company has successfully sailed through the turbulent waters of overall economic recession and today the company is a leading manufacturer of specialized irrigation system and aluminium conductors in India. The Companys product portfolio is increasing. The company has already ventured into the Power Sector and the Management is working on the same so that the ambit of the company widens and the Company can grow steadfast in the new areas. The core competence of the Company remains to add on activities which are the need of the hour and be a leader in the Industry.

During the year under review, the company has achieved a turnover of Rs .210,06,37,004.76 for the year ended 31st March 2018, as compared to the previous year turnover of Rs. 398,58,42,071.11. The turnover of the company has fallen substantially. The Financial expenses of the company have also been decreased during the year. The Company has incurred a loss of Rs. 21,46,65,326.75 during the financial year under review. The Company has met the standards set by the Management and the Management is committed to scale new heights and peaks in the times to come. The company has been further strengthened and able to compete in original sector with large players. The driving force behind the Companys success is the able guidance and experience of Mr. M. L. Gupta and Mr. Ramesh Gupta. The managements vision to be a Leader in the Industry is being achieved and the commitment to achieve this is unmatched.

II. OPPORTUNITIES AND THREATS:

Opportunities and risks go side by side in the business and one cannot have only opportunities and no risks. The major risk that is perceived is low quality products being manufacture at lower cost being thrown into the market by the competitors. The Companys initiatives in this direction help the company to perceive risks and be ready to counter them The Company is expanding its manufacturing capacity for the domestic and the export markets. The Company has to sustain its growth, retain its leadership and for that no stone is left unturned. Consistent efforts are put in to cover the risks in the business. Pricing and procurement risks are reduced through integrated management efforts and plans. The key competitive strengths of the company are:

1. Strong brand name in the Industry 2. Increasing product base 3. Cost competitiveness

4. Venturing into expansion and reaching new horizons 5. Diverse revenue streams

III. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE SEGMENT-WISE/PRODUCT-WISE PERFORMANCE

A) PRIMARY SEGMENT

The companys primary segment includes Aluminum Conductor, Pipes & fitting, Irrigation System, ACC

& ACP Sheets and Trading in Polymers & Aluminum etc.

During the year ended 31st March, 2018, the details of primary segment information and revenue are as follows:

(Rs. In Lacs)
S. No. Description (Manufacturing) Plastic Pipes & Irrigations (Manufacturing) Aluminum Divisions Trading Others Total
1. Sales 6625.46 14361.14 19.77 2212.41 23218.78
2. Total Revenue 6625.46 14361.14 19.77 2212.41 23218.78
3. Segment Result - - - - -
4. Interest - - - - 346.02
5. Profit/Loss Before Tax - - - - (2510.19)
6. Provision for Current - - - - -
Tax
7. Profit/Loss Before Tax - - - - (2510.19)
8. Segment Assets - - - - 30196.83
9. Segment Liabilities - - - - 30196.83
10. Capital Expenditure - - - - -
11. Depreciation 8.84 527.16 - 65.70 601.70

B) SECONDARY SEGMENT

The company caters all over the country

IV. OUTLOOK

The key products of the Company are as follows:

? Micro Irrigation Systems, sprinkler and drip irrigation systems and HDPE, PVC and LLDPE pipes. The SWATI brand of the Company products have made a mark for itself in the Industry ? Metallic/colored Aluminum Composite panels and sheets with SUNBOND brand name well accepted in the market.

? Power transmission and distribution infrastructure comprising Aluminium conductors, cables and aluminium wires.

? The new line being added to the companys product portfolio is venturing into the Power Sector i.e. by setting up of EPC division.

EXPORTS:

The Companys initiatives in the Direction are expected to bear fruits in the coming times as with the appointment of Distributors abroad the Company has been able to make its name in the Foreign Market. The management is exploring new ways and means to venture into the other parts of the world and the talks and negotiations are on for the export of different products under the ambit of the Company. The Company has been exporting its products to UAE, Mauritius, Spain, Africa, Switzerland, Bulgaria, among others.

V. RISKS AND CONCERNS:

Risk means uncertainties about events and their outcomes that could have a material impact on the performance and projections of the Company. Since risk is inherent in every business, it is the Companys responsibility to minimize its incidence in order to protect and enhance shareholder value.

Our framework for combating risks recognizes that risks may be divided into two broad categories - risks that are common and relevant for most business in general and risks that are more specifically applicable to your company and business in particular. The Risk Management Policy at STURDY INDUSTRIES LIMITED inter-alia provides for Risk identification, assessment, and reporting and mitigation procedure. The Policy is continuously updated and adopted to the changing environment in which the Company operates.

Risks of General Nature:

Risks relating to the general macroeconomic environment of the Company include risks associated with political and legal changes, changes in tax structures, and commercial rules & laws. The Company keeps a proactive track to anticipate such changes and mitigate associated risks to the extent possible.

Risks related to man-made and natural disasters such as explosions, earthquakes, storms as well as civil disturbances are handled by following best practices in the design of structures and "safety first" as a guiding principle while designing technical and business processes duly supplemented with requisite insurance coverage.

The third set of general risks relates to risks from market led changes. These include risks associated with sudden fall in GDP and growth rates, overall market condition in India and abroad, or sudden changes in market preferences. The mitigation of these risks is achieved by a cost-effective and flexible working structure which would allow the Company to scale up or scale down working in affected areas in accordance with the changes.

Specific Risks:

We have identified the some specific risks that need more detailed attention in the present circumstances and business of the Company. The Company is structurally focusing on increasing the revenue from other manufacturing business streams and strategically enhancing the growth of these segments, which will help is offsetting the over dependence on the watch segment.

Risk related to Personnel:

Our business is increasingly dependent on the skills and competencies of our employees and management team. The general war for talent in our growing economy has created a risk related to the retention of key personnel both in manufacturing and retail sector. This risk is mitigated through effective HR policies relating to recruitment and retention and a proactive remuneration and rewards policy that is periodically reviewed at the highest management level.

VI. INTERNAL CONTROL SYSTEM:

A strong internal control culture is an important focus and thrust area in the company. The company has comprehensive internal systems, controls and policies for all the major processes to ensure the reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws, and regulations, safeguarding of assets and economical and efficient use of resources. The formalized systems of control facilitate effective compliance as per Listing Agreement/ SEBI (LODR) 2015. The company also has well documented Standard Operating Procedures (SOPs) for various processes which are periodically reviewed for changes warranted due to business needs. The Company has clearly defined roles and responsibilities for all managerial positions and all operating parameters are monitored and controlled. The Company has a sound internal control system for financial reporting for various transactions, efficiency of operations and compliance with relevant laws and regulations. Suitable delegation of power and also the guidelines for preparation of accounts have been issued for uniform compliances. The Company has established a separate internal Control department to exercise the various controls and see check that all the organizations departments function properly. The internal control department reviews the effectiveness and efficiency of these systems to ensure that all assets are protected against loss and that the financial and operational information is complete and accurate. The scope and authority of the Internal Audit activity are well defined in the Internal Audit scope and guidelines, approved by the Audit Committee. Internal Auditors develops a risk based annual audit plan with inputs from major stake holders and the major focus areas as per previous audit reports.

VII. HUMAN RESOURCE AND INDUSTRIAL RELATIONS:

The Company believes that the quality of its employees is the key to its success in the long run and is committed to provide necessary human resource development and training opportunities to equip them with skill, enabling them to adapt to contemporary technological advancements. We lay special emphasis to the human resources function and believe that our opportunities and competitive compensation policy help us in attracting and retaining our personnel. We have an elaborate performance system in place comprising goal setting and periodic reviews (including confirmation and annual reviews). The review sessions impress upon several aspects of the professionals careers such as career and competency, individual preferences and organizational needs. Our compensation package has a fixed component in line with the industry standards and a variable component linked to the corporate and individual performance.

VIII. CORPORATE IMAGE BUILDING:

Sturdy continued with the corporate image building initiatives in 2017-18 with focus on the Customer contact programs. Emotional Connect initiatives such as performing Puja during the delivery of goods and customer meets were organized. This along with well-planned media relations activities made sure Sturdys growth story was present in the mass media throughout the year. Sturdy explored branding and communications with a view to explore both, external and internal communications to best effect. Our credit screens and processes are aligned to deliver superior customer service to our target customers who are largely first time buyers and small customers in deeper reaches of rural and semi urban India. On the other hand our Captive team focuses on converting our existing customers into lifelong customers. Sturdy continues to invest time and money in further refining sales processes and systematic measurement of process metrics, aimed at improving efficiency and customer satisfaction. Significant investments in branch network and sales force automation will hold the key to winning customers in an ever increasing competitive environment.

IX. FUTURE PROSPECTS:

Considering the overall business conditions, the Company is confident about its future prospects. The Directors are striving hard to bring better symmetries of proper utilization of resources and to accomplish the basic goals with an overall objective of customer satisfaction. The low manufacturing cost of our products is our basic strength and the Company offers the good quality products to its customers at an acceptable price. The ever rising raw material cost is a growing concern to all. Aluminum, plastic and energy costs have recorded historical high prices, and with energy crisis the Company expects the raw material costs and bank rate of interest to remain high. The Company will continue to strike for correct selling price in order to maintain an acceptable profit margin. Management believes that with the ongoing efforts to control overall cost, improve plant efficiency and create the right mix of products, the Company will emerge as the most successful company in India.

X. CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys Structure, projections, estimates, expectations may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates/ would operate, changes in the Government regulations, tax laws and other statutes and other incidental factors.

FOR & ON BEHALF OF THE BOARD
Sd/- Sd/-
(MOHAN LAL GUPTA) (RAMESH GUPTA)
(MANAGING DIRECTOR) (DIRECTOR)
(DIN NO. 00161184) (DIN NO. 00161363)

DATE: 29.08.2018

PLACE: Parwanoo