ums technologies ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Company s Business

The Company is engaged in the business of manufacture of high-end precision machined components, radial engines, aero model engines and accessories. The Company has an Electrical Discharge Machining (EDM) Division with high precision machines. The Training Division, which is a part of EDM Division, provides short-term courses in EDM, CNC & CAD / CAM. The Company has a full fledged tool room and is engaged in the development of new products. The trading division of Mosquito Terminator Bats also contributes to the total turnover.

Industry Structure and Developments

Engineering Sector is the largest of the industrial sectors in India. It has emerged as the largest contributor to the country s total merchandise exports. Engineering companies thus have a potential for direct exports and outsourcing. The Indian engineering industry is highly competitive with a number of players in each segment. A large number of multinational companies have also entered the industry. India is preferred by global manufacturing companies as an outsourcing destination due to its low labour cost and better designing capabilities.

The growth of this industry depends on unpredictable global economy. The advanced economies are gradually recovering after the global financial crisis, growth in developing and emerging markets is finally picking up. On the other hand financial condition in emerging markets has remained tight. The volatile prices of raw material like steel, aluminium, copper and other input materials, high financing cost, frequent disruptions in power and volatile foreign currency movements are all threat to the industry.

Discussion and Analysis

Low cost labour, inexpensive manufacturing capabilities, availability of a technical education infrastructure that provides an increasing number of technically-trained human resources each year are the key attractions boosting the market growth. India is fast moving from exporting low value goods to developing countries to exporting high value goods to developed countries. However hardening of interest rates, lack of inadequate credit facilities extended by the banks to the customers, materials and other inputs, fluctuating foreign currency, global recession etc., are threat thrown to the industry.

Segment-wise Performance

Segment-wise results along with appropriate disclosures are given in the notes forming part of accounts for the year-ended 31.03.2014.

Outlook

Improving the operational efficiency and actively reducing the costs are planned for enhancing the profits for the coming years. However this proves to be challenging, because of the volatility of the material prices, especially steel and copper and the inflexibility in hiking the prices of the output, owing to stiff market conditions. The pressure on the margin, therefore becomes imminent and the company is actively combating this pressure.

Risks and Concerns

The Company recognizes that proper risk identification, evaluation and mitigation would help to achieve its target of sustained profitability and growth.

Internal Control Systems

The Company has adequate internal control systems to monitor internal business process, financial reporting and compliance with applicable laws. The company periodically reviews the adequacy and effectiveness of the control systems.

Human Resources

Excellent relationship is maintained with the employees throughout the year. The number of employees of the company as at 31.03.2014 is 103.

Cautionary Statement

The Management Discussion and Analysis Report contains forward looking statements based upon the data available with the Company, assumptions with regard to global economic conditions, the government policies etc., Therefore it is cautioned that the actual results may materially differ from those expressed or implied in the report.