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Uniflex Cables Ltd merged Management Discussions

12.3
(-5.96%)
Sep 27, 2012|12:00:00 AM

Uniflex Cables Ltd merged Share Price Management Discussions

UNIFLEX CABLES LIMITED ANNUAL REPORT 2010-2011 MANAGEMENT DISCUSSION AND ANALYSIS Forward-Looking Statements: This report contains forward looking statements that covers expectations and projections about the future, including statements about the Companys strategy for growth, product development, market scenario, expenditures and financial results. 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 realized fully. The Companys actual results, performance or achievements, could thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. Overall review: The Company is manufacturing Electrical & Telecommunication cables and markets its cable under the brand name UNICAB and UNIFLEX. The power cable industry showed sign of recovery in demand in the domestic market despite continued global recessionary trends and commodity raw material price volatility. The demand for elastomer cable also has been improving due to increased focus on Windmill, Steel and Mining sector. The demand in international market was generally stagnant. The Multinational cable manufacturers are looking to enter Indian cable market and looking for tie- up with domestic manufacturers. The demand of the telecommunication cables remained subdued due to wireless technologies getting higher preference and has also not been showing any major improvement, though its outlook remains positive in terms of Fiber optic cable demand. Opportunities and Threats: The Indian power sector is currently dominated by State/ Central utilities. The installed generation capacity in the country at present is about 1,60,000 MW and is growing. India still is a power deficient country with a significant energy shortage. As our countrys Annual GDP continues to grow at close to about 9%, energy requirement is also bound to grow rapidly. To bridge this deficit and to cater to future demand, the country needs additional power generation capacity of approx. 100,000 MW during the next five years. Apart from capacity shortage, the power sector in the country is having problems of high transmission and distribution losses, power pilferage and concessional tariff for certain sectors. Several power generation projects are coming up in private sector. Many private Discoms are strengthening power distribution network leading to higher demand for cables. Govt. impetus towards renewable energy projects is opening several opportunities. All these measures will give a boost to power sector in the country which will provide good opportunities for business growth in the power cable segment. The telecommunication cable sector continues to witness tough times due to over capacity besides slow down in decision making at lead telecom operator BSNL due to certain contract award anomalies in the past. The capacity utilization rates across companies are at low and uneconomical levels. The surplus capacity relating to demand, has led to lower realizations, making the business operations for Jelly Filled Telecom Cable (JFTC) un- remunerative. Therefore the Company has decided to exit this business. There is likely to be good demand for Fiber optic cables coming up at BSNL. With the proposed introduction of 3G services by the Telecom operators, there is expected to be good demand for Fiber optic cables in private sector also. There is severe competition in this sector, which has taken its toll on revenues and profits of all major fiber optic cable manufacturing companies. Threats: Since the Company largely depends on projects and tenders and any slow-down in the same mainly in core sector, could effect companys growth. There is significant excess capacity in the industry both in power cables and in telecom cables, therefore prices are expected to remain under pressure. Similarly in its Telecom Division major orders come from internet service providers and its procurement may effect due to technological advancement in wireless technology. The volatility in the International Metal prices in optical fiber prices (post earth quake in Japan) and in polymer raw material prices may affect business performance. Outlook: The demand for electrical cable is likely to be emerging stronger as economy is already showing signs of good growth. The Government is continuing with plans to create significant additional power capacity, giving major boost to power generation & distribution sector. The distribution of power is getting better streamlined for improving its efficiency. Similarly further investment by large industrial houses in various infrastructure and mining projects gaining momentum, it will also drive the demand of electrical cables significantly. The demand for Fiber Optic cables is also likely to show improvement due to Govt. deciding to create a country wide parallel telecom infrastructure for Defense services. Higher penetration of broadband services and also introduction of 3G services, all resulting in increased demand for fiber optic cables. Internal Control Systems and their Adequacy: The Management shall ensure compliances of Indian GAAP and adherence thereto in its entirety. Uniflexs internal controls is strengthened to ensure that all assets are safeguarded and protected against loss from un-authorized use and that transactions are authorized, recorded and reported correctly. The internal control systems is supplemented by an extensive program of internal audits, reviews by management and documented policies, guidelines and procedures. The management has continued the engagement of M/s. KPMG, a Chartered Accountants Firm, as Internal Auditors of the Company. Internal audit findings and recommendations are reviewed by the top Management at the level by the Audit Committee of the Board and corrective measures if necessary, are taken by the Management in due course. Financial Performance with respect to Operational Performance: The Financial Statements have been prepared in compliance with the requirements of the Companies Act and the Accounting Standards issued by the Institute of Chartered Accountants of India. Sales (net of excise] for the financial year 2010-11 stood at Rs. 31127.28 Lacs substantially higher as against Rs. 18061.85 Lacs in the previous financial year 20092010. However, Company has shown loss before depreciation to the tune of Rs. 2194.07 Lacs due to margins under pressure as against loss of Rs. 2132.99 Lacs in the previous year. Reserves and Surplus: There is no change in the figures of Reserve and Surplus for the year under review which stand at Rs. 4409.70 lacs for the year ended 31st March, 2011. Fixed Assets: During the year, there is an addition of Rs. 458.85 lacs in fixed assets. Inventories: Inventories stood at Rs. 5241.05 Lacs as at 31-03-2011 as against Rs.5191.88 Lacs as at the end of previous year. The inventories do not include any obsolete and unserviceable items. Sundry Debtors: Sundry debtors increased to Rs. 5903.14 Lacs as at 3103-2011 as against Rs.4820.94 Lacs as at 31-03-2010 due to increase in sales turnover during current year. These debtors are considered good and realizable. Cash and Bank Balances: Cash Bank and Bank Deposits with scheduled banks stood at Rs. 1082.88 Lacs as on 31-03-2011. Loans and Advances: Loans and Advances as on 31-03-2011 stood at Rs. 2366.99 Lacs representing advances paid for raw materials, stores and services, loans and advances to employees, advance taxes, unutilized modvat, export entitlement benefit and Sundry Deposit etc. Current Liabilities: Current liabilities amounting to Rs. 5819.33 Lacs includes creditors and advance received from customers and other liabilities. Provisions: During the year the Company made provisions for excise duty and others to the tune of Rs. 282.60 Lacs. Human Resources: Uniflex has a good mix of experience and young among its employees. Apar Industries Ltd. (AIL), the Holding Company, has deputed some of its Officials at Uniflex. Medical check ups are done for all the Staff & Workers at factory on regular basis and facilities are also provided for check up of their family members.

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