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.