Vishal Malleables Ltd Management Discussions

VISHAL MALLEABLES LIMITED ANNUAL REPORT 2007-2008 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL RESULTS The financial results of the Company for the year ended March 31,2008 are as follows (Rupees in Lakhs) PARTICULARS For the F.Y. 2007-08 F.Y 2006-07 Gross Sales and Other Income 7343.41 6871.89 Profit before Interest, Depreciation & Taxation 494.64 404.39 Interest and financial charges 247.03 185.75 Profit before depreciation 247.61 218.64 Depreciation 138.11 116.14 Provision for Income Tax 7.00 10.05 Deferred Income Tax 8.90 0.00 Profit after taxation, available for 93.72 92.45 appropriation Dividend on equity shares 0.00 23.40 Dividend Distribution Tax 0.00 3.28 Balance Carries over to P&L / General Reserve 93.72 65.77 1. OPERATIONS DURING THE YEAR: The year has been very challenging in all respect because input cost have been rising consistently and have reached unprecedented levels. Besides, supplies has been very erratic and irregular. We are giving a table which will give the statistical view of the trend in input cost. Movement of Price and Raw materials during the period Major Metallic Raw Materials (In Rupees) Per Sept.07 Nov.07 Jan. 08 March 08 Foundry Grade Pig Iron Tonne 18500 21000 21500 26000 M S Scrap (Good Quality) -do- 18400 20000 20500 25000 Low Mn Steel Scrap -do- 19400 20500 21200 26000 Si Steel Stamping Scrap -do- 18500 20500 21000 25000 Low Ash Met. Coke -do- 12500 18000 18500 22000 Ferro Silicon (70-75% Si) Kg 47 47 53 65 Fe-Si-Mg (5-7% Mg) Kg 64 66 72 80 This trend is still continuing during the year and the forecast and planning of the raw material has been very difficult one. Due to all this effects the production and sales in terms of quantity has been less in comparison to last year. The profitability will continue to be remain under pressure as the input cost is unlikely to come down in near future. Due to the cumulative effects of all above, the working capital requirement has been enormous and even for the day to day operations the is facing liquidity crunch in arranging the funds. The company has taken number of steps to cut costs as the price of the key inputs and energy costs is gone up very rapidly. Because of the cost reduction at various levels and repositioning of the various activities the Company has been able to achieve reasonable profits during the period. Vishal Malleables Limited had planned to install a 4 TPH cokeless cupola using Natural Gas as fuel at its Ankleshwar plant. Subsequent to this the equipment was ordered and installation and commissioning of the same is under process. The Company is conceptualizing for registration of this project with the UNFCCC for availing carbon credits. The revenue from the sale of carbon credits is visualized as an important part in the cash flow of the project and would make the project financially more attractive. This would also help towards the sustainable development goals of our country and help in reducing pollution. Safety, Pollution & Environmental Control: The safety record of your Company remained satisfactory. The Company is making all out efforts to maintain the safety records and observing the norms for pollution and controlling environments as per the requirements of the Gujarat Pollution Control Board (GPCB). Conservation of Energy, Technology Absorption, Research & Development: Particulars required to be disclosed under the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to the report. INDUSTRIAL RELATIONS: Human resources are considered as the valuable assets of the organisation and is given utmost importance, as a result of which, the co-operation and understanding between the workmen and management is cordial. Your Directors wish to place on record the cooperation extended by the employees at all levels for achieving the objectives of your Company and expect that such cordial relations will be maintained in future also.