MANAGEMENT DISCUSSION & ANALYSIS A. INDUSTRY STRUCTURE & DEVELOPMENT: The growth rate of Indian economy has been satisfactory during the year. The Indian automotive industry has shown a mixed trend under different segment of vehicles during the year. B. OPPORTUNITIES, THREATS, RISKS & CONCERNS: 1. Opportunities: The next year forecast of the Indian Automotive Sector is projected to be better than brvious year. The Company has been able to retain market share from automobile sector customers which has resulted into adequate order position for the company. The Company has been able to develop new customers during the year under review and hope to increase volume from new customers in the coming years. The export business has also helped the company to some extent. The company has continued its focus on the development of new business in aero space sector, with the help of adding vacuum melting furnace which may help increase volume of business of the company. 2. Threats: The entries of many new suppliers in the domestic market in automobile industries have affected the company to some extent. However, The Company has started to develop business with non-auto customers, which will balance the company's position in the market of investment casting. 3. Risks & Concerns: The brvailing uncertain volatile trend of increase/decrease in the cost of inputs, etc. has effect on the operational manufacturing cost of the Company. Also, the frequent and uncontrolled increase in fuel cost has also affected automotive sector largely. All these factors have put strain on the business and margins of the company. C. OUTLOOK: Overall market seems improved as compared to last couple of years for IPCL. We also see good business potential from the Export market in coming years. The Company has made need based Capital Investment during the year. D. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has in place adequate systems of internal control and documented procedures covering all financial and operating functions. These have been designed to provide reasonable assurance with regard to maintaining proper accounting controls, monitoring economy and efficiency of operations, protecting assets from unauthorised use or losses, and ensuring reliability of financial and operational information. An Audit Committee of the Board of Directors comprising of Independent Directors and Whole Time Directors, which is functional from 2005-06 Financial Year, has reviewed regularly the audit plans, significant audit findings, adequacy of internal controls as well as compliance with Accounting Standards. E. FINANCIAL PERFORMANCE: Turnover (sales and other income from operations), net of Excise Duties, increased by over 10 % from Rs. 7487.45 Lacs to Rs. 8275.25 Lacs. Expenditure increased by over 8 % from Rs. 7419.14 Lacs to Rs. 8063.95 Lacs mainly on account of the increase in the turnover and level of production. During the year finance costs and debrciation cost increased from Rs. 843.17 Lacs to Rs. 871.57 Lacs, Profit before debrciation, finance costs and tax increased from Rs. 1152.51 Lacs to Rs. 1317.71 Lacs. The Company's Profit before Tax (PBT) increased from Rs. 309.34 Lacs to Rs. 446.15 Lacs. F. HUMAN RESOURCES: Industrial relations continued to be cordial during the year. G. CAUTIONARY STATEMENT: Statement in the Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied important factors that could make a difference to the Company's operations include, among others, economic conditions affecting demand/supply and price conditions in the domestic and overseas markets, change in the Government regulations, tax laws and other statues and incidental factors. |