Some salient points from the annual report for FY 17
The Company makes payment in foreign currency for import of machinery and raw materials. It has also investment exposure in overseas Subsidiary and Joint Venture. The change in the exchange rate between the USD and INR may have negative impact on the Company’s result and financial condition. The Company many times don’t hedge the currency exposure and takes advantage of its natural hedge by exports of moulded articles and return on investment from Subsidiary / Joint Venture Company (JV) to some extent. The Company does not deal in derivative transaction(s) as a matter of policy.
RM Price fluctuation risk
The Company is exposed to the risk of price fluctuation on raw materials as well as finished goods. The Company apart from passing the cost to end user also manages these risks in inventory management etc. The Company developed new products to meet the growing demand and customer needs. Although the competition in the market may be increasing, your Company is able to control the same by strategic planning and improved manufacturing process.
Indian moulded furniture market was in general benefited due to lower polymer prices during most part of the year. The Company had to come to terms with increase in price of raw material compared to previous year. This has impacted the operating margins however your Company maintained a reasonable performance from its operations due to introduction of premium range.
Any major upward movement in the Crude Prices could change the inflationary scenario impacting on input prices and the margin of the Company.
Further the rampant changes in regulatory laws, may pose some initial hiccups to the industry till clarity from Government authorities is received on laws implemented. Weak Global outlook can make it difficult for the country to continue on a growth plan.
The Company had launched new range of plastic articles with better consumer taste and expected to fetch higher demand of these products. The Company is positive on the demand growth of plastic articles in long term with higher capita income of Indian middle class. The Company is also focusing to further penetrate in new territories of Indian market. The Company has set up a Subsidiary Company at Guatemala, Central America which will take control of supply of products in the region however this may impact the quantum of goods exported from India.
GST is expected to boost the growth of your Company’s business at pan India level. The Company expects to achieve about 10-15 percent annual growth in turnover in medium term.
The interest cost has increased to 28.23 Lakhs in comparison to 14.61 Lakhs in previous year. In consideration of the expansions completed by the Company, the control on fund management and consequential interest cost is appreciable.