MANAGEMENT DISCUSSION & ANALYSIS According to the World Bank report titled World Economic prospects June 2017, the global economy is estimated to have grown by 2.4% in 2016. This economic stagnation was brought about by two key drivers – a conscious shift of the Chinese economy from manufacturing to consumption and service sectors, and tightening of the US monetary policy and consequent slowdown in global trade. All major economies started bottoming out in 2016 owing to a slow rise in commodity prices and strengthening global trade. The global trade growth has firmed and is on a path to outpace GDP growth in next two years. The world economy is anticipated to have steady growth over the coming years. 2.4% GLOBAL ECONOMY OVERVIEW OUTLOOK The World Bank, in its June report on Global economic prospectus, indicated that the world economy could grow at 2.7% in 2017 and 2.9% in 2018. This forecast is based on improvement in global trade and investments which bottomed out in 2016 along with a gradual rise in commodity prices. Activity in advanced economies is expected to gain momentum in 2017, supported by an upturn in the United States, as previously anticipated. In the Euro Area and Japan, growth forecasts have been upgraded, reflecting strengthening domestic demand and exports. The forecast is subject to moderate downside risks that include escalating trade restrictions because of protectionist policies by countries such as US and UK and a slowdown in Chinese economy. INDIAN ECONOMIC OVERVIEW Indian economy grew at a pace of 7.1% in 2016-17 registering lower growth compared to 2015-16. The growth slowed down from 7.6% in previous year 2015- 16 due to a below-average monsoon coupled with a liquidity crunch curbing rural demand, a key growth engine of the Indian economy. The Union budget 2017-18 is strictly in line with the fiscal consolidation path of the government and the reforms by the government are aimed at making India a more organized economy. The Government’s conscious focus upon the improvement of Ease of Doing Business with reforms such as the Implementation of GST and the Make In India Campaign created a launch-pad for the Indian economy to scale greater heights. OUTLOOK The Government is aimed at fiscal consolidation along with continuous reforms that will reduce impediments to sustainable growth. The political stability of the country along with its macroeconomic prospectus is setting India on a robust growth path for the future. The World Bank has estimated the growth for India to be 7.5% in 2018 and 7.7% in 2019. 2017 is expected to have an above normal monsoon that will activate the growth engines of the Indian economy such as rural consumption thus setting stage for robust growth. INDIA’S INFRASTRUCTURE OVERVIEW The Indian Infrastructure sector is one of the key drivers of the Indian economy. The sector is largely responsible for propelling India’s overall development and enjoys intense focus from the Government policy making that would ensure time-bound creation of world class infrastructure in the country The Road Transport & Highways Ministry has invested approximately Rs.32,000 crore (US$ 47.7 billion), while the Shipping Ministry has invested around Rs 80,000 crore (US$ 12.0 billion) in the past two and a half years towards building world class highways and shipping infrastructure in the country. The Government of India is expected to invest sizably in the infrastructure sector, mainly highways, renewable energy and urban transport, prior to the general elections in 2019. GOVERNMENT INITIATIVES In the Union Budget 2017-18, the Government of India has taken the following measures for the development of infrastructure. • Increased total infrastructure outlay and defense capital expenditure by 10 per cent and 20.6 per The worldbank retained 7.6% growth rate for India in 2016-17, Which it said could accelerate to 7.7% in 2017-18 and 7.8% in 2018-19. GROWTH RATE +7.6 % 37 Pennar Industries 36 Annual Report 2017 Pennar Industries Pennar Industries
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According to the World Bank report titled World Economic prospects June 2017, the global economy is estimated to have grown by 2.4% in 2016. This economic stagnation was brought about by two key drivers – a conscious shift of the Chinese economy from manufacturing to consumption and service sectors, and tightening of the US monetary policy and consequent slowdown in global trade.
All major economies started bottoming out in 2016 owing to a slow rise in commodity prices and strengthening global trade. The global trade growth has firmed and is on a path to outpace GDP growth in next two years. The world economy is anticipated to have steady growth over the coming years.
2.4%GLOBAL ECONOMY OVERVIEW
OUTLOOK The World Bank, in its June report on Global economic
prospectus, indicated that the world economy could
grow at 2.7% in 2017 and 2.9% in 2018. This forecast is
based on improvement in global trade and investments
which bottomed out in 2016 along with a gradual rise
in commodity prices. Activity in advanced economies is
expected to gain momentum in 2017, supported by an
upturn in the United States, as previously anticipated.
In the Euro Area and Japan, growth forecasts have been
The revenue generated by the Railways is expected to
grow at 10 per cent in the fiscal year 2017-18. The Union
Budget 2017-18 has estimated that the overall earnings
will rise to Rs 189,498.37 crore (US$ 28.42 billion) in 2017-
18, compared to Rs 172,305 crore (US$ 25.84 billion) in
the fiscal year 2016-17.
GOVERNMENT INITIATIVESThe Government allocated Rs 55,000 crore (US$ 8.25
billion) towards capital and development expenditure
of Railways. A fund named Rashtriya Rail Sanraksha
Kosh worth Rs 100,000 crore (US$ 15 billion) will be
created, which will be directed towards passenger
safety All the coaches of the Indian Railways will be
fitted with bio toilets by the year 2019 Railway lines of
3,500 kms will be commissioned in 2017-18.
OUTLOOKIndian railways is growing at a very good pace and is
expected to grow at a 10 % growth rate in 2017-18. Indian
railways is expected to be the third largest railway
market in the coming five years. The government’s
initiatives towards proper utilization of railway assets
for revenue generation along with increased capital
expenditure into railway projects will push growth in
railway sector moving forward. Improvement in FDI and
development of cold storage chains along the railway
networks will substantially increase the revenue
generation in future. development of cold storage
chains along the railway networks will substantially
increase the revenue generation in future.
Proposed to develop Rail side logistics parks and warehousing in PPP mode and 10 goods sheds will be developed by TRANSLOC, the Transport Logistics Company of India, in 2016-17.
Encourage development of cold storage facilities on vacant land near freight terminals. Local farmers and shermen would be given preferential usage of the facility.
Capital expenditure proposed1.21 LAC CR
BUDGET 2016-17 PROPOSALS
RISK MANAGEMENTRisk is integral to every business transaction. hence it is critical to balance risk and returns in order to maximise long-term
sustainability. the company possesses a risk management team which periodically evaluates the risks associated with the
company and takes corrective measures.
Risk Mitigation
The Company provides more than 1,500 products across diverse industry
verticals and a number of them are growing strongly. It is also continuously
evaluating new products and high growth sectors to further diversify its
user base.
Risk Mitigation
The Company’s products have high entry barriers. Clients need to test
them for a long period to approve them. To change vendors, clients have to
replicate the test processes with others. Besides, the Company is quick to
adopt new processes and provides clients with suggestions for procedural
improvements
Risk Mitigation
The Company is ISO 9001:2008-compliant. It invested in state-of-the-art
quality control laboratory to ensure high product quality. Quality is critical
as some of the products have stringent applications. The Company also
invested in modern technologies at its manufacturing locations. These
technologies include laser cutting, plasma cutting, transfer presses and
CNC machines.
Risk Mitigation
Over the years, the Company has produced high precision and value-
added products. The Company’s high precision fabricated products are
evolved as per dynamic customer requirements. The Company moved from
commodity to value-added products, enabling it to derive better margins.
Risk Mitigation
The Company enjoyed a bare minimum debt-equity ratio for long-term