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*AAKASHAYA PATRA SEVEN STAR SMART EDUCATION SERIES PART – 44 :* 11.05.2020
Management Discussion Analysis
An Important Part of Company's Annual Report!


Management Discussion and Analysis (MDA) is an important section of the annual report of a company.It is mandatory for all companies registered in India to have this section in their annual report.This report is basically the opinion of the management of the company about the company's current financial and business health and its growth potential.This section also covers information about the overall economic activity in the country and across the globe, macro-economic performance of the industry in which the company operates, company's vision and strategy, threats and opportunities that the company faces and some key financial data.

The word 'Management' here refers to the complete structure of organization including the top, middle and lower management levels.From investors' point of view, this section of an annual report is very important as it can enable the investors' to evaluate a company and make informed decisions.
Common Contents of Management Discussion and Analysis Report :

The important points discussed in this report normally contains the following -

1. The competitive and regulatory structure of the industry and developments affecting the industry.
2. A SWOT analysis of the industry and the company, focusing on the business opportunities and threats.
3. Highlights of the financial performance of the year gone by including commentary on some key elements of the financials and performance break-up of the financials either segment-wise or productwise.
4. Future outlook for the industry and the company in general.
5. Discussion on key risks and concerns faced by the business and steps taken to mitigate them.
6. Details about the internal control systems of the company and their adequacy.
7. Specific discussion on the operational performance parameters.
8. Company specific developments with respect to entry or exit of key managerial personnel.
9. Specific disclosures in case of related party transactions that may need to be highlighted to ensure there is no conflict of interest and absolute transparency in the conduct of the business.

It is important to go through at least 3 or 5 years of Management Discussion and Analysis (MDA) of a company to understand trends of the companyin different economic situations.Careful reading of this section of an annual report will inform the reader about the extent of transparency in disclosures, idea about extent of corporate governances and a complete insight about the business and its operating environment. Reading the Annual reports and specially the MDA section of the competitors in the same industry will also give an idea about the standards of disclosure followed by the company and its operating environment. Hence it can be said that MDA acts as a starting point for performing fundamental analysis.

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