(Forming part of the Directors' Report for the financial year ended 31st March, 2011)
Industrial Structure and Developments : Indian Textile Industry contributes about14 percent to the Industrial Production and constitutes 4% of the GDP and 17% of the totalexport earnings. India has the potential to increase its Textile and Apparel share inWorld Trade from current level of 4.5% to 8% by 2020. This is mainly because of higherretail penetration in the domestic market, easy availability of cotton, and healthy exportdemand of yarn.
Opportunities and Threats : Cotton, the main raw material, is expecting a bumpercrop as prices were very high during the previous year. It is expected that the priceswill come down in spite of threat of higher export. Also the recently announced revisedTUF Scheme will encourage investments and modernization to this sector. Appreciation ofIndian rupee, change in government policy and availability of skilled labour are the majorthreats to the Industry.
Product-wise Performance : The production as well as the sales of yarn & clothhas decreased mainly due to outbreak of fire in the spinning section resulting in partialloss of production from September, 2010 to February, 2011 and discarding of 28 Air JetLooms, which will be replaced with 21 TOYOTA Air Jet Looms in the current year. Theaverage realization of yarn & cloth has improved significantly and also commensuratewith the increased cotton price. The gist of performance of the textile products of theCompany, during the financial year 2010-2011 is as under :
| || |
| ||Production (Lac Mtrs.) ||Sales (Lac Mtrs.) ||Average Realisation (Rs. Per Mtr.) ||Production (Lac Kgs.) ||Sales (Lac Kgs.) ||Average Realisation (Rs. Per Kg.) |
|2010-11 ||97.24 ||103.30 ||61.23 ||38.44 ||33.88 ||191.44 |
|2009-10 ||134.47 ||134.50 ||39.47 ||42.53 ||42.76 ||133.68 |
|Change ||(-) 27.69% ||(-) 23.20% ||(+) 55.13% ||(-) 9.62% ||(-) 20.77% ||(+) 43.21% |
Outlook: The outlook for the Indian textile industry is stable in 2011, despiteappreciation of the value of the rupee against the U.S. dollar and a consequent dip ingarment exports. Robust domestic demand for fabric and apparel, driven by India'sincreasing purchasing power, organized retail penetration and demographics, will keepdemand for textile products growing.
The Outlook of the Division is expected to be positive due to increasing value additionand modernization resulting in better quality and lower cost.
Risk and Concerns : The increase in the cotton prices, the appreciation of rupee,adverse changes in regulations (impacting raw materials or end-product prices) are themajor areas of concern for the Textile Industry.
Discussion on the Financial Performance with respect to the Operational Performance : Thedivision has shown improvement in performance by making a net profit of Rs. 53 lacs asagainst net loss of Rs. 56 lacs in the previous year. This is due to higher outsourcingdemand of yarn, cloth and cost control measures initiated by the Company.
Industry Structure & Developments : The financial year 2010-11 has brought inmixed fortunes for the Tea Industry. In terms of crop production and export, it was lowerthan the corresponding previous year with only marginal improvement in the average salesrealization.
Opportunities & Threats : The continuous promotional efforts and bettermarketing and brand building initiatives taken jointly by the Government/Tea Boardincluding hunt for newer export markets, providing incentives in the form of subsidiesetc, are likely to benefit the Industry in the long term.
The higher increase in the cost of production is making Indian Teas uncompetitive inthe International market. The increase in the production of green tea leafby the small teagrowers and mushrooming of bought-leaf factories is posing a serious threat to theorganized Tea sector.
Product-wise Performance : During the year under review, the production of GreenTea leaves of Ananda Tea Estate was 68.68 lac kgs as compared to previous year of 69.75lac kgs. The Company has improved the overall Tea production with the exploitation ofoutsourced green tea leaves, which stand higher during the year at 24.60 lac kgs incomparison to 22.16 lac kgs during the previous year. During the current year also, strongdemand for teas persisted and the average realization of the tea sold by the Company wasabout 3% higher as compared to the previous year. The gist of performance of the divisionduring the financial year 2010-2011 is as under :
| || |
| ||Production (Lac Kgs.) ||Sales (Lac Kgs.) ||Average Realisation (Rs. Per Kg.) |
|2010-11 ||21.20 ||21.28 ||153.30 |
|2009-10 ||20.95 ||20.97 ||148.84 |
|Change(%) ||(+) 1.19% ||(+) 1.48% ||(+) 3.00% |
Outlook : The crop of the major producing countries viz. Kenya, Sri Lanka and Indiais ranging lower as compared to previous year which should have positive effect on theprice realization of tea.
Risks & Concerns : Besides climatic conditions, global production, the strategyof bought leaf factories and import of cheaper tea for re-export may also affect the fateof the Tea Industry.
Discussion on Financial Performance with respect to Operational Performance : TheCompany's steady progress in making quality tea and better product mix has resulted intoachieving satisfactory profitability. Considering the overall scenario of the Industry forquality tea, the performance of the Division appears to be satisfactory.
Internal Control Systems and their Adequacy: The Company has laid down guidelinesprocedures and policies for better management control, which are periodically tested andsupplemented by an extensive internal audit program. Significant findings are placedbefore the Audit Committee of the Board and the corrective measures are recommended forimplementation. In the opinion of the management, the existing internal checks &controls are adequate.
Information regarding Human Resources/Industrial Relations : The relationships withthe employees at both the divisions were cordial throughout the year. Tea and TextileIndustry are labour intensive and hence the human factor in this relationship isimportant. The Company did not suffer from any major disruption as your Company hasfavorable working environment that motivates performance; customer focus and innovationand adheres to the highest degree of quality and integrity among employees. The totalnumbers of manpower employed by the Textile and Tea Division as on 31st March, 2011 were764 & 1389, respectively.
Cautionary Statement: The forward-looking statements and the views expressed in theManagement Discussion and Analysis Report are based on certain assumptions. The actualresults may differ materially from those stated therein. The Company would not be heldliable, in any manner, if the future turns out to be quite different, even materially.
| ||For and on behalf of the Board |
|Kolkata ||ADARSH KANORIA |
|Dated, the 7th day ofMay, 2011 ||Chairman |