Management Discussions and Analysis
Bloom Dekor Limited is engaged in the manufacture of high pressure laminate sheets usedin the furniture industry as well as interiors. The Company was mainly exporting itsproducts till 2005-06. The growth in the local market and the continuous strengthening ofthe Rupee against the USD opened new opportunities for the company to shift focus onto thedomestic markets. The result was a steep rise in domestic sales and some reduction inExports. Domestic sales has shown a growth of 20% over the previous year 07-08. Thecompany is not only growing but has also achieved a change in the ratio of domestic toexport sales which is now at 1.7:1
The gross turnover of the company in the year 2008-09 has shown a growth of 9.64% ascompared to the previous year which also exceeded the projections. The turnover of thecompany in the year 2008-09 was Rs.3672.13 Lacs as against Rs.3349.12 Lacs in 2007-2008.
The domestic markets in India have shown tremendous up trends in demand due to boom inthe construction industry and new design concepts emerging for sophisticated interiors.This is reason enough for the increase in domestic laminate sales and strategic decisionstaken by the management have helped in improving the top line of the company both indomestic and international markets.
During the financial year under review, there had been a number of external factorsadversely affecting the performance and profitability of the Company i.e Increase in 1)raw material cost, for chemicals like Phenol, Methanol, Formaldehyde and Melamine due torising crude oil prices upto 3rd quarter. 2) Unfavourable exchange rates of US Dollar andEURO 3) Increase in both inward and outward freight costs due to high fuel prices. Inaddition to this, frequent shortage of raw materials also affected the overall productionand in turn, the anticipated top line of the Company.
Despite the downturn in the economy Bloom Dekor has returned an increase of 10% on thetop line with better margins.
INDUSTRY OVERVIEW AND DEVELOPMENTS:
Globally, the decorative laminate industry is projected to have a marginal growth.However, the domestic market is showing a very healthy double digit growth, which appearsto be sustainable for the coming decade mainly on account of boom in the real estatemarkets which has put a high demand for decorative laminate sheets catering to theinterior decoration of the innumerable residential and commercial buildings sector.
At the same time, the Chinese invasion with low prices is adding pressure on the pricerealizations. The contribution of Indian laminate industry to the world demand is stillunder utilized and offers a lot of opportunity for the growth in volume but the valuegrowth is not correspondingly high. A lot of cost control in the process will have to beensured to improve ROI.
NEW DOOR PROJECT:
OUTLOOK & OPPORTUNITIES :
The Management of Bloom Dekor Limited is pleased to announce the commencement of thedoor project located in the same campus as the laminate factory and has a capacity toproduce 63000 doors per annum on two shift basis. The market size for Engineered paneldoors projected at Rs.1250 Crs. gives very easy market access to achieve a target of Rs.20 Crs per annum which also happens to be the capacity of the plant.
As a strategic decision the management decided to add designer flush doors to theproduct profile to keep the order position healthy for the organization and you will bepleased to learn that orders have started multiplying and the plant will be in full swingby the third quarter of 2009.
Your company is poised for phenomenal growth and has also started the Managementrestructuring process and introduction of modern systems to ensure total professionalapproach to business. Bloom Dekor Limited enjoys a Brand reputation of holding the No.2position in India. The company is also planning an official tie-up overseas for enhancingthe laminate business.
Looking at the price movement of world crude oil prices, there would be noticeablevariations in prices and supply of various chemicals and raw materials. Considering thecurrent inflation index at -1.75% business will tend to be good but competitive andchallenging.
However, the company is determined and focused to gain momentum in growth and toimprove their profit margins substantially for the coming financial year.
For the doors division competition will come in from cheaper doors being marketed byChinese companies and not to forget the growth of new companies which would be wanting totap the huge market that exists for the eco-friendly engineered panel doors and designerflush doors. This will induce heavy pressure on the cost control during the manufacturingprocess.
INTERNAL CONTROLS & THEIR ADEQUACY:
a) Internal Audit & Inspection:
A comprehensive system of internal inspection and audit is in place in the company tomonitor internal control systems. The scope and coverage of the Audit is reviewed fromtime to time to make it more focused and effective. The system of both out-sourcing andin-house audit continued during the year 2008-2009.
During the year under review the employee attrition was minimal. The managementcontinues its efforts in imparting professional training to Executives and Staff membersat various levels with the view to upgrade their competence and managerial abilities. NewHR manager and a financial controller will be inducted this year to cater to the increasedbusiness projected for Bloom Dekor Limited. The Industrial relations in the companycontinued to be cordial in the year 2008-2009.
New focus is being given to improve safety for the workers and improve awareness ofwork place management through training on 5S principles.
The statements and observations made in this analysis are reflective of the collectiveopinion of the company. Wherever possible, conservative estimates have been considered.
Certain statements in this section relating to estimates, projections and expectationsmay be forward looking within the meaning of applicable laws and regulations. The actualresults could differ marginally from what the directors envisage in terms of the futureperformance and outlook. The factors that may affect the performance of the company willbe changes pertaining to government policies, tariff barriers, delays in registrations,changes in local and overseas markets and the related factors there of.