Industry structure and developments
Indian textile industry is one of the major contributor to GDP, it is independent andself reliant. Large number of human resource is employed directly and indirectly. Afterfacing the heat of recession and economic slowdown in most of countries for last couple ofyears, industry has recovered and started generating adequate contribution to the economy.Industry is diversified with large variety of products. The rise in the demand of textilefor last six months has boosted production and industry is expected to grow decently incoming years.
Opportunities and Threats
The Company surrendered 100% export oriented unit capacity in previous years. TheCompany is now planning to enhance its productivity and supplies to existing customers andtarget new customers. The Company can tie-up with footwear manufacturers for freesocks offer with purchase of shoes. The Company is planning to enter into contractwith manufacturers of school shoes, formal wear and other footwear dealers. The increasein disposable income and purchasing power of Indian customers opens opportunities' formarket development.
The Company faces competition at domestic and international level. The outsourcingenhanced the competition for quality and price of socks. Due to economies of scale, largeplayers in the market have edge over the small manufacturers. This is decreasing number ofsmall manufacturers in the market.
The Company is planning to increase the installed capacity for socks manufacturing andupgradation of plant & machinery and for that purpose, has procured new machines. TheCompany's efforts in trading of textile intermediary products like petrochemical,polyurethane, and other plastic products which enhances the scope of business to otherindustries like automobile ,electronics are being accepted through which the Company canscale up its sales and diversify its risk, which act as a cushion in case of decline inone industry and can dilute adverse effect.
Risks and concerns
The textile industry export has drastically fallen by 33% in past Eight months. Indiantextiles export consists of 60 % of Europe and U.S.. The two major global consumer's i.e.U.S and Europe has taken initiatives to reduce the import and enhance export. Thisinitiative can threat the domestic export oriented units The dumping of huge textileproducts by Chinese and Thailand has reduced the demand for domestic products. The lowprice imported textile products resulting decline of the profits of domestic manufacturerand retailers.
Internal control systems and their adequacy
The internal control systems are aimed at promoting operational efficiencies. Since theoperations have continued at same scale with plans to diversify, the new guidelines forcontrol will be implemented according to the Industry specific requirement at appropriatetime. The internal audit is conducted as per the requirement of the Company and the reportis submitted to the Audit committee and to the Management. It reviews the policies andprocedures followed. The Audit committee with three directors be meet regularly toinvestigate any matter relating to the internal control system and reviews the InternalAudit. The committee also reviews the quarterly and half yearly financials before they aresubmitted to the Board of Directors.
Financial Condition Share Capital
During the year under review Company has not raised any fresh capital during the yearunless review. The paid up capital of the Company is Rs. 6,90,22,725.
The outstanding Secured Term loan of Rs 5,49,478 as on 31st March 2010 is a vehicleloan being serviced on due dates. The Company has not borrowed any amounts for workingcapital also from Banks and financial institutions during the year
Fixed Assets (gross block) stands at Rs. 5,66,14,847 often providing for depreciationof Rs. 57,65,184 for the financial year. The company proposes to continue the operationswith existing assets along with the new assets being purchased during the current yeartill the expansion plans are completed.
The Company has reviewed the entire work force and most of redundant positions havebeen abolished to cut down on cost. There has been no substantial increase in human costfor the year.