MANAGEMENT DISCUSSION AND ANALYSIS
The Turnover for the current year was Rs.103.68 Lacs as against Rs.263.55 Lacs in theprevious year. The company has earned a net Profit of Rs.0.40 Lac as against net Profit ofRs.2.49 Lacs in the previous year. In the absence of working capital funds, the ownmanufacturing activities are under suspension. However, the company is continuing itsproduction on job work basis.
REFERENCE TO BIFR:
BIFR declared the company as Sick Industrial Company under provisions of SickIndustrial Companies (Special Provisions) Act, 1985 and as per the direction of BIFR theCompany has prepared a DRS and the same has been submitted to Operating Agency and BIFR.
a) Review of Operations
The Company's performance during the year has was satisfactory looking into theConstraint of non availability of working capital finance.
The Company's Sales including job charges receipts during the year under review wasRs.103.68 Lacs as against Rs.263.55 Lacs in the previous year. The production includingthe job work has decreased. However, the trading activities have shown the goodperformance.
b) Industry structure and Developments
The Company falls in the Textile Sector, which is one of the largest Industrial Sectorin India employing the largest number of employees in the manufacturing sector in India.It is also growing at a faster pace with the growth of population and increase in percapita income. This Sector is dominated by the unorganized sector so the growth potentialsare very high.
c) Opportunities and Threats
In USA and EEC Markets there is a rapid consolidation of Manufacturing and retailingactivity. Due to which there will be few buyers with muscle power to dictate price anddeliver term and therefore supplying Countries and units have to work at optimum costs andprovide excellent service. There is also Threat from China and other Countries who areproducing large quantities with low overheads, low labor cost and with various concessionsavailable to them.
However the production at competitive cost and with good quality will certainly have anedge in Global Market. The concessions offered to the Textile Industry by our Governmentby cutting custom and excise duties on Textile Machineries and favorable EXIM Policy willhelp to face challenge in the Global Market.
d) Future Outlook
The long-term outlook for the Yarn Industry is encouraging considering high GDP growthof our Country. However, due to shortage of working capital funds the Company could notresume its own production and therefore, presently doing Job work only. Company does nothave much scope to improve its performance and reap the benefits of improvement in theYarn Industry. However Company will be certainly benefited by increasing it job workproduction and by realizing better margin for Job work.
e) Risk and Concerns
Presently the Company is doing job work only, therefore, it does not have much risk andconcern for the fluctuation in the Yarn price, which now fluctuates with the change inInternational prices. There is no risk on the Marketing front. However Company may have toface risk in case it is unable to renew the Job work order or pre-mature-termination ofthe same.