MANAGEMENT DISCUSSION AND ANALYSIS
The financial statements have been prepared in compliance with the requirements of theCompanies Act, 1956, guidelines issued by the Securities and Exchange Board of India(SEBI) and other statutory requirements. Our Management accepts responsibility for theintegrity and objectivity of these financial statements, as well as for various estimatesand judgments used therein. The estimates and judgments relating to the financialstatements have been made on a prudent and reasonable basis, so that the financialstatements reflect in a true and fair manner the form and substance of transactions andreasonably present our state of affairs, profits and cash flows for the year.
INDUSTRY STRUCTURE AND DEVELOPMENT:
India is the 19th-largest exporter and the 10th-largest importer in the world. Theeconomy slowed to around 5.0% for the 2012-13 fiscal year compared with 6.2% in theprevious fiscal. India's GDP grew by 9.3% in 2010-11; thus, the growth rate has nearlyhalved in just three years. GDP growth rose marginally to 4.8% during the quarter throughMarch 2013, from about 4.7% in the previous quarter. The government has forecast a growthrate of 6.1%-6.7% for the year 2013-14, whilst the RBI expects the same to be at 5.7%.
India is one of the leading exporters of human hair. According to the United Nationstrade statistics, China and India exported more than USD 180 Million worth of human hairlast year. That is precisely because Asian hair grows the fastest and has the greatestelasticity. Moreover, Indian hair is considered to be fine, lustrous and free fromchemical treatments, making it suitable for manufacturing wigs.
The year under review, has been a very successful year for the Company. The hardefforts of the management has resulted in a topline of Rs.796.54 Lacs against a mereRs14.95 Lacs in the previous year. The operations resulted in bottomline of Rs. 77.1 lakhsas against loss of Rs - 0.40 previous year.
All though the Company has done well in terms of sales and profits, the managementbelieves that this is just the beginning. The management will strive hard in the ensuingFinancial year to attain greater heights both in terms of sales and profitability.
OPPORTUNITIES & THREATS
Strength: Huge demand of Hair wigs produced in India in foreign countries,providing high export potential.
Weakness: To get the Hairs for the manufacturing of wigs whenever required is notpossible. So it needs to be purchased in bulk quantity whenever it is available, requiringheavy capital investments in stocks.
Opportunities: Asian hair grows the fastest and has the greatest elasticity, makingit the most preferred wigs around the world. There is huge demand for human hair andArticles of human hair in China, Brazil, Spain, Korea, U.K, Hong Kong, Indonesia, Italy,Austria, Germany etc.
Threats: Earlier the industry experienced serious threat from synthetic hair.However, the synthetic hair had not found favor with the consumers, as it is said to havecaused allergic problems and cancer. Other perceived threats are Un Organized Sector,largely dependent on overseas market and normal market competition.
INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The philosophy we have with regard to internal control systems and their adequacy hasbeen formulation of effective systems and their strict implementation to ensure thatassets and interests of the Company are safeguarded; checks and balances are in place todetermine the accuracy and reliability of accounting data. The Company has a well definedorganization structure with clear functional authority, limits for approval of alltransactions. The Company has a strong reporting system, which evaluates and forewarns themanagement on issues related to compliance. Company updates its internal control systemfrom time to time, enabling it to monitor employee adherence to internal procedures andexternal regulatory guidelines.
Human wealth is the ultimate wealth in for any industry. The Company recognizes thisfact and understands that employees are one of the most important sources for sustainedgrowth of any business. Quality personnel delivering their optimum potential for theorganization is the key differentiator. The Company maintained good relations with itsemployees and there was no unrest in the Company at any point of time.
Industrial relations in the organization continued to be cordial and progressive.
HEALTH AND SAFETY:
The Company places considerable emphasis on health and safety throughout its operationand displays commitment to ensure the high standards being maintained in compliance withapplicable laws and regulations.
FORWARD LOOKING / CAUTIONARY STATEMENT:
Certain statements in the Management Discussion & Analysis Report detailing theCompany's objectives, projections, estimates, expectations or predictions may be forwardlooking statements within the meaning of applicable securities laws and regulations. Thesestatements being based on certain assumptions and expectation of future event, actualresults could differ materially from those expressed or implied. Important factors thatcould make a difference to the Company's operations include economic conditions affectingdomestic demand supply conditions, finished goods prices, changes in GovernmentRegulations and Tax regime etc. The Company assumes no responsibility to publically amend,modify or revise any forward looking statements on the basis of subsequent developments,information or events.