MANAGEMENT DISCUSSION AND ANALYSIS REPORTIndustry Structure and Developments: The present scenario in the Textile industryis quite sluggish on account of spiralling cotton prices and reduced movement of finishedproducts (Yarn & Fabrics) with mismatch of selling prices to that of cost price. Thecost of raw materials, human resources and power have increased during the year. Due topower cut & frequent power interruption, the utilization has decreased which resultedin increase of cost of production.
Opportunities and Threats: World-wide, there is an increasing orientation towardsclothing made of organic and natural fibers. There is a continuous increase in demand forcotton garments in both domestic and export market. Due to volatility of cotton prices,profitability may not be sustained.
Product-wise performance: The Company's main product range continues to be CottonYarn and Knitted fabrics, catering to the needs of Hosiery/Knitted Garment Industries. Thecompany continues to pursue a policy of constant up-gradation of quality of yarn andfabric produced.
Outlook: Due to competitiveness at all levels, it is necessary to implementconsolidation strategies such as cost reduction measures, improving productivity andexploring new markets, maintaining high quality and these measures are under way.
Risks and Concerns: The key raw material for our industry is cotton and major areaunder cotton cultivation is rain-fed and hence it is dependent on vagaries of monsoon.Adequate availability of raw cotton is crucial for the company. Any disruption in thesupply and / or violent changes in the cost structure would affect the profitability ofthe company. Power also plays a major role in cost structure.
Internal Control system and their adequacy: The Company has proper and adequatesystems of internal controls, to ensure that all assets are safeguarded and protectedagainst loss from unauthorized use or disposition. These systems also ensure that alltransactions are authorized, recorded and reported correctly. A strong system of internalaudit and effective and comprehensive reviews by the Audit Committee of the Board havestrengthened the internal controls within the organization.
The Company's Financial Performance & Analysis: The Company earned a post taxprofit of Rs.447.15 Lacs (Previous year Rs.225.74 Lacs) after providing for current IncomeTax and deferred Tax. The Financial performances of the company are explained in detail inthe Directors report to Shareholders.
Human Resources/Industrial relations: The efforts of the staff and management areon imparting continuous training to improve overall working practices; Industrialrelations are cordial and satisfactory.
| BY ORDER OF THE BOARD |
| Place: Coimbatore | SHYAMLAL AGARWALA |
| Date: 28th May, 2011 | Chairman |