filaments india ltd Management discussions
FILAMENTS INDIA LIMITED
ANNUAL REPORT 2003-2004
MANAGEMENT DISCUSSION AND ANALYSIS
INDUSTRY STRUCTURE& DEVELOPMENT:
In spite of various initiatives taken by the industry and the Government in
the recent past, the textile industry is still reeling under losses due to
the demand-supply imbalance and mounting costs. Though the interest rates
in the economy have fallen considerably in the recent past, the benefit has
not been fully passed on by the lenders to the borrowers. Consequently,
most of the units in the industry either have closed down, or have gone
sick- The cost cutting mantra remains the single largest factor deciding
the fate of units in the industry.
The Debt Relief Package announced by the erstwhile NDA Government to revive
the ailing textile industry has been a shot in the arm, giving it a much-
needed relief. However, the scheme failed to be implemented in spirit due
to the unwillingness of various lenders, thereby defeating the purpose of
the package to a large extent. The delay in its implementation too has
taken its toll. Many textile units that expected to benefit from it were
forced to close down before they could benefit from the package-
Though the closure of some units has been unfortunate, concurrently it has
been a blessing in disguise for other units of the industry. Due to the
sudden demand-supply gap recently created by the closure, the remaining
units have been able to breathe a sign of relief. This has enabled them to
implement the much needed price correction in the products that was long
pending, but was not possible due to the prevailing buyers market.
Consequently, the textile market has started to look up, indicating that
the realizations and sales of the company would improve considerably this
year over the previous year.
RISK AND CONCERNS:
Though the outlook of the market has improved in the recent times, the
company has constantly faced the problem of piling debts that it has been
trying hard to serve. With the partial implementation of Debt Relief
Package by the Financial Institutions, the cost of debt servicing has
fallen considerably. However, the quantum of debt remains a cause of
concern to the company, which more or less sets-off the fall in the
interest rates on the loans.
HUMAN RESOURCE DEVELOPMENT:
The company presently employs around 160 people. The cost-cutting exercise
undertaken by the company has resulted in the reduction of work force cost
by around 5-6%, which is a considerable amount in monetary terms. This has
enabled the company to sustain its commitment to provide the best possible
working conditions and remuneration to the existing work force.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The company has incorporated an Audit Committee on 30th March 2001 pursuant
to Section 292A of the Companies Act, 1956, consisting of three members.
The purpose of the Committee has been to advise the Board on the matters
relating to the accounting, auditing and internal controls, thereby
assisting the Board to carry out the day-to-day functioning of the company
effectively and efficiently As a result of this and other measures taken by
the company, it has identified the areas in which there is a scope to take
up the cost reduction exercise,. and the company has been constantly
working on it.
CAUTIONARY STATEMENT:
Statements in the Management Discussion and Analysis Report describing
the Companys objectives, outlook, estimates, expectations or predictions
may be forward-looking statements within the meaning of applicable
securities laws and regulations. Actual results may differ materially from
those expressed or implied. Important factors that could make a difference
to the Companys operations include among others, economic conditions
affecting demand/ supply and price conditions in domestic and overseas
markets in which the company operates, changes in the Government
regulations, tax law and other statutes and incidental factors.
For and on behalf of the Board
K.G. BAJORIA C.K. SARAWGI
MANAGING DIRECTOR DIRECTOR
Place: Bhiwadi
Dated: 30th June 2004