girnar fibres ltd Management discussions

GIRNAR FIBRES LIMITED ANNUAL REPORT 2006-2007 MANAGEMENT DISCUSSION AND ANALYSIS A. INDUSTRY STRUCTURE: The textile industry in India has an important place, account for 14% of total industrial production and contribute 30% of the total exports and is a largest employment generator. Providing one of the most basic needs of people and holds importance maintaining sustained growth for improving quality of life. It is a major contribution to the countrys economy. Post lifting up of the import restriction of the multi-fiber arrangement,the market has become competitive and the data released by the OTEXA, USA shows that the first year of the non-quota regime for textiles has been Indian export to the US grow by 27 percent year on year to US$ 4.6 billion. Besides that the Govt. has also taken steps for the development of the textile Industry by framing textile policy for achieving target export. Inspite the performance of the Indian textile lndusty suffered from the second quarter onward of the current year because of strengthening of rupee as compared to dollars resulted in decline of export and increase in pressure on the domestic market and decline in nest sales realization, But, the global textile industry is growing faster due to ever increasing demand for cotton fibre consumption in worldwide and as a result, the Indian textile industry is also bound to grow in the international and domestic market. Secondly, the increase in per capital income is reason of increasing consumption of cotton fibres in India. Your Company is striving and making all its efforts for its revival and the CDR cell a voluntary organization under the aegis of the RBI has taken some effective steps and ordered for the re-working of its debts restructuring as per presentcash flow, so that the Company may able to derive the maximum benefit of the present scenario of open economy. Your Company has also to cope with the problem of shortage of working capital limits and increasing price of cotton the major raw material has converted the unit no.2 into Polyester/Cotton Yarn (PC). B. FINANCIAL PERFORMANCE: The turnover of the Company for the current year is Rs. 4119.81 Lacs as compared to Rs.4037.25 Lacs in the previous year and ended the year with cash profit of Rs. 14.55 Lacs as compared to cash loss of Rs. 6.98 Lacs in the previous year. C. FUTURE PROSPECTS: Your Company during the current year has taken effective steps in revival of its financial and operational strength and as above said, the CDR cell has allowed and ordered for the re-working of the debts restructuring as per the present cash flow. Although, the modernization of plant was envisaged in the earlier approved CDR package and that could not be implemented due non-availability of financial support from the Institutions. Now, therefore, the Company is stressing more on the maintenance of its old plant and machinery to achieve optimum level of production, maintaining high quality standard and working on to reduce power and other, costs. As already said the demand for the cotton fibres is growing faster in international and domestic market and your Company is manufacturer of cotton yam and with the re-working of the debt restructuring as per present cash flow the Company will start delivering improved and better results in the year to come. D. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: Commensurate with the size and operations, your Company has adequate internal control systems, which are in place. The Company regularly gets its internal control report and its suggestions are implemented as and when required. E. HUMAN RESOURCES/INDUSTRIAL RELATIONS: The Company has good industrial relations with its employees. The company has taken adequate steps to harmonize the relations with its employees and workers and also taken steps for the welfare of employees. DISCLOSURE: The disclosures are as mentioned in Clause 8 under Section of Corporate Governance.