hotline teletube components ltd Management discussions

HOTLINE TELETUBE AND COMPONENTS LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS - Industry Structure and Development - The business of the Company is dependant on the growth of the TV industry, as the Company is dealing in various components of television. The TV industry is growing at 12 to 15% per annum. The Black & White TV market, is being slowly replaced by colour TV. - Opportunities and Threats -As the purchasing power continue to increase steadily the demand for Colour TV is growing. Due to low level of penetration of Colour TVs in urban, semi-urban as well as rural market all these areas will continue to have increased demand in coming years for Colour TVs. Further global increase in demand especially from developing countries is expected to increase demand. Hence, there is great opportunity for the company to manufacture the parts required in this industry. Lowering of custom duties on TV, Picture Tubes and other major components of TV poses a challenge for the Industry. - Segment wise or Product wise Performance - The Company has been engaged in the business of picture tubes and components and no separate segment has been identified. - Outlook - The outlook for Colour TV industry is bright due to:- (i) Decline in the prices of Colour TV coupled with increasing per capita income of the country. (ii) Unexplored rural market having low penetration levels presently (iii) Emphasis of the Government on Rural Electrification. As the future of your Company is directly related to the growth of Colour TV industry, the outlook for the Company is positive. - Risks and Concerns - Being dependent on a single buyer, though the market for Colour TV and Colour Picture Manufacturing is increasing in the country. To mitigate this risk your Company plans to expand its customer base from TV as well as other industries. - Internal Control Systems and their adequacy - The Company has Internal Control System and procedures commensurate with its size and nature of business. The Internal Control Systems are supported by internal audit carried out by professional audit firms aiming at increasing operational efficiency and achieving cost efficiency and reduction in overheads at all ends of the business operations The Internal Audit Reports of the Internal Auditors are discussed at the Audit Committee Meetings and appropriate corrective steps have been taken. - Discussions on financial performance with respect to operational performance - During this year, the company have incurred a net loss before tax of 16 lakhs as against net profit before tax of Rs.112 lakhs in the year 2004-2005. The loss has been due to reduced scales of operations of Hotline CPT Limited, to whom the Company has been supplying sheet metal parts. - Material developments in Human Resources / Industrial Relations front, including number of people employed - To manage the ever increasing competition and changing work environment your Company focuses its efforts to upgrade the skills of its workforce. Your Company provides equal opportunities to the employees to perform and in their work. The company provides in-house training to its employees and maintaining safety and healthy environment for workers working within the factory premises. The company employs 102 workers. As a result of sound Human Resources policies the industrial as well as labour relations have been good and cordial.