indian yarn ltd Management discussions

INDIAN YARN LIMITED ANNUAL REPORT 2006-2007 MANAGEMENT DISCUSSION AND ANALYSIS REVIEW OF OPERATIONS: The Directors are pleased to report that the company has made a quantum jump in its capacity and sales turnover during the year under review. The installed capacity has increased from 13944 spindles to 24696 spindles till 31st March, 2007. The company has focused on production of fiber dyed yarns and has responded to changing market conditions by prudently altering the product mix, resulting in better performance. The fiber dyeing capacity was also enhanced during the year leading to increase in production of fiber dyed yarns. The company is now one of the leading suppliers of fiber dyed yarns in the Hosiery segment of Ludhiana. The company has recently upgraded its winding and doubling technology by replacing all manual winding machines with autconers and doubling. machines with TFOs. This shall reduce labour requirements and further increase productivity and quality. It has also recently added 2016 spindles thereby increasing its spinning capacity to 26712 spindles. The Company is establishing itself as regular exporter. During the year, the company was able to export yarn valued at Rs. 757.34 lacs, being 8.21% of the total sales, through merchant exporters. Export focus shall continue in the current year also. With diversification across product categories and establishment of products in the export markets, the company is rightly poised to improve its performance in the near future. In order to further consolidate its position in the domestic and export markets it is planning to take up a project for further expansion of spinning capacity by 10000 spindles during the year 2007-08. The plant and machinery for the expansion shall be fully automated requiring minimum labour, thus improving productivity & quality. With this expansion, the company would be able to increase its turnover to Rs. 12500 lacs, operating profit to Rs. 1480 lacs and net profits to over Rs. 418 lacs. It will also be able to get a foothold in the synthetic suitings market as also increase its product portfolio for exports. India is now developing into a major garment supplier to the US and European countries. The domestic apparel market is also buoyant and growing at a rapid pace. The company sees a major opportunity in manufacture of high quality apparel and is accordingly finalizing plans for entry into this sector in the current year.