jaidka industries ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Structure/Development

The Textile industrys growth started galloping after the opening of the sector through liberalization policies as initiated by the Government of India. There are issues of currency depreciation and inflation. Turbulent global economic conditions, falling value of rupee, rising inflation coupled with weak industrial sector have emerged challenges for Indian economy. The Indian economys growth declined to 6.9 percent in FY 2012 while it grew consistently by 8.3% in fiscal year (FY10) and 8.5% in (FY11). For Indian textile Industry, year 2011-12 was one of the most struggling and challenging year. Record-high cotton and yarn prices seen during 2010-11, In order to check the rise in cotton yarn prices, the Indian Government in January 2011 has fixed cap on cotton yarn to be exported in FY2011-12. In the first week of April, 2011 The Government announced its new policy on export of Cotton Yarn and Yarn export was brought under Open General License. When exports were allowed from April 2011, the accumulated stock caused a crash of cotton yarn prices in the global and domestic markets.

Risk/concern/threat/Opportunities

Cotton prices which have been highly volatile are of major concern for textile manufacturers. Apart from rising cost of raw material, the textile and apparel industry is facing upward cost pressure from other parameters as well.

Major cost components like power has been increasing significantly and contributing to overall increase in production costs. Non-availability of skilled manpower is also one of the issue faced by the textile industry. The management is making all efforts to meet the prevailing challenges by focusing its efforts on further reduction of cost and by improving operational efficiencies to reduce the cost pressure. The Company keeps reviewing its strategy in the light of changes.

Outlook

Our industry is passing through an adverse phase although the future would be more optimistic if input costs, including the cost of raw material and interest, could remain generally stable. Global trade is shifting in favour of sourcing from low cost Asian Countries; India is expected to get benefit out of this. New consumption markets like Brazil, south Africa, and Turkey are also expected to create huge export opportunities for India. At the same time, increasing manufacturing cost of china will force some of the manufacturing to shift to other countries including India. Overall the year is expected to be more stable due to expectation that cotton will be much less volatile than last year. Indias domestic demand shall be the driver of growth for Indian textile & apparel industry.

Risk and Concerns

The relative competitiveness of the Indian textile industry is dependent on rupee exchange rate fluctuations and raw cotton prices. The raw cotton which is a natural fibre continues to depend on the nature i.e. monsoon. A good monsoon results in bumper crop but any shortfall can play havoc for the textile industry as most of the cost of the end products of the industry is cotton. The textile industry shall always be prone to such type of risks. Any significant change in the above said factors can affect the performance of the Industry, both ways.

Internal Control Systems and their adequacy

The Company maintains adequate internal control system and procedures which commensurate with the nature of its business and the size of its operations. In order to further strengthen the internal control system and to automate the various processes of the business.

All the significant audit observation and follow up action thereon are taken care of by the audit committee. The audit committee met four times during the financial year under review.

Financial/operation performance

The detailed performance has already been discussed in the Directors Report.

Human Resources/Industrial Relations

Beyond Balance Sheet lies companys singly biggest Asset Human Resources but unfortunately, the company is running through a difficult phase to retain the employees. Currently, there are 3 employees in the Company.

	FOR AND ON BEHALF OF THE BOARD
	Sd/-	Sd/-
PLACE : LUDHIANA	ASHOK JAIDKA	JAGDISH JAIDKA
DATED: 20.08.2012	(Director)	(Director)