majestic industries ltd Management discussions

MAJESTIC INDUSTRIES LIMITED ANNUAL REPORT 2008-2009 MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis presents the industry overview, the opportunities and threats, the initiates taken by the company and overall strategy of MAJESTIC INDUSTRIES LIMITED in pursuing the business as enshrined in the main objects of the company: 1. Industry Structure and Developments The iron steel industry in India has revived, however, only those existing units located in the states of Himachal Pradesh and Uttranchal Pradesh and other states earmarked by the Central Government for availing incentives have been able to pull out of red which could able to make requisite expansion and comply with other prescribed terms & conditions. 2. Opportunities and threats During the last few years the company has been under financial crunch and has been facing a number of problems in procuring raw material from reputed suppliers mainly due to non-availability of financial assistance from any Bank/ Financial Institution. The plant & machinery also got obsolete over the time. Consequently, the Company suffered heavy losses. The management made a reference with Board for Industrial-and Financial reconstruction for availing a suitable relief package to revive the unit but to no avail. 3. Initiatives taken by the company Despite the persistent financial crunch and a number of problems being faced by the company, the management under the leadership of Sh. N.K. Gupta Managing Director has never lost heart and has always been trying its level best to bring the company on operational track, may be with some other business venture. 4. Business operations and review The company could not carry on any manufacturing activity during the year- under review. Since the companys unit is located in the state of Himachal Pradesh wherein the excise and income tax benefits are not made available to the old units. Therefore, due to price competition, it cold not be possible for the company to sustain its production level and at last it was thought prudent by the management to close the commercial operation in order to avoid operating losses. Further, due to the non-availability of Working and other capital finance, the company could not shift the plant to the other location. The Company became a sick industrial company within the meaning of section 2(f)(46AA) of the Companies (Second Amendment)Act, 2002. Board for Industrial & Financial Reconstruction (BIFR) in the order dated 09th August, 2005, on the reference of the Company made on 20th August, 2001 u/s 15(1) of the Side Industrial Companies (Special Provisions) Act, 1985 and registered as case No. 39/2002, declared-the Company as sick under clause (o) of sub-section (1) of Section (3) of the Act and appointed Industrial Development Bank of India as Operating Agency u/s 17(3) of the Act to prepare Rehabilitation Scheme. However, the net worth of the Company has turned positive thereafter Hence keeping in view the above and being there no scope-of future revival- of the unit in the state of Himachal Pradesh, your management has decided to commence the other related activities with the funds which are planned to be raised from the sale of fixed assets of the company. It is hoped that with the future plan once implemented, the company will be able to regain its past track of existence. 5. Cautionary Statement The Management Discussion and Analysis statement of the Annual Report has been included in adherence of the spirit enunciated in the code of Corporate Governance approved by the Securities and Exchange Board of India. Statement in the Management Discussion and Analysis describing the companys objectives, projects, estimates and expectations may be forward- looking statements within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference in the companys operation include economic conditions affecting demand. Place : Barotiwala BY ORDER OF THE BOARD OF DIRECTORS Date : 02nd September, 2009 CHAIRMAN