marvel industries ltd Management discussions

MARVEL INDUSTRIES LIMITED ANNUAL REPORT 2008-2009 MANAGEMENT DISCUSSION AND ANALYSIS A. INDUSTRY STRUCTURE & DEVELOPMENT: Your Company is a manufacture of Polypropylene woven Sacks/Fabrics. The Industry is fragmented and there are many unorganized players in this Industry. The entry barriers in this industry are very low. The Industry mainly cater to Cement, Fertilizer, Food Grains and Exports. B. ECONOMY AND BUSINESS OUTLOOK: During the year under review the Indian economy was buoyant. Investors confidence grew in the corporate sector, which was reflected through the stock exchange index. GDP growth was 8% percent in the year of 2008-09. Healthy foreign exchange reserves, lower interest rates, low inflation rate and fiscal deficit indicate growing confidence in the Indian economy. However this Industry is facing margin pressures due to increasing prices of raw material which could not be passed on to the customers fully. C. OPPORTUNITIES & THREATS: (I) OPPORTUNITY: With the abolition quota system your company sees lot of opportunities in USA market for its fabrics and bags. Your company has an advantage over other competitions because of its presence in USA market. Your company is making all efforts to further capture this market post quota abolition. (ii) THREAT: Since new capacities have been created by the competition, business is becoming more competitive. D. SEGMENTWISE PERFORMANCE: Your Company has operating single segment in terms of Accounting Standard 17 issued by the Institute of Chartered Accountants of India. E. RISKS & CONCERNS: BUSINESS RISK: 1. Since entry barrier are low, new capacities will emerge. 2. Your Companys business is dependant on Cement Industry, which in our country is controlled by a few companies/groups and exports are primarily to single customer. (ii) FINANCIAL RISK: (a) Foreign Currency: Any weakling of dollar against rupee would impact your companys margin adversely. (b) Leverage: Your companys debts are for in excess of its assets. Your company has already given revivals schemes before Honble BIFR for their approval. Further your company is also making efforts to arrive at settlement with the Lenders so that company would be revived. (c) Statutory Risk: Your Company has system in place for statutory compliance to ensure that all the statutory requirements are complied within running business operations. F. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY: Your company has audit committee of directors, however not effective system of accounting and administrative control. Your company is making efforts now to strive link the all department and strive to make effective system of internal control. G. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: This has been dealt with in the Directors Report. H. HUMAN RESOURCES INDUSTRIAL RELATIONS: Your Company has team of qualified and dedicated personnel who have contributed to the consolidation of the operations of your Company. Your Companys industrial relations continued to be harmonious during the year under review. As on March 31, 2009 the Company has 379. employees. H. CAUTIONARY STATEMENT: Statements in the Management Discussion and Analysis describing the Companys objective estimate expectations or projections may constitute forward looking statements, within the meaning of applicable lows and regulations. Actual results may differ material from those either expressed or implied in the statement Important factors that could make a difference to your Companys operations include economic condition affecting demand / supply and price conditions in the domestic and international markets, changes in the Government regulations, tax laws and other statutes an other incidental factors.