shaw wallace distilleries ltdmerged Management discussions

SHAW WALLACE DISTILLERIES LIMITED ANNUAL REPORT 2004-2005 OPERATIONS: The Company during the financial year under review has achieved a sales volume of IMFL of 96.31 lacs cases against 74.43 lacs cases in the previous year through its own units. The net sales of the Company rose to Rs. 569.74 crores as against Rs. 476.65 crores during the previous year. The Profit after Tax during the year was Rs. 7.83 crores as against Rs. 27.52 crores in the previous year. The decrease in the profit was mainly due to steep increase in input costs. During the year, the Company focused on premium products while taking a conscious decision to weed out the cheap brands thereby enabling a healthy product mix. This, coupled with the impressive rise in sales volumes helped in mitigating the adverse impact on the bottom line due to multifold increase in input costs mainly in the case of molasses and Extra Neutral Alcohol. The Company continues to maintain its focus on premium brands and also correcting /negotiating sales prices to its customers and this is expected to help to tide over the cost push and improve bottomline in the coming years. EXPANSION AND MODERNISATION PLAN: The Company installed Reverse Osmosis Plant and Bio Composting in two of its major ENA producing Units to achieve zero discharge as per stipulated norms of CPCB. This has resulted in not only complying with the PCB norms but also enhanced the ENA production, as compared to the previous year. The Company has, in one of its units replaced old Rowmatic labeling machine with new Multimatic labeling machine in order to improve the productivity and quality. Most of the units of the Company achieved highest capacity utilization during the year under review, which resulted in reduction in the overhead cost per case. The Company continues to embark on new technologies through which it would be possible to produce international quality products to counter the challenges of increased competition arising out of WTO agreements. HUMAN RESOURCES: In April 2004, the Company went through an envisioning process. The Vision 3x3 was aimed at achieving double the revenue and triple the profits in 3 years time. Each and every member of the organisation was aligned to this Vision 3X3 and its key themes - innovation, execution and empowerment through a cascade process. The training and development programme was redesigned on the line of the key themes of Vision 3X3. As in the past the emphasis was on developing cutting edge skills for Sales personnel as also the development of new skills sets in the areas of problem solving, team working and leadership. To ensure better clarity and accountability for the business results, performance contracts were charted out for the business heads and functional heads. The performance contracts provided clarity regarding the individual goals and targets, decision rights, performance standards and qualifiers, career development and the variable plans. The Industrial Relations scenario once again remained peaceful with no loss of productivity due to labour related issues. Performance linked settlements signed in the previous year(s) are paying positive dividends in terms of higher productivity and reduced cost per case. Rightsizing of manpower at key units through appropriate VRS schemes is also in progress.